CONSULTING AGREEMENTConsulting Services Agreement |
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CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into as of
April 5, 2005, by and between HEALTH WEST MARKETING INCORPORATED, a California
corporation ("Health West"), and PATIENT SAFETY TECHNOLOGIES, INC., a Delaware
corporation ("PST").
RECITALS
WHEREAS, PST desires to engage Health West, and Health West desires to
accept the engagement by PST, to act as a consultant to PST under the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
AGREEMENT
1. CONSULTING SERVICES. Subject to the terms and conditions of this Agreement,
effective as of the date hereof, PST hereby engages Health West, and Health West
hereby accepts the engagement by PST, to act as a consultant to PST for the
duration of the Term (as defined below). In his capacity as a consultant to PST,
Health West agrees to perform the services identified in Appendix A and such
other services relating to PST's business and operations as are reasonably
requested from time to time by PST (collectively, the "Services"). The manner
and means by which Health West chooses to perform the Services shall be in the
discretion and control of Health West; provided, however, that Health West shall
perform all Services in a timely and professional manner, using a degree of
skill and care at least consistent with industry standards.
2. COMPENSATION. As consideration for Health West's performance of the Services,
PST shall issue to Health West, or Health West's nominee, shares of common stock
of PST in an amount equal to $250,000 divided by the last sale price of PST's
common stock on the date of this Agreement (the "Consulting Fees"). Consulting
Fees shall be issued over three vesting periods in amounts of 25%, 37.5% and
37.5% of the total Consulting Fees. The initial 25% of the Consulting Fees shall
be issued to Health West immediately on the date of this Agreement. 37.5% of the
Consulting Fees shall be issued to Health West three (3) months after the date
of this Agreement if the milestone described in Part 1(a) of Appendix A has been
completed at such time. The remaining 37.5% of the Consulting Fees shall be
issued to Health West ten (10) months after the date of this Agreement if the
milestones described in Part 1(b) of Appendix A have been completed at such
time. If the milestones described in Part 1 of Appendix A are not completed
within the timeframes contemplated by this Section 2, then, unless otherwise
agreed to by PST in writing, Health West shall not be entitled to any unissued
portion of the Consulting Fees. Health West shall not be responsible for the
performance of hardware or software or the impact of such hardware or software
performance on the milestones described in Appendix A. In addition, PST shall
implement a validated cost justification system in order to facilitate
completion of the milestones by Health West.
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3. WARRANTS. As incentive for entering into this Agreement, on the date of this
Agreement, PST shall issue to Health West a callable warrant ("Warrant") to
purchase 50,000 pre 3:1 forward stock split (150,000 post 3:1 forward stock
split) shares of common stock of PST at an exercise price equal to the last sale
price of PST's common stock on the date of this Agreement. As a performance
incentive under this Agreement, on the date of this Agreement, PST shall issue
to Health West a callable warrant to purchase 8,333 pre 3:1 forward stock split
(25,000 post 3:1 forward stock split) shares of common stock of PST at an
exercise price equal to the last sale price of PST's common stock on the date of
this Agreement ("Additional Warrants"). The Additional Warrants shall become
exercisable upon meeting the milestones described in Part 2 of Appendix A. If
the milestones described in Part 2 of Appendix A are not completed prior to
expiration of the Initial Term, then the Additional Warrants shall expire.
4. EXPENSES. PST shall reimburse Health West for any reasonable out-of-pocket
expenses, including, without limitation, reasonable travel expenses, incurred in
connection with Health West's performance of the Services; provided, however,
that Health West must: (i) obtain the prior written approval of PST for any such
expenses that, individually or in the aggregate, exceed $150; and (ii) submit
such written documentation of all such expenses as PST may reasonably require.
PST will reimburse Health West for expenses covered by this Section 4 within
thirty (30) days of the date that Health West submits proper documentation of
such expenses to PST.
5. INDEPENDENT CONTRACTOR RELATIONSHIP. Health West's relationship with PST
shall be solely that of an independent contractor, and nothing in this Agreement
shall be construed to create a partnership, joint venture, or employer-employee
relationship. Health West is not the agent of PST and is not authorized to make
any representation, contract or commitment on behalf of PST. Health West shall
not be entitled to any of the benefits that PST may make available to its
employees, such as group insurance, profit sharing or retirement benefits.
Health West shall be solely responsible for all tax returns and payments
required to be filed with or made to any federal, state or local tax authority
with respect to Health West's performance of the Services and receipt of the
Consulting Fees and Warrant pursuant to this Agreement. PST will regularly
report amounts paid to Health West by filing Form 1099-MISC with the Internal
Revenue Service as required by law, but given that Health West is an independent
contractor, PST will not withhold or make payments for social security, make
unemployment insurance or disability insurance contributions, or obtain worker's
compensation insurance on Health West's behalf. Health West agrees to accept
exclusive liability for complying with all applicable federal, state and local
laws governing self-employed individuals, including, without limitation,
obligations such as payment of taxes, social security, disability and other
contributions based on the Consulting Fees paid to Health West. Health West
hereby agrees to indemnify, hold harmless and defend PST from and against any
and all such taxes and contributions, as well as any penalties and interest
arising therefrom.
6. INFORMATION AND INTELLECTUAL PROPERTY RIGHTS.
6.1 Proprietary Information. Health West agrees that, during the Term and
thereafter, Health West shall take all steps necessary to hold the Proprietary
Information (as defined below) in trust and confidence, shall not use such
Proprietary Information in any manner or for any purpose except as expressly set
forth in this Agreement and shall not disclose any such Proprietary Information
to any third party without first obtaining PST's express written consent on a
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case-by-case basis; provided, however, that Health West may disclose certain
Proprietary Information, without violating its obligations under this Agreement,
to the extent such disclosure is required by a valid order of a court or other
governmental body having jurisdiction, provided that Health West provides PST
with reasonable prior written notice of such disclosure and uses commercially
reasonable efforts to obtain, or to assist PST in obtaining, a protective order
preventing or limiting the disclosure and/or requiring that the Proprietary
Information so disclosed be used only for the purposes for which the law or
regulation required, or for which the order was issued. For purposes of this
Agreement, "Proprietary Information" means any and all confidential and/or
proprietary information regarding PST or any of its affiliates and their current
and proposed business and operations, including, without limitation, information
pertaining to their current or forecasted capital structure, equity or debt
financing or investment activities, strategic plans, current or proposed
products or services, investors, employees, directors, consultants, and other
business and contractual relationships; provided, however, that information
received by Health West shall not be considered to be Proprietary Information if
Health West can demonstrate with competent evidence that such information has
been published or is otherwise readily available to the public other than by a
breach of this Agreement.
6.2 Third-Party Information. Health West understands that PST has received
and will in the future receive from third parties certain confidential or
proprietary information relating to such third parties (collectively,
"Third-Party Information"), subject to duties on PST's part to maintain the
confidentiality of such Third-Party Information and to use such Third-Party
Information only for certain limited purposes. Health West agrees to hold all
Third-Party Information in confidence and not to disclose to anyone (other than
personnel of PST) or to use, except in connection with Health West's performance
of the Services, any Third-Party Information unless expressly authorized in
writing by an executive officer of PST.
6.3 Intellectual Property Rights. Health West agrees that any and all
intellectual property and intellectual property rights that Health West
conceived, reduced to practice or developed during the course of its performance
of services as a director, officer, employee or consultant for PST, together
with any and all intellectual property and intellectual property rights that
Health West conceives, reduces to practice or develops during the course of its
performance of the Services pursuant to this Agreement, in each case whether
alone or in conjunction with others (all of the foregoing being collectively
referred to herein as the "Inventions"), shall be the sole and exclusive
property of PST. Accordingly, Health West hereby: (i) assigns and agrees to
assign to PST its entire right, title and interest in and to all Inventions; and
(ii) designates PST as its agent for, and grants to the officers of PST a power
of attorney (which power of attorney shall be deemed coupled with an interest)
with full power of substitution solely for the purpose of, effecting the
foregoing assignments from Health West to PST. Health West further agrees to
cooperate with and provide reasonable assistance to PST to obtain and from time
to time enforce any and all current or future intellectual property rights






