MANCHESTER COMPANIES, INC.
ENGAGEMENT AGREEMENT
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THIS AGREEMENT (the "Agreement") dated as of August 24, 2000 confirms that
Applied Biometrics, Inc. ("ABI") located at 501 East Highway 13, Suite 108,
Burnsville, MN 55337, has engaged, as of the date hereof, Manchester Companies,
Inc. ("MCI") to perform certain Consulting and Financial Services (the
"Services") for ABI. In connection with the foregoing, ABI and MCI agree that:
1. RETENTION/TERMINATION. The initial term of this Agreement shall be for
six (6) months commencing September 1, 2000. To the extent that a
sale/merger of ABI's public shell has been negotiated and agreed upon
but is pending shareholder or other approval as of the end of such
term, this Agreement will automatically be extended until the
conclusion of such transaction. This Agreement may not be terminated
by ABI, except: (i) for the failure by MCI to provide, using
reasonable business practices, the Services described herein; or (ii)
for any reason after the first ninety (90) days of the term upon
notice given by ABI, subject to payment of the final liquidation fee
provided for in the attached Proposal Letter and any transaction fees
earned by MCI under paragraph 4A of this Agreement.
2. SERVICES. Applying reasonable business efforts, MCI will provide ABI
with the services outlined in the Proposal Letter dated August 16,
2000, attached hereto as Exhibit A and incorporated herein and made a
part hereof.
3. ADDITIONAL TERMS OF RETENTION. Pursuant to the terms of the Proposal
Letter, MCI will act as Interim CEO of ABI, and will be subject to
such direction and authority given by, and implementation of MCI's
recommendations will be subject to the sole discretion of ABI's Board
of Directors. Notwithstanding any other provision of this Agreement or
the Proposal Letter, MCI is solely an independent contractor of ABI.
4. CONSULTING FEES AND EXPENSES.
A. Consulting Fees: MCI shall be paid fees in accordance with the
Proposal Letter and its attached Schedule I which are attached
hereto as Exhibit A.
B. Expenses - ABI agrees to, on an as-incurred basis, as documented
by MCI, to reimburse MCI for all reasonable out-of-pocket
expenses incurred in connection with the rendering of the
Services described herein. MCI will submit expense reimbursements
bills on a monthly basis, and ABI agrees that they will be paid
within 10 days. Any individual expense in excess of $500 will be
subject to ABI's prior approval.
C. Expenses not included - MCI's fees do not include any fees which
may be charged by other related or non-related entities involved
in pursuit of the
execution of the Services outlined herein. Such other fees may
include, but are not limited to, those charged by Bankers, legal
counsel, auditors and tax advisors, appraisal companies,
environmental testing concerns, lenders, industry consultants and
other consultants or professionals as may be mutually determined
to be necessary.
5. COOPERATION. ABI will cooperate with MCI and provide, where possible,
financial and other information reasonably requested by MCI on a
timely basis for the purpose of rendering its services pursuant to
this Agreement.
6. CONFIDENTIALITY.
A. This Agreement and its contents, including any information
received by the parties and clearly identified as confidential,
will be treated by ABI and MCI as confidential except as required
by law. MCI will also treat as confidential the contemplated
plans and strategies of ABI. Neither ABI nor MCI will, unless
required by a statute, rule, regulation, agency or court, make
any public or private statements about ABI's contemplated plans
and strategies, without the prior consent of the other parties to
this Agreement.
B. Without limiting the generality of Section 8, any advice rendered
by MCI pursuant to this Agreement may not, unless required by
statute, rule, regulation, agency or court, be disclosed publicly
or privately in any matter without MCI's prior written approval
and will be treated as confidential.
C. With respect to information about the business provided by ABI
and clearly identified as or communicated under circumstances so
as to be reasonably understood to be confidential, MCI agrees
that, for a period of five (5) years from the date of this
Agreement, such information will be kept confidential by it and
that access to such information will be limited to those persons
who have a need to know the information. MCI further agrees that
such information shall he deemed to be the property of ABI and,
when in tangible form, shall be returned to ABI upon request. ABI
information shall be used only for purposes expressed herein and
may be used for other purposes only with the prior written
approval of ABI. MCI also agrees to keep confidential in
accordance herewith any analysis, compilation, study, or other
documents prepared by MCI for use in connection with the
above-mentioned Services. Notwithstanding any other provision of
this Agreement or the Proposal Letter, MCI's use and disclosure
of ABI's confidential information related to its intellectual
property may be further restricted to the extent of, and MCI
agrees to become bound by, any more restrictive terms of any
agreement with any third party(ies) regarding ABI's sale or
licensing of such intellectual property.
D. For the purpose of this section, the phrase "confidential
information" does not include information which (i) is or becomes
available to the public other than as a result of a disclosure in
violation of the terms hereof; (ii) was in the possession of a
respective party on a non-confidential basis prior to its
disclosure under this Agreement; or (iii) becomes available on a
non-confidential basis from a source other than a party hereto or
its respective representative.
7. INDEMNIFICATION. If, in connection with any Services or matters that
are the subject of this Agreement, MCI or any of its directors,
officers, employees or agents become involved in any capacity in any
action or legal proceeding, pending or threatened, ABI, agrees (i) to
reimburse MCI or any of its directors, officers, employees or agents
for the reasonable legal fees, disbursements of counsel and other
expenses including the cost of investigation and preparation incurred
by MCI or any of its directors, officers, employees or agents as such
fees, disbursements and other expenses are incurred; and (ii) to
indemnify, defend, and hold MCI or any of its directors, officers,
employees or agents harmless against any losses, claims, damages, or
liabilities, joint or several, to which MCI or any of its directors,
officers, employees or agents may become subject arising out of any
such action or legal proceeding. Notwithstanding the foregoing, ABI
shall not be required to indemnify, defend or hold MCI or any of its
directors, officers, employees or agents harmless against any losses,
claims, damages, or liabilities to the extent such action or legal
proceedings is a result of the negligence or willful misconduct of MCI
or any of its directors, officers, employees or agent.
Further ABI agrees to maintain its Directors and Officers liability
coverage during the term of this Agreement and name MCI's designees as
insureds in such policy.
8. SURVIVAL. The provisions of this Agreement shall, where applicable,
survive the expiration of the period of this Agreement, including any
extensions thereof. Without limiting the foregoing, sections 5, 8 and
10 shall survive the termination of this Agreement.
9. ENTIRE AGREEMENT. This Agreement together with the attached copy of
the Proposal Letter (Exhibit A) constitutes the entire agreement among
the parties hereto with respect to the subject matter hereof and
supersedes and cancels as of the date hereof all prior understandings,
written or oral, with respect to the subject matter hereof.
10. GOVERNING LAW. This Agreement and the agreements contained herein
shall be governed by, and construed in accordance with, the laws of
the State of Minnesota, without giving effect to the principles of
conflicts of laws thereof.
11. MISCELLANEOUS. Facsimile copies of this agreement, signed in
counterpart, shall be considered for all purposes, including delivery,
as originals.
12. ENGAGEMENT DATE: MCI is prepared to begin the proposed engagement
immediately, pending the execution of this Engagement Agreement. To
begin the engagement, MCI also requires the initial payment of the
first monthly retainer fee of $10,000. Invoices will be submitted
monthly thereafter, in accordance with the fee schedule.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
MANCHESTER COMPANIES, INC. APPLIED BIOMETRICS, INC.
/s/ Mark W. Sheffert /s/ Andrew M. Weiss
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By: Mark W. Sheffert By: Andrew M. Weiss
Its: Chairman & CEO Its: President & CEO