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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- - Exchange Act of 1934 For the quarterly period ended September 27, 1996
OR
Transition report pursuant to Section 13 or 15(d) of the Securities
- -- Exchange Act of 1934
Commission File Number: 0-25746
RENAISSANCE SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-3150009
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Lincoln North
55 Old Bedford Road
Lincoln, MA 01773
(Address of principal executive offices)
Telephone Number (617) 259-8833
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days:
Yes X No
- --
As of October 23, 1996, there were 7,035,518 shares of the Registrant's Common
Stock, $.0001 par value per share, outstanding.
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RENAISSANCE SOLUTIONS, INC.
Form 10-Q for the Fiscal Quarter Ended September 27, 1996
Table of Contents
PART I. FINANCIAL INFORMATION Page No.
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Item 1. Financial Statements:
Consolidated Statements of Income for the three and
nine months ended September 27, 1996 and September 29, 1995..... 3
Consolidated Balance Sheets as of
September 27, 1996 and December 31, 1995........................ 4
Consolidated Statements of Cash Flows for the
nine months ended September 27, 1996 and September 29, 1995..... 5
Notes to Consolidated Financial Statements...................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 7
PART II. OTHER INFORMATION Page No.
--------
Item 5. Other Information............................................... 14
Item 6. Exhibits and Reports on Form 8-K................................ 14
Signatures...................................................... 15
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
RENAISSANCE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Amount in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 27, 1996 September 29, 1995 September 27, 1996 September 29, 1995
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Revenues................................ $ 9,049 $ 5,657 $ 25,395 $ 15,721
------------------- ------------------- ------------------- -------------------
Cost and expenses:
Professional personnel............. 4,506 2,899 13,617 8,224
Professional development and
recruiting....................... 710 344 1,318 982
Marketing and sales................ 359 140 1,047 383
General and administrative......... 1,540 1,045 4,354 2,873
------------------- ------------------- ------------------- -------------------
Total costs and expenses........ 7,115 4,428 20,336 12,462
------------------- ------------------- ------------------- -------------------
Income from operations.................. 1,934 1,229 5,059 3,259
Interest expense........................ (2) (5) (41) (57)
Interest income......................... 478 185 899 355
------------------- ------------------- ------------------- -------------------
Income before taxes..................... 2,410 1,409 5,917 3,557
Provision for income taxes.............. 939 564 2,302 1,087
------------------- ------------------- ------------------- -------------------
Net income.............................. $ 1,471 $ 845 $ 3,615 $ 2,470
=================== =================== =================== ===================
Pro forma data:
Historical income before income taxes... $ 2,410 $ 1,409 $ 5,917 $ 3,557
------------------- ------------------- ------------------- -------------------
Historical provision for income taxes... 939 564 2,302 1,087
Additional provision for income taxes... --- --- --- 336
------------------- ------------------- ------------------- -------------------
Pro forma provision for income taxes.... 939 564 2,302 1,423
------------------- ------------------- ------------------- -------------------
Pro forma net income.................... $ 1,471 $ 845 $ 3,615 $ 2,134
=================== =================== =================== ===================
Pro forma net income per share.......... $ 0.19 $ 0.13 $ 0.49 $ 0.36
=================== =================== =================== ===================
Pro forma weighted average number of
common and common equivalent shares
outstanding............................. 7,861 6,349 7,376 5,758
=================== =================== =================== ===================
</TABLE>
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RENAISSANCE SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
September 27, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents........................................ $ 22,380 $ 6,040
Marketable securities............................................ 19,769 4,890
Accounts receivable, net......................................... 8,809 5,791
Unbilled services, net........................................... 2,574 3,759
Receivable from officers/shareholders............................ --- 278
Prepaid expenses and other current assets........................ 898 161
------------------- ---------------
Total current................................................ 54,430 20,919
------------------- ---------------
Property and equipment, net.......................................... 1,979 2,034
Other assets......................................................... 72 72
------------------- ---------------
Total assets................................................. $ 56,481 $ 23,025
=================== ===============
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings............................................ $ --- $ 1,500
Accounts payable................................................. 639 1,150
Accrued payroll and related costs................................ 1,789 850
Accrued income taxes............................................. 66 270
Other accrued liabilities........................................ 268 62
Advance payments................................................. 131 341
------------------- ---------------
Total current liabilities.................................... 2,893 4,173
Other liabilities.................................................... 161 87
------------------- ---------------
Total liabilities................................................ 3,054 4,260
------------------- ---------------
Stockholders' equity.................................................
Preferred stock, $.01 par value, authorized
2,000,000 shares, none issued................................. --- ---
Common stock, $.0001 par value, authorized 20,000,000
shares, issued and outstanding 7,035,318 shares at
September 27, 1996 and 5,969,396 shares at
December 31, 1995............................................. 1 1
Additional paid in capital....................................... 45,389 14,337
Warrants to acquire common stock................................. 1,600 1,600
Cumulative translation adjustments............................... (33) (46)
Unrealized gain on marketable securities......................... 17 35
Retained earnings................................................ 6,453 2,838
------------------- ---------------
Stockholders' equity......................................... 53,427 18,765
------------------- ---------------
Total liabilities and stockholders' equity................... $ 56,481 $ 23,025
=================== ===============
</TABLE>
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RENAISSANCE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
September 27, 1996 September 29, 1995
------------------ ------------------
<S> <C>
Cash flows from operating activities:
Net income............................................... $ 3,615 $ 2,470
Adjustments to reconcile net income to net cash:
Depreciation and amortization............................ 368 211
Change in:
Accounts receivable, net.............................. (3,018) (4,143)
Unbilled services, net................................ 1,185 ---
Receivable from officers/shareholders................. 278 ---
Prepaid expenses and other............................ (737) (131)
Accounts payable...................................... (511) 334
Accrued payroll and related costs..................... 939 289
Accrued income taxes.................................. (204) 216
Other accrued liabilities............................. 206 (69)
Advanced payments..................................... (210) (837)
Increase in other liabilities......................... 74 ---
----------------------- -----------------------
Net cash provided by (used for) operating activities..... 1,985 (1,660)
----------------------- -----------------------
Cash flows from investing activities:
Purchase of marketable securities..................... (20,046) ---
Sales and maturities of marketable securities......... 5,185 ---
Expenditures for property and equipment............... (323) (671)
----------------------- -----------------------
Net cash used for investing activities................ (15,184) (671)
----------------------- -----------------------
Cash flows from financing activities:
Issuance of common stock, net......................... 30,085 12,208
Tax benefit from exercise of stock options............ 967 ---
Sale of warrants to acquire common stock.............. --- 1,600
Repayment of short-term borrowings.................... (1,500) 500
Payment on notes payable - Gemini..................... --- (2,000)
----------------------- -----------------------
Net cash provided by financing activities............. 29,552 12,308
----------------------- -----------------------
Effect of exchange rate changes on cash and cash
equivalents.............................................. (13) ---
----------------------- -----------------------
Increase in cash and cash equivalents.................... 16,340 9,977
Cash and cash equivalents, beginning of period........... 6,040 1,384
======================= =======================
Cash and cash equivalents, end of period................. $ 22,380 $ 11,361
======================= =======================
Supplemental disclosure of cash flow information:
Interest paid......................................... $ 47 $ 88
======================= =======================
Income taxes paid..................................... $ 1,541 $ 870
======================= =======================
</TABLE>
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RENAISSANCE SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Reorganization and Basis of Presentation
Renaissance Solutions, Inc. ("Renaissance" or the "Company") was organized
as a Delaware corporation in March 1992. In December 1993, the Company
contributed all of its assets, subject to all of its liabilities, to
Renaissance Strategy Group Limited Partnership, a Delaware limited
partnership (the "Partnership"), in exchange for the sole general
partnership interest in the Partnership. The business of the Company was
conducted by the Partnership from December 1, 1993 to April 3, 1995.
Pursuant to a reorganization agreement (the "Reorganization Agreement")
entered into among the Company, the Partnership, the limited partners of
the Partnership, the holders of certain units of economic interest
("Units") in the Partnership and the holders of certain options to purchase
Units, effective April 3, 1995 (i) the Company issued 4,567,396 shares of
its Common Stock in exchange for all of the outstanding limited partnership
interests and Units in the Partnership, and (ii) options to purchase
1,730,000 Units outstanding as of such date were exchanged for options to
purchase 432,605 shares of Common Stock. Immediately thereafter, the
Partnership was dissolved and all of its assets and liabilities were
distributed to and assumed by the Company. The reorganization of the
Company described above is referred to herein as the "Reorganization." The
Reorganization has been accounted for in a manner similar to a pooling of
interests and, except as otherwise indicated or where the context otherwise
requires, the information set forth in these financial statements has been
adjusted to give retroactive effect to the Reorganization. References
herein to the "Company" and "Renaissance" refer to Renaissance Solutions,
Inc. and, with respect to operations between December 1, 1993 and April 3,
1995 (the date of the Reorganization), the Partnership, and its
wholly-owned subsidiaries, Renaissance Solutions Limited and Renaissance
Securities Corp.
The consolidated financial statements at December 31, 1995 and September
27, 1996 and for the nine months ended September 27, 1996 have been derived
from the Company's audited financial statements. The consolidated financial
statements at September 29, 1995 and for the three and nine months ended
September 29, 1995 and the three months ended September 27, 1996 are
unaudited and reflect all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the financial position and operating results for the
interim periods. The consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto,
together with management's discussion and analysis of financial condition
and results of operations, included in the Company's 1995 Annual Report to
Stockholders. The results of operations for the three and nine months ended
September 27, 1996 are not necessarily indicative of the results for the
entire fiscal year ending December 31, 1996 or for any subsequent period.
2. Initial Public Offering
On April 11, 1995, the Company completed its initial public offering of
Common Stock, whereby the Company issued 1,400,000 shares of Common Stock
and an additional 885,000 shares were offered by existing stockholders of
the Company. The net proceeds from the sale of the shares by the Company
were approximately $15,636,000 after deducting offering expenses of
$1,291,000. Approximately $1,872,000 of the net proceeds of the offering
were used to repay a note due to Gemini Consulting, Inc. ("Gemini") and
$3,426,475 of the net proceeds were used to repay notes payable to the
Company's stockholders incurred by the Company in connection with the
payment of partnership distributions in January and March 1995.
Simultaneously with the closing of the offering, the Company also sold
warrants to Gemini to acquire 633,600 shares of the Company's Common Stock
for cash of $1,600,000.
3. Follow-on Offering
On May 17, 1996, the Company completed a follow-on public offering, whereby
the Company issued 902,125 shares of Common Stock and existing shareholders
sold 647,500 shares of Common Stock. The net proceeds from the sale of
shares by the Company were approximately $28,263,000, after deducting
offering expenses of $225,000.
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4. Income Per Share
Pro forma income per share is based on the weighted average number of
common and dilutive common equivalent shares (common stock options and
warrants) outstanding during each period presented. The pro forma weighted
average number of common shares assumes that 10,002 shares of common stock
issued in March 1994 and all stock options granted in January and March
1995 were outstanding for all periods presented. Common equivalent shares
are not included in the per share calculations where the effect of their
inclusion would be anti-dilutive, except in accordance with Securities and
Exchange Commission Staff Accounting Bulletin No. 83. This Bulletin
requires that all common shares issued and options to purchase shares of
common stock granted by the Company during the twelve-month period prior to
filing of its initial public offering be included in the calculation as if
they were outstanding for all periods. The pro forma weighted average
number of common shares for the three and nine months ended September 29,
1995 also assume that approximately 300,000 shares of the 1,400,000 shares
issued in the Company's initial public offering, the proceeds of which were
used to repay stockholder notes totaling approximately $3,426, 475, were
outstanding for all of the nine months ended September 29, 1995.
5. Income Taxes
Prior to the Reorganization the Company operated as an S corporation or a
limited partnership, neither of which was subject to federal or state
income taxes. Accordingly, no federal or state income tax provision was
required for the Company for the three months ended March 31, 1995. The
provisions for income taxes for the nine months ended September 27, 1996
and September 29, 1995 were based on estimated effective tax rates of 39%
and 40%, respectively, for the fiscal years.
The pro forma provision for income taxes for the three months ended March
31, 1995 reflects the estimated amounts of income taxes which would have
been payable for that period if the Company had operated as a taxable C
corporation. Beginning with the three months ended June 30, 1995, the
Company was subject to federal and state income taxes at the statutory tax
rates then in effect. The components of the Company's actual and pro forma
deferred tax assets and liabilities as of September 27, 1996 and September
29, 1995 were not material.
Item 2. Management's Discussion And Analysis Of Financial Condition And
Results Of Operations
Overview
The Company derives substantially all of its revenues from management consulting
and client/server systems integration services. The Company markets its services
directly and through a Teaming Agreement (the "Teaming Agreement") with Gemini
Consulting, Inc. ("Gemini"). Pursuant to the Teaming Agreement, Renaissance and
Gemini have agreed to market and perform certain service offerings on a
collaborative basis. Approximately 79%, 54% and 43% of the Company's revenues in
1994 and 1995 and for the nine months ended September 27, 1996, respectively,
resulted from its relationship with Gemini; approximately 65%, 24% and 27% of
revenues were from services and other amounts billable to Gemini and
approximately 14%, 30% and 16% of revenues were from services billable directly
to third parties in 1994 and 1995 and for the nine months ended September 27,
1996, respectively. The Company and Gemini have entered into a Third Amended and
Restated Teaming Agreement (the "Restated Teaming Agreement"), which will become
effective upon the closing of the Company's proposed offering of Common Stock
pursuant to a Registration Statement on Form S-3, currently anticipated to be
filed with the Securities and Exchange Commission on or about October 28, 1996
(the "Offering"). See "Certain Factors That May Affect Future Results" and
"Item 5--Other Information."
Fees for services provided by the Company typically are based on the project
schedule, Renaissance staffing requirements, the level of customer involvement
and the scope of the project as agreed upon with the customer at the project's
inception. The Company generally seeks to obtain an adjustment in its fees in
the event of any significant change in any of the assumptions upon which the
original estimate was based. The Company
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records revenues at estimated realizable rates as labor hours are incurred.
Provisions are made for estimated unbillable and uncollectible amounts.
This Quarterly Report on Form 10-Q contains forward-looking statements that
involve a number of risks and uncertainties. Among the important factors that
could cause actual results to differ materially from those indicated by such
forward-looking statements are the factors set forth in the Company's Annual
Report on Form 10-K under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Certain Factors That May
Affect Future Results," which are incorporated by reference herein and those set
forth below under the caption "Certain Factors That May Affect Future Results."
Results of Operations
The following table sets forth, for the periods indicated, the percentage
relationship to revenues of certain items in the Company's consolidated
statements of income.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 27, 1996 Sept. 29, 1995 Sept. 27, 1996 Sept. 29, 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Statement of Income Data:
Revenues................................ 100.0% 100.0% 100.0% 100.0%
-------------- -------------- ------------ -------------
Cost and expenses:
Professional personnel............ 49.8% 51.2% 53.6% 52.3%
Professional development and...... 7.8 6.1 5.2 6.3
recruiting
Marketing and sales............... 4.0 2.5 4.1 2.4
General and administrative........ 17.0 18.5 17.2 18.3
-------------- ------------- ------------- ---------------
Total costs and expenses....... 78.6 78.3 80.1 79.3
-------------- ------------- ------------- ---------------
Income from operations.................. 24.4 21.7 19.9 20.7
Interest expense........................ --- (.1) --- (.4)
Interest income......................... 5.3 3.3 3.4 2.3
-------------- ------------- -------------- --------------
Income before taxes..................... 26.7 24.9 23.3 22.6
Income taxes............................ 10.4 10.0 9.1 6.9
============== ============= ============= ===============
Net income.............................. 16.3% 14.9% 14.2% 15.7%
============== ============= ============= ===============
Pro forma data:
Historical income before income taxes... 26.7% 24.9% 23.3% 22.6%
-------------- ------------- -------------- ---------------
Historical income taxes................. 10.4 10.0 9.1 6.9
Additional provision for income taxes... --- --- --- 2.1
-------------- ------------- -------------- ---------------
Pro forma income taxes.................. 10.4 10.0 9.1 9.0
-------------- ------------- -------------- ---------------
Pro forma net income.................... 16.3% 14.9% 14.2% 13.6%
============== ============= ============== ===============
</TABLE>
Revenues increased 60% to $9.0 million in the third quarter of 1996 from $5.7
million in the third quarter of 1995. Revenues increased 62% to $25.4 million in
the first three quarters of 1996 from $15.7 million in the first three quarters
of 1995. The increase in revenues for the three months ended September 27, 1996
was primarily attributable to the significantly increased level of services
provided to existing clients as well as new clients. The increase in revenues
for the nine months ended September 27, 1996 was primarily attributable to the
significantly increased level of services performed for clients by both the
Strategic Management Services Group and the Performance Innovation Services
Group. Revenues attributable to the Company's relationship with Gemini
represented 40% and 45% of revenues in the three month periods ended September
27, 1996 and September 29, 1995, respectively, and 43% and 46% of revenues in
the nine month periods ended September 27, 1996 and September 29, 1995,
respectively. The Company expects that revenues from Gemini will decrease as a
percentage of revenues in the future. See "Certain Factors That May Affect
Future Results." Revenues from operating companies of AT&T represented, in the
aggregate, approximately 43% and 32% of the revenues in the three month periods
ended September 27, 1996 and September 29, 1995, respectively, and 46% and 32%
of the Company's revenues in the nine month periods ended September 27, 1996 and
September 29, 1995, respectively. The Company anticipates that revenues
attributable to operating companies of AT&T will decrease in the future because
several engagements for this group of clients have been completed.
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In each of the three six month periods ended on April 30, 1996, Gemini's
actual bookings were lower than the minimum bookings provided for under the
Teaming Agreement. Gross bookings attributable to Gemini under the Teaming
Agreement (without regard to the application of bookings to prior period
deficiencies) for the six month periods ended April 30, 1995, October 31, 1995
and April 30, 1996 were $6.8 million, $2.0 million and $5.3 million,
respectively. For the six month period ending October 31, 1996, the Company
estimates that such gross bookings will total approximately $5.0 million.
Because bookings for the six month period ended October 31, 1995 were
substantially below the bookings commitment for such period, bookings for the
subsequent six month period ended April 30, 1996 were, and for the six month
period ending October 31, 1996 will be, in accordance with the Teaming
Agreement, used to satisfy prior period deficiencies.
In particular, during the six month period commenced on May 1, 1995 and ended
October 31, 1995, Gemini's bookings commitment to the Company was $8.25 million.
The actual bookings for such period, net of bookings applied to the prior period
deficiency, totalled approximately $1.9 million. Gemini satisfied the resulting
$6.3 million deficiency in the subsequent six month period through a combination
of revenues generated from client work referred to Renaissance by Gemini, work
performed by Renaissance as a subcontractor for Gemini, work performed by
Renaissance directly for Gemini and the acquisition by Gemini from the Company
for $2.2 million (included in revenue for the nine months ended September 27,
1996) of certain Company program designs and related materials. During the six
month period commenced on November 1, 1995 and ended April 30, 1996, Gemini's
bookings commitment to the Company was $7.0 million. The actual bookings for the
period, net of bookings applied to the prior period deficiency, totalled
approximately $1.2 million. Gemini issued to Renaissance a purchase order for
the deficiency of approximately $5.8 million. This purchase order was satisfied
by Gemini in the subsequent period through a combination of revenues generated
from client work referred to Renaissance by Gemini of approximately $4.0 million
and a cash payment by Gemini to Renaissance of $750,000 in the third quarter of
1996 in satisfaction of the remaining $1.8 million purchase order obligation.
The Company's net income for the third fiscal quarter of 1996 was favorably
affected by this cash payment which was included in revenues and had no
incremental cost associated with it.
During the six month period commenced on May 1, 1996 and ending on October 31,
1996, Gemini's bookings commitment to the Company is $8.0 million. Approximately
$4.0 million in revenues generated from the estimated $5.0 million in bookings
in this six month period will be applied to satisfy the prior period deficiency.
Renaissance and Gemini have agreed that Gemini will satisfy the bookings
deficiency for this period with a one time payment by Gemini to Renaissance of
approximately $1.6 million (subject to adjustment in accordance with the terms
of the Restated Teaming Agreement), to be made simultaneously with the closing
of the Offering.
Professional personnel costs increased 55% in the third quarter of 1996 to $4.5
million, or 55% of revenues, from $2.9 million, or 50% of revenues, in the third
quarter of 1995. Professional personnel costs increased 66% in the first three
quarters of 1996 to $13.6 million, or 54% of revenues, from $8.2 million, or 52%
of revenues, in the first three quarters of 1995. The number of full-time
equivalent professional employees increased to 111 at September 27, 1996 from 82
at September 29, 1995. The increase in personnel costs resulted from the
addition of professionals, the standardization of all employee compensation
adjustments to January of each year beginning in January 1996 and professional
time investment in the Company's Web-based information services offering.
Professional development and recruiting costs increased 106% in the third
quarter of 1996 to $710,000, or 8% of revenues, from $344,000, or 6% of
revenues, in the third quarter of 1995. This increase in professional
development and recruiting costs resulted primarily from the decision to hold
the annual company-wide training session offsite, the recruitment and relocation
of twelve professional employees, and the significant investment in orientation
and training programs for new employees. Professional development and recruiting
costs increased 34% in the first three quarters of 1996 to $1.3 million, or 5%
of revenues, from $982,000, or 6% of revenues, in the first three quarters of
1995. This increase in professional development and recruiting costs resulted
primarily from significant expansion in the number of professional employees
retained by the Company.
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Marketing and sales expenses increased 156% in the third quarter of 1996 to
$359,000, or 4% of revenues, from $140,000, or 2% of revenues, in the third
quarter of 1995. Marketing and sales expenses increased 173% in the first three
quarters of 1996 to $1.0 million, or 4% of revenues, from $383,000, or 2% of
revenues, in the first three quarters of 1995. This increase in marketing and
sales expenses reflected an increase in the level and scope of marketing
communications activities in 1996. The Company is expanding its marketing and
sales efforts and therefore expects related expenses to increase as a percentage
of revenues in the future.
General and administrative expenses increased 47% in the third quarter of 1996
to $1.5 million, or 17% of revenues, from $1.0 million, or 18% of revenues, in
the third quarter of 1995. General and administrative expenses increased 52% in
the first three quarters of 1996 to $4.4 million, or 17% of revenues, from $2.9
million, or 18% of revenues, in the first three quarters of 1995. This increase
in general and administrative expenses resulted primarily from additional costs
necessary to support the growth in the Company's business and professional staff
during 1996 and included increases in salary costs for administrative staff,
increases in facilities and operating costs and investments in upgrading the
Company's telecommunications (video and audio), networks and systems.
Interest expense declined 28% in the first three quarters of 1996 to $41,000, or
0.2% of revenues, from $57,000, or 0.4% of revenues, for the first three
quarters of 1995. This decline was primarily attributable to the reduction in
interest payments to Gemini under a $2.0 million working capital loan from
Gemini to the Company (the "Gemini Loan"), which was repaid following the
Company's initial public offering in April 1995, offset by payments made to
Shawmut Bank under the Company's working capital line of credit. Interest income
increased 158% in the third quarter of 1996 to $478,000, or 5% of revenues, from
$185,000, or 3% of revenues, for the third quarter of 1995. Interest income
increased 153% in the first three quarters of 1996 to $899,000, or 4% of
revenues, from $355,000, or 2% of revenues, for the first three quarters of
1995. This increase was primarily the result of higher cash balances from cash
generated by operations and the proceeds from the Company's follow-on public
offering in May 1996. Interest income consists of interest earned on the
Company's cash, cash equivalents and marketable securities.
The provision for income taxes in the third quarter of 1996 of $0.9 million or
39% compared with a tax provision of $564,000 or 40% in the third quarter of
1995. The provision for income taxes in the first three quarters of 1996 was
$2.3 million or 39% compared with a pro forma tax provision of $1.4 million or
40% in the first three quarters of 1995. The 1995 figure was computed as if the
Company has been taxable as a C Corporation since its inception. Prior to its
Reorganization on April 3, 1995, the Company was not subject to federal or state
income taxes at the Company level.
Liquidity and Capital Resources
To date, the Company's financing requirements have been met through a
combination of funds generated by operations, loans from Gemini, bank
borrowings, loans from certain of the Company's stockholders, the sale of
Common Stock in the Company's initial and follow-on public offerings and the
sale to Gemini of warrants to purchase Common Stock. At September 27, 1996, the
Company had working capital of $51.5 million, an increase of $34.8 million as
compared to working capital of $16.7 million at December 31, 1995. The increase
was primarily attributable to the Company's follow-on offering in May 1996,
which provided net proceeds of $28.8 million.
Funds provided (used) by operations amounted to $(1,638,000), $2,287,000,
$(2,306,000) and $1,985,000 for 1993, 1994, 1995 and the first three fiscal
quarters of 1996, respectively. Accounts receivable and unbilled services
increased significantly in 1994 over 1993 and in 1995 over 1994 as a result of
the increased services performed by the Company in these years. Accounts
receivable and unbilled services increased 253% to $3.2 million on December 31,
1994, as compared to $904,000 on December 31, 1993. During the same period,
revenues increased 407%, to $12.9 million from $2.5 million. Accounts receivable
and unbilled services increased 199% to $9.6 million on December 31, 1995 as
compared to $3.2 million on December 31, 1994. During the same period revenues
increased 75%, to $22.6 million from $12.9 million in 1994. Accounts receivable
and unbilled services increased 19% to $11.4 million on September 27, 1996 as
compared to $9.6 million on December 31, 1995. Advance payments are recorded
when billings exceed revenues earned or expenses incurred. In 1994, advance
payments increased to $983,000 from $0 in 1993 as a result of billings in excess
of revenues earned and expenses incurred with respect to one customer. In 1995,
advanced payments decreased to $341,000 from $983,000 in 1994. Advance payments
in the first three fiscal quarters of 1996 decreased to $131,000 from $341,000
in 1995.
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Capital expenditures were $331,000, $774,000, $1,391,000 and $1,283,000 for
1993, 1994, 1995 and the first three fiscal quarters of 1996, respectively. The
Company expects capital expenditures in the remainder of 1996 to be
approximately $250,000, primarily for the purchase of hardware and software, for
furniture and fixtures and for leasehold improvements. In August 1996 the
Company entered into an operating lease with Digital Equipment Corporation
("Digital") pursuant to which Digital repurchased a portion of the Company's
installed base of computers and will provide the Company with certain equipment,
services, and support. Under this operating lease, the Company will pay Digital
approximately $407,000, $1.2 million, $1.2 million and $866,000 in 1996, 1997,
1998 and 1999, respectively.
Net cash used for investing activities of $15.2 million during the nine month
period ended September 27, 1996 resulted primarily from the purchase of
marketable securities.
On July 21, 1994, the Company entered into a revolving line of credit agreement
with Shawmut Bank (now Fleet Bank, N.A.) providing for borrowings of up to $1.0
million. The line of credit agreement was subsequently amended to increase the
amount available for borrowings to $3.5 million. This line of credit expires on
June 1, 1997. As of December 31, 1995, $1.5 million was outstanding under the
line. No borrowings were outstanding under the line as of September 27, 1996.
The line of credit includes customary financial and other covenants relating to
the maintenance of certain financial tests, such as minimum tangible net worth
and quarterly profitability, and restricting the Company's ability to incur
additional indebtedness. On August 25, 1995, the Company entered into a
revolving line of credit agreement with Barclays Bank in London providing for
borrowings of up to British Pound Sterling 250,000. The line of credit was
subsequently amended to increase the amount available for borrowings to British
Pound Sterling 425,000. No borrowings were outstanding under the line as of
December 31, 1995 or September 27, 1996.
The Company made a partnership distribution totaling $2,672,000 in January 1995,
which represented the cumulative net earnings of Renaissance Strategy Group
Limited Partnership (the "Partnership") a predecessor to the Company, from
December 1, 1993 through December 31, 1994. The Company made a final partnership
distribution totaling $754,475 in March 1995, which represented the estimated
amount of the Partnership's net earnings during the period commencing on January
1, 1995 and ending immediately prior to the Reorganization. Both the January
1995 and the March 1995 partnership distributions were evidenced by promissory
notes from the Company and were repaid from a portion of the net proceeds of the
Company's initial public offering. The partnership distributions represent
earnings of the Partnership upon which the recipients of such promissory notes
have been or will be required to pay income taxes.
In the event that the Restated Teaming Agreement is validly terminated by either
party prior to its expiration, Renaissance is required to pay a termination fee
to Gemini in an amount declining from $1.6 million in the event of a termination
prior to November 1, 1996 to $250,000 in the event of a termination prior to
November 1, 1999.
Management believes that funds generated by operations, existing cash balances
(including proceeds from the Company's initial and follow-on public offerings)
and borrowings under the bank lines, will be sufficient to meet the Company's
working capital and capital expenditure requirements for at least the next
twelve months. Thereafter, the Company's liquidity will be materially dependent
upon its internally generated funds and its ability to obtain funds from
financings from external sources, in the form of either additional equity or
indebtedness. The Company's ability to borrow will be a function of the level of
its internally generated funds and the assets of its business that are available
to serve as collateral, which will consist primarily of accounts receivable.
-11-
<PAGE>
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
In addition to the factors set forth in the Company's Annual Report on Form 10-K
under the caption "Certain Factors that May Affect Future Results," which are
incorporated herein by reference, the following important factors, among others,
could cause actual results to differ materially from those indicated by forward-
looking statements made in this Quarterly Report on Form 10-Q and presented
elsewhere by management from time to time.
Since 1993 the Company has been a party to the Teaming Agreement with Gemini
pursuant to which the Company and Gemini have agreed to market and perform
certain service offerings on a collaborative basis. The Company currently relies
on Gemini for a significant portion of the Company's marketing activities.
Approximately 79%, 54% and 43% of the Company's revenues in 1994, 1995 and the
first three fiscal quarters of 1996, respectively, resulted from its
relationship with Gemini; approximately 65%, 24% and 27%, respectively, of
revenues were from services and other amounts billable to Gemini and
approximately 14%, 30% and 16%, respectively, of revenues were from services
billable directly to third parties. As a result, the Company's success is
currently dependent in large part on the success of Gemini's marketing efforts.
The Company and Gemini have entered into the Restated Teaming Agreement,
which will become effective upon the closing of the Offering. Gemini has
committed to provide the Company with certain minimum bookings during the term
of the Restated Teaming Agreement, subject to the satisfaction of certain
conditions. In the event that during any of the six month periods during the
term of the Restated Teaming Agreement bookings obtained by Renaissance from
Gemini customers or customers of joint service offerings by Renaissance and
Gemini are less than specified minimum commitment levels, Gemini may retain
the services of Renaissance for a fee equal to the amount of the deficiency.
If at the end of twelve months a bookings deficiency still remains, Gemini is
required to make a compensating payment to Renaissance of 25% of the remaining
deficiency in full satisfaction of the bookings deficiency. Gemini's
obligation to provide these bookings to the Company will terminate in the
event that any of Harry M. Lasker, David A. Lubin or David P. Norton, the
founders of the Company, ceases to be employed by the Company on a full time
basis during the term of the Restated Teaming Agreement. In such event, the
parties have agreed to negotiate in good faith to establish new commitments
for the remainder of the term of the Restated Teaming Agreement. In addition,
the amount of Gemini's bookings commitment is subject to adjustment as a
result of, among other things, any failure by Renaissance to make available to
Gemini such quantities of marketing and sales resources and such number of
staff for joint service offerings as may from time to time be mutually agreed
upon by the parties.
The Company monitors Gemini's progress in meeting its bookings commitments
through regular conference calls and meetings with Gemini representatives.
"Bookings" are generally defined for purposes of the Restated Teaming
Agreement as gross fees (excluding expense reimbursements) committed to
Renaissance as a result of the relationship with Gemini during the applicable
period, as evidenced by a written agreement between the Company and the
customer for the delivery of goods or services within twelve months, plus any
such fees actually collected by the Company during such period which are not
evidenced by a written agreement. Gemini generally is treated as having
satisfied its bookings commitment regardless of whether revenues are
recognized by Renaissance with respect to a particular engagement. For
example, under the Restated Teaming Agreement, 50% of the fees attributable to
a cancelled contract count towards Gemini's bookings commitment if such
cancellation is not primarily attributable to the actions or omissions of
Gemini. In accordance with industry practice, nearly all of the Company's
contracts are terminable by either the customer or the Company on short or no
notice and without penalty. In addition, Gemini does not guarantee the
collectibility of any receivables resulting from customer engagements under
the Restated Teaming Agreement.
-12-
<PAGE>
The Restated Teaming Agreement has a term ending on November 1, 1999. The
Restated Teaming Agreement is subject to earlier termination upon the occurrence
of certain events, including a change in control of the Company (as defined in
the Restated Teaming Agreement). In the event that the Restated Teaming
Agreement is validly terminated by either party prior to its expiration,
Renaissance is required to pay a termination fee to Gemini in an amount
declining from a maximum of $1.6 million in the event of a termination prior to
November 1, 1996 to a minimum of $250,000 in the event of a termination prior to
November 1, 1999. In addition, in such event, various payment obligations
contained in the Restated Teaming Agreement will terminate on the termination
date. While the Company is continuing to build its internal marketing force and
seeking additional strategic alliances, the termination of the Restated Teaming
Agreement could have a material adverse effect on the Company's business and
results of operations.
Under the Restated Teaming Agreement, the Company has agreed to train Gemini
in the use of the Company's Balanced Scorecard, desktop application and
certain other methodologies during the period ending October 31, 1998 and to
perpetually license these methodologies, to the extent developed prior to
November 1, 1998, to Gemini on a non-exclusive basis. As a result, during the
term of the Restated Teaming Agreement Gemini personnel may perform services
in connection with joint service offerings which might otherwise be performed
by Company personnel. In addition, following the termination of the Restated
Teaming Agreement, Gemini will be in a position to compete with the Company
using know-how and methodologies which might otherwise be proprietary to the
Company.
The Company's ability to obtain the benefit of the bookings commitments
under the Restated Teaming Agreement may be affected by Gemini's
creditworthiness. Under the terms of the Restated Teaming Agreement, Gemini is
not required to provide the Company with information regarding Gemini's
financial condition. Based on information made publicly available by an
affiliate of Gemini, the Company believes that Gemini experienced a
significant decline in sales and profits as well as capacity problems in 1995,
and that Gemini's results for the first quarter of 1996 were below its budget
for such quarter.
In each of the three six month periods ended April 30, 1996, Gemini's actual
bookings were lower than the minimum bookings provided for under the Teaming
Agreement. During the six month period commenced on May 1, 1995 and ended
October 31, 1995, Gemini's bookings commitment (as defined in the Teaming
Agreement) to the Company was $8.25 million. The actual bookings for such
period, net of bookings applied to the prior period deficiency, totalled
approximately $1.9 million. Gemini satisfied the resulting $6.3 million
deficiency in the subsequent six month period through a combination of revenues
generated from client work referred to Renaissance by Gemini, work performed by
Renaissance as a subcontractor for Gemini, work performed by Renaissance
directly for Gemini and the acquisition by Gemini from the Company of certain
Company program designs and related materials. During the six month period
commenced on November 1, 1995 and ended April 30, 1996, Gemini's bookings
commitment to the Company was $7.0 million. The actual bookings for the period,
net of bookings applied to the prior period deficiency, totalled approximately
$1.2 million. Gemini issued to Renaissance a purchase order for the deficiency
of approximately $5.8 million. This purchase order was satisfied by Gemini in
the subsequent six month period through a combination of revenues generated from
client work referred to Renaissance by Gemini of approximately $4.0 million and
a cash payment by Gemini to Renaissance of $750,000 in the third fiscal quarter
of 1996 in satisfaction of the remaining $1.8 million purchase order obligation.
The Company's net income for the third fiscal quarter of 1996 was favorably
affected by this cash payment which was included in revenues and had no
incremental cost associated with it. During the six month period commenced on
May 1, 1996 and ending on October 31, 1996, Gemini's bookings commitment to the
Company is $8.0 million. Approximately $4.0 million in revenues generated from
the estimated $5.0 million in bookings in this six month period will be applied
to satisfy the prior period deficiency. Pursuant to the terms of the Restated
Teaming Agreement, Renaissance and Gemini have agreed that Gemini will satisfy
the resulting bookings deficiency for the period ending October 31, 1996 with a
one-time payment by Gemini to Renaissance of approximately $1.6 million (subject
to adjustment in accordance with the terms of the Restated Teaming Agreement),
to be made simultaneously with the closing of the Offering.
Simultaneously with the closing of the Company's initial public offering in
April 1995, the Company sold to Gemini two warrants (the "Gemini Warrants") to
purchase up to 633,600 shares of Common Stock. In addition, Messrs. Lasker and
Lubin and Melissa E. Norton, the wife of David Norton, sold to Gemini, at such
closing, options (the "Gemini Options") to purchase up to an aggregate of
150,000 shares of Common Stock held by them. The Gemini Warrants and the Gemini
Options were subsequently transferred by Gemini to an affiliate of Gemini. It is
currently anticipated that such affiliate of Gemini will exercise the Gemini
Warrants and the Gemini Options and sell the shares of Common Stock represented
thereby in connection with the Offering.
-13-
<PAGE>
PART II. OTHER INFORMATION
Items 1-3 None
Item 5 Other Information
On October 23, 1996, the Company and Gemini announced that
they had entered into a Third Amended and Restated Teaming
Agreement (the "Restated Teaming Agreement"), pursuant to
which the parties agreed to restructure their relationship
under the Teaming Agreement. The Restated Teaming Agreement
will become effective upon the closing of a public offering of
Common Stock by Renaissance pursuant to a Registration
Statement on Form S-3 to be filed with the Securities and
Exchange Commission on or about October 28, 1996 (the
"Offering"). Under the Restated Teaming Agreement, Gemini
bookings commitments for the three years beginning November 1,
1996 would be reduced from $24 million, $25 million and $25
million to $12 million, $12.5 million and $12.5 million,
respectively. In consideration of the reduced bookings targets
and the methodology licenses set forth in the Restated Teaming
Agreement, Gemini would pay Renaissance license fees totalling
$5.0 million. In addition, the provisions of the Teaming
Agreement which provide Gemini with exclusivity, and restrict
Renaissance's ability to create additional marketing
alliances, make certain acquisitions and issue securities
would also be eliminated. It is currently anticipated that
under the Form S-3 Registration Statement referred to above,
an affiliate of Gemini will sell 783,600 shares of Common
Stock (to be acquired upon the exercise of certain warrants
and options held by such affiliate) in the Offering.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Third Amended and Restated Teaming
Agreement, dated as of October 23, 1996, by
and between the Company and Gemini.
10.2 PC Utility Statement of Work, dated as of
August 29, 1996, by and between the Company
and Digital Equipment Corporation.
10.3 Amendment No. 1 to Employment Agreement,
dated as of July 1, 1996, by and between the
Company and Harry M. Lasker.
10.4 Amendment No. 1 to Employment Agreement,
dated as of July 1, 1996, by and between the
Company and David A. Lubin.
10.5 Amendment No. 1 to Employment Agreement,
dated as of July 1, 1996, by and between the
Company and David P. Norton.
11. Statement Regarding Computation of Earnings
per Share.
27. Financial Data Schedule.
99. Pages 30 through 35 of the Company's Annual
Report on Form 10-K for the period ended
December 31, 1995 (which is not deemed to
filed except to the extent that portions
thereof are expressly incorporated by
reference herein).
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the
fiscal quarter ended September 27, 1996
-14-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RENAISSANCE SOLUTIONS, INC.
(Registrant)
Dated: October 24, 1996
/s/David P. Norton
-----------------------------------------------
David P. Norton
President and Chief Executive Officer
(Principal Executive Officer)
Dated: October 24, 1996
/s/George A. McMillan
-----------------------------------------------
George A. McMillan
Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
-15-
<PAGE>
EXHIBIT 10.1
================================================================================
THIRD AMENDED AND RESTATED TEAMING AGREEMENT
between
RENAISSANCE SOLUTIONS, INC.
and
GEMINI CONSULTING, INC.
_____________________
October 23, 1996
================================================================================
<PAGE>
Table of Contents
-----------------
Section Page
- ------- ----
1. Definitions............................................... 1
2. Background................................................ 8
3. Overview of Teaming Relationship.......................... 8
4. Renaissance Obligations................................... 12
5. Gemini Obligations........................................ 13
6. Non-Solicitation.......................................... 14
7. Confidentiality........................................... 15
8. Intellectual Property..................................... 17
9. Infringement Indemnification.............................. 20
10. Promotional Materials; Trademarks......................... 21
11. Term; Termination......................................... 22
12. Miscellaneous............................................. 25
Schedule A -- The Balanced Score Card
Schedule B -- Desktop Systems
Schedule C -- Gemini Competitors
Schedule D -- Gemini Proprietary Materials
Schedule E -- Renaissance Proprietary Materials
<PAGE>
THIRD AMENDED AND RESTATED TEAMING AGREEMENT
This THIRD AMENDED AND RESTATED TEAMING AGREEMENT is entered into as of the
23rd day of October, 1996, by and between RENAISSANCE SOLUTIONS, INC., a
Delaware corporation and the successor to Renaissance Strategy Group Limited
Partnership ("Renaissance"), and GEMINI CONSULTING, INC., a Delaware corporation
("Gemini").
Recitals
WHEREAS, Renaissance and Gemini, together with Melissa Norton, Harry
Lasker, Diana Korzenik and Abigail C. Housen, as trustees of the Harry M. Lasker
Children's Trust (and not individually), Jeffrey Huvelle, as trustee of the
David A. Lubin Children's Trust (and not individually), and David Lubin
(together with their permitted assigns, the "Stockholders"), are parties to a
Second Amended and Restated Teaming Agreement dated as of October 17, 1994, as
amended by Amendment No. 1 thereto dated as of February 14, 1995, Amendment No.
2 thereto dated as of November 10, 1995, Amendment No. 3 thereto dated as of
March 25, 1996, and Amendment No. 4 thereto dated as of April 29, 1996 (as so
amended, the "Original Agreement"), pursuant to which Renaissance and Gemini set
forth certain arrangements with respect to one or more joint service offerings
to be offered by such parties; and
WHEREAS, Renaissance, Gemini and the Stockholders desire to amend and
restate the Original Agreement in its entirety in the manner set forth herein;
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, the Original Agreement is hereby amended and restated in its
entirety as follows:
1. Definitions. For purposes of this Agreement, the following terms shall
-----------
have the meanings ascribed to them below:
(a) "Additional Securities" means (i) any equity interests in
---------------------
Renaissance issued after the date of this Agreement, (ii) any option, warrant or
other right to subscribe for, purchase or otherwise acquire any equity interests
in Renaissance issued after the date of this Agreement, or (iii) any debt
securities convertible into equity interests in Renaissance issued after the
date of this Agreement.
(b) "Affiliate" means, with respect to a party, any person or entity
---------
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such party. To the extent that
this Agreement imposes obligations on an Affiliate of a party, such party agrees
to cause such Affiliate to perform or otherwise abide by such obligations.
<PAGE>
(c) "Agreement" means this Third Amended and Restated Teaming
---------
Agreement, as such Agreement may be amended from time to time in accordance with
the terms hereof.
(d) "Balanced Score Card" means Renaissance's proprietary methodology
-------------------
for strategic analysis and performance measurements, as described on Schedule A
-------- -
attached hereto, and all enhancements, improvements and updates to such
methodology developed by or for Renaissance during the first four years of the
Term.
(e) "Bankruptcy Event" means, with respect to a party:
------------------
(i) the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of such party in an involuntary case
under the Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state or foreign bankruptcy, insolvency or other similar
law, or appointing a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of such party or for any substantial part of
its property, or ordering the winding-up or liquidation of its affairs and the
continuance of any such decree or order unstayed and in effect for a period of
90 consecutive days; or
(ii) the commencement by such party of any proceeding seeking a
decree, order, appointment or other relief referred to in clause (i) above, the
consent to or failure to oppose the granting of such relief, or the failure of
such party generally to pay its debts as such debts become due, or the taking of
any action by such party in furtherance of any of the foregoing.
(f) "Bookings" means, with respect to any Period during the Term, the
--------
sum of (i) the gross fees (excluding expense reimbursements) committed to
Renaissance during such Period, either directly or through a prime contractor
(such as Gemini), as evidenced by a written agreement between Renaissance and
the relevant Client or prime contractor that goods or services will be provided
to such Client in consideration of such fees within the 12 month period
following the date of such agreement, plus (ii) any fees actually collected by
Renaissance during such Period which are not evidenced by a written client
agreement of the nature specified in the foregoing clause (i). Notwithstanding
the foregoing, if during any Period any portion of the goods or services
contemplated by any such agreement is not delivered at the Client's request,
Bookings for such Period shall be reduced by the amount of fees corresponding to
the cancelled goods or services to the extent that such request is primarily
attributable to the actions or omissions of Gemini; provided, that if such
request is made for the Client's convenience or is otherwise not attributable
primarily to the acts or omissions of either Gemini or Renaissance, Bookings
shall be reduced by 50% of the amount of fees corresponding to the cancelled
goods or services. For example, if a client commits to a $2 million (in fees)
engagement but cancels $500,000
-2-
<PAGE>
worth of services because it runs out of funding and cancels another $250,000
because it is dissatisfied with Gemini's performance, Renaissance shall realize
$1.5 million in Bookings for purposes of this Agreement. Except as provided
above, the collection of fees for goods and services delivered will not impact
the level of Bookings. Notwithstanding the foregoing, Bookings shall not include
any billings relating to services to be provided by Renaissance with respect to
any Gemini Bookings Deficiencies pursuant to Section 3(d)(i) of this Agreement.
(g) "Change in Control" means, with respect to Renaissance (which, for
-----------------
the purpose of this definition and Section 11(a)(v), shall include any surviving
entity after a merger or consolidation of Renaissance with any other entity
under clause (iv)(A) or (B) below), (i) the sale, lease, transfer or disposal of
all or substantially all of the assets of Renaissance to a third party or
parties in a single transaction or a series of related transactions, (ii) the
consummation of a single transaction or a series of related transactions,
including a merger or consolidation pursuant to clause (iv)(A) or (iv)(B) below,
pursuant to which any person (within the meaning, for the purpose of this
definition, of Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (other than any of the Stockholders or a
person which is or is controlled by a Gemini Competitor) becomes the beneficial
owner (within the meaning, for the purpose of this definition, of Rule 13d-3 of
the Exchange Act) of securities representing more than 40% of the combined
voting power of Renaissance, (iii) the consummation of a single transaction or a
series of related transactions, including a merger or consolidation pursuant to
clause (iv)(A) or (iv)(B) below, pursuant to which any person which is or is
controlled by a Gemini Competitor becomes the beneficial owner of securities
representing more than 25% of the combined voting power of Renaissance, or (iv)
a merger or consolidation of Renaissance with any other entity other than (A) a
merger or consolidation which would result in the voting securities of
Renaissance outstanding immediately prior thereto continuing to represent more
than 50% of the combined voting power of the voting securities of Renaissance or
such surviving entity outstanding immediately after such merger or consolidation
and being held immediately after the merger or consolidation by the same
beneficial owners of Renaissance as immediately prior to the merger or
consolidation or (B) a merger or consolidation effected to implement a
recapitalization of Renaissance.
(h) "Client" means a client organization (such as, for example, the
------
ultimate parent client entity and all of its subsidiaries) or, if services are
being provided specifically to a division or corporate unit of the client
organization, such division or corporate unit, in each case which retains the
services of Renaissance and/or Gemini. Definitions of certain types of existing
or potential Clients are set forth below:
-3-
<PAGE>
(i) "Active Client" means, with respect to a party to this Agreement
-------------
as of a particular date, a Client for which such party has within 12 months of
such date performed and billed for consulting services.
(ii) "Gemini Referral Client" means (A) an Active Client of Gemini,
----------------------
(B) an Active Client of Renaissance which retains the services of Renaissance as
part of a Joint Service Offering or as a result of joint marketing or staffing
by Renaissance and Gemini, provided that such Client shall be considered a
Gemini Referral Client only to the extent of such Joint Service Offering or to
the extent such joint marketing and staffing result in incremental Bookings, and
(C) a Client which is not an Active Client of Gemini or Renaissance and which
retains the services of Renaissance as part of a Joint Service Offering or as a
result of joint marketing or staffing by Renaissance and Gemini, provided that
such Client shall be considered a Gemini Referral Client only to the extent of
such Joint Service Offering or to the extent such joint marketing and staffing
result in incremental Bookings.
(iii) "Prospective Client" means, with respect to a party to this
------------------
Agreement, (A) a prospective Client to whom such party has submitted a formal
written proposal which has yet to be acted upon, and (B) a prospective Client
which has submitted a formal request for a proposal to such party.
(i) "Commencement Date" means November 1, 1994.
-----------------
(j) "Confidential Information" means any oral or written information
------------------------
furnished by or on behalf of the Disclosing Party to the Receiving Party (or its
representatives), whether furnished prior to or after the date of this
Agreement, and shall include, by way of illustration and not limitation, all
information (whether or not patentable and whether or not copyrightable) owned,
possessed or used by the Disclosing Party, including, without limitation, any
methodology, invention, customer information, trade secret, process, research,
report, technical data, know-how, computer program, software, software
documentation, technology, marketing or business plan, forecast, unpublished
financial statement, budget, license, price, cost and employee list that is
communicated to, learned of, developed or otherwise acquired by the Receiving
Party in the course of its relationship with the Disclosing Party.
(k) "Departing Partner Termination Event" means the date on which any
-----------------------------------
of the Founders ceases to be employed by Renaissance in a capacity requiring him
to devote substantially all of his time and efforts to Renaissance (exclusive of
time and efforts devoted to Board, civil and charitable activities to the extent
such activities do not interfere with such Founder's duties and responsibilities
to Renaissance under the applicable employment agreement with such Founder).
(l) "Desktop Systems" means Renaissance's proprietary methodology for
---------------
designing a networked work process using personal computers and associated
-4-
<PAGE>
software as part of the business re-engineering process, as described on
Schedule B attached hereto, and all enhancements, improvements and updates to
- -------- -
such methodology developed by or for Renaissance during the first four years of
the Term.
(m) "Founders" means Harry M. Lasker, David A. Lubin and David P.
--------
Norton.
(n) "Gemini Bookings Deficiency" means, with respect to any Period
--------------------------
during the Term, an amount equal to the excess, if any, of (i) the Gemini
Guaranteed Bookings for such Period, minus (ii) the Gemini Delivered Bookings
for such Period.
(o) "Gemini Competitor" means (i) any person or entity that is set
-----------------
forth on the illustrative Schedule C attached hereto, (ii) any person or entity
-------- -
actively engaged in a business that is competitive with, and conducted in any or
all of the same geographic market areas as, the general management and strategy
consulting, business and system transformation, change management and
implementation service offering comprising Gemini's current or future business,
or (iii) any person or entity which is controlled by, controls or is under
common control with a person or entity referenced in clause (i) or (ii) of this
Section 1(o) (control for purposes of this Section 1(o) being defined as
beneficial ownership of securities representing more than 50% of the combined
voting power of a person or entity).
(p) "Gemini Delivered Bookings" means, with respect to any Period
-------------------------
during the Term, the sum of (i) the actual amount of Bookings from Gemini
Referral Clients during such Period plus (ii) the actual amount, if any, of
Bookings from Gemini Referral Clients in excess of the Gemini Guaranteed
Bookings target for the immediately preceding Period plus (iii) the actual
amount, if any, of Bookings for which Francis Gouillart had, has or will have
any involvement in the client development, marketing, sale or delivery of the
goods or services associated with such Bookings.
(q) "Gemini Guaranteed Bookings" means, with respect to any Period
--------------------------
during the Term, the target amount of Bookings from Gemini Referral Clients
during such Period, as set forth below, so long as Renaissance (A) makes
available to Gemini substantially the quantities of marketing and sales
resources mutually agreed upon from time to time at the meetings contemplated by
Section 3(f), (B) makes available to Gemini substantially the number of staff
for Joint Service Offerings mutually agreed upon from time to time at the
meetings contemplated by Section 3(f), and (C) charges rates for service
provided by Renaissance in connection with Joint Service Offerings which are not
materially higher than the then-current rates offered to its Clients for similar
services:
-5-
<PAGE>
<TABLE>
<CAPTION>
Target
Year of Amount
Agreement Period of Bookings
--------- ------ -----------
<S> <C> <C>
1 First $6,750,000
Second $8,250,000
2 First $7,000,000
Second $8,000,000
3 First $6,000,000
Second $6,000,000
4 First $6,250,000
Second $6,250,000
5 First $6,250,000
Second $6,250,000
</TABLE>
In the event that Renaissance fails in any Period to satisfy its obligations
described in clauses (A), (B) and/or (C) of this Section 1(q), the Gemini
Guaranteed Bookings for such Period shall be equitably adjusted to the extent
necessary to reflect the amount by which Gemini was unable to satisfy its
Guaranteed Bookings obligation as a result of such failure. Gemini shall notify
Renaissance as promptly as reasonably possible following any failure by
Renaissance to satisfy its obligations under this Section 1(q) so as to
facilitate Renaissance's ability to mitigate the effects of such failure.
(r) "Gemini Proprietary Materials" means the methodologies, attendant
----------------------------
tools, technologies, software and proprietary information and materials of
Gemini summarized on Schedule D attached hereto, as such Schedule D may be
-------- - -------- -
supplemented in accordance with the terms of this Agreement. Gemini shall have
the right from time to time during the Term to add additional information and
materials to Schedule D if such information or materials (i) have been
-------- -
designated Gemini Proprietary Materials by mutual written agreement of the
parties, or (ii) constitute Developments owned by Gemini pursuant to Section 8
of this Agreement. Any such information, when delivered to Renaissance in
accordance with the terms of Section 12(a) hereof, shall constitute a supplement
to Schedule D and be incorporated herein by this reference. All Gemini
-------- -
Proprietary Materials shall be considered to be Confidential Information for
purposes of this Agreement.
(s) "Joint Software Products" means any software products developed
-----------------------
jointly by Renaissance and Gemini for purposes of sale or licensing to third
parties.
(t) "Licensed Methodologies" means (i) the Balanced Score Card,
----------------------
Performance Innovation, Knowledge Based Competition, Strategic Feedback and
-6-
<PAGE>
Desktop Systems methodologies, and (ii) any other consulting methodologies and
attendant tools developed by or for Renaissance during the first four years of
the Term. Notwithstanding the foregoing, in no event shall the term Licensed
Methodologies be construed to include any computer software.
(u) "Period" means any of the six-month periods commencing on November
------
1 and ending on April 30 or commencing on May 1 and ending on October 31 during
the Term. Notwithstanding the foregoing, the initial Period during the Term
shall commence on October 17, 1994 and shall end on April 30, 1995.
(v) "Promotional Materials" means all advertising, promotional and
---------------------
marketing materials and announcements to the press by either Renaissance or
Gemini regarding a Joint Service Offering, this Teaming Agreement or the
business to be conducted by Renaissance and Renaissance and Gemini jointly
hereunder.
(w) "Proprietary Mark" means any trademark or trade name adopted or
----------------
subject to a trademark application by a party to this Agreement, and any
markings, colors or other insignia which are contained on or in or affixed to
Promotional Materials prepared or products manufactured by or for such party in
accordance with the terms of this Agreement.
(x) "Renaissance Proprietary Materials" means the Licensed
---------------------------------
Methodologies, attendant tools, and the other methodologies, software,
technologies and proprietary information and materials of Renaissance summarized
on Schedule E attached hereto, as such Schedule E may be supplemented in
-------- - -------- -
accordance with the terms of this Agreement. Renaissance shall have the right
from time to time during the Term of this Agreement to add additional
information and materials to Schedule E if such information or materials (i)
-------- -
have been designated Renaissance Proprietary Materials by mutual written
agreement of the parties, or (ii) constitute Developments owned by Renaissance
pursuant to Section 8 of this Agreement. Any such information, when delivered
in accordance with the terms of Section 12(a) hereof, shall constitute a
supplement to Schedule E and be incorporated herein by this reference. All
-------- -
Renaissance Proprietary Materials shall be considered to be Confidential
Information for purposes of this Agreement.
(y) "Solely-Owned Software Products" means any software products
------------------------------
developed solely by or for Renaissance or Gemini for purposes of sale or
licensing to third parties and which are used in connection with Joint Service
Offerings.
(z) "Term" means the period commencing on October 17, 1994 and ending
----
on the date on which this Agreement is terminated in accordance with the
provisions of Section 11.
-7-
<PAGE>
(aa) "Termination Fee" means, in connection with any valid termination
---------------
of this Agreement (other than a termination pursuant to Section 11(a)(vi)
hereof), the fee set forth below opposite the year in which such termination
occurs:
<TABLE>
<CAPTION>
Year of Term During Which
Termination Occurs Termination Fee
-------------------------- ---------------
<S> <C>
1 $1,600,000
2 $1,600,000
3 $1,150,000
4 $ 800,000
5 $ 250,000
</TABLE>
2. Background. Gemini is in the business of providing consulting
----------
services and technology consulting and implementation services to domestic and
international business clients. Renaissance is in the business of (a) developing
software, electronic media technology, methodologies, approaches and other
intellectual property and (b) providing consulting services to domestic and
international business clients. Gemini has certain rights in the Gemini
Proprietary Materials summarized on Schedule D attached hereto.
-------- -
Renaissance has certain rights in the Renaissance Proprietary Materials
summarized in Schedule E attached hereto. Renaissance and Gemini desire to
-------- -
continue their development of one or more joint service offerings combining
Gemini's service offering (or any component(s) thereof) with Renaissance's
service offering (or any component(s) thereof) (each such combined offering, a
"Joint Service Offering"). Gemini desires to license and develop expertise in
providing Clients with services utilizing the Licensed Methodologies.
Renaissance is willing to license the Licensed Methodologies to Gemini and
train Gemini personnel in the use thereof upon the terms and conditions set
forth in this Agreement in consideration of, among other things, the guarantee
by Gemini to Renaissance of a minimum level of Bookings and the payment by
Gemini to Renaissance of certain fees. The purpose of this Agreement is to
describe the arrangements pursuant to which (i) Renaissance and Gemini will
develop, market and implement Joint Service Offerings, and (ii) Renaissance will
license the Licensed Methodologies to Gemini.
3. Overview of Teaming Relationship.
--------------------------------
(a) Joint Services Offerings. Joint Service Offerings by Renaissance
------------------------
and Gemini or by Gemini acting alone will utilize one or more of the Licensed
Methodologies. All such offerings will be identified by Renaissance and Gemini
as "Renaissance/Gemini Joint Offerings" or "Gemini/Renaissance Joint
Offerings." During the Term, Gemini shall not perform any services relating to
or based upon all
-8-
<PAGE>
or any portion of the Licensed Methodologies other than pursuant to this
Agreement. Renaissance shall work with Gemini to develop capabilities within
Gemini for providing the Joint Service Offerings on the terms and conditions set
forth herein. In order to develop these capabilities, Renaissance shall,
subject to the terms of this Agreement, provide Gemini with the services
outlined in Section 3(b) and the licenses set forth in Section 8(a). Gemini
shall select Gemini personnel to be trained in the Licensed Methodologies in
accordance with Section 3(b)(iii). Subject to the limitations set forth in
Section 3(b) below, staffing and revenue sharing arrangements for each Client
engagement involving a Joint Service Offering shall be agreed upon by
Renaissance and Gemini prior to the commencement thereof.
(b) Methodology Development and License. Renaissance has agreed to assist
-----------------------------------
Gemini, on the terms and conditions set forth in this Agreement, in building an
internal capability to deliver services utilizing the Licensed Methodologies
independently of Renaissance after the termination of this Agreement. In
return, Gemini will assist Renaissance in growing its business. Accordingly,
Renaissance and Gemini have agreed as follows:
(i) During the Term, Renaissance will (A) document the Licensed
Methodologies in a form mutually agreed by Renaissance and Gemini, (B) provide
documentated updates, in a form mutually agreed by Renaissance and Gemini, to
the Licensed Methodologies at least semi-annually to reflect any enhancements or
improvements that have been developed by Renaissance during the first four years
of the Term, and (C) periodically deliver to Gemini, in a form mutually agreed
by Renaissance and Gemini, collateral material reflecting the "best practices"
relating to the Licensed Methodologies, including without limitation case
libraries, classroom instruction, instructor notes and computer based, multi-
media education, but expressly excluding any computer software.
(ii) Renaissance will identify an "Alliance Coordinator" for each of
the Licensed Methodologies. The role of this individual will be to work with
Gemini counterparts to execute the operational details of this Agreement. The
individual assigned to this role from time to time will be subject to Gemini
approval. Gemini will identify an "Alliance Coordinator" with responsibilities
comparable to those outlined above. The individual assigned to this role from
time to time will be subject to Renaissance approval.
(iii) Renaissance shall serve as the "Center of Excellence" for the
Renaissance Proprietary Materials. As such, Renaissance shall be responsible
for methodology development and project quality control. In consideration of
certain of the fees payable by Gemini to Renaissance pursuant to Section 8(c)
hereof, Renaissance will assist Gemini in causing Gemini employees to become
generally familiarized with the Licensed Methodologies in a manner to be
mutually agreed by Renaissance and Gemini.
-9-
<PAGE>
(iv) In order to help Renaissance employees participate effectively in
Joint Service Offerings, Gemini shall provide during the first three years of
the Term all Renaissance personnel who are assigned to Joint Service Offerings
with a practice qualification training program mutually agreed by Gemini and
Renaissance. Such program shall include, without limitation, training in GSW,
A&D process, Results Delivery and Large Scale Mobilization. Renaissance shall
pay Gemini during the first three years of the Term an annual fee of $400,000,
payable quarterly in arrears, for this training.
(v) In connection with the methodology license contemplated hereby,
Renaissance is granting Gemini the licenses in the Licensed Methodologies set
forth in Section 8 on the terms and conditions set forth therein.
(c) Personnel and Staffing. The parties intend to establish an effective,
----------------------
practical resource development and allocation process to insure that qualified
personnel staff Joint Service Offerings and that the methodology license
contemplated by Sections 3(b) and 8 occurs. Accordingly, Renaissance and Gemini
have agreed as follows:
(i) the individuals referred to in Section 3(b)(ii) shall form the
joint resource allocation team, and shall work in consultation with Gemini's
global market teams.
(ii) Each party shall have final authority to make staffing decisions
with respect to its Clients, but always in consultation with the other party
concerning Joint Service Offerings.
(d) Bookings Guarantee. The parties jointly believe that a commitment to
------------------
help achieve specified Bookings levels for Renaissance during the Term will be
beneficial to the building of the Joint Service Offering. Accordingly, the
parties agree as follows:
(i) It is currently anticipated that, for each Period during the Term,
Renaissance will obtain Gemini Delivered Bookings in an amount equal to or
greater than the Gemini Guaranteed Bookings for such Period. Renaissance and
Gemini have established the Gemini Guaranteed Bookings based on the premise that
each of Renaissance and Gemini will act in a commercially reasonable manner in
marketing, staffing and pricing Joint Service Offerings. In the event that
Gemini Delivered Bookings in any Period are less than the Gemini Guaranteed
Bookings for such Period, then Gemini may directly retain Renaissance to provide
Gemini with consulting and/or training services or products based on or
comparable to the Licensed Methodologies for a fee equal to the Gemini Bookings
Deficiency for such Period. The services or products to be provided by
Renaissance to Gemini with respect to a Gemini Bookings Deficiency in any Period
shall be provided during the
-10-
<PAGE>
immediately succeeding twelve months and shall be comprised of such consulting
and training services or products as may be mutually agreed upon by Renaissance
and Gemini. Except as otherwise provided in Section 11(e), to the extent that a
Gemini Bookings Deficiency has not been satisfied pursuant to this Section
3(d)(i) during the 12-month period provided for in the immediately preceding
sentence, Gemini shall, in lieu of any further obligation with respect to such
Gemini Bookings Deficiency, pay to Renaissance an amount equal to 25% of the
Gemini Bookings Deficiency remaining unsatisfied as of the end of such 12-month
period. Such amount shall be paid by Gemini within 30 days of Renaissance's
invoice therefor. Renaissance shall account for Bookings on a "first in, first
out" basis, therefore applying Gemini Delivered Bookings in any Period first to
any Gemini Bookings Deficiency then existing, and then to Gemini Guaranteed
Bookings for the then current Period. In no event whatsoever shall Gemini be
liable, whether under this Section 3(d)(i), Section 11(c) or otherwise, to pay
Renaissance in respect of any Gemini Bookings Deficiency any amount in excess of
25% of such Gemini Bookings Deficiency.
(ii) In the event that Gemini Delivered Bookings for the Period ending
October 31, 1999 exceed the Gemini Guaranteed Bookings for such Period,
Renaissance shall pay to Gemini an amount equal to 25% of such excess.
(iii) In the event that a Gemini Bookings Deficiency is satisfied in
whole or in part through the provision by Renaissance of consulting and/or
training services or products directly to Gemini, for use by Gemini and not by
any third party, such services shall be provided to Gemini at 85% of
Renaissance's customary rates; payment for such services shall be credited to
satisfy any Gemini Bookings Deficiency at 100% of Renaissance's customary rates.
(iv) Payment for services or products provided by Renaissance to
Gemini pursuant to Section 3(d)(iii) above shall be subject to acceptance of
deliverables by the Joint Venture Operating Group, which approval shall not be
unreasonably withheld or delayed.
(v) The parties will use their respective best efforts during the
period commencing on March 25, 1996 and ending on March 25, 1997 to jointly sell
client work based on the "Project Beta" deliverables described in Amendment No.
3 to the Original Agreement, and will price client work during this period in a
manner that will recognize payment by Gemini for the Project Beta deliverables.
(vi) Notwithstanding the foregoing, the commitments undertaken
pursuant to this Section 3(d) shall not be applicable from and after the date of
any Departing Partner Termination Event. In such event, the parties will
negotiate in good faith to establish new goals and commitments for the remainder
of this Agreement.
-11-
<PAGE>
(vii) Notwithstanding anything to the contrary set forth herein, (A)
the parties currently anticipate that there will be a Gemini Bookings Deficiency
for the Period ended October 31, 1996 of $8,000,000 (the "October Bookings
Deficiency") and (B) the parties agree that Gemini shall satisfy such Gemini
Bookings Deficiency by the payment to Renaissance, on the Effective Date of this
Agreement (as such term is defined in Section 12(n) below), of $1,600,000 (the
"October Deficiency Payment"). The parties agree that the October Deficiency
Payment shall be reduced as necessary (I) in accordance with the terms of the
letter agreement dated September 27, 1996, between Renaissance and Gemini, and
(II) in the event that the October Bookings Deficiency is less than $8,000,000
(an "October Surplus") by an amount equal to 20% of any such October Surplus.
(e) Meetings. Renaissance and Gemini shall hold meetings at least once
--------
each calendar quarter during the Term of this Agreement. At such meetings Joint
Service Offering business and decisions will be presented and discussed for
resolutions, including:
. personnel and staffing issues
. methodology licensing issues
. the levels of Bookings that are currently being achieved
. questions over the identity and ownership of Clients
. review of sales pipelines and "ownership" of support requirements for
upcoming marketing efforts
(f) Payment Terms.
-------------
(i) It is anticipated that Clients will be billed for Joint Service
Offering services substantially in accordance with the past practice of
Renaissance and Gemini or as may otherwise be mutually agreed upon by
Renaissance and Gemini.
(ii) Renaissance and Gemini shall keep full, true and accurate books
of account and other records containing all information and data which may be
necessary to ascertain and verify the amounts payable to the other party under
this Agreement. During the term of this Agreement and for a period of two years
thereafter, each party shall have the right, on not more than two occasions in
any 12-month period, during normal business hours and with reasonable prior
notice, to inspect or have an agent, accountant or other representative inspect,
such books, records and supporting data for the purposes of verifying the
amounts due hereunder.
4. Renaissance Obligations. In order to implement the Joint Service
-----------------------
Offerings contemplated herein, Renaissance agrees as follows:
-12-
<PAGE>
(a) Marketing. Renaissance shall provide Gemini with such marketing
---------
assistance as Renaissance and Gemini may from time to time jointly consider
necessary to assist with the promotion of Joint Service Offerings to Clients.
In addition, Renaissance may from time to time engage in additional marketing
activities designed generally to enhance awareness within the industry of Joint
Service Offerings.
(b) Client Support and Service. Renaissance shall use commercially
--------------------------
reasonable efforts to provide such support and service to Clients in connection
with each Joint Service Offering as may be mutually agreed upon by Renaissance
and Gemini.
(c) Personnel Commitment. Renaissance shall provide the personnel
--------------------
necessary to satisfy its staffing commitments pursuant to Section 3 of this
Agreement. Notwithstanding the foregoing, the parties acknowledge that
Renaissance may provide consulting and other services and products to third
parties separate from the Joint Service Offerings. Renaissance shall allocate
its resources between Joint Service Offerings and such other services and
products in good faith and in a reasonable and prudent manner, subject to its
understanding that inability to allocate resources to Joint Service Offerings
may impact the Bookings commitments set forth in Section 3(d) pursuant to
Section 1(q).
(d) Additional Responsibilities. Renaissance will: (i) provide relevant
---------------------------
information concerning Joint Service Offerings to prospective Clients; (ii)
periodically transmit to Gemini any material complaints concerning any aspect of
Joint Service Offerings which Renaissance receives from Clients; (iii) remain
reasonably informed and knowledgeable concerning those components of Joint
Service Offerings which are to be provided by Gemini; and (iv) make no
representations, warranties or guaranties to existing or potential Clients with
respect to those components of Joint Service Offerings which are to be provided
by Gemini that are inconsistent with the literature or documentation
distributed, or other instructions provided, by Gemini.
(e) Cooperation. Renaissance agrees generally to cooperate in good faith
-----------
and in a reasonable manner with Gemini in connection with the development,
marketing and implementation of Joint Service Offerings.
5. Gemini Obligations. In order to implement the Joint Service Offerings
------------------
contemplated herein, Gemini agrees as follows:
(a) Marketing. Gemini shall have responsibility for marketing Joint
---------
Service Offerings commensurate with its Bookings commitment in Section 3(d).
-13-
<PAGE>
(b) Client Support and Service. Gemini shall use commercially reasonable
--------------------------
efforts to provide such support and service to Clients in connection with each
Joint Service Offering as may be mutually agreed upon by Renaissance and Gemini.
(c) Personnel Commitment. Gemini shall provide the personnel necessary to
--------------------
satisfy its staffing commitments pursuant to Section 3 of this Agreement.
Notwithstanding the foregoing, the parties acknowledge that Gemini may provide
consulting services not utilizing the Licensed Methodologies to third parties
separate from Joint Service Offerings. Gemini shall allocate its resources
between Joint Service Offerings and such other services in good faith and in a
reasonable and prudent manner.
(d) Additional Responsibilities. Gemini will: (i) provide relevant
---------------------------
information concerning Joint Service Offerings to prospective Clients; (ii)
periodically transmit to Renaissance any material complaints concerning any
aspect of Joint Service Offerings which Gemini receives from Clients; (iii)
remain reasonably informed and knowledgeable concerning those components of
Joint Service Offerings which are to be provided by Renaissance; and (iv) make
no representations, warranties or guarantees to existing or potential Clients
with respect to those components of Joint Service Offerings which are to be
provided by Renaissance that are inconsistent with the literature or
documentation distributed, or other instruction provided, by Renaissance.
(e) Cooperation. Gemini agrees generally to cooperate in good faith and in
-----------
a reasonable manner with Renaissance in connection with the development,
marketing and implementation of Joint Service Offerings.
6. Non-Solicitation.
----------------
(a) Renaissance. During the Term, Renaissance will not, directly or
-----------
indirectly, knowingly solicit any Active or Prospective Client of Gemini seeking
to perform any services competitive with the Joint Service Offerings for such
Client, or knowingly perform any such services at the invitation of any such
Client other than pursuant to this Agreement as part of a Joint Service
Offering. In addition, during the period commencing on the date of this
Agreement and ending on the first anniversary of the date on which this
Agreement is terminated or expires, Renaissance shall not, directly or
indirectly, recruit, solicit or induce, or attempt to induce, any employee or
employees of Gemini to terminate their employment with, or otherwise cease their
relationship with, Gemini, or hire any such employees.
(b) Gemini. During the Term, Gemini will not, directly or indirectly,
------
knowingly solicit any Active or Prospective Client of Renaissance seeking to
perform services competitive with the Joint Service Offerings for such Client,
or knowingly
-14-
<PAGE>
perform any such services at the invitation of any such Client, other than
pursuant to this Agreement as part of a Joint Service Offering. In addition,
during the period commencing on the date of this Agreement and ending on the
first anniversary of the date on which this Agreement is terminated or expires,
Gemini shall not, directly or indirectly, recruit, solicit or induce, or attempt
to induce, any employee or employees of Renaissance to terminate their
employment with, or otherwise cease their relationship with, Renaissance, or
hire any such employees.
(c) Interpretation. The agreements of the parties contained in this
--------------
Section 6 shall be construed as separate agreements covering each country (and,
in the case of the United States, each state and county) in which the parties do
business, and to the extent any of such agreements shall be illegal or
unenforceable in any one country (or state or county) or shall be enforceable
only for a term shorter than the term set forth herein, the parties' agreements
shall be effective with respect to each country (or state or county) or parts
thereof for the maximum period of time for which they can be enforced, such
agreements with respect to each country (and state and county) being construed
as separable and independent.
(d) Noncircumvention. Neither party will seek to terminate this Agreement
----------------
or take any other action in order, directly or indirectly, to substitute such
party's or third party personnel, services or methodologies for the personnel,
services and methodologies anticipated to be provided to Clients by the other
party as part of any Joint Service Offerings.
7. Confidentiality.
---------------
(a) Each party to this Agreement (the "Receiving Party") shall hold in
confidence, and shall not disclose (or permit or suffer its personnel to
disclose) to any person outside its organization, any Confidential Information
of the other party (the "Disclosing Party"). The Receiving Party and its
personnel shall use such Confidential Information only in connection with the
performance of services on a joint basis as part of Joint Service Offerings and
shall not use or exploit such Confidential Information for its own benefit or
the benefit of another without the prior written consent of the Disclosing
Party. The Receiving Party shall disclose Confidential Information received by
it under this Agreement only to persons within its organization who have a need
to know such Confidential Information in the course of the performance of their
duties in connection with this Agreement. The Receiving Party shall adopt and
maintain programs and procedures which are reasonably calculated to protect the
confidentiality of Confidential Information and shall be responsible to the
Disclosing Party for any disclosure or misuse of Confidential Information which
results from a failure to comply with this provision. In the event that any
Receiving Party is acquired (in whole or in part) by a third party during the
Term of this Agreement, then, to the extent necessary for the Receiving Party to
comply with the terms of this Section 7, the Receiving Party shall
-15-
<PAGE>
erect a "Chinese Wall" between the Receiving Party and its acquirer to preserve
the confidentiality of the Disclosing Party's Confidential Information to the
extent such Confidential Information is comprised of Gemini Proprietary
Materials (in the event that Gemini is the Disclosing Party) or Renaissance
Proprietary Materials (in the event that Renaissance is the Disclosing Party).
The Receiving Party will promptly report to the Disclosing Party any actual or
suspected violation of the terms of this Section 7 and will take all reasonable
further steps requested by the Disclosing Party to prevent, control or remedy
any such violation. Notwithstanding the foregoing, Gemini may disclose to its
Clients Licensed Methodologies constituting Confidential Information of
Renaissance, provided that (i) such disclosure is made in the ordinary course of
providing consulting services based on the Licensed Methodologies and (ii) to
the extent reasonably feasible, Gemini requires such Clients to maintain the
confidentiality of such methodologies.
(b) The obligations of the Receiving Party specified in paragraph (a) above
shall not apply, and the Receiving Party shall have no further obligations, with
respect to any Confidential Information to the extent the Receiving Party can
demonstrate that such Confidential Information:
(i) is generally known to the public at the time of disclosure or
becomes generally known through no wrongful act on the part of the Receiving
Party;
(ii) is in the Receiving Party's possession at the time of disclosure
other than as a result of the Receiving Party's breach of any legal obligation;
(iii) becomes known to the Receiving Party through disclosure by
sources other than the Disclosing Party having the legal right to disclose such
Confidential Information;
(iv) is independently developed by the Receiving Party without
reference to or reliance upon the Confidential Information; or
(v) is required to be disclosed by the Receiving Party to comply with
applicable laws or governmental regulations, provided that the Receiving Party
provides prior written notice of such disclosure to the Disclosing Party and
takes reasonable and lawful actions to avoid and/or minimize the extent of such
disclosure.
(c) The Receiving Party shall, upon the termination of this Agreement or
the request of the Disclosing Party, return to the Disclosing Party all
drawings, documents and other tangible manifestations of Confidential
Information
-16-
<PAGE>
received by the Receiving Party pursuant to this Agreement (and all copies and
reproductions thereof).
(d) The parties agree to jointly use all reasonable efforts to ensure that,
to the extent permitted by law, neither the identity of their Clients or any
confidential Client information obtained during the course of performing a Joint
Service Offering will be disclosed to the public as a result of Renaissance's
having consummated an initial public offering of its securities (an "IPO")
without the consent of such Client(s). These efforts may include, without
limitation, structuring Joint Service Offerings so that Renaissance is a
subcontractor to Gemini or otherwise not in privity with Clients and/or
disclosing to the Client prior to the commencement of the Joint Service Offering
that the IPO has occurred.
8. Intellectual Property.
---------------------
(a) Renaissance hereby grants to Gemini, and Gemini hereby accepts, a non-
exclusive, non-transferable (except as provided herein) license (which shall
become perpetual upon satisfaction of the terms set forth in Section 8(d)),
subject to the terms and conditions of this Agreement, to use the Licensed
Methodologies (i) solely in connection with Joint Service Offerings during the
Term and (ii) in the ordinary course of its consulting business thereafter,
subject to Section 8(d); provided, that to the extent any portion of the
Licensed Methodologies is not owned exclusively by Renaissance, this Section
8(a) shall grant rights to Gemini in such portion only to the extent Renaissance
possesses the authority to grant sublicenses thereof. Gemini shall not have the
right to sell, license, sublicense, convey, transfer, dispose of or use the
Licensed Methodologies except in connection with Joint Service Offerings and as
otherwise expressly provided herein. Gemini shall be permitted to sublicense the
Licensed Methodologies to its Clients for their internal purposes only.
(b) Except as otherwise provided in Section 11(e), in consideration of the
reduction in Gemini Guaranteed Bookings provided for in this Agreement from
those provided for in the Original Agreement and the methodology licenses
granted herein for use of the Licensed Methodologies during each Period of the
third, fourth and fifth years of the Term, Gemini shall pay Renaissance a
license fee for each Period as set forth below on or before the date specified:
Period Covered Payment Date Payment
-------------- ------------ -------
November 1, 1996 - April 30, 1997 November 1, 1996 (or, if $1,000,000
later, the Effective Date)
May 1, 1997 - October 31, 1997 May 1, 1997 $1,000,000
November 1, 1997 - April 30, 1998 November 1, 1997 $1,000,000
-17-
<PAGE>
May 1, 1998 - October 31, 1998 May 1, 1998 $1,000,000
November 1, 1998 - April 30, 1999 November 1, 1998 $1,000,000
In addition to any other remedies available to Renaissance hereunder, if Gemini
fails to pay any amounts after payment is due, (i) Gemini shall, within 30 days
of the due date therefor, cease making use of any of the Licensed Methodologies
(other than any use (A) authorized pursuant to existing agreements with Gemini
Clients in connection with engagements completed prior to the date such payment
is due and (B) required to complete engagements with Gemini Clients pursuant to
agreements entered into with such Clients prior to the date such payment is due,
in each case only to the extent required pursuant to the terms of such
agreements as in effect on the date such payment is due) until such time as such
amounts have been paid in full to Renaissance, and (ii) Gemini shall pay
Renaissance a late payment charge equal to 10% per annum, compounded monthly, on
such unpaid amounts (or, if less, the maximum amount permitted by law). The
parties acknowledge and agree that the payment obligations of Gemini pursuant to
this Section 8(b) shall be unconditional (except in the event that this
Agreement is validly terminated pursuant to Section 11) and not in any way
related or conditioned upon the performance by Renaissance of any services or
the delivery by Renaissance of any deliverables hereunder.
(c) In consideration of the licenses granted to Gemini pursuant to Section
8(a), the services provided by Renaissance pursuant to Section 3(b) and the
training and other costs to be incurred by Renaissance in connection therewith,
and in addition to the license fees provided for in paragraph (b) above, during
the first three years of the Term, except as otherwise provided in Section
11(e), Gemini shall pay to Renaissance an annual fee of $2,000,000. Such fee
shall be paid in quarterly installments of $500,000 on November 1, February 1,
May 1 and August 1 of each year during the first three years of the Term.
Renaissance will be paid its reasonable out-of-pocket expenses for such services
incurred during the fourth year of the Term. Renaissance and Gemini shall agree
on the nature and scope of, and a timetable for, the services to be provided by
Renaissance to Gemini in connection with the fees payable under this Section
8(c) during the third year of the Term, provided that such timetable shall
provide for the completion of such services by no later than the dates set forth
below with respect to the invoice dates listed opposite such dates:
Work to be
Invoice Date Completed By
------------ ------------
November 1, 1996 (or, if September 30, 1996
later, the Effective Date)
February 1, 1997 December 31, 1996
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<PAGE>
May 1, 1997 March 28, 1997
August 1, 1997 June 27, 1997
Payment for services or products provided by Renaissance pursuant to this
Section 8(c) during the third year of the Term shall be subject to acceptance of
deliverables by the Gemini sponsor for such project or, if no such Gemini
sponsor is designated, by the Joint Venture Operating Group, which approval
shall not be unreasonably withheld or delayed.
(d) Following the expiration or valid termination of this Agreement in
accordance with Section 11, and notwithstanding any payment obligations of
Gemini under Sections 3(d)(i), 8(b), 8(c) or 11(c), the licenses granted to
Gemini pursuant to Section 8(a) shall be fully paid and perpetual; provided,
however, that Gemini shall not have the right to use the Renaissance name in
connection with its use of the Licensed Methodologies following the expiration
or termination of this Agreement.
(e) All right, title and interest in and to all Gemini Proprietary
Materials shall be owned exclusively by Gemini. All right, title and interest
(subject to the licenses granted herein) in and to all Renaissance Proprietary
Materials shall be owned exclusively by Renaissance.
(f) Except as otherwise agreed upon in advance and in writing by
Renaissance and Gemini, all right title and interest in and to all methodolo-
gies, attendant tools, technologies, software, inventions, discoveries and
proprietary information, all enhancements thereto, and all materials, ideas,
concepts, knowledge and techniques developed or conceived solely by personnel of
Renaissance or Gemini after the date hereof and prior to the expiration or
termination of the Term (a "Development") shall be owned exclusively by such
party. All right, title and interest in and to all Developments developed or
conceived jointly by Renaissance and Gemini shall be owned jointly by such
parties and, except for Developments which constitute Joint Software Products,
may be used for any purpose by Renaissance or Gemini without any duty to account
to the other. Any Development shall be added to the schedule of Renaissance
Proprietary Materials and/or Gemini Proprietary Materials, as the case may be.
(g) Each party hereby grants to the other, and the other party hereby
accepts, a perpetual, non-exclusive, royalty free worldwide license, with the
right to sublicense, to any and all Developments owned by such party pursuant to
Section 8(f) to the extent relating to all or any portion of the Licensed
Methodologies
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(in the case of Developments by Gemini) and the Gemini Proprietary Materials (in
the case of Developments by Renaissance).
(h) Each of Renaissance and Gemini shall have an option to license
from the other (on a non-exclusive basis and on the most favorable commercial
terms made available from time to time by the other party) any Solely-Owned
Software Product developed by the other party during the Term; provided, that to
the extent any portion of a Solely-Owned Software Product is not owned
exclusively by the other party, this Section 8(h) shall grant rights to
Renaissance or Gemini in such portion only to the extent the other party
possesses the authority to grant sublicenses thereof.
(i) In the event that Renaissance and Gemini agree to jointly develop
a Joint Software Product during the Term of this Agreement, such parties shall,
prior to the development thereof, agree on the allocation of development and
maintenance costs in connection with such Joint Software Product and the sharing
of royalties and revenues payable by third parties in connection therewith.
(j) Notwithstanding any other provision of this Section 8, if the
prime contract with a Client in any Joint Service Offering requires that the
Client own any Development, the Client shall have all rights granted to it under
the contract and Gemini and Renaissance will share in any residual rights in
accordance with this Section 8.
(k) Renaissance hereby represents and warrants to Gemini as of the
date hereof that since the Commencement Date, Renaissance has not sold,
transferred, conveyed, assigned, licensed, sublicensed, disposed, encumbered or
restricted in any way so as to limit in any material respect the uses of the
licenses to the Licensed Methodologies to Gemini under this Agreement, any
right, title or interest of Renaissance in and to any of the Licensed
Methodologies. This representations shall survive the termination of the
Agreement for a period of five years. Renaissance further covenants that after
the date hereof it shall not sell, transfer, convey, assign, license,
sublicense, dispose, encumber or restrict in any way so as to limit in any
material respect the uses of the licenses to the Licensed Methodologies to
Gemini under this Agreement, any right, title or interest of Renaissance in and
to any of the Licensed Methodologies.
9. Infringement Indemnification.
----------------------------
(a) If notified promptly in writing of any claim or action (and all
prior related claims) asserted or brought against a party (the "Indemnified
Party") based on a claim that any material furnished by the other party (the
"Indemnifying Party") in connection with a Joint Service Offering infringes any
valid United States patent, trademark, copyright or trade secret, the
Indemnifying Party shall defend
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<PAGE>
such claim or action at its expense and pay all costs and damages finally
awarded in such action or settlement which are attributable to such claim. The
Indemnifying Party shall have sole control of the defense of any such claim or
action and all negotiations for its settlement or compromise. The Indemnified
Party shall not be entitled to participate in such defense except at its own
expense. The Indemnified Party shall cooperate fully with the Indemnifying Party
in the defense, settlement or compromise of any such claim or action. In the
event that a final injunction is obtained against the Indemnified Party's use of
material supplied by the Indemnifying Party by reason of infringement of a valid
United States patent, copyright or trade secret, or if in the opinion of the
Indemnifying Party such material is likely to become the subject of a successful
claim of such infringement, the Indemnifying Party may, at its option and
expense, (i) procure for the Indemnified Party the right to continue using such
material, (ii) replace or modify such material so that it becomes non-infringing
(so long as its functionality is essentially unchanged), or (iii) terminate the
use of such material.
(b) Notwithstanding the foregoing, the Indemnifying Party shall have
no liability to the Indemnified Party to the extent that any infringement or
claim thereof is based upon (i) use of any material supplied by the Indemnifying
Party in combination with equipment, software or other material not supplied by
the Indemnifying Party where the material supplied by the Indemnifying Party
would not itself be infringing, (ii) compliance with designs, specifications or
instructions of the Indemnified Party, (iii) use of any material supplied by the
Indemnifying Party in an application or environment for which such material was
not designed or not contemplated hereunder, (iv) modification of such material
by anyone other than the Indemnifying Party, (v) any claims of infringement of
any patent, copyright or trade secret in which the Indemnified Party or any
Affiliate or Client of the Indemnified Party has an interest or license, or (vi)
use of any Developments developed by the personnel of the Indemnified Party.
THE FOREGOING INDEMNIFICATION PROVISIONS STATE THE ENTIRE LIABILITY OF THE
INDEMNIFYING PARTY WITH RESPECT TO INFRINGEMENT OR ALLEGED INFRINGEMENT OF
PATENTS, COPYRIGHTS, TRADEMARKS, TRADE SECRETS AND OTHER INTELLECTUAL PROPERTY
OR PROPRIETARY RIGHTS BY MATERIALS SUPPLIED BY THE INDEMNIFYING PARTY HEREUNDER.
10. Promotional Materials; Trademarks.
---------------------------------
(a) Except to the extent expressly provided in this Section 10, all
Promotional Materials which include or make reference to the name or any
Proprietary Mark of the other party shall be submitted to be approved by such
other party in advance of its use (which approval shall not be unreasonably
withheld).
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(b) Renaissance shall be authorized to include in its Promotional
Materials a statement that it is engaged in Joint Service Offerings with Gemini,
and Gemini shall be authorized to include in its Promotional Materials a
statement that it is engaged in Joint Service Offerings with Renaissance.
(c) Gemini shall include the Renaissance name in all Promotional
Materials which makes reference to all or any aspect of any Joint Service
Offering and otherwise use its best efforts to promote the Renaissance name and
business with Gemini's Active and Prospective Clients. Renaissance shall include
the Gemini name in all Promotional Materials which make reference to all or any
aspect of any Joint Service Offering and otherwise use its best efforts to
promote the Gemini name and business with Renaissance's Active and Prospective
Clients.
(d) Gemini and Renaissance will cooperate in marketing efforts
relating to Joint Service Offerings, and each shall also be free to conduct
whatever independent marketing efforts (relating to Joint Service Offerings or
otherwise) it desires so long as they are not inconsistent with the provisions
of this Agreement.
(e) Neither party shall use any Proprietary Mark of the other party in
connection with any business conducted by such party other than in connection
with any Joint Service Offering. Each party agrees that any use of the
Proprietary Marks of the other party authorized pursuant to this Agreement shall
not create in its favor any right, title or interest therein. Each party agrees
that it will not use, without the other party's prior written consent, any mark
which is likely to be similar to or confused with the other party's Proprietary
Marks.
(f) Any articles or other materials submitted for publication by
Gemini personnel to business or academic journals based on or otherwise relating
to all or any part of the Renaissance Proprietary Materials shall be credited to
the appropriate Renaissance principal(s) in a manner mutually agreed upon by the
parties. Gemini shall cause all such materials to be submitted to Renaissance
for review and approval by the appropriate principal(s) not less than 30 days
prior to the date on which such materials are proposed to be submitted for
publication.
11. Term; Termination.
-----------------
(a) The Term of this Agreement shall commence on the date hereof and
shall remain in effect until the first to occur of any of the following:
(i) if a party shall have materially breached this Agreement
(other than the breaches referred to in Section 11(a)(ii)) and shall have failed
to cure such material breach within 60 days after notice of such breach from the
non-breaching party;
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<PAGE>
(ii) if (A) Gemini shall have breached any of its payment or
Bookings Deficiency obligations set forth in Section 8(b), 8(c) or 3(d) of this
Agreement or (B) Renaissance shall have breached any of its payment obligations
set forth in Section 3(b)(iv) or 3(d)(ii), and in either such case such party
shall have failed to cure such breach within 15 days after notice of such breach
from the non-breaching party;
(iii) if a Bankruptcy Event shall have occurred with respect to a
party and the other party shall have given notice of its election to terminate
this Agreement pursuant to this Section 11(a)(iii) within 60 days after it shall
have learned of such Bankruptcy Event on the part of the other party;
(iv) at any time, upon the mutual agreement of both Renaissance
and Gemini;
(v) at any time during the 30-day period after Gemini becomes
aware of the consummation of a transaction resulting in a Change in Control of
Renaissance, at the election of Gemini; and
(vi) on the fifth anniversary of the Commencement Date.
(b) The provisions of Sections 3(d), 3(f), 6, 7, 8, 9, 11(b), 11(c),
11(d) and 11(e) shall survive any termination of this Agreement.
(c) Neither party shall be entitled to monetary damages or any other
remedy for the breach of this Agreement by the other party hereto, other than
the remedy of termination provided for in paragraph (a)(i) or (ii) above, except
to the extent such breach relates to (i) the obligation of Renaissance to make
payments to Gemini under Section 3(b)(iv) or 3(d)(ii), (ii) the obligation of
Gemini, subject to Section 11(e), to satisfy the Gemini Bookings Deficiency or
other payment obligations of Gemini under Section 3(d), 8(b) or 8(c), or (iii) a
breach by Gemini of any of its obligations (other than any of Gemini's payment
obligations which are the subject of clause (ii) of this Section 11(c)) relating
to the Licensed Methodologies set forth in Section 8. Notwithstanding the
foregoing, nothing in this Section 11 shall be construed as limiting in any way
the right of a party to seek injunctive relief with respect to any actual or
threatened breach of this Agreement, including without limitation an actual or
threatened breach of Section 3(d), 6, 7, 8 or 9, from a court of competent
jurisdiction. Furthermore, notwithstanding the foregoing, the parties
acknowledge that if this Agreement is validly terminated prior to the fifth
anniversary of the Commencement Date in accordance with Section 11(a)(i),
11(a)(ii), 11(a)(iii) or 11(a)(v), Gemini's damages will be difficult to
calculate with precision. Accordingly, the parties agree that, in the event of
such a termination, as liquidated damages and not a penalty, Renaissance shall
promptly pay to Gemini the applicable Termination Fee. The parties further agree
that, in light of Gemini's investment in
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performing its obligations under this Agreement, it is fair and reasonable that
(A) such termination fee should be paid to Gemini and (B) Gemini shall not pay
any termination fee to Renaissance in the event that Renaissance elects to
terminate this Agreement (it being understood that nothing set forth in clause
(B) of this Section 11(c) shall affect Gemini's obligation with respect to any
other fees or payments otherwise due pursuant to the terms of this Agreement).
(d) Notwithstanding anything to the contrary set forth herein, if
prior to the termination of this Agreement, Renaissance and Gemini shall have
jointly agreed with each other on the terms for a Joint Service Offering to be
provided by the parties to a Client and such Client shall have accepted such
terms, then the parties agree to continue to work together following the
termination of this Agreement, in accordance with the terms of Sections 3(a),
3(b), 3(c), 3(f), 4 and 5 hereof, to complete such Joint Service Offering for
such Client.
(e) Notwithstanding any provision to the contrary herein, in no event
shall Gemini be liable to Renaissance upon a valid termination of this Agreement
by Gemini under Section 11(a)(i), 11(a)(ii)(B), 11(a)(iii) or 11(a)(v) for any
(i) payment obligation under Section 3(d)(i) unless Renaissance has sent Gemini
an invoice therefor prior to such termination in accordance with the terms of
Section 3(d)(i), (ii) license fee payable under Section 8(b) on any payment date
set forth therein if this Agreement is so terminated prior to any such payment
date, and (iii) service fee or out-of-pocket expense under Section 8(c) payable
in respect of completed work if the Agreement is so terminated prior to the
applicable invoice date for such work as set forth in Section 8(c). In addition,
and notwithstanding any other provision to the contrary herein, the parties
agree that:
(A) in the event that Gemini validly terminates this Agreement
pursuant to Section 11(a)(i), 11(a)(ii)(B), 11(a)(iii) or 11(a)(v), Gemini shall
pay to Renaissance (I) all amounts for which Renaissance has sent Gemini an
invoice prior to such termination in accordance with the terms of Section
3(d)(i), (II) all license fees payable under Section 8(b) with respect to any
payment date set forth therein which has occurred on or prior to the date of
such termination, and (III) all service fees and out-of-pocket expenses under
Section 8(c) payable in respect of work completed under such Section to the
extent that the applicable invoice date for such work, as set forth in Section
8(c), occurs on or prior to the date of such termination;
(B) in the event that Renaissance validly terminates this Agreement
pursuant to Section 11(a)(i), 11(a)(ii)(A) or 11(a)(iii) and, on the date of
such termination, no Bookings Deficiency exists with respect to any Period or
Periods ended prior to the date of such termination, Gemini shall pay to
Renaissance (I) all amounts for which Renaissance has sent Gemini an invoice
prior to such termination in accordance with the terms of Section 3(d)(i), (II)
all license fees payable under Section 8(b) with respect to any payment date set
forth therein which has occurred on
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or prior to the date of such termination, and (III) all service fees and out-of-
pocket expenses under Section 8(c) payable in respect of work completed under
such Section to the extent that the applicable invoice date for such work, as
set forth in Section 8(c), occurs on or prior to the date of such termination;
(C) in the event that Renaissance validly terminates this Agreement
pursuant to Section 11(a)(i), 11(a)(ii)(A) or 11(a)(iii) and, on the date of
such termination, a Bookings Deficiency exists with respect to any Period or
Periods ended prior to the date of such termination, Gemini shall pay to
Renaissance (I) an amount equal to 25% of such Bookings Deficiencies as of the
date of such termination, (II) all amounts for which Renaissance has sent Gemini
an invoice prior to such termination in accordance with the terms of Section
3(d)(i), (III) all license fees payable under Section 8(b) with respect to any
payment date set forth therein which has occurred on or prior to the date of
such termination, and (IV) all service fees and out-of-pocket expenses under
Section 8(c) payable in respect of work completed under such Section to the
extent that the applicable invoice date for such work, as set forth in Section
8(c), occurs on or prior to the date of such termination;
(D) in no event shall Renaissance be liable to Gemini upon a valid
termination of this Agreement by either party pursuant to Section 11(a) for any
fee payable under Section 3(b)(iv) on any payment date set forth therein if this
Agreement is terminated prior to any such payment date; and
(E) in all events, Gemini shall pay to Renaissance following any
termination of this Agreement (I) amounts collected by Gemini from Clients with
respect to services provided by Renaissance to such Clients prior to the date of
such termination and (II) amounts payable in respect of any services performed
by Renaissance for Gemini (other than any services performed by Renaissance for
Gemini pursuant to Section 8(c)) prior to the date of such termination.
12. Miscellaneous.
-------------
(a) Any and all notices, elections, consents or demand permitted or
required to be made under this Agreement shall be in writing, signed by the
party giving such notice, election, consent or demand, and shall be delivered
personally, sent by United States registered or certified mail, return receipt
requested, or delivered by Federal Express or another reputable U.S. overnight
courier to the other party at its address set forth below, or at such other
address as may be supplied by written notice given in conformity with the terms
of this Section 12(a).
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If given to Renaissance:
Renaissance Solutions, Inc.
Lincoln North
55 Old Bedford Road
Lincoln, Massachusetts 01773
Attention: David A. Lubin
With a copy to:
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
Attention: David E. Redlick, Esq.
If given to Gemini:
Gemini Consulting, Inc.
25 Airport Road
Morristown, New Jersey 07960
Attention: Gabriel Bresler
With a copy to:
Gemini Consulting, Inc.
25 Airport Road
Morristown, New Jersey 07960
Attention: Michael R. Chayet, Esq.
The date of personal delivery, the date that is three business days following
the date of mailing or the date that is one business day following deposit with
an overnight courier service, as the case may be, shall be the date of such
notice.
(b) This Agreement shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns; provided,
however, that no party hereto may assign any of its rights or obligations under
this Agreement without the prior written consent of the other party.
(c) This Agreement may be amended at any time or from time to time by
a written instrument duly executed by both Renaissance and Gemini.
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<PAGE>
(d) The failure of any party to this Agreement to insist upon strict
performance of a covenant or obligation hereunder, irrespective of the length of
time for which such failure continues, shall not constitute a waiver of such
party's right to demand strict compliance in the future. No consent or waiver,
express or implied, to or of any breach or default in the performance of any
obligation hereunder shall constitute a consent or waiver to or of any other
breach or default in the performance of the same or any other obligation
hereunder.
(e) Except as otherwise expressly provided for herein or agreed to in
writing by Renaissance and Gemini, each party will pay all costs and expenses
incurred in the performance of its obligations under this Agreement.
(f) This Agreement, together with the Schedules hereto, constitutes
the full and complete agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements, understandings,
representations or warranties with respect to the subject matter hereof, whether
written or oral. The Schedules attached hereto are incorporated herein by this
reference.
(g) Titles or captions of Sections contained in this Agreement are
inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Agreement or the intent of
any provision hereof.
(h) This Agreement may be executed in a number of counterparts, all of
which together shall for all purposes constitute one Agreement, binding upon
both parties notwithstanding that both parties have not signed the same
counterpart.
(i) This Agreement and the rights and obligations of the parties
hereunder shall be governed by and interpreted, construed and enforced in
accordance with the internal laws of the State of Delaware without reference to
the conflicts of laws provision thereof.
(j) The provisions of this Agreement are solely for the benefit of the
parties hereto and shall not confer any rights of any nature on any third party.
(k) If any provision of this Agreement shall be declared invalid for
any reason whatsoever, that provision shall not affect any other provision of
this Agreement, which shall remain in full force and effect; and to this end,
the provisions of this Agreement are hereby declared severable.
(l) Nothing contained in this Agreement shall be deemed to constitute
either party as the agent or representative of the other party, or both parties
as joint venturers or partners for any purpose.
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(m) The parties hereto represent that in the negotiation and drafting
of this Agreement Renaissance and Gemini have been represented by and have
relied upon the advice of counsel. The parties affirm that their counsel have
had a substantial role in the drafting and negotiation of this Agreement and,
therefore, the rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement or any Schedule attached hereto.
(n) This Agreement shall become effective from and after the delivery
of stock certificates (or the equivalent) and payment therefor on the Closing
Date (as such term is defined in the Underwriting Agreement to be entered into
by or on behalf of Gemini, Renaissance and the underwriters and selling
stockholders named therein in connection with an underwritten public offering
(the "Gemini Offering") for the sale of the shares of Renaissance Common Stock
issuable to Gemini pursuant to the Common Stock Purchase Warrants and Common
Stock Purchase Options dated April 11, 1995 among Gemini, Renaissance and
certain of the Stockholders) (such date being referred to in this Agreement as
the "Effective Date"); provided, however, that this Agreement shall be void and
of no further force or effect in the event that the Closing Date has not
occurred by the close of business on December 24, 1996. Unless and until this
Agreement becomes effective in accordance with the prior sentence, the Original
Agreement shall continue to be in full force and effect.
(o) Gemini hereby acknowledges and agrees that no consent or waiver
from Gemini is or shall be necessary or required for Renaissance to (i) proceed
with the filing of any registration statement for, or the offer, sale or
issuance of any Additional Securities in connection with, any public offering of
capital stock by Renaissance or (ii) comply with the reporting, disclosure and
other obligations imposed upon public companies pursuant to the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as amended (the
matters referred to in these clauses (i) and (ii) being hereinafter referred to
as "Public Company Activities"); provided, that nothing set forth in this
sentence shall limit any claim or remedy available to Gemini under this
Agreement as the result of any breach of the Agreement arising out of or
relating to Public Company Activities (it being agreed by Gemini, however, that
there shall be no such breach solely as a result of the occurrence of Public
Company Activities in and of itself).
(p) The Stockholders have entered into this Agreement for the sole
purpose of consenting to the amendment and restatement of the Original
Agreement, and shall not have any further rights, responsibilities or
obligations hereunder from and after the Effective Date.
(q) Any disputes between the parties relating to whether a party is
entitled to or has effectively terminated this Agreement pursuant to Section
11(a)
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(other than Section 11(a)(v)) hereof or any election by Gemini to exercise its
right, to which Renaissance hereby agrees, to determine whether any person or
entity is a "Gemini Competitor" within the meaning set forth in Section 1(o)
hereof shall be settled and finally determined exclusively by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, subject to the provisions of this Section 12(q). Any arbitration
pursuant to this Section 12(q) shall be conducted by a single arbitrator, who
shall be a lawyer who has previously served as a federal judge or as a judge in
a state trial or appellate court of general jurisdiction (a "Former Judge")
selected by agreement of the parties. If within 60 days of the receipt by one
party from the other of written notice of a dispute governed by this Section
12(q) the parties have not selected an arbitrator who has agreed to serve, the
arbitrator shall be selected in accordance with Rule 13 of the Commercial
Arbitration Rules of the American Arbitration Association, provided that the
American Arbitration Association shall be instructed that a majority of the
names on the list of potential arbitrators it submits to the parties shall be of
Former Judges, and in the event the appointment cannot be made from the
submitted lists in accordance with Rule 13, the American Arbitration Association
shall appoint a Former Judge. The parties shall bear equally the fees of the
arbitrator. Each party shall be entitled to assert in the arbitration such legal
and equitable claims, counterclaims and defenses as would otherwise be available
to such party in civil litigation. In addition, the parties shall be permitted
to engage in discovery, present written briefs to the arbitrator and present
evidence and witnesses to the arbitrator pursuant to the Federal Rules of Civil
Procedure, all as interpreted by the arbitrator. The arbitrator may proceed to a
resolution notwithstanding the failure of a party to participate in the
proceedings. The location of any such arbitration shall be at a site mutually
agreeable to the parties within Washington, D.C. The parties shall instruct the
arbitrator to structure the arbitration in a manner so as to result in a final
determination by the arbitrator on a date no later than 12 months following the
date of the event giving rise to the arbitration and to allow, at the request of
either party, at least 90 days for pre-hearing discovery. A judgment upon the
award rendered in any such arbitration shall be final and binding upon the
parties and may be entered in any court having jurisdiction thereof.
Notwithstanding the foregoing, nothing in this Section 12(q) shall be construed
as limiting, expanding or otherwise affecting in any way the right of a party to
seek injunctive relief with respect to any actual or threatened breach of this
Agreement, including without limitation an actual or threatened breach of
Section 3(d),6,7,8 or 9, from a court of competent jurisdiction.
(r) Gemini hereby consents to the sale by the Stockholders of up to a
total of 225,000 shares of Renaissance Common Stock in the Gemini Offering and
hereby waives any and all provisions of the Original Agreement in connection
therewith.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as a
sealed instrument effective as of the date first set forth above.
RENAISSANCE SOLUTIONS, INC.
By: /s/ David A. Lubin
------------------------------------------
Title: Co-Chairman, Treasurer and Director
GEMINI CONSULTING, INC.
By: /s/ Jean-Pierre Durant des Aulnois
-----------------------------------
Title: Chief Financial Officer
The undersigned hereby enter into this Agreement solely for the
purposes of Section 12(p) hereof:
/s/ Melissa E. Norton
---------------------------------------
Melissa E. Norton
/s/ Harry M. Lasker
---------------------------------------
Harry M. Lasker
THE HARRY M. LASKER CHILDREN'S TRUST
By: /s/ Diane Korzenik
------------------------------------------------
Diane Korzenik, as trustee and not individually
and
By: /s/ Abigail C. Housen
------------------------------------------------
Abigail C. Housen, as Trustee and not individually
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/s/ David A. Lubin
--------------------------------
David A. Lubin
THE DAVID A. LUBIN CHILDREN'S TRUST
By: /s/ Jeffrey Huvelle
---------------------------------------------------
Jeffrey Huvelle, as Trustee and not individually
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SCHEDULE A -- THE BALANCED SCORE CARD
<PAGE>
[LETTERHEAD OF HARVARD BUSINESS REVIEW]
================================================================================
THE BALANCED SCORECARD -
MEASURES THAT DRIVE
PERFORMANCE
by Robert S. Kaplan and David P. Norton
<PAGE>
================================================================================
Harvard Business Review
JANUARY-FEBRUARY 1992
Reprint Number
------------------------------------------------------
CHARLES F. KNIGHT EMERSON ELECTRIC: 92106
CONSISTENT PROFITS, CONSISTENTLY
------------------------------------------------------
ROBERT S. KAPLAN AND THE BALANCED SCORECARD- 92105
DAVID P. NORTON MEASURES THAT DRIVE PERFORMANCE
------------------------------------------------------
ROBERT H. SCHAFFER SUCCESSFUL CHANGE PROGRAMS BEGIN WITH 92108
AND HARVEY A. THOMSON RESULTS
------------------------------------------------------
ALAN M. WEBBER JAPANESE-STYLE ENTREPRENEURSHIP: 92109
AN INTERVIEW WITH SOFTBANK'S CEO, MASAYOSHI SON
------------------------------------------------------
HANS M. HINTERHUBER ARE YOU A STRATEGIST OR JUST A MANAGER? 92104
AND WOLFGANG POPP
------------------------------------------------------
JOHN MOORE BRITISH PRIVATIZATION - 92107
TAKING CAPITALISM TO THE PEOPLE
======================================================
HBR CASE STUDY
TOM EHRENFELD THE CASE OF THE UNPOPULAR PAY PLAN 92102
------------------------------------------------------
FOUR CORNERS
HERBERT HENZLER MANAGING THE MERGER: A STRATEGY FOR 92103
THE NEW GERMANY
------------------------------------------------------
IN QUESTION
WILLIAM TAYLOR CRIME? GREED? BIG IDEAS? WHAT WERE
THE '80s ABOUT? 92110
------------------------------------------------------
FIRST PERSON
REGINALD D. DICKSON THE BUSINESS OF EQUAL OPPORTUNITY 92101
------------------------------------------------------
<PAGE>
The scorecard tracks the key elements of a company's strategy from continuous
improvement and partnerships to teamwork and global scale.
The Balanced Scorecard -- Measures That Drive Performance
by Robert S. Kaplan and David P. Norton
What you measure is what you get. Senior executives understand that their
organization's measurement system strongly affects the behavior of managers and
employees. Executives also understand that traditional financial accounting
measures like return-on-investment and earnings-per-share can give misleading
signals for continuous improvement and innovation--activities today's
competitive environment demands. The traditional financial performance measures
worked well for the industrial era, but they are out of step with the skills and
competencies companies are trying to master today.
- --------------------------------------------------------------------------------
The balanced scorecard is like the dials in an airplane cockpit: It gives
managers complex information at a glance.
- --------------------------------------------------------------------------------
As managers and academic researchers have tried to remedy the inadequacies of
current performance measurement systems, some have focused on making financial
measures more relevant. Others have said, "Forget the financial measures.
Improve operational measures like cycle time and defect rates; the financial
results will follow." But managers should not have to choose between financial
and operational measures. In observing and working with many companies, we have
found that senior executives do not rely on one set of measurements to the
exclusion of the other. They realize that no single measure can provide a clear
performance target or focus attention on the critical areas of the business.
Managers want a balanced presentation of both financial and operational
measures.
During a year-long research project with 12 companies at the leading edge of
performance measurement, we devised a "balanced scorecard", a set of measures
that gives top managers a fast but comprehensive view of the business. The
balanced scorecard includes financial measures that tell the results of actions
already taken. And it complements the financial measures with operational
measures on customer satisfaction, internal processes, and the organization's
innovation and improvement activities--operational measures that are the drivers
of future financial performance.
- --------------------------------------------------------------------------------
Robert S. Kaplan is the Arthur Lowes Dickinson Professor of Accounting at the
Harvard Business School. David P. Norton is president of Nolan, Norton &
Company, Inc., a Massachusetts-based information technology consulting firm he
cofounded.
HARVARD BUSINESS REVIEW Copyright(C) 1991 by the President and
January-February 1992 Fellows of Harvard College
<PAGE>
Think of the balanced scorecard as the dials and indicators in an airplane
cockpit. For the complex task of navigating and flying an airplane, pilots need
detailed information about many aspects of the flight. They need information on
fuel, air speed, altitude, bearing, destination, and other indicators that
summarize the current and predicted environment. Reliance on one instrument can
be fatal. Similarly, the complexity of managing an organization today requires
that managers be able to view performance in several areas simultaneously.
The balanced scorecard allows managers to look at the business from four
important perspectives. [See the exhibit "The Balanced Scorecard Links
Performance Measures."] It provides answers about basic questions:
[_] How do customers see us? (customer perspective)
[_] What must we excel at? (internal perspective)
[_] Can we continue to improve and create value? (innovation and learning
perspective)
[_] How do we look to shareholders? (financial perspective)
While giving senior managers information from four different perspectives,
the balanced scorecard minimizes information overload by limiting the number
of measures used. Companies rarely suffer.
The Balanced Scorecard Links Performance Measures
[GRAPHIC APPEARS HERE]
HARVARD BUSINESS REVIEW January-February 1992
<PAGE>
from having too few measures. More commonly, they keep adding new measures
whenever an employee or a consultant makes a worthwhile suggestion. One manager
described the proliteration of new measures at his company as its "kill another
tree program." The balanced scorecard forces managers to focus on the handful
of measures that are most critical.
Several companies have already adopted the balanced scorecard. Their early
experiences using the scorecard have demonstrated that it meets several
managerial needs. First, the scorecard brings together, in a single management
report, many of the seemingly disparate elements of a company's competitive
agenda: becoming customer oriented, shortening response time, improving quality,
emphasizing teamwork, reducing new product launch times, and managing for the
long term.
Second, the scorecard guards against suboptimization. By forcing senior
managers to consider all the important operational measures together, the
balanced scorecard lets them see whether improvement in one area may have been
achieved at the expense of another. Even the best objective can be achieved
badly. Companies can reduce time to market, for example, in two very different
ways: by improving the management of new product introductions or by releasing
only products that are incrementally different from existing products. Spending
on setups can be cut either by reducing setup times or by increasing batch
sizes. Similarly, production output and first-pass yields can rise, but the
increases may be due to a shift in the product mix to more standard, easy-to-
produce but lower-margin products.
We will illustrate how companies can create their own balanced scorecard
with the experiences of one semiconductor company - let's call it Electronic
Circuits Inc. ECI saw the scorecard as a way to clarify, simplify, and then
operationalize the vision at the top of the organization. The ECI scorecard was
designed to focus the attention of its top executives on a short list of
critical indicators of current and future performance.
Customer Perspective:
How Do Customers See Us?
Many companies today have a corporate mission that focuses on the customer.
"To be number one in delivering value to customers" is a typical mission
statement. How a company is performing from its customers' perspective has
become, therefore, a priority for top management. The balanced scorecard
demands that managers translate their general mission statement on customer
service into specific measures that reflect the factors that really matter to
customers.
Customers' concerns tend to fall into four categories: time, quality,
performance and service, and cost. Lead time measures the time required for the
- --------------------------------------------------------------------------------
The balanced scorecard shows how results are achieved: Did the cost of
setups fall because of shorter setup time or bigger batch sizes?
- --------------------------------------------------------------------------------
company to meet its customers' needs and existing products, lead time can be
measured from the time the company receives an order to the time it actually
delivers the product or service to the customer. For new products, lead time
represents the time to market, or how long it takes to bring a new product from
the product definition stage to the start of shipments. Quality measures the
defect level of incoming products as perceived and measured by the customer.
Quality could also measure on-time delivery, the accuracy of the company's
delivery forecasts. The combination of performance and service measures how the
company's product or service contribute to creating value for its customers.
To put the balanced scorecard to work, companies should articulate goals
for time, quality, and performance and service and then translate these goals
into specific measures. Senior managers of ECI, for example, established general
goals for customer performance; get standard products to market sooner, improve
customers' time to market, become customers' supplier of choice through
partnerships with them, and develop innovative products tailored to customer
needs. The managers translated these general goals into four specific goals and
identified an appropriate measure for each. (See the exhibit "ECI's Balanced
Scorecard.")
To track the specific goal of providing a continuous stream of attractive
solutions, ECI measured the percent of sales from new products and the percent
of sales from proprietary products. That information was available internally.
But certain other measures forced the company to get data from outside to assess
whether the company was achieving its goal of providing reliable, responsive
supply, ECI turned to its customers. When it found that each customer defined
"reliable, responsive supply" differently, ECI
HARVARD BUSINESS REVIEW January-February 1992
<PAGE>
BALANCED SCORECARD
- --------------------------------------------------------------------------------
Other Measures for the Customer's Perspective
- --------------------------------------------------------------------------------
A computer manufacturer wanted to be the competitive leader in customer
satisfaction, so it measured competitive rankings. The company got the rankings
through an outside organization hired to talk directly with customers. The
company also wanted to do a better job of solving customers' problems by
creating more partnerships with other suppliers. It measured the percentage of
revenue from third-party relationships.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The customers of a producer of very expensive medical equipment demanded
high reliability. The company developed two customer-based metrics for its
operations: equipment up-time percentage and mean-time response to a service
call.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A semiconductor company asked each major customer to rank the company
against comparable suppliers on efforts to improve quality, delivery time, and
price performance. When the manufacturer discovered that it ranked in the
middle, managers made improvements that moved the company to the top of
customers' rankings.
- --------------------------------------------------------------------------------
created a database of the factors as defined by each of its major customers. The
shift to external measures of performance with customrs led ECI to redefine "on
time" so it matched customers' expectations. Some customers defined "on-time" as
any shipment that arrived within five days of scheduled delivery; others used a
nine-day window. ECI itself had been using a seven-day window, which meant that
the company was not satisfying some of its customers and overachieving at
others. ECI also asked its top ten customers to rank the company as a supplier
overall.
Depending on customers' evaluations to define some of a company's
performance measures forces that company to view its performance through
customers' eyes. Some companies hire third parties to perform anonymous customer
surveys, resulting in a customer-driven report card. The J.D. Powers quality
survey, for example, has become the standard of performance for the automobile
industry, while the Department of Transportation's measurement of on-time
arrivals and lost baggage provides external standards for airlines.
Benchmarking procedures are yet another technique companies use to compare their
performance against competitors' best practice. Many companies have introduced
"best of breed" comparison programs; the company looks to one industry to find,
say, the best distribution system, to another industry for the lowest cost
payroll process, and then forms a composite of those best practices to set
objectives for its own performance.
In addition to measures of time, quality, and performance and service,
companies must remain sensitive to the cost of the products. But customers see
price as only one component of the cost they incur when dealing with their
suppliers. Other supplier-driven costs range from ordering, scheduling
delivery and paying for the materials; to receiving, inspecting, handling and
storing the materials; to the scrap, rework, and obsolescence caused by the
materials; and schedule disruptions (expediting and value of lost output) from
incorrect deliveries. An excellent supplier may charge a higher unit price for
products than other vendors but nonetheless be a lower cost supplier because it
can deliver defect-free products in exactly the right quantities at exactly the
right time directly to the production process and can minimize, through
electronic data interchange, the administrative hassles of ordering, invoicing,
and paying for materials.
INTERNAL BUSINESS PERSPECTIVE:
WHAT MUST WE EXCEL AT?
Customer-based measures are important, but they must be translated into
measures of what the company must do internally to meet its customers'
expectations. After all, excellent customer performance derives from processes,
decisions, and actions occurring throughout an organization. Managers used to
focus on thoses critical internal operations that enable them to satisfy
customer need. The second part of the balanced scorecard gives managers that
internal perspective.
The internal measures for the balanced scorecard should stem from the
business processes that have
74
HARVARD BUSINESS REVIEW January-February 1992
<PAGE>
the greatest impact on customer satisfaction - factors that affect cycle time,
quality, employee skills, and productivity, for example. Companies should also
attempt to identify and measure their company's core competencies, the critical
technologies needed to ensure continued market leadership. Companies should
decide what processes and competencies they must excel at and specify measures
for each.
Managers at ECI determined that submicron technology capability was critical
to its market position. They also decided that they had to focus on
manufacturing excellence, design productivity, and new product introduction. The
Company developed operational measures for each of these four internal business
goals.
To achieve goals on cycle time, quality, productivity, and cost, managers
must devise measures that are influenced by employees' actions. Since much of
the action takes place at the department and workstation levels, managers need
to decompose overall cycle time, quality, product, and cost measures to local
levels. That way, the measures link top management's judgment about key internal
processes and competencies to the actions taken by individuals that affect
overall corporate objectives. This linkage ensures that employees at lower
levels in the organization have clear targets for actions, decisions, and
improvement activities that will contribute to the company's overall mission.
Information systems play an invaluable role in helping managers disaggregate
the summary measures. When an unexpected signal appears on the balanced
scorecard, executives can query their information system to find the source of
the trouble. If the aggregate measure for on-time delivery is poor, for example,
executives with a good information system can quickly look behind the aggregate
measure until they can identify late deliveries, day by day, by a particular
plant to an individual customer.
If the information system is unresponsive, however, it can be the Achilles'
heel of performance measurement. Managers at ECI are currently limited by the
absence of such an operational information system. Their greatest concern is
that the scorecard information is not timely; reports are generally a week
behind the company's routine management meetings, and the measures have yet to
be linked to measures for managers and employees at lower levels of the
organization. The company is in the process of developing a more responsive
information system to eliminate this constraint.
INNOVATION AND LEARNING PERSPECTIVE:
CAN WE CONTINUE TO IMPROVE AND CREATE VALUE?
The customer-based and internal business product measures on the balanced
scorecard identify the paramaters that the company considers most important for
competitive success. But the targets for success keep changing. Intense
global competition requires that companies make continual improve-
OTHER MEASURES FOR THE INTERNAL BUSINESS PERSPECTIVE
- --------------------------------------------------------------------------------
One company recognized that the success of its TOM program depended on all
its employees internalizing and acting on the program's messages. The company
performed a monthly survey of 600 randomly selected employees to determine if
they were aware of TOM, had changed their behavior because of it, believed the
outcome was favorable, or had become missionaries to others.
- --------------------------------------------------------------------------------
Hewlett-Packard uses a metric called break even time (BET) to measure the
effectiveness of its product development cycle. BET measures the time required
for all the accumulated expenses in the product process development cycle
(including equipment acquisition) to be recovered by the product's contribution
margin (the selling price manufacturing, delivery, and selling expenses).
- --------------------------------------------------------------------------------
A major office products manufacturer, wanting to respond rapidly to changes
in the marketplace, set out to reduce cycle time by 50%. Lower levels of the
organization aimed to radically cut the times required to process customer
orders, order and receive materials from suppliers, move materials and products
between plants, produce and assemble products, and deliver products to
customers.
- --------------------------------------------------------------------------------
HARVARD BUSINESS REVIEW January-February 1992
<PAGE>
BALANCED SCORECARD
- --------------------------------------------------------------------------------
ments to their existing products and processes and have the ability to introduce
entirely new products with expanded capabilities.
A company's ability to innovate, improve, and learn ties directly to the
company's value. That is, only through the ability to launch new products,
create more value for customers, and improve operating efficiencies continually
can a company penetrate new markets and increase revenues and margins--in short,
grow and thereby increase shareholder value.
ECI's innovation measures focus on the company's ability to develop and
introduce standard products rapidly, products that the company expects will form
the bulk of its future sales. Its manufacturing improvement measure focuses on
new products; the goal is to achieve stability in the manufacturing of new
products rather than to improve manufacturing of existing products. Like many
other companies, ECI uses the percent of sales from new products as one of its
innovation and improvement measures. If sales from new products is trending
downward, managers can explore whether problems have arisen in new product
design or new product introduction.
In addition to measures on product and process innovation, some companies
overlay specific improvement goals for their existing processes. For example,
Analog Devices, a Massachusetts-based manufacturer of specialized
semiconductors, expects man-
- --------------------------------------------------------------------------------
ECI's Balanced Business Scorecard
- --------------------------------------------------------------------------------
==========================================
Financial Perspective
==========================================
GOALS MEASURES
------------------------------------------
Survive Cash flow
Succeed Quarterly sales growth
and operating income
by division
Prosper Increased market share
and ROE
------------------------------------------
==========================================
Customer Perspective
==========================================
GOALS MEASURES
------------------------------------------
New Percent of sales from new
products products
Percent of sales from
proprietary products
Responsive On-time delivery (defined
supply by customer)
Preferred Share of key accounts'
supplier purchases
Ranking by key accounts
Customer Number of cooperative
partnership engineering efforts
------------------------------------------
==========================================
Internal
Business Perspective
==========================================
GOALS MEASURES
------------------------------------------
Technology Manufacturing geometry
capability vs. competition
Manufacturing Cycle time
excellence Unit cost
Yield
Design Silicon efficiency
productivity Engineering efficiency
New product Actual introduction
introduction schedule vs. plan
------------------------------------------
==========================================
Innovation and
Learning Perspective
==========================================
GOALS MEASURES
------------------------------------------
Technology Time to develop next
leadership generation
Manufacturing Process time to maturity
learning
Product Percent of products that
focus equal 80% sales
Time to New product introduction
market vs. competition
------------------------------------------
- --------------------------------------------------------------------------------
76 HARVARD BUSINESS REVIEW January-February 1992
<PAGE>
agers to improve their customer and internal business process performance
continuously. The company estimates specific rates of improvement for on time
delivery, cycle time, defect rate, and yield.
Other companies, like Milliken & Co., require that managers make improvements
within a specific time period. Milliken did not want its "associates"
(Milliken's word for employees) to rest on their laurels after winning the
Baldrige Award. Chairman and CEO Roger Milliken asked each plant to implement a
"ten-four" improvement program: measures of process defects, missed deliveries,
and scrap were to be reduced by a factor of ten over the next four years. These
targets emphasize the role for continuous improvement in customer satisfaction
and internal business processes.
Financial Perspective: How Do We Look to Shareholders?
Financial performance measures indicate whether the company's strategy,
implementation, and execution are contributing to bottom-line improvement.
Typical financial goals have to do with profitability, growth, and shareholder
value. ECI stated its financial goals simply: to survive, to succeed, and to
prosper. Survival was measured by cash flow, success by quarterly sales growth
and operating income by division, and prosperity by increased market share by
segment and return on equity.
But given today's business environment, should senior managers even look at
the business from a financial perspective? Should they pay attention to short-
term financial measures like quarterly sales and operating income? Many have
criticized financial measures because of their well-documented inadequacies,
their backward-looking focus, and their inability to reflect contemporary value-
creating actions. Shareholder value analysis (SVA), which forecasts future cash
flows and discounts them back to a rough estimate of current value, is an
attempt to make financial analysis more forward looking. But SVA still is based
on cash flow rather than on the activities and processes that drive cash flow.
Some critics go much further in their indictment of financial measures. They
argue that the terms of competition have changed and that traditional financial
measures do not improve customer satisfaction, quality, cycle time, and employee
motivation. In their view, financial performance is the result of operational
actions, and financial success should be the logical consequence of doing the
fundamentals well. In other words, companies should stop navigating by financial
measures. By making fundamental improvements in their operations, the financial
numbers will take care of themselves, the argument goes.
Assertions that financial measures are unnecessary are incorrect for at least
two reasons. A well-designed financial control system can actually enhance
rather than inhibit an organization's total quality management program. (See the
insert, "How One Company Used a Daily Financial Report to Improve Quality.")
More important, however,the alleged linkage between improved operating
performance and financial success is actually quite tenuous and uncertain. Let
us demonstrate rather than argue this point.
Over the three-year period between 1987 and 1990, a NYSE electronics company
made an order-of-magnitude improvement in quality and on-time delivery
performance. Outgoing defect rate dropped from 500 parts per million to 50,
on-time delivery improved from 70% to 96%, and yield jumped from 26% to 51%. Did
these breakthrough improvements in quality, productivity, and customer service
provide substantial benefits to the company? Unfortunately not. During the same
three-year period, the company's financial results showed little improvement,
and its stock price plummeted to one-third of its July 1987 value. The
considerable improvements in manufacturing capabilities had not been translated
into increased profitability. Slow releases of new products and a failure to
expand marketing to new and perhaps more demanding customers prevented the
company from realizing the benefits of its manufacturing achievements. The
operational achievements were real, but the company had failed to capitalize on
them.
The disparity between improved operations performance and disappointing
financial measures creates frustration for senior executives. This frustration
is often vented at nameless Wall Street analysts who allegedly cannot see past
quarterly blips in financial performance to the underlying long-term values
these executives sincerely believe they are creating in their organizations. But
the hard truth is that if improved performance fails to be reflected in the
bottom line, executives should reexamine the basic assumptions of their strategy
and mission. Not all long-term strategies are profitable strategies.
Measures of customer satisfaction, internal business performance, and
innovation and improvement are derived from the company's particular view of the
world and its perspective on key success factors. But that view is not
necessarily correct. Even an excellent set of balanced scorecard measures does
not guarantee a winning strategy. The balanced score -
HARVARD BUSINESS REVIEW January-February 1992 7x
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
How One Company Used a Daily Financial Report
to Improve Quality*
In the 1980s, a chemicals company became committed to a total quality
management program and began to make extensive measurements of employee
participation, statistical process control, and key quality indicators. Using
computerized controls and remote data entry systems, the plant monitored more
than 30,000 observations of its production processes every four hours. The
department managers and operating personnel who now had access to massive
amounts of real-time operational data found their monthly financial reports to
be irrelevant.
But one enterprising department manager saw things differently. He created a
daily income statement. Each day, he estimated the value of the output from the
production process using estimated market prices and subtracted the expenses of
raw materials, energy, and capital consumed in the production process. To
approximate the cost of producing out-of-conformance product, he cut the
revenues from off-spec output by 50% to 100%.
The daily financial report gave operators powerful feedback and motivation and
guided their quality and productivity efforts. The departments head understood
that it is not always possible to improve quality, reduce energy consumption,
and increase throughput simultaneously, tradeoffs are usually necessary. He
wanted the daily financial statement to guide those tradeoffs. The difference
between the input consumed and output produced indicated the success or failure
of the employees' efforts on the previous day. The operators were empowered to
make decisions that might improve quality, increase productivity, and reduce
consumption of energy and materials.
That feedback and empowerment had visible results. When, for example, a
hydrogen compressor failed, a supervisor on the midnight shift ordered an
emergency repair crew into action. Previously, such a failure of a noncritical
component would have been reported in the shift log, where the department
manager arriving for work the following morning would have to discover it. The
midnight shift supervisor knew the cost of losing the hydrogen gas and made the
decision that the cost of expediting the repairs would be repaid several times
over by the output produced by having the compressor back on line before
morning.
The department proceeded to set quality and output records. Over time, the
department manager became concerned that employees would lose interest in
continually improving operations. He tightened the parameters for in-spec
production and reset the prices to reflect a 25% premium for output containing
only negligible fractions of impurities. The operators continued to improve the
production process.
The success of the daily financial report hinged on the manager's ability to
establish a financial penalty for what had previously been an intangible
variable: the quality of output. With this innovation, it was easy to see where
process improvements and capital investments could generate the highest returns.
- --------------------------------------------------------------------------------
*Source "Texas Eastman Company," by Robert S. Kaplan, Harvard Business School
Case No. 9-190-009.
[GRAPH APPEARS HERE]
================================================================================
card can only translate a company's strategy into specific measurable
objectives. A failure to convert improved operational performance, as measured
in the scorecard, into improved financial performance should send executives
back to their drawing boards to rethink the company's strategy or its
implementation plans.
As one example, disappointing financial measures sometimes occur because
companies don't follow up their operational improvements with another round of
actions. Quality and cycle-time improvements can create excess capacity.
Managers should be prepared to either put the excess capacity to work or else
get rid of it. The excess capacity must be either used by boosting revenues or
eliminated by reducing expenses if operational improvements are to be brought
down to the bottom line.
As companies improve their quality and response time, they eliminate the need
to build, inspect, and rework out-of-conformance products or to reschedule and
expedite delayed orders. Eliminating those tasks means that some of the people
who perform them are no longer needed. Companies are understandably reluctant to
lay off employees, especially since the employees may have been the source of
the ideas that produced the higher quality and reduced cycle time. Layoffs are a
poor reward for past improvement and can damage the morale of remaining workers,
curtailing further improvement. But companies will not realize all the financial
benefits of
78 HARVARD BUSINESS REVIEW January-February 1992
<PAGE>
their improvements until their employees and facilities are working to
capacity - or the companies confront the pain of downsizing to eliminate the
expenses of the newly created excess capacity.
If executives fully understood the consequences of their quality and
cycle-time improvement programs, they might be more aggressive about using the
newly created capacity. To capitalize on this self-created new capacity,
however, companies must expand sales to existing customers, market existing
products to entirely new customers (who are now accessible because of the
improved quality and delivery performance), and increase the flow of new
products to the market. These actions can generate added revenues with only
modest increases in operating expenses. If marketing and sales and R&D do not
generate the increased volume, the operating improvements will stand as excess
capacity, redundancy, and untapped capabilities. Periodic financial statements
remind executives that improved quality, response time, productivity, or new
products benefit the company only when they are translated into improved sales
and market share, reduced operating expenses, or higher asset turnover.
Ideally, companies should specify how improvements in quality, cycle time,
quoted lead times, delivery, and new product introduction will lead to higher
market share, operating margins, and asset turnover or to reduced operating
expenses. The challenge is to learn how to make such explicit linkage between
operations and finance. Exploring the complex dynamics will likely require
simulation and cost modeling.
Measures That Move Companies Forward
As companies have applied the balanced scorecard, we have begun to
recognize that the scorecard represents a fundamental change in the underlying
assumptions about performance measurement. As the controllers and finance vice
presidents involved in the research project took the concept back to their
organizations, the project participants found that they could not implement the
balanced scorecard without the involvement of the senior managers who have
the most complete picture of the company's vision and priorities. This was
revealing because most existing performance measurement systems have been
designed and overseen by financial experts. Rarely do controllers need to have
senior managers so heavily involved.
- --------------------------------------------------------------------------------
The balanced scorecard puts strategy - not control at the center.
- --------------------------------------------------------------------------------
Probably because traditional measurement systems have sprung from the
finance functions, the systems have a control bias. That is, traditional
performance measurement systems specify the particular actions they want
employees to take and then measure to see whether the employees have in fact
taken those actions. In that way, the systems try to control behavior. Such
measurement systems fit with the engineering mentality of the Industrial Age.
The balanced scorecard, on the other hand, is well suited to the kind of
organization many companies are trying to become. The scorecard puts strategy
and vision, not control, at the center. It establishes goals but assumes that
people will adopt whatever behaviors and take whatever actions are necessary to
arrive at those goals. The measures are designed to pull people toward the
overall vision. Senior managers may know what the end result should be, but they
cannot tell employees exactly how to achieve that result, if only because the
conditions in which employees operate are constantly changing.
This new approach to performance measurement is consistent with the
initiatives under way at many companies: cross-functional integration, customer-
supplier partnerships, global scale, continuous improvement, and team rather
than individual accountability. By combining the financial, customer, internal
process and innovation, and organizational learning perspectives, the balanced
scorecard helps managers understand, at least implicitly, many
interrelationships. This understanding can help managers transcend traditional
notions about functional barriers and ultimately lead to improved decision
making and problem solving. The balanced scorecard keeps companies looking - and
moving - forward instead of backward.
HARVARD BUSINESS REVIEW January-February 1992
<PAGE>
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<PAGE>
SCHEDULE B -- DESKTOP SYSTEMS
[Description of Desktop Systems methodology to be provided by David Norton.]
<PAGE>
SCHEDULE C -- ILLUSTRATIVE LIST OF COMPETITORS
Alexander Proudfoot Company
American Management Services
AMS (American Management Systems)
Andersen Consulting
Arthur D. Little
AT Kearny
AT&T
Bain & Company
Booz-Allen & Hamilton
Boston Consulting Group (BCG)
Cambridge Technology Partners
Coopers & Lybrand
Cresap
CSC Index
Deloitte & Touche Group
Delta Consulting Group
EDS
Ernst & Young
IBM
KPMG Peat Marwick
L/E/K Partnership
McKinsey & Company
Mercer Management Consulting
Minitor Company
Oracle
PA Consulting
Perot Systems Corp.
Price Waterhouse
PRTM
Roland Berger & Partner
Strategos
Symmetrics
The Thomas Group
<PAGE>
SCHEDULE D -- GEMINI PROPRIETARY MATERIALS
BUSINESS TRANSFORMATION SM and all its attendant methodologies and
tools, a partial listing of which includes:
Business modeling
Construct SM
Change Management
Strategic Intent and Core Competencies
Market Focus
Business Process Redesign
Benefits Measurement and Tracking
Operations Strategy
IT Strategy
Channel Strategy
Service Strategy
IT Effectiveness
Product Development and Introduction Strategy
Brown Paper Process
Analysis & Design
Shareholder Value Analysis
Portfolio Assessment
<PAGE>
SCHEDULE E -- RENAISSANCE PROPRIETARY MATERIALS
* Balanced Score Card (BSC) Measurement Process
* Strategic Feedback System Development and Management Process
* BSC Communication & Corporate Linkage Process
* BSC Strategic Planning Process
* Learning Systems (LS) Design Process
* LS Performance Modeling
* LS Role Modeling
* LS Innovation/Solutions Lab
RENAISSANCE SOLELY-OWNED SOFTWARE PRODUCTS
(TO BE LICENSED IN SEPARATE AGREEMENT)
* BSC Strategic Feedback System
(Executive Information System)
* Career Builder
<PAGE>
EXHIBIT 10.2
================================================================================
DIGITAL EQUIPMENT CORPORATION
PC UTILITY
STATEMENT OF WORK
FOR
RENAISSANCE SOLUTIONS, INC.
AUGUST 29, 1996
[LOGO OF DIGITAL EQUIPMENT CORPORATION APPEARS HERE]
================================================================================
This document is confidential and is not to be disclosed in whole or in part
without the express written consent of the parties hereto.
<PAGE>
THIS STATEMENT OF WORK AND THE ASSOCIATED PRODUCT AND SERVICE SCHEDULES ARE
EXPRESSLY CONTINGENT UPON A THIRD PARTY FINANCIAL COMPANY AGREEING TO PROVIDE
THE FINANCING FOR RENAISSANCE SOLUTIONS, INC. TO PURCHASE THE PRODUCTS AND
SERVICES DESCRIBED IN THIS STATEMENT OF WORK AND ASSOCIATED SCHEDULES.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
REVISION CONTROL HISTORY................................................................. 1
------------------------
1.0 PURPOSE.............................................................................. 2
2.0 SCOPE................................................................................ 2
3.0 ASSUMPTIONS.......................................................................... 3
4.0 DIGITAL AND RENAISSANCE RESPONSIBILITIES............................................. 4
Digital Responsibilities................................................................ 4
Renaissance Responsibilities............................................................. 4
5.0 PROGRAM CONTROL..................................................................... 4
Change Control........................................................................... 4
Issue Resolution......................................................................... 5
Management Escalation.................................................................... 6
6.0 STATUS MEETINGS AND REPORTS.......................................................... 6
Status Meetings.......................................................................... 6
Status Reports........................................................................... 7
7.0 DEPENDENCIES........................................................................ 7
Equipment, Facilities, and Operations Support............................................ 7
Program Personnel........................................................................ 8
Information and Assistance............................................................... 8
8.0 DELIVERABLES........................................................................ 8
Program Management Services.............................................................. 9
Buy Back Services........................................................................ 9
Acquisition Services..................................................................... 10
Staging and Integration Services......................................................... 12
Deinstallation Services.................................................................. 14
Installation and End-User Orientation Services........................................... 14
Migration Services....................................................................... 16
Migrating Existing Clients to Microsoft Windows 95 and Microsoft Office 95 Professional.. 21
Lotus Notes Migration - V3 to V4......................................................... 22
Helpdesk Services........................................................................ 22
Hardware Maintenance Services............................................................ 29
Software Maintenance..................................................................... 30
Microsoft Systems Management Server...................................................... 32
Technology Refresh....................................................................... 34
Resident Senior LAN Engineer............................................................. 35
Acceptance and Payment................................................................... 36
9.0 PRECEDENCE OF AGREEMENT............................................................. 37
10.0 ACCEPTANCE SIGNATURES............................................................... 37
Appendix A - Service/Product Schedules................................................... 38
Appendix B - Renaissance Locations....................................................... 44
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Appendix C - Change Request Form......................................................... 45
Appendix D - Certificate of Acceptance................................................... 46
Appendix E - Issue Resolution Form....................................................... 47
</TABLE>
<PAGE>
REVISION CONTROL HISTORY
-----------------------------------------------------------------
This section provides an account of revisions to this PC Utility
Services Agreement commencing with V1.0 dated April 8, 1996.
DOCUMENT VERSION/DATE DOCUMENT STATUS AND/OR DESCRIPTION
--------------------- -----------------------------------
OF CHANGES
----------
V1.0 April 8, 1996 Initial draft issued for formal
Customer review.
V 2.0 April 25, 1996 Revised document based on
Customer requests
V 3.0 April 26, 1996 Following changes agreed to during
meeting with Anatoly Roytman on
April 25.
P. 8 Windows NT Migration
P. 9 Added "approximately" to
existing inventory
P. 10 & 11 Change DEC to NEC
monitor
P. 11 Change WIN NT to WIN 95
P. 12 Removed references to
Cheyenne Innoculan
P. 12 Change to "Digital provides
image"
P. 15 Change Renaissance
provides to approves
P. 32 Change responsibility to
liability
P. 33 Change Windows'95 to NT
P. 44 Under Technology Refresh,
add: Renaissance will have the
option, after the 20th month, to
re-fresh ...........keeping the
current price per seat.
P. 48 Change Quantity 23 to 18,
$182,988 to $143,208.
P. 49 Change Quantity 83 to 71,
$917,316. to $784,692.
P. 52 Change Quantity 20 to 12,
$381,120 to $228,672.
V 4.0 April 30, 1996 P. 44 Pricing and Quantity revised
to reflect revised Service/Product
Schedules (App. A)
P. 50 Price per Seat revised to
$5,864.
V 5.0 August 29, 1996 P. 9 Buyback inventory revised to
reflect physical inventory results.
P. 10 Configuration 3 changed to
Venturis 5150
P. 22 Help Desk changes to
incorporate Custom Solution from
Sutherland which includes Call
Processing for User Application
Support, Back Office, Procurement,
Remedial Dispatch, Tracking &
Escalation & Remote Network
Support
P. 39 - 43 Revised schedule Price,
Quantity and Services
<PAGE>
1.0 PURPOSE
This Statement of Work ("SOW") defines the scope of services and
deliverables that Digital Equipment Corporation, hereafter
referred to as "Digital", will provide to Renaissance Solutions,
Inc. hereafter referred to as "Renaissance". This SOW, and the PC
Utility Services Agreement constitute the entire PC Utility
Program between Digital and Renaissance.
Digital's performance of this SOW is contingent upon Renaissance
reasonably performing Renaissance's responsibilities that are
expressly designated herein.
This SOW details:
. The scope of work Digital agrees to deliver to
Renaissance
. The working relationship between Digital and
Renaissance, including roles and responsibilities
. Description of deliverable items under this PC Utility
Agreement
. The process for deliverable acceptance
. Significant tasks
. Change Procedure and Issue Resolution process.
2.0 SCOPE
Under this agreement, Digital will define, develop, and deliver
to Renaissance the following services which will begin 30 days
from the signing of the agreement:
. BUY-BACK OF THE CURRENT INSTALLED BASE
. PROCUREMENT SERVICES
. STAGING AND INTEGRATION SERVICES
. INSTALLATION SERVICES
. MIGRATION SERVICES
. LOTUS NOTES MIGRATION
. HELP DESK SERVICES (SUTHERLAND)
. CALL PROCESSING (SUTHERLAND)
. END USER SOFTWARE SUPPORT (SUTHERLAND)
. HARDWARE MAINTENANCE AND SUPPORT SERVICES
. MICROSOFT SOFTWARE MAINTENANCE (2 YEARS)
. MICROSOFT SYSTEM MANAGEMENT SERVER
. TECHNOLOGY REFRESH SERVICES
. PROGRAM MANAGEMENT SERVICES
. RESIDENT SENIOR LAN CONSULTANT/PROGRAM MANAGER
<PAGE>
3.0 ASSUMPTIONS
The program is based upon this SOW and if the assumptions stated
are in error the pricing is subject to change. Additions,
deletions or changes to this SOW will require either a change
order or a new SOW accompanied with the appropriate pricing,
schedule, or deliverable changes before any work affected by the
changes will commence.
Digital and Renaissance hereby acknowledge the following
assumptions and further acknowledge that Digital, in the
preparation of the cost, schedule and resource estimates
contained in this SOW relied on said assumptions.
. The locations where equipment will be installed and services
provided per this SOW are identified in Appendix B.
. Installation work at all sites will be performed during the
hours specified by Renaissance, which are currently Monday to
Friday, 8 AM to 5 PM. Holiday work will be considered a change
of scope and will be handled through the change order process
specified herein.
. Renaissance will designate a small, securable holding area at
each Renaissance location. This area will be needed to store
shipments overnight and unbox systems prior to installation.
. As near as practical, shipments will be timed to coincide with
planned installations.
. Prior to Digital personnel arriving for the installation, the
desktop location will be available for the existing equipment
to be de-installed and the new equipment to be installed.
Renaissance will coordinate this activity with the end-users.
. Renaissance will provide a complete listing of the existing
desktop systems that are to be deinstalled and removed.
. Prior to Digital personnel arriving for the installation,
Renaissance will use it's best efforts to set end-user's
expectations for the forthcoming change in their desktop system
so as to minimize any detrimental affect on their day-to-day
responsibilities and productivity.
. Digital Financial Services (DFS), as the leasing agent,
Renaissance, as the customer, and Digital, as the vendor, will
develop mutually agreeable Terms and Conditions for financing
of this program.
. Renaissance will establish " Standard" hardware and software
configurations for the purpose of placing orders under this
agreement. Non-standard options or orders will be processed on
a time and material basis.
. Loading of Tracktime by CLI provided by Renaissance will take
no longer than 20 minutes per system.
. Asset Management is not being provided by Digital
. Renaissance has proper licensing for all software
<PAGE>
4.0 DIGITAL AND RENAISSANCE RESPONSIBILITIES
DIGITAL RESPONSIBILITIES
Digital will designate an individual from it's organization to
serve as the Digital Program Manager, and be Renaissance's
primary contact with Digital. The Digital Program Manager will be
responsible for the overall program delivery including:
. Management of scope
. Planning, Scheduling and Program Controls
. Coordinating site specific implementations
. Conducting Status Meetings
. Preparing Status Reports
. Other activities as specified in this SOW
RENAISSANCE RESPONSIBILITIES
Renaissance will assign an individual to serve as Renaissance's
Program Manager and be Digital's primary contact with
Renaissance. The Renaissance Program Manager shall use his or
her best efforts to ensure that Renaissance personnel responsible
for individual parts of this program will report status on a
weekly basis to the Digital Program manager. Renaissance's
Program Manager is authorized to perform his or her duties under
this Agreement.
5.0 PROGRAM CONTROL
The Program Implementation Plan will identify and describe the
tasks, activities, schedule and resources required to produce the
deliverables specified in this SOW.
CHANGE CONTROL
Any changes to this SOW must be mutually agreed upon by both
Digital and Renaissance in writing. Any verbal agreement between
persons involved in the program will not be binding on neither
Digital nor Renaissance. Mutually acceptable changes in the
scope of work and adjustments in schedule and price will be
incorporated as a modification to this Agreement or may become
the basis of a new, follow-on agreement.
A change is an alteration to the Program scope, deliverables, or
milestones that affects the Program cost, schedule, quality, or
conformance of the deliverables to the agreed on specifications.
The Digital Program Manager has overall responsibility for the
Change Order Process.
CHANGE ORDER PROCESS
Change requests that impact program scope must be submitted in
writing using Digital's standard Change Request Form (attached as
Appendix C).
<PAGE>
Digital will take the following steps upon receipt of a Change
Request Form from Renaissance
1. DEFINITION - The requirements for change are defined and
change impact is initially estimated. The proposed change is
classified, and the effort required to evaluate its full impact
is estimated. A review of the proposed change takes place. The
status of the proposed change is logged and communicated.
2. EVALUATION - A full-scale impact analysis is conducted and any
missing data are requested from the change originator. The status
of the proposed change is logged and communicated.
3. APPROVAL - The proposed change and impact analysis is reviewed
and a decision is reached regarding its approval, rejection, or
deferral. If a change proposal is deferred, additional studies or
external approval can be requested. Funding for implementing the
change may need to be negotiated. The status of the request is
logged and communicated. Digital will either accept or reject the
requested change within fifteen (15) days of receipt of a Change
Request Form.
Acceptance of the change is signified by the Renaissance and
Digital Program Managers signing the Change Request Form.
Renaissance and Digital will revise the contract/purchase orders
as necessary.
4. IMPLEMENTATION - The change is implemented and the baseline
information is updated. The change status is tracked and
reported.
5. VERIFICATION - A check for correctness, completeness, and
adherence to quality requirements is completed, and final status
of the change is logged and reported.
Once approved, Digital will promptly implement the requested
change and complete verification procedures.
RENAISSANCE SHALL USE IT'S BEST EFFORTS TO MANAGE THE IMPACT THAT
CHANGE REQUESTS HAVE ON PROGRAM PRICE AND SCHEDULE. THIS
INCLUDES BOTH THE IMPACT OF PERFORMING THE CHANGE REQUEST
EVALUATION AND THE IMPACT OF CHANGE REQUEST IMPLEMENTATION.
ISSUE RESOLUTION
The process for resolving issues will be in conformance with
Digital's Standard for Issue Resolution. Digital and Renaissance
shall each designate an escalation manager. Digital's Program
Manager is the primary contact for issue resolution.
An Issue Resolution Form (Appendix E) is submitted when
individuals working on the program experience problems within a
given area. The Digital Program Manager is responsible for
tracking all program issues.
<PAGE>
Either Digital or Renaissance may escalate an issue when it is
deemed necessary. Each escalation manager will actively assist in
defining and influencing the resolution, and further escalate to
their management if executive assistance is required.
ISSUE RESOLUTION PROCESS
The following activities will be performed for each issue:
. Define the problem and agree it should be handled as an issue
. Evaluate the issue, estimate its impact on the program and
potential financial exposure
. Identify corrective action and responsible individuals
. Log and track the issue
. Notify the appropriate business management
. Follow up until resolution is reached
Identified issues shall be resolved promptly. Notwithstanding the
foregoing, Renaissance will hereby retain any and all rights it
may have pursuant to this Agreement or otherwise should an issue
not be resolved to Renaissance's satisfaction.
MANAGEMENT ESCALATION
In the event a problem cannot be resolved to Renaissance's
satisfaction, Renaissance will have the option of escalating the
problem. The following Digital senior managers will be available
for issue resolution
. George Bergeron - On site Senior LAN consultant
. Raymond Mercier - Program Manager
(617) 676-4502
. Robert Zepf - Unit Delivery Manager
(617)676-4312
. Tim Hines - District Manager
(617)676-4297
. John Kelley - Territory Operations Manager
(617)676-4744
. Fran Delaney - Vice President, Eastern States Territory
(617)676-4385
6.0 STATUS MEETINGS AND REPORTS
STATUS MEETINGS
Program status meetings will be held, at a minimum, two (2) times
per month during the implementation of the Service/Product
Schedules (Appendix A). Renaissance's Program Manager and
Digital's Program Manager will represent their organizations at
these meetings. Status Meetings will include, but are not limited
to:
<PAGE>
. Review of action items
. Review progress relative to plan
. Review open Change Requests
. Review open Issues
. Review achievement against milestones
Minutes will be taken at each Status Meeting, documenting
decisions made, and distributed with the Program Status Report.
STATUS REPORTS
Program Status Reports will be prepared by Digital's Program
Manager and sent to Renaissance's Program Manager within one (1)
week following each Status Meeting. Status Reports will contain,
but are not limited to, the following:
. Major accomplishments during the reporting period
. Program status summary
. Change Request status (new, open, closed since last
report)
. Issue status (new, open, closed since last report)
. Schedule status, including Inventory of Systems installed
during the reporting period
7.0 DEPENDENCIES
EQUIPMENT, FACILITIES, AND OPERATIONS SUPPORT
During program implementation, Digital personnel will be accorded
priority access to Renaissance facilities during normal business
hours, Monday through Friday. Renaissance will provide Digital
personnel access to Renaissance facilities outside of these hours
upon mutual agreement.
Renaissance will be responsible for handling any and all security
related issues pertaining to this program, including providing
unescorted access to buildings where the program team will be
working.
Renaissance will obtain and pay for any and all approvals, of
whatever nature, from any landlord, mortgagee, or from any other
person or entity whose permission is needed to accomplish the
Program, as reasonably necessary so as not to impede the progress
of this Program.
In addition, the following will be supplied by Renaissance:
. A safe and secure workplace for program team members,
including access to telephones and FAX services.
. Access to shipping/receiving (delivery dock) area, if needed.
. All necessary technical matter and data required for this
program such as client and server network names, addresses,
and passwords.
<PAGE>
PROGRAM PERSONNEL
In addition to a Program Manager, Renaissance agrees to provide a
Technical Consultant on an as needed basis.
INFORMATION AND ASSISTANCE
Renaissance agrees to respond, within a time frame mutually
agreed to by the Digital Program Manager and the Renaissance
Program Manager, to requests for the following documentation,
information, or assistance needed for the Program. This includes
but is not limited to:
. Documentation and information needed for the current
environment such as login scripts and naming conventions
including usernames, addresses, and passwords.
. Skilled and knowledgeable Renaissance personnel to assist
Digital in the program.
. Samples of data and/or the assistance of Renaissance
personnel to prepare required staging and installation
procedures testing.
Renaissance is responsible for the accuracy and completeness of
all information it provides. If information is incomplete or
incorrect or if information is uncovered during the course of the
program which could not be reasonably anticipated by Digital, any
work required to correct problems created by the use of such
incomplete or inaccurate information or any additional work
required by the discovery of such unanticipated information,
shall be treated as a Renaissance requested change to the scope
of the work and subject to the change order procedure.
Renaissance will notify Digital in advance of potentially
hazardous environments of which Renaissance has knowledge.
8.0 DELIVERABLES
Pursuant to this PC Utility Agreement, Digital shall provide the
following services and products to Renaissance:
. Program Management Services
. Buy-back of the current installed base
. Procurement Services for hardware and software products
. Staging and Integration of the procured products
. Installation Services
. Migration of the existing Novell environment to Windows NT
. Migrate Lotus Notes 3.0 to 4.0
. Help Desk Services (Sutherland Group)
. End user software support (Sutherland Group)
. Hardware Maintenance and Support Services
. Microsoft Software Maintenance (2 years)
. Microsoft System Management Server
. Technology Refresh Services
<PAGE>
. Resident Senior LAN Consultant
PROGRAM MANAGEMENT SERVICES
Digital will establish a Program Management Office (PMO) for the
purpose of fulfilling the deliverables to Renaissance as defined
in this SOW. The PMO will be headed by a Digital Program Manager
and staffed by a team of Digital resources assigned to fulfill
the terms of the Digital/Renaissance PC Utility Agreement. The
Digital team will be comprised of project managers and
specialists trained in administration, procurement, staging,
integration, roll out, and support.
Digital's Program Manager will be responsible for providing:
ANALYSIS - Identify Renaissance's needs/objectives relative to
the program, specify approaches to address those needs, recommend
preferred approaches, and secure approval of Renaissance to
proceed with an approach.
PLANNING & SCHEDULING - Generate detailed plan(s) to implement
the chosen approach. Plans will include identification of the
tasks to pursue the approach, identification of resource
requirements (personnel and/or equipment), assignment of
responsibilities, and identification of methods to achieve the
planned objectives. Working with the combined Digital,
Renaissance and supplier teams (if applicable), the Digital
Program Manager will develop the scheduling strategy and master
schedule for the Renaissance roll out. The master schedule will
be submitted to Renaissance for approval. Once approved, changes
to the schedule will be accomplished via the Change Order
Process.
IMPLEMENTATION - Responsible for program implementation. On a
proactive daily basis manage suppliers and Digital resources.
Act as the single point of contact to Renaissance for all issues
and work both with Renaissance and within Digital to resolve
issues. Coordinate multiple site activities. Monitor and report
the status of contract deliverables and program milestones.
Control changes and ensure continued progress toward program
objectives. Review actual schedules, budgets, costs, and results
against program plans. Manage exceptions and risks, and
implement corrections to achieve program plans. Establish and
maintain project files including correspondence, change
summaries, contracts, historical records, plans, and other
program related information.
PROGRAM REVIEWS - Define and conduct joint Renaissance and
Digital program status reviews as defined in the Program Plan.
Provide Digital approval for any documentation. Obtain
Renaissance acceptance and approval at each step to proceed.
BUY BACK SERVICES
PURCHASE OF EXISTING ASSETS
Digital Equipment Corporation. through its Financial Partner,
Digital Financial Services, will purchase an existing approximate
inventory of 38, predominately
<PAGE>
486 type Desktop PC's, 62 Standard Laptops, the laptop units
being primarily NEC VERSA 4000 series, 23 HP Laserjet Printers,
and 7 Compaq Proliant Servers, plus miscellaneous Cisco, Bay
Networks, and Shiva network hardware for a price of $830,000. A
bank transfer (or check) will be presented to Renaissance no
later than four days after the commencement date of the PC
Utility Program. The Program will commence 30 days after the
signing of the PC Utility Agreement. All legal documents must be
completed and a physical inventory will be taken to confirm
availability of the assets prior to the money being transferred
to Renaissance.
At Renaissance's request, Digital is able to dispose of any
displaced units. The disposal fee is 20% of Fair Market Value
(FMV) of the asset. If Renaissance wants Digital to clean the
Hard Disk Drives prior to disposal, the fee for disposal and
cleaning is 40% of FMV.
ACQUISITION SERVICES
Digital will manage the procurement of all material necessary to
the Program. These materials are described below as "Renaissance
Standard Configurations". The Digital purchasing specialist will
provide the following services:
. Procure such third party material that Renaissance orders from
Digital.
. Procure such Digital material that Renaissance orders.
. Develop/manage Basic Order Agreement(s) with third party
supplier(s) as necessary
. Manage delivery performance of the supplier(s).
. Manage any return authorization or supplier issues (as
provided for by the supplier channel/vendor).
RENAISSANCE STANDARD CONFIGURATIONS
CONFIGURATION 1: LAPTOP POWER USER
OEM PART # VENDOR PART #
Digital HiNote Ultra II CTS-5/133 FR-P87WG-AA 112702 TD
Pentium 133 MH CPU
256 KB L2 CACHE
8 MB DRAM
1.35 GB HDD, 1.44 MB FDD
VL-BUS SVGA Video w/1 MB DRAM
10.4" Active Color Display
16 Bit Audio
2 Type II or 1 Type III PCMCIA EXPN
I/R Port, LiIon Batt
Windows 95
Kingston 16 MB DIMM KTV-ULTRA/16 KST-E-03875 MA
Quad Speed Multimedia Module FR-PCP8D-W1 108119 TD
<PAGE>
Configuration 2: Laptop Power User
Same as Configuration 1 above plus the following:
NEC Multisync XV17+ JC-1734VMA-1 501062
17" SVGA Color Monitor
1024x768 ni; .28 DP
CONFIGURATION 3: DIGITAL VENTURIS 5150 DESKTOP PC
OEM PART # VENDOR PART #
DEC Venturis FP 5150 FR-92EAA-WE DEC-A-12210 TD
150 MH Pentium CPU
1.2 GB EIDE HDD
3.5" 1.44 MB FDD
8 MB RAM
S3 64 Bit Graphics Accel W/1MB
Windows 95
Kingston 8 MB Upgrade (1x8MBx70NS) KTV-NPVEN/8 447819 TD
NEC Multispin 6XCDROM CDR-502 NEC-F-47535 MA
Soundcard Wave Table 16 Bit FR-PCXBJ-DH DEC-G-70910 MA
NEC Multisync XV17+ JC-1734VMA-1 501062
17" SVGA Color Monitor
1024 x 768ni .28DP
SOFTWARE OEM PART # VENDOR PART #
WIN '95 Single User 3.5" 050-31V950 454901 TD
WIN '95 MOLP-A Lic 050S051V95LPA 534781 TD
MS Office PRO V7.0 for WIN'95 2697054V95LPA 454123 TD
w/ACCESS Single User 3.5"
MS Office PRO V7.0 for WIN'95 269A050V70LPA 532461 TD
w/ACCESS MOLP-A Lic
MS Office Std. V7.0 for WIN'95 021-056V700 454936 TD
on CD ROM
MS Office Std. V7.0 for WIN'95 021A055V70LPA 532452 TD
MOLP-A Lic (50-499 total units)
Visual Basic PRO V4.0 CD-ROM 203-056V400 453589 TD
<PAGE>
MS Visual Basic V4.0 CD-ROM 203-1056V400 454081 TD
Enterprise Ed.
MS Visual Basic V4.0 203A550V40LPA 532544 TD
Enterprise Ed. MOLP-A User Lic
(50-499 total units)
NETSCAPE for WIN 953.5 " 123480 STREAM
NETSCAPE for WIN 95 3.5" 123481 STREAM
with Reference Manuals
NETSCAPE Navigator pers edition 237562 STREAM
for WIN'95 3.5"
MISCELLANEOUS
Megahertz Xjack Combo XJEM3288T MHZ-G-50365
FAX/Modem 28.8/ 14.4 and Ethernet
10 Base-T Adaptor
Megahertz Xjack 28.8/14.4 PCMCIA XJ4288 573195 TD
Data/FAX Modem
3COM Ethernet Adaptor for 10Base-T 3C509B-TP 3COM
UTP RJ45
STAGING AND INTEGRATION SERVICES
This service will be performed at Digital's Andover, MA facility
for the Lincoln, MA and Chicago, Ill sites. For cost
considerations, staging and integration will be done in Europe
for the London site.
Digital will provide a software image/ scripted input for the
entire suite of software for each type of hardware configuration
as approved by Renaissance.
Digital will manage all aspects of the staging and integration,
defined by Renaissance as follows:
CONFIGURATIONS #1 & 2 DIGITAL HINOTE ULTRA II CTS-5/133
. integrate 1 x 16 MB DIMM
. integrate multiMedia Module
. install MS Office Std Win'95
. install Lotus Notes (supplied by Renaissance)
. install Lotus Organizer (supplied by Renaissance)
. install Innoculan by Cheyenne
<PAGE>
. install MS Visual Basic V4.0
. install Netscape Navigator
. test PCMCIA FAX/Modem
. power up and self-test the hardware
. set special configuration parameters and node addresses, to be
provided by Renaissance
. perform a viral scan
. perform acceptance testing based on mutually agreed to
scripts
. apply a Renaissance PC Utility Asset Tag
CONFIGURATIONS # 3, DIGITAL VENTURIS FP 5150
. integrate 2 x 8 MB SIMMS
. integrate Network Interface Adapter
. integrate the Sound Card
. install Sel-A-Sys Win'95
. install MS Office for Win'95
. install Lotus Notes (supplied by Renaissance)
. install Lotus Organizer (supplied by Renaissance)
. install Netscape
. install Visual Basic
. install Innoculan by Cheyenne
. install Tracktime by CLI (supplied by Renaissance)
. power up and self-test the hardware
. set special configuration parameters and node addresses, to be
provided by Renaissance
. perform a viral scan
. perform acceptance testing based on mutually agreed to
scripts
. apply a Renaissance PC Utility Asset Tag
OTHER - There are no other configuration components or tasks
Renaissance requires be performed during staging and
integration, such as time-specific burn-in or application-
specific testing.
ORDER SCHEDULING AND TRACKING - As required, Digital will manage
order scheduling and tracking for all Renaissance orders. The
Digital Program Manager will communicate shipment and schedule
information to the Renaissance Program Manager.
SHIPPING - Product shipment to Renaissance locations will take
place in accordance with the requirements of the installation
schedule. As near as practical, shipments will be scheduled to
coincide with planned installations. Digital ships standard
carrier, but has the ability to ship using any special
Renaissance specified channel.
Renaissance is responsible for all shipping and insurance costs.
<PAGE>
In order to facilitate a smooth installation, Renaissance will
designate a small holding area at the Renaissance location. This
area will be needed to securely store materials overnight.
DEINSTALLATION SERVICES
Digital will perform the following deinstallation tasks:
. transfer data from former system to new system
. disconnect system (PC, Laptop, Server) and printers from
network cable and power outlet
. disconnect monitor and keyboard
. move equipment to docking/packing area designated by
Renaissance
. bubble wrap and box all components together
. apply identifying labels to each box
. palletize multiple boxes at the loading dock
. visually inspect all equipment to ensure it is secure for
shipping
. remove all trash associated with the deinstallation/
installation activity
. transport the deinstalled equipment according to Renaissance's
requirements one option will be disposal through Digital's
Resource Recovery Center
INSTALLATION AND END-USER ORIENTATION SERVICES
Digital will install all newly acquired Systems and Printers in
accordance with system installation specifications, as jointly
finalized by Renaissance and Digital in writing. These
specifications will include procedures for obtaining and
implementing any software, addresses, cables or Printer network
cards necessary for connecting the newly installed Systems to the
network, unless already implemented during Staging and
Integration.
SITE SPECIFIC TASKS - GENERAL
. Coordinate the logistics of the hardware to meet Renaissance
requirements.
. Perform site walk through with local Renaissance contact.
. Inventory Products and compare with Renaissance site specific
requirements.
. Oversee the "call logging" requirements to ensure that the
installations are logged in Digital's call management system
for support services.
. Manage installation problems/issues.
. Resolve site installation issues within Digital's control in a
timely manner.
. Provide an inventory of installed systems by site.
SITE SPECIFIC TASKS - PRINTER, PC, AND LAPTOPS
. Unpack and move the system and/or printer to the final
location.
. Cable printer to network wall plate
. Install personal computer components at desktop location.
. Cable PC to the network wall plate
. Power up the personal computer and verify installation of
operating system.
. Set Default printer in user account.
. Provide a general orientation and system overview, not to
exceed one-half hour, to each end user.
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SITE SPECIFIC TASKS - COMPLETION AND ACCEPTANCE
. Test the file, print and application services from each
client .
. Send test print to appropriate printers.
. Review completed installation with Renaissance local contact.
. Report completion of installation to Renaissance Program
Manager.
. Renaissance signs Certificate of Acceptance. (attached as
Appendix D).
. Activate Digital's Service Obligation System for Hardware and
Software Maintenance.
INSTALLATION ROLES AND RESPONSIBILITIES - This portion of the SOW
defines the roles and responsibilities of Digital and Renaissance
personnel involved in the installation of desktop devices under
the PC Utility Agreement. Digital will provide an Installation
Plan promptly after the PC Utility Agreement has been
consummated, which Plan will detail the activities required by
both parties for a complete, successful installation to occur.
Examples of these roles are:
DIGITAL AND RENAISSANCE ROLES AND RESPONSIBILITIES
. Define a mutually acceptable installation acceptance criteria
to insure a complete, high quality installation.
. Communicate candidly and regularly on any deficiencies or non-
conformance issues.
DIGITAL RESPONSIBILITIES
. The Digital Program Manager shall designate a Digital
Installation Project Manager.
. The Installation Project Manager under the authority of the
Program Manager shall have full responsibility for the timely
and correct de-installation and removal of old equipment and
for the timely and correct installation of all new equipment.
. The Installation Project Manager shall inform the Program
Manager of any installations which fail for any reason so that
an escalation plan can be put in place and executed as
needed.
. The Installation Project Manager will insure that all
appropriate forms and paperwork are completed accurately and
in a timely manner for each assigned installation.
RENAISSANCE RESPONSIBILITIES
. Renaissance shall provide all network name and address
information required to complete an installation in a timely
and usable manner.
. Renaissance will provide any required facility modifications
in order to complete end user installation in a timely manner.
. Renaissance will notify the Digital Program Manager of any
special events, priority requirements, or other unusual
situations which might adversely affect normal installation
activities.
. Renaissance will designate a small holding area at the
Renaissance location to securely store shipments overnight.
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. Prior to Digital personnel arriving for the installation, the
desktop location will be cleared and available for the
existing equipment to be de-installed and the new equipment to
be installed. Renaissance will coordinate this activity with
the end-users.
. Renaissance will approve all scripts and software necessary to
load the client system requirements.
. Renaissance will approve any documentation required for
orientation of Desktop and Laptop users.
MIGRATION SERVICES
Part of the service that will be provided by Digital Equipment
Corporation will be installing Microsoft Windows NT file servers
to replace the Novell NetWare version 3.12 file servers. At least
one of the NetWare file servers will remain in service at the
Renaissance Solutions, Inc. corporate headquarters. This is
because the Time and Billing application that is at the heart of
the Renaissance Solutions, Inc. business suite only runs on
NetWare at this time.
The NetWare to Windows NT migration service that will be
performed will migrate user accounts and files from the NetWare
file servers to the Windows NT file servers. Some small number of
users at Renaissance Solutions, Inc. corporate headquarters will
need to access both the new Windows NT file servers and the
NetWare file server that runs the Time and Billing system.
PREPARATION FOR THE MIGRATION
The first step in the migration process is planning. As part of
the plan, Digital will ensure that Renaissance end-users do not
experience any downtime as a result of the migration.
To begin Digital Equipment will conduct an inventory of the
NetWare file servers located at Renaissance Solutions, Inc.
corporate headquarters. This inventory will focus on identifying
user accounts, groups, directory and file rights and any unique
login script entries. This information will be used to plan the
Windows NT file server account, group and permission structure.
The next step will be installing software on the Windows NT file
server. Two software options are necessary to provide a path
between the NetWare and Windows NT file servers. This software is
Nwlink and Gateway Services for NetWare. The first implements the
IPX/SPX protocol on the Windows NT file server. The second allows
NetWare services to be used by workstations logged into the
Windows NT file server.
Microsoft NetWare Link protocol (NWLink) is a Network Device
Interface Specification (NDIS)-compliant version of the IPX/SPX
protocol used in NetWare networks. NWLink is a 32-bit transport
that allows computers running Windows NT to communicate with
other Windows NT-based computers or NetWare servers.
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The second software product is Microsoft Gateway Service for
NetWare (GSNW). This is a 32-bit Windows NT service. In
combination with NWLink, GSNW allows a Windows NT Server to
access files or printers on a Novell NetWare server. The service
also allows a Windows NT Server to act as a nondedicated gateway
to NetWare file systems for any Server Message Block (SMB)
client, including Windows for Workgroups, Windows NT, or any
Microsoft networking client. The Gateway Service takes the
incoming SMB request, and translates it to a NetWare Core
Protocol (NCP) request for the NetWare Server. GSNW can be used
to access file and print services on NetWare 2.x and 3.x file
servers, and NetWare 4.x file servers running bindery emulation.
With GSNW, the Windows NT Server-based computer connects to a
NetWare file server's directory and then shares it, just as if
the directory were on the Windows NT-based computer. Microsoft
network clients can access the directory on the NetWare server by
connecting to the share created on the Windows NT Server-based
computer.
PREPARING THE NETWARE SERVER
For a Windows NT Server to act as a gateway to resources on a
NetWare Server, the NetWare Server must have a group named
NTGATEWAY. In addition, the user name that is going to be used as
the gateway account must be included in the group NTGATEWAY on
the NetWare server. Use the NetWare SYSCON utility to create the
group and user account.
Any resources that you want shared through the gateway must be
made available to the members of the group NTGATEWAY through the
SYSCON group options.
The default permissions for Gateway-shared directories are Full
Control for everyone.
The GSNW allows a Windows NT Server computer to share resources
located on a NetWare Server, as if those resources were on the
Windows NT Server computer.
While Nwlink and GSNW can provide NetWare resources to Windows NT
clients, that is not our intention. We will use this gateway
between NetWare and Windows NT to facilitate the migration of
user accounts, groups and files to the Windows NT server.
WINDOW NT SERVER MIGRATION TOOL FOR NETWARE
The Window NT Server Migration Tool for NetWare (NWCONV.EXE)
allows you to migrate NetWare servers to computers running
Windows NT Server. The Migration Tool transfers user and group
accounts, and files and directories from NetWare servers to
Windows NT Server domain controllers.
The Migration Tool allows you to:
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. Preserve appropriate user account information.
. Control how user and group names are transferred.
. Set passwords for transferred accounts.
. Control how account restrictions and administrative rights
are transferred.
. Select the directories and files to transfer.
. Select a destination for transferred directories and files.
. Preserve effective rights on directories and files.
Before running an actual migration, we will run a trial migration
to ensure that users, groups, files and directories will transfer
as planned. During a trial migration, the Migration Tool keeps
track of events as though an actual conversion were in progress.
This allows us to check for errors before running an actual
migration.
Note that the Migration Tool does not change a NetWare server
into a Windows NT Server. It is used for copying files and
bindery information to a separate Windows NT Server domain
controller.
When migrating from NetWare to Windows NT Server, we consider the
configuration of the server before actually doing the migration.
The Migration Process involves:
. Identifying NetWare components (users, groups, and data) for
migration.
. Identifying Windows NT Server domain controllers to receive
the users, groups, and data.
. Migrating accounts and data.
In a multiple NetWare server environment, it is common to find
the same user or group entered in the binderies of more than one
server. When migrating from the NetWare environment, we must
consider how to manage duplicate NetWare accounts (users or
groups).
Because Windows NT Server uses the domain model, account names
are required to be unique within the domain. When duplicate names
are encountered during the migration, they can overwrite the
existing account, be logged as errors, be ignored, or migrated by
adding a prefix to the NetWare user name. We will select the last
option. This will allow us to combine multiple user accounts from
the NetWare servers into one user account on the Windows NT
server.
NetWare assigns restrictions on an account-by-account basis. Some
of these restrictions are implemented in Windows NT Server
through account policies instead of being based on the individual
user.
The Migration Tool will transfer most NetWare user account
information, files, and directories. However, some of the NetWare
settings do not directly translate to Windows NT Server.
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WHAT WILL BE MIGRATED
The Migration Tool will migrate the following NetWare
information.
. User accounts
. Group accounts
. Account permissions where applicable
. Directory structures
. Files
WHAT WILL NOT BE MIGRATED
The Migration Tool will not migrate the following NetWare
information.
. Login scripts--Windows NT login scripts provide similar
functionality.
. Print server and queue information--Printers will be set up
as either Windows NT printers,
. Workgroup and user account managers--There is no equivalent
group in Windows NT Server.
. Passwords--Windows NT Server does not have the ability to
read NetWare passwords.
Because NetWare does not implement all rights in the same way as
Windows NT Server, translations are made when there is an
equivalent permission. If there is not an equivalent permission,
the right is dropped during migration.
The following table shows the NetWare effective rights for
directories and the equivalent Windows NT Server permissions.
NetWare directory rights Windows NT Server permissions
Supervisor (S) Full Control (All)
Read (R) Read (RX)
Write (W) Change (RWXD)
Erase (E) Change (RWXD)
Modify (M) Change (RWXD)
Create (C) Add (WX)(not specified)
File Scan (F) List (RX)(not specified)
Access Control (A)
By default, all user accounts are transferred from the selected
NetWare server to the domain of the selected Windows NT Server-
based computer, except when there is a name conflict. When a user
name on the NetWare server is identical to a user name on the
Windows NT domain, the account is not transferred, and an
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error is logged in the ERROR.LOG. When a group name is identical,
the account is not transferred and no error is logged in the
ERROR.LOG. The error log information will provide information
necessary to decide how to deal with these conflicts.
SELECT WHICH FILES ARE TO BE TRANSFERRED
When determining where to transfer directories and files, the
Migration Tool looks for a share on the computer running Windows
NT Server that matches the volume name on the NetWare server. If
no share exists, the Migration Tool creates one when the
migration is started. The Migration Tool locates the shares it
creates by first looking for enough space on NTFS partitions.
With the information we gather during the inventory of the
NetWare file servers, we will have created the appropriate
directory structure on the proper volumes on the Windows NT
server.
Once the configuration information is complete we will test what
will occur during the migration by running a trial migration.
This is a feature of the Migration Tool which gives the ability
to try out the migration settings without actually completing the
migration and having to deal with the errors that could occur.
When running a trial or actual migration, the Migration Tool
records information on the migration in three LOG files. The
three LOG files created are:
. LOGFILE.LOG which contains information on users, groups, and
files, including the information that currently exists on
the NetWare server. Also, it provides a record of what was
successfully transferred and what failed.
. SUMMARY.LOG which presents an overview including the names
of servers that were migrated and the number of users,
groups, and files that were transferred.
. ERROR.LOG which provides a list of any errors that occurred
during the migration, including any system failures that
prevented the migration, for example, running out of disk
space.
If there are any errors during the trial migration, we will
determine which settings will be most useful for fixing them, and
run another trial. This allows the number of errors to be pared
down considerably. Each time a Trial Migration is run a new set
of log files are created with a consecutively numbered file
extension.
These log files are important for reviewing the status of trial
migrations so that errors can be minimized prior to the final
migration, and also for a record from which to work for any final
cleanup or changes to be made after the actual migration. When we
are satisfied with the results of the trial migration, we will
run the process over again, this time committing changes on the
Windows NT Server-based computer.
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The final result will be a successful migration of user accounts,
groups and files from the NetWare servers to the Windows NT file
server. It will be necessary to create login batch files on the
Windows NT server to establish any drive mappings that user
applications may be looking for. This will be identified as part
of the NetWare inventory process.
MIGRATING EXISTING CLIENTS TO MICROSOFT WINDOWS 95 AND MICROSOFT
OFFICE 95 PROFESSIONAL
Digital Equipment Corporation, using a combination of automated
and manual processes, will collect information about the
installed base of client PC hardware and software at the
Renaissance Corporate Headquarters location. This information
will be used to categorize the hardware and identify the
software.
HARDWARE
The hardware will be grouped into classes of machines. That is,
machines having like characteristics. A machine will be selected
from each class and setup in a test area provided at the
Renaissance Lincoln, MA facility. Migrations from the existing
operating system to Microsoft Windows 95 will be performed on
this collection of sample machines using a combination of
automated and manual processes. The test migration will document
the procedure to successfully migrate a PC to Windows 95. This
documentation will include any automated scripts and any problems
areas and the corrective actions necessary to remove these
problem areas.
SOFTWARE
The software information collected during the inventory process
will be compared to the Microsoft Windows 95 approved software
list. Any software that is not on the approved list will result
in an exception condition. The exception conditions will require
a manual test effort to determine if the software can run
reliably under Windows 95 and if so, what is the process
necessary to migrate to Windows 95. A reasonable effort will be
expended to determine if the software can be made to run under
Windows 95. The results of the software evaluation and testing
will be documented along with any procedures necessary to migrate
the software to Windows 95.
The process to migrate to Microsoft Office 95 Professional will
be included in the migration design process.
MIGRATION PROCESS
Using the information from the hardware and software test and
evaluation process migration scenarios will be developed. These
scenarios will be a combination of automated and manual
procedures. Automated migration scripts will be developed for
each class of machine identified during the inventory process.
These scripts will also include the necessary commands to migrate
the software that can be migrated. The scripts will be executed
at a time mutually agreed to by Renaissance and Digital Equipment
Corporation. The success of the migration will be
<PAGE>
determined by the ability to log into the primary file server and
execute all required programs successfully.
EXCEPTIONS
Exceptions are PCs that do not have the minimum hardware
necessary to run Windows 95. These will be identified and
presented to Renaissance. These exceptions may result in a
complete unit replacement, hardware upgrade or component
replacement to bring the PC into conformance.
Software exceptions will be presented to Renaissance with
recommendations to resolve them.
If the hardware meets the requirements for Windows 95 and the
software is on the approved software list but the PC cannot be
successfully migrated using an automated process, an attempt will
be made to identify the problems and resolve them. This will be
on a best effort basis.
LOTUS NOTES MIGRATION - V3 TO V4
Digital will install a Lotus Notes server based on the Windows NT
Network Operating System. Lotus Notes version 4.0 Server will be
installed on the new server. Once this is complete, databases and
user accounts will be migrated from Lotus Notes version 3.0 to
Lotus Notes version 4.0. No migration effort will be required on
the Lotus Notes client.
When the Lotus Notes Mail to SMTP gateway is available for a
Windows NT Server platform, Digital will migrate the existing
gateway from OS/2 to Windows NT and implement the new Lotus Notes
Mail to SMTP gateway.
This activity will migrate Renaissance from Lotus Notes Server
version 3.0 to Lotus Notes version 4.0, migrate the Notes server
platform from OS/2 to Windows NT and consolidate two Notes
servers to one server. The Notes Mail to SMTP gateway migration
will migrate the server platform from OS/2 to Windows NT.
Digital will implement the migration in a manner that minimizes
any adverse impact to the Renaissance user community.
HELPDESK SERVICES
Digital will provide program management and direction in
delivering Renaissance Solution's Help Desk Support Services. As
the program manager, Digital will utilize specific resources and
expertise from both Digital and from a partnership that Digital
has developed with a key industry resource. For the Help Desk
Support Center we will be utilizing one of our partners, The
Sutherland Group, Ltd. located in Rochester, N.Y.
<PAGE>
DELIVERABLES
Digital and Sutherland will provide a Help Desk customized to
meet Renaissance Solution's requirements. The Help Desk will
incorporate a team of Technical Support Engineers who are career
employees of Sutherland. Following are the components for the
Help Desk:
. Support for Windows NT Server and Workstations versions
3.51 and 4 (when commercially available), Windows 3.11,
MS-Office 4.3, WIN 95, MS-Office 95, NOTES 4.2,
NETSCAPE Navigator, Innoculan, Visual Basic 4.X
. Order Management for HW and SW product procurement
. Logging calls for remedial maintenance for office and
traveling consultants
. Access on Open Call status reports
. Managing Moves, Adds, Changes (MAC) via taking work
orders and distributing them to the on site LAN manager
or other appropriate resource
. Interface for network problem reporting to LAN manager
EXCLUSIONS:
. The Help Desk will not support any Macintosh operating
systems or applications. Any calls on these applications
will be dispatched to the Digital LAN manager who will
address the issues on a best effort basis.
. The Help Desk will not support custom developed applications
in Lotus Notes, Visual Basic, or other development
environments.
. The Help Desk will not support any applications or operating
systems (ie. OS/2 and Novell NetWare) except those mentioned
above.
The Help Desk Team provided will be qualified on each
software product and task within the scope of this SOW.
COVERAGE
The Help Desk will be available for 5 days per week, 16 hours per
day, 6 A.M. TO 10 P.M. EST. Access will consistently be provided
by dialing 1-800-200-6452, E-Mail, and FAX.
DEDICATED MODEL
No customer program "sharing" is designed into the employee
model except for unplanned overflow scenarios. Versus a
shared model where a phone agent may represent several
customer programs from one station during one shift, the
Renaissance Help Desk follows a strict program dedication
for each employee
<PAGE>
assigned to a customer and the program teams are located in
the same office area.
PLATFORM
The Help Desk will support, at a minimum, the following
hardware and software environments:
. Applications / System environmentsa
o WINDOWS NT Server and Workstation 3.51 (4.x
when commercially available
o WINDOWS 95
o WINDOWS 3.11
o MS-OFFICE 95
o MS OFFICE 4.3
o NOTES 4.2
o NETSCAPE NAVIGATOR
o INNOCULAN
o VISUAL BASIC 4.X
. Intel based PC's (386,486, Pentium)
. Compaq Proliant 1500R/4500
CALL FLOW/ESCALATION
When a call enters into the Help Desk the Technical Support
Engineer first identifies the caller as a registered
employee of Renaissance Solutions. This is accomplished by
starting the call with an identification question(s)
minimally consisting of asking for the name, employee id,
and phone number of the caller. This information will be
verified against a list of valid employees. When a
successful match results, the callers record and profile is
updated into the Technical Support Engineer's screen. The
employee profile will contain the platform, configuration,
and software used by the employee, as well as a call history
of prior requests and problems logged at the Help Desk.
The Engineer then asks the caller to describe the problem
they are having or request and inputs the description into a
"problem" or "request" screen. For Problem Calls, the Help
Desk has an automatic FAQ tool built into the system which
rapidly searches for similar descriptions and offers the
Engineer possible solutions. The Help Desk program is
designed with an intelligent system as well as staffed with
qualified engineers to accomplish a problem / resolution
exercise quickly and efficiently.
<PAGE>
When the problem is resolved, the Engineer inputs the
solution into the system and the caller's record is updated.
All problem calls are tracked for historical purposes. The
Engineer has a history of all problem calls for a specific
subscriber which aides in pattern identification of non-
technical callers for a higher quality support service. This
is especially effective for subscribers who call several
times for the same problem and deal with different Engineers
on each call.
If the Engineer cannot find the resolution for the problem,
he/she can attempt to duplicate the caller's problem. A
"LAB" is maintained at the Help Desk location with the
intent to make available the possible environmental make-up
of a subscriber's system setup. This lab will include a
laptop similar to or the same as the employee callers. The
Engineer will attempt to duplicate the caller's problem and
then find the solution. For complex or elusive problems it
is common for the Engineer to disconnect the call with the
subscriber, perform the research, and then call back the
subscriber as soon as possible.
If the problem is related to hardware or unsupported
software the Engineer will initiate the appropriate process.
The Help Desk will have the ability to accept a "work order"
for HW repair, and will initiate a work order process with
Digital. The Help Desk will also take orders on Moves, Adds,
and Changes which will be dispatched to the on-site Digital
LAN manager. All escalation's or work orders keep the
problem ticket open until confirmation of the problem
resolution is obtained. The Help Desk Engineer has the
ability to "queue" a callback to the caller for follow-up
scenarios to ensure that the escalation or dispatch action
has been fulfilled. For Hardware Dispatch calls, the Help
Desk will call the Renaissance Solution employee at the end
of the service level time frame to ensure that a Digital
engineer has been dispatched to the caller's site unless the
Digital engineer has contacted the Help Desk to indicate a
response to the service call.
For HW/SW procurement requests, the Help Desk Engineer will
create a log on a customized screen and forward the request
to the Digital procurement specialist who will respond to
the Help Desk with a written quote within 48 hours and will
proceed with the procurement activity upon acceptance of the
quote by Renaissance.
<PAGE>
END-USER SUPPORT
The Help Desk Team will provide end-user support to
Renaissance Solutions' employees in a team environment. The
Technical Support Engineers will provide support remotely
via the 1-800-200-6452 number and the LAN Manager will be
on-site at Renaissance. The Digital LAN manager will be the
primary resource who will provide the hands-on support
necessary to maintain the integrity of the operations at
Renaissance pertaining to the network, servers, clients
(PC's), and users. The Technical Support Engineers will
provide the vehicle for the users to request changes, log
problems, and find resolution. The Technical Support
Engineers will also support the LAN Manager in areas
requiring additional information on applications, status on
open requests, and by providing an organized flow of
information pertaining to work requests.
Both the Help Desk Engineers and on site LAN Manager will
get direction and support from the Program Manager provided
by Digital. The Digital Program Manager will provide
leadership to the entire team pertaining to the end-goals of
the contract between Renaissance and Digital.
All team members will conduct themselves as a team
regardless of which company they are employed with.
Renaissance will view this team as one.
The Help Desk is responsible for all dispatch requests and will
follow-up with the end-user and Digital to ensure that the
service level agreement for break-fix is being met. The Help Desk
will escalate to the appropriate management level within Digital
when necessary to report a break in the service level agreement
with the intent to remedy the situation as soon as possible.
Renaissance will also provide Digital a management escalation
tree to be used by the team when necessary.
DATABASE
The Help Desk's comprehensive database houses information
about the end user, captures trouble ticket data, stores
historical data, tracks open tickets, closed tickets,
escalation's, and call transfers (i.e. customer service).
Each caller is given a "trouble ticket number" for reference
in call back scenarios or for solution attempts when caller
must hang up from the Help Desk to attempt a solution
recommendation (in the case of callers who have only one
phone line). If a caller calls in with a trouble ticket
number the
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Engineer has only to enter the number to access the record
and the open trouble ticket. All information about the
previous call is immediately available to the Engineer for
the convenience of the caller, in the event the original
Engineer is not available. Problem trends are tracked off-
line for statistical research and is available on-line
within the FAQ tool embedded in the system.
REPORTS
All standard reports are available to measure the activity
levels and performance of the program. Each report can be
delivered weekly and is available via E-Mail, FAX, or USPS
mail. Following are the standard reports:
. Number of calls, type, and disposition (open, closed)
. Duration of closure (time from open ticket to closed
ticket)
. Phone report (hold time, abandonment, time to answer,
overflow)
. Escalation's, Work Orders, Requests
. LAN Manager Move, Adds, Changes
. Order Management Reports
. Call Backs (includes time to call back)
Additional custom reports are available upon request.
STATUS MEETINGS
Status Meetings will be held once a month and will include, as a
minimum, the Renaissance Program Manager, the Sutherland Program
Manager, the Digital on site engineer, and Digital
representatives from the Chicago and U.K. Renaissance offices.
These meetings will be chaired by the Digital Program Manager and
will focus on the performance of the program.
CALL SERVICE LEVEL
Service level indicators will be monitored by the Help Desk
and Digital will make these available to Renaissance
Solutions for performance evaluation. This information will
be utilized to make adjustments to the program for higher
quality results. The reports mentioned in the Report section
of this SOW will be utilized. Following are the metrics and
goals:
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. first call closure rate greater than 80%
. abandon rate less than 8% of calls (voice mail
messages do not count as abandoned calls)
. 90% of calls answered within 20 seconds (or voice
mail option)
. all calls not answered when agents are unavailable
will be given the option to leave voice mail. All voice
mails will be responded to when the next agent is
available.
PROOF OF CONCEPT TEST
Renaissance has requested that a 45 day proof of concept
test period be implemented initially for this contract. The
test period will begin on a date selected by Digital and
Renaissance. The test will prove all components of the
contract are being met or are set up.
The Service Level Indicators for the test period are:
. All Renaissance end-users receive support on the
identified applications and functions
. All dispatches for break-fix are managed by the
support team
. The network, servers, and clients (PC's) are supported
by the Digital LAN Manager on-site
. All existing problems are either remedied or are
covered under a plan to be remedied
. Digital and Sutherland will conduct themselves as one
unit (team) to support Renaissance
. Status on all requests described within this SOW can be
provided on a timely and accurate reporting process
The terms of the Proof of Concept Test are:
. During the test Renaissance must agree or disagree
that all service level indicators for the test are
being met on the 25th day, 35th day, and 45th day of
the test
. Upon disagreement Digital will provide to Renaissance a
plan to remedy the component in question and will
execute any changes necessary to remedy that component
if possible
. Renaissance agrees to be fair in their assessment
<PAGE>
HARDWARE MAINTENANCE SERVICES
Digital will implement Hardware Maintenance Services for the term
of three years from the date on which the hardware is installed
and is operational, as follows:
GENERAL
. Remedial hardware maintenance will be performed on-site during
the standard hours of coverage, specified as Monday through
Friday 8:00 AM - 5:00 PM. Digital will automatically activate a
Problem Management plan to involve the necessary technical
resources should some extraordinary problem cause repairs to
exceed predetermined time limits.
. Problem Management will be in effect Monday through Friday 6 AM
to 10 PM. Digital Management will be automatically notified if
the following criteria are not met:
- Response 1 Hour
- Desktop Repair 24 Hours
- LAN Server Repair 4 Hours
. Digital will provide all labor and materials.
. Replacement parts may be new or refurbished. Replaced parts
become the property of Digital.
. A designated service representative (if applicable) is assigned
to each account to monitor the equipment's performance and
service history.
. In the event a hardware problem on Laptops, Desktops, and
Printers is not repaired within one business day ( 24 hours),
Digital will swap out the defective unit.
SERVERS:
Digital will provide our premium level of service, DECservice for
the eight (8) servers and related hubs and routers. This provides
a four hour response during the call window, and continuous
effort to effect a repair. The hours of coverage are Monday to
Friday, 8:00 AM to 8:00 PM, excluding Digital holidays.
DESKTOP/PRINTERS:
Digital will provide onsite maintenance, Monday thru Friday, 8:00
AM to 5:00 PM with a four (4) hour response time during the call
window and continuous effort to effect a repair.
LAPTOPS:
Renaissance's Laptop installed base falls into three groups; (1)
Digital HiNote Ultra II, (2) NEC Versa, and (3) Multivendor, ie.
a mix of AT&T, IBM, Toshiba, etc.
Digital will provide overnight spare replacement for any Laptop
requiring maintenance or repair. In order for this to occur,
Renaissance has agreed to stock
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4 Ultra II laptops as "hot spares" in Lincoln. The spares will be
managed by the Digital on-site LAN engineer. Over time, actual
usage will determine the ideal stocking level. If additional
spares are required, Renaissance will be requested to purchase
the recommended spares. If less is required, Renaissance will
decide how to redeploy the excess spares.
When a laptop fails, the Renaissance employee will call the Help
Desk and indicate if they require a replacement unit. If
required, a replacement unit will be shipped next day via
overnight carrier.
For Digital HiNote Ultra II's covered by Passport support and for
NEC Versa's covered by Ultracare, the Help Desk will schedule an
Airborne currier will pick up the defective unit for repair. The
repaired unit will be returned to the user within 3-5 days of
initial pickup.
For Multivendor laptops not covered by Passport or Ultracare, the
defective unit will be returned to a designated Depot Repair
Center in the same shipping carton that the spare unit was
delivered in. In instances where a replacement was not required,
the defective unit will be returned to a designated depot repair
center in a shipping carton provided by the onsite LAN engineer.
Once repaired, the unit will be returned to the enduser and the
enduser will return the spare unit to the Lincoln facility within
24 hours. This timely return will ensure that minimum spare units
are stocked in Lincoln.
SOFTWARE MAINTENANCE
THE OPEN LICENSE
The Microsoft Open License is the simplest volume licensing
option for Renaissance and can also be used for any of your
affiliates that are too small or dispersed to effectively
participate in a Variable or Enterprise License. The Open
License offers volume pricing over a two-year period based on an
initial, up-front volume purchase and includes the ability to
renew and reorder.
If you have a Variable License and some of your affiliates decide
to acquire software through an Open License, you will be able to
count those Open License purchases toward your total Variable
License forecast, so your organization as a whole can still
benefit from their purchases.
The Open License operates as an independent agreement that can be
signed with any local, Microsoft-authorized reseller. It has a
minimum entry requirement of only 50 units. While your
affiliates that use the Open License won't have access to your
more advantageous pricing, you can still count the purchases they
make under their Open License toward your total Variable License
forecast, so the organization as a whole can still benefit from
their purchases.
<PAGE>
Once you've determined your degree of participation in the
Enterprise License you can evaluate Maintenance. Maintenance
should be considered if you have a large number of users that
need to work together and share documents. If software users
procure upgrades independently, you may end up with a mixed
environment and users will find that they cannot read each
other's documents or work together effectively. If your licenses
are enrolled in Maintenance, all users will have access to the
latest software versions at the same time and will be able to
continue working together productively.
Maintenance should also be considered if your organization
operates on a set budget that does not allow for unplanned budget
spikes. It can be very difficult to predict and plan for upgrades
in your budgeting process. Maintenance can solve this problem by
establishing a set quarterly fee that is predictable and
unchanging and that will provide your users will access to all
upgrade releases. Maintenance can take the guess-work out of your
budgeting process.
MAINTENANCE
With Select Maintenance Renaissance can optimize your software
investment through efficient, ongoing access to the latest
upgrades of Microsoft products. When you enroll your licenses in
Maintenance, you'll have the right to distribute the latest
technology to your Maintenance users when new, upgraded versions
of your Microsoft software are released.
You can take advantage of this right at any time during the
entire 2 year term of your agreement. In addition, if you enroll
any previous version of a product in Maintenance, you can
immediately upgrade that product to the most current version
under Maintenance for no additional fee.
Maintenance is an excellent tool to help manage the costs of
product upgrades over time. When you enroll in Maintenance, the
only fee you'll pay for upgrades is a fixed quarterly Maintenance
fee that is both predictable and unchanging.
This makes it possible to plan a smooth software budget because
there will be no unexpected upgrade costs to cause spikes in your
budget. In addition, the quarterly Maintenance fee that you
agree to when you sign your agreement is guaranteed, so you know
it won't increase during the term of your agreement.
NEW VERSION LICENSE SERVICE (NVLS)
New Version License Service grants the right to use all new
versions of a specific PC software product released during the
agreement period. New Version License Service is primarily sold
on Digital-developed PC software products and on selected third
party developed products for which Digital has license
distribution rights.
<PAGE>
SERVICE FEATURES
. Grants the right to use all new versions of a specific PC
software product released during the contract period.
. Available on Digital-developed PC software products.
. Available on third party developed products for which Digital
has license distribution rights .
MICROSOFT SYSTEMS MANAGEMENT SERVER
Microsoft's System Management Server(SMS) is a system management
environment for corporate networks, which are composed of one or
more local area networks.
SMS works with the Microsoft family of networks, Windows NT and
LAN Manager, and the Novell family of networks, NetWare 3.x and
NetWare 4.x in bindery emulation mode, to provide a complete
resource management solution.
SMS provides inventory management. SMS collects and maintains a
hardware and software inventory of the entire enterprise. This
inventory is maintained in a relational database that can be used
to provide asset management and tracking, support for the on site
engineer and provide the information necessary to plan future
network growth.
SMS can be used to distribute and install software on clients and
servers in the enterprise. Managing this from a central site can
substantially reduce the cost of software upgrades and new
installations.
SMS is one of the support tools that can be used by the on site
engineer. SMS can monitor the enterprise for specific events and
generate alerts when those events occur. The resident engineer
has a great deal of flexibility in determining what events to
monitor and what action to take when an event occurs. SMS also
provides a suite of troubleshooting utilities. There is a client
remote control function that allows the resident engineer to take
control of a remote PC and assist the user in solving a problem.
There are network monitoring tools that aid in determining what
is happening in the network.
Because Systems Management Server is the basis of an enterprise
management system and such a powerful suite of tools,
implementation planning is critical to realizing the benefits of
the system. The Digital migration team will work with Renaissance
to develop the implementation plan.
IMPLEMENTATION PLANNING
Systems Management Server is a hierarchical management system
that is extensible across the enterprise. The hierarchy starts
with the central site. The
<PAGE>
central site may be responsible for managing one domain or
multiple domains depending on the management structure of the
organization. The central site has the master copy of the SQL
database. The central site can have multiple subordinate sites
reporting in to it. These subordinate sites can be primary sites
which means they also have an SQL database that maintains
information on the portion of the network the primary site is
responsible for and also reports the contents of its database to
the central site.
Secondary sites do not have an SQL database. They have servers
that perform SMS functions but they report the results of these
functions to a primary site. There is no management function at a
secondary site. This means that there is no SMS console and no
management personnel to man one. Management functions are
originated at a primary site and sent to the secondary site for
execution.
The planning activities deal with determining the hierarchy and
the locations of databases and servers. The sizes of the
databases is determined by the number of devices in the
enterprise, the frequency of data collection, the database
retention time and the size and frequency of software
distribution. Once these computations are completed, the database
devices and databases are created in SQL.
There are several server functions in SMS. There are SMS servers,
logon servers, distribution and helper servers. Planning
determines which physical servers perform which functions.
The network infrastructure must be evaluated to determine if it
can service the communication that SMS will generate. The intent
of the design process is to minimize this additional network
communication load.
Other parts of the planning process will address how the help
desk will make use of the information collected by SMS, what the
software distribution strategy will be and the frequency of the
hardware and software inventory.
IMPLEMENTATION OF SMS
SQL Server will be installed and the database devices and
databases created. A system administrator type of account will be
established for use by SMS. When this is completed, SMS can be
installed.
When the central site SMS is installed, if there are other
primary sites in the hierarchy, they can attach to the central
site. This establishes the hierarchy and starts communication. If
there are secondary sites, the primary sites can acquire them
which establishes the hierarchy and communication. With the
installation complete, SMS jobs can be created and scheduled for
execution. The first job is usually the one that installs the
client portion of SMS the next time the client logs in. This job
needs to be sent to the logon servers. When this is complete,
inventory jobs can be scheduled.
<PAGE>
Any software distribution jobs can be constructed and distributed
for execution and help desk personnel can be shown how to access
the system and scheduled for further training.
The last part of the implementation is the "as built"
documentation. This includes the planning documents that provide
information on why the system was built as it was. It also
includes database documentation and any scripts that have been
developed to perform SMS functions.
The Digital migration team will install and implement Microsoft
SQL Server, Microsoft Systems Management Server and SMS Clients
at the Renaissance Lincoln, MA. location on a server platform
provided by Renaissance.
TECHNOLOGY REFRESH
Under the PC Utility program, all hardware is eligible for
periodic replacement with new technology. The refresh strategy
for Renaissance is to provide the "Power Laptop User" with a
periodic refresh of technology every 12 months for three
consecutive refreshes. At month 36 of the initial contract,
Digital recommends that Renaissance review the said contract to
determine the best economic strategy.
The Power Laptop environment will have 30 units refreshed within
75 days of contract commencement. The initial term for the Power
Laptops will be 48 months. The refreshment of 42 Power Laptops
plus 4 hot spares will take place at month 13 from the original
contract commencement date. The term for the refreshment of Power
Laptops at month 13 is included in the initial 48 month term.
The price per seat for the Power Laptop User will remain at
$397.00 per seat. The 46 replaced Power Laptops will then cascade
to other Users defined by Renaissance and the 46 replaced units
will be returned to Digital within 15 days. The contract duration
will not change as a result of the cascading. At the end of the
24th month of the original contract commencement date,
Renaissance will have the option to refresh 42 Power Laptops,
plus 4 hot spares in which the term for the Power Laptop will
extend for 48 months at the $397.00 per seat price from date of
installation of the refreshed Power laptop environment. At this
point Digital has refreshed the Power Laptop Environment
successfully for the 36 month term based upon the original
contract commencement date.
The laptop refresh program assumes that the cost of the
configuration will not exceed the current pricing at the time of
the said refresh. Please refer to the hardware pricing referenced
in your Purchase Order number MP0496. If Renaissance prefers a
more expensive product, the cost per seat, per month will be
adjusted accordingly.
Digital will refresh 10 desktop PC's as described in the
Statement of Work, which will be replaced within 30 days of
contract commencement.
<PAGE>
This refresh program is designed to replace all of the equipment,
keeping current the price per seat, per month after the 20th
month of the contract. However, this is not a planned refresh and
the Program Manager will work with Renaissance to optimize the
best time and equipment to result in the refresh that Renaissance
requires at that point in time. Renaissance will have the option,
after the 20th month to refresh the equipment covered under this
SOW for an additional term of 36 months except power laptops,
which will be extended 48 months; keeping the current price per
seat.
The "Refresh" program is subject to "Float" language tied to
three year T-Bills. After the initial and subsequent refresh, all
future refreshes will have the price per seat, per month changed
up or down by the following %:
<TABLE>
<CAPTION>
Term Change in 3 Year T-Bill Change to
------ ----------------------- ---------
Monthly Price
-------------
<S> <C> <C>
48 Months + 0.5% 0.915%
36 Months + 0.5% 0.688%
</TABLE>
The Three Year T-Bill rate at contract commencement is 6.11%.
Flexibility is the key to this program. Many options will arise
during the life of this agreement. Digital is ready to
accommodate Renaissance's needs.
RESIDENT SENIOR LAN ENGINEER
A full time Resident Network Engineer will be assigned to
Renaissance Solutions, Inc. for the term of the PC Utility. This
individual will be located in Lincoln, MA and be responsible for
the day to day requirements and will have complete control of
Renaissance Solutions LAN and WAN environment. This individual
will arrange for the necessary support agreements to be
initiated, assist in the supervision of Digital personnel
assigned to the account, and act as a focal point for all
services delivered by Digital Multivendor Customer Services
during the term of the PC Utility. In the event the workload is
greater than what can successfully be accomplished by one
individual, Renaissance will add one or more of its own technical
staff to the Digital staff to assist with the workload. In this
event, the Renaissance people assigned will be under the
supervision and direction of the Digital on site LAN Engineer.
Tasks involve daily management and on-going support of the
network. The following describes the nature of some of the
activities carried out by the on-site Network engineer for
Renaissance platform (Novell or Windows NT):
<PAGE>
. Setting up user groups
. Setting up users within each user group
. Establishing proper access rights and privileges of
users and groups
. Setting up printer queues for all networked printers
. Running virus protection as needed
. Running regular back ups on LAN data and/or
application files
. Moving, adding or changing users
. Updating passwords
. Performing single new user orientation
. Participate in updating existing hardware as required
by the software
. Technical edit of procurement requests
A Digital Network Engineer can also provide expertise to help
Renaissance make strategic decisions related to network planning,
growth, business goals and technology refresh. A consultant helps
with such fundamental decisions as:
. Growth Strategy
. Network design
. Addition or expansion of network(s) or site(s)
. Interoperability testing
. Migration (data & application)
. Technology - hardware and software platforms-
Selections
. Training Plan
. Network redundancy (fault tolerance)
. Network & data Security
. Disaster Recovery
. Help Desk & Call Escalation Process
. Network Documentation
. Network support policies and procedures
. Project Management
. Investment protection via Technology refresh
. Internet connectivity
ACCEPTANCE AND PAYMENT
. With respect to the products and services to be delivered to
Renaissance hereunder, including any and all new PC's and all
equipment related thereto, Digital will invoice DFS as
appropriate, upon (i) delivery of such hardware and equipment
to Renaissance's premises AND (ii) the successfully completed
installation of the hardware and equipment as evidenced by a
Certificate of Acceptance signed by Renaissance.
. DFS will invoice Renaissance on a monthly basis or on any other
such terms as are mutually agreed to between Renaissance and
DFS.
<PAGE>
9.0 PRECEDENCE OF AGREEMENT
Unless otherwise provided herein, if there is any conflict or
inconsistency between the Statement of Work and the Digital PC
Utility Services Agreement, the Digital PC Utility Services
Agreement governs.
Entered into by Renaissance Solutions,
Inc. /s/ William Jenkins
--------------------------
(Authorized Signature)
and by Digital Equipment Corporation
/s/ Raymond Mercier
-----------------------------
(Authorized Signature)
10.0 ACCEPTANCE SIGNATURES
Renaissance Solutions, Inc. and Digital Equipment Corporation
hereby agree to this Statement of Work, version 5 dated August
29 described herein. This Statement of Work, version 5, is to be
effective on September 3, 1996 and on such date, will replace in
its entirety version 4 of this Statement of Work.
RENAISSANCE SOLUTIONS, INC.
By /s/ William T Jenkins Date: 9/3/96
------------------------------ --------------
(Authorized Signature)
Name: William T. Jenkins Title: VP Finance &
---------------------------- ---------------
(type or printed) Administration
DIGITAL EQUIPMENT CORPORATION
By /s/Raymond Mericer Date: /s/3 Sept 96
----------------------------- -----------------
(Authorized Signature)
Name: Raymond Mercier Title: Program Manager
--------------------------- -----------------
(type or printed)
<PAGE>
APPENDIX A - SERVICE/PRODUCT SCHEDULES
PC UTILITY
SERVICE/PRODUCT SCHEDULE
SERVICE/PRODUCT SCHEDULE NO. REN-01A TO PC UTILITY AGREEMENT.
-------
Services Agreement No. ES 1006-96, dated as of April 30, 1996.
This Service/Product Schedule is issued pursuant to the PC
Utility Agreement, consisting of the SOW and Digital's Terms for
this program, between Renaissance and Digital, and will be
governed by that Agreement. This schedule, REN-01A dated August
29, is to be effective on September 3, 1996 and on such date,
will replace in its entirety schedule REN-01 of this Statement of
Work.
SYSTEMS PROVIDED UNDER THIS SCHEDULE:
36 Month Extended
Configuration 1 Quantity 10 Price per Seat $260.16
------------- -------- ----- --- ----
(includes services) Total $ 93,657.60 Monthly Price: $2601.60
----- -------------
Digital Venturis FP 5150
Pentium 150 MHZ Processor
1.2 GB IDE HDD, 3.5 " 1.44MB FDD
8MB DRAM
S3 64 Bit Graphics Accelerator w/1MB
Kingston 8MB Upgrade
NEC Multispin 6X CDROM
Sound card Wave Table 16 Bit
3COM Ethernet Adaptor for 10Base-T UTP RJ45
NEC 17" SVGA Monitor 1024x768
Microsoft Windows 95
Microsoft Office Standard V7.0 on CD ROM (Qty 1)
Microsoft Office Standard V7.0 for WIN'95
MOLP-A License -50 User Pack
Netscape Navigator for Win'95
Acquisition, Staging and Integration
Installation, End-user Orientation
End User Application Support
Hardware Maintenance
Custom Help Desk
Microsoft Software Maintenance (2 years)
Program Management Services
Technology Refresh Services
<PAGE>
Schedule REN-01A (continued)
36 Month Extended
Configuration 2 Quantity 38 Price per Seat: $260.16
------------- -------- --------------
(Includes Services) Total $355,898.88 Monthly Price:$ 9,886.08
-------------
IBM Compatables
486 Type Desktop PCs
WIN'95 Migration Services
Custom Help Desk
End User Application Support
Hardware Maintenance
Microsoft Soft ware Maintenance (2 years)
Program Management Services
36 Month Extended
Configuration 3 Quantity: 62 Price per Seat: $ 412.21
------------- -------- --------------
(Includes Services) Total $920,052.72 Monthly Price: $25,557.12
-------------
NEC Versa 4000 type laptops
WIN'95 Migration Services
Custom Help Desk
End User Application Support
Hardware Maintenance
Microsoft Software Maintenance (2 years)
Program Management Services
36 Month Extended
Configuration 4 Quantity: 23 Price per Seat: $86.48
------------- -------- --------------
(Includes Services) Total $ 71,605.44 Monthly Price: $1,989.04
----- -------------
HP Laserjet Printers
Custom Help Desk
Hardware Maintenance
Program Management Services
<PAGE>
Schedule REN-01A (continued)
36 Month Extended
Configuration 5 Quantity: 7 Price per Seat: $6,379.37 Total $ 1,607,601.20
------------- -------- ----- --- ---- -----
(Includes Services) Monthly Price: $44,655.61
--------------
Compaq Proliant Servers
64 MB RAM
8 GB HDD
Misc. Cisco, Bay Networks, and Shiva Hubs and Routers
NT Migration Services
Lotus Notes Migration
Custom Help Desk
End User Applications Support
Hardware Maintenance
Microsoft Software Maintenance (2 years)
Microsoft System Management Server
Program Management Services
Resident Senior LAN Engineer
CONFIGURATION 1-5 TOTAL:
36 MONTH EXTENDED $3,299,430.10
MONTHLY TOTAL $ 84,689.45
__________________________________________________________________________
RENAISSANCE SOLUTIONS, INC. DIGITAL EQUIPMENT CORPORATION
By: /s/ William T Jenkins By: /s/ Raymond Mercier
---------------------------------- -------------------------
(Authorized Signature) (Authorized Signature)
Name: William T. Jenkins Name: Raymond Mercier
-------------------------------- -----------------------
(Typed or Printed) (Typed or Printed)
Title: V P Finance & Administration Title: Program Manager
-------------------------------- ----------------------
Date: 09/03/96 Date: 03 Sept 96
------------------------------- ----------------------
<PAGE>
PC UTILITY
SERVICE/PRODUCT SCHEDULE
SERVICE/PRODUCT SCHEDULE NO. REN-02A TO PC UTILITY AGREEMENT. Services
-------
Agreement No. ES 1006-96, dated as of April 30, 1996. This Service/Product
Schedule is issued pursuant to the PC Utility Agreement, consisting of the
SOW and Digital's Terms for this program, between Renaissance and Digital,
and will be governed by that Agreement. This schedule, REN-02A dated August
29, is to be effective on September 3, 1996 and on such date will replace
in its entirety, schedule REN-02 of this Statement of Work.
SYSTEMS PROVIDED UNDER THIS SCHEDULE:
48 Month Extended
Configuration 6 Quantity 34 Price per Seat $ 382.49 Total $ 624,223.68
------------- -------- -------------- -----
(Includes services) Monthly Price: $13,004.81
--------------
Digital Hi Note Ultra II CTS-5/133
Pentium 133 MH CPU
256 KB L2 CACHE
8 MB DRAM
1.35 GB HDD, 1.44 MB FDD
VL-BUS SVGA Video w/1MB BRAM
10.4" Active Color Display
16 Bit Audio
2 Typ II or 1 Type III PCMCIA EXPN
I/R Port, LiIon Batt
Kingston 16 MB DIMM
Quad Speed Multimedia Module (Qty 15)
Megahertz XJACK 28.8/14.4 Kbps
PCMCIA FAX/Modem
3COM Ethernet Adaptor for 10 Base-T; RJ45
NEC 17" SVGA Color Monitor (Qty 10)
1024X768 ni, .28DP
Microsoft Office PRO V7.0
Visual Basic PRO V4.0
Netscape Navigator
WIN'95
Acquisition, Staging and Integration
Installation, End User Orientation
Custom Help Desk
End User Application Support
Hardware Maintenance
Microsoft Software Maintenance (2 years)
Program Management Services
Technology Refresh Services
<PAGE>
Schedule REN-02A (continued)
___________________________________________________________________________
Renaissance Solutions, Inc. Digital Equipment Corporation
By: /s/ William T Jenkins By: /s/ Raymond Mercier
------------------------------ ------------------------------
(Authorized Signature) (Authorized Signature)
Name: William T. Jenkins Name: Raymond Mercier
---------------------------- ----------------------------
(Typed or Printed) (Typed or Printed)
Title: VP Finance & Administration Title: Program Manager
--------------------------- ---------------------------
Date: 09/03/96 Date: 03 Sept 96
---------------------------- ---------------------------
<PAGE>
PC UTILITY
SERVICE/PRODUCT SCHEDULE
SERVICE/PRODUCT SCHEDULE NO. REN-03 A TO PC UTILITY AGREEMENT. Services
--------
Agreement No. ES 1006-96, dated as of April 30, 1996. This Service/Product
Schedule is issued pursuant to the PC Utility Agreement, consisting of the
SOW and Digital's Terms for this program, between Renaissance and Digital,
and will be governed by that Agreement. This schedule, REN-03A dated August
29, is to be effective on September 3, 1996 and on such date will replace
in its entirety, Schedule REN-03 of this SOW.
SYSTEMS PROVIDED UNDER THIS SCHEDULE:
36 Month Extended
Configuration 7 Quantity 15 Price per Seat $ 274.00 Total $ 147,960.00
------------- -------- -------------- -----
(Includes services) Monthly Price: $4,109.88
-------------
Digital Hi Note Ultra II CTS-5/133
Pentium 133 MH CPU
256 KB L2 CACHE
8 MB DRAM
1.35 GB HDD, 1.44 MB FDD
VL-BUS SVGA Video w/1MB BRAM
10.4" Active Color Display
16 Bit Audio
2 Typ II or 1 Type III PCMCIA EXPN
I/R Port, LiIon Batt
Kingston 16 MB DIMM
Quad Speed Multimedia Module (Qty 15)
Megahertz XJACK 28.8/14.4 Kbps
PCMCIA FAX/Modem
3COM Ethernet Adaptor for 10 Base-T; RJ45
Microsoft Office PRO V7.0
WIN'95
34 Spare Batteries
34 Nylon Carrying Cases
3 Battery Chargers
Acquisition, Staging and Integration
Installation, End User Orientation
Custom Help Desk
End User Application Support
Hardware Maintenance
Microsoft Software Maintenance (2 years)
Program Management Services
___________________________________________________________________________
Renaissance Solutions, Inc. Digital Equipment Corporation
/s/ Williams T Jenkins /s/ Raymond Mercier
--------------------------------- ----------------------------------
(Authorized Signature) (Authorized Signature)
Williams T. Jenkins Raymond Mercier
--------------------------------- ----------------------------------
(Typed or Printed) (Typed or Printed)
Title: VP Finance & Administrator Title: Program Manager
-------------------------- ---------------------------
Date: 9/3/96 Date: 9/3/96
--------------------------- ----------------------------
<PAGE>
APPENDIX A TOTALS
SCHEDULE Monthly Total Extended Total
REN-01A $ 84,689.45 $3,048,815.80
REN-02A $ 13,004.81 $ 624,223.68
REN-03A $ 4,109.88 $ 147,960.00
----------- -------------
TOTAL $101,804.14 $3,820,999.40
APPENDIX B - RENAISSANCE LOCATIONS
1. LINCOLN, MA. - CORPORATE
2. CHICAGO, Ill.
3. NEW YORK, NY
4. LONDON, U.K.
<PAGE>
APPENDIX C - CHANGE REQUEST FORM
FOR ___________________________ PROJECT
_________________________________________________________________
CHANGE REQUEST NUMBER:__________ CREATION DATE:_________________
DESCRIPTION OF CHANGE: MORE DETAILS ATTACHED: [_]Yes No [_]
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
REASONS FOR PROPOSED CHANGE:..
[_] Problem/Error/Nonconformance (corrective change)
[_] Improvement/Enhancement (perfective change)
[_] Change in Environment (adaptive change)
DOCUMENTS AND DELIVERABLES REQUIRING UPDATE:
[_] Contract Agreement [_] SOW [_] Payment Schedule
[_] Project Plan [_] Quality Plan [_]______________Plan
[_] Functional Specification [_] Acceptance Test Specification
[_] _____________ Specification [_] _____________ Specification
[_] System Design Specification [_] Acceptance Test Package
[_] Solution Component __________________________________________
[_] Solution Component __________________________________________
[_] Solution Component __________________________________________
[_] Solution Component __________________________________________
[_] Solution Component __________________________________________
[_]______________________________________________________________
[_]______________________________________________________________
ESTIMATE OF IMPACT:
[_] Minimal [_] Moderate [_] Major
Cost to Implement: _________ hours ________ (local currency)
IMMEDIATE RESOLUTION: [_] Yes [_] No-start formal change control
process
FULL EVALUATION REQUIRED: [_] No [_] Yes -- Evaluation cost:
_________ hours _________ (local currency)
Recommended Evaluator:
_________________________________________________________________
ORIGINATOR: ___________________ SIGNATURE: _____________________
ADMINISTRATOR: ________________ SIGNATURE: _____________________
APPROVAL FOR FULL EVALUATION:
DIGITAL PM: ___________________________________
CUSTOMER PM: __________________________________
REVIEW DATE: __________________________________
DECISION: [_] Approved [_] Rejected [_] Defer Until:________
Reason:
_________________________________________________________________
DIGITAL PM: __________________ SIGNATURE: ______________________
CUSTOMER PM:__________________ SIGNATURE:_______________________
______________________________ SIGNATURE: ______________________
<PAGE>
APPENDIX D - CERTIFICATE OF ACCEPTANCE
PC UTILITY SERVICES STANDARD AGREEMENT
CERTIFICATE OF ACCEPTANCE
TO SERVICE/PRODUCT SCHEDULE NO. _____, DATED __________,19__.
UNDER
A PC UTILITY AGREEMENT DATED AS OF _______, 1996 BETWEEN DIGITAL
EQUIPMENT CORPORATION AND RENAISSANCE SOLUTIONS, INC..
RENAISSANCE HEREBY ACKNOWLEDGES THAT THE SERVICES AND/OR PRODUCTS
DESCRIBED IN THE ABOVE REFERENCED SERVICE/PRODUCT SCHEDULE HAVE
BEEN COMPLETELY DELIVERED, PROPERLY EXECUTED AND/OR INSTALLED,
MEET ALL RELEVANT SPECIFICATIONS AND ARE HEREBY ACCEPTED FOR
PURPOSES OF THE ABOVE REFERENCED AGREEMENT. RENAISSANCE HEREBY
CONFIRMS ITS PAYMENT OBLIGATIONS UNDER THE TERMS OF SUCH
AGREEMENT.
RENAISSANCE
_____________________________
(AUTHORIZED SIGNATURE)
_____________________________
(PRINTED NAME)
_____________________________
(TITLE)
_____________________________
(ACCEPTANCE DATE)
<PAGE>
APPENDIX E - ISSUE RESOLUTION FORM
------------------------------------------------------------------
ISSUE RESOLUTION FORM
Customer Name ___________________ Program Name
____________________
Issue Resolution Number _________ Date _____________________
Requester _________________ Orgn.______________________
Issue Type Rfi/Problem/Change/Other (Specify)__________________
Issue Description _____________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Impact (If Not Resolved) ______________________________________
_______________________________________________________________
Date Resolution Needed _________ Proposed Assignee __________
Attachments (If Any) __________________________________________
_______________________________________________________________
Reviewer _________________ Review Completion Date____________
Reviewer Comments: ____________________________________________
_______________________________________________________________
Estimate of Additional Effort _________________________________
Reviewer Recommendations (Circle One): Accept/Reject/Need More
Info/Other
Disposition (Circle One): Accepted/Accept Conditionally/Need
More Info/Rejected
Planned Completion Date _________
Comments ______________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Program Mgr. Signature______________________Resolved Date______
Copyright (C) 1989 By Digital Equipment Corporation All Rights
Reserved
------------------------------------------------------------------
<PAGE>
EXHIBIT 10.3
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
THIS AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT (the "Amendment") is entered
into as of the 1st day of July, 1996, by and between Renaissance Solutions,
Inc., a Delaware corporation with its principal place of business at Lincoln
North, 55 Old Bedford Road, Lincoln, Massachusetts 01773 (the "Corporation"),
and Harry M. Lasker, 213 Brattle Street, Cambridge, Massachusetts 02138 (the
"Employee").
WHEREAS, the Corporation and the Employee are parties to an Employment
Agreement, dated as of January 31, 1995 (the "Employment Agreement"), pursuant
to which the Employee, inter alia, serves as Co-Chairman of the Corporation; and
WHEREAS, the Corporation and the Employee desire to amend the Employment
Agreement with respect to the annual base salary provided for therein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Corporation and the Employee
agree as follows:
1. Notwithstanding the provisions of Section 3.1 of the Employment
Agreement, the Employee's annual base salary, effective July 1, 1996, shall be
$375,000.
2. In all other respects, the Employment Agreement shall remain in full
force and effect and is hereby affirmed and ratified.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year set forth above.
RENAISSANCE SOLUTIONS, INC.
By: /s/ George A. McMillan
--------------------------------------
Title: Vice President, Chief Finanical
-------------------------------------
Officer and Chief Operating Officer
------------------------------------
EMPLOYEE:
/s/ Harry M. Lasker
-------------------------------------------
Harry M. Lasker
<PAGE>
EXHIBIT 10.4
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
THIS AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT (the "Amendment") is entered
into as of the 1st day of July, 1996, by and between Renaissance Solutions,
Inc., a Delaware corporation with its principal place of business at Lincoln
North, 55 Old Bedford Road, Lincoln, Massachusetts 01773 (the "Corporation"),
and David A. Lubin, 10 Stoneleigh Circle, Watertown, Massachusetts 02172 (the
"Employee").
WHEREAS, the Corporation and the Employee are parties to an Employment
Agreement, dated as of January 31, 1995 (the "Employment Agreement"), pursuant
to which the Employee, inter alia, serves as Co-Chairman of the Corporation; and
WHEREAS, the Corporation and the Employee desire to amend the Employment
Agreement with respect to the annual base salary provided for therein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Corporation and the Employee
agree as follows:
1. Notwithstanding the provisions of Section 3.1 of the Employment
Agreement, the Employee's annual base salary, effective July 1, 1996, shall be
$375,000.
2. In all other respects, the Employment Agreement shall remain in full
force and effect and is hereby affirmed and ratified.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year set forth above.
RENAISSANCE SOLUTIONS, INC.
By: /s/ George A. McMillan
--------------------------------------
Title: Vice President, Chief Finanical
-----------------------------------
Officer and Chief Operating Officer
-----------------------------------
EMPLOYEE:
/s/ David A. Lubin
-------------------------------
David A. Lubin
<PAGE>
EXHIBIT 10.5
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
THIS AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT (the "Amendment") is entered
into as of the 1st day of July, 1996, by and between Renaissance Solutions,
Inc., a Delaware corporation with its principal place of business at Lincoln
North, 55 Old Bedford Road, Lincoln, Massachusetts 01773 (the "Corporation"),
and David P. Norton, 5 Crowell Farm Road, Concord, MA 01742 (the "Employee").
WHEREAS, the Corporation and the Employee are parties to an Employment
Agreement, dated as of January 31, 1995 (the "Employment Agreement"), pursuant
to which the Employee, inter alia, serves as President and Chief Executive
Officer of the Corporation; and
WHEREAS, the Corporation and the Employee desire to amend the Employment
Agreement with respect to the annual base salary provided for therein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Corporation and the Employee
agree as follows:
1. Notwithstanding the provisions of Section 3.1 of the Employment
Agreement, the Employee's annual base salary, effective July 1, 1996, shall be
$375,000.
2. In all other respects, the Employment Agreement shall remain in full
force and effect and is hereby affirmed and ratified.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year set forth above.
RENAISSANCE SOLUTIONS, INC.
By: /s/ George A. McMillan
--------------------------------------
Title: Vice President, Chief Financial
-----------------------------------
Officer and Chief Operating Officer
-----------------------------------
EMPLOYEE:
/s/ David P. Norton
---------------------------------------
David P. Norton
<PAGE>
EXHIBIT 11
RENAISSANCE SOLUTIONS, INC.
COMPUTATION OF PRO FORMA EARNINGS PER COMMON SHARE
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 27, September 29, September 27, September 29,
1996 1995 1996 1995
------------------ ------------------ ------------------ -----------------
<S> <C> <C> <C> <C>
Weighted average number of
common and common equivalent
shares outstanding:
Common stock.................. 6,989 5,968 6,605 5,481
Stock Options (treasury
stock method)...................... 872 381 771 277
================== ================== ================== =================
Total.................... 7,861 6,349 7,376 5,758
================== ================== ================== =================
Pro forma net income per common
share.............................. $ .19 $ .13 $ .49 $ .36
================== ================== ================== =================
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF RENAISSANCE SOLUTIONS, INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-27-1996
<CASH> 22,380
<SECURITIES> 19,769
<RECEIVABLES> 11,727
<ALLOWANCES> 344
<INVENTORY> 0
<CURRENT-ASSETS> 54,430
<PP&E> 2,660
<DEPRECIATION> 681
<TOTAL-ASSETS> 56,481
<CURRENT-LIABILITIES> 2,893
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 53,426
<TOTAL-LIABILITY-AND-EQUITY> 56,481
<SALES> 0
<TOTAL-REVENUES> 25,395
<CGS> 0
<TOTAL-COSTS> 20,336
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41
<INCOME-PRETAX> 5,917
<INCOME-TAX> 2,302
<INCOME-CONTINUING> 3,615
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,615
<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0
</TABLE>
<PAGE>
EXHIBIT 99
will be required in 1996, establishes financial accounting and
reporting standards for stock-based employee compensation plans.
The Company has not determined the effects of implementing
SFAS 121 and SFAS 123 on its financial position and results of
operations for any future period.
Certain Factors That May Affect Future Results
The following important factors, among others, could cause
actual results to differ materially from those indicated by
forward-looking statements made in this Annual Report on Form 10-K
and presented elsewhere by management from time to time.
Dependence on Gemini. Pursuant to the Teaming Agreement, the
Company and Gemini have agreed to market and perform certain
service offerings on a collaborative basis. The Company currently
relies on Gemini for a significant portion of the Company's
marketing activities. Approximately 79% and 54% of the Company's
revenues in 1994 and 1995, respectively, resulted from its
relationship with Gemini; approximately 65% and 24%, respectively,
of revenues were from services billable to Gemini and
approximately 14% and 30%, respectively, of revenues were from
services billable directly to third parties. As a result, the
Company's success is currently dependent in large part on the
success of Gemini's marketing efforts.
Gemini has committed to provide the Company with certain
minimum bookings during the term of the Teaming Agreement, subject
to the satisfaction of certain conditions. In the event that
during any of the six month periods during the term of the Teaming
Agreement bookings obtained by Renaissance from Gemini customers
or customers of joint service offerings by Renaissance and Gemini
are less than specified guaranteed bookings, Gemini has agreed,
subject to the satisfaction of certain conditions, to retain the
services of Renaissance for a fee equal to the amount of the
deficiency. Purchase orders from Gemini providing for Renaissance
to perform services over no more than a twelve month period and
containing certain other terms qualify as bookings under the
Teaming Agreement. If at the end of any twelve month period
covered by a purchase order from Gemini, a bookings deficiency
still remains, Gemini is required to make a compensating payment
to Renaissance of 25% of the remaining deficiency (50% with
respect to any remaining deficiency relating to the six month
period ending April 30, 1996) in full satisfaction of the
remaining deficiency.
The Company monitors Gemini's progress in meeting its
bookings commitments through regular conference calls and meetings
with Gemini representatives. "Bookings" are generally defined for
purposes of the Teaming Agreement as gross fees (excluding expense
reimbursements) committed to Renaissance as a result of the
30
<PAGE>
relationship with Gemini during the applicable period, as
evidenced by a written agreement between the Company and the
customer for the delivery of goods or services within twelve
months, plus any such fees actually collected by the Company
during such period which are not evidenced by a written agreement.
Gemini generally is treated as having satisfied its bookings
commitment regardless of whether revenues are recognized by
Renaissance with respect to a particular engagement. For example,
under the Teaming Agreement, 50% of the fees attributable to a
cancelled contract count towards Gemini's bookings commitment if
such cancellation is not primarily attributable to the actions or
omissions of Gemini. In accordance with industry practice, nearly
all of the Company's contracts are terminable by either the
customer or the Company on short or no notice and without penalty.
In addition, Gemini does not guarantee the collectibility of any
receivables resulting from customer engagements under the Teaming
Agreement.
The Teaming Agreement has a term of five years, commencing on
November 1, 1994. The Teaming Agreement is subject to earlier
termination upon the occurrence of certain events, including a
change in control of the Company (as defined in the Teaming
Agreement). In the event that the Teaming Agreement is terminated
by Gemini during the first four years following the commencement
of the Teaming Agreement as a result of the Company's breach or
bankruptcy or as a result of a change in control of the Company,
Renaissance is required to pay a termination fee to Gemini in the
amount of $1,600,000. While the Company is currently building its
internal marketing force and seeking additional strategic
alliances, the termination of the Teaming Agreement would have a
material adverse effect on the Company's business and results of
operations.
Under the Teaming Agreement, the Company has agreed to train
Gemini in the use of the Company's Balanced Scorecard, desktop
application and certain other methodologies during the first four
years of the term of the Teaming Agreement and to perpetually
license these methodologies, to the extent developed during the
first four years of the term of the Teaming Agreement, to Gemini
on a non-exclusive basis. As a result, during the term of the
Teaming Agreement Gemini personnel may perform services in
connection with joint service offerings which might otherwise be
performed by Company personnel. In addition, following the
termination of the Teaming Agreement, Gemini will be in a position
to compete with the Company using know-how and methodologies which
might otherwise be proprietary to the Company.
Pursuant to the Teaming Agreement, Renaissance has agreed not
to work for or enter into any comparable teaming agreement with
certain specified competitors of Gemini during the term of the
Teaming Agreement and for a period of one year thereafter. In
addition, the Teaming Agreement imposes certain restrictions on
31
<PAGE>
the ability of the Company to issue additional capital stock and
on the ability of the Company's principal stockholders to dispose
of their Common Stock prior to the first anniversary of the
termination of the Teaming Agreement. These provisions may have
the effect of delaying or preventing transactions involving a
change in control of the Company, including transactions in which
stockholders might otherwise receive a premium for their shares
over then current market values.
Concentration of Revenues. The Company has in the past
derived, and may in the future derive, a significant portion of
its revenues from a relatively limited number of major projects.
The Company's revenues and earnings can fluctuate from quarter to
quarter based on the number of customer engagements and the
requirements of these engagements. In accordance with industry
practice, nearly all of the Company's contracts are terminable by
either the customer or the Company on short or no notice and
without penalty. An unanticipated termination of a major project
could have a material adverse effect on the Company's business and
results of operations.
Variability of Quarterly Operating Results. Variations in
the Company's revenues and operating results occur from quarter to
quarter as a result of a number of factors. Quarterly revenues
and operating results can depend on the size of customer
engagements during a quarter, the number of working days in a
quarter and employee utilization rates. The timing of revenues is
difficult to forecast because the Company's sales cycle is
relatively long in the case of new customers and may depend on
factors such as the size and scope of assignments and general
economic conditions. Because a high percentage of the Company's
expenses are relatively fixed, a variation in the level of
customer assignments can cause significant variations in operating
results from quarter to quarter and could result in losses. The
Company attempts to manage its personnel utilization rates by
closely monitoring project timetables and staffing requirements
for new projects. While the number of professional staff may be
adjusted to some degree to reflect active projects, the Company
must maintain a sufficient number of senior professionals to
oversee existing customer projects and participate in securing new
customer engagements. In addition, most of the Company's
engagements are terminable without customer penalty. An
unanticipated termination of a major project could result in an
increase in underutilized employees and a decrease in revenues and
profits or the incurrence of losses.
Limited Operating History. The Company was organized in
March 1992. Although the Company has been profitable in each of
its last eight quarters, and has recorded net income of $2.8
million and $3.7 million (or $2.2 million and $3.3 million if the
Company had been taxable as a C corporation for the entire fiscal
year) for the twelve months ended December 31, 1994 and 1995,
32
<PAGE>
respectively, the Company recorded a net loss of $1.7 million
(both on an actual basis and if the Company had been taxable as a
C corporation) for the twelve months ended December 31, 1993. In
1994 and 1995, the Company experienced a significant increase in
customer assignments and substantial revenue growth and
profitability. Due to the Company's limited operating history,
there can be no assurance that the recent revenue growth and
profitability will continue. In order to support the growth of
its business, the Company expanded its operations during 1994 and
1995 and expects to continue such expansion. The planned increase
in the Company's operating expenses resulting from this expansion
may adversely affect the Company's operating results and
profitability if revenues do not increase as anticipated.
Dependence on Principal Service Offerings; Need to Develop
New Offerings. The Company currently derives substantially all of
its revenue from two service offerings, consulting services based
on its Balanced Scorecard methodology and client/server systems
integration services relating to the design and development of
desktop applications to support business processes. Any factor
adversely affecting the sales or profitability of these services
could have a material adverse effect on the Company's business and
results of operations. The market for desktop applications of the
type offered by the Company is new, reflecting the greater use of
client/server architecture and related computer and computer
software technology. Accordingly, there can be no assurance that
this market will develop as anticipated by the Company.
The Company's future success will depend in significant part
on its ability to successfully develop and introduce new service
offerings and improved versions of existing service offerings.
There can be no assurance that the Company will be successful in
developing, introducing on a timely basis and marketing such
service offerings or that any service offerings will be accepted
in the market. Moreover, services offered by others may render
the Company's services non-competitive or obsolete.
Project Risks. Many of the Company's engagements involve
projects which are critical to the operations of its customers'
businesses and which provide benefits that may be difficult to
quantify. The Company's failure or inability to meet a customer's
expectations in the performance of its services could result in
the incurrence by the Company of a financial loss and could damage
the Company's reputation and adversely affect its ability to
attract new business. In addition, an unanticipated difficulty in
completing a project could have an adverse effect on the Company's
business and results of operations.
Management of Growth. The Company is currently experiencing
a period of rapid growth which has placed and could continue to
place a strain on the Company's financial, management and other
resources. The Company's ability to manage its staff and
33
<PAGE>
facilities growth effectively will require it to continue to
improve its operational, financial and other internal systems and
to train, motivate and manage its employees. If the Company's
management is unable to manage growth effectively and new
employees are unable to achieve anticipated performance levels,
the Company's business and results of operations could be
adversely affected.
Competition. The management consulting and client/server
systems integration markets are subject to rapid change and are
highly competitive. The Company competes with and faces potential
competition for customer assignments and experienced personnel
from a number of companies that have significantly greater
financial, technical and marketing resources, generate greater
revenues and have greater name recognition than does the Company.
In addition, the management consulting and client/server systems
integration markets are highly fragmented and served by numerous
firms, many of which serve only their respective local markets.
The Company's customers primarily consist of major corporations,
and there are an increasing number of professional services firms
seeking management consulting and client/server systems
integration engagements from that customer base. The Company
believes that the principal competitive factors in the management
consulting and client/server systems integration industries
include the nature of the services offered, quality of service,
responsiveness to customer needs, experience, technical expertise
and price. There can be no assurance that the Company will
continue to compete successfully with its existing competitors or
will be able to compete successfully with any new competitors.
International Operations. Sales outside North America
accounted for approximately 15.7% of the Company's revenues in the
year ended December 31, 1995. The Company intends to expand its
presence in European markets and anticipates that international
sales will account for an increasing portion of revenues in the
future. International revenues are subject to a number of risks,
including the following: agreements may be difficult to enforce
and receivables difficult to collect through a foreign country's
legal system; foreign customers may have longer payment cycles;
foreign countries could impose additional withholding taxes or
otherwise tax the Company's foreign income, impose tariffs or
adopt other restrictions on foreign trade; fluctuations in
exchange rates could affect product demand and adversely affect
the profitability in U.S. dollars of services provided by the
Company in foreign markets where payment for the Company's
services is made in the local currency; U.S. export licenses may
be difficult to obtain; and the protection of intellectual
property in foreign countries may be more difficult to enforce.
There can be no assurance that any of these factors will not have
a material adverse effect on the Company's business and results of
operations.
34
<PAGE>
Intellectual Property Rights. The Company relies upon a
combination of trade secret, nondisclosure and other contractual
arrangements, and copyright and trademark laws to protect its
proprietary rights. The Company presently holds no patents or
registered copyrights, trademarks or service marks. The Company
generally enters into confidentiality agreements with its
employees, consultants, customers and potential customers and
limits distribution of its proprietary information. There can be
no assurance that the steps taken by the Company in this regard
will be adequate to deter misappropriation of its proprietary
information or that the Company will be able to detect
unauthorized use and take appropriate steps to enforce its
intellectual property rights. Although the Company believes that
its services and products do not infringe on the intellectual
property rights of others, there can be no assurance that such a
claim will not be asserted against the Company in the future.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
All financial statements required to be filed hereunder are
filed as Appendix A hereto, are listed under Item 14(a), and are
incorporated herein by this reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is contained in part
under the caption "Executive Officers of the Company" in PART I
hereof, and the remainder is contained in the Company's Proxy
Statement for the Company's Annual Meeting of Stockholders to be
held on May 10, 1996 (the "1996 Proxy Statement") under the
caption "PROPOSAL 1 - ELECTION OF DIRECTORS" and is incorporated
herein by this reference.
Officers are elected on an annual basis and serve at the
discretion of the Board of Directors.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is contained under the
caption "PROPOSAL 1 - ELECTION OF DIRECTORS" in the Company's 1996
Proxy Statement and is incorporated herein by this reference.
35
