EXHIBIT 10.19
MANAGEMENT
AGREEMENT
This Management Agreement (this
“ Agreement ”) is entered into as of
November 11, 2005 by and between Spyglass Merger Corp., a
Delaware corporation (together with its successors (including
Serena (as defined below) after the Merger (as defined below) and
permitted assigns, the “ Company ”), and Silver
Lake Management Company, L.L.C., a Delaware limited liability
company (the “ Manager ”). Unless the context
otherwise requires, all capitalized terms used, but not defined
herein, shall have the meanings set forth in the Stockholders
Agreement referenced in the Contribution and Voting Agreement,
dated as of the date hereof (as amended, supplemented or otherwise
modified from time to time, the “ Contribution
Agreement ”) among the Company, Silver Lake Partners II,
L.P. and the other parties thereto (as such Stockholders Agreement
may be amended, supplemented or otherwise modified from time to
time).
RECITALS
WHEREAS, the Company has been formed
for the purpose of merging with and into (the “ Merger
”) SERENA Software, Inc., a Delaware corporation (“
Serena ”), pursuant to the Agreement and Plan of
Merger, dated as of November 11, 2005, between the Company and
Serena (as amended, supplemented or otherwise modified from time to
time, the “ Merger Agreement ”);
WHEREAS, to enable the Company to
engage in the Merger and related transactions, the Manager provided
financial and structural advice and analysis as well as assistance
with due diligence investigations and negotiations (the “
Financial Advisory Services ”); and
WHEREAS, the Company desires to
retain the Manager to provide certain management and advisory
services to it, and the Manager is willing to provide such services
on the terms and subject to the conditions set forth
below.
AGREEMENT
NOW THEREFORE, in consideration of
the mutual covenants contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Services . The Manager
hereby agrees that, during the term of this Agreement (the “
Term ”), it will provide the following consulting and
management advisory services to the Company as requested from time
to time by the Board of Directors of the Company:
(a) advice in connection with the
negotiation and consummation of agreements, contracts, documents
and instruments necessary to provide the Company with financing on
terms and conditions satisfactory to the Company;
(b) financial, managerial and
operational advice in connection with the Company’s
day-to-day operations, including, without limitation, advice with
respect to the development and implementation of strategies for
improving the operating, marketing and financial performance of the
Company and its subsidiaries; and
(c) such other services (which may
include financial and strategic planning and analysis, consulting
services, human resources and executive recruitment services and
other services) as the Manager and the Company may from time to
time agree in writing.
The Manager shall devote such time
and efforts to the performance of services contemplated hereby as
the Manager deems reasonably necessary or appropriate;
provided , however , that no minimum number of hours
is required to be devoted by the Manager on a weekly, monthly,
annual or other basis. The Company acknowledges that the
Manager’s services are not exclusive to the Company and that
the Manager will render similar services to other persons and
entities. The Manager and the Company understand that the Company
may, at times, engage one or more investment bankers or financial
advisers to provide services in addition to, but not in lieu of,
services provided by the Company under this Agreement. In providing
services to the Company, the Manager will act as an independent
contractor and it is expressly understood and agreed that this
Agreement is not intended to create, and does not create, any
partnership, agency, joint venture or similar relationship and that
no party has the right or ability to contract for or on behalf of
any other party or to effect any transaction for the account of any
other party.
2. Payment of Fees
.
(a) In the event that the
Termination Fee (as defined in the Merger Agreement) becomes
payable to the Company pursuant to the terms of the Merger
Agreement, the Company shall cause the Termination Fee to be paid
to the Manager.
(b) The Company will pay to the
Manager, in consideration of the Manager providing the Financial
Advisory Services, a transaction fee (the “ Transaction
Fee ”) in the amount of $10,000,000, such fee being
payable at the Closing (as defined in the Merger Agreement) of the
Merger.
(c) During the period commencing on
the Closing Date (as defined in the Merger Agreement) and
continuing throughout the Term, the Company will pay to the
Manager, an annual periodic fee of $1,000,000 (the “
Periodic Fee ”) in exchange for the ongoing services
provided by the Manager under this Agreement, such fee being
payable by the Company quarterly in advance on or before the start
of each calendar quarter; provided , however , that
the Periodic Fee for the period from the Closing Date through the
last day of the calendar quarter in which the Closing occurs shall
be paid upon Closing. The Periodic Fee shall be prorated for any
partial period of less than three months.
(d) During the Term, as the Manager
and the Company may mutually agree, the Manager may advise the
Company in connection with financing, acquisition, disposition and
change of control transactions involving the Company or any of its
respective direct or indirect subsidiaries (however structured),
and in connection with any such transaction the Company will pay to
the Manager (or such Affiliates as they may respectively designate)
an aggregate fee that is mutually agreed between the Manager and
the Company, with the approval of the Co-Investor Designee, as
defined in the Stockholders Agreement (the “ Subsequent
Fee ”).
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Each payment made pursuant to this
Section 2 shall be paid by wire transfer of immediately
available federal funds to the account specified on Schedule 1
hereto, or to such other account(s) as the Manager may specify to
the Company in writing prior to such payment.
3. Term . (a) This
Agreement shall continue in full force and effect until the
seven-year anniversary of the Closing (the “ End Date
”); provided , however , that (a) the
Manager and the Company may unanimously cause this Agreement to be
terminated with the approval of the Co-Investor Designee (in which
case this Agreement will terminate), (b) the Manager may cause
this Agreement to terminate at any time following (i) an
Initial Public Offering, (ii) a transaction subject to
Section 3.5 of the Stockholders Agreement or (iii) a sale
of all or substantially all of the assets of the Company, in each
case by delivering written notice of such termination to the
Company (in which case this Agreement will terminate) and
(c) the Company may cause this Agreement to be terminated at
any time following an Initial Public Offering by delivering written
notice of such termination to the Manager (in which case this
Agreement will terminate). In the event of a termination of this
Agreement, the Company shall pay Manager (or such Affiliates as
they may respectively designate) (i) all unpaid Periodic Fees
(pursuant to Section 2(c) above), Subsequent Fees (pursuant to
Section 2(d) above) and expenses (pursuant to
Section 4(a) below) due with respect to periods prior to the
date of termination plus (ii) the net present value (using a
discount rate equal to the then yield on U.S. Treasury Securities
of like maturity) of the Periodic Fees that would have been payable
with respect to the period from the date of termination until the
End Date. Sections 3 through 12 (inclusive) of this Agreement
shall survive any termination of this Agreement.
4. Expenses; Indemnification
.
(a) Expenses . The Company
will pay on demand all Reimbursable Expenses. As used herein,
“ Reimbursable Expenses ” means (i) all
reasonable expenses incurred or accrued prior to the Closing Date
by the Manager or its Affiliates in connection with this Agreement,
the Merger Agreement, the Merger or any related transactions,
consisting of their respective out-of-pocket expenses for travel
and other incidentals in connection with such transactions
(including, without limitation, all air travel (in such manner as
determined by the Manager) and other travel related expenses) and
the out-of-pocket expenses and the fees and charges of
(A) Simpson Thacher & Bartlett LLP (as counsel to the
Manager and its affiliated funds), (B) PricewaterhouseCoopers
LLP and (C) any other consultants or advisors retained by the
Manager or its Affiliates in connection with such transactions,
(ii) reasonable out-of-pocket expenses incurred from and after
the Closing Date relating to its affiliated funds’ investment
in, the operations of, or the services provided by the Manager or
its Affiliates to the Company or any of its Affiliates from time to
time (including, without limitation, all air travel (in such manner
as determined by the Manager) and other travel related expenses),
and (iii) reasonable out-of-pocket legal expenses incurred by
the Manager or its Affiliates from and after Closing Date in
connection with the enforcement of rights or taking of actions
under this Agreement, the Contribution Agreement or the
Stockholders Agreement.
(b) Indemnity and Liability .
The Company will indemnify, exonerate and hold the Manager and its
Affiliates (other than the Company’s subsidiaries and other
controlled Affiliates), and each of their respective partners,
shareholders, members,
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directors, officers, fiduciaries,
managers, controlling persons, employees and agents (collectively,
the “ Indemnitees ”) free and harmless from and
against any and all actions, causes of action, s
