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CONSULTING AGREEMENT

Consulting Services Agreement

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This Consulting Services Agreement involves

PATIENT SAFETY TECHNOLOGIES, INC | HEALTH WEST MARKETING INCORPORATED

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Title: CONSULTING AGREEMENT
Governing Law: California     Date: 4/11/2005
Law Firm: Sichenzia Ross Friedman Ference LLP    

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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

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