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Consulting Agreement

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Sectors: Transportation
Governing Law: New York, View New York State Laws
Effective Date: March 30, 1998
Related Agreement Types:
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Exhibit 10.7


CONSULTING AGREEMENT


This CONSULTING AGREEMENT, dated as of March 30, 1998, by and among NA Holding Corporation, a Delaware corporation ("Holding"), NA Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of Holding ("NA Acquisition"), and North American Van Lines, Inc. a Delaware corporation and wholly owned subsidiary of Holding (the "Company", together with Holding and NA Acquisition, the "Acquisition Group") and Clayton, Dubilier & Rice, Inc., a Delaware corporation ("CD&R").


W I T N E S S E T H:


WHEREAS, NA Acquisition has acquired all of the outstanding shares of capital stock of the Company pursuant to a certain Stock Purchase Agreement, dated as of January 9, 1998 (as amended from time to time, the "Stock Purchase Agreement") and a certain Preferred Shares Stock Purchase Agreement, dated as of January 9, 1998 (the "Preferred Stock Agreement") (such transactions being hereinafter referred to as the "Acquisition");


WHEREAS, CD&R has performed financial, management advisory and other services for the Acquisition Group, including but not limited to assistance in connection with (i) the preparation, negotiation, execution and delivery of the Stock Purchase Agreement and the Preferred Stock Purchase Agreement, (ii) the retention of legal, accounting, environmental, insurance, investment banking, financial and other advisors and consultants in connection with the Acquisition, (iii) the preparation, negotiation, execution and delivery of the commitment, fee and engagement letters, registration rights and purchase agreements, credit agreements, guarantees, mortgages, pledge agreements and other security agreements, subscription, management equity agreements, and other agreements, instruments and documents, relating to the Acquisition, the financing of the Acquisition and (iv) the structuring, implementation and consummation of the Acquisition (such services collectively, the "Acquisition Services");


WHEREAS, immediately following the closing of the Acquisition, it is contemplated that NA Acquisition will be merged with and into the Company, leaving the Company as the surviving entity and a wholly owned subsidiary of Holding;


WHEREAS, the Acquisition Group desires, following the Acquisition, to receive financial and managerial advisory services from CD&R, and CD&R desires to provide such services to the Acquisition Group;


NOW, THEREFORE, in consideration of the premises and the respective agreements hereinafter set forth and the mutual benefits to be derived herefrom, the parties hereto hereby agree as follows:


1. Engagement. The Acquisition Group hereby engages CD&R as a consultant, and CD&R hereby agrees to provide financial and managerial advisory services to the Acquisition Group, all on the terms and subject to the conditions set forth below.


2. Services, etc. (a) CD&R hereby agrees during the term of this engagement to assist, advise and consult with the respective Boards of Directors and management of each member of the Acquisition Group and their respective subsidiaries in such manner and on such business, management and financial matters, and provide such other financial and managerial advisory services (collectively, the "Continuing Services"), as may be reasonably requested from time to time by the Boards of Directors of each member of the Acquisition Group, including but not limited to assistance in:


(i) establishing and maintaining banking, legal and other business
relationships for each such member and its subsidiaries;


(ii) developing and implementing corporate and business strategy and
planning for each such member and its subsidiaries, including plans
and programs for improving operating, marketing and financial
performance, budgeting of future corporate investments, acquisition
and divestiture strategies, and reorganizational programs;


(iii) arranging future debt and equity financings and refinancings; and


(iv) providing professional employees to serve as directors or officers
of each member of the Acquisition Group.


(b) Each member of the Acquisition Group will furnish CD&R with such information as CD&R believes appropriate to its engagement hereunder (all such information so furnished being referred to herein as the "Information"). Each member of the Acquisition Group recognizes and confirms that (i) CD&R will use and rely primarily on the Information and on information available from generally recognized public sources in performing the services to be performed hereunder and (ii) CD&R does not assume responsibility for the accuracy or completeness of the Information and such other information.


3. Compensation; Payment of Expenses. (a) The Acquisition Group jointly and severally agree to pay to CD&R, concurrent with the execution of this Agreement, as compensation for the Acquisition Services, a fee of $2,950,000.


2


(b) The Acquisition Group jointly and severally agree to pay to CD&R, as compensation for Continuing Services rendered and to be rendered by CD&R hereunder, a fee of $500,000 per year (the "Continuing Services Fee"), one-twelfth of which shall be payable on the first day of each month commencing on the first day of the month following the date of the closing of the Acquisition. Such Continuing Services Fee may, in the sole discretion of a majority of the members of the Company's Board of Directors who are not affiliated with CD&R, be increased but may not be decreased without the prior written consent of CD&R. If any employee of CD&R shall be elected to serve on the Board of Directors of any member of the Acquisition Group or any of their affiliates (a "Designated Director"), in consideration of the Continuing Services Fee being paid to CD&R, CD&R shall cause such Designated Director to waive any and all fees to which such director would otherwise be entitled as a director for any period for which the Fee or any installment thereof is paid.


(c) The Acquisition Group jointly and severally agree to reimburse CD&R for such reasonable travel and other out-of-pocket expenses ("Expenses") as may be incurred by CD&R and its employees and agents in the course or on account of rendering any Acquisition Services or Continuing Services including but not limited to any fees and expenses of any legal, accounting or other professional advisors to CD&R engaged in connection with Acquisition Services and Continuing Services previously provided or being provided hereunder and any expenses incurred by any Designated Director in connection with the performance of his duties. CD&R may submit monthly expense statements, which shall be payable within thirty days.


4. Term, etc. (a) This Agreement shall be in effect until, and shall terminate upon, the earlier to occur of (x) the tenth anniversary of the date hereof and (y) the date on which the CD&R Fund no longer owns any shares of the capital stock of Holding, and may be earlier terminated by either party hereto upon 30 days' prior written notice to the other party hereto. The provisions of this Agreement shall survive any termination of this Agreement, except for the provisions of Section 1, Section 2(a), the first sentence of Section 2(b) and (solely as to any portion of the Continuing Services Fee or any Expense not paid or reimbursed prior to such termination and not required to be paid or reimbursed thereafter pursuant to Secti
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