Exhibit 10.7
CONSULTING AGREEMENT
This Consulting Agreement (this
“ Agreement ”) is made as of December 19,
2007 by and between NovaRay, Inc. (the “ Company
”) and Heartstream Corporate Finance B.V. (“
Consultant ”) (each a “ Party ” and
collectively referred to hereafter as the “ Parties
”).
WITNESSETH :
WHEREAS, the Company and Consultant
previously entered into a letter of interest agreement dated
January 22, 2007 (the “ Engagement Agreement
”), pursuant to which Consultant agreed to provide certain
services to the Company.
WHEREAS, the Company and Consultant
wish to terminate the Engagement Agreement and replace it with this
Agreement.
WHEREAS, the Company is desirous of
completing a “reverse merger” transaction whereby a
public shell company to be identified (“ PubCo
”) will acquire by merger the business of the Company (the
“ Reverse Merger ”), and, concurrently
therewith, a financing with aggregate proceeds to the Company or
its successors of not less than $10,000,000 (the “
Financing ,” and with the Reverse Merger, collectively
the “ Proposed Transaction ”).
WHEREAS, to further facilitate
pursuing the Proposed Transaction, the Company desires to engage
Consultant to serve as a consultant to provide advice related to
the Proposed Transaction on the terms and for the services
specified in this Agreement.
NOW, THEREFORE, in consideration of
the premises and the mutual covenants herein contained and for
other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Parties, intending to be legally
bound, hereby agree in good faith as follows:
1. Services . The
services which Consultant shall provide under this Agreement shall
include the following (collectively, the “ Services
”):
(a) Consultant
will assist the Company in identifying potential European investors
which might have an interest in participating in the
Financing.
2. Restrictions . In
connection with its provision of the Services, the Consultant
agrees that:
(a) the
Consultant shall not engage in any general solicitation, general
advertising or other activity that would jeopardize the
availability of the exemption from registration under the
Securities Act of 1933, as amended, pursuant to Regulation D
promulgated thereunder and the qualification or registration
requirements of any applicable state or foreign securities or blue
sky laws or regulations;
(b) the
Company shall determine, in its sole and absolute discretion, when
it will consummate the Reverse Merger with PubCo, which investors
shall participate in the Financing; the price, amount and terms of
the securities to be sold in the Financing; the
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allocation of securities among investors in the Financing; and
whether or not to consummate the Proposed Transaction; and
(c) the
Consultant shall have no authority to make offers to sell the
Company’s securities, make any representations or warranties
on the Company’s behalf or bind the Company in any way.
3. Termination of Engagement
Agreement . The Engagement Agreement is terminated and replaced
by this Agreement. No sections of the Engagement Agreement shall
survive the termination of the Engagement Agreement and no sections
of the Engagement Agreement shall be of any further force or
effect.
4. Term and Termination;
Survival .
(a) The
term of this engagement shall be for a period commencing with the
date of this Agreement and terminating on the earlier of
(i) the closing date of the Financing or (ii) January 31,
2007. The term may only be extended upon the mutual written
agreement of the Parties.
(b) Section 6
(Taxes), Section 7 (Independent Contractor), Section 8
(Indemnification), Section 9 (Nonsolicitation), and
Section 10 (Confidentiality) will survive termination of this
Agreement.
5. Fees . In connection
with the Services described above, the Company shall pay to
Consultant the following compensation (referred to herein as the
“ Consulting Fees ”):
(a) The
Company shall cause PubCo to pay to Consultant a cash placement fee
equal to 7% of the aggregate purchase price paid by the purchasers
of securities that Consultant first introduced to the Company
(“Consultant Investor”) in the Offering. The fee will
be paid within 10 days following the closing of the Proposed
Transaction from the gross proceeds of the securities sold to a
Consultant Investor; and
(b) As
additional compensation for the Services, if Consultant Investors
purchase securities in this Offering, the Company shall cause the
PubCo to issue to Consultant or its designees at the closing of the
Proposed Transaction, warrants to purchase that number of shares of
common stock of PubCo equal to 7% of the aggregate dollar amount
actually invested by Consultant Investors divided by the exercise
price for the warrants to purchase Pubco’s common stock
issued to all of the investors in the Proposed Transaction (the
“Warrants”). The Warrants shall have the same exercise
price as the warrants to purchase Pubco’s common stock issued
to all the investors in the Offering.
6. Taxes . Consultant is
ultimately liable and responsible for all taxes owed by the
Consultant in connection with the Consulting Fees, regardless of
any action the Company or its successors takes with respect to any
tax withholding or reporting obligations that arise in connection
with the Consulting Fees. Neither the Company nor it successors
makes any representation or undertaking regarding the tax treatment
of the Consulting Fees or tax treatment of the issuance, exercise
or subsequent sale of the Warrants. The Company and its successors
do
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