Exhibit 10.12
EXECUTION VERSION
ADVISORY SERVICES EXPENSE REIMBURSEMENT AGREEMENT
made as of February 23, 2006 (this "Agreement")
BETWEEN:
COREL CORPORATION, a corporation incorporated pursuant to the
federal laws of Canada
("Corel")
- and -
VECTOR CAPITAL CORPORATION, a Delaware corporation
("Vector")
WHEREAS from time to time Corel may request Vector to provide Advisory
Services (as defined below), solely on the terms and within the scope specified
by Corel; and
WHEREAS Vector expects to incur certain reasonable out-of-pocket costs and
expenses in connection with the providing of Advisory Services to Corel and
Corel has agreed to reimburse Vector for these costs and expenses; and
WHEREAS Corel and Vector have entered into this Agreement to confirm the
terms and conditions of Corel's obligation to reimburse Vector for certain
reasonable costs and expenses incurred by Vector in connection with the
providing of Advisory Services to Corel;
NOW THEREFORE in consideration of the mutual covenants and agreements in
this Agreement, and other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), Corel and Vector agree as
follows.
1. ADVISORY SERVICES
1.1 SCOPE OF SERVICES. From time to time at the written request of Corel,
Vector will provide, or will cause to be provided, the following services
to Corel (collectively, "Advisory Services"): (i) evaluation and analysis
(including the conducting of due diligence) of potential M&A transactions,
including the review of potential acquisition targets; (ii) evaluation and
analysis of potential strategic business relationships; (iii) analysis of
planning and structuring considerations and alternatives applicable to
Corel Corporation and its direct and indirect subsidiaries; and (iv) other
services as requested by Corel. For greater certainty, Advisory Services
will be comprised only of services described in this Section 1.1 which are
provided by Vector for the benefit of Corel.
1.2 NO FEES FOR ADVISORY SERVICES. Except for the reimbursement of
out-of-pocket costs and expenses expressly contemplated in Section 2 below,
Vector will not receive any fees or other remuneration for the provision of
Advisory Services to Corel.
1.3 TERM AND TERMINATION. This Agreement is for a term of three (3) years from
the date of execution (the "Initial Term"). The Initial Term shall
automatically be extended for an additional three (3) years unless one of
the parties to this Agreement provides, within ninety (90) days prior to
the expiration of the Initial Term, the other party with express written
notice indicating the desire to terminate this Agreement upon the
expiration of the Initial Term. This Agreement may be terminated by either
party (i) without notice, immediately upon the other party (A) committing a
breach of the terms of this Agreement; or (B) being the subject of a
voluntary or involuntary bankruptcy and/or insolvency proceeding; and (ii)
upon ninety (90) days prior written notice, without cause. No fees or
damages will be payable in connection with any termination pursuant to this
Agreement, provided that all Reimbursable Expenses incurred prior to the
effective date of termination will be reimbursed in accordance with this
Agreement.
1.4 ENGAGEMENT NOT EXCLUSIVE. Corel may engage other parties to provide
Advisory Services on terms and conditions agreed upon with those other
parties. Vector may provide Advisory Services to other parties
(collectively, "Other Clients") provided, however, that the provision of
Advisory Services to Other Clients does not result in Vector providing
confidential information in respect of Corel to Other Clients.
2. REIMBURSEMENT OF EXPENSES
2.1 REIMBURSEMENT. Subject to the limitations set out in Section 2.2 below,
Corel will reimburse Vector for reasonable out-of-pocket costs and expenses
which are incurred by Vector and reasonably relate to the provision of
Advisory Services to Corel ("Reimbursable Expenses"). Vector will provide
Corel with reasonable back-up documentation supporting the characterization
of costs and expenses as Reimbursable Expenses ("Supporting
Documentation"). Corel will reimburse Vector for Reimbursable Expenses
within sixty (60) days of the end of the month in which the Supporting
Documentation for the applicable Reimbursable Expense was provided by
Vector to Corel. Reimbursement payments by Corel pursuant to this Agreement
will be made in accordance with the payment instructions set out on
SCHEDULE A to this Agreement.
2.2 LIMITATIONS ON REIMBURSEMENT. Reimbursable Expenses in excess of $250,000
in any fiscal year of Corel must be approved, prior to reimbursement by
Corel, by the independent members of the audit committee of Corel's board
of director.
2.3 NOT EMPLOYEES. Individuals providing Advisory Services under this Agreement
will in no event be considered employees of Corel. The costs and expenses
of all of those individuals, whether employees of Vector or consultants to
or agents or representatives of Vector, will be Vector's responsibility
including all compensation, statutory deductions and remittances.
2
3. GENERAL
3.1 ASSIGNMENT. Vector may not assign this Agreement. Corel may assign this
Agreement to a direct or indirect wholly-owned subsidiary, and this
Agreement enures to the benefit of and is binding upon the successors and
assigns of Corel.
3.2 CONFIDENTIALITY. Vector agrees to (and to cause its affiliates to) keep
confidential, and not make use of (other than in the course of providing
Advisory Services) or disclose to any person, any information or matter
relating to Corel or the Advisory Services provided to Corel, provided that
the following information shall not be subject to this restriction (i)
information that was previously publicly disclosed by Corel; (ii)
information that otherwise becomes legally known by Vector; or (iii)
information which is required to be disclosed by applicable law.
3.3 SEVERABILITY. If a provision of this Agreement is declared void or
unenforceable, such provision will be deemed severed from this Agreement to
the extent of the particular circumstances giving rise to such declaration
and such provision as it applies to other persons and circumstances and the
remaining terms and conditions of this Agreement will remain in full force
and effect.
3.4 ENTIRE AGREEMENT. This Agreement contains the entire understanding of
Vector and Corel on these matters.
3.5 NOTICES. All notices, requests or instructions hereunder shall be in
writing and delivered personally, sent by telecopy, sent by federal express
or other nationally recognized overnight carrier, or sent by registered or
certified mail, postage prepaid, as follows:
(i) If to Vector:
Vector Capital Corporation
000 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
Telecopy No.: (000) 000-0000
(ii) If to Corel:
Corel Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx X00 0X0
Xxxxxx
Attention: Xxxxxxxxxxx XxXxxxxxxxx
Telecopy No.: (000) 000-0000
3
with a copy to:
Torys LLP
00 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx Xxxxxx X0X 0X0
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of
address shall be effective only upon receipt. All notices, requests or
instructions given in accordance herewith shall be deemed received on the
date of delivery, if hand delivered, telecopied or by overnight courier,
and five (5) Business Days after the date of mailing, if mailed by
registered or certified mail.
3.6 AMENDMENT: This Agreement may only be amended by an agreement in writing
signed by Vector and Corel, provided that any amendment is approved, in
advance, by independent members of the audit committee of Corel's board of
directors.
3.7 LAWS. This Agreement shall be governed by and construed in accordance with
the laws of the [State of New York without regard to the law of the
conflicts of law of such State].
4. INDEMNIFICATION
4.1 Corel will indemnify Vector, its shareholders, officer, directors and
employees, and all of its former shareholders, directors, officers and
employees, agents, representatives and independent contractors (the "Vector
Indemnified Parties"), and hold the Vector Indemnified Parties harmless
against all costs, charges and expenses, including all amounts paid to
settle an action or satisfy a judgment, reasonably incurred by any of the
Vector Indemnified Parties in respect of any civil, criminal or
administrative action or proceeding to which any of the Vector Indemnified
Parties is a party by reason of Vector being or having been engaged by
Corel to provide Advisory Services, so long as:
(i) the Vector Indemnified Party in question acted honestly, in good faith
and with a view to the best interests of Corel and its affiliates; and
(ii) in the case of a criminal or administrative action or proceeding that
is enforced by a monetary penalty, the Vector Indemnified Party in
question had reasonable grounds for believing that his/her conduct was
lawful.
* * *
4
IN WITNESS WHEREOF the parties have executed this Agreement as of the date
first written above.
COREL CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
VECTOR CAPITAL CORPORATION
By: /s/ XXXXX X. XXXXXXXX
------------------------------------
Name: XXXXX X. XXXXXXXX
Title: CHIEF FINANCIAL OFFICER
IN WITNESS WHEREOF the parties have executed this Agreement as of the date
first written above.
COREL CORPORATION
By: /s/ XXXXX XXXXXXXXXXX
------------------------------------
Name: XXXXX XXXXXXXXXXX
Title: V P Legal, General Counsel
& Secretary
VECTOR CAPITAL CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SCHEDULE A
VECTOR PAYMENT INSTRUCTIONS
6
