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EXHIBIT 10.8
CONSULTING AGREEMENT
CONSULTING AGREEMENT dated as of March 18, 1997 between Exchange
Applications, Inc., a Delaware corporation (the "COMPANY"), and Exchange
Marketing Group, LLC, a Massachusetts limited liability company ("EMG").
RECITALS
The Company has engaged in the business of, among other things,
providing database marketing strategy and marketing program implementation
consulting services to third parties. The Company is discontinuing such
business. The members and employees of EMG were formerly employees of the
Company that provided such consulting services to third parties on behalf of the
Company. The Company wishes to hereby engage EMG to continue to provide such
consulting services to the Company's existing clients in order to complete the
consulting assignments that the Company has heretofore been engaged by such
persons to provide. EMG is willing to provide such services to such of the
Company's existing clients on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties agree as follows:
1. PROVISION OF CONSULTING SERVICES; COMPENSATION.
(a) The Company hereby engages EMG to provide to the persons listed
on SCHEDULE 1 hereto (such persons being collectively referred to as the
"EXISTING CLIENTS") on the Company's behalf, and EMG hereby agrees to provide to
the Existing Clients on the Company's behalf, the database marketing strategy
and marketing program implementation consulting services (database marketing
strategy and marketing program implementation consulting services being referred
to herein as "CONSULTING SERVICES") of the type and scope as the Company has
heretofore been engaged by such persons to provide. The Company shall
concurrently herewith transfer and deliver to EMG all of the Company's records,
files, data and other information and materials with respect to the Existing
Clients that is necessary in connection with EMG's providing Consulting Services
to the Existing Clients as contemplated hereby.
(b) In consideration for providing Consulting Services hereunder, the
Company shall pay to EMG the following amounts:
(i) The sum of $71,400 concurrently herewith, such sum to be
delivered to EMG by the Company on the date hereof in immediately
available funds;
(ii) The sum of $10,000, such sum or portions thereof to be
delivered to EMG by the Company in immediately available funds at such
times and in such portions as the Company shall receive payment of
amounts due from Invesco Funds, Inc. on account of Consulting Services
heretofore provided by the Company to Invesco Funds, Inc.;
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(iii) An amount equal to the payments received from each of the
Existing Clients listed on SCHEDULE 1 up to the amount set forth next to
each such Existing Client's name on SCHEDULE 1, plus in each case (i)
additional fees arising from the extension of any of the projects
referenced on SCHEDULE 1 and (ii) an additional amount equal to the
out-of-pocket expenses that EMG incurs in providing Consulting Services
hereunder to such Existing Clients on behalf of the Company, all such
amounts or portions thereof to be delivered to EMG by the Company in
immediately available funds at such times and in such portions as the
Company shall receive such payments.
(c) The Company shall from time to time hereafter promptly upon EMG's
request prepare and send to each of the Existing Clients an invoice in such form
as EMG shall request billing the Existing Clients for the Consulting Services
provided by EMG in accordance with this Agreement up to the amounts set forth on
SCHEDULE 1 and for the out-of-pocket expenses incurred by EMG in providing such
Consulting Services.
(d) The Company shall use its reasonably diligent efforts consistent
with past practices to collect the amounts described in Section 1(a)(iii) from
the Existing Clients and (ii) the $10,000 due to the Company from Invesco Funds,
Inc. as described in Section 1(a)(ii). If the Company is for any reason unable
to collect any such amounts within 90 days of the date of the invoice therefor,
EMG shall have the right, as the Company's agent, to undertake to collect such
amounts in a commercially reasonable manner.
(e) EMG shall reimburse the Company for any out-of-pocket costs and
expenses incurred by the Company in connection with the collection efforts
required by paragraph (d). EMG acknowledges and agrees that EMG shall bear the
risk of non-collection of payments from any Existing Clients or Invesco Funds,
Inc., and that EMG shall not look to the Company for any reimbursement or
indemnification of amounts that Invesco Funds, Inc. or any Existing Client fail
to pay.
2. INDEMNIFICATION.
(a) EMG hereby agrees to indemnify and hold the Company and each of
its directors, officers, agents and representatives harmless from and against
any and all liabilities, demands, claims, losses, actions or causes of action,
suits, amounts paid in settlement actually and reasonably incurred, assessments,
damages, fines, taxes, penalties, costs and expenses, including, without
limitation, reasonable attorney's fees, incurred or suffered by the Company or
any of its directors, officers, agents and representatives arising in connection
with or resulting from any third party claim naming the Company or any of its
directors, officers, agents or representatives as a party and relating to (i)
Consulting Services heretofore or hereafter rendered to the Existing Clients by
or on behalf of the Company with respect to the projects described on SCHEDULE 1
or (ii) any Consulting Services rendered to any person by EMG at any time after
the date hereof.
(b) The Company hereby agrees to indemnify and hold EMG and its
managers, agents and representatives harmless from and against any and all
liabilities, demands, claims, losses, actions or causes of action, suits,
amounts paid in settlement actually and reasonably
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incurred, assessments, damages, fines, taxes, penalties, costs and expenses,
including, without limitation, reasonable attorney's fees, incurred or suffered
by EMG, its managers, agents and representatives, arising in connection with or
resulting from any third party claim naming EMG or any of its managers, agent or
representatives as a party and relating to (i) the Company's products,
including, without limitation, the development, marketing, sale and installation
thereof, and (ii) systems integration and other services (except for Consulting
Services heretofore rendered to the Existing Clients by the Departing Persons
(as hereafter defined) on behalf of the Company with respect to the projects
described on SCHEDULE 1) that the Company has heretofore rendered or may
hereafter render to third parties, including, without limitation, the Existing
Clients.
3. NON-COMPETITION.
(a) EMG hereby covenants and agrees that it will not during the three
year period ending on the third anniversary of the date of this Agreement (such
period being referred to as the "NON-COMPETE PERIOD") compete directly or
indirectly with the Company in the business of developing database marketing
software ("SOFTWARE") or of providing systems integration services (such
businesses being referred to as "COMPANY BUSINESSES") anywhere in the United
States or Canada. Without limiting the generality of the foregoing, EMG shall
not during the Non-Compete Period (1) engage in or have any interest, directly
or indirectly, as owner, partner, member, manager, sales representative,
stockholder, capital investor, lender, lessor, renderer of consultation services
or advice, either alone or in association with others, in Company Businesses,
(2) solicit any Company employees to leave the employ of the Company, (3)
solicit any Company employees to become employees of any other person or entity,
or (4) solicit any customer of the Company with respect to the Company
Businesses. Notwithstanding the foregoing, EMG shall not be prohibited from
holding legally or beneficially up to two percent (2%) of the outstanding shares
of any series or class of securities of any person that engages in Company
Businesses, which securities of such series or class are publicly traded in the
securities markets. Nothing herein shall be deemed to prohibit EMG from
providing Consulting Services to third parties who are engaged in Company
Businesses (such third parties being referred to as "COMPANY COMPETITORS") or
from providing Consulting Services to persons in association with Company
Competitors that are selling to such persons Software or providing to such
persons systems integration services, provided that EMG does not violate Section
4 below. The Company acknowledges that there may be some limited amount of
activity engaged in by EMG incidental to EMG providing Consulting Services that
could be characterized as being part of the Company Businesses, and that such
activities of such scope shall not be prohibited by this Section 3(a).
(b) The Company hereby covenants and agrees that it will not during
the Non-Compete Period compete directly or indirectly with EMG in the business
of providing Consulting Services anywhere in the United States or Canada.
Without limiting the generality of the foregoing, the Company shall not during
the Non-Compete Period (1) engage in or have any interest, directly or
indirectly, as owner, partner, member, manager, sales representative,
stockholder, capital investor, lender, lessor, renderer of consultation services
or advice, either alone or in association with others, in the business of
providing Consulting Services, (2) solicit
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any member or employee of EMG to withdraw as a member of, or leave the employ
of, EMG, (3) solicit any of the members or employees of EMG to become employees
of any other person or entity, or (4) solicit any customer of EMG with respect
to the provision of Consulting Services. Notwithstanding the foregoing, the
Company shall not be prohibited by this Agreement from holding legally or
beneficially up to two percent (2%) of the outstanding shares of any series or
class of securities of any person that engages in the business of providing
Consulting Services, which securities of such series or class are publicly
traded in the securities markets. Nothing herein shall be deemed to prohibit the
Company from selling Software or providing systems integration services to third
parties who are engaged in the business of providing Consulting Services (such
third parties being referred to as "EMG COMPETITORS") or from selling Software
or providing systems integration services to persons in association with EMG
Competitors that are providing Consulting Services to such persons. EMG
acknowledges that there will necessarily be some limited amount of Consulting
Services provided by the Company incidental to the Company Businesses, and that
providing Consulting Services of such scope shall not be prohibited by the
foregoing this Section 3(b).
4. NON-DISCLOSURE. EMG acknowledges that some of its employees have
had access to certain confidential and proprietary information belonging to the
Company relating to the Company Businesses, including inventions, products,
processes, methods, techniques, projects, developments, plans, research data and
computer programs, relating to the following:
- improvements and enhancements to the Value Exchange Business
Model and supporting materials;
- improvements and enhancements to the Customer and Employee Value
Optimization Processes and supporting materials;
- improvements and enhancements to the Segment Investment
Management Workstation concept and ValEx prototype developed by
the Company or Grant & Partners, Inc. ("GPI") and various
supporting materials and proprietary developments of such concept
and prototype developed by the Company;
- the Company's Business Model Benchmarking Survey methodology, all
best practices data and supporting materials;
- reports, presentations, training programs, and software developed
by the Company or improvements and enhancements to such as has
been developed by GIP for its clients or prospects, or for
internal or external publication; and
- the Company's financial data, personnel data, customer and
supplier lists.
All such information shall be referred to herein as "PROPRIETARY
INFORMATION".
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EMG will not disclose any Proprietary Information to others or use the
same for any unauthorized purpose without the written approval of the Company,
unless and until such Proprietary Information has become public knowledge
without fault of EMG or any of its employees. Notwithstanding the foregoing, in
no event shall EMG be prohibited from using any Proprietary Information that has
historically been used by the Departing Persons in engaging in any business
other than Company Businesses.
5. OFFICE SERVICES.
(a) From and after the date hereof, the Company shall make available
to EMG for EMG's use that portion of the Company's office space located at 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx together with all associated furnishings,
computer and other equipment that is presently utilized by EMG's members and
employees whom the Company formerly employed (the "DEPARTING PERSONS") and
otherwise commonly designated as the "marketing area", and furnish to EMG in
connection therewith office supplies, telephony, facsimile, e-mail and other
telecommunications services, postage, photocopying facilities and accounting,
receptionist, computer maintenance and clerical services to the same extent that
the Departing Persons have heretofore been furnished such supplies, facilities
and services by the Company in connection with their employment by the Company.
(b) In consideration for the Company's making available to EMG the
office space, furnishings, equipment, supplies, facilities and services
described in Section 4(a) (collectively, all of the foregoing is referred to as
the "OFFICE SERVICES"), EMG shall pay to the Company $10,000 for each calendar
month that EMG shall utilize the Office Services, such amount to be PRO RATED
for any partial month during which EMG shall utilize the Office Services. EMG
shall pay such amount to the Company on the last business day of each calendar
month during which EMG shall utilize the Office Services, with the first such
payment to be made on March 31, 1997 and on the date on which such utilization
ceases.
(c) EMG agrees to utilize the Office Services through December 31,
1997; provided that the Company may terminate the Office Services by giving EMG
not less than 120 days prior written notice of such termination. After December
31, 1997, EMG may cease utilizing the Office Services, or the Company may
terminate the Office Services, by giving the other party not less than 120 days'
prior written notice. The Company and EMG shall share equally the moving costs
incurred by EMG upon EMG's ceasing to utilize the Office Services for any
reason, such costs to include only the actual packing and shipping costs
reasonably incurred in physically transporting EMG's tangible personal property
from the Company's offices to EMG's new location.
6. EFFECTIVE DATE. To the extent not prohibited by applicable law,
this Agreement shall be deemed effective for all tax, accounting and reporting
purposes as of March 1, 1997.
7. LEGAL FEES. The Company shall pay up to $30,000 of the amount of
all legal fees and expenses owing to Xxxxxxx & Xxxxxx in connection with this
Agreement and the transactions contemplated hereby and related matters.
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8. NOTICES.
(a) All notices, requests, consents and other communications
hereunder shall be in writing and (i) during such time as EMG shall be utilizing
the Office Services, shall be personally delivered to the office of Xxxxxx X.
Xxxxxxx, in the case of communications to the Company, and to the office of
Xxxxxxx X. Xxxxxxx, in the case of communications to EMG, and (ii) following
such time as EMG shall cease utilizing the Office Services, shall be personally
delivered or sent by facsimile machine, commercial or U.S. Postal Service
overnight delivery service (provided the sender is able to obtain a receipt upon
delivery thereof) or mailed first-class, registered or certified mail, postage
prepaid:
(i) If to the Company, to it at the following address:
Xxxxxx X. Xxxxxxx, President
Exchange Applications, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile No. (000) 000-0000
(ii) If to EMG, to it at the address or facsimile number
provided to the Company for such purpose.
(b) Notices shall be deemed given upon the earlier to occur of the
following: (i) receipt by the party to whom such notice is directed, (ii) if
sent by facsimile machine, at 5 o'clock p.m. eastern time of the day (other than
a Saturday, Sunday or legal holiday in the jurisdiction in which the recipient
of the notice resides) on which such notice is sent, (iii) on the next day
(other than a Saturday, Sunday or legal holiday in the jurisdiction in which the
recipient of the notice resides), if sent by overnight delivery service, or (iv)
on the third day following deposit thereof with the U.S. Postal Service, as
registered mail (return receipt requested) as aforesaid. Each party, by notice
duly given in accordance herewith, may specify a different address for the
giving of any notice hereunder.
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9. WAIVER, AMENDMENT, REMEDIES.
(a) No delay on the part of either party in the exercise of any right,
power, privilege or remedy hereunder shall operate as a waiver thereof, nor
shall any exercise or partial exercise of any such right, power, privilege, or
remedy preclude any further exercise thereof or the exercise of any other right,
power, privilege or remedy.
(b) No amendment to or waiver of any provision of this Agreement, and no
consent to any departure by either party therefrom, shall be effective in any
event unless the same shall be in writing and signed by the party sought to be
charged therewith, and then such amendment, waiver, or consent shall be
effective only in the specific instance, and for the purpose, for which given.
10. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding among the parties hereto and supersedes all prior agreements
and understandings relating to the subject matter hereof.
11. PARTIES IN INTEREST. This Agreement shall inure to the benefit of
and shall be binding upon the parties hereto and their respective successors and
assigns; PROVIDED, HOWEVER, that the provisions of Section 3 shall terminate and
be of no further force or effect upon either (i) the sale of the Company or EMG,
whether by merger, sale of assets, issuance or sale of stock or membership
interests, as the case may be, or otherwise, such that one or more persons
(whether or not they are Company Competitors or EMG Competitors) who are not as
of the date hereof stockholders of the Company or members of EMG hereafter
obtain 50% or more of the voting power or power to direct the management and
disposition of the Company or EMG or (ii) the initial public offering by the
Company of any class or series of its capital stock. No person other than the
parties hereto is intended to be benefited hereby or is entitled to rely hereon.
There are no third-party beneficiaries of this Agreement.
12. ENFORCEABILITY. If any term or provision of this Agreement, or
the application thereof to any person or entity or circumstance, shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement, or
application to other persons or entities or circumstances, shall not be affected
thereby, and each term and provision hereof shall be enforced to the fullest
extent permitted by law. Without limitation of the foregoing if one or more of
the provisions contained in Section 3 shall for any reason be held to be
excessively broad as to scope, activity or subject so as to be unenforceable at
law, such provision or provisions shall be construed by a court of competent
jurisdiction by limiting and reducing it or them so as to be enforceable to the
maximum extent compatible with the applicable law as it shall then appear.
13. COUNTERPARTS. This Agreement may be executed simultaneously in
one or more counterparts hereof, each of which shall be deemed an original but
all of which together shall constitute one and the same agreement.
14. GOVERNING LAW. This Agreement shall be deemed to be a contract
made under seal and shall be construed in accordance with and governed by the
laws of the Commonwealth
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of Massachusetts (without giving effect to any conflicts or choice of laws
provisions which would cause the application of the domestic substantive laws of
any other jurisdiction).
15. CONSENT TO JURISDICTION (a) THE COMPANY AND EMG EACH HEREBY
CONSENT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS AND THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF
MASSACHUSETTS, AS WELL AS TO THE JURISDICTION OF ALL COURTS TO WHICH AN APPEAL
MAY BE TAKEN FROM SUCH COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF ANY OF ITS DUTIES ARISING HEREUNDER OR WITH RESPECT TO
THE TRANSACTIONS CONTEMPLATED HEREBY. THE COMPANY AND EMG EACH HEREBY EXPRESSLY
WAIVE ANY AND ALL OBJECTIONS IT MAY HAVE AS TO VENUE, INCLUDING, WITHOUT
LIMITATION, THE INCONVENIENCE OF SUCH FORUM, IN ANY OF SUCH COURTS. IN ADDITION,
THE COMPANY AND EMG EACH CONSENT TO THE SERVICE OF PROCESS BY PERSONAL SERVICE
OR U.S. CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO
SUCH PARTY AT THE ADDRESS PROVIDED HEREIN.
16. WAIVER OF JURY TRIAL.
THE COMPANY AND EMG EACH HEREBY VOLUNTARILY AND IRREVOCABLY WAIVE THEIR
RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION BROUGHT ON OR IN CONNECTION
WITH THIS AGREEMENT OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the parties have executed this Agreement under seal as of
the day and year first above written.
EXCHANGE APPLICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, President
EXCHANGE MARKETING GROUP, LLC
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx, Manager
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