March 21, 2006
DataLogic International, Inc.
00000 Xxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxx, President
Dear Xx. Xxxxxx:
This letter agreement confirms the engagement of Monarch Bay Management
Company, L.L.C. ("MBMC") by DataLogic International, Inc. ("DataLogic") as
consultants to provide chief financial officer and accounting services to
DataLogic.
1. Services.
(a) MBMC will perform the consulting services described in Exhibit A
hereto (the "Services"). MBMC will devote such time and effort as is it
deems necessary to provide the Services. DataLogic will provide MBMC with all
information concerning DataLogic which MBMC reasonably deems appropriate in
connection with its engagement and will provide MBMC with access to
DataLogic's officers, directors and advisors. To DataLogic's knowledge, all
such information will be true and accurate in all material respects and will
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading
in light of the circumstances under which such statements are made. DataLogic
acknowledges that MBMC will be using and relying upon the accuracy and
completeness of publicly available information and the information supplied by
the Company and its officers in connection with its engagement without
independent verification.
(b) MBMC will keep confidential and not disclose or permit its
employees or representatives to disclose confidential information received
from DataLogic (other than to MBMC employees or agents involved in the
performance of services hereunder or otherwise on a need-to-know basis),
except as contemplated in this letter agreement, as otherwise may be
authorized by DataLogic, or as may be required by law. For purposes of this
letter agreement, "confidential information" means information provided by
DataLogic to MBMC that is not otherwise available to MBMC from sources outside
of DataLogic, and any such information shall cease to be confidential
information when it becomes generally available, or comes to MBMC's attention,
through other sources that do not, to MBMC's knowledge at the time, involve a
violation of this or any similar agreement.
2. Fees.
(a) Monthly Fee. For each month during the term of this letter
agreement, DataLogic will pay to MBMC a fee (the "Monthly Fee) equal to
$6,250; provided that the initial payment for the period from March 21, 2006
through March 31, 2006 will be $2,218 in cash. The Monthly Fee will be
payable in cash. The Monthly Fee will be due and payable on the first
business day of such month and is non-refundable.
(b) Option Grant. DataLogic will grant to the Chief Financial Officer
made available by MBMC to DataLogic hereunder (the "CFO") an option to
purchase 200,000 shares of common stock of DataLogic (the "Option"). The
Initial Option will vest 20% on grant and thereafter equally per quarter over
the next succeeding 8 quarters, so long as the CFO remains Chief Financial
Officer of DataLogic. Should a change of control take place with respect to
DataLogic at any time during the term hereof, then 100% of the Option shall
accelerate and immediately vest. The exercise base price the Option will
equal the average closing price of DataLogic common stock for the ten days
prior to grant. The Option will be exercisable for a period of five years
from the date of grant. DataLogic will register the shares of common stock
issuable upon exercise of the Option with the Securities and Exchange
Commission on Form S-8 or other suitable form that will permit such shares to
be freely traded upon issuance.
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3. Expenses. In addition to the compensation described in Section 2
above, DataLogic will reimburse MBMC for all reasonable out-of-pocket expenses
incurred in connection with the performance of the Services upon presentation
of supporting documentation (including but not limited to, related tax and
benefits expense associated with the CFO, travel and entertainment expense
incurred in accordance with DataLogic policies, and reasonable fees and
expenses of consultants or legal counsel retained by MBMC), provided that such
expenses are pre-approved by DataLogic. Such reimbursement will be due and
payable within five days after DataLogic's receipt of MBMC's invoice for same.
4. Indemnity; Limitation of Liability.
(a) DataLogic will indemnify and hold harmless MBMC against any and all
losses, claims, damages, obligations, penalties, judgments, awards,
liabilities, costs, expenses and disbursements (and any and all actions,
suits, proceedings and investigations in respect thereof and any and all legal
and other costs, expenses and disbursements in giving testimony or furnishing
documents in response to a subpoena or otherwise), including, without
limitation, the costs, expenses and disbursements, reasonably incurred, as and
when incurred, of investigating, preparing or defending any such action, suit,
proceeding or investigation (whether or not in connection with litigation in
which MBMC is a party), directly or indirectly, caused by, relating to, based
upon, arising out of, or in connection with this letter agreement or MBMC's
performance hereunder, except to the extent primarily caused by the gross
negligence or willful misconduct of MBMC.
(b) The indemnification provisions shall be in addition to any
liability which DataLogic may otherwise have to MBMC or the persons
indemnified below in this sentence and shall extend to the following: MBMC,
its affiliated entities, members, employees, legal counsel, agents and
controlling persons (within the meaning of the federal securities laws), and
the officers, directors, employees, legal counsel, agents and controlling
persons of any of them. All references to MBMC in this Section 4 shall be
understood to include any and all of the foregoing.
(c) MBMC shall not have any liability (whether direct or indirect, in
contract or tort or otherwise) to DataLogic for or in connection with this
letter agreement or MBMC's performance hereunder, except to the extent that
any such liability is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) to have resulted primarily from
MBMC's gross negligence or willful misconduct. In no case shall MBMC's
liability (whether direct or indirect, in contract or tort or otherwise) to
DataLogic for or in connection with this letter agreement or MBMC's
performance hereunder exceed the aggregate fees paid by DataLogic to MBMC
hereunder.
5. Term of Engagement. The initial term of this letter agreement shall
be from the date hereof through March 31, 2007 (the "Initial Term"). After
the Initial Term, the term of this letter agreement will automatically be
extended for an additional successive one-year periods unless either party
provides written notice to the other party of its intent not to so extend the
term at least 30 days before the expiration of the then current term. Upon
termination or expiration of this letter agreement, neither party will have
any liability or continuing obligation to the other, except that: (a)
DataLogic will remain liable for any Monthly Fees and out-of-pocket expenses
incurred up to the time of termination, (b) upon any termination of this
letter agreement other than for Cause (as defined below), DataLogic shall pay
to MBMC the balance of the Monthly Fees payable for the Initial Term or any
renewal term the in effect, and (c) the provisions of Sections 4, 6 and 7 will
survive the termination or expiration of this letter agreement. "Cause" as
used herein means termination based on (i) MBMC's material breach of this
letter agreement, (ii) conviction of the CFO for (A) any crime constituting a
felony in the jurisdiction in which committed, (B) any crime involving moral
turpitude whether or not a felony), or (C) any other criminal act against
DataLogic involving dishonesty or willful misconduct intended to injure
DataLogic (whether or not a felony), (iii) substance abuse by the CFO, (iv)
the failure or refusal of the CFO to follow one or more lawful and proper
directives of the Board of Directors delivered to the CFO and MBMC in writing,
or (v) willful malfeasance or gross misconduct by the CFO which discredits or
damages DataLogic.
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6. Successors and Assigns. The benefits of this letter agreement shall
inure to the respective successors and assigns of the parties hereto and of
the indemnified parties hereunder and their successors and assigns and
representatives, and the obligations and liabilities assumed in this letter
agreement by the parties hereto shall be binding upon their respective
successors and assigns; provided, that the rights and obligations of either
party under this Agreement may not be assigned without the prior written
consent of the other party hereto and any other purported assignment shall be
null and void.
7. Miscellaneous.
(a) DataLogic is a sophisticated business enterprise that has retained
MBMC for the limited purposes set forth in this letter agreement, and the
parties acknowledge and agree that their respective rights and obligations are
contractual in nature. DataLogic recognizes that the consulting relationship
is not an exclusive relationship for MBMC or any of its personnel. Each party
disclaims an intention to impose fiduciary obligations on the other by virtue
of the engagement contemplated by this letter agreement, and each party agrees
that there is no fiduciary relationship between them.
(b) The Services do not include requiring MBMC to engage in any
activities for which an investment advisor's registration or license is
required under the U.S. Investment Advisors Act of 1940, or under any other
applicable federal or state law; or for which a "broker's" or "dealer's"
registration or license is required under the U.S. Securities Exchange Act of
1934, or under any other applicable federal or state law. MBMC's work on this
engagement shall not constitute the rendering of legal advice, or the
providing of legal services, to DataLogic. Accordingly, MBMC shall not
express any legal opinions with respect to any matters affecting DataLogic.
(c) The validity and interpretation of this letter agreement shall be
governed by the law of the State of California applicable to agreements made
and to be fully performed therein. DataLogic and MBMC agree that if any
action is instituted to enforce or interpret any provision of this letter
agreement, the jurisdiction and venue shall be Orange County, California.
(d) This letter agreement constitutes the entire agreement of the
parties with respect to the matters herein referred and supersedes all prior
agreements and understandings, written and oral, between the parties with
respect to the subject matter hereof. Neither this letter agreement nor any
term hereof may be changed, waived or terminated orally, except by an
instrument in writing signed by the party against which enforcement of the
change, waiver or termination is sought.
Please confirm your agreement by signing and returning a copy of this letter
agreement to MBMC.
Very truly yours,
Monarch Bay Management Company, L.L.C.
/s/ Xxxxx Xxxxxxx
By: Xxxxx Xxxxxxx
President
Accepted and agreed by:
DataLogic International, Inc.
/s/ Xxxxx Xxxxxx
By: Xxxxx X. Xxxxxx
President
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Exhibit A
Services
Chief Financial and Accounting Officer
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.. Make available Xxxxxxx X. Xxxxxx (or another individual acceptable to
DataLogic in DataLogic's sole discretion) to serve as Chief Financial
Officer of DataLogic.
.. Perform all principal accounting and financial officer duties.
.. Prepare and maintain current status with all taxes including but not
limited to Federal, State, Employment, Sales and Use taxes.
.. Direct all finance, accounting and treasury functions including cash
forecasting, cash management, operational budgeting, month-end closing,
and ensure accuracy and compliance in accounting/financial reporting.
.. Re-engineer the Finance Department - transform finance operations through
improved processes, advising on financial performance, evaluation of
outsourcing options, best management practices, evaluating/appraising
strategic partnerships.
.. Support fundraising activities.
.. Analyze financial and operating information for management to facilitate
decision-making and provide input for corrective action, where applicable.
.. Recommend/implement improvements to ensure the integrity of the company's
financial information and systems.
.. Forecast and monitor financial information against goals and operating
strategy.
.. Manage/oversee relationships with independent auditors, banks and
investment banking community.
.. Handle financial negotiations with other third party relationships.
.. Prepare quarterly updates to the financial forecast.
.. Lead the financial due diligence efforts.
.. Lead the integration of accounting and finance systems for mergers.
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