Exhibit No. 10.2 Agreement for
Non-Competition and Earn-Out Compensation
dated February 24, 2005
AGREEMENT FOR NON-COMPETE AND EARN OUT SCHEDULE
This Agreement for Non-Competition and
Earn-Out Compensation ("Agreement") is
made February 24, 2005, by and among the
following parties: DataLogic
International, Inc., a Delaware corporation
("Parent"), and DataLogic New
Mexico, Inc., a Delaware
corporation("Purchaser") and I.S. Solutions LLC, a
New Mexico limited liability company
("Seller") and Tony Grundler ("Managing
Member"), David J. Heil ("Member") and Eric
M. Siegel ("Member").
WHEREAS, Purchaser and Seller are parties
to an Asset Purchase Agreement
executed contemporaneously with this
Agreement;
WHEREAS, the execution of this Agreement is
a condition precedent to closing
under the Asset Purchase Agreement between
Purchaser and Seller; and
WHEREAS, Parent, Purchaser, Seller,
Managing Member and Members desire to
enter this Agreement, subject to the terms
and conditions set forth below.
NOW THEREFORE, for good and valuable
consideration, the receipt and
sufficiency of which is acknowledged,
Parent, Purchaser, Seller, Managing
Member and Members agree as follows.
1. Parent and
Purchaser agree to the terms of this Agreement, subject to
closing under the Asset Purchase Agreement
described in the recitals.
2. Seller,
Managing Member and Members agree to the terms of this
Agreement, subject to closing under the
Asset Purchase Agreement described in
the recitals.
3. Parent,
Purchaser, Seller, and Managing Member or Member, as the case
may be, shall each execute the
Non-Competition Agreements attached hereto as
Exhibit 1 [Tony Grundler]; Exhibit 2 [Eric
M. Siegel] and Exhibit 3 [David J.
Heil].
4. Subject to
closing under the Asset Purchase Agreement described in the
recitals, Parent and Purchaser agree that
the persons named below shall
participate in the Earn Out Plan during the
two years following the closing of
the Asset Purchase Agreement. Moreover, each persons,
participation
percentage is set forth opposite their name
below.
Tony Grundler (70%)
David J. Heil (22%)
Eric M. Siegel (8%)
5. Under the
Earn Out Plan, the participants, as a group, may earn up to
$400,000.00, payable in shares of
restricted common stock of the Parent (the
"Earn Out Payment"). The Earn Out Payment shall be
made, if at all, within
two years of the closing Asset Purchase
Agreement and upon the achievement of
certain post-closing revenue and net income
before tax milestones.
All
parties understand and agree that both
revenue and net income before tax
targets must be met to earn any portion of
the Earn Out Payment.
6. If the
Purchaser reports revenue greater than $3,000,000 and net
income before taxes greater than $100,000
at any point during any consecutive
12 months following the Closing, but still
within 2 years of Closing, then 25%
of the Earn Out Payment shall be earned and
delivered to the persons in the
proportions stated.
If the
Purchaser reports revenue greater than $3,500,000 and net
income
before taxes greater than $175,000 at any
point during any consecutive 12
months following the Closing, but still
within 2 years of Closing, then 50% of
the Earn Out Payment shall be earned and
delivered to the persons in the
proportions stated.
If the
Purchaser reports revenue greater than $4,000,000 and net
income
before taxes greater than $250,000 at any
point during any consecutive 12
months following the Closing, but still
within 2 years of Closing, then 75% of
the Earn Out Payment shall be earned and
delivered to the persons in the
proportions stated.
If the
Purchaser reports revenue greater than $5,000,000 and net
income
before taxes greater than $350,000 at any
point during any consecutive 12
months following the Closing, but still
within 2 years of Closing, then 100%
of the Earn Out Payment shall be earned and
delivered to the persons in the
proportions stated.
There
shall be no obligation for the Earn Out Payment unless and
until
Purchaser meets the revenue and net income
before taxes targets set forth
above during the two years following the
Closing.
8. Revenue
and net income before taxes shall be calculated in accordance
with generally accepted accounting
principles applied upon a consistent basis
and the final accounting information relied
upon in preparing the audited
financial statements of Parent and
Purchaser shall be determinative for the
purposes of this Agreement. In the event, Purchaser expands
the marketing
plan or budget for Purchaser during the
term of this Agreement, then Tony
Grundler and Parent will mutually agree on
the revised operating budget for
Purchaser. If a decision is made to front end
load marketing expenses, these
expenses will be allocated over a 2 to 4
year period depending upon the load
amount, rather than expensed in a single
accounting period. The
purpose of
the preceding sentence being to equitably
adjust, to the extent possible, the
targets for revenue and net income before
taxes caused by a change in the
marketing budget.
9. The table
set forth below summarizes agreement and understanding by
and among Parent, Purchaser, Seller,
Managing Member and Members concerning
the revenue and net income before tax
required during the two years following
closing.
<TABLE>
<CAPTION>
Net Income
Earn Out %
Profit
Revenue
Before Tax
Payment
-----------------------------------------------------------------------------------
<s>
<c>
<c>
<c>
<c>
Phase 1
-------
If the sales are equal to or
greater than $3 Mil and the net
income before tax is equal to
or greater than $100,000 then
the transfer of Parent Stock
will be made
$ 3,000,000.00 $
100,000.00 $
100,000.00
3.33%
Phase 2
-------
If the sales are equal to or
greater than $3.5 Mil and the
net income before tax is equal
to or greater than $175 K then
the transfer of Parent Stock
will be made
$ 3,500,000.00 $
175,000.00 $
100,000.00
5.00%
Phase 3
-------
If the sales are equal to or
greater than $4 Mil and the
net income before tax is equal
to or greater than $250 K then
the transfer of Parent Stock
will be made
$ 4,000,000.00 $
250,000.00 $
100,000.00
6.25%
Phase 4
-------
If the sales are equal to or
greater than $5 Mil and the
net income before tax is equal
to or greater than $350 K then
the transfer of Parent Stock
will be made
$ 5,000,000.00 $
350,000.00 $
100,000.00
7.00%
</TABLE>
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the
day and year first above written.
PARENT:
DATALOGIC INTERNATIONAL, INC., a Delaware
corporation
/s/ Keith
C. Moore
By: _______________________
Name: Keith C. Moore
Title: Chief Executive Officer
PURCHASER:
DATALOGIC NEW MEXICO, INC., a Delaware
corporation
/s/ Keith C.
Moore
By: _______________________
Name: Keith C. Moore
Title: President
SELLER:
I.S. SOLUTIONS, LLC, a New Mexico limited
liability company
/s/ Tony
Grundler
By: _______________________
Name: Tony Grundler
Title: Managing Member
MANAGING MEMBER
/s/ Tony
Grundler
By: _______________________
Name: Tony Grundler
MEMBER
/s/ Eric
M. Siegal
By: _______________________
Name: Eric M. Siegel
MEMBER
/s/ David
J. Heil
By: _______________________
Name: David J. Heil
------------------------------------------------------------------------------
Exhibit 1
NON-COMPETITION AGREEMENT
[Tony Grundler]
THIS NON-COMPETITION AGREEMENT is made and
entered into this 24th day of
February, 2005 (this "Agreement"), between
and among DataLogic International
Inc., a Delaware corporation (the
"Parent"), its wholly owned subsidiary,
DataLogic New Mexico, Inc., a Delaware
corporation (the "Purchaser"), I.S.
Solutions LLC, a New Mexico limited
liability company (the Seller) and Tony
Grundler an individual residing in
Albuquerque, New Mexico (the "Managing
Member").
RECITALS:
A.
Simultaneously with the execution of this Agreement, the
Purchaser,
the Seller, and the Managing Member have
consummated the transactions
contemplated by that certain Asset Purchase
Agreement, dated February 24,
2005, (the "Asset Purchase Agreement"),
among the Parent, the Purchaser, the
Seller, and the Managing Member, providing
for, among other things, the
purchase by the Purchaser, and the sale by
the Seller, of Seller's Business
Agreements and Seller's Equipment, as
defined in the Asset Purchase Agreement.
B. The
Managing Member is the primary officer and director, and the
majority member, of the Seller.
C. The
execution and delivery of this Agreement is a condition to the
consummation of the asset purchase
contemplated by the Asset Purchase
Agreement, and the parties are entering
into this Agreement in order to
fulfill such condition.
NOW, THEREFORE, in consideration of the
foregoing, the mutual covenants and
agreements contained herein, and other good
and valuable consideration, the
receipt and sufficiency of which are hereby
acknowledged, the parties,
intending to be legally bound, hereby agree
as follows:
1. Period of
Agreement.
The period of this Agreement shall commence
on the date hereof and remain in
effect through February 24, 2009 (the
"Non-Compete Period").
2.
Compensation.
Simultaneously with the execution of this
Agreement, the Purchaser has paid or
become obligated to pay the amounts stated
in the Asset Purchase Agreement.
The parties acknowledge and agree that the
foregoing compensation paid or to
be paid to the Managing Member is
independent of the damages that the
Purchaser may suffer in the event of any
breach of this Agreement by the
Managing Member and is not intended (and
shall not be deemed or construed) to
limit the amount of damages the Purchaser
shall suffer or be entitled to
recover in the event of any such
breach.
3. Covenant Not to
Compete.
The Managing Member covenants and agrees
that during the Non-Compete Period,
the Managing Member shall not , without the
prior written consent of the
Purchaser, directly or indirectly, and
whether as a principal or as an agent,
officer, director, employee, consultant, or
otherwise, alone or in association
with any other person, carry on, be
engaged, concerned, or take part in,
render services to, otherwise assist in any
manner (with or without any form
of compensation), or own, share in the
earnings of, or invest in the stock,
bonds, or other securities of, any person
which is engaged in a business
competitive with the business conducted
under the Seller's Business Agreements
(the "Business") or a similar business of
the Purchaser involving the business
of information systems business providing
services to Public Safety and
Homeland Security organizations , within
the State of New Mexico (the
"Competitive Business"); provided, however,
that the Managing Member may
invest in stock, bonds, or other securities
of any Competitive Business (but
without otherwise participating in the
Competitive Business) if: (A) such
stock, bonds, or other securities are
listed on any national securities
exchange or are registered under Section
12(g) of the Securities Exchange Act
of 1934, as amended; (B) the investment
does not exceed, in the case of any
class of capital stock of any one issuer,
two percent (2%) of the issued and
outstanding shares, or, in the case of
bonds or other securities of any one
issuer, two percent (2%) of the aggregate
principal amount thereof issued and
outstanding; and ) such investment would not
prevent, directly or indirectly,
the transaction of business by the
Purchaser or any affiliate of the Purchaser
with any state, district, territory, or
possession of the United States or any
governmental subdivision, agency, or
instrumentality thereof by virtue of any
statute, law, regulation or administrative
practice. The period
of time
during which the Managing Member is
prohibited from engaging in certain
activities by this Section shall be
extended by the length of time during
which the Managing Member is in breach of
the terms of this section.
It is understood by and between the parties
hereto that the foregoing covenant
by the Managing Member not to enter into
competition with the Business or a
similar business of the Purchaser is an
essential element of this Agreement
and the Asset Purchase Agreement and that,
but for the agreement of the
Managing Member to comply with such
covenant, the Purchaser would not have
agreed to enter into this Agreement or the
Asset Purchase Agreement. The
Managing Member has independently consulted
with the Managing Member's counsel
and has been advised in all respects
concerning the reasonableness and
propriety of such covenant, with specific
regard to the Business and the
nature of the business conducted by the
Purchaser and its affiliates. The
Managing Member agrees that such covenant
is reasonable in scope, geographic
area, and duration, and that compliance
with such covenant would not impose
economic or professional hardship on the
Managing Member.
4.
Restrictions on Soliciting Business of the Purchaser.
Each of the Seller and the Managing Member
further covenants and agrees that,
during the Non-Compete Period, neither the
Seller nor the Managing Member
will, either for itself or himself or
herself or for any other person or
entity, directly or indirectly, engage in
any of the following activities
without the express prior written consent
of the Purchaser:
(a) Solicit or hire
any of the employees of the Purchaser or solicit or
take away any of the Purchaser's customers,
lessors, or suppliers or attempt
any of the foregoing;
(b) Acquire or
attempt to acquire rights providing any product or service
in a Competitive Business within the
territory described in Section 3 hereof;
or
(c) Solicit or
accept orders for services competitive to those previously
provided or sold by the Seller in the
Business from any then or previous
customer of the Seller or the Business or
otherwise induce or attempt to
induce any such customer to reduce such
customer's patronage of the business
with the Purchaser or otherwise engage in
any act which would interfere with
or harm any business relationship the
Purchaser has with any customer, lessor,
employee, principal, or supplier.
5. Specific
Performance.
Without intending to limit the remedies
available to the Purchaser, each of
the Seller and the Managing Member
acknowledges that the Purchaser will have
no adequate remedies at law if the Seller
or any Member violates the terms of
Section 3 or 4, hereof. In such event, each of the Seller
and the Managing
Member agrees that the Purchaser shall have
the right, in addition to any
other rights it may have (including,
without limitation,) to obtain in any
court of competent jurisdiction specific
performance of such Sections of this
Agreement or injunctive relief to restrain
any breach or threatened breach
thereof. Nothing herein shall be construed
as prohibiting the Purchaser from
pursuing any other remedies available to
the Purchaser (whether at law or in
equity) for such breach or threatened
breach, including, without limitation,
the recovery of monetary damages from the
Seller and the Managing Member and
the right of recoupment set forth in the
Asset Purchase Agreement. The
provisions of this Section 5 shall survive
the expiration, termination or
cancellation of this Agreement.
6. Attorneys Fees
and Costs.
If an action at law or in equity is
necessary to enforce or interpret the
terms of this Agreement, the prevailing
party shall be entitled to reasonable
attorneys fees, costs, and necessary
expenses in addition to any other relief
to which that party may be entitled.
This provision is
applicable to this
entire Agreement.
7.
Representations and Warranties of the Purchaser, the Seller, and
the
Managing Member.
(a) Representations
and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Seller and
the Managing Member that: (I) the
Purchaser has all requisite power to enter
into and perform the Purchaser's
obligations under this Agreement; (ii) this
Agreement has been duly and
validly authorized by all necessary
corporate action on the part of the
Purchaser; (iii) the execution of this
Agreement by the Purchaser and
performance of the Purchaser's obligations
hereunder do not require the
consent or approval of any other party; and
(iv) this Agreement is a valid and
binding obligation of the Purchaser.
(b) Representations
and Warranties of the Seller and the Managing Member.
The Seller and the Managing Member hereby
jointly and severally represent and
warrant to the Purchaser that: (I) the
Seller and the Managing Member have the
capacity and power to enter into and
perform their obligations under this
Agreement; (ii) the Seller and the Managing
Member have duly and validly
executed this Agreement; (iii) the
execution of this Agreement and performance
of obligations of the Seller and the
Managing Member hereunder do not require
the consent or approval of any other party;
and (iv) this Agreement
constitutes a valid and binding obligation
of the Seller and the Managing
Member.
8. General
Provisions.
(a) Compliance with
Laws. The parties
agree that they will comply with
all applicable laws and regulations of
government bodies or agencies in their
respective performance of their obligations
under this Agreement.
(b) Governing Law
and Construction. This
Agreement will be governed by
and construed in accordance with the laws
of the State of New Mexico without
reference to its conflict-of-laws
principles. This
Agreement's final form
resulted from review and negotiations among
the parties and their attorneys,
and no part of this Agreement should be
construed against any party on the
basis of authorship.
(c) Forum for
Dispute Resolution. If
any dispute arises among the parties
concerning the interpretation or
performance of any portion of this Agreement
which the parties are unable to resolve
themselves, and any party brings an
action against any other party seeking a
declaratory order, specific
performance, damages, or any other legal or
equitable relief based on this
Agreement, the parties agree that the forum
for any such action shall be an
appropriate federal or state court in New
Mexico having jurisdiction, agree
that venue will be proper in such courts,
and waive any objections based on
inconvenience of the forum, and further
agree that the prevailing party in any
such action, as determined by the court,
shall be awarded its reasonable
attorneys' fees and costs in addition to
any relief or judgment the court
awards.
(d) Entire
Agreement; Amendment.
This Agreement constitutes the entire
agreement between the parties with respect
to the subject matter contained
herein and supersedes any previous oral or
written communications,
representations, understandings or
agreements with respect thereto. The terms
of this Agreement may be modified only in
writing, signed by authorized
representatives of both parties.
(e)
Assignability. This
Agreement will be binding upon the parties'
respective successors and permitted
assigns. No party may
assign this
Agreement and/or any of its rights and/or
obligations hereunder without the
prior written consent of the other party or
parties, and any such attempted
assignment will be void; provided, however,
that the Purchaser may assign this
Agreement without the prior written consent
of the Seller or the Managing
Member.
(f) Waiver.
A waiver of a breach
or default under this Agreement will
not constitute a waiver of any other breach
or default. Failure or
delay by
either party to enforce compliance with any
term or condition of this
Agreement will not constitute a waiver of
such term or condition.
(g)
Severability. If any
provision of this Agreement is declared to be
invalid, the parties agree that such
invalidity will not affect the validity
of the remaining provisions of this
Agreement, and further agree, to the
extent possible, to substitute for the
invalid provision a valid provision
that approximates the intent and economic
effect of the invalid provision as
closely as possible.
(h) Headings.
The titles of the
Sections and subsections of this
Agreement are for convenience of reference
only and are not to be considered
in construing this Agreement.
(i) Notice.
Any notice, request,
consent, demand or other communication
required to be given under this Agreement
will be in writing and will be given
personally, by facsimile or by mailing the
same, first-class, postage prepaid
to the appropriate address and facsimile
number set forth below or to such
other person or at such other address as
may hereafter be designated by like
notice. Notices by mail will be considered
delivered and become effective
three days after the mailing thereof.
All notices by
facsimile will be
considered delivered and become effective
immediately upon the confirmed (by
answer back or other tangible printed
verification or successful receipt)
sending thereof.
To the Parent or Purchaser:
DataLogic International Inc
