Master Consulting Services Agreement - SeraNova Inc., Intelligroup Inc. and Mueller/Shields
MASTER CONSULTING SERVICES AGREEMENT
THIS MASTER CONSULTING SERVICES AGREEMENT (this "Agreement"), made and entered
into this 21 day of December, 1999 ("Effective Date"), by and between SeraNova,
Inc. and Intelligroup, Inc. collectively (hereinafter "SeraNova"), New Jersey
corporations, and Mueller/Shields (hereinafter "Consultant"), a California
corporation:
Recitals:
Consultant represents that it has expertise in the area of sales, marketing,
training, and strategic planning, and is ready, willing, and able to provide
consulting assistance to SeraNova on the terms and conditions set forth herein;
and
SeraNova, in reliance on Consultant's representations, is willing to engage
Consultant as an independent contractor, and not as an employee, on the terms
and conditions set forth herein;
NOW THEREFORE, in consideration of the obligations herein made and undertaken,
the parties, intending to be legally bound, hereby agree as follows:
SECTION 1. SCOPE OF SERVICES
1.1 Consultant shall provide consulting services (the "Services") as set forth
in the Intelligroup, Inc. Integrated Sales and Marketing Program for NewCo
Proposal Version 2.4 dated October 12, 1999 (the "Proposal") and submitted
by Consultant to SeraNova. Consultant shall render such services and
deliver the required reports and other deliverables ("Deliverables") in
accordance with the timetable and milestones set forth in Exhibit A and
the Proposal. In the event Consultant anticipates at any time that it will
not reach one or more milestones or complete one or more assignments
within the prescribed timetable, Consultant shall immediately so inform
SeraNova by written notice, submit proposed revisions to the timetable and
milestones that reflect Consultant's best estimates of what can
realistically be achieved, and continue to work under the original
timetable and milestones until otherwise directed by SeraNova. Consultant
shall also prepare and submit such further reports of its performance and
its progress as set forth in the Proposal and as SeraNova may reasonably
request from time to time.
1.2 Consultant shall provide and make available to SeraNova such resources as
shall be necessary to perform the Services called for by this Agreement.
Such resources shall include the key employees (Key employees) named by
the parties and listed in Exhibit B, as amended in writing by the parties
from time to time. If any such Key Employee leaves the employ of
Consultant during the term of this Agreement for any reason or is
unavailable to continue work at the specified level of commitment
(full-time, X number of hours/week, etc.) called for herein, and if
substitute individuals acceptable to SeraNova are not available to
continue the work within 5 business days, SeraNova shall have the right to
terminate this Agreement pursuant to Section 2.2 hereof.
1.3 SeraNova shall, within 10 business days of receipt of each Deliverable
submitted to SeraNova, advise Consultant of SeraNova's acceptance or
rejection of such Deliverable. Any rejection shall specify the nature and
scope of the deficiencies in such Deliverable. Consultant shall, upon
receipt of such rejection, act diligently, but in no event later than 10
business days to correct such deficiencies.
1.4 All work shall be performed in a workmanlike and professional manner by
employees of Consultant having a level of skill and experience in the area
commensurate with the requirements of the scope of
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work to be performed. Consultant shall make sure its employees at all
times observe security and safety policies of SeraNova while on SeraNova's
site.
1.5 SeraNova and Consultant shall develop appropriate administrative
procedures to apply to Consultant's personnel. SeraNova shall periodically
prepare an evaluation of the performance of Consultant's personnel.
1.6 SeraNova may interview the Consultant's personnel assigned to SeraNova's
work. Consultant shall have the right, at any time, to request removal of
any employee(s) of Consultant whom SeraNova deems to be unsatisfactory.
Upon such request, Consultant shall use its best efforts to promptly
replace such employee(s) with substitute employee(s) having appropriate
skills and training within two business days.
1.7 Anything herein to the contrary notwithstanding, the parties hereby
acknowledge and agree that SeraNova shall have no right to control the
manner, means, or method by which Consultant performs the Services called
for by this Agreement. Rather, SeraNova shall be entitled only to direct
Consultant with respect to the elements of Services to be performed by
Consultant and the results to be derived by SeraNova, to inform Consultant
as to where and when such Services shall be performed, and to review and
assess the performance of such Services by Consultant for the limited
purposes of assuring that such Services have been performed and confirming
that such results were satisfactory.
SECTION 2. TERM OF AGREEMENT
2.1 This Agreement shall commence on the Effective Date, and unless modified
by mutual agreement of the parties or terminated earlier pursuant to the
terms of this Agreement, shall continue until the satisfactory completion
of the Services.
2.2 This Agreement may be terminated by either party upon sixty (60) business
days' prior written notice, if the other party breaches any term hereof
and the breaching party fails to cure such breach within such sixty (60)
business day period.
2.3 This Agreement may be terminated by SeraNova at its discretion upon thirty
(30) business days' prior written notice.
2.4 Upon termination of this Agreement for any reason, SeraNova shall pay the
Consultant for all services performed in accordance with the Milestone
Payment Schedule as well as the Cancellation Fee specified in Exhibit A.
Consultant shall promptly return to SeraNova all copies of any SeraNova
data, records, or materials of whatever nature or kind, including all
materials incorporating the proprietary information of SeraNova and all
work for hire pursuant to this Agreement. Consultant shall furnish to
SeraNova all works in progress or portions thereof, including all
incomplete work.
2.5 In the event of termination, Consultant will assist SeraNova in the
orderly termination of the Services and/or any applicable attachments
hereto, and the transfer of all items and Work Product (defined below),
tangible and intangible, as may be necessary for the orderly,
non-disrupted business continuation of Consultant; and shall promptly
deliver to SeraNova, upon the expiration or termination of all or part of
the Services, complete and correct copies of all Work Product (including
any related source code) in the form and on the media in use as of the
date of such expiration or termination.
2.6 Upon termination by SeraNova, SeraNova shall have no liability for any
payments accruing for Services performed after the termination date.
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SECTION 3. FEES, EXPENSES AND PAYMENT
3.1 In consideration of the Services to be performed by Consultant, SeraNova
shall, within thirty (30) days of receipt of an invoice for each
milestone, as set forth in the Milestone Payment Schedule in Exhibit A
attached hereto, pay Consultant the fees due pursuant to such Milestone
Payment Schedule, as well as provide the Shared Risk/Shared Reward
Compensation and Stock Options in Exhibit A.
3.2 In the event Consultant terminates this Agreement because of a material
breach by SeraNova, Consultant shall be entitled to a pro rata payment for
work in progress based on the percentage of work then completed as well as
the Cancellation Fees in Exhibit A. No such pro rata payment shall be made
if SeraNova terminates this Agreement because of a breach of Consultant.
3.3 Consultant agrees that the fees and charges for any follow-on or
additional work not included in the Proposal attached hereto shall be
performed at the lesser of (1) Consultant's then-current rates for such
work as charged to Consultant's most favored customer receiving similar
services, or (2) the rates applicable to the scope of work fixed by this
Agreement, including any discount previously applied to the work set forth
in the proposal. In the event any payment is delinquent under this
Agreement, all amounts due and owing shall accrue interest at eight
percent per annum.
SECTION 4. CONSULTANT PERSONNEL
4.1 Consultant shall bear sole responsibility for payment of compensation to
its personnel. Consultant shall pay and report, for all personnel assigned
to SeraNova's work, federal and state income tax withholding, social
security taxes, and unemployment insurance applicable to such personnel as
employees of Consultant. Consultant shall bear sole responsibility for any
health or disability insurance, retirement benefits, or other welfare or
pension benefits (if any) to which such personnel may be entitled.
Consultant agrees to defend, indemnify and hold harmless SeraNova,
SeraNova's officers, directors, employees and agents, and the
administrators of SeraNova's benefit plans from and against any claims,
liabilities or expenses relating to such compensation, tax, insurance or
benefit matters; provided that SeraNova shall promptly notify Consultant
of each such claim when and as it comes to SeraNova's attention. SeraNova
shall cooperate with Consultant in the defense and resolution of such
claims, and SeraNova shall not settle or otherwise dispose of such claims
without Consultant's prior written consent; such consent not to be
unreasonably withheld.
4.2 Notwithstanding any other workers' compensation or insurance policies
maintained by SeraNova, Consultant shall procure and maintain workers'
compensation coverage sufficient to meet the statutory requirements of
every state where Consultant's personnel assigned to SeraNova's work are
located.
4.3 Consultant shall obtain and maintain in effect written agreements with
each of its personnel who participate in any of SeraNova's work hereunder.
Such agreements shall contain terms sufficient for Consultant to comply
with all provisions of this Agreement.
4.4 As neither Consultant nor its personnel are SeraNova's employees, SeraNova
shall not take any action or provide Consultant's personnel with any
benefits or commitments inconsistent with any of such undertakings by
Consultant. In particular, SeraNova will not withhold FICA (Social
Security) from Consultant's payments; make state or federal unemployment
insurance contributions on behalf of Consultant or its personnel; withhold
state and federal income tax from payment to Consultant; make disability
insurance contributions on behalf of Consultant; and obtain workers'
compensation insurance on behalf of Consultant or its personnel.
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SECTION 5. INTELLECTUAL PROPERTY RIGHTS
5.1 All rights, titles and interests in and to the programs, systems, data,
reports, audio and video materials, databases, or other materials used or
produced by Consultant in the performance of the Services called for in
this Agreement, including any modifications, enhancements, or derivative
works thereof, shall remain or become the property of Consultant.
5.2 All rights, titles and interests in and to all Deliverables and other
materials provided pursuant to this Agreement, including all rights in
copyrights, research, databases created specifically for SeraNova, domain
names and internet addresses, or other intellectual property rights
pertaining thereto ("Work Product"), shall be held by SeraNova, and all
Work Product shall, to the extent possible, be considered works made by
Consultant for hire for the benefit of SeraNova. Consultant shall mark all
Work Product with SeraNova's copyright or other proprietary notices as
directed by SeraNova and shall take all actions deemed necessary by
SeraNova to protect SeraNova's rights therein. In the event that the Work
Product does not constitute work made by Consultant for hire for the
benefit of SeraNova under applicable law, or in the event that Consultant
otherwise retains any rights to any Work Product, Consultant agrees to
assign, and upon creation thereof hereby automatically assigns, all
rights, titles, and interests in and to such Work Product to SeraNova,
without further consideration. Consultant agrees to execute any documents
of assignment or registration of copyright requested by SeraNova
respecting any and all Work Product.
5.3 All rights, titles and interests in and to any programs, systems, data,
and materials furnished to Consultant by SeraNova are and shall remain the
property of SeraNova.
5.4 Notwithstanding the above, neither party shall be prevented from making
use of know-how and principles learned or experience gained of a
non-proprietary and non-confidential nature.
SECTION 6. CONFIDENTIAL INFORMATION
6.1 Consultant acknowledges that in order to perform the Services called for
in this Agreement, it shall be necessary for SeraNova to disclose to
Consultant certain trade secret(s) or other confidential and proprietary
information that has been developed by SeraNova at great expense and that
required considerable effort of skilled professionals ("Confidential
Information"). As used herein, the term Confidential Information shall
mean any scientific or technical data, marketing or strategic business
information, design, process, procedure, formula, methodology, or
improvement that is commercially valuable to SeraNova and not generally
known in the industry. Confidential Information shall not include
information which is:
a. independently developed by Consultant or already known by Consultant
prior to Consultant's receipt of Confidential Information and
without violating its obligations hereunder or any of SeraNova's
proprietary rights;
b. publicly known (other than through unauthorized disclosure by
Consultant);
c. disclosed by SeraNova to a third party without any obligation of
confidentiality; or
d. required to be disclosed by Consultant pursuant to any applicable
law or order of court (provided that consultant shall provide
reasonable prior written notice to SeraNova of such disclosure).
Consultant agrees that it shall not disclose, transfer, use, copy, or
allow access to any such Confidential Information to any employees or to
any third parties, except for those who have a need to know such
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Confidential Information in order to accomplish the requirements of this
Agreement and who are bound by contractual obligations of confidentiality
and limitation of use sufficient to give effect to this Section 6.
Consultant further acknowledges that the Work Product will of necessity
incorporate such Confidential Information. In no event shall Consultant
disclose any such Confidential Information to any competitors of SeraNova
or to third parties generally.
6.2 The parties agree to hold the nature and terms of this Agreement as
Confidential Information and Consultant shall not disclose the nature of
the effort undertaken for SeraNova or the terms of this Agreement to any
other person or entity, except as may be necessary to fulfill Consultant's
obligations hereunder, or as required by law.
6.3 Consultant shall not at any time use SeraNova's name or any SeraNova
trademark(s) or trade name(s) in any advertising or publicity without the
prior written consent of SeraNova.
6.4 The obligations set forth in this Section shall survive termination of
this Agreement and continue for so long as the relevant information
remains proprietary or Confidential Information.
SECTION 7. WARRANTIES
7.1 Consultant warrants that:
a. Consultant's performance of the Services called for by this
Agreement do not and shall not violate any applicable law, rule, or
regulation; any contracts with third parties; or any third-party
rights in any patent, trademark, copyright, trade secret, or similar
right; and
b. Consultant is the lawful owner or licensee of any software programs
or other materials used by Consultant in the performance of the
Services called for in this Agreement and has all rights necessary
to convey to SeraNova the unencumbered ownership of Work Product.
b. Consultant warrants that all SeraNova data and information in
Consultant's possession or accessible by Consultant are and shall
remain the property of SeraNova. The SeraNova data and information
shall not be: (i) used by Consultant other than in connection with
providing the Services; (ii) disclosed, sold, assigned, leased or
otherwise provided to third parties by Consultant; or (iii)
commercially exploited by or on behalf of Consultant or any other
third party.
d. Consultant warrants that it shall establish and maintain safeguards
against the destruction, loss, alteration or unauthorized disclosure
of the SeraNova data and information in Consultant's possession in
accordance with SeraNova's security standards as notified by
SeraNova to Consultant from time to time, including use of secure
passwords and login IDs.
SECTION 8. INDEMNIFICATION AND EXCLUSION OF DAMAGES
8.1 Consultant hereby indemnifies and agrees to hold harmless SeraNova from
and against any and all claims, demands, and actions, and any liabilities,
damages, or expenses resulting therefrom, including court costs and
reasonable attorney fees, arising out of or relating to the Services
performed by Consultant hereunder or any breach of the warranties made by
Consultant pursuant to Section 8 hereof. Consultant's obligations under
this Section 9.1 shall survive the termination of this Agreement for any
reason. SeraNova agrees to give Consultant prompt notice of any such
claim, demand, or action and shall, to the extent SeraNova is not
adversely affected, cooperate fully with Consultant in defense and
settlement thereof.
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8.2 EXCEPT IN THE EVENT OF BREACH OF SECTIONS 5, 7, 8, OR 9.1, NEITHER PARTY
SHALL BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL,
PUNITIVE OR EXEMPLARY DAMAGES WHETHER ARISING UNDER CONTRACT, WARRANTY, OR
TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY) OR ANY OTHER THEORY OF
LIABILITY, REGARDLESS OF WHETHER SUCH PARTY KNEW OR SHOULD HAVE KNOWN OF
THE POSSIBILITY OF SUCH DAMAGES.
SECTION 9. NON-COMPETITION
9.1 Consultant hereby agrees that during the term of this Agreement and for a
period of twelve (12) months thereafter it will not directly or indirectly
offer substantially similar services to another entity that develops,
offers, or provides Internet or Enterprise Information Portal ("EIP")
services to substantially the same or similar markets as SeraNova, as
described in the Proposal, without SeraNova's prior written consent.
SECTION 10. MISCELLANEOUS
10.1 Consultant shall not assign, transfer, or subcontract this Agreement or
any of its obligations hereunder without the prior written consent of
SeraNova; provided, however, that Consultant may assign its right to
receive payments hereunder to such third parties as Consultant may
designate by written notice to SeraNova.
10.2 This Agreement shall be governed and construed in all respects in
accordance with the laws of the State of New Jersey as they apply to a
contract executed, delivered and performed solely in such State.
10.3 The parties are and shall be independent contractors to one another, and
nothing herein shall be deemed to cause this Agreement to create an
agency, partnership, or joint venture between the parties. Nothing in this
Agreement shall be interpreted or construed as creating or establishing
the relationship of employer and employee between SeraNova and either
Consultant or any employee or agent of Consultant.
10.4 Consultant shall, at is sole expense, obtain and carry in full force and
effect, during the term of this Agreement, insurance coverage of the types
and in the amounts listed in Exhibit A. Upon the request of SeraNova,
Consultant shall provide SeraNova with evidence satisfactory to SeraNova
of such insurance.
10.5 All remedies available to either party for one or more breaches by the
other party are and shall be deemed cumulative and may be exercised
separately or concurrently without waiver of any other remedies. The
failure of either party to act in a breach of this Agreement by the other
shall not be deemed a waiver of such breach or a waiver of future
breaches, unless such waiver shall be in writing and signed by the party
against whom enforcement is sought.
10.6 All notices required or permitted hereunder shall be in writing addressed
to the respective parties as set forth below, unless another address shall
have been designated, and shall be delivered by hand or by registered or
certified mail, postage prepaid.
10.7 This Agreement constitutes the entire agreement of the parties hereto and
supersedes all prior representations, proposals, discussions, and
communications, whether oral or in writing. This Agreement may be modified
only in writing and shall be enforceable in accordance with its terms when
signed by the party sought to be bound.
10.8 The parties covenant and agree that, subsequent to the Effective Date and
without any additional consideration, each of the parties shall execute
and deliver any further legal instruments and perform any acts which are
or may become necessary to effectuate the purposes of this Agreement.
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10.9 In the event of a conflict or an inconsistency between this Agreement, the
Proposal, and any Exhibit attached hereto, the Exhibit shall govern this
Agreement and this Agreement shall govern the Proposal.
10.10 Any dispute or controversy arising under or relating to this Agreement or
the relationship between the parties created by this Agreement shall be
resolved by final and binding arbitration under the auspices of the
American Arbitration Association. The parties shall have the right to
conduct reasonable discovery and the hearing shall be held as promptly as
possible. In the event any legal action is necessary to enforce or
interpret this Agreement, the prevailing party shall recover all costs and
attorneys' fees.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives, on the date and year first above written.
[SeraNova] [Mueller/Shields]
/s/ Raj Koneru /s/ Phyllis L. Mueller
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By: By:
Raj Koneru Phyllis L. Mueller
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Title: Title:
CEO, SeraNova, Inc. CEO, Mueller/Shields
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Address for correspondence: Address for correspondence:
499 Thornall Street 15225 Alton Parkway
Edison, NJ 08837 Building 100
Irvine, CA 92618
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EXHIBIT A - DELIVERABLES
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MONTH SCHEDULE OF WORK
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October 1999 o Kickoff meeting
o Assign M/S team members
o Develop and finalize the research strategy and
questionnaire
o Start research interviews
o Develop Class "A" lead definition, lead distribution
protocol, lead form, and lead generation questionnaire
o IT setup for marketing database
o List purchase and prospect database build
o Weekly reporting
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November 1999 o Continue with research questionnaire interviews
o Data entry of research interviews
o Begin the development of the sales training program
o Interim market research analysis and report
o Begin development on corporate brochure
o Begin creative development for corporate identity
program
o Begin creative development for marketing programs
(direct mail, seminar program, and advertising)
o Begin the telecontact demand generation program
o Monthly review meeting
o Develop lead tracking/pipeline report and system
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December 1999 o Complete research questionnaire interviews and data
entry
o Code, tabulate, and analysis market data
o Develop market research report and recommendations
o Present market research findings
o Complete creative development of corporate identity
program
o Finalize copy for corporate brochure
o Begin development of planning guide
o Develop initial creatives for the marketing programs
and begin the market testing
o Begin the prospect database build for the seminar and
direct marketing programs
o Final selection of seminar sites
o Continue development of the sales training program
o Continue the telecontact demand generation program
o Continue lead tracking/pipeline report
o Program management
o Weekly reporting
o Monthly status review meeting
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MONTH SCHEDULE OF WORK
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January 2000 o Finalize planning guide
o Print corporate brochure
o Develop the collateral carrier and envelope
o Begin development of data sheets
o Begin development of proposal template program
o Complete the sales training materials
o Continue development of the sales training program
o Complete market testing of creatives and finalize the
creatives
o Review creatives for the marketing programs (direct
mail, advertising, and seminar programs)
o Finalize the prospect database build for seminar and
direct mail programs
o Continue the telecontact demand generation program
o Continue lead tracking/pipeline report
o Program management
o Weekly reporting
o Monthly status review meeting
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February 2000 o Print the planning guide
o Print the collateral carrier and envelope
o Finalize copy and creative for data sheets
o Complete development of the white papers
o Complete development of proposal template program
o Develop and finalize telecontact scripts for the direct
marketing and seminar programs
o Continue development of the sales training program
o Finalize all creatives for marketing programs
o Mail invitations for the first seminar
o Begin telecontact program in support of the seminar
program
o Begin seminar confirmation and reminder programs
o Trade show consulting
o Implement wave 1A of direct marketing program
o Begin telecontact program in support of the direct
marketing program
o Develop and implement collateral fulfillment program
o Begin lead qualification, distribution, and reporting
o Continue lead tracking/pipeline report
o Program management
o Weekly reporting
o Monthly status review meeting
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MONTH SCHEDULE OF WORK
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March 2000 o On-site management and setup of first seminar
o First seminar held
o Qualify and distribute all leads from the seminar
o Mail invitations for the second seminar
o Continue telecontact program in support of the seminar
program
o Continue seminar confirmation and reminder programs
o Continue telecontact program in support of the direct
marketing program
o Continue collateral fulfillment program
o Continue lead qualification, distribution, and
reporting
o Continue lead tracking/pipeline report
o Deliver first sales training class
o Program management
o Weekly reporting
o Monthly status review meeting
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April 2000 o On-site management and setup of second seminar
o Second seminar held
o Qualify and distribute all leads from the seminar
o Mail invitations for the third seminar
o Continue telecontact program in support of the seminar
program
o Continue seminar confirmation and reminder programs
o Implement wave 1B of direct marketing program
o Continue telecontact program in support of the direct
marketing program
o Continue collateral fulfillment program
o Continue lead qualification, distribution, and
reporting
o Continue lead tracking/pipeline report
o Program management
o Weekly reporting
o Monthly status review meeting
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May 2000 o On-site management and setup of third seminar
o Third seminar held
o Qualify and distribute all leads from the seminar
o Mail invitations for the fourth seminar
o Continue telecontact program in support of the seminar
program
o Continue seminar confirmation and reminder programs
o Continue telecontact program in support of the direct
marketing program
o Continue collateral fulfillment program
o Continue lead qualification, distribution, and
reporting
o Continue lead tracking/pipeline report
o Program management
o Weekly reporting
o Monthly status review meeting
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MONTH SCHEDULE OF WORK
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June 2000 o Implement wave 2A of direct marketing program
o On-site management and setup of fourth seminar
o Fourth seminar held
o Qualify and distribute all leads from the seminar
o Continue seminar confirmation and reminder programs
o Continue telecontact program in support of the direct
marketing program
o Continue collateral fulfillment program
o Continue lead qualification, distribution, and
reporting
o Conduct sales training course
o Program management
o Weekly reporting
o Monthly status review meeting
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July 2000 o Continue telecontact program in support of the direct
marketing program
o Continue collateral fulfillment program
o Continue lead qualification, distribution, and
reporting
o Continue lead tracking/pipeline report
o Program management
o Weekly reporting
o Monthly status review meeting
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August 2000 o Continue telecontact program in support of the direct
marketing program
o Continue collateral fulfillment program
o Continue lead qualification, distribution, and
reporting
o Continue lead tracking/pipeline report
o Program management
o Weekly reporting
o Monthly status review meeting
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September 2000 o Implement wave 2B of direct marketing program
o Continue telecontact program in support of the direct
marketing program
o Continue collateral fulfillment program
o Conduct sales training course
o Continue lead qualification, distribution, and
reporting
o Continue lead tracking/pipeline report
o Conduct sales training course
o Program management
o Weekly reporting
o Monthly status review meeting
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October 2000 o Conduct sales training course
o Continue telecontact program in support of the direct
marketing program
o Continue collateral fulfillment program
o Continue lead qualification, distribution, and
reporting
o Continue lead tracking/pipeline report
o Program management
o Weekly reporting
o Monthly status review meeting
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MONTH SCHEDULE OF WORK
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November 2000 o Continue telecontact program in support of the direct
marketing program
o Continue collateral fulfillment program
o Conduct sales training course
o Continue lead qualification, distribution, and
reporting
o Continue lead tracking/pipeline report
o Program management
o Weekly reporting
o Monthly status review meeting
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December 2000 o Continue telecontact program in support of the direct
marketing program
o Continue collateral fulfillment program
o Conduct sales training course
o Continue lead qualification, distribution, and
reporting
o Continue lead tracking/pipeline report
o Program management
o Weekly reporting
o Monthly status review meeting
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SERANOVA MILESTONE PAYMENT SCHEDULE
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MILESTONE PAYMENT SCHEDULE
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INVOICE DATE PAYMENT DUE MONTHLY MILESTONE
PAYMENT SCHEDULE
---------------------------------------------------------------
October 1, 1999 Deposit Due Upon $294,905
Receipt
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November 1, 1999 November 30, 1999 $503,630
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December 1, 1999 December 31, 1999 $401,465
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January 15, 2000 February 15, 2000 $520,000
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February 1, 2000 February 29, 2000 $520,000
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March 1, 2000 March 31, 2000 $560,000
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April 15, 2000 May 15, 2000 $644,714
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May 1, 2000 May 31, 2000 $573,915
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June 1, 2000 June 30, 2000 $232,041
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July 1, 2000 July 31, 2000 --
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August 1, 2000 August 31, 2000 --
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September 1, 2000 September 30, 2000 --
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October 1, 2000 October 31, 2000 --
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November 1, 2000 November 30, 2000 --
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December 1, 2000 December 31, 2000 --
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TOTAL PROGRAM INVESTMENT $4,250,670
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SHARED RISK/SHARED REWARD COMPENSATION
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Mueller/Shields will receive additional compensation based on the actual
quarterly revenues generated in the United States by SeraNova according to the
schedule below.
The quarterly revenue goals (generated in the United States) on which this
compensation will be based:
Q1 2000 $12,070,000
Q2 2000 $15,964,000
Q3 2000 $19,345,000
Q4 2000 $23,821,000
The compensation that Mueller/Shields will receive for each quarter is:
o If the actual quarterly revenue is less than 80% of the goal of that quarter,
Mueller/Shields will receive no compensation for that quarter.
o The compensation for the quarter will be 3.1% of the actual incremental
revenue over 80% of the quarterly revenue goal.
o If the actual revenue achieved is over 100%, Mueller/Shields will receive an
additional 5% of the actual incremental revenue over 100% of the quarterly
revenue goal.
o The compensation will not exceed $150,000 for each quarter.
Examples of how the compensation would be calculated are included in the
following table
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Quarter Actual Revenue Total
Achieved Compensation
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Q1 2000 $12,000,000 $73,000
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Q2 2000 $16,000,000 $101,000
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Q3 2000 $20,000,000 $150,000
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Q4 2000 $24,000,000 $150,000
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The calculated compensation will be paid within the 30 days after a quarter is
completed. Example, the Q1 2000 payment would be due on April 30, 2000.
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A. Stock Options
Mueller/Shields is hereby granted options to buy 15,000 shares of SeraNova
common stock, at a strike price of $6.66 per share exercisable after January 1,
2000. The rights to exercise these options will expire on December 31, 2000.
In addition, Mueller/Shields will be granted options to buy 5,000 additonal
shares of SeraNova common stock on July 15, 2000 if SeraNova meets 80% of its
cumulative Q1 2000 and Q2 2000 revenue targets or $22,427,000. The strike price
of these 5,000 shares will be the market price on July 1, 2000 exercisable until
June 30, 20001.
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CANCELLATION FEES
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If the contract is terminated for any reason, Muller/Shields will be paid a
cancellation fee as detailed in the following table. These cancellation fees are
in addition to the fees specified in the Milestone Payment Schedule.
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Month of Notice of Contract Cancellation
Termination Fee
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October 1999 to January 1999 $0
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February 2000 $267,000
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March 2000 $534,000
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April 2000 $800,000
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May 2000 $400,000
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June 2000 to December 2000 $0
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EXHIBIT B: KEY EMPLOYEES
SeraNova shall have ready and unencumbered access during regular business hours
to the following Consultant personnel:
1. Phyllis Mueller
2. Craig Shields
3. Bill Thompson
4. Stephen Hansmire
The following employees shall be deemed Key Employees pursuant to the terms of
the Agreement:
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Name Minimum Hours per Week/Month on SeraNova Project
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Willie Bloomstein 15 per week/60 per month
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Paula Davey 10 per week/45 per month
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Scot Hansen 5 per week/20 per month
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Alain Jamar 10 per week/45 per month
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Bill Kline 40 per week/175 per month
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Sally Mikhail 10 per week/45 per month
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John Moriarty 40 per week/175 per month
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Jennifer Murray 10 per week/45 per month
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Gary Patrick 10 per week/45 per month
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Kalee Przybylak 40 per week/175 per month
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John Simmons 40 per week/175 per month
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Glenn Warren 5 per week/20 per month
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Robin Young 5 per week/20 per month
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