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Consulting Agreement

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AMENDED AND RESTATED CONSULTING AGREEMENT
-----------------------------------------


THIS AMENDED AND RESTATED CONSULTING AGREEMENT (this "Agreement") is made as of May 24, 1996, by and between EP MedSystems, Inc. (the "Company"), and Elliot Young & Associates, Inc. ("EYA").


WHEREAS, the Company and EYA previously entered into a Consulting Agreement dated August 17, 1995 (the "Consulting Agreement") whereby EYA agreed to provide the Company with certain consulting services; and


WHEREAS, the parties wish to amend certain provisions contained in the Consulting Agreement by amending and restating it as set forth below;


NOW, THEREFORE, for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Company and EYA hereby agree as follows:


1. Engagement. The Company hereby engages EYA to perform the consulting
---------- services set forth on Schedules A and B hereto (the "Services"), and EYA agrees to perform such Services, for a term commencing as of August 17, 1995, and ending on the later if (i) August 16, 1996 or (ii) upon completion of the clinical study protocols to be submitted to the U.S. Food and Drug Administration ("FDA") as part of an application for an investigational device exemption ("IDE"), to the complete satisfaction of the President of the Company (the "Term"), whereupon the obligations of the parties hereunder shall terminate and this Agreement shall be null and void, except as expressly provided herein.


2. Compensation for Business Development Consulting Services. In
--------------------------------------------------------- consideration of EYA's performance of the consulting services set forth on Schedule A hereto relating to development of the Company's business, the Company agrees:


a. to grant EYA an option to purchase up to 150,000 shares of common stock of the Company subject to the terms of a separate Stock Option Agreement by and between the Company and EYA, as it may be amended from time to time;


b. to pay EYA $25,000 in cash;


c. to pay EYA an additional $30,000 in cash upon the completion of the human clinical study protocol to be submitted to the FDA as part of an application for an IDE, to the complete satisfaction of the President of the Company; and


d. to pay EYA five percent (5%) of net sales, less shipping costs, taxes and returns, made by any non-U.S.-based company, dealer, sales agent or individual ("Distributor") to whom the Company is introduced or presented by EYA during the Term of this Agreement and with whom the Company enters into a sales/distributor/dealer/representative agreement for its products within twelve (12) months of introduction. Payments to EYA will be made by certified check on a quarterly basis and will


continue for a period of three (3) years from the signing of any such agreement between the Company and a Distributor. The Company further agrees to allow EYA or its designated agent reasonable and timely access to audit Company books on a quarterly basis, at the sole expense of EYA, for the duration of this three year period.


3. Compensation for Financial Consulting Services. In consideration
---------------------------------------------- of EYA's performance of the financial consulting services set forth on Schedule B hereto, the Company agrees to pay EYA a consulting fee (the "Fee") of one hundred ninety five thousand dollars ($195,000) in immediately available funds subject to the terms of this Agreement and the further conditions specified below. The Fee shall be paid to EYA pursuant to the following schedule:


a. $15,000 upon delivery to the Company by EYA of a revised business plan (as detailed on Schedule B hereto), and acceptance thereof as to content and sufficiency by the Company at its sole discretion;


b. $5,000 upon delivery to the Company of a corporate slide presentation by EYA (as detailed on Schedule A hereto), and acceptance thereof as to content and sufficiency by the Company at its sole discretion; and


c. $175,000 upon the closing of an initial public offering of the Company's securities resulting in gross proceeds to the Company of at least $18 million; provided, if such initial public offering results in gross proceeds to the Company of less than $18 million, $52,500 shall be paid to EYA upon such closing.


4. Acknowledgment of Compensation Previously Paid. EYA acknowledges
---------------------------------------------- and agrees that the compensation set forth in Section 2.b. and Sections 3.a. and 3.b. above has already been paid in full by the Company. EYA further expressly acknowledges and agrees that the Stock Option Agreement dated August 31, 1995 and amended as of the date hereof to purchase 150,000 shares of the Company's common stock issued to Tracey E. Young fully satisfies the Company's compensation obligation under Section 2.a. above.


5. Reimbursement of Expenses. The Company agrees to reimburse EYA for
------------------------- all reasonable, documented, out-of-pocket expenses incurred in the course of performing consulting services for the Company, including coach travel, lodging, meals, express mail service, long distance telephone and fax charges, and copying charges. Expenses may be billed to the Company at cost on a periodic basis and must be accompanied by supporting documentation. Payment is due upon receipt of each invoice.


6. Confidentiality.
---------------


a. Employee acknowledges and agrees that all Confidential Information (as defined below) is, and shall remain, the sole and exclusive property of the Company, and EYA recognizes that it has no rights thereto or interest therein. For purposes of this Agreement, the term "Confidential Information" shall mean (i) all confidential or secret processes, plans,
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