Services Agreement - Meridian Consulting Group and Ultrafem Inc.
[Letterhead Ultrafem]
October 29, 1996
Mr. Jeffrey Hill
Meridian Consulting Group
274 Riverside Avenue
Westport, CT 06880
Dear Jeff:
This letter agreement serves to memorialize our understanding with respect to
which you (Meridian Consulting Group) will continue to provide on-going sales
management to us (Ultrafem, Inc.) for the introduction of INSTEAD(TM). This
letter restates and supersedes the letter agreement between us dated April 11,
1996. As you know, we plan to continue the introduction of INSTEAD(TM) into
approximately 8% of the United States during the Fall of 1996 and to begin Wave
II (the expansion of the introduction of INSTEAD(TM) into approximately an
additional 16% of the United States market) in April, 1997.
If during the term of this agreement the launch to expanded geography (beyond
approximately, 25%) results in a significant change in broker field sales
activity levels, then the terms of this agreement will be re-evaluated.
Part I - On-Going Broker Management
You have agreed to provide us with the full breadth of Sales Management
capability which will be required in connection with the introduction of and
ongoing management of, INSTEAD(TM). In this capacity your responsibilities
include:
I. Developing The Sales Strategy: You will meet in person with brokers for
the following:
- Developing the Sell-In Strategy
- By Class of Trade/Customer
- Distribution Objectives
- Promotional Objectives
- Pricing Objectives (Feature and Everyday)
- Shelving Objectives
- Developing Short Term (Quarterly) Goals
- Developing Long Term (Annual) Goals
- Full Analytics at the Class of Trade Level by Market
<PAGE>
Mr. Jeffrey Hill
October 30, 1996
Page 2
- Development of Fully Customized Key Account Presentations (the
"Customized Presentations") currently Committed to 8 target
presentations at a total cost of $64,000 (or an incremental
$8K per account). These 8 target presentations are dependant
on the timing of Wave II and therefore subject to change at
Ultrafem's discretion.
-- Coordinating Introductory Headquarter Calls
-- Follow Up/Summary to Introductory Presentations
-- Scorecard of Sell-In Acceptance
-- Assisting Development of Pipeline and On-Going Volume Goals
-- Assisting Development of SKU Breakout and On-Going SKU Sales Volume
-- Managing National Accounts
-- Headquarter Calls
-- Account Specific Requests
II. Management Reporting
- Summarize Status vs. Goal (including weekly updates)
- Identifying Risks/Oportunities In Objectives
-- Identify Programming to Address Barriers
-- Develop Contingency Plans
- Evaluating Broker Performance - Factory & Nielsen
-- Short Term Goals
-- Long Term Goals
- Identifying/Eliminating Unnecessary Spending
III. On-Going Broker Management
- Executional Steps Required to Support the Business
- Business Forecasting
-- Sales Tracking - Actual vs. Forecast
o Monthly
o Quarterly
o Yearly
- Tracking Profitabiity with Regard to Trade Spending
- Participation in Key Account Presentations
- All Logistics and Customization of the Support Issues Between the
Customer and Ultrafem, Inc. to be Handled by Ultrafem, Inc.
- Communications of Promotions, Deals, Advertising, PR/Professional
Support, Ad Slicks, Displays, etc. (Specific Promotional Development
Will be done Separately)
- Providing Sales Updates
<PAGE>
Mr. Jeffrey Hill
October 30, 1996
Page 3
In addition to providing sufficient resources to implement the foregoing, you
agree (i) that you will continue to assign Gene Moriarity to work full-time with
Ultrafem as the acting Vice President of Sales, and (ii) that, without limiting
your obligations under clause (i) of this sentence, if for any reason, Mr.
Moriarity ceases to work full-time in such capacity with Ultrafem, you will
hire one person who shall be satisfactory to us in our sole discretion to serve
as an "acting Vice President of Sales. " You agree to have this person commence
employment within one month of Mr. Moriarity ceasing to work full-time in such
capacity. The acting Vice President of Sales shall devote his/her entire
business time and effort during the term of this letter agreement to the
management of our on-going broker field sales and related Sales activities.
The fee for your services to be rendered hereunder shall be an amount equal to
$42,500 per month. Such fee has been paid in advance through December 31, 1996.
The monthly fee shall be increased as follows: Three months prior to the
initial ship date for the Wave II introduction of INSTEAD(TM) into an
additional 16% of the United States market, which is currently scheduled for
April 1, 1997, the fee for your services to be rendered hereunder shall be
increased to $58,000 per month. We may reschedule the initial ship date for the
Wave II introduction of INSTEAD(TM) into an additional 16% of the United States
market, and will give you notice of any rescheduling of such date at least 15
days in advance the date of your scheduled fee increase. You will bill us this
monthly retainer, as well as any additional fees for any Customized
Presentations, on the first of each month, with payment due 30 days after our
receipt of the invoice.
Part II - Special Advanced Strategic Planning
In addition to your agreement to provide on-going sales management to us as
specified in Part I above, this letter agreement also serves to memorialize our
understanding with respect to which you will perform and complete certain
special strategic planning which we have requested of you, for the fee set forth
opposite such service in the chart below. You understand INSTEAD(TM) is being
introduced in a staged roll out in the full United States market, where Wave I
represents INSTEAD(TM)'s introduction into 8% of the United States market, and
Wave II represents INSTEAD(TM)'s introduction into approximately an additional
16% of the United States market. The subsequent stages of the roll out, which
have not yet been fully delineated, are referred to herein as Wave III through
Wave VI, with Wave VI representing full United States distribution.
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Estimated Estimated Date
Strategic Planning Fee Start Date of Completion
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Prioritize Market Selection for Waves $60,000 Immediately upon 2 months
II through VI signing
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Evaluate Mass Opportunity for $30,000 Immediately upon 1 month
Waves II through VI signing
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<PAGE>
Mr. Jeffrey Hill
October 30, 1996
Page 4
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Preliminary Volumetrics, Trade $25,000 Immediately upon 1 month
Budgets, Timing for Wave II signing
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Preliminary Volumetrics, Trade $25,000 6 months prior to 1 month
Budgets, Timing for Wave III shipment
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The payment schedule for the above items shall be as follows: you will receive
55% of the fee for each item at the start of the assignment, 25% of the fee at
the midpoint of the assignment, and 20% of the fee upon completion of the
assignment. We reserve the right to change the Start Date for any of the items
listed above provided that we give you a minimum of two weeks notice.
Part III - General
You agree to provide the services hereunder in a first rate, high quality
manner, consistent with your and our reputations and the image we are seeking to
establish for INSTEAD(TM). The provision of your services hereunder shall be
subject to our supervision. Neither you nor any of your employees (including
without limitation the acting Vice President of Sales) shall have the authority
to bind us without our prior written consent.
The term of this letter agreement shall commence on the date hereof and end on
December 1, 1997. The term of this letter agreement may be extended at our
option; any such extension shall be based upon a mutually acceptable
responsibility and fee structure. If upon the expiration or termination of this
agreement, by either party for any reason, a mutually acceptable responsibility
and fee structure cannot be arranged, you will provide us with transitional
services, at the monthly fee in effect prior to such expiration or termination,
for a reasonable period which shall not exceed six months.
In addition to the fees payable to you above, you will be reimbursed for the
following out-of-pocket expenses:
1. Travel/related out-of-pocket expenses (which need to be agreed by us
in advance);
2. Any research/data collection costs associated with pursuing this
initiative (which need to be agreed by us in advance);
3. Any production charges associated with the activity (which need to
be agreed to by us in advance); and
4. Office expenses including: phone, fax, postage, etc.
All out-of-pocket expenses are due and payable within thirty (30) days
after invoicing.
It is understood that any cancellation of the arrangement prior to December 1,
1997 would result in a cancellation fee equal to the full unpaid balance due
under Part I of the agreement, plus all unpaid out-of-pocket expenses, provided
that prior to the cancellation Meridian has complied
<PAGE>
Mr. Jeffrey Hill
October 30, 1996
Page 5
with the terms of this agreement, and that at the time of cancellation of the
agreement, Mr. Moriarity or a suitable replacement is acting as Vice President
of Sales.
This letter agreement constitutes the entire agreement between the parties and
supersedes all prior agreements, including, without limitation, the letter
agreement dated April 11, 1996, with respect to the subject matter hereof. This
letter agreement shall be governed by the internal laws of the State of New
York.
If the foregoing correctly sets forth your understanding of our agreement,
please sign in the space provided below. An extra copy has been provided for
your files. If we do not receive a fully executed copy of this letter from
you on or before November 8, 1996, this letter agreement shall be deemed null
and void.
AGREED TO FOR MERIDIAN AGREED TO FOR ULTRAFEM, INC.
CONSULTING GROUP, INC.
By: /s/ [ILLEGIBLE] By: /s/ Dori M. Reap
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Title: Managing Director Title: SVP & CFO
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Date: 11/1/96 Date: 11/7/96
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