EXHIBIT 10.40.1
XXXXX PATCH & XXXXX, LLP
ATTORNEY CLIENT FEE AGREEMENT
This Attorney Client Fee Agreement (the "Agreement") is entered into by
and between Xxxxx Patch & Xxxxx, LLP (hereafter "YP&Y") and HIENERGY
TECHNOLOGIES, INC. (hereinafter "Client"). This Agreement will confirm upon all
parties' signatures that YP&Y has been engaged to represent Client in the
below-defined Matter, subject and limited to the terms contained herein. We
apologize for the formality of this Agreement, but it is our policy to set out
the terms of our engagement and to obtain our client's agreement to our fee
arrangements.
SCOPE OF WORK, DUTIES AND RESPONSIBILITIES OF XXXXX PATCH & XXXXX.
By way of this Agreement, Client is engaging YP&Y as legal counsel to
represent it in connection with the following matters: securities matters and
general corporate matters ("Matter").
YP&Y agrees to and will provide legal representation of Client in
connection with the foregoing Matter. The foregoing Matter represents the full
scope of work for which YP&Y has been retained to provide legal services. It is
expressly understood that YP&Y is not engaged to represent or advise the Client
in any other matter, unless expressly agreed to IN WRITING. It is further
understood and agreed that YP&Y has not been engaged to prosecute or defend any
litigation or appeal that may arise from the Matter, or to enforce, or defend
against, any rule, order, judgment or claim arising out of or relating to the
Matter, without a separate written fee agreement.
In the event of a new subject matter and/or a new client related to the
above-defined Matter arising, Client agrees to provide YP&Y with a written
request for additional representation of same. Acceptance of additional legal
representation must be agreed to IN WRITING by YP&Y and Client, and said
additional representation will be incorporated by reference as an Addendum
hereto and thereafter will become subject to the terms and conditions of this
Agreement. In unrelated matters, it may be deemed more appropriate to open a
separate file with a separate engagement and fee agreement.
In the event we are required to respond to a subpoena of our records
relating to services we have performed for you, or testify by deposition or
otherwise concerning such services, we will first consult with you as to whether
you wish to supply the information demanded or assert your attorney-client
privilege to the extent you may properly do so. It is understood that you will
pay us for our time and reimburse us for expense incurred in responding to any
such demand, including, but not limited to, time and expense incurred in search
and photocopying costs, reviewing documents, appearing at depositions or
hearings, and otherwise dealing with issues raised by the request.
1
DUTIES AND RESPONSIBILITIES OF CLIENT.
As a condition for representation of Client, Client agrees as follows:
(1) Client shall provide YP&Y such information, assistance and
cooperation as is necessary for YP&Y to effectively perform its services under
this Agreement;
(2) Client shall timely pay YP&Y's bills for fees, costs and expenses;
(3) With respect to non-litigation matters, YP&Y's fees until August
31, 2003 will be payable by delivery of promissory notes due September 15, 2003
in substantially the form accompanying this agreement and each in the original
principal amount of the fees billed and dated the date of mailing of the xxxx;
(4) Payment by Client of YP&Y's costs and expenses is expected prior to
expenditure or immediately after request for reimbursement is made by YP&Y; and
(5) Client shall keep YP&Y advised of Client's address, telephone
number and whereabouts during the pendency of this Agreement.
CLIENT CONTACT FOR LEGAL SERVICES AND BILLING.
To assist in effective client communication, client has advised YP&Y
that the primary Client contact(s) shall be as follows:
XXXXXX X. XXXXXXX
CHIEF EXECUTIVE OFFICER
HIENERGY TECHNOLOGIES, INC.
0000 XXXXX XXXXXXX, XXXX X
XXXXXX, XX 00000
Client agrees to promptly notify YP&Y IN WRITING of any change in or addition to
the above contact(s).
LEGAL FEES, BILLING PRACTICES, AND PERSONNEL.
YP&Y's fees will be charged to Client on an hourly basis for all time
actually expended and will be generally billed monthly with payment due within
30 days after the date of the xxxx. YP&Y reserves the right to impose finance
and/or service charges of 1 1/2% per month on account balances not paid within
30 days of the billing statement date. It is presently anticipated that
2
XXXXXXXX X. XXXXX, a partner with YP&Y, is principally responsible for
overseeing the performance of all legal services under this Agreement. Xx. Xxxxx
and YP&Y will, however, exercise his and its respective discretion to utilize
those attorneys and/or staff which it deems necessary and well suited to
accomplish all necessary tasks such as would be consistent with the competent
and efficient rendering of legal services.
Subject to any signed addendum or addenda to this agreement that
memorialize(s) an agreed discount, Client agrees to pay YP&Y its prevailing
hourly rates for the services performed. These rates vary between $200.00 per
hour and $275.00 per hour for associates (with lower rates for paralegals or
clerks) depending upon the experience and background of the individual
attorneys, and $375 per hour or less for partners. The current hourly rates for
specific attorneys and staff who may work on the Matter will be detailed in the
monthly billing statements.
Hourly rates are reviewed periodically by YP&Y and when appropriate
adjusted to reflect increases in seniority and experience, as well as
inflationary factors. Such increases are ordinarily made on an annual basis,
effective as of the beginning of each calendar year, although increases may
occur at other times. Instead of formal notices, we include the hourly rate
detail in each billing statement.
COSTS AND OTHER CHARGES.
YP&Y will incur various costs and expenses in performing legal services
under this Agreement. Client agrees to pay for those costs and expenses in
addition to the hourly fees. Costs and expenses commonly include but are not
limited to: court costs, filing and recording fees, expert witness fees,
deposition fees and cost, service of process fees, other fees fixed by law or
assessed by Courts or other public agencies, long distance telephone calls,
messenger and delivery service fees, postage, in-house photocopying (charged at
..15 per page), outside photocopying and reproduction costs, fax transmission
(charged at $1.00 for the first page and 50 cents for each page thereafter),
clerical staff overtime, on-line legal research fees, travel costs (including
parking, lodging, rental car, meals and incidentals), investigation fees,
consultant fees, and other related costs and expenses. In many instances, rather
than paying the costs of items directly and seeking client reimbursement, YP&Y
will forward such invoices to the Client for direct payment or provide the
Client's contact information for third parties to deliver invoices.
Under no circumstances will extraordinary expenses and/or costs be
undertaken by YP&Y absent Client's written authority or applicable written
policy.
RETAINER.
A retainer is required, and is made a part of the Fee Agreement. With
respect to services rendered by YP&Y to Client under this Agreement, YP&Y
requires that Client deposit with YP&Y the sum of $10,000 as a legal retainer,
payable in advance, and which retainer will be
3
held in trust until such time as legal services are no longer required, or,
alternatively, until such time as such retainer is required to satisfy
outstanding fees, or, in the further alternative, until such time as the
services of YP&Y are no longer required by Client and no xxxx for legal services
and/or costs remains outstanding. The retainer requested will be held in YP&Y's
trust account for disbursement by YP&Y on either of two terms: (1) After
September 15, 2003, the firm may apply the funds to pay the current balance on
each statement as is rendered. Upon exhaustion of the retainer, the bills will
be presented for payment in the usual fashion, and YP&Y may ask that Client
renew the retainer. (2) Prior to September 15, 2003, bills shall be presented
for regular payment in the usual fashion, and the retainer shall be held in
trust for an indefinite period as security for payment; provided, however, in
the event any xxxx is not timely paid (within 30 days of invoice date) by
delivery of a promissory note, the retainer may be applied by YP&Y to Client's
xxxx.
BILLING STATEMENTS.
YP&Y shall send Client statements for fees and costs incurred on a
periodic basis, generally monthly. The statements shall indicate the basis of
the fees, including the hours worked, the billable rates charged, and a
description of the work performed. More detail will be provided if requested one
complete billing cycle in advance of the statement date.
YP&Y always wants its clients to be satisfied with the reasonableness
of our charges. Open and candid communication about xxxxxxxx is critical, and
you should not harbor any unexpressed concern. As such, Client agrees to
promptly notify YP&Y in writing if Client disputes any entry for legal services
or costs on any statement. If Client fails to do so within 30 days of the date
of the statement, then Client agrees that all such entries shall be
unconditionally acknowledged as correct as between YP&Y and Client.
Client shall have the right to request a current xxxx at any time
covering YP&Y fees and costs to date, and YP&Y shall provide such a xxxx within
ten (10) business days of the request.
DISCLAIMER OF GUARANTEE.
YP&Y makes no promises or guarantees to Client regarding the foregoing
matters, save and except for YP&Y's promise to devote its best efforts toward
the legal representation of Client's interests with respect to those matters
identified in the paragraph herein entitled "SCOPE OF WORK, DUTIES AND
RESPONSIBILITIES OF XXXXX, PATCH & XXXXX." YP&Y comments about any given matter
at any time during the performance of the services are to be regarded as merely
expressions of opinion by YP&Y, and in no way should be interpreted as a promise
or a guarantee. Nothing in this Agreement and nothing in YP&Y's statements to
Client will be construed as a promise or a guarantee about the outcome of any
given matter. Furthermore, YP&Y cannot make any guarantee as to the amount that
Client will incur for attorney's fees and costs in any given matter, and such
figures will wholly depend on the time and effort required to be devoted to that
given matter. As is the nature of litigation and transactional matters, fees and
costs could be substantial.
4
ERRORS AND OMISSIONS COVERAGE.
YP&Y maintains errors and omissions insurance coverage applicable to
the services that will be rendered to Client by YP&Y.
DISCHARGE AND WITHDRAWAL.
Client may discharge YP&Y at any time. YP&Y may withdraw from
representation of Client at any time, to the extent permitted by law and the
Rules of Professional Conduct, and upon reasonable notice to Client.
In the event of such discharge or withdrawal, Client shall pay YP&Y's
fees and costs in accordance with this Agreement for all work performed (and
costs incurred) through the termination of YP&Y's representation of Client plus
only the following:
1) out-of-pocket costs paid after termination pursuant to
pre-termination commitments;
2) fees and costs to continue to represent Client involuntarily
or pursuant to order or legal or regulatory or ethical
requirement or otherwise to thereafter appear, attend, prepare
for or avoid any proceeding or trial on behalf of Client or
representing Client or at the request or demand of Client or
its current or former owners, directors, management or
affiliates.
WORK WITH OTHER CLIENTS.
It is understood and agreed that YP&Y's representation of Client in the
foregoing Matter is for the specific purposes set forth in the paragraph
entitled "SCOPE OF WORK, DUTIES AND RESPONSIBILITIES OF XXXXX, PATCH & XXXXX."
of this Agreement, and Client agrees that YP&Y may represent other parties in
the future on matters which may be adverse to Client, but only so long as such
future representation does not conflict with matters for which YP&Y already
represents Client's interests, and so long as such future representation does
not involve the actual release or use of confidential information which YP&Y
gained from its representation of Client pursuant to this Agreement. Presently
or in the past or future, YP&Y may represent other people and entities of any
kind, some of whom may have interests actually or potentially adverse to
Client's. It is incumbent upon Client to bring any such actual or perceived
conflicts to YP&Y's immediate attention. YP&Y reserves its rights to withdraw
from the matter described herein or obtain Client's approval to continue in such
matter.
5
NO WAIVERS.
A waiver by either party or a breach of any of the conditions, terms,
or time requirements under this Agreement shall not be construed as waiver of
any succeeding breach of the same or other conditions, terms or time
requirements.
INTEGRATION.
This Agreement constitutes the entire Agreement between YP&Y and Client
with respect to those matters identified in the paragraph entitled "SCOPE OF
WORK, DUTIES AND RESPONSIBILITIES OF XXXXX, PATCH & XXXXX." herein.
DISPUTE RESOLUTION.
Any dispute regarding our xxxxxxxx shall be litigated in Orange County,
California under California law, with the prevailing party entitled to recover
costs and attorneys' fees in connection with said dispute, including fees and
costs incurred in the enforcement and/or appeal of any judgment, and including
the fees normally charged by YP&Y attorneys in any action by YP&Y for recovery
under this Agreement. If there is any dispute between the parties over the fees
charged, the amount to be billed or the reasonable value for our services, then
YP&Y agrees to submit the controversy to binding arbitration in accordance with
the rules of the State Bar Fee Arbitration Program set out in Sections 6200-6206
of the California Business and Professions Code.
6
Dated: March 15, 2003 XXXXX PATCH & XXXXX, LLP
By: /s/ XXXXXXXX X. XXXXX
---------------------
XXXXXXXX X. XXXXX,
Partner
AGREED AND ACCEPTED:
CLIENT(S):
HIENERGY TECHNOLOGIES, INC.
By: /s/ XXXXXX X. XXXXXXX Dated: March _19_, 2003
-------------------------------------------------
Xxxxxx Xxxxxx Xxxxxxx, X.Xx., Ph.D., F.A.P.S.,
Chairman, Chief Executive Officer and
Chief Scientist
7
