Exhibit 10(c)
AGREEMENT BETWEEN CATUITY INC. AND MIA PTY LTD AND ▇▇▇▇▇ ▇▇▇▇▇, INDIVIDUALLY,
FOR MANAGEMENT SERVICES
V0.21
1. PARTIES TO THE AGREEMENT
THIS AGREEMENT is made on 31st August, 2005 BY and BETWEEN Catuity Inc., of ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇ (hereinafter "Catuity") AND Mentoring
Institute of Australia Pty Limited ABN 42 073 425 644 of ▇.▇. ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ (hereinafter "MIA") and ▇▇▇▇▇ ▇▇▇▇▇, individually, of ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇. (hereinafter "▇▇▇▇▇").
2. RECITALS
MIA is in the business of providing management consultants ("MIA Consultants")
to Catuity.
MIA is desirous of being engaged by Catuity to supply the full-time consulting,
executive management, and other miscellaneous services ("Services") of ▇▇▇▇▇
▇▇▇▇▇ ("▇▇▇▇▇") to Catuity.
Catuity is desirous of engaging MIA to provide executive level management
services to Catuity, its Board of Directors and its businesses, including its
Australian subsidiaries and in the Asia Pacific region.
MIA represents that ▇▇▇▇▇ ▇▇▇▇▇ is desirous and willing to provide the services
to Catuity that are described herein, under the terms and conditions herein, on
a full-time basis.
MIA shall be paid in accordance with Schedule 1, attached herein.
This management services agreement ("Agreement") confirms MIA's appointment to
provide the Services in accordance with the details set out below in this
Agreement.
3. TERM AND TERMINATION
The Services commence on the first day after Catuity assumes control and
ownership of Loyalty Magic Pty Ltd., which is expected to be no later than 15th
September, 2005 and will continue for a period of twenty-eight (28) calendar
months, ending 31st December, 2007. The Parties may elect to renew this
Agreement. Any extension or change to this Agreement shall not be binding on the
parties unless agreed to in writing and signed by the appropriate executes for
both parties. Either Party may terminate this Agreement
(a) For cause on 30 days written notice, or
(b) Immediately in the case of gross misrepresentation or unethical
behaviour on the part of the other Party, their employees or
representatives, or
(c) Immediately in the event that ▇▇. ▇▇▇▇▇ dies or becomes incapacitated
(d) For other reasons on 90 days notice.
4. TASKS
The Services will include the following:
- General Executive Management including executing the sales and
operational strategy of Catuity's Australian operations and delivering
agreed to profit and loss goals of Catuity's Australian operations
through Loyalty Magic Pty Ltd. ("LM"), including the expansion of
those operations into selected markets outside of Australia.
- All aspects of managing the day-to-day operational needs of Catuity's
Australian operations, including, but not limited to, hiring and
training key employees; all aspects of financial oversight and
reporting; managing business relationships; compliance with all
applicable regulations and laws.
- Contingent on completion of a Board-approved strategy for Australia
through 2007, ▇▇. ▇▇▇▇▇ will add responsibilities for developing and
executing a growth strategy across Asia Pacific. Upon acceptance of a
written strategy for these new responsibilities, the Board will
approve additional incentives for on mutually acceptable terms.
- Full financial management, reporting and accountability under the
requirements and standards of a dual-listed publicly traded company.
- Management of and active daily participation in the sales effort to
support the business objectives of Catuity's Australian operations.
- Management of the corporate-wide Research and Development function
based in Sydney, NSW
- As directed by the CEO of Catuity Inc., active participation in the
strategic planning and development for all of Catuity Inc., including
international travel to North America to export the knowledge and
expertise developed in Australia
- As requested, active monthly participation in matters presented to the
Board of Directors of Catuity Inc.
- At all times, positively and accurately representing Catuity, its
services and products, be it to employees, customers, prospects,
investors or others.
- Actively manage companywide training and development of the knowledge
and skills of all sales, technology and customer-facing staff across
Catuity Inc.
- Know and keep updated on the loyalty relationship marketing market so
as to assist and develop our strategic plan globally.
5. KEY PERFORMANCE CRITERIA
In contracting with MIA and its consultant, ▇▇. ▇▇▇▇▇, Catuity has set some
fundamental business objectives for its Australian operations. These include:
- Make Loyalty Magic a cash flow positive business on a month-over-month
basis by Nov. 1, 2005.
- Manage the day-to-day affairs of the business in keeping with
generally accepted proper business practices.
- Drive profitable growth in the business of LM to meet or exceed the
revenue and EBIT goals established for LM in calendar years 2005, 2006
and 2007
- Assist in delivering monthly updates about Catuity's Australian
operations to the Catuity's Board of Directors.
- Identify, qualify, propose and pursue joint-ventures, mergers and
acquisitions, partnerships and strategic investment - within the
parameters set by the Board of Directors - to further and accelerate
the company's growth and profit objectives.
6. MANAGEMENT DUTIES
All work is to be carried out within the parameters and guidelines associated
with each project that Catuity is undertaking and MIA is to ensure that outcomes
are delivered. The Catuity address for presentation of invoices on a monthly
basis is as above in Section 1. Invoices are to be presented by the end of each
month, and will be paid within seven (7) days of Catuity receiving the invoice.
7. PROJECT REPORTING REQUIREMENTS
▇▇▇▇▇ will provide Catuity with reports in the format and at times as specified
by Catuity.
Any matters that arise that may be deemed to materially affect the development
of any project should be communicated to the Catuity worldwide CEO immediately
and no later than twelve (12) hours of ▇▇▇▇▇ or MIA becoming aware of the
circumstances or events.
8. FEE STRUCTURE
The fee structure is described in Schedule 1, as amended only by written mutual
agreement of the parties from time to time.
Other fees: The only fees due to MIA or ▇▇▇▇▇ are those specified in this
Agreement. Any additional fees or compensation for services will require
separate or amended written agreements that must be executed by both parties'
duly authorized representatives.
9. SERVICE HOURS
▇▇▇▇▇/MIA shall provide Services described in Sections 4 and 5 herein during
customary business hours and, as necessary, outside normal business hours in
order to facilitate open and clear communication with clients, prospects, the
Board of Directors of Catuity Inc. and the U.S.-based executive management team
10. SPECIAL PROVISIONS
At all times during the term of this Agreement and for a period of two (2) years
following its expiration or termination, ▇▇▇▇▇, individually, and MIA, as a
business entity agree to the following special provisions:
▇. ▇▇▇▇▇ and MIA agree to keep private and confidential all information
relating to Catuity, its operations, its technology, its intellectual
property, its financial position and all matters relating to Catuity's
customers and prospects.
ii. ▇▇▇▇▇ and MIA agree to comply with ethics, policies and standards of
conducts for its executives and employees that the Catuity Board of
Director may set and amend, from time to time, as the Board sees fit.
iii. ▇▇▇▇▇, individually, and MIA agree that for a period of two (2) years
following the expiration or termination of this Agreement, they will,
under no circumstances, approach, solicit or otherwise affect the
relationship between Catuity Inc. and its affiliates or subsidiaries
and its customers, prospects, and partners.
iv. ▇▇▇▇▇ and MIA agree that for a period of two (2) years following the
expiration or termination of this Agreement, they will not solicit or
respond to inquiries from current employees of Catuity, its affiliates
or subsidiaries for a period of two (2) years, if the communication
concerns competing with Catuity, discussing confidential information
or soliciting customers or key prospects.
By executing this agreement, ▇▇▇▇▇, individually, and MIA and any of its agents
hereby agrees to the terms and conditions of this clause
11. INTELLECTUAL PROPERTY
Catuity represents and warrants that it owns or otherwise has all necessary
rights to provide MIA with all intellectual property related to this Agreement.
This includes the rights to material which may be the work of Catuity's
employees, sub-contractors or other third parties.
Title of all intellectual property created in the course of providing services
to Catuity under this Agreement, including, without limitation, programs,
routines, designs, reports, graphs, diagrams, documents and computer data files
shall belong to Catuity, and MIA and ▇▇▇▇▇, individually, shall do all acts and
things necessary to protect and document Catuity's rights.
At the end of this Agreement, MIA shall return or provide an accurate written
account to Catuity for all consulting, books, papers, drawings, writings and
other things, such as (but not limited to) Catuity's equipment, software, tools,
or other devices, which have come into MIA's possession or under its control.
12. PERSONNEL
MIA shall perform its obligations under this Agreement in a competent and
professional manner. MIA's employee, ▇▇▇▇▇ ▇▇▇▇▇, is the only designated
representative of MIA who shall perform the tasks described in Clause 4. MIA
agrees to provide customary benefits, paid leave and holiday to its employees
and certifies that it shall only employ persons to perform the work who:
- Are properly qualified, adequately experienced and, where required,
certified or credentialed, to perform the duties allocated to them;
- Exhibit a high standard of work and conduct;
- Are of known reliability and integrity; and
- May be relied upon not to breach the requirements of this Agreement
including those relating to security and confidentiality.
Catuity shall have the sole and exclusive right to accept or reject any
additional persons recommended by MIA to provide Services.
MIA and ▇▇▇▇▇, individually, further indemnify Catuity for any additional costs
that Catuity incurs if regulatory authorities, including a taxing authority or
industrial relations body, determines that ▇▇▇▇▇ could not be classified as a
contractor.
13. CHANGES TO AGREEMENT
Changes in this Agreement shall not be binding on the parties unless documented
in a notice of variation signed by authorised representatives from all parties.
14. GENERAL TERMS
1. Assignment. Catuity may assign or otherwise transfer any right or
obligation arising out of this Agreement with the prior written
consent of the other party.
2. Relationship of Parties. MIA is an independent consultant to Catuity
and nothing in this Agreement constitutes a relationship of joint
venture, employment, agency or partnership between MIA or ▇▇▇▇▇,
individually, and Catuity.
3. Severability. The whole or any part of any clause of this Agreement
that is illegal or unenforceable will be severed and will not affect
the continued operation of the remaining provisions of this Agreement.
4. Waiver. The failure of a party at any time to insist on performance of
any obligation under this Agreement of the other party is not a waiver
of its rights to insist on performance of that application or to claim
damages unless that party acknowledges in writing that the failure is
a waiver, nor is it a waiver of its right at any other time to insist
on performance of that or any other obligation under this Agreement of
that party. The waiver of any breach or non-observance of any terms of
this Agreement will not be construed as a general waiver and will only
relate to the particular breach or non-observance in respect of which
it was made. No waiver will be effective unless it is in writing and
signed by the party against whom such waiver is claimed.
5. Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior representations and
agreements in connection with the Services and they only be varied in
writing signed by the parties.
6. Governing Law. This Agreement is governed by the laws applicable in
the State of New South Wales and the parties submit to the
jurisdiction of the courts of that State.
15. SIGNATORIES
Signed for and on behalf of Signed for and on behalf of MIA
ABN 96 ▇▇▇ ▇▇▇ ▇▇▇ ABN 42 073 425 644
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------- ------------------------------------
NAME: ▇▇▇▇ ▇. ▇▇▇▇▇▇ NAME: ▇▇▇▇▇ ▇▇▇▇▇
TITLE: President & CEO TITLE: Director of MIA
DATED: 31 August 2005 DATED: 31 August 2005
Who warrants that he is Who warrants that he is
Authorised to sign this Agreement authorised to sign this Agreement
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇, individually
Dated: 31 August 2005
SCHEDULE 1
TO THE AGREEMENT FOR MANAGEMENT SERVICES BETWEEN MIA AND
▇▇▇▇▇ ▇▇▇▇▇, INDIVIDUALLY, AND CATUITY INC. DATED 31ST AUGUST, 2005
The fees and other remuneration to be paid to MIA for the Services to be
performed pursuant to the Agreement dated 31st August, 2005 shall be as
reflected below.
All amounts shown are in Australian dollars unless otherwise noted.
Last Update: 31st August 2005
1. RETAINER
$195,000 per annum plus a lump sum payment to MIA that is equal to the
cost of customary benefits to be paid in twelve equal monthly
installments.
2. INCENTIVE PAYMENT THRESHOLDS - For CY 2005 and CY 2006.
LOYALTY MAGIC/CATUITY'S FINANCIAL OBJECTIVES ARE:
CY 2005, 6 months July to December, Revenues of AUD$1.4Million(*)
EBITDA of AUD$100,000 (*)
CY 2006, Revenues at 25% greater than CY2005 revenues, and EBITDA that
is the greater of a 35% above CY2005 EBITDA or at least a 20% EBITDA
margin.
CY 2007 Revenues at 25% greater than CY2006 revenues, and EBITDA at
25% greater than CY2006 EBITDA
These numbers are exclusive of any growth which may be a result of
mergers and acquisitions. In the event that Catuity undertakes a
merger which is managed by ▇▇. ▇▇▇▇▇, this incentive is capped at the
figures listed above.
(*) This excludes one time gains, including the Sky City Entertainment
contract.
(A.) CASH BASED INCENTIVE THRESHOLDS
MIA will receive a cash-based incentive equal to 2.5% of EBITDA in a
calendar year when Loyalty Magic reaches 100% of its target for each
year. Any payment under this incentive shall be subject to the
following provision:
- The incentive will be calculated and paid based on the
completed audited financials for each calendar year.
- The incentive will be calculated and paid after the cost of
all equity and cash incentives are imputed.
- Incentives will be calculated after inclusion of all
overhead allocations form Catuity Inc. The formula for
determining the allocations will be developed at the sole
discretion of Catuity Inc., shall be transparent and will be
consistently and equally applied to all business units. The
formulas for these allocations will be adjusted
semi-annually and provided in advance to all business unit
managers.
- All results are subject to U.S. Generally Acceptable
Accounting Principles.
(B.) EQUITY BASED INCENTIVE THRESHOLDS
15,000 stock options in the following manner:
- 5,000 vested on the day after the close of the merger with a
trigger price equal to 25% above the 30-day average closing
price on NASDAQ preceding the grant.
- 5,000 vested on 1st January 2006 with a trigger price equal
to 35% above the 30-day average closing price on NASDAQ
preceding the date of the grant.
- 5,000 vested on the 1st of January 2007 with the trigger
price equal to 35% above the 30-day average closing price on
NASDAQ preceding the date of the grant.
20,000 restricted share grants in the following manner:
- 5,000 shares granted on 30th January 2006 at no cost to you
if ▇▇. ▇▇▇▇▇ meets 100% of the Revenue and EBITDA goals for
the second half of CY2005 goals
- 7,000 shares granted on 30th January 2007 for meeting 100%
of the Revenue and EBITDA goals for the full year CY2006
goals
- 8,000 shares granted on 30th January 2008 for meeting 100%
of the Revenue and EBITDA goals for the full year CY2007
goals
(C.) ASIA PACIFIC INCENTIVES
Subject to Board approval of a written strategy for growth in the Asia
Pacific region, MIA and ▇▇▇▇▇ will be offered a supplementary set of
incentives tied to the forecasted results of that strategy.
