Document:

ex10-31.htm

    
      
        	
                 

              	
                
                  EXHIBIT
      10.31

                

              

      

       

      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:

      

      
        	
                1.

              	
                Services.

              

      

       

      
        	
                 
      

              	
                A.

              	
                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”).

              

      

       

      
        	
                 
      

              	
                B.

              	
                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.

              

      

       

      
        	
                 
      

              	
                C.

              	
                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.

              

      

       

      
        	
                 
      

              	
                D.

              	
                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.

              

      

       

      
        	
                 
      

              	
                E.

              	
                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.

              

      

       

      
        	
                2.

              	
                Compensation; Payment; Deposit;
      Expenses.

              

      

       

      
        	
                 
      

              	
                A.

              	
                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.

              

      

       

      
        	
                 
      

              	
                B.

              	
                As
      additional compensation to FLG, Client will pay FLG the incentive bonus or
      warrants or options, if any, set forth in Exhibit
  A.

              

      

       

      
        	
                 
      

              	
                C.

              	
                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.

              

      

       

      
        	
                 
      

              	
                D.

              	
                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.

              

      

       

      
        	
                 
      

              	
                E.

              	
                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.

              

      

       

      
        	
                3.

              	
                Relationship of the
      Parties.

              

      

       

      
        	
                 
      

              	
                A.

              	
                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.

              

      

       

      
        	
                4.

              	
                Term and
      Termination.

              

      

       

      
        	
                 
      

              	
                A.

              	
                The
      term of this Agreement shall be for the period set forth in Exhibit
      A.

              

      

       

      
        	
                 
      

              	
                B.

              	
                Either
      party may terminate this Agreement upon thirty (30) days’ advance written
      notice to the other party.

              

      

       

      
        	
                 
      

              	
                C.

              	
                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.

              

      

       

      
        	
                 
      

              	
                D.

              	
                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.

              

      

       

      
        
          
            Initial:
Client   FLG

          

        

        
          Page 1 of
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                    EXHIBIT
      10.31

                  

                

           

          CONFIDENTIAL
CONSULTING AGREEMENT

        

         

      

      
        	
                 
      

              	
                E.

              	
                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.

              

      

       

      
        	
                 
      

              	
                F.

              	
                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%).

              

      

       

      
        	
                5.

              	
                Disclosures

              

      

       

      
        	
                 
      

              	
                A.

              	
                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).

              

      

       

      
        	
                 
      

              	
                B.

              	
                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.

              

      

       

      
        	
                6.

              	
                DISCLAIMERS
      AND
      LIMITATION OF LIABILITY.

              

      

       

      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.

       

      
        	
                 
      

              	
                A.

              	
                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.

              

      

       

      
        	
                7.

              	
                Indemnification.

              

      

       

      
        	
                 
      

              	
                A.

              	
                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.

              

      

       

      
        
          
            Initial:
Client   FLG

          

        

        
          Page 2 of
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                    EXHIBIT
      10.31

                  

                

           

          CONFIDENTIAL
CONSULTING AGREEMENT

        

         

      

      
        	
                 
      

              	
                B.

              	
                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.

              

      

       

      
        	
                 
      

              	
                C.

              	
                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.

              

      

       

      
        	
                8.

              	
                Representations and
      Warranties.

              

      

       

      
        	
                 
      

              	
                A.

              	
                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.

              

      

       

      
        	
                 
      

              	
                B.

              	
                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.

              

      

       

      
        	
                 
      

              	
                C.

              	
                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.

              

      

       

      
        	
                9.

              	
                Miscellaneous.

              

      

       

      
        
          	
                   
      

                	
                  A.

                	
                  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.

                
	 	 	 
	 	 	If
      to FLG:

        

      

       

      Jeffrey
S. Kuhn

      Managing
Partner

      FLG
Partners, LLC

      P.O. Box
556

      7 East
Road

      Ross, CA
94957-0556

      Tel:
415-454-5506

      Fax:
415-456-1191

      E-mail:
jeff@flgpartners.com

       

      
        	
                 
      

              	
                If
      to Client:  the address, telephone numbers and email address
      shown below Client’s signature on the signature
  page.

              

      

       

      
        	
                 
      

              	
                B.

              	
                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.

              

      

       

      
        	
                 
      

              	
                C.

              	
                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.

              

      

       

      
        	
                 
      

              	
                D.

              	
                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.

              

      

       

      
        	
                 
      

              	
                E.

              	
                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.

              

      

       

      
        	
                 
      

              	
                F.

              	
                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.

              

      

       

      
        
          
            Initial:
Client   FLG

          

        

        
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                    EXHIBIT
      10.31

                  

                

           

          CONFIDENTIAL
CONSULTING AGREEMENT

        

         

      

      
        	
                 
      

              	
                G.

              	
                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.

              

      

       

      
        	
                 
      

              	
                H.

              	
                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.

              

      

       

      
        	
                 
      

              	
                I.

              	
                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.

              

      

       

      
        	
                 
      

              	
                J.

              	
                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.

              

      

       

      
        	
                 
      

              	
                K.

              	
                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.

              

      

       

      
        	
                 
      

              	
                L.

              	
                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”).

              

      

       

      
        	
                 
      

              	
                A.

              

      

      
 

      IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the Effective
Date.

      

      
        
          
            
              
                
                  
                    	
                            CLIENT:

                            Neomagic
      Corporation,

                            a
      Delaware corporation.

                          	
                            FLG:

                            FLG
      Partners, LLC,

                            a
      California limited liability company.

                          
	
                            By:

                            Signed:

                            Title:

                             

                            Address:

                             

                             

                            Tel:

                            Fax:

                            Email:

                          	
                            Douglas
      R. Young

                            /s/
      Douglas R. Young

                            President
      & CEO

                             

                            780
      Montague Expressway Suite 504 

                            San
      Jose, CA 95131

                             

                            408-428-9725

                            408-428-9712

                            dyoung@neomagic.com

                          	
                            By:

                            Signed:

                            Title:

                            Effective
      Date:

                          	
                            Jeffrey
      S. Kuhn

                            /s/
      Jeffrey S. Kuhn

                            Managing
      Partner

                            December
      7,
2009

                          

                  

                

              

            

          

        

      

      

      

      

      REMAINDER
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            Initial:
Client   FLG

          

        

        
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                    EXHIBIT
      10.31

                  

                

           

          CONFIDENTIAL
CONSULTING AGREEMENT

        

      

       

      EXHIBIT
A

       

      
        	
                 
      

              	
                1.

              	
                Description of
      Services:  CFO level services typical of those for a
      publicly-held corporation.

              

      

       

      
        	
                 
      

              	
                2.

              	
                FLG
      Member:  James D.
Pardee.

              

      

       

      
        	
                 
      

              	
                3.

              	
                Fees:  $300
      per hour.

              

      

       

      
        	
                 
      

              	
                4.

              	
                Additional
      Compensation:  None.

              

      

       

      
        	
                 
      

              	
                5.

              	
                Deposit:  $10,000.00.

              

      

       

      
        	
                 
      

              	
                6.

              	
                Term:  Indefinite,
      and terminable pursuant to Section 4 of the
  Agreement.

              

      

       

      
        	
                 
      

              	
                7.

              	
                Non-Disclosure
      Agreement: FLG-Neomagic Mutual Non-Disclosure Agreement dated
      November 11, 2009.

              

      

       

      

      

      

      REMAINDER
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        Initial:
Client   FLG

      

      Page
5 of 5Unassociated Document

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Agreement (the “Agreement”) is dated December 8, 2009, by and between Atwood Oceanics, Inc. (the “Company”), and Robert J. Saltiel (“Executive”) (collectively, the “Parties” and individually “Party”).

 

In consideration of the promises and mutual covenants herein and for other good and valuable consideration, the Parties agree as follows:

 

1. Employment Term; Duties and Responsibilities.

 

a. Term.  Subject to the provisions of this Agreement, Executive shall serve as the Company’s President and Chief Executive Officer commencing upon a start
date selected by Executive, but which shall not be later than February 1, 2010 (the “Commencement Date”). Such employment shall continue until the third anniversary of the Commencement Date, (the “Employment Term”) on the terms and subject to the conditions set forth in this Agreement; provided, however, that unless the Company or Executive provides the other
Party hereto 90 days prior written notice that the Employment Term shall not be so extended.  Commencing upon the third anniversary of the Commencement Date, the Employment Term shall be automatically extended for an additional two (2) year period, and provided further, however, that commencing on the first day immediately following the third anniversary of the Commencement
Date, the term of this Agreement shall be extended automatically for one (1) additional day for each day that has then elapsed since the such date so that thereafter the unexpired term of this Agreement shall be two (2) years.  Following any such timely notice that the Employment Term shall not be automatically extended pursuant to this Section 1.a, Executive’s employment shall terminate upon the expiration of
the Employment Term (unless sooner terminated pursuant to Section 5).

 

b. Duties.  Executive shall have all of the duties and responsibilities as are set forth for his positions on the date hereof and upon the date of his becoming
President and Chief Executive Officer in the Second Amended and Restated By-laws of the Company (as amended or restated from time to time, the “Bylaws”), to the extent addressed in the Bylaws, and such other duties and responsibilities as may be assigned from time to time by Board of Directors of the Company (“Board”) consistent with this Agreement and with such duties and responsibilities of a president and chief executive officer.  As President and Chief Executive Officer,
Executive shall be the senior-most officer of the Company, shall report to the Board, and all officers and other employees shall report directly or indirectly to him.  Within 30 days of the commencement of the Employment Term, Executive shall be nominated for election as a member of the Board of Directors of the Company (the “Board”).  Such nomination shall be subject to election by the shareholders at the annual meeting of shareholders scheduled February 11, 2010, or any adjournments
thereof and any elections thereafter.  During the Employment Term, Executive shall devote himself to a fulltime schedule of work on behalf of the Company and shall use his best efforts to advance the business and welfare of the Company.  Executive shall not engage in any other employment or board activities for direct or indirect remuneration without the prior written consent of the Board.  At all times during the Employment Term Executive shall abide by all Company policies and
procedures and shall comport himself in accordance with the direction of the Board.

 

 

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2. Compensation.  During the Employment Term, the Company shall pay Executive as follows:

 

a. Signing Bonus.  In recognition that Executive shall forego other awards and incentives available to him if he were to continue his previous employment, and
provided Executive executes this Agreement and commences employment subject to the terms hereof on or before the Commencement Date, the Company shall pay Executive a one-time signing bonus of $500,000 which shall be payable to Executive not later than 30 days after the Commencement Date.

 

b. Base Salary.  Company shall pay Executive salary for his services at the annualized rate of $650,000, payable in regular installments in accordance with the
Company’s usual payment practices for senior executive officers (the “Base Salary”).  Such Base Salary shall be subject to periodic review and increase as provided in Section 2.d.

 

c. Bonus.  Executive shall be eligible to receive an annual cash bonus (“Bonus”) commencing on Commencement Date based upon achievement of targeted
performance levels upon satisfactory performance of reasonable goals and milestones (“Target Goals”) established by the Compensation and Human Resources Committee of the Board (the “Compensation Committee”), as determined within the Compensation Committee’s sole discretion exercised consistent with the above provisions of this Section 2 and consistent with awards to other Company senior executive officers.  Such Bonus shall be targeted at 85% of the Base Salary if
such Target Goals are achieved; achievement beyond the Target Goals, i.e. “stretch goals” may result in a higher Bonus up to 175% of the Base Salary and performance under Target Goals but at a minimum level, i.e. “threshold goals” shall result in a lower Bonus, but in no event shall such Bonus be less than 20% of the Base Salary.  Unless otherwise provided by this Agreement, the Bonus will be paid by January 15 of the fiscal year following the performance year and shall be prorated
for any partial years of Executive’s employment, except with respect a Bonus for a partial year in which Executive terminates, unless otherwise provided in this Agreement.  Such Bonus shall be subject to periodic review and adjustment as provided in Section 2.d.

 

d. Adjustment to Compensation.  Executive’s Base Salary, Bonus, Target Goals, and performance measures, goals and milestones shall be subject to review which
shall occur at least annually and adjustment in the sole discretion of the Compensation Committee consistent with awards to other Company senior executive officers, but taking into account differences in responsibilities and positions, and such adjustments shall thereafter constitute Executive’s “Base Salary,” “Bonus,” “Target Goals,” and performances measures, goals and milestones for all purposes hereunder.  Provided however, that notwithstanding anything
in the foregoing to the contrary, Base Salary shall not be less than the Base Salary for the preceding fiscal year without Executive’s consent.

 

3. Equity Awards.  On the Commencement Date, the Company and Executive will enter into a Restricted Stock Award Agreement – 2007 Long-Term Incentive Plan ,
the terms and conditions of which will be set forth in such separate agreement and which will be subject to the Company’s 2007 Long-Term Incentive Plan (as amended or restated from time to time, the “2007 Plan”).  Such agreement is not a “prior agreement” as set forth in Section 1414.j and shall have full force and effect.

 

 

2

 

a. First Restricted Stock Award.  On the Commencement Date, Company shall grant Executive shares of restricted stock totaling $2,000,0000, based upon Fair Market
Value as defined in the 2007 Plan on such date.  The shares included in such restricted stock award shall be subject to three (3) year cliff vesting, as well as the other terms and conditions provided in the 2007 Plan.  If Executive is terminated without Cause, to the extent permitted under the 2007 Plan, all restricted stock shall immediately vest; if such immediate vesting is not permitted by the 2007 Plan and applicable law, Executive shall be paid the financial equivalent of the shares
as of the date of termination.

 

b. Second Restricted Stock Award.  On the Commencement Date, Company shall grant Executive shares of restricted stock totaling $1,000,000 based upon Fair Market
Value as defined in the 2007 Plan on such date.  The shares included in such restricted stock award shall be subject to four (4) year cliff vesting, as well as the other terms and conditions provided in the 2007 Plan as well as performance performances measures, goals and milestones to be determined in good faith by Executive and the Compensation Committee no later than December 15, 2010.  If Executive is terminated without Cause, to the extent permitted under the 2007 Plan, all restricted
stock shall immediately vest; if such immediate vesting is not permitted by the 2007 Plan and applicable law, Executive shall be paid the financial equivalent of the shares as of the date of termination.

 

c. Annual Incentive Grants.  Beginning December 2010, the Executive will be eligible for additional grants of restricted stock, awards of non-qualified stock options,
and other awards in accordance with the 2007 Plan (or any subsequent long term incentive plans adopted by the Company), subject to recommendation and approval of the Compensation Committee in its sole discretion, but consistent with awards to other Company senior executive officers.  The target for the December 2010 award will 350% of Base Salary, subject to Executive’s performance from the Commencement Date to the date of such award, with subsequent targets for annual grants to be determined
at the sole discretion of the Compensation Committee consistent with awards to other Company senior executive officers.

 

4. Miscellaneous Benefits.

 

a. D&O Coverage.  During the Employment Term and all times thereafter during which Executive may be subject to liability for his acts or omissions to act in
his capacity as a member of the Board, officer or employee of the Company or any subsidiary thereof, (i) the Company will indemnify Executive and hold him harmless to the maximum extent permitted under the Company’s Amended and Restated Certificate of Formation, as amended or restated from time to time, Bylaws, internal policies and procedures, and applicable law, and (ii) the Company will provide Executive with Directors’ and Officers’ Liability Insurance at a level and for the amount agreed
upon by the Parties, but in no event less favorable to Executive than such insurance as is provided to members of the Board (other than the Chairperson, if any).

 

 

3

 

b. Benefits.  On the Commencement Date, the Company will also provide Executive with at least the same level of executive and employee benefits as provided to
other Company executive officers from time to time.  The Parties specifically agree that Company shall reasonably endeavor to provide life insurance coverage for Executive through a qualified carrier, subject to such carrier’s underwriting requirements, in an amount equal to 250% of the Base Salary, but not to exceed total limits of $1,000,000, on terms and conditions consistent with those under which life insurance is made available to the senior executive officers of the Company.  Such
executive benefits may be subject to change or amendment at the sole discretion of the Company.

 

c. Vacation.  Executive shall be entitled to up to five (5) weeks vacation in accordance with the Company’s vacation policy applicable to senior executive
officers of the Company.  Such vacation may not rollover from year to year, and upon termination, Executive will only be paid for one (1) week of accrued, but unused vacation.  Vacation shall be taken at times when reasonably appropriate given Executive’s responsibilities and consistent with the needs of the Company, and Executive shall be reasonably available to the Company during any such vacation.

 

d. Business Expenses.  During the Employment Term, reasonable business expenses that are consistent with Company policies and that are incurred by Executive in
the performance of Executive’s responsibilities shall be promptly reimbursed by the Company.

 

5. Termination.  The Employment Term may be terminated by either Party at any time and for any reason in accordance with the Company’s Bylaws and policies
as otherwise provided in this Agreement; provided that Executive will be required to give the Company at least 90 days’ advance written notice of any resignation of Executive’s position.  Executive may pay the Company as liquidated damages, an amount equal to 90 days of Executive’s Base Pay in lieu of the requisite notice.  Upon a termination of Executive’s employment for any reason, the Company shall
pay or provide Executive: (i) his accrued and unpaid Base Salary and accrued but unused vacation, subject to the limitations of Section 4.c, not less than 15 days after the date of termination; (ii) his unreimbursed business expenses incurred on or prior to the date of termination, as are substantiated and payable in accordance with Section 4.d; and (iii) his accrued and vested benefits under the employee welfare, savings and retirement plans in which he participated immediately prior to termination, payable
in accordance with the terms of such plans (collectively, the amounts and benefits under clauses (i) through (iii) are Executives “Accrued Benefits”).

 

6. Severance Payment for Qualifying Termination.

 

a. If, and only if, Executive’s employment is terminated during the Employment Term pursuant to a “Qualifying Termination” (as defined in Section 6c), in addition to Executive’s
Accrued Benefits, the Company shall pay Executive severance in an aggregate amount equal to 250% of the sum of the Base Salary and Bonus.  Such severance amount shall be paid in a lump sum not later than 45 days following the date of termination, shall be reduced by any other cash severance payable to Executive under any other severance plans, programs or arrangements of the Company and its affiliates, provided such offset shall not result in any additional tax under Code Section 409A.

 

 

4

 

b. For purposes of this Agreement, a “Change of Control” shall mean the occurrence of any of the following events while Executive is employed by the Company:

 

(i) The acquisition or formal tender offer by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of either (i) the then outstanding shares of common stock of the Company or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that the following acquisitions shall
not constitute a Change of Control:  (i) any acquisition directly from the Company; (ii) any acquisition by the Company or any subsidiary of the Company; (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company; or

 

(ii) The Company shall sell substantially all of its assets to another corporation which is not a wholly owned subsidiary; or

 

(iii) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.

 

(iv) For the purposes of this Agreement, ownership of voting securities shall take into account and shall include ownership as determined by applying the provisions of Rule 13d-3(d)(1)(i) promulgated under the Exchange Act.

 

c. For purposes of this Agreement, a “Qualifying Termination” shall mean the occurrence of (i) a termination of Executive’s employment as a result of a Change in Control (as defined in Section 6.b); (ii) a termination
of Executive’s employment by the Company without Cause (as defined in Section 6.e), (iii) termination of Executive’s employment by Executive with Good Reason (as defined in Section 6.f), or (iv) termination following Company’s failure to renew the Employment Term upon written notice (as defined in Section 1.a).

 

d. Notwithstanding any provision of this Agreement, a Qualifying Termination shall not occur and no severance amounts shall be payable hereunder upon: (i) the termination of Executive’s employment due to Executive’s death
or disability, where “disability” means the physical or mental incapacity qualifying Executive for a long-term disability under the Company’s long-term disability plan. If no such plan exists on the date on which a relevant determination is being made, the term “Disability” means physical or mental incapacity as determined by a physician jointly selected by Executive and the Board qualifying Executive for long-term disability under reasonable employment standards (although the Executive
may be eligible for other executive benefits); or (ii) the termination of Executive’s employment following the Company’s offer and Executive’s refusal of an equivalent position following a Change of Control, unless the terms and conditions of the position offered would allow Executive to resign for Good Reason (as defined Section 6.f).  In the event of death or disability of Executive, to the extent
permitted under the 2007 Plan, all restricted stock shall immediately vest; if such immediate vesting is not permitted by the 2007 Plan and applicable law, Executive shall be paid the financial equivalent of the shares as of the date of termination.

 

 

5

 

e. For purposes of this Agreement, “Cause” shall mean: (i) Executive’s willful and continuing failure to substantially perform Executive’s duties hereunder (other than as a result of total or partial incapacity
due to physical or mental illness); (ii) willful misconduct materially and demonstrably injurious to the Company, (iii) intentional action, materially and demonstrably injurious to Company, which Executive knows would not comply with the laws of the United States or any other jurisdiction applicable to Executive’s actions on behalf of the Company, and/or any of its subsidiaries or affiliates, including specifically, without limitation, the United States Foreign Corrupt Practices Act, generally codified
in 15 USC 78 (the “FCPA”), as the FCPA may hereafter be amended, and/or its successor statutes; (iv) Executive’s intentional act of misappropriation, embezzlement, fraud or any similar conduct involving the Company or any of its subsidiaries or affiliates; (v) Executive’s conviction of, or plea of guilty or nolo contendre to, a crime constituting; (x) a felony under the laws of the United States or any state thereof; or (y) a misdemeanor
involving moral turpitude; or (z) an act of fraud, or any other willful offense that materially adversely affects the Company’s prospects or reputation or Executive’s ability to perform his obligations or duties; (vi) Executive’s willful material violation of the Company’s material employment policies, including those policies relating to sexual harassment, and substance abuse; (vii) Executive’s willful or repeated misconduct or gross negligence in the performance of Executive’s
duties hereunder; or (viii) Executive’s breach of the provisions of Sections 8 or 9 of this Agreement; provided, that the events described in clauses (i), (ii), (iii), (iv), (vi), (vii), and (viii) of this Section 6.e shall constitute Cause only if Executive fails to cure such event, if curable, within 30 days after receipt from the Company of written notice detailing the failure, misconduct or breach which the Board believes
constitutes Cause; provided further, that no act or omission to act by Executive shall be “willful” if conducted in good faith or with a reasonable belief that such act or omission was in the best interests of the Company.

 

f. For purposes of this Agreement, “Good Reason” shall mean: (i) a material diminution in Executive’s duties or responsibilities (including direct reporting responsibilities); (ii) material change in Executive’s
title; (iii) any direction or requirement that Executive engage in conduct which could reasonably be construed to violate local, state or federal law; (iv) relocation of Executive’s principal business office more than 50 miles from its location on the first day of the Employment Term unless pursuant to a Company restructure or similar plan approved by the Company’s Board and shareholders, however a relocation of Executive’s principal business office to any location outside the United States
shall not fall within the restructure exception; (v) failure to pay Base Salary or any Bonus due pursuant to this Agreement in a timely manner; or (vi) failure to allow the exercise of vested options or termination of restrictions on restricted stock in accordance with the awards providing for same; provided, that the events described in clauses (i) - (iii), (v) and (vi) of this Section 6.f shall constitute Good Reason only if Executive’s
termination of employment occurs within two (2) years after the first occurrence of the facts constituting Good Reason, Executive gave the Company detailed written notice of such facts within 90 days after their first occurrence, and the Company failed to cure such Good Reason within 30 days after it received such detailed written notice.

 

 

6

 

7. Board and/or Committee Resignation.  Upon termination of Executive’s employment for any reason, Executive agrees to resign, as of the date of such termination
and to the extent applicable, from the Board (and any committees thereof) and the Boards of Directors (and any committees thereof) of any of Company’s affiliates.

 

8. Non-Competition.

 

a. Customer.  The term “Customer” includes all persons, firms or entities that are purchasers or end-users of services or products offered, provided,
developed, designed, sold or leased by the Company during the relevant time periods, and all persons, firms or entities which control, or which are controlled by, the same person, firm or entity which controls such purchase

 

b. Confidential Information.  Executive acknowledges and recognizes the highly competitive nature of the business of the Company and its affiliates, as a drilling
contractor and that upon execution of this Agreement as an essential support to the conduct of his duties, Executive shall be provided immediate access to, and will receive during the Employment Term, highly confidential and proprietary information of the Company, its subsidiaries, and affiliates.  Executive agrees that such confidential and propriety information, includes, without limitation, all information, whether written or otherwise, regarding the Company’s business, including, but not limited
to, secret information regarding Customers, Customer contact information, Customer lists, costs, prices, finances, investments, profits, products, services, vendors, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, earnings, drilling methods, drilling techniques, formulae, analyses, compositions, machines, equipment, apparatus, drilling plans, drilling programs, bids, estimates, contract terms, systems, manufacturing procedures, operations,
projections, strategic plans, potential acquisitions, new location plans, prospective and executed contracts and other business arrangements, sources of supply, proprietary software, databases and the data contained therein, inventions, processes, technology, designs and other intellectual property, government and regulatory activities and approvals concerning the past, current or future business, activities and operations of the Company, its subsidiaries or affiliates.  Executive agrees that to the
extent any subsidiary, affiliate or third party has disclosed or provided any information of the foregoing types to the Company on a confidential basis, such information is prima facie presumed to be important, material and confidential information of the Company for the purposes of the Agreement, except to the extent that such information may be otherwise lawfully and readily available to or known by the general public, in any case other than as a result
of Executive’s breach of this covenant.  The information referred to in the previous two sentences is collectively referred to herein as the “Confidential Information”.  If disclosed or utilized outside of the conduct of the business of the Company, its subsidiaries, and affiliates, Executive agrees that the Confidential Information, by its nature, would cause substantial harm to the business and prospects, financial and otherwise, of these entities.

 

 

7

 

c. Noncompete.  In consideration of this Agreement and covenants contained herein Section 8 and 9.a, during the Employment Term and for a period of two (2)
years thereafter, Executive will not, directly or indirectly, either as an individual, proprietor, stockholder (other than as a holder of up to one percent (1%) of the outstanding shares of a corporation whose shares are listed on a stock exchange or traded in accordance with the automated quotation system of the National Association of Securities Dealers), partner, officer, employee or otherwise:

 

(i) work for, become an employee of, contractor to, invest in, provide consulting services to or in any way engage in any business which (i) is primarily engaged in the offshore drilling and workover of oil and gas wells within the geographical
area described in this Section 8 and (ii) actually competes to a substantial extent with the Company; or

 

(ii) provide, sell, offer to sell, lease, offer to lease, or solicit any orders for any products or services which the Company provided and with regard to which Executive had direct or indirect supervision or control, within three (3)
years preceding Executive’s termination of employment, to or from any person, firm or entity which was a Customer for such products or services of the Company during the three (3) years preceding such termination from whom the Company had solicited business during such three (3) years; or

 

(iii) solicit, aid, counsel or encourage, directly or indirectly, any officer, director, employee or other individual to (i) leave his or her employment or position with the Company, (ii) compete with the business of the Company, or
(iii) violate the terms of any employment, non-competition or similar agreement with the Company.

 

d. Scope.  The geographical area within which the obligations in Sections 8.c and 9.a of this Agreement shall apply is that territory within two hundred
(200) miles of (i) any of the Company’s present offices or offices established during the Employment Term, (ii) any of the Company’s present rig operations or rig operations during the Employment Term and (iii) any additional location where the Company, as of the date of any action taken in violation of the non-competition obligations and covenants of the Agreement, has an office, a rig operation, or definitive plans to locate an office, a rig operation or a rig yard or has recently conducted rig
operations.  Notwithstanding the foregoing, if the two hundred (200) mile radius extends into another country or its territorial waters and the Company is not then doing business in that other country, there will be no territorial limitations extending into such other country.

 

e. It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section 8 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction
that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable.  Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction
cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.

 

 

8

 

f. Notwithstanding anything to the contrary in this Agreement, the Parties agree that Executive may seek a waiver of the non-compete obligations contained in this Section 8 from the Board, who will not unreasonably withhold its consent
to such waiver, subject to the reasonable protection of the Company’s interests.

 

9. Confidentiality; Intellectual Property.

 

a. Confidentiality.

 

(i) In exchange for the Company’s agreement to provide Executive immediate access to the Company’s Confidential Information (as defined in Section 8.b) and the provision of such Confidential Information during the Employment
Term, Executive agrees not to (whether during or after Executive’s employment with the Company): (a) retain or use for the benefit, purposes or account of Executive or any other Person; or (b) disclose, divulge, reveal, communicate, share, transfer or provide access to any Person outside the Company (other than its professional advisers who are bound by confidentiality obligations), any such Confidential Information without the prior written authorization of the Board.

 

(ii) “Confidential Information” shall not include any information that is: (a) known broadly to the public other than as a result of Executive’s breach of this covenant or any breach of other confidentiality obligations
by third parties; (b) made legitimately available to Executive by a third party without breach of any confidentiality obligation; or (c) required by law to be disclosed; provided that Executive shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and cooperate with any attempts by the Company to obtain a protective order or similar treatment.

 

(iii) Except as required by law, Executive will not disclose to anyone, other than Executive’s immediate family and legal or financial advisors, the existence or contents of this Agreement; provided that
Executive may disclose to any prospective future employer the provisions of Sections 8 and 9, only, of this Agreement provided they agree to maintain the confidentiality of such terms.

 

(iv) Upon termination of Executive’s employment with the Company for any reason, Executive shall: (a) cease and not thereafter commence use of any Confidential Information or intellectual property (including without limitation,
any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned or used by the Company, its subsidiaries or affiliates; (b) immediately destroy, delete, or return to the Company in good condition, at the Company’s option, (1) all property of the Company, including without limitation, computers, personal digital assistants, laptops, software, hardware, passkeys and passwords, and (2) all originals and copies in any form or medium (including memoranda,
books, papers, plans, analyses, computer files, reports, letters and other data) in Executive’s possession or control (including any of the foregoing stored or located in Executive’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information or otherwise relate to the business of the Company, its affiliates and subsidiaries, except that Executive may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential
Information; and (c) notify and fully cooperate with the Company regarding the delivery or destruction of any other Confidential Information of which Executive is or becomes aware.  Executive agrees to promptly provide reasonable written affirmative of the return of such Confidential Information upon request by the Company.

 

 

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b. Intellectual Property.

 

(i) If Executive has created, invented, designed, developed, contributed to or improved any works of authorship, inventions, intellectual property, materials, documents or other work product (including without limitation, research, reports,
software, databases, systems, applications, presentations, textual works, content, or audiovisual materials) (“Works”), either alone or with third parties, prior to Executive’s employment with the Company, that are relevant to or implicated by such employment (“Prior Works”), Executive hereby grants the Company a perpetual, non-exclusive, royalty-free, worldwide, assignable, sublicensable license under all rights and intellectual property rights (including rights under patent, industrial
property, copyright, trademark, trade secret, unfair competition and related laws) therein for all purposes in connection with the Company’s current and future business.

 

(ii) If Executive creates, invents, designs, develops, contributes to or improves any Works, either alone or with third parties, at any time during Executive’s employment with the Company and within the scope of such employment
and/or with the use of any the Company resources (“Company Works”), Executive shall promptly and fully disclose same to the Company and hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to the Company to the extent ownership of any such rights does not vest originally in
the Company.

 

(iii) During the Employment Term, Executive agrees to keep and maintain adequate and current written records (in the form of notes, sketches, drawings, and any other form or media requested by the Company) of all Company Works.  The
records will be available to and remain the sole property and intellectual property of the Company at all times.

 

(iv) Executive shall take all requested actions and execute all requested documents (including any licenses or assignments required by a government contract) at the Company’s expense (but without further remuneration) to assist
the Company in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Prior Works and Company Works.  If the Company is unable for any other reason to secure Executive’s signature on any document for this purpose, then Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive’s agent and attorney in fact, to act for and in Executive’s behalf
and stead to execute any documents and to do all other lawfully permitted acts in connection with the foregoing.

 

(v) Executive shall not improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with the Company any confidential, proprietary or non-public information
or intellectual property relating to a former employer or other third party without the prior written permission of such third party.  Executive hereby indemnifies, holds harmless and agrees to defend the Company and its officers, directors, partners, employees, agents and representatives from any breach of the foregoing covenant.  Executive shall comply with all relevant policies and guidelines of the Company, including regarding the protection of Confidential Information and intellectual
property and potential conflicts of interest.  Executive acknowledges that the Company may amend any such policies and guidelines from time to time, and that Executive remains at all times bound by their most current version.

 

 

10

 

(vi) The provisions of Sections 6, 8, and 9, and such provisions of Section 11 as are required to administer such other Sections, of this Agreement shall survive the termination of Executive’s employment for any reason.

 

10. Specific Performance.  Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions
of Sections 8 or 9 would be inadequate and the Company would suffer irreparable damages as a result of such breach or threatened breach.  In recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, may obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available.

 

11. Miscellaneous.

 

a. Governing Law and Venue.  This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without regard to conflicts of
laws principles thereof.  Exclusive jurisdiction of any disputes arising under this Agreement shall lie in Harris County, Texas.

 

b. Entire Agreement/Amendments.  This Agreement contains the entire understanding of the parties with respect to the employment of Executive.  There
are no restrictions, agreements, promises, warranties, covenants or undertakings between the Parties with respect to the subject matter herein other than those expressly set forth herein.  This Agreement may not be altered, modified, or amended except by written instrument signed by the Parties.

 

c. No Waiver.  The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s
rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

 

d. Severability.  In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.

 

e. Dispute Resolution.  Any and all claims, demands, cause of action, disputes, controversies and other matters in question arising out of or relating to this
Agreement and any awards made to Executive hereunder and as part of the Company’s 2007 Plan, (collectively, the “Executive Agreements”), any provision of the Executive Agreements, the alleged breach thereof, or in any way relating to the subject matter of the Executive Agreements, involving the Company, its subsidiaries and affiliates and Executive (all of which are referred to herein as “Claims”), even though some or all of such 

  

 

11

 

Claims allegedly are extra-contractual in nature, whether such Claims arise under contract, tort or otherwise, at law or in equity, under state or federal law, whether provided by statute or the common law, for damages or any other relief, including equitable relief and specific performance, shall be resolved and decided solely by binding arbitration pursuant to the Federal Arbitration Act (“FAA”) in accordance with the Commercial Arbitration Rules then in effect with the American Arbitration
Association (“AAA”); provided, however, that if a Party makes a good faith determination that a breach (or potential breach) of any of the confidentiality or noncompete  provisions of this Agreement by another Party may result in consequences that will be immediate, severe, and incapable of adequate redress after the fact, that Party may seek a temporary restraining
order, temporary injunction or other immediate injunctive relief through the Harris County District Courts or Federal Courts of the Southern District of Texas without first seeking relief through arbitration.  Either Party may initiate arbitration under this Section 11.e.  After the court has ruled on the request for a temporary injunctive relief, the Parties will thereafter proceed with arbitration of the remainder
of the dispute and stay the litigation pending arbitration, although any injunctive relief granted by the court shall remain in force and effect, subject to enforcement by contempt of the court and the arbitrator as part of the AAA proceeding.  Three (3) arbitrators selected under AAA Rules shall preside over the proceeding, whose decision shall be binding on Executive, the Company and its subsidiaries and affiliates, and such arbitrators may award reasonable costs, including attorneys’ fees and
expenses to the prevailing Party.  The arbitration proceeding shall be conducted in Houston, Texas.  Judgment upon any award rendered in any such arbitration proceeding may be entered by any federal or state court having jurisdiction.  This agreement to arbitrate shall be enforceable in either federal or state court.  The enforcement of this agreement to arbitrate and all procedural aspects of this agreement to arbitrate, including but not limited to, the construction and
interpretation of this agreement to arbitrate, the scope of the arbitrable issues, allegations of waiver, delay or defenses to arbitrability, and the rules governing the conduct of the arbitration, shall be governed by and construed pursuant to the FAA and governing AAA rules.  In deciding the substance of any such Claim, the arbitrator shall apply the substantive laws of the State of Texas; provided, however,
that the arbitrator shall have no authority to award treble, exemplary or punitive type damages under any circumstances regardless of whether such damages may be available under Texas law, the parties hereby waiving their right, if any, to recover treble, exemplary or punitive type damages in connection with any such Claims.

 

f. Assignment.  This Agreement and all of Executive’s rights and duties hereunder, shall not be assignable or delegable by Executive.  Any purported
assignment or delegation by Executive in violation of the foregoing shall be null and void ab initio and of no force and effect.  This Agreement may be assigned by the Company to any third party who becomes a successor to all or any substantial portion of the business operations of the Company by operation of law, contract or otherwise.  Upon such assignment, the rights and obligations of the Company hereunder shall become the rights
and obligations of such affiliate or successor person or entity.  Executive’s rights under the Executive Agreements and all other agreements between the Company and Executive shall inure to the benefit of Executive’s heirs, legatees and beneficiaries; provided, that in the event of Executive’s death, all amounts payable under this Agreement (including, without limitation, Sections 4.d and 5) shall be payable to Executive’s
estate.

 

 

12

 

g. Set Off and Counterclaim.  The Company’s obligation to pay Executive the amounts provided and to make the arrangements provided hereunder shall not be
subject to set-off against any amounts owed by Executive to the Company or its affiliates, but are expressly made subject to counterclaim by Company.

 

h. Compliance with Code Section 409A.  Notwithstanding anything herein to the contrary, (i) if at the time of Executive’s termination of employment with
the Company, Executive is a “specified employee” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the rules and regulations there under, and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the Company will defer the commencement of the payment of
any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Executive) until the date that is six months following Executive’s termination of employment with the Company (or the earliest date as is permitted under Section 409A of the Code) and (ii) if any other payments of money or other benefits due to Executive hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits
shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code, or otherwise such payment or other benefits shall be restructured, to the extent possible, in a reasonable manner, determined by the Board, that does not cause such an accelerated or additional tax.  Any reimbursement provided under this Agreement shall be made no later than December 31 of the calendar year following the calendar year in which the related expense was incurred; provided, however,
that in no event will reimbursements in one taxable year affect the amount of reimbursements in any other taxable year, nor shall the right to reimbursement be subject to liquidation or exchange for another benefit.  No payment or benefit that is deferred compensation for purposes of Code Section 409A and that is due upon Executive’s termination of employment will be paid or provided unless such termination is also a separation from service within the meaning of Code Section 409A and the rules
and regulations there under.  The Company shall consult with Executive in good faith regarding the application of this Section 11.h to maximize tax efficiency, provided the Company does not guarantee to the Executive any specific tax consequences relating to entitlement to or receipt of payments or benefits pursuant to this Agreement, and that neither the Company nor any of its employees or representatives shall have any liability to Executive with respect thereto.  Any cash payment deferred
as a consequence of this Section 11.h shall bear interest at the prime rate until paid.

 

i. Automatic Deferral of Payment to Preserve Deductibility under Section 162(m).  Notwithstanding any other provision of this Agreement, any payment or partial
payment (whether in the form of cash or in the form of Company stock) otherwise required to be made by the Company to Executive shall be delayed to the extent that the Company reasonably anticipates that if the payment were made as scheduled, the Company's deduction with respect to such payment would not be permitted due to the application of Section 162(m) of the Code, provided that such payment shall be made

 

13

 

during the Company's first taxable year in which the Company reasonably anticipates, or should reasonably anticipate, that if the payment is made during such year, the deduction of such payment will not be barred by application of Section 162(m).  Any cash payment deferred as a consequence of this Section 11.i  shall bear interest at the prime rate until paid.

 

j. Notice.  For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered by hand or overnight courier or three days after it has been mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below in this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

   

    If to the Company:

 

    Atwood Oceanics, Inc.

    Chairman of the Compensation and Human Resources Committee

    Board of Directors of Atwood Oceanics

    15835 Park Ten Place Drive

    Houston, TX 77084

 

    With a copy to:

   

    W. Garney Griggs

    Strasburger & Price, LLP

    1401 McKinney, Suite 2200

    Houston, Texas 77010

 

If to Executive:

 

To the most recent address of Executive set forth in the personnel records of the Company.

 

k. Prior Agreements.  Executive represents that there are no prior agreements that prevent him from performing the duties of President and Chief Executive Officer
of the Company, and that he can perform such duties without using or disclosing any trade secrets of any prior employers or affiliates.  This Agreement supersedes all prior agreements and understandings (including verbal agreements) between Executive and the Company and/or its affiliates regarding the terms and conditions of Executive’s employment with the Company.

 

l. Cooperation.  Executive shall provide Executive’s reasonable cooperation in connection with any action or proceeding (or any appeal from any action or
proceeding) which relates to events occurring during Executive’s employment hereunder, and Company shall provide reasonable compensation and reimbursement of expenses associated with such cooperation to Executive.  This provision shall survive any termination of this Agreement.

 

m. Withholding.  The Company may withhold from any amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant
to any applicable law or regulation and any deductions authorized by Executive.

 

 

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n. Counterparts.  This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument.

 

o. Tax Penalty Avoidance.  The provisions of this Agreement are not intended and should not be construed to be legal, business or tax advice.  To ensure
compliance with requirements imposed by the Internal Revenue Service, the parties hereto are informed that the U.S. federal tax advice contained in this document, if any, is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Code or promoting, marketing or recommending to any party any transaction or matter addressed herein.

 

[SIGNATURE PAGE FOLLOWS]

  

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

 

	
COMPANY

Atwood Oceanics, Inc.

By: /S/ George S. Dotson

      George S. Dotson
	
EXECUTIVE

Robert “Rob” J. Saltiel

/S/ Robert J. Saltiel

	
Chairman of the Compensation and Human Resources Committee of the Board of Directors
	  

  

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