EXHIBIT 10.12
MANAGEMENT AGREEMENT
This Management Agreement (the "Agreement") is made as of the
25th day of November, 1997, by and between Southwest Marine, Inc., a California
corporation (the "Company"), and TC Group, L.L.C., a Delaware limited liability
company ("Carlyle").
RECITALS
WHEREAS, Carlyle, by and through its officers, employees,
agents, representatives and affiliates, has expertise in the areas of corporate
management, finance, product strategy, investment, acquisitions and other
matters relating to the business of the Company and its subsidiaries; and
WHEREAS, the Company desires to avail itself of the expertise of
Carlyle in the aforesaid areas, in which it acknowledges the expertise of
Carlyle.
NOW, THEREFORE, in consideration of the foregoing recitals and
the covenants and consulting services herein set forth, the parties agree as
follows:
AGREEMENT
1. Appointment. The Company hereby appoints Carlyle to
render the advisory and consulting services described in Paragraph 2 hereof for
the term of this Agreement.
2. Services. Carlyle hereby agrees that during the term of
this Agreement it shall render to the Company and its subsidiaries, by and
through such of Carlyle's officers, employees, agents, representatives and
affiliates as Carlyle, in its sole discretion, shall designate from time to
time, advisory and consulting services, (the "Services") in relation to the
affairs of the Company and its subsidiaries in connection with strategic
financial planning and other services (but not including those referred to in
the next sentence) including, without limitation, advisory and consulting
services in relation to the selection, retention and supervision of independent
auditors, the selection, retention and supervision of outside legal counsel, and
the selection, retention and supervision of investment bankers or other
financial advisors or consultants. It is expressly agreed that the services to
be performed hereunder shall not include investment banking or other financial
advisory services rendered by Carlyle to the Company and its subsidiaries in
connection with acquisitions and divestitures by the Company and its
subsidiaries. Carlyle shall be entitled to receive additional reasonable
compensation for providing any services of the type specified in the preceding
sentence.
3. Fees. In consideration of the services contemplated by
Paragraph 2, subject to the provisions of Paragraph 6, the Company and its
subsidiaries and its successors agree to pay to Carlyle an aggregate per annum
fee (the "Fee") equal to $350,000* payable in equal quarterly installments in
advance on each December 15, March 15, June 15 and September 15 hereafter
commencing December 15, 1997. Fee payments shall be nonrefundable.
4. Reimbursements. In addition to the Fee, the Company and
its subsidiaries shall, at the direction of Carlyle, pay directly or reimburse
Carlyle for its reasonable Out-of-Pocket Expenses. For the purposes of this
Agreement, the term "Out-of-Pocket Expenses" shall mean the amounts paid or
payable by Carlyle in connection with the services provided for in Paragraph 2,
including, without limitation, reasonable (i) fees and disbursements of any
independent professionals and organizations, including independent auditors,
outside legal counsel, consultants, investment bankers or financial advisors,
(ii) costs of any outside services or independent contractors such as financial
printers, couriers, business publications or similar services and (iii)
transportation, per diem, telephone calls, word processing expenses or any
similar expense not associated with its ordinary operations. All reimbursements
for Out-of-Pocket Expenses shall be made promptly upon or as soon as practicable
after presentation by Carlyle to the Company and/or its subsidiaries of the
statement in connection therewith.
5. Indemnification. The Company will indemnify and hold
harmless Carlyle and its officers, employees, agents, representatives and
affiliates (each being an "Indemnified "Party") from and against any and all
losses, claims, damages and liabilities, joint or several (the "Liabilities"),
to which such Indemnified Party may become subject under any applicable federal
or state law, or any claim made by any third party, or otherwise, to the extent
they relate to or arise out of the performance of the Services or the engagement
of Carlyle pursuant to, and the performance by Carlyle of the Services
contemplated by, this Agreement. The Company will reimburse any Indemnified
Party for all reasonable costs and expenses (including reasonable attorneys'
fees and expenses) as they are incurred in connection with investigation of,
preparation for or defense of any pending or threatened claim for which the
Indemnified Party would be entitled to indemnification under the terms of the
previous sentence, or any action or proceeding arising therefrom, whether or not
such Indemnified Party is party hereto, provided that, subject to the following
sentence, the Company shall be entitled to assume the defense thereof at its own
expense, with counsel satisfactory to such Indemnified Party in its reasonable
judgment. Any Indemnified Party may, at its own expense, retain separate counsel
to participate in such defense, and in any action, claim or proceeding in which
the Company, on the one hand, and an Indemnified Party, on the other hand, is,
or is reasonably likely to become, a party; such Indemnified Party shall have
the right to employ separate counsel at the Company's expense and to control its
own defense of such action, claim or proceeding if, in the reasonable opinion of
counsel to such Indemnified Party, a conflict or potential conflict exists
between the Company, on the one hand, and such Indemnified Party, on the other
hand, that would make such separate representation advisable. The Company agrees
that it will not, without the prior written consent of the applicable
Indemnified Party, settle, compromise or consent to the entry of any judgment in
any pending or threatened claim, action or proceeding relating to the
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* Subsequently amended by oral agreement to increase the Fee to $3.0 million.
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matters contemplated hereby (if any Indemnified Party is a party thereto or has
been actually threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of the applicable
Indemnified Party and each other Indemnified Party from all liability arising or
that my arise out of such claim, action or proceeding. So long as the Company is
not in breach of any of its indemnification obligations hereunder, no
Indemnified Party shall settle or compromise any claim subject to
indemnification hereunder without the consent of the Company. The Company will
not be liable under the foregoing indemnification provision to the extent that
any loss, claim, damage, liability, cost or expense is determined by a court, in
a final judgment from which no further appeal may be taken, to have resulted
solely from the gross negligence or willful misconduct of Carlyle. If an
Indemnified Party is reimbursed hereunder for any expenses, such reimbursement
of expenses shall be refunded to the extent it is finally judicially determined
the Liabilities in question resulted solely from the gross negligence or willful
misconduct of Carlyle.
6. Term*. This Agreement shall be effective as of the date
hereof and shall continue until such time as Carlyle and its affiliates
collectively control, in the aggregate, less than 10% of the outstanding shares
of voting common stock of the Company. The provisions of Paragraphs, 5, 7 and 8
and otherwise as the context so requires shall survive the termination of this
Agreement.
7. Permissible Activities. Nothing herein shall in any way
preclude Carlyle or its officers, employees, agents, representatives or
affiliates from engaging in any business activities or from performing services
for its or their own account or for the account of others, including for
companies that be in competition with the respective businesses conducted by the
Company and its subsidiaries.
8. General.
(a) No amendment or waiver of any provisions of this
Agreement, or consent to any departure by either party from any such provision,
shall be effective unless the same shall be in writing and signed by the parties
to this Agreement, and, in any case, such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(b) This Agreement and the rights of the parties
hereunder may not be assigned without the prior written consent of the parties
hereto; provided, however, Carlyle may assign or transfer its duties or
interests hereunder to a Carlyle affiliate at the sole discretion of Carlyle.
(c) Any notice or request required or permitted to
be given under this Agreement shall be in writing and will be deemed to have
been given (i) when delivered personally or sent by telecopy, (ii) on the next
business day after being sent by reputable overnight courier service (charges
prepaid), or (iii) five days following mailing by certified or registered mail,
postage prepaid and return receipt requested, to the recipient at the address
below indicated:
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* Subsequently amended by oral agreement to provide that the Management
Agreement will terminate upon completion of the initial public offering of
its common stock by United States Marine Repair, Inc.
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If to Carlyle: TC Group, L.L.C.
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 000 Xxxxx
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxx
Telecopy: (000) 000-0000
If to the Company: Southwest Marine, Inc.
x/x Xxxxxxxxx Xxxxxx, Xxx.
Xxxx Xxxxxx Xxx 00000 7217
Foot of Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: President
Telecopy: (619) ______________
(d) This Agreement shall constitute the entire
agreement between the parties with respect to the subject matter hereof, and
shall supersede all previous oral and written (and all contemporaneous oral)
negotiations, commitments, agreements and understandings relating hereto.
(e) This Agreement shall be governed by, and
enforced in accordance with, the laws of the State of Delaware (excluding the
choice of law principles thereof). The parties to this Agreement hereby agree to
submit to the non-exclusive jurisdiction of the federal and state courts located
in the state of Delaware in any action or proceeding arising out of or relating
to this Agreement. This Agreement shall inure to the benefit of, and be binding
upon, Carlyle and the Company (including any future subsidiaries of the Company
that are not signatories hereto), and their respective successors and assigns.
(f) This Agreement may be executed in two or more
counterparts, and by different parties on separate counterparts. Each set of
counter parts showing execution by all parties shall be deemed an original, and
shall constitute one and the same instrument.
(g) The waiver by any party of any breach of this
Agreement shall not operate as or be construed to be a waiver by such part of
any subsequent breach.
* * * * *
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SIGNATURE PAGE TO MANAGEMENT AGREEMENT
IN WITNESS WHEREOF, the parties have caused this agreement to be
executed and delivered by the duly authorized officers or agents as set forth
below.
TC GROUP L.L.C.
By: TCG Holdings, L.L.C.
By:
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Name:
Title:
SOUTHWEST MARINE, INC.
By:
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Name:
Title:
