CONFIDENTIAL CONSULTING AGREEMENT
This
Consulting Agreement (the “Agreement”) is executed as of the date shown on the
signature page (the “Effective Date”), by and between FLG Partners, LLC, a
California limited liability company (“FLG”), and the entity identified on the
signature page (“Client”).
RECITALS
WHEREAS, FLG is in the
business of providing certain financial services;
WHEREAS, Client wishes to
retain FLG to provide and FLG wishes to provide such services to Client on the
terms set forth herein;
NOW, THEREFORE, in
consideration of the mutual covenants set forth herein, the parties hereto agree
as follows:
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1.
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Services.
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A.
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Commencing
on the Effective Date, FLG will perform those services (the “Services”)
described in one or more exhibits attached hereto. Such
services shall be performed by the member or members of FLG identified in
Exhibit A (collectively, the “FLG
Member”).
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B.
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Client
acknowledges and agrees that FLG’s success in performing the Services
hereunder will depend upon the participation, cooperation and support of
Client’s most senior management.
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C.
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Notwithstanding
anything in Exhibit A or elsewhere in this Agreement to the contrary,
neither FLG nor any of its members shall serve as an employee, an
appointed officer, or an elected director of Client. Consistent
with the preceding: (i) Client shall not appoint FLG Member as a corporate
officer in Client’s corporate minutes; (ii) Client shall not elect FLG
Member to its board of directors or equivalent governing body; and (iii)
the FLG Member shall have no authority to sign any documents on behalf of
Client, including, but not limited to, federal or state securities
filings, tax filings, or representations and warranties on behalf of
Client except as
pursuant to a specific resolution(s) of Client’s board of directors or
equivalent governing body granting such authority to FLG Member as a
non-employee consultant to Client.
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D.
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The
Services provided by FLG and FLG Member hereunder shall not constitute an
audit, attestation, review, compilation, or any other type of financial
statement reporting engagement (historical or prospective) that is subject
to the rules of the California Board of Accountancy, the AICPA, or other
similar state or national licensing or professional
bodies. Client agrees that any such services, if required, will
be performed separately by its independent public
accountants.
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E.
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During
the term of this Agreement, Client shall not hire or retain the FLG Member
as an employee, consultant or independent contractor except pursuant to
this Agreement.
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Compensation; Payment; Deposit;
Expenses.
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A.
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As
compensation for Services rendered by FLG hereunder, Client shall pay FLG
the amounts set forth in Exhibit A for Services performed by FLG hereunder
(the “Fees”). The Fees shall be net of any and all taxes,
withholdings, duties, customs, social contributions or other reductions
imposed by any and all authorities which are required to be withheld or
collected by Client or FLG, including ad valorem, sales, gross receipts or
similar taxes, but excluding US income taxes based upon FLG’s or FLG
Member’s net taxable income.
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B.
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As
additional compensation to FLG, Client will pay FLG the incentive bonus or
warrants or options, if any, set forth in Exhibit
A.
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C.
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Client
shall pay FLG all amounts owed to FLG under this Agreement upon Client’s
receipt of invoice, with no purchase order required. Any
invoices more than thirty (30) days overdue will accrue a late payment fee
at the rate of one and 50/100 percent (1.5%) per month. FLG
shall be entitled to recover all costs and expenses (including, without
limitation, attorneys’ fees) incurred by it in collecting any amounts
overdue under this Agreement.
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D.
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Client
hereby agrees to pay FLG a deposit as set forth on Exhibit A (the
“Deposit”) to be held as security for Client’s future payment obligations
to FLG under this Agreement. Upon termination of this
Agreement, all amounts then owing to FLG under this Agreement shall be
charged against the Deposit and the balance thereof, if any, shall be
refunded to Client.
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E.
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Within
ten (10) days of Clients receipt of an expense report from FLG’s personnel
performing Services hereunder, Client shall immediately reimburse FLG
personnel directly for reasonable travel and out-of-pocket business
expenses detailed in such expense report. Any required air
travel, overnight accommodation and resulting per diem expenses shall be
consistent with Client’s travel & expense policies for Client’s
employed executive staff.
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3.
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Relationship of the
Parties.
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A.
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FLG’s
relationship with Client will be that of an independent contractor and
nothing in this Agreement shall be construed to create a partnership,
joint venture, or employer-employee relationship. FLG is not
the agent of Client and is not authorized to make any presentation,
contract, or commitment on behalf of Client unless specifically requested
or authorized to do so by Client in writing. FLG agrees that
all taxes payable as a result of compensation payable to FLG hereunder
shall be FLG’s sole liability. FLG shall defend, indemnify and
hold harmless Client, Client’s officers, directors, employees and agents,
and the administrators of Client’s benefit plans from and against any
claims, liabilities or expenses relating to such taxes or
compensation.
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4.
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Term and
Termination.
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A.
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The
term of this Agreement shall be for the period set forth in Exhibit
A.
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B.
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Either
party may terminate this Agreement upon thirty (30) days’ advance written
notice to the other party.
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C.
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Either
party may terminate this Agreement immediately upon a material breach of
this Agreement by the other party and a failure by the other party to cure
such breach within ten (10) days of written notice thereof by the
non-breaching party to the breaching
party.
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D.
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FLG
shall have the right to terminate this Agreement immediately without
advance written notice (i) if Client is engaged in, or requests that FLG
or the FLG Member undertake or ignore any illegal or unethical activity,
or (ii) upon the death or disability of the FLG
Member.
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E.
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This
Agreement shall be deemed terminated if in any six month period no
billable hours occur, with the termination date effective on the date of
the last billable hour therein.
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F.
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If
at any time during the one (1) year period following termination of this
Agreement Client shall hire or retain the FLG Member as an employee,
consultant or independent contractor, AND in doing so induce,
compel or cause FLG Member to leave FLG as a precondition to commencing or
continuing employment or consultancy with Client, Client shall immediately
pay to FLG in readily available funds a recruiting fee equal to the
annualized amount of Fees payable hereunder, which shall equal either (i)
260 multiplied by the daily rate, if this Agreement provides for Fees
payable by daily rate, or (ii) 2,100 multiplied by the hourly rate, if
this Agreement provides for Fees payable by hourly rate, multiplied by
thirty percent (30%).
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5.
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Disclosures
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A.
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IRS
Circular 230. To ensure compliance with requirements imposed by
the IRS effective June 20, 2005, we hereby inform you that any tax advice
offered during the course of providing, or arising out of, the Services
rendered pursuant to this Agreement, unless expressly stated otherwise, is
not intended or written to be used, and cannot be used, for the purpose
of: (i) avoiding tax-related penalties under the Internal Revenue Code, or
(ii) promoting, marketing or recommending to another party any tax-related
matter(s) said tax advice
address(es).
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B.
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Attorney-Client
Privilege. Privileged communication disclosed to FLG or FLG
Member may waive the privilege through no fault of our own. We
strongly recommend that you consult with your legal counsel before
disclosing privileged information to us. Pursuant to paragraph
6, neither FLG nor FLG Member will be responsible for damages caused
through Client’s waiver of privilege, whether deliberate or inadvertent,
by disclosing such information to
FLG.
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DISCLAIMERS
AND
LIMITATION OF LIABILITY.
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EXCEPT
AS EXPRESSLY SET FORTH HEREIN, ALL SERVICES TO BE PROVIDED BY FLG AND FLG MEMBER
(FOR PURPOSES OF THIS PARAGRAPH 6, COLLECTIVELY “FLG”) HEREUNDER ARE PROVIDED
“AS IS” WITHOUT ANY WARRANTY WHATSOEVER. CLIENT RECOGNIZES THAT THE
“AS IS” CLAUSE OF THIS AGREEMENT IS AN IMPORTANT PART OF THE BASIS OF THIS
AGREEMENT, WITHOUT WHICH FLG WOULD NOT HAVE AGREED TO ENTER INTO THIS
AGREEMENT. FLG EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, TERMS OR
CONDITIONS, WHETHER EXPRESS, IMPLIED, OR STATUTORY, REGARDING THE PROFESSIONAL
SERVICES, INCLUDING ANY, WARRANTIES OF MERCHANTABILITY, TITLE, FITNESS FOR A
PARTICULAR PURPOSE AND INFRINGEMENT. NO REPRESENTATION OR OTHER
AFFIRMATION OF FACT, REGARDING THE SERVICES PROVIDED HEREUNDER SHALL BE DEEMED A
WARRANTY FOR ANY PURPOSE OR GIVE RISE TO ANY LIABILITY OF FLG
WHATSOEVER.
IN
NO EVENT SHALL FLG BE LIABLE FOR ANY INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL,
PUNITIVE OR CONSEQUENTIAL DAMAGES, UNDER ANY CIRCUMSTANCES, INCLUDING, BUT NOT
LIMITED TO: LOST PROFITS; REVENUE OR SAVINGS; WAIVER BY CLIENT, WHETHER
INADVERTENT OR INTENTIONAL, OF CLIENT’S ATTORNEY-CLIENT PRIVILEGE THROUGH
CLIENT’S DISCLOSURE OF PRIVILEGED INFORMATION TO FLG; OR THE LOSS, THEFT,
TRANSMISSION OR USE OF ANY DATA, EVEN IF CLIENT OR FLG HAVE BEEN ADVISED OF,
KNEW, OR SHOULD HAVE KNOWN, OF THE POSSIBILITY
THEREOF. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY,
FLG’S AGGREGATE CUMULATIVE LIABILITY HEREUNDER, WHETHER IN CONTRACT, TORT,
NEGLIGENCE, MISREPRESENTATION, STRICT LIABILITY OR OTHERWISE, SHALL NOT EXCEED
AN AMOUNT EQUAL TO TWO (2) MONTHS OF FEES PAYABLE BY CLIENT UNDER PARAGRAPH 2(A)
OF THIS AGREEMENT. CLIENT ACKNOWLEDGES THAT THE COMPENSATION PAID BY
IT UNDER THIS AGREEMENT REFLECTS THE ALLOCATION OF RISK SET FORTH IN THIS
AGREEMENT AND THAT FLG WOULD NOT ENTER INTO THIS AGREEMENT WITHOUT THESE
LIMITATIONS ON ITS LIABILITY. THIS PARAGRAPH SHALL NOT APPLY TO EITHER PARTY
WITH RESPECT TO A BREACH OF ITS CONFIDENTIALITY OBLIGATIONS.
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A.
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As
a condition for recovery of any amount by Client against FLG, Client shall
give FLG written notice of the alleged basis for liability within ninety
(90) days of discovering the circumstances giving rise thereto, in order
that FLG will have the opportunity to investigate in a timely manner and,
where possible, correct or rectify the alleged basis for liability;
provided that the failure of Client to give such notice will only affect
the rights of Client to the extent that FLG is actually prejudiced by such
failure. Notwithstanding anything herein to the contrary,
Client must assert any claim against FLG by the sooner of: (i) ninety (90)
days after discovery; (ii) ninety (90) days after the termination of this
Agreement; (iii) ninety (90) days after the last date on which the
Services were performed; or, (iv) sixty (60) days after completion of a
financial or accounting audit for the period(s) to which a claim
pertains.
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7.
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Indemnification.
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A.
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FLG
and FLG Member acting in relation to any of the affairs of Client shall,
to the fullest extent permitted by law, as now or hereafter in effect, be
indemnified and held harmless, and such right to indemnification shall
continue to apply to FLG and FLG Member following the term of this
Agreement out of the assets and profits of the Client from and against all
actions, costs, charges, losses, damages, liabilities and expenses which
FLG or FLG Member, or FLG’s or FLG Member’s heirs, executors or
administrators, shall or may incur or sustain by or by reason for any act
done, concurred in or omitted in or about the execution of FLG’s or FLG
Member’s duty or services performed on behalf of Client; and Client shall
advance the reasonable attorney’s fees, costs and expenses incurred by FLG
or FLG’s Member in connection with litigation related to the foregoing on
the same basis as such advancement would be available to the Client’s
officers and directors, PROVIDED THAT Client shall not be obligated to
make payments to or on behalf of any person (i) in connection with
services provided by such person outside the scope of Services
contemplated by this Agreement, and not authorized or consented to by
Client’s Board of Directors, or (ii) in respect of any (a) gross
negligence or willful misconduct of such person, or (b) negligence of such
person, but only to the extent that FLG’s errors and omissions liability
insurance would cover such person for such negligence without regard to
Client’s obligation to indemnify FLG
hereunder.
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B.
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FLG
and FLG Member shall have no liability to Client relating to the
performance of its duties under this agreement except in the event of
FLG’s or FLG Member’s gross negligence or willful
misconduct.
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C.
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FLG
and FLG Member agree to waive any claim or right of action FLG or FLG
Member might have whether individually or by or in the right of Client,
against any director, secretary and other officers of Client and the
liquidator or trustees (if any) acting in relation to any of the affairs
of Client and every one of them on account of any action taken by such
director, officer, liquidator or trustee or the failure of such director,
officer, liquidator or trustee to take any action in the performance of
his duties with or for Client; PROVIDED THAT such waiver shall not extend
to any matter in respect of any gross negligence or willful misconduct
which may attach to any such
persons.
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8.
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Representations and
Warranties.
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A.
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Each
party represents and warrants to the other that it is authorized to enter
into this Agreement and can fulfill all of its obligations
hereunder.
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B.
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FLG
and FLG Member warrant that they shall perform the Services diligently,
with due care, and in accordance with prevailing industry standards for
comparable engagements and the requirements of this
Agreement. FLG and FLG Member warrant that FLG
Member has sufficient professional experience to perform the Services in a
timely and competent manner.
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C.
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Each
party represents and warrants that it has and will maintain a policy or
policies of insurance with reputable insurance companies providing the
members, officers and directors, as the case may be, of itself with
coverage for losses from wrongful acts. FLG covenants that it has an error
and omissions insurance policy in place in the form provided to Client
prior to or contemporaneously with the date of execution of this Agreement
and will continue to maintain such policy or equivalent policy provided
that such policy or equivalent policy shall be available at commercially
reasonable rates.
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Miscellaneous.
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A.
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Any
notice required or permitted to be given by either party hereto under this
Agreement shall be in writing and shall be personally delivered or sent by
a reputable courier mail service (e.g., Federal Express) or by facsimile
confirmed by reputable courier mail service, to the other party as set
forth in this Paragraph 9(A). Notices will be deemed effective
two (2) days after deposit with a reputable courier service or upon
confirmation of receipt by the recipient from such courier service or the
same day if sent by facsimile and confirmed as set forth
above.
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| If to FLG: |
Xxxxxxx
X. Xxxx
Managing
Partner
FLG
Partners, LLC
X.X. Xxx
000
0 Xxxx
Xxxx
Xxxx, XX
00000-0000
Tel:
000-000-0000
Fax:
000-000-0000
E-mail:
xxxx@xxxxxxxxxxx.xxx
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If
to Client: the address, telephone numbers and email address
shown below Client’s signature on the signature
page.
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B.
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This
Agreement will be governed by and construed in accordance with the laws of
California without giving effect to any choice of law principles that
would require the application of the laws of a different
jurisdiction.
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C.
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Any
claim, dispute, or controversy of whatever nature arising out of or
relating to this Agreement (including any other agreement(s) contemplated
hereunder), including, without limitation, any action or claim based on
tort, contract, or statute (including any claims of breach or violation of
statutory or common law protections from discrimination, harassment and
hostile working environment), or concerning the interpretation, effect,
termination, validity, performance and/or breach of this Agreement
(“Claim”), shall be resolved by final and binding arbitration before a
single arbitrator (“Arbitrator”) selected from and administered by the San
Francisco office of JAMS (the “Administrator”) in accordance with its then
existing commercial arbitration rules and procedures. The
arbitration shall be held in the San Mateo County,
California. The Arbitrator shall, within fifteen (15) calendar
days after the conclusion of the Arbitration hearing, issue a written
award and statement of decision describing the essential findings and
conclusions on which the award is based, including the calculation of any
damages awarded. The Arbitrator also shall be authorized to
grant any temporary, preliminary or permanent equitable remedy or relief
he or she deems just and equitable and within the scope of this Agreement,
including, without limitation, an injunction or order for specific
performance. Each party shall bear its own attorney’s fees,
costs, and disbursements arising out of the arbitration, and shall pay an
equal share of the fees and costs of the Administrator and the Arbitrator;
provided, however, the Arbitrator shall be authorized to determine whether
a party is the prevailing party, and if so, to award to that prevailing
party reimbursement for its reasonable attorneys’ fees, costs and
disbursements, and/or the fees and costs of the Administrator and the
Arbitrator. The Arbitrator's award may be enforced in any court of
competent jurisdiction. Notwithstanding the foregoing, nothing
in this Paragraph 9(C) will restrict either party from applying to any
court of competent jurisdiction for injunctive
relief.
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D.
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Neither
party may assign its rights or delegate its obligations hereunder, either
in whole or in part, whether by operation of law or otherwise, without the
prior written consent of the other party; provided, however, that FLG may
assign its rights and delegate its obligations hereunder to any affiliate
of FLG. The rights and liabilities of the parties under this
Agreement will bind and inure to the benefit of the parties’ respective
successors and permitted assigns.
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E.
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If
any provision of this Agreement, or the application thereof, shall for any
reason and to any extent be invalid or unenforceable, the remainder of
this Agreement and application of such provision to other persons or
circumstances shall be interpreted so as best to reasonably effect the
intent of the parties. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision which will achieve, to the extent possible, the
economic, business and other purposes of the void or unenforceable
provision.
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F.
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This
Agreement, the Exhibits, and any executed Non-Disclosure Agreements
specified therein and thus incorporated by reference constitute the entire
understanding and agreement of the parties with respect to the subject
matter hereof and thereof and supersede all prior and contemporaneous
agreements or understandings, express or implied, written or oral, between
the parties with respect hereto. The express terms hereof
control and supersede any course of performance or usage of the trade
inconsistent with any of the terms
hereof.
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G.
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Any
term or provision of this Agreement may be amended, and the observance of
any term of this Agreement may be waived, only by a writing signed by the
parties. The waiver by a party of any breach hereof for default
in payment of any amount due hereunder or default in the performance
hereof shall not be deemed to constitute a waiver of any other default or
succeeding breach or default.
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H.
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Upon
completion of the engagement hereunder, FLG may place customary
“tombstone” advertisements using Client’s logo and name in publications of
FLG’s choice at its own expense, and/or cite the engagement in similar
fashion on FLG’s website.
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I.
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If
and to the extent that a party’s performance of any of its obligations
pursuant to this Agreement is prevented, hindered or delayed by fire,
flood, earthquake, elements of nature or acts of God, acts of war,
terrorism, riots, civil disorders, rebellions or revolutions, or any other
similar cause beyond the reasonable control of such party (each, a “Force
Majeure Event”), and such non-performance, hindrance or delay could not
have been prevented by reasonable precautions of the non-performing party,
then the non-performing, hindered or delayed party shall be excused for
such non-performance, hindrance or delay, as applicable, of those
obligations affected by the Force Majeure Event for as long as such Force
Majeure Event continues and such party continues to use its best efforts
to recommence performance whenever and to whatever extent possible without
delay, including through the use of alternate sources, workaround plans or
other means.
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J.
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This
Agreement may be executed in any number of counterparts and by the parties
on separate counterparts, each of which when executed and delivered shall
constitute an original, but all the counterparts together constitute one
and the same instrument.
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K.
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This
Agreement may be executed by facsimile signatures (including electronic
versions of this document in Adobe Acrobat Portable Document Format form
which contain scanned or secure, digitally signed signatures) by any party
hereto and such signatures shall be deemed binding for all purposes
hereof, without delivery of an original signature being thereafter
required.
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L.
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Survivability.
The following paragraphs shall survive the termination of this Agreement:
6 (“Disclaimers and Limitation of Liability”); 7 (“Indemnification”); 8
(“Representations and Warranties”); and 9
(“Miscellaneous”).
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A.
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IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the Effective
Date.
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CLIENT:
Neomagic
Corporation,
a
Delaware corporation.
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FLG:
FLG
Partners, LLC,
a
California limited liability company.
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By:
Signed:
Title:
Address:
Tel:
Fax:
Email:
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Xxxxxxx
X. Xxxxx
/s/
Xxxxxxx X. Xxxxx
President
& CEO
000
Xxxxxxxx Xxxxxxxxxx Xxxxx 000
Xxx
Xxxx, XX 00000
408-428-9725
000-000-0000
xxxxxx@xxxxxxxx.xxx
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By:
Signed:
Title:
Effective
Date:
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Xxxxxxx
X. Xxxx
/s/
Xxxxxxx X. Xxxx
Managing
Partner
December
7,
2009
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REMAINDER
OF THIS PAGE LEFT BLANK
EXHIBIT
A
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1.
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Description of
Services: CFO level services typical of those for a
publicly-held corporation.
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2.
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FLG
Member: Xxxxx X.
Xxxxxx.
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3.
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Fees: $300
per hour.
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4.
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Additional
Compensation: None.
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5.
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Deposit: $10,000.00.
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6.
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Term: Indefinite,
and terminable pursuant to Section 4 of the
Agreement.
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7.
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Non-Disclosure
Agreement: FLG-Neomagic Mutual Non-Disclosure Agreement dated
November 11, 2009.
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REMAINDER
OF THIS PAGE LEFT BLANK
Initial:
Client FLG
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