CONFIDENTIAL
PROFESSIONAL SERVICES AGREEMENT
This PROFESSIONAL SERVICES AGREEMENT (the "Agreement") is made this 30th day
of December, 1999 between PROTEGE SOFTWARE LIMITED, whose principal place of
business is Xxxxxxx Xxxxxx, Xxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx XX0
0XX (the "Contractor") and CHANGEPOINT CORPORATION of 0000 Xxxxxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxx X0X 0X0 (the "Client Company") who
agree as follows:
1. TERM
The term of this Agreement shall begin on February 1, 2000 (the "Effective
Date") and shall end when this Agreement is terminated in accordance with
Clause 7.
2. PROFESSIONAL SERVICES
(a) The Contractor agrees to act as General Manager for the Client Company
and to perform the professional services specified in Schedule A, and
elsewhere in this Agreement as modified from time to time by mutual
agreement of the parties (the "Professional Services").
(b) The Contractor shall in all cases act in a professional manner and
shall perform the Professional Services in a manner which conforms to
the standards, specifications and other reasonable requirements agreed
between the parties.
(c) The Contractor agrees to submit the weekly and the monthly progress
reports to the Client Company set out in Schedule A and such other
reports as may be reasonably requested by the Client Company.
(d) The Contractor shall report to the President and Chief Executive
Officer or, in his/her absence, the Chief Financial Officer or Vice
President, Business Development, who shall act as the authorised
liaison point on behalf of the Client Company.
(e) The Contractor may attend executive meetings of the Client Company.
The Contractor and Client Company will agree upon the method of such
attendances,
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which methods may include attendances by teleconference, telephone,
or in person attendances.
(f) Within six (6) weeks following the Effective Date, the Contractor will
develop a business plan for the Subsidiary (as defined in Schedule A)
or, as the case may be, any Other Entities (as defined in Schedule A)
(the business plan for such entities is referred to as the "ELP").
The ELP shall contain, among other things, a detailed sales and
marketing plan for the sales and licensing of the Client Company's
professional services automation software currently known as Front
Office for IT (this software and new releases and versions thereof
together with other products which the Contractor and the Client
Company agree will form part of this Agreement are referred to herein
as the "Product"). The ELP shall also contain cash flow projections
for the Subsidiary and Other Entities including a list of all budgeted
costs, expenses and income for the Subsidiary and Other Entities as
well as the other information set out in Schedule A. Upon approval by
the Client Company, the ELP shall be deemed to be incorporated herein.
(g) The Contractor agrees to manage the Subsidiary and Other Entities in
accordance with the terms of the ELP. During the term of this
Agreement, either party may request changes to the ELP. The other
party will not unreasonably refuse to agree to such changes. Pending
approval for any change, the parties will act in accordance with the
latest approved ELP.
3. CONTRACTOR'S REWARD
The Client Company guarantees that the Subsidiary shall reward the
Contractor for performing the Professional Services in accordance with the
provisions of Schedule B.
4. FINANCING OF SUBSIDIARY
The Client Company shall transfer in cleared funds to the Subsidiary or, as
the case may be, any Other Entities within seven (7) days after the end of
each calendar month an amount equal to one hundred per cent (100%) of all
costs reasonably incurred by the Subsidiary and such Other Entities, which
have either been approved within the agreed ELP or otherwise agreed to by
the Client Company in writing or by e-mail. The Contractor will on behalf
of the Subsidiary keep records of and receipts for all costs incurred by
the Subsidiary and such Other Entities and will provide copies of such
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records to the Client Company upon reasonable request. All such records
will be the property of Subsidiary.
5. PROPRIETARY INFORMATION
(a) All intellectual property rights including copyrights, designs and
registered designs, patents, trade secrets, trade marks and other
proprietary rights (the foregoing are referred to as "Intellectual
Property Rights") in any intellectual property arising from the
Professional Services including the ELP shall be owned by the Client
Company and shall be considered to be part of its Proprietary
Information (as that term is defined in clause 6(b)). However,
provided that the ELP of the Client Company or the Subsidiary is not
disclosed or used to or for the benefit of any third party, the
Contractor may reuse the ELP and the know-how used in preparing the
ELP for the benefit of its other clients, except for a Client
Competitor (as that term is defined in clause 6(e)), without the
requirement to make any payments or to obtain any further consents
from the Client Company to do so. The Client Company agrees only to
use the ELP for its business purposes including those of its
subsidiaries and affiliates of the Client Company. During the term of
this Agreement, the Client Company agrees not to use the ELP for the
purpose of establishing a subsidiary or other affiliate of Client
Company in the Territory for the licensing or sale of the Products in
competition with the Subsidiary or Other Entities. As used herein,
the term "affiliate" means with respect to any person, any other
person directly or indirectly controlling, controlled by, or under
common control with such first person and for this purpose the term
"control" means DE FACTO control including having the power to direct
the affairs of a person by reason of the ownership of or controlling
the right to vote sufficient number of shares of voting stock, or to
direct the general management of the affairs of such person by
contract or otherwise.
(b) Unless otherwise agreed to in writing by the parties, any work
products (the "Work Products") including without limitation documents,
plans (including business, marketing and financial plans and the ELP),
customer lists, compilations of information, databases, and computer
software developed by Contractor for or on behalf of the Client
Company or furnished to the Client Company as part of the Professional
Services and all Intellectual Property Rights therein shall be owned
by the Client Company and shall be deemed to form part of the
Proprietary
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Information of the Client Company.
(c) The Subsidiary shall be the owner of all word, symbols, logos,
indicia of origin, and other trade marks used by the Subsidiary,
other than those which are trade marks of the Client Company, which
trade marks shall remain the property of the Client Company.
However, nothing herein shall transfer to the Subsidiary or the
Client Company the trade xxxx "Protege" or any words, symbols,
logos, indicia of origin, and other trade xxxx used by the
Contractor as of the date hereof. This provision shall survive the
termination of this Agreement.
(d) Each party acknowledges that it may be furnished with or may otherwise
receive or have access to confidential or proprietary information
which belongs to or relates to the other party's business or the
business of its affiliates (including in the case of Client Company,
the Subsidiary and Other Entities), including (without limitation)
past, present or future business plans, marketing plans, products,
software, research, development, inventions, processes, techniques,
design or other technical information and data (the "Proprietary
Information").
(e) Each party agrees to preserve and protect the confidentiality of the
other party's Proprietary Information and all forms thereof, whether
disclosed to it before this Agreement is signed or afterwards. In
addition, each party agrees that it shall not disclose or disseminate
the other party's Proprietary Information to any third party and shall
not use such Proprietary Information for its own benefit or for the
benefit of any third party (other than in furtherance of the goals of
the party to whom the Proprietary Information belongs or relates).
Notwithstanding the foregoing, the Client Company may disclose the
Proprietary Information of the Contractor to employees, officers and
directors of the Client Company and its affiliates and their
professional advisors for use solely in conjunction with the business
of the Client Company and its affiliates.
(f) The foregoing obligations shall not apply to any information which the
recipient can prove:
(i) is previously publicly known at the time of receipt from the
other party or which subsequently becomes publicly known through
no act or fault of the recipient;
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(ii) was independently developed by it without resort to the
Proprietary Information of the other party; or
(iii) disclosures which are required by law, however, the party making
the disclosure will notify the other party before a disclosure
is made and use reasonable efforts to have such information
remain confidential.
(g) Within 30 days after the termination of this Agreement or such other
period as the parties may agree, each party shall return to the other
all materials embodying the Proprietary Information of the other in
its possession or control and shall confirm that all copies of such
materials have been permanently deleted from its computer systems.
(i) This Clause 5 shall survive the termination of the Agreement.
6. WARRANTIES AND COVENANTS
(a) The Contractor warrants and covenants that:
(i) it is able to perform the Professional Services;
(ii) it has the know how and expertise to provide the Professional
Services and it will use such know how and expertise to assist
the Subsidiary in achieving the objectives set out in the ELP;
(iii) it will use reasonable efforts to provide and transfer to the
Subsidiary expertise related to marketing, promoting, and
distributing software products and services in the Territory;
(iv) any information or materials including Work Products it
discloses to the Client Company, the Subsidiary or Other
Entities shall not be in any way be based upon any confidential
or proprietary information from any third party, unless the
Contractor is specifically authorised in writing by such source
to use and disclose such proprietary information;
(v) if the Client Company, Subsidiary or Other Entity incurs any
liability or expense as a result of any warranty which the
Contractor makes in this Agreement not being true, the
Contractor shall indemnify such persons and
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hold them harmless against all such liability or expense
including reasonable attorney/solicitor's fees, provided that
the Client Company notifies the Contractor of the claim and
co-operates with the Contractor in defending it against the
claim. Each party shall notify the other if it ever becomes
aware of any such claim;
(vi) it shall not infringe any Intellectual Property Right or moral
right of any third party in the performance of its obligations
hereunder and the Work Products developed or delivered by the
Contractor will not infringe or violate any Intellectual
Property Right or moral right of any third party; and
(vii) it shall perform the Professional Services in a competent,
diligent, professional and careful manner and discharge its
obligations to the Subsidiary honestly and in good faith and
with a view to the best interests of the Subsidiary.
(b) The Client Company warrants and covenants that:
(i) it is entitled to appoint the Contractor to perform the
Professional Services in the Territory (as defined in Schedule
C);
(ii) any information or materials it discloses to the Contractor
shall not in any way be based upon any confidential or
proprietary information from any third party, unless the Client
Company is specifically authorised in writing by such source to
use such proprietary information;
(iii) if the Contractor incurs any liability or expense as a result of
any warranty which the Client Company makes in this Agreement
not being true, the Client Company shall indemnify the
Contractor and hold it harmless against all such liability or
expense, including reasonable attorney/solicitor fees, provided
that the Contractor notifies the Client Company of the claim and
co-operates with the Client Company in defending it against the
claim. Each party shall notify the other if it ever becomes
aware of any such claim; and
(iv) the Client Company will not unreasonably withhold the supply of
Product
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to the Subsidiary or Other Entities.
(c) The Client Company will defend (or at its option) settle any claim or
action brought against the Contractor to the extent that it is based
on a claim that (i) the performance of the obligations of the Client
Company or the provision of information to the Contractor or any
product supplied by the Subsidiary, any Other Entity, or the Client
Company, infringes any Intellectual Property Right of any third
person, or (ii) any claim or action brought against the Contractor to
the extent that it is based on a claim that the Products suffers from
a design or manufacturing defect or is defective, dangerous or
otherwise faulty (a "Claim") and will indemnify the Contractor against
damages and costs awarded against the Contractor by a court of
competent jurisdiction by final order from which no appeal is taken or
the time for appealing has expired, provided that the Contractor
notifies the Client Company promptly in writing of same, and provided
further that the Contractor permits the Client Company to control the
litigation and to defend, compromise or settle the Claim and provides
all available information, assistance and authority to enable the
Client Company to do so. The Client Company shall not be liable to
reimburse the Contractor for any compromise or settlement made by the
Contractor without the Client Company's prior written consent, or for
any legal fees or expenses incurred by the Contractor in connection
with such Claim (other than such reasonable legal fees or expenses
which the Contractor incurs as a result of the Client Company failing
to comply with its obligation to defend (or at its option) settle any
Claim). The Contractor shall have not authority to settle any claim
on behalf of the Client Company. Notwithstanding the foregoing, the
Client Company shall have no liability for any Claim that is based on
intellectual property created by Contractor to the extent that such
intellectual property is not generated automatically by the functions
or features of the Product, or intellectual property created in the
normal course of installing or implementing the Product if the
Contractor follows the installation procedures prescribed, recommended
or normally used by the Client Company. . This provision shall
survive the termination of this Agreement.
(d) The Client Company undertakes with the Contractor that:
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(i) it will provide prompt and clear instructions to the Contractor
in response to requests for information or instruction from the
Contractor in relation to the Professional Services;
(ii) it shall procure that the Subsidiary and all Other Entities meet
in full all their debts as they fall due in the normal course of
business provided that the payments are reflected in the ELP or
have otherwise been agreed to in writing or e-mail by the Client
Company and have been properly incurred;
(iii) it shall procure that the Subsidiary or Client Company will
obtain Directors' Liability Insurance as soon as practicable
after the Subsidiary has been incorporated; and
(iv) following the establishment of the Subsidiary's bank account, it
shall procure that L85,000 will be transferred to such bank
account immediately following the execution. Approximately forty
thousand pounds of this amount shall be used to pay the First
Quarterly Management Fee described in Schedule B and the
remaining amount (apprximately forty-five thousand pounds
(L45,000)) shall be left in the account as a float for the term
of this Agreement.
(e) The Contractor agrees that during the term of this Agreement and for a
period of twelve (12) months that it will not, directly or indirectly,
and whether as principal, employee, officer, director, shareholder or
investor or otherwise without the written consent of the Contractor:
(i) provide substantially similar services to those provided to the
Client Company in the Territory to any Client Competitor;
(ii) be involved in the development, or marketing of any software
directly competitive to the Product; or
(iii) solicit the customers of the Subsidiary or the Client Company
for any products or services of a Client Competitor. In this
Agreement, the term "Client Competitor" means the entities
listed in Schedule D, and such other entities notified to the
Contractor by the Client Company who are in the business of
supplying Professional Services Automation (PSA)
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software. If Contractor objects to the addition of an
additional entity to the list of Client Competitors,
Contractor may, within thirty (30) days of receiving the
notice, notify the Client Company that it objects to the
addition of the entity to the list of Client Competitors and
provide the Client Company with the reasons why the
Contractor believes such entity should not be added to the
list. The Client Company and the Contractor shall thereafter
discuss in good faith whether the entity should be removed
from the list of Client Competitors. If the parties are
unable to resolve such dispute, either party may, by notice
in writing to the other, request that such dispute be settled
by binding arbitration by Xxxxxx Xxxxxx or such other person
as the parties acting reasonably shall agree to (such person
is referred to as the "Arbitrator"). The Arbitrator shall
meet with the parties to discuss the dispute within twenty
(20) days of being asked to do so and shall within seven (7)
days of such meeting notify the parties of his decision. The
decision of the Arbitrator shall be final and binding upon
the parties and no appeal thereof may be taken by either
party on any grounds. If requested to do so by Contractor,
the Client Company agrees to review the list of Client
Competitors and not to unreasonably refuse to remove the
names of businesses who cease to be Client Competitors. The
reference to "investor" or "shareholder" in this paragraph
(e) above shall not apply to an investor or shareholder in a
public company where the investment does not exceed ten
percent (10%) of the issued shares of the company, or to an
investor in a private company where the investment does not
exceed five percent (5%) of the issued shares of the company
and where the private company is also an existing or former
client company of Contractor for whom the Contractor is or
has provided similar services to those provided to the Client
Company, provided that neither the Contractor nor any
affiliate of Contractor provides any services to such private
company or any affiliate thereof in the Professional Services
Automation software market.
(f) Personnel supplied by the Contractor are employees of the Contractor
and not the Client Company's personnel or agents, and the Contractor
assumes full responsibility for their acts. The Contractor shall be
solely responsible for the payment to the Contractor's employees
assigned to perform services hereunder
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(including the VP appointed hereunder), of compensation (including
the withholding and the remitting of income taxes, social security
taxes; providing for Workers' Compensation, disability insurance
benefits, unemployment insurance benefits and the like; and any and
all claims made by the Contractor's employees relating to their
employment by the Contractor). The Contractor shall inform its
employees that they are not entitled to any Client Company employee
benefits.
(g) Personnel supplied by the Client Company are employees of the
Subsidiary or the Client Company and not the Contractor's personnel or
agents, and the Client Company assumes full responsibility for their
acts. The Client Company and/or Subsidiary shall be solely
responsible for the payment to the Client Company's employees or hired
as employees by the Subsidiary to perform services for the Subsidiary,
of compensation (including the withholding and the remitting of income
taxes, social security taxes; providing for Workers' Compensation,
disability insurance benefits, unemployment insurance benefits and the
like; and any and all claims made by the Subsidiary or Client
Company's employees relating to their employment by the Client
Company). The Client Company shall inform its employees that they are
not entitled to any of the Contractor's benefits.
(h) If the Contractor, or any shareholder of the Contractor, or any
officer or director of the Contractor appointed by the Shareholders,
the Contractor or its Board of Directors is a party to a material
contract or proposed material contract with the Subsidiary or Other
Entity, or if any such person has a material interest in any person
who is a party to a material contract or a proposed material contract
with the Subsidiary or Other Entity, such person shall disclose such
interest in writing to the Client Company forthwith after the Company
or such individual, as the case may be, becomes aware of the contract
or proposed contract. Further all contracts with any such persons
shall be at market prices, unless this requirement is expressly waived
by the Client Company. For the avoidance of doubt, a person shall not
be considered to be an officer of the Contractor merely because such
person is appointed as a Vice President of any client company for whom
the Contractor is providing substantially similar services to the
Professional Services provided to the Client Company.
(i) The Contractor shall provide to the Subsidiary a full time person to
act as the Vice President of the Subsidiary during the term of this
Agreement. The Contractor
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shall, within thirty (30) days following the Effective Date,
provide the Client Company with the name, background and
qualifications of the person proposed as well as the reasons why
the Contractor believes such person would be suitable to carry out
the responsibilities of Vice President of the Subsidiary. If the
Client Company agrees that such person is suitable (such agreement
not to be unreasonably withheld), the Client Company will approve
of such person and thereafter such person shall act as the Vice
President of the Subsidiary. Such person shall remain an employee
of the Contractor. Prior to assuming the duties of Vice President
of the Subsidiary, such person shall execute a confidentiality and
proprietary rights agreement with the Client Company and the
Subsidiary in a form acceptable to the Client Company. The
Contractor shall cause the Vice President to devote his or her full
time and attention to performing the Professional Services during
the term of this Agreement. Any replacement of the Vice President
shall be subject to the Client Company's prior written approval
(which approval may be given in writing or by e-mail) and which
approval will not be unreasonably withheld. The Contractor agrees
to use reasonable commercial efforts to replace the Vice President
of the Subsidiary within thirty (30) days of any removal, dismissal
or resignation.
(j) The Client Company shall have the right by notice in writing to the
Contractor to have the Vice President replaced (i) for serious
misconduct, (ii) in the event the Subsidiary's business is not carried
on in material compliance with the terms of the ELP due to the
negligence, incompetence or wilful acts of the Vice President, or
(iii) in the event that in the Client Company's opinion, acting
reasonably, and after discussions with the Contractor, concludes that
the Vice President is not demonstrating the knowledge or skills
required to manage the Subsidiary. In this Agreement the term
"serious misconduct" means (i) the Vice President has been unable to
perform his or her duties by reason of ill health or injury for ninety
(90) days (whether consecutive or not) in any period of fifty-two (52)
consecutive weeks, (ii) the Vice President becomes of unsound mind, a
patient for the purpose of any statute relating to mental health,
becomes bankrupt or applies for protection against creditors
generally, (iii) the Vice President is convicted of a criminal offence
other than one which in the opinion of the Client Company does not
affect his or her position as Vice President of the Subsidiary,
bearing in mind the nature of his or her duties and the capacity in
which the Vice President is performing
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services, or (iv) the Vice President is guilty of any serious
default or misconduct in connection with or affecting the business
of the Subsidiary, Other Entities, the Client Company or the
Contractor or affiliates of any thereof, commits any serious or
repeated breaches of his or her obligations to the Subsidiary, is
guilty of serious neglect or negligence in the performance of his
duties or behaves in a manner (whether on or off duty) which is
likely to bring the Subsidiary, Other Entities, the Client Company
or the Contractor into disrepute or which seriously impairs his or
her ability to perform his or her duties.
(k) In the event the Vice President of the Subsidiary is not appointed
within thirty (30) days following the Effective Date, or in the event
the Vice President of the Subsidiary is removed, dismissed or resigns
and is not replaced within thirty (30) days of the date thereof, the
Client Company shall have the right to cease paying the Management Fee
until a new Vice President of the Subsidiary is appointed. The
Contractor acknowledges that the Client Company will require the Vice
President to execute a confidentiality and non-competition agreement
with the Client Company and/or the Subsidiary prior to his
appointment. In the event the hiring (or replacement) of the Vice
President is delayed because the Client Company is seeking a
restrictive covenant more onerous than the restrictive covenant that
the Contractor ordinarily requires of the vice presidents it hires for
other client companies for which it provides substantially similar
services to those provided to the Client Company, such delays shall
not be calculated in computing the thirty (30) day period for the
hiring or replacement of the Vice President in this paragraph (k).
7. TERMINATION AND RENEWAL
(a) The initial term of this Agreement shall be for an 18 month period
from the Effective Date (the "Initial Term").
(b) This Agreement may be renewed by the parties for subsequent twelve
(12) months periods (each such period is referred to as a "Renewal
Term"), by an agreement in writing. The Client Company agrees to give
the Contractor no less than ninety (90) days notice of its intention
not to renew the Agreement for a Renewal Term prior to the expiration
of the Initial Term or a Renewal Term, as the case may be, provided
that any failure to provide such notice shall not be deemed an
agreement
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to renew the Agreement for a Renewal Term. If the Client Company
does not give the Contractor a notice of its intention not to renew
this Agreement as provided for herein, then this Agreement will
expire at the end of the Initial Term, or Renewal Term, as the case
may be.
(c) This Agreement may be terminated as follows:
(i) during the Initial Term or any Renewal Term, by either party if
the other party has committed any material breach of the terms
of this Agreement, which breach has not been cured within thirty
(30) days from the receipt of a notice from the other party (a
"Termination for Breach");
(ii) by the Client Company in the event the aggregate of the Net
Revenue and Third Party Related Net Revenue (as those terms are
defined in Schedule B) of the Subsidiary and Other Entities in
any calendar quarter commencing on July 1, 2000 is not at least
five percent (5%) of the Client Company Worldwide Revenue in the
calendar quarter. Client Company shall provide Contractor no
less than thirty (30) days notice of its intention to terminate
this Agreement pursuant to this Clause 7(c)(ii). As used herein
the term "Client Company Worldwide Revenue" means the aggregate
gross revenue of the Client Company and its affiliates
(including the Subsidiary and Other Entities) from the sales
and/or licenses of the Product and third party products related
to the Products and the supply of services related thereto
invoiced and collected by such entities during the relevant
period (net of allowances, credits, discounts (based on volume
or otherwise) and net of actual bad debts in respect of invoices
issued by such entities);
(iii) by the Client Company if there is a change in control of the
Contractor (and for this purpose, the term "control" has the
meaning given to it in Clause 5(a)), other than to an affiliate
the Contractor or in the event of a public offering of the
shares of the Contractor on a public stock exchange;
(iv) by the Client Company if the Contractor breaches its
non-competition covenant to the Client Company set out in
Clause 6(e); or
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(v) by the Client Company on a winding up, liquidation, bankruptcy,
receivership or other similar event with respect to the
Contractor.
(d) This Agreement may be terminated by the Contractor with immediate
effect and on written notice, if proceedings are commenced for the
liquidation or winding up of the Client Company or the Subsidiary, and
such proceedings are not dismissed, discontinued, or abandoned within
sixty (60) days of their commencement.
(e) This Agreement may be terminated by the Client Company for convenience
upon not less than thirty (30) days prior written notice in the event
of a merger, amalgamation or change in control (as that term is
defined in Clause 5(a)) of the Client Company with an arm's length
third party and in such event the Contractor shall become entitled to
the Corporate Bonus referred to in Clause 4(C)(iii) of Schedule B as
the sole and exclusive remedy of the Contractor arising from such
termination.
(f) Termination of this Agreement pursuant to this Clause 7 shall be
without prejudice to the accrued rights and remedies of either party
prior to such termination, including the Contractor's rights to
payments in accordance with Schedule B.
(g) Prior to and upon the termination of this Agreement for any reason,
the Contractor shall provide the transitional services to the Client
Company set out in Schedule B.
8. MISCELLANEOUS
(a) The laws of the Province of Ontario shall govern this Agreement (other
than its conflict of law rules) and the parties hereby submit and
attorn to the non-exclusive jurisdiction of the courts of the Province
of Ontario for any action arising out of or relating to this
Agreement.
(b) This Agreement, including the Schedules attached hereto, comprises the
entire agreement between the parties. Any amendment to this Agreement
must be made in writing and signed by both the Client Company and the
Contractor.
(c) If either party cannot perform its respective obligations by reason of
fire, flood, earthquake, explosion or other casualty or accident or
act of God, strikes or labour
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disputes, war, or inability to obtain power or a material disruption
in telecommunications beyond the party's reasonable control, then the
non-defaulting party shall:
(i) notify the other party as soon as reasonably practicable;
(ii) take reasonable steps to resume performance as soon as possible;
and
(iii) not be considered in breach during the period in which
performance is beyond that party's reasonable control.
(d) If any provision of this Agreement shall be deemed by a court to be
too broad, the court is hereby authorised to limit any scope, duration
or area of applicability, or all of them, so such provision is no
longer overly broad and to enforce the same as so limited. Subject to
the prior sentence, if any part of this Agreement is held
unenforceable for any reason, such unenforceability shall void only
such part and shall not render unenforceable any other part of this
Agreement.
(e) Either party's waiver of a default by the other does not constitute a
waiver of future or other defaults.
(f) Neither party nor any of their affiliates shall, save with the consent
of the other party (which such consent shall, in the case of the
Contractor, be given on the terms set out below), during the term of
this Agreement or for a period of 12 months after its termination,
solicit or engage for employment or for the provision of services, any
employee of the other party, or any employee of an affiliate of the
other party
(g) The Client Company shall not, save with the consent of the Contractor
during the term of this Agreement or for a period of 12 months after
its termination, knowingly solicit or engage for employment or for the
provision of services, any employee of other client companies for whom
the Contractor is providing substantially similar services to those
provided to the Client Company (for as long as the client company
remains a client company for whom the Contractor is providing such
services) and the Contractor agrees that no client company for whom
the Contractor is providing substantially similar services to those
provided to the Client Company will, for the period which is the
shorter of (1) the period
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during which the client company remains a client company for whom
the Contractor is providing such services, and (2) the term of this
Agreement and for a period of twelve (12) months after its
termination, knowingly solicit or engage for employment or for the
provision of any services, any employee of the Client Company, the
Subsidiary, or Other Entities.
(h) The parties agree that the Contractor will license to the Subsidiary
space at the Kinetic Business Centre at Xxxxxxxx Street, Borehamwood,
Hertz or other premises in London, England which are suitable for the
Subsidiary's business requirements. The terms of such license shall
be negotiated in good faith by the parties and be executed by no later
than thirty (30) days from the Effective Date. The license will
provide to the Client Company approximately three hundred (300)
square feet of office space. The monthly license fee will be no
greater than thirteen hundred pounds sterling (L1,300) per month, plus
VAT..
(i) Notwithstanding Clause 8(f), the Contractor consents to the Client
Company soliciting the Vice President of the Subsidiary on the
condition that if the Client Company or any affiliate does engage such
person for employment or for the provision of services, the Client
Company pays to the Contractor upon the commencement of such
engagement a sum equal to fifty percent (50%) of the guaranteed
minimum pre-tax salary and bonus which the Client Company or any
affiliate thereof has agreed to pay to such person during the first
year of his/her engagement with the Client Company or its affiliate,
plus the reasonable head hunter's fees, if any, paid by the Contractor
originally to hire the Vice President for the position of Vice
President of the Subsidiary.
(j) Neither party shall assign its rights or obligations under this
Agreement, unless it first obtains the prior written consent of the
other party, such consent not to be unreasonably withheld.
(l) Any notice or other communication required or permitted to be given by
this Agreement shall be in writing and shall be effectively given if
delivered personally, by facsimile confirmed received, or by
registered mail to the relevant party at its address set out below.
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Dated at __________________________ this _______day of __________________
_______________________________________
duly authorised for and on behalf of
CHANGEPOINT CORPORATION
of 0000 Xxxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxx X0X 0X0
Dated at __________________________ this _______day of __________________,
_______________________________________
duly authorised for and on behalf of
PROTEGE SOFTWARE LIMITED
of Xxxxxxx Xxxxxx, Xxxxxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxxxxxx XX0 0XX
SCHEDULE A
WORK ASSIGNMENT
During the term of this Agreement, the Contractor shall perform the following
professional services in the Territory.
A. CLIENT COMPANY SUBSIDIARY
The Contractor shall:
(a) incorporate, or otherwise set up, a wholly owned subsidiary of the Client
Company (subject to local approval) to be called Changepoint Europe Limited
(the "Subsidiary"); and
(b) incorporate, or otherwise set up, such other corporations or entities as
the Client Company and Contractor agree to establish in the Territory from
time to time ("Other Entities").
(c) The Client Company shall have the prior right of approval with respect to
the activities described in this paragraph A.
B. DEVELOPMENT OF ELP
The ELP shall contain the following information:
Foreword
SECTION 1
[EXECUTIVE SUMMARY]
European Objectives
MISSION
ANALYSIS OF THE EUROPEAN MARKET
MARKET LEADERSHIP
QUICK BREAK EVEN
REASONABLE PERCENTAGE OF WORLDWIDE SALES
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LEVERAGE
EXISTING OPPORTUNITIES
SECTION 1
SALES & MARKETING OVERVIEW
European Objectives
MARKETS
European trends by selected country
SPECIFIC MARKET DRIVERS
EUROPEAN COMPETITIVE REVIEW
SECTION 2
PLAN OF EXECUTION
Overall operational objectives
MARKET TIMINGS
EUROPE SALES AND PARTNER STRATEGY OVERVIEW . . . . . . . . . . . . . . . . . .
Content
Routes to Market
Product Strategy
SALES STRATEGY
EUROPEAN PRICING
PROFESSIONAL SERVICES
GEOGRAPHICAL
REFERENCE CUSTOMERS
MARKETING STRATEGY
European Marketing Objectives and Strategies
Key Tactics
KEY METHODS
Localization
Technical Services
Operational Plan
Key issues
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Eurocentric Content
SECTION 3
Finance & Operations
The Benefits of Outsourcing to Protege Back Office
Financial Plan
Non-financial matters
C. ANALYSIS, RECOMMENDATIONS AND IMPLEMENTATION
The Contractor shall carry out analysis and make recommendations relating to:
- marketing positioning
- presentation
- technical support
- competitiveness
- localisation
The Contractor shall implement its approved recommendations for:
- sales
- marketing
- technical support
- production
- finance and administration
all for operations in the Territory, as more particularly set out in the annual
business plans (including budgets) of the Client Company, as such plans and
budgets relate to its operations implemented directly or through the Subsidiary
and/or Other Entities.
The business plan and budgets shall be mutually agreed by the Contractor and
Client Company.
D. SCOPE OF ACTIVITIES
The establishment of an organisation for the Territory, to complement the
current resources, technology and economic considerations of the Client Company,
and the circumstances that prevail in the Territory, so that through the
Subsidiary and Other Entities, the Client Company may professionally provide the
following:
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(a) solicitation of orders for Product;
(b) provision of support for the Client Company's distributors and dealers in
the Territory for the Products;
(c) co-ordination of Product and warranty service between the Subsidiary and
such other affiliated or third party, arms length corporations or entities,
and licensees and distributors/VARs etc. of the Client Company's products
(including Other Entities), located in the Territory;
(d) provision of product technical support services for the Product;
(e) the conducting of periodic training courses and seminars regarding
applications and operations of the Products in major marketing centres
located in the Territory for the benefit of distributors and dealers etc.;
(f) development of business plans for the Territory;
(g) management and co-ordination of the implementation of the Client Company's
marketing strategy in the Territory (for the Product of the Client Company
handled by the Contractor);
(h) localisation of marketing materials, and where agreed to by the Client
Company, the Product;
(i) set up and operate systems (such as accounting, legal and human resources
consistent with those set-up by the Client Company) and for these purposes
the Contractor shall assist the Subsidiary (and other related entities as
agreed at the Client Company's request) with implementation and
administration of all general, administrative and financial systems as
requested by the Client Company; and
(j) administration of the "Market Development Fund" specified in the budget
approved by the Client Company related to customers in the Territory (for
products of the Client Company).
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E. SOLICITATION OF CONTRACTS
(a) The Subsidiary and any Other Entities shall solicit orders for Product
only at such current prices as may be periodically established in
writing or e-mail by the Client Company and notified to the Contractor.
(b) All orders solicited by the Subsidiary or Other Entities from customers in
the Territory are subject to acceptance or rejection based on agreed
authorisation procedures.
(c) The Contractor agrees to despatch all inquiries received by it, applicable
to the Client Company or the Product of the Client Company, from points or
sources outside the Territory promptly to the Client Company for attention
and handling.
(d) All invoices in connection with sales to customers in the Territory shall
be rendered by the Subsidiary or (as the case may be) Other Entities to
such customers. It is expressly understood that full power by and such
authority for all collections rests with the Subsidiary or (as the case may
be) Other Entities and the Client Company, which exercise complete control
over the approval of all customers' credit, orders, and contracts. The
Contractor agrees to protect the Subsidiary or (as the case may be) Other
Entities and the Client Company, as far as is reasonable, by reporting
adverse credit information of which it is aware with respect to customers
of the Subsidiary or (as the case may be) Other Entities in the Territory
and by following the Client Company's credit manager's procedures
communicated to the Contractor. The Client Company will provide to the
Contractor a copy of its credit procedures and will provide updates to the
Contractor when same become available.
F. REPORTS
Unless otherwise agreed to by the parties in writing or by e-mail, the
Contractor shall provide the Client Company with the following monthly
reports:
1. REPORTS REQUIRED BY CLIENT COMPANY
1.1 MONTHLY REPORTS
FINANCIAL REPORTS
- full set of financial statements; B/S, P/L, C/F
- Product Line income statements
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- Departmental Income statements
- supporting schedules including;
- detailed trial balance
- aged accounts payable listing
- aged accounts receivable listing
- bank reconciliations
- detailed revenue analysis by customer and revenue type, i.e.
software, services, support and other.
MARKETING REPORTS
- summary of marketing activities for the month
HUMAN RESOURCES REPORTS
- copy of payroll activity report and, if available, payroll activity
exception report.
- summary of personnel changes
CONTRACTS REPORTS
- list of contracts signed
- copy of contracts signed
1.2 WEEKLY REPORTS
SALES REPORTS
- detailed sales report
- third party software and services acquired and sold
- detailed pipeline report
- detailed revenue forecast for coming month, balance of quarter, and
next quarter
G. DIRECTIONS
The Contractor shall follow the reasonable instructions of the Client
Company regarding the management and operation of the Subsidiary, provided
that such instructions are not inconsistent with the ELP or the
instructions given by the Board of Directors of the Subsidiary.
SCHEDULE B
CONTRACTOR'S REWARD
1. GENERAL
Without prejudice to the Subsidiary's liabilities to the Contractor for all
sums payable pursuant to this Agreement, the Contractor shall be entitled
to invoice the Subsidiary or (as the case may be) Other Entities in respect
of any sums payable by the Subsidiary to the Contractor pursuant to this
Agreement. The Client Company will authorize the Vice President of the
Subsidiary to pay the Management Fee referred to in paragraph 2 and the
Financial Services Fee referred to in paragraph 3, in the amounts and at
the times set forth below. All other payments to the Contractor shall be
approved in writing or by e-mail by the Client Company before such payments
are made to the Contractor.
All sums due to the Contractor whether from the Client Company or
Subsidiary pursuant to this Agreement shall be paid in UK pounds sterling
and all sums payable to the Contractor by the Client Company pursuant to
this Agreement are quoted (unless the contrary is stated) exclusive of VAT.
2. MANAGEMENT FEE
The Subsidiary shall pay the Contractor a management fee of L135,000 per
annum. The management fee shall be payable quarterly in advance, the first
such instalment being due on the Effective Date, with each subsequent
instalment being due quarterly thereafter. If this Agreement terminates or
is scheduled to terminate prior to the end of a twelve (12) month period
from the Effective Date, the Management Fee shall be pro-rated from the
anniversary of the Effective Date until the effective date of the
termination of this Agreement.
3. PROTEGE FINANCIAL SERVICES FEE
The Subsidiary shall pay to the Contractor a fee, calculated as set out
below, for the provision and/or co-ordination of administration functions
(the "Financial Services Fee"). Such administration functions shall
include:
(a) ensuring that the Subsidiary and any Other Entities are properly
incorporated;
-2-
(b) providing persons to act as directors, company secretary and (if
required) other officers of the Subsidiary and any Other Entity, all
of which persons shall be subject to the prior approval of the Client
Company;
(c) providing and co-ordinating facilities management, banking facilities,
VAT management, accounts receivable, accounts payable and cash
management, purchase orders, all financial reporting (including
integration with the Client Company's financial systems), Government
reporting requirements, payroll functions, income tax reporting and
tax returns for the Subsidiary and any Other Entities; and
(d) providing day-to-day Human Resources management in connection with the
hiring and personnel management requirements of the Subsidiary and any
Other Entities.
The Financial Services Fee will be charged at the rate of L6,500 per month
until the Subsidiary and Other Entities are employing 5 staff. Once the
number of employees has reached 5 the Financial Services Fee shall be
increased to L7,000 per month to reflect the increased Human Resources
management costs. An additional Financial Services Fee of L1,750 per month
shall be charged for each additional country in the Territory (other than
the United Kingdom) in which the Client Company instructs the Contractor to
establish an office or Other Entity. The Financial Services Fee will be
invoiced on the last day of each calendar month and shall be payable seven
days thereafter.
4. CORPORATE BONUS
(A) The Subsidiary shall pay a bonus to the Contractor in respect of the
Agreement Period, Termination Period and the Post-termination Period
calculated and payable in accordance with the provisions of this paragraph
4 (the "Corporate Bonus").
(B) The Corporate Bonus in respect of the Agreement Period (other than the
Termination Period) shall be 15% of the Net Revenue and 50% of the Gross
Margin on Third Party Related Net Revenue in respect of that period.
(C) The Corporate Bonus in respect of the Termination Period shall be (i) where
this Agreement is terminated by the Client Company pursuant to Clause 7(c),
there shall be no Corporate Bonus in respect of the Termination Period;
(ii) where this Agreement is
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terminated by the Contractor pursuant to Clause 7(d) or Clause 7(c)(i),
15% of the Annualised Net Revenue where the Annualised Net Revenue is
the average of the Net Revenue for each completed month of the Agreement
Period prior to the termination of this Agreement multiplied by the
number of months in the Termination Period not to exceed 12 months, plus
50% of the Annualised Gross Margin on Third Party Related Net Revenue
where the Annualised Gross Margin on Third Party Related Net Revenue is
the average of the Gross Margin on Third Party Related Net Revenue for
each completed month of the Agreement Period multiplied by the number of
months in the Termination Period not to exceed 12 months; or (iii) where
this Agreement is terminated by the Client Company pursuant to Clause
7(e) the Contractor will retain the Corporate Bonus for the periods
prior to the termination and in addition the following shall be due: (1)
in the event this Agreement is terminated at any time before the seventh
month of this Agreement, the sum of two hundred and twenty-five thousand
U.S. dollars (U.S.$225,000), and (2) in the event this Agreement is
terminated at any time during the seventh month to the eighteenth month
of the Initial Term, the greater of (A) eighteen thousand, seven hundred
and fifty U.S. dollars (U.S.$18,750) for the remaining months of the
Initial Term, and (B) an amount equal to the average monthly Corporate
Bonus in each completed month of the Agreement Period the period prior
to the termination of this Agreement multiplied by the remaining months
of the Initial Term.
(D) The parties agree that the payment of the Corporate Bonus in respect of the
Termination Period shall be the Contractor's sole remedy with respect to
claims it may have against the Client Company arising from or related to
the termination of this Agreement. This provision will not release the
Client Company for claims for arrears in Management Fees or Financial
Services Fees existing as of the date of the termination of this Agreement
or for other claims which do not arise from or relate to the termination of
the Agreement.
(E) The Corporate Bonus in respect of the Post-termination Period shall be 15%
of the Net Revenue and 50% of the Gross Margin on Third Party Related Net
Revenue during the Post-termination Period for professional services
supplied in connection with Products sold and/or licensed by the Subsidiary
or Other Entities during the Agreement Period.
(F) The Corporate Bonus shall be paid (together with any applicable VAT subject
to submission of an appropriate invoice) within 30 days of the end of the
Agreement Period, Termination Period, and Post-termination Period, as the
case may be. However, unless the Contractor notifies the company in
writing within thirty (30) days of the end of the
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applicable period that it desires to be paid the Corporate Bonus, the
Contractor shall be deemed instead to subscribe for (or purchase from
the Client Company) warrants exercisable for common shares in the Client
Company with the amount of the appropriate Corporate Bonus (excluding
any VAT) at a price of two Canadian dollars and forty five cents
($CDN2.45), per warrant. Such warrants will be exercisable by the
Contractor at any time during the period of five years commencing upon
the earlier of (i) the day prior to the closing of an initial public
offering of shares by the Client Company and (ii) the completion of the
Post-Termination Period, and shall be exercisable for no additional
consideration. The terms of such warrants will provide, among other
things, that the Client Company has the right, exercisable in its sole
and absolute discretion, to effect the exercise of such warrants
immediately prior to the completion of any transaction (an "Acquisition
Transaction") pursuant to which (i) there is a sale, whether by way of
private agreement or otherwise, of all or substantially all of the
assets or shares of the Client Company, (ii) a merger, amalgamation or
other transaction involving a change of control of the Client Company,
or (iii) an initial public offering (an "IPO") of shares of the Client
Company to the public. The Contractor acknowledges that the terms of
such warrants will provide that upon any exercise thereof it will be
deemed to be bound by the provisions of any unanimous shareholders
agreement then in effect among the shareholders of the Client Company.
The Contractor further acknowledges that the Client Company's
Shareholders Agreement will contain tag-along and drag-along provisions
which would require the Contractor to sell its shares in the Client
Company in the event of certain transactions and would permit the
Contractor to participate in any such transaction, in each case at a
price per share equal to that received by the other Shareholders of the
Client Company participating in such transaction. Upon the exercise of
the warrants, the Contractor agrees to become a party to the
aforementioned Shareholders Agreement before any shares are issued to
the Contractor. The Client Company hereby agrees and undertakes that by
entering into or agreeing to be bound by the aforementioned Shareholders
Agreement the Contractor will be entitled to all of the rights,
privileges and benefits to which the holders of common shares of the
Client Company (other than those who also hold Class A Preferred Shares)
are, generally, entitled to pursuant to such Shareholders Agreement.
The warrants shall not in any event be assignable or transferable. The
Client Company hereby represents and warrants to the Contractor that it
has the requisite power and authority under its constating documents to
issue the warrants and that there is sufficient authorized but unissued
share capital to permit the Client Company to issue the shares
underlying the warrants. The Client
-5-
Company hereby agrees and undertakes that the warrants will entitle the
Contractor to the benefit of all dividends and distributions made to
holders of common shares of the Client Company as if the Contractor were
the holder of the shares underlying the warrants from the date at which
the Contractor receives the warrants. The Client Company hereby agrees
and undertakes that upon the issuance of warrants to the Contractor the
Contractor shall be registered in the books of the Client Company as the
holder of such warrants with reference to the number of shares
underlying such warrants. If the warrants are not converted into the
common shares of the Client Company within three (3) years of the
Effective Date, the Client Company shallbe deemed as of such date to
have effected the exercise of such warrants on such date.
(G) Each party shall notify the other of the accrued Net Revenue and Gross
Margin on Third Party Related Net Revenue within thirty days of the end of
each month during each Agreement Period. Any disputes as to the amounts
shall be notified to the other party within a reasonable period. Amounts in
currencies other than sterling shall be converted to sterling at the mid
market closing rate on the London market at the end of the applicable
month.
(H) If the aggregate of Net Revenue and Third Party Related Net Revenue during
any calendar quarter commencing July 1, 2000 (a "Period") amounts to less
than 10% of the Client Company World-Wide Revenue (as that term is
described in Clause 7(c)(ii) during that Period; then the Corporate Bonus
for that Period shall be reduced proportionately.
(I) "AGREEMENT PERIOD" means the Initial Term and the Renewal Term, if any, but
does not include any of the Termination Period.
(J) "TERMINATION PERIOD" means any period commencing on the effective date of
the termination of this Agreement, and terminating at the end of the
Initial Term, or if this Agreement has been renewed, at the end of the
Renewal Term as the case may be.
(K) "POST TERMINATION PERIOD" shall mean the period of six months following the
termination or expiration of this Agreement.
(L) "NET REVENUE" shall mean in respect of the Agreement Period or Post
Termination Period the gross revenue generated by the Subsidiary and Other
Entities from the sales and/or licences of the Product and the supply of
services related thereto (the "Subsidiary Services") in the Territory
invoiced by the Subsidiary and/or Other Entities during the
-6-
Agreement Period (net of allowances, credits, discounts (based on volume
or otherwise) and net of actual bad debts in respect of invoices issued
by the Subsidiary or Other Entities) and specifically excluding (i)
Third Party Related Net Revenue, (ii) revenues of the Subsidiary and
Other Entities from sales and/or licenses of the Product or services
provided outside of the Territory, or (iii) revenues of the Subsidiary
and Other Entities which did not result from any material efforts of the
Subsidiary or Other Entities such as where the Subsidiary has performed
no more than an administrative function with respect to the procurement
of the applicable contract, or has provided only administrative services
such as accounting or collection assistance related to the provision of
the services; however, gross revenue generated by the Subsidiary and
Other Entities from the sales and/or licenses of the Product and the
supply of the services related thereto in the Territory (other than
Third Party Related Net Revenue) which are invoiced by the Client
Company and affiliates thereof shall be deemed to be gross revenue of
the Subsidiary for the purposes of this paragraph to the extent and only
to the extent that such revenue is from the sales and/or licenses of the
Product and the supply services related thereto in the Territory and was
generated by the Subsidiary and Other Entities. In calculating Net
Revenue in respect of the Corporate Bonus for the Agreement Period and
the Post-Termination Period, the Client Company may deduct from the
applicable gross revenue a reasonable amount to reflect anticipated bad
debts in respect of invoices issued. Should the actual bad debts in
respect of such invoices prove to be higher or lower, then an adjustment
shall be made to the Net Revenue prior to the calculation of the
Corporate Bonus in respect of the Post Termination Period. Further, in
calculating Net Revenue for the purpose of determining the Corporate
Bonus for the Post Termination Period, the applicable gross revenue
shall be the gross revenue invoiced and collected.
(M) "THIRD PARTY RELATED NET REVENUE" shall mean in respect of the Agreement
Period and the Post Termination Period the gross revenue generated by the
Subsidiary and Other Entities from the sales and/or licenses of third party
products related to the Product or the supply of services by a third party
related to the Product or such third party products in the Territory
invoiced by the Subsidiary and/or Other Entities during the Agreement
Period (net of allowances, credits, discounts (based on volume or
otherwise) and net of actual bad debts in respect of invoices issued by the
Subsidiary or Other Entities) and specifically excluding (ii) revenues of
the Subsidiary and Other Entities from sales and/or licenses of any of the
products or services provided outside of the Territory, or (iii) revenues
of the Subsidiary and Other Entities which did not result from any material
-7-
efforts of the Subsidiary or Other Entities. In calculating Third Party
Related Net Revenue in respect of the Corporate Bonus for the Agreement
Period and the Post Termination Period, the Client Company may deduct from
the applicable gross revenue a reasonable amount to reflect anticipated bad
debts in respect of invoices issued. Should the actual bad debts in
respect of such invoices prove to be higher or lower than the actual bad
debts, then an adjustment shall be made to the Third Party Related Net
Revenue prior to the calculation of the Corporate Bonus in respect of the
Post Termination Period. Further, in calculating Third Party Related Net
Revenue for the purpose of determining the Corporate Bonus for the Post
Termination Period, the applicable gross revenue shall be the gross revenue
invoiced prior to the termination of the Post Termination Period and
collected by no later than sixty (60) days after the end of the Post
Termination Period.
(N) "GROSS MARGIN ON THIRD PARTY NET REVENUE" means the Third Party Related Net
Revenue less amounts paid or payable to the third parties for the sales
and/or licenses of products or the supply of services related to the
Product or the third party products.
5. TRANSITION, CHANGE OF CONTROL OR CLOSURE OF THE SUBSIDIARY
Upon the termination of this Agreement for any reason, the Contractor shall
provide Financial Services support in the transition of the Subsidiary and
any Other Entities from the Contractor to a stand-alone basis. The
services include the hand-over of accounting information to the new
management of the Subsidiary and the management of employment issues such
as relocation of staff to new premises. In addition, the Contractor shall
liase with the Subsidiary's (and any Other Entities) recruitment agents for
the employment of administrative staff for the Subsidiary.
In the event of the closure of the Subsidiary (or any Other Entity) during
the Agreement Period or upon the termination of this Agreement, the
Contractor shall be entitled to a fee of L12,000, payable immediately. This
fee is for the provision of Financial Services support in order to ensure
an orderly closure of the Subsidiary (and any Other Entity) including the
dismissal of the Subsidiary's employees. The maximum payable under this
paragraph is the sum of L12,000 even if more than one entity is closed
during the Agreement Period or upon the termination of this Agreement.
In the event of a change of control of the Client Company the Contractor
shall be entitled to a fee of L12,000, payable immediately. This fee is
for the provision of Financial Services support in connection with the
change of control, including the provision of
-8-
additional accounting information and dealing with any changes to
employees' contracts of employment. For these purposes, control of the
Client Company means the holding of shares conferring in the aggregate
50% or more of the total voting rights conferred by all the shares in
the capital of the Client Company for the time being in issue and
conferring the right to vote on all resolutions passed at all general
meetings.
6. SHARE OPTIONS
(a) As soon as reasonably practicable following execution hereof the
Client Company shall grant a share or stock option (the "Share
Option") to the employee of the Contractor appointed as Vice President
of the Subsidiary (the "Nominated Employee") upon the terms of the
Client Company Stock Option Plan (the "Plan") and as provided below.
(b) The Share Option shall be over fifty thousand (50,000) common shares
of common stock of the Client Company with an exercise price in the
amount prescribed by the Plan.
(c) No performance target or performance condition shall attach to the
Share Option. The shares shall vest rateably over a three (3) year
period commencing on the first anniversary of the grant thereof to the
Nominated Employee and thereafter on the subsequent two anniversaries
thereof. However, the Nominated Employee must be a full time employee
of, or a full time consultant to, or a full time employee of a full
time consultant to, the Client Company or one of its Affiliates for
the shares to vest in the Nominated Employee.
(d) Upon exercise of the Share Option by the Nominated Employee the Client
Company shall forthwith notify the Contractor thereof and provide such
details as the Contractor may require to enable it to calculate any
liability it may have in respect of PAYE or employees' national
insurance contributions or any equivalent or replacement taxes in
connection with the exercise of the Share Option ("Option Tax
Liability"). The Nominated Employee agrees to execute the Client
Company's Share Subscription Agreement and become a party to the
Client Company's Shareholder Agreement, before any shares are issued
to the Contractor.
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(e) The Client Company shall pay to the Contractor (on behalf of the
Nominated Employee) the amount of any Option Tax Liability within
fourteen days of receiving notice from the Contractor of the amount
thereof, (which notice shall be given as soon as reasonably
practicable after receipt of the information referred to in
sub-paragraph (d) above), but in any event, no later than 30 days
from exercise of the Share Option, save in case of default on the
part of the Contractor giving notice. Following receipt of the
amount of the Option Tax Liability the Contractor shall not seek to
recover the same from the Nominated Employee.
(f) The Client Company warrants to the Contractor that it has full power
and authority to grant the Share Option on the foregoing terms.
7. PUBLIC OFFERING OF THE CLIENT COMPANY'S SHARES
(a) In addition and without prejudice to the Contractor's right to
acquire warrants pursuant to Clause 4 (F) of Schedule B, the Client
Company undertakes that if, at any time during the term of this
Agreement or within twelve months after its termination, there is a
public offering of shares in the Client Company, then:
(i) the Contractor shall be entitled to participate in any such
public offering of the Client Company's common shares (each such
share is referred to as a "Share") by subscribing for up to
25,000 Shares of the Client Company at the price and the other
terms at which those shares are offered pursuant to the public
offering;
(ii) it will take all reasonable steps and do all reasonable things
which are necessary and within its power to ensure that the
Contractor is so able to participate in any such public offering
of the Client Company's shares; and
(iii) it will notify the Contractor in good time and generally keep
the Contractor fully informed of its intentions in connection
with and of any proposed public offering of the Client Company's
shares;
(b) In case the Client Company shall at any time subdivide the outstanding
common shares of the Client Company into a greater number of common
shares, the purchase price per Share shall be proportionately reduced
and the number of
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subdivided common shares entitled to be purchased shall be
proportionately increased, and conversely, in case the Client
Company shall at any time consolidate the outstanding common shares
of the Client Company into a smaller number of common shares, the
purchase price per Share shall be proportionately increased and the
number of combined common shares entitled to be purchased hereunder
shall be proportionately decreased; and
(c) If any capital reorganisation, reclassification, subdivision or
consolidation of the capital stock of the Client Company, or the
merger or amalgamation of the Client Company with another corporation
shall be effected, then adequate provision shall be made whereby the
Contractor shall have the right to purchase and receive upon the basis
and upon the terms and conditions specified in this paragraph 7 and in
lieu of the Shares immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby, such shares of
stock, or other securities as may be issued with respect to or in
exchange for such number of outstanding Shares equal to the number of
Shares purchasable and receivable upon the exercise of the rights, had
such reorganisation, reclassification, subdivision or consolidation,
merger or amalgamation not taken place. This paragraph 7(c) shall
apply as well to the shares underlying the warrants which the
Contractor may acquire pursuant to Clause 4(F) of Schedule B.
SCHEDULE C
TERRITORY
In this Agreement, the term "Territory" means Europe excluding the countries in
the former Eastern Block, Africa and the Middle East subject to the then
prevailing export regulations in Canada, The United States, and other countries
which may be applicable and except to the extent that the sale or licensing of
the Product is prohibited pursuant to the laws of Canada, the United States or
other jurisdictions applicable to the Client Company's or the Subsidiary's
operations.
Client Company shall have the right at any time up to six (6) months following
the Effective Date to request the Contractor to remove from the Territory
countries in which the Contractor does not have any plans to actively market and
promote the Products. The Contractor will not unreasonably refuse any such
request and will respond to such request within ten (10) days of the receipt of
the request.
SCHEDULE D
LIST OF CLIENT COMPANY COMPETITORS
2. CHANGEPOINT'S PSA (PROFESSIONAL SERVICES AUTOMATION) COMPETITORS
NAME CURRENT PRODUCT NAME
---- --------------------
ABT Results Manager
Augeo Intelliplanner
Automation Center Automation Centre
Business Engine Business Engine
Deltek Costpoint, Front Office
Eden Communications Project Track
Evolve Servicesphere
Extensity Extensity Time
Great Plains Projects
Invisic Invisic
JETech Data Eproject
Marin Research Project Gateway
Netmosphere Netmosphere
Niku Niku
Novient Novient/Engagement,Reso
-2-
Opus360 Opus Enterprise
Planview Planview
Proamics Proacta
QuickArrow QuickArrow
SHL Systemhouse Project Office
Solomon Project Controller
Suretrak/P3 Primavera
Teamplay Primavera
Work Management Solutions Account 4
WSG Empire Time
NOTE: PSA is also sometimes referred to as ESA (Enterprise Services Automation)
or ESM (Enterprise Services Management).
