Tatum, LLC Full-Time Permanent Engagement Resources Agreement
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EXHIBIT 10.9
▇▇▇▇▇, LLC
Full-Time Permanent Engagement Resources Agreement
January 10, 2006
▇▇. ▇.
▇. ▇▇▇▇
Chief Executive Officer
Netlist, Inc.
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Mr. Hong:
▇▇▇▇▇, LLC ("▇▇▇▇▇") understands that Netlist, Inc. (the "Company") desires to hire ▇▇▇ ▇▇▇, one of our partners, as an employee of the Company (the "Employee"). The Company acknowledges that the Employee is and will remain a partner in our firm so that he will have access to our firm's resources for use in his employment with the Company. This Full-Time Permanent Engagement Resources Agreement (the "Resources Agreement") sets forth the rights of the Company, through the Employee, to use such resources for the benefit of the Company and for the payment for such services.
Since the Employee will be under the control and direct management of the Company, and not ▇▇▇▇▇, ▇▇▇▇▇'▇ obligations to the Company are exclusively those set forth in this Resources Agreement. This document will serve as the entire agreement between the Company and ▇▇▇▇▇.
Compensation
The Company will pay directly to ▇▇▇▇▇, as partial compensation for the resources provided, an amount equal to (i) 1.67% of monthly Salary of the Employee during the first and second 12 months of the term of the Resources Agreement, (ii) 1.00% of monthly Salary during the third 12 months, and (iii) $1,000 per month during the remainder of the term of this Resources Agreement.
The Company will pay directly to ▇▇▇▇▇ a portion of any Severance Payments that the Company may make to Employee equal to the same percentage that applies above with respect to Salary, or $1,000 per month of Severance Payment after 36 months under this Resources Agreement.
In addition, the Company will pay directly to ▇▇▇▇▇ 15% of any Cash Bonus otherwise payable to the Employee during the term of this Resources Agreement. With respect to 15% of any Equity Bonus otherwise to be granted to the Employee, after receiving appropriate representations from ▇▇▇▇▇ for securities law purposes, the Company agrees to issue such 15% portion directly to ▇▇▇▇▇, in lieu of the Employee, in the form of one or more warrants containing terms and conditions substantially equivalent to those applicable to the portion of Equity Bonus retained by the Employee.
For purposes hereof, (i) "Cash Bonus" means any contingent cash consideration (i.e., not yet realized in cash) that is paid, (ii) "Equity Bonus" means any stock, option, warrant, or similar right (i.e., not yet realized in cash) that is granted, in each case in connection with services rendered by the Employee, and (iii) "Salary" means all compensation, including severance, paid to Employee, except bonuses and benefits (including medical benefits subsidy paid to Employee). All compensation payable or deliverable to ▇▇▇▇▇ is referred to herein as the "Resource Fee."
Payments to ▇▇▇▇▇ should be made by direct deposit through the Company's payroll system, or by an automated clearing house ("ACH") payment at the same time as payments are made to the Employee. If such payment method is not available and payments are made by check, ▇▇▇▇▇ will issue invoices to the Company, and the Company agrees to pay such invoices no later than ten (10) days after receipt of invoices.
Deposit
Company agrees to pay ▇▇▇▇▇ and maintain a security deposit of $5,000 for the Company's future payment obligations to ▇▇▇▇▇ under this Resources Agreement (the "Deposit"). If the Company breaches this Resources Agreement and fails to cure such breach as provided herein, ▇▇▇▇▇ will be entitled to apply the Deposit to its damages resulting from such breach. Upon termination or expiration of this Resources Agreement, ▇▇▇▇▇ will return to the Company the balance of the Deposit remaining after application of any amounts to unfulfilled payment obligations of the Company to ▇▇▇▇▇ as provided for in this Resources Agreement.
Termination
This Resources Agreement will terminate immediately upon the effective date of termination or expiration of the Employee's employment with the Company or upon the Employee ceasing to be a partner of ▇▇▇▇▇.
In the event that either party commits a breach of this Resources Agreement and fails to cure the same within seven (7) days following delivery by the non-breaching party of written notice specifying the nature of the breach, the non-breaching party will have the right to terminate this Resources Agreement immediately effective upon written notice of such termination.
Hiring Employee Outside of Resources Agreement
The parties recognize and agree that ▇▇▇▇▇ is responsible for introducing the Employee to the Company. Therefore, if, at any time during the twelve (12)-month period following the termination or expiration of this Resources Agreement as a result of the termination of Employee's employment with the Company, the Company employs the Employee or engages the Employee as an independent contractor (other than in connection with another form of ▇▇▇▇▇ agreement) to render services of substantially the same nature as those for which ▇▇▇▇▇ is making the Employee available pursuant to this Resources Agreement, ▇▇▇▇▇ will be entitled to receive as a placement fee an amount equal to forty-five percent (45%) of the Employee's Annualized Compensation (as defined below). The amount will be due and payable to ▇▇▇▇▇ upon written demand to the Company. In addition, any equity previously granted to ▇▇▇▇▇ will continue to vest for as long as Employee or independent contractor, as the case may be, provides services for the Company. For this purpose, "Annualized Compensation" will mean the lesser of: a) the most recent annual Salary and the maximum amount of any bonus for which the Employee was eligible with respect to the then current bonus year; or b) if the Employee becomes an independent contractor, the amount of total fees paid or payable over the course of the 12 months following the first date that independent contractor provides services to the Company.
Insurance
To the extent the Company has directors' and officers' liability insurance in effect, the Company will provide such insurance coverage for the Employee, along with written evidence to ▇▇▇▇▇ or the Employee that the Employee is covered by such insurance.
Furthermore, the Company will maintain such insurance coverage, if any, with respect to occurrences arising during the term of this agreement for at least three years following the termination or expiration of this agreement or will purchase a directors' and officers' extended reporting period, or "tail," policy to cover the Employee.
Disclaimers, Limitations of Liability & Indemnity
It is understood that ▇▇▇▇▇ does not have a contractual obligation to the Company other than to make its resources available to the Employee (by virtue of the Employee being a partner in ▇▇▇▇▇) for the benefit of the Company under the terms and conditions of this Resources Agreement. The Resource Fee will be for the resources provided. ▇▇▇▇▇ assumes no responsibility or liability under this Resources Agreement other than to render the services called for hereunder and will not be
responsible for any action taken by the Company in following or declining to follow any of ▇▇▇▇▇'▇ advice or recommendations.
▇▇▇▇▇ represents to the Company that ▇▇▇▇▇ has conducted its standard screening and investigation procedures with respect to the Employee becoming a partner in ▇▇▇▇▇, and the results of the same were satisfactory to ▇▇▇▇▇. ▇▇▇▇▇ disclaims all other warranties, either express or implied. Without limiting the foregoing, ▇▇▇▇▇ makes no representation or warranty as to the accuracy or reliability of reports, projections, forecasts, or any other information derived from use of ▇▇▇▇▇'▇ resources, and ▇▇▇▇▇ will not be liable for any claims of reliance on such reports, projections, forecasts, or information. ▇▇▇▇▇ will not be liable for any non-compliance of reports, projections, forecasts, or information or services with federal, state, or local laws or regulations. Such reports, projections, forecasts, or information or services are for the sole benefit of the Company and not any unnamed third parties.
In the event that any partner of ▇▇▇▇▇ (including without limitation the Employee to the extent not otherwise entitled in his or her capacity as an officer of the Company) is subpoenaed or otherwise required to appear as a witness or ▇▇▇▇▇ or such partner is required to provide evidence, in either case in connection with any action, suit, or other proceeding initiated by a third party or by the Company against a third party, then the Company shall reimburse ▇▇▇▇▇ for the costs and expenses (including reasonable attorneys' fees) actually incurred by ▇▇▇▇▇ or such partner and provide ▇▇▇▇▇ with compensation at ▇▇▇▇▇'▇ customary rate for the time incurred.
The Company agrees that, with respect to any claims the Company may assert against ▇▇▇▇▇ in connection with this Resources Agreement or the relationship arising hereunder, ▇▇▇▇▇'▇ total liability will not exceed twelve (12) months of the then current monthly Resource Fee.
As a condition for recovery of any liability, the Company must assert any claim against ▇▇▇▇▇ within three (3) months after discovery or ninety (90) days after the termination or expiration of this Resources Agreement, whichever is earlier.
▇▇▇▇▇ will not be liable in any event for incidental, consequential, punitive, or special damages, including without limitation, any interruption of business or loss of business, profit, or goodwill.
Arbitration
If the parties are unable to resolve any dispute arising out of or in connection with this Resources Agreement, either party may refer the dispute to arbitration by a single arbitrator selected by the parties according to the rules of the American Arbitration Association ("AAA"), and the decision of the arbitrator will be final and binding on both parties. In the event that the parties fail to agree on the selection of the arbitrator within thirty (30) days after either party's request for arbitration under this paragraph, the arbitrator will be chosen by AAA. The arbitrator may in his discretion order documentary discovery but shall not allow depositions without a showing of compelling need. The arbitrator will render his decision within ninety (90) days after the call for arbitration. The arbitrator will have no authority to award punitive damages. Judgment on the award of the arbitrator may be entered in and enforced by any court of competent jurisdiction. The arbitrator will have no authority to award damages in excess or in contravention of this Resources Agreement and may not amend or disregard any provision herein. Notwithstanding the foregoing, no issue related to the ownership of intellectual property will be subject to arbitration but will instead be subject to determination by a court of competent jurisdiction, and either party may seek injunctive relief in any court of competent jurisdiction.
Miscellaneous
▇▇▇▇▇ will be entitled to receive all reasonable costs and expenses incidental to the collection of overdue amounts under this Resources Agreement, including but not limited to attorneys' fees actually incurred.
Neither the Company nor ▇▇▇▇▇ will be deemed to have waived any rights or remedies accruing under this Resources Agreement unless such waiver is in writing and signed by the party electing to waive the right or remedy. This Resources Agreement binds and benefits the successors of ▇▇▇▇▇ and the Company.
Neither party will be liable for any delay or failure to perform under this Resources Agreement (other than with respect to payment obligations) to the extent such delay or failure is a result of an act of God, war, earthquake, civil disobedience, court order, labor dispute, or other cause beyond such party's reasonable control.
The terms of this Resources Agreement are severable and may not be amended except in a writing signed by ▇▇▇▇▇ and the Company. If any portion of this Resources Agreement is found to be unenforceable, the rest of the Resources Agreement will be enforceable except to the extent that the severed provision deprives either party of a substantial portion of its bargain.
The provisions in this Resources Agreement concerning payment of compensation and reimbursement of costs and expenses, limitation of liability, directors' and officers' insurance, and arbitration will survive any termination or expiration of this Resources Agreement.
This Resources Agreement will be governed by and construed in all respects in accordance with the laws of the State of Georgia, without giving effect to conflicts-of-laws principles.
Nothing in this Resources Agreement shall confer any rights upon any person or entity other than the parties hereto and their respective successors and permitted assigns and the Employee.
Each person signing below is authorized to sign on behalf of the party indicated, and in each case such signature is the only one necessary.
Bank Lockbox Mailing Address for Deposit and Resource Fee only:
▇▇▇▇▇,
LLC
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Electronic Payment Instructions for Deposit and Resource Fee:
| Bank Name: | Bank of America | |
| Branch: | Atlanta | |
| Routing Number: | For ACH Payments: 061 000 052 For Wires: 026 009 593 |
|
| Account Name: | ▇▇▇▇▇, LLC | |
| Account Number: | 003 279 247 763 | |
| Please reference Netlist, Inc. in the body of the wire. | ||
Please sign below and return a signed copy of this letter to indicate the Company's agreement with its terms and conditions.
We look forward to serving you.
Sincerely yours,
▇▇▇▇▇, LLC
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Signature
▇▇▇▇
▇▇▇▇▇▇▇▇
Area Managing Partner
Acknowledged and agreed by:
| NETLIST, INC. | |||
By: |
/s/ ▇▇▇▇ ▇. ▇▇▇▇ |
||
Title: |
President |
||
Date: |
January 11, 2006 |
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▇▇▇▇▇, LLC Full-Time Permanent Engagement Resources Agreement