CONSULTING SERVICES AGREEMENT
M-Squared and Technology L.L.C. ("Consultant") and Faroudja Laboratories,
Inc. ("Client") make this Agreement this 21st day of September, 1994.
The parties agree as follows:
1. SERVICES. Consultant agrees to render consulting services to Client
in connection with (i) specific projects requested by Client and (ii) the
proposed acquisition of Client or one or more of its businesses, including, but
not limited to, a sale of substantially all of the assets of Client or one or
more of its businesses, a sale by Client or Client's shareholders of the stock
of the Client, or merger or other method of acquisition of Client or one or more
of its businesses, ("Acquisition Transaction"). The term "Acquisition
Transaction" also shall include a proposed acquisition of Faroudja Research,
Inc. or one or more of its businesses (determined as in the preceding sentence).
2. SCOPE OF SERVICES. Consultant's services will include all services
reasonably requested by the Client during the term of this Agreement to assist
Client with its business, strategy or acquisition, including the following:
(i) the projects listed on Exhibit A; and
(ii) assistance relating to one or more Acquisition Transactions,
including review and finalization of the Information Memorandum (in
coordination with Xxxxxxxxx Xxxxxxxx), selection of potential
acquiring companies, identification of the specific persons to be
approached and strategies to be utilized for presentations, arranging
and participating in presentations, follow up to presentations and
discussions, and negotiation of the terms of the acquisition.
3. ACCESSIBILITY. Consultant agrees to promptly respond to Client's
requests for assistance, to be easily accessible by telephone and fax facilities
and to periodically inform Client of place of contact during travel. Consultant
agrees to consult with Client at Client's facility in California on a monthly
basis if requested by Client.
4. COMPENSATION.
(a) As payment for Consultant's services under this Agreement, Client
agrees to pay Consultant the amount of $8,333 on the last day of each month
during the term of this Agreement.
(b) Unless this Agreement is terminated by Client for breach by
Consultant pursuant to paragraph 5, Consultant will also receive, conditioned
upon the
completion of one or more Acquisition Transactions during the term of this
Agreement, or within 180 days thereafter, an amount equal to two percent (2%) of
the aggregate proceeds paid by the acquirer(s) in connection with each such
Acquisition Transaction (whether or not paid during such period). If the
proceeds of any Acquisition Transaction include stock of the acquiring company,
(i) the value of such stock shall be the fair market value of the stock at the
time of payment by the acquiring company (determined without regard to any
restrictions on such stock), and (ii) at the option of Client, Consultant may be
paid such compensation in stock of the acquiring company, based on such fair
market value. The portion of the fee payable in stock shall not exceed the
portion of the aggregate proceeds of the Acquisition Transaction which are paid
in stock. The fee shall be paid within fifteen (15) days after receipt of the
proceeds of the Acquisition Transaction or, if the proceeds are payable in
installments, a pro rata portion of the fee shall be paid within fifteen (15)
days after receipt of each installment.
(c) Client will reimburse Consultant for reasonable out-of-pocket
costs incurred in the performance of this Agreement (including travel outside
the New York/Connecticut area), upon submission of receipts therefor.
5. TERM OF SERVICES. Consultant will render the services herein to be
provided for a period of six (6) months, commencing upon the date of this
Agreement. This Agreement may be terminated at the option of Client upon 90
days written notice to Consultant. Either party may at its option terminate
this Agreement if the other party defaults in the performance of a material
obligation and such default has not been cured within ten (10) days after
receipt of written notice thereof (an "Uncured Default"). In the event that the
Client terminates this Agreement other than by reason of an Uncured Default on
the part of Consultant, (i) the Client shall continue to pay Consultant the
monthly consulting fee through the effective date of such termination (but in no
event shall the total monthly payments to Client under this Agreement be less
than $33,333), and (ii) solely for purposes of determining whether the
Consultant is entitled to the fee described in Section 4(b), the term of this
Agreement shall be determined without regard to such termination.
6. INDEPENDENT CONTRACTOR. Consultant and Client agree that services
will be furnished by Consultant as an independent contractor. Unless authorized
in writing by Client, Consultant has no general power or authority to act for,
represent, or contractually bind Client.
7. CONFIDENTIAL INFORMATION. Consultant acknowledges execution of the
Client's Confidential Nondisclosure Agreement [Acquisition Discussions] which
shall apply to the transactions under this Agreement and shall survive any
termination hereof.
8. CONFLICTING ACTIVITIES.
(a) During the term of this Agreement and for a period of six (6)
months thereafter, Consultant agrees not to represent any potential purchaser in
connection with an Acquisition Transaction, or provide any services relating to
the areas of line doubling,
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image enhancement, or PAL or NTSC encoding and decoding to, or acquire any
equity or other financial interest (directly or indirectly) in, any competitor
of Client that competes with Client in the areas of line doubling, image
enhancement, or PAL or NTSC encoding and decoding.
(b) Client acknowledges that Xxxxxxx X. Xxxxxx, the principal of the
Consultant, is subject to certain contractual restrictions on his activities in
connection with the termination of his employment by General Instrument
Corporation ("GI"). In the event that Consultant reasonably determines that
services to be performed by Consultant hereunder could result in a violation of
such contractual restrictions, Xxxxxx shall notify the Client and shall attempt
in good faith to obtain a waiver of such contractual restrictions from GI. In
the event that Xxxxxx is unable to timely obtain such a waiver, Consultant shall
not be obligated to perform such potentially-conflicting services unless Client
agrees in writing to indemnify Xxxxxx against all damages, liabilities, costs
and expenses (including attorneys' fees) arising out of the performance of such
services without a waiver from GI. In the event that Consultant does not
perform services under the circumstances described in this Section 8(b), (i) it
shall not constitute a default under this Agreement, and (ii) the amount of the
fees payable hereunder shall not be reduced as a result thereof.
(c) The Consultant represents and warrants that the services
described in Section 2(ii) and Exhibit A of this Agreement (other than those
described in Section 2(a) of Exhibit A) do not result in a violation of the GI
contractual restrictions referred to in Section 8(b).
9. NO GUARANTY OF RESULTS. The Client acknowledges that the Consultant
does not warrant, represent or guarantee the results of the services rendered to
Client hereunder. The Client also acknowledges that any reports and
recommendations made by the Consultant under this Agreement will be based in
part upon assumptions and subjective data not readily subject to verification.
The Client agrees that the Consultant shall not be liable, in breach of contract
or otherwise, for direct or indirect damages arising from any decisions made or
actions taken (or omitted) by the Client based upon the Consultant's reports or
recommendations. The Client hereby waives any claims against the Consultant for
any loss, injury or damage of any kind (including consequential damage) arising
out of the performance of services by the Consultant under this Agreement. The
Client hereby agrees to indemnify the Consultant against any claims against the
Consultant for any loss, injury or damage of any kind (including consequential
damages) arising out of the performance of services by the Consultant under this
Agreement in connection with an Acquisition Transaction; provided, however, that
the Consultant shall not be entitled to such indemnity in the event that it is
determined that such claims resulted from the negligence or willful misconduct
of the Consultant.
10. ARBITRATION. In the event of any dispute between the parties to this
Agreement, the parties agree to submit such dispute to binding arbitration
before the American Arbitration Association in Palo Alto, California. The costs
of such arbitration will be borne equally between the parties.
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11. GENERAL. This Agreement shall be governed by the laws of the State of
California. This Agreement represents that entire agreement between the
parties, supersedes all prior agreements and understandings with respect to the
matters covered in this Agreement and may only be amended in a writing signed by
both parties. All notices shall be provided in writing to the address set forth
below (or to such other address which a party may provide notice) and shall be
given by personal delivery, certified or registered mail (return receipt
requested), nationally-utilized overnight delivery service or confirmed
facsimile transmission and shall be considered given when received.
IN WITNESS WHEREOF, the parties below have signed this Agreement as of the
date set forth above.
M-SQUARED MEDIA AND TECHNOLOGY L.L.C.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------------
Xxxxxxx X. Xxxxxx
Address: 00 Xxxxxx X'Xxxxx Xxxx
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
FAROUDJA LABORATORIES, INC.
By: /s/ Yves Faroudja
----------------------------------------------------
Yves Faroudja, President
Address: 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
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EXHIBIT A
1) Review of Client technological options and assistance towards the
establishment of a business plan.
2) Assistant Client in the following specific projects:
a) Negotiations with General Instrument on patents No. 4,876,596 (YF) and
4,881,125, 4,998,287 (GI).
b) Negotiations with C-Cube for use of Client technology within MPEG
process.
c) Gathering information on NTV status and business approach.
d) Interface with Zilog, Inc. and Q.D. Technology, Inc to resolve the
potentially competitive and infringing activities of such companies.
e) Optimization of Faroudja Research Enterprises situation and
presentation.
A-1
