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Sample Business Contracts

Consulting Agreement - Cheung Laboratories Inc. and NACE Resources Inc.

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                              CONSULTING AGREEMENT

         This  CONSULTING  AGREEMENT,  dated  as of  August  1,  1996,  with  an
effective  date of June 1,  1996  (the  "Effective  Date"),  is  between  Cheung
Laboratories,  Inc., a Maryland corporation (the "Company"), and NACE Resources,
Inc., a Delaware corporation (the "Consulting Firm").
                                   WITNESSETH
         WHEREAS,  since the Effective  Date, the  Consulting  Firm has provided
consulting  services  to  the  Company  with  respect  to  the  development  and
application of the Company's  products and  proprietary  technology  (the "Prior
Consulting Services");
         WHEREAS,  the Company desires to compensate the Consulting Firm for the
Prior  Consulting  Services  and  to  engage  the  Consulting  Firm  to  provide
consulting  services  in the  future  in  accordance  with  the  terms  of  this
Agreement.
         NOW,  THEREFORE,  in  consideration  of the  premises and of the mutual
agreements contained herein, the Company and the Consulting Firm hereby agree as
follows:
         1.       Term.
                  The  Company  hereby  engages  the  Consulting  Firm,  and the
Consulting Firm hereby agrees to perform services for the Company, in accordance
with this  Agreement,  for an  initial  term of one (1) year  commencing  on the
Effective Date (the "Initial  Term"),  unless  terminated  earlier in accordance
with  Section  5  hereof.  The term of this  Agreement  shall  be  automatically
extended for an unlimited  number of one year  renewal  terms (each,  a "Renewal
Term"), unless terminated in accordance with Section 5 hereof or by either party
upon written  notice given thirty (30) days prior to the end of the Initial Term
or any Renewal Term.
         2.       Duties of the Consulting Firm.
                  (a) The  Consulting  Firm hereby  agrees to cause Stuart Fuchs
(the "Designated  Consultant") to provide such advisory and consulting  services
to the Company and its  Affiliates as may be requested  from time to time by the
Board  of  Directors  or  the  President  of the  Company  with  respect  to the
development   and   application  of  the  Company's   products  and  proprietary
technology.  In addition, to the extent requested from time to time by the Board
of Directors or President of the Company,  the Consulting  Firm will  coordinate
the activities of an advisory committee of scientific and medical  professionals
to assist in the development of and  application of the Company's  products  and

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proprietary  technology.  The  Consulting  Firm shall not change,  substitute or
replace the Designated  Consultant  without the express  written  consent of the
Company.  As used in this Agreement,  the term "Affiliate" means any corporation
or other business  organization that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the
Company.
                  (b) The Consulting Firm shall cause the Designated  Consultant
to devote such time as shall be necessary to the  performance  of the Consulting
Firm's duties and responsibilities hereunder, but in no event less than 32 hours
in each of 48 weeks  per year  during  the  term of this  Agreement.  Commencing
January 1, 1997,  Designated  Consultant  shall provide to the Company a monthly
report  detailing  the time spent  working on behalf of the  Company  during the
previous month.
                  (c) Nothing  contained  herein shall constitute the Designated
Consultant an employee or agent of the Company or any of its  Affiliates but the
relationship  of  the  Consulting  Firm  to  the  Company  shall  be  one  of an
independent  contractor.  Any other  provision of this Agreement to the contrary
notwithstanding, neither the Consulting Firm nor the Designated Consultant shall
not have the  authority  to enter into any  agreement on behalf of, or otherwise
bind, the Company or any of its Affiliates, without the prior written consent of
the Company.
         3.       Compensation.
                  (a) For the Prior Consulting  Services,  the Company shall pay
to the  Consulting  Firm an aggregate of $75,000,  all of which has been paid by
the Company to the Consulting Firm on or prior to the date of this Agreement.
                  (b) For its services under Section , the Company shall pay the
Consulting  Firm  compensation  in an amount  equal to  $20,000  per month  (the
"Current  Compensation"),  commencing  August 1, 1996, of which $5,000 per month
(the "Deferred  Compensation")  shall be deferred until the completion after the
date  of this  Agreement  of any  debt or  equity  financings  providing  in the
aggregate  gross proceeds to the Company of at least  $5,000,000,  whereupon the
aggregate Deferred  Compensation shall be immediately  payable to the Consulting
Firm in full. The Current  Compensation shall be payable in arrears on the first
business day of each calendar month during the term of this Agreement.
                  (c) The Company  shall pay the  Consulting  Firm eight percent
(8%) of any  direct or  indirect  cash  contributions  or cash  payments  to the
company,  resulting  from  the  Consulting  Firm  or the  Designated  Consultant
introducing  the Company and the  contributor,  and that are  deductible  by the
contributor  or payor under  501(c)(3) of the Internal  Revenue Code of 1986, as
amended (the "Contingent Compensation"), payable

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promptly  upon the  direct  or  indirect  receipt  by the  Company  of such cash
contributions or cash payments.

         4.       Reimbursement of Expenses.
                  The Company shall pay the  Consulting  Firm for its reasonable
out-of-pocket  expenses  incurred in the  performance of the  Consulting  Firm's
duties hereunder, upon submission of an adequate accounting for such expenses in
accordance with the Company's policies form time to time in effect.
         5.       Termination.
                  This Agreement shall terminate upon the first to occur of  the
following:
                  (a)      Commencing June 1, 1997, either party  may  terminate
this Agreement,  without cause  or penalty, by delivering to other party written
notice of the termination thirty (30) days prior to the termination.
                  (b) The  Designated  Consultant's  death or, at the  Company's
election,  the  Designated  Consultant's   disability.   For  purposes  of  this
Agreement, the Designated Consultant shall be deemed to be "disabled" if (1) for
medical  (including  psychological)  reasons he has been  unable to perform  his
duties  hereunder for 30 consecutive  days or 60 days in any 12 month period and
(2) it shall have been  certified to the Company,  by a medical  doctor or other
expert   approved  by  the  Company  in  writing,   that  the  disability   will
substantially impair the Designated Consultant's abilities to perform his duties
as  contemplated  hereby for the  remainder of the term of this  Agreement.  The
Company,  in its sole  discretion,  shall be entitled to require the  Designated
Consultant  to  submit  to an  examination  by a  medical  doctor  or  expert to
determine disability.  Failure of the Designated Consultant to submit to such an
examination shall constitute a default hereunder.
                  (c)  Termination of this Agreement "for cause" by the Board of
Directors of the  Company.  Termination  "for cause" shall be limited  solely to
termination  by action of the Board of Directors of the Company  because of: (i)
the negligence,  willful misconduct or malfeasance of the Consulting Firm in the
performance  of  its  obligations  under  this  Agreement;  (ii)  breach  of the
Agreement;  (iii) the  perpetration  by the  Consulting  Firm or the  Designated
Consultant  of a fraud  against the Company or any of its  Affiliates;  (iv) the
filing of a bankruptcy  petition or  assignment  for the benefit of creditors by
the Consulting Firm or the Designated Consultant;  or (iv) the conviction of the
Consulting  Firm or the Designated  Consultant for any felony.  Termination  for
cause  shall  occur upon  delivery  to the  consulting  firm of a notice of such
action by the Board of Directors of the company,  which notice shall specify the
grounds for such termination.


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                  (d) Upon any  termination  under Section  5(a),  the Company's
obligation to make payments  under Section 3 shall  terminate 30 days after such
notice is given and the Company  thereupon shall have no further  obligations to
Consulting Firm whatsoever, other than reimbursement of expenses under Section 4
for expenses  incurred prior to such  termination and payment of any accrued and
payable Current Compensation, Deferred Compensation and Contingent Compensation.
Upon any  termination  under  Section  5(b),  the  Company's  obligation to make
payments  under  Section 3 shall  terminate  upon the death or disability of the
Designated   Consultant  and  the  Company   thereupon  shall  have  no  further
obligations to Consulting Firm whatsoever,  other than reimbursement of expenses
under Section 4 for expenses  incurred prior to such  termination and payment of
any  accrued  and  payable  Current  Compensation,   Deferred  Compensation  and
Contingent Compensation.  Upon any termination under Section 5(c), the Company's
obligation to make payments  under Section 3 shall  terminate  immediately  upon
giving notice to Consulting Firm and the Company thereupon shall have no further
obligations to Consulting Firm whatsoever,  other than reimbursement of expenses
under Section 4 for expenses  incurred prior to such  termination and payment of
any  accrued  and  payable  Current  Compensation,   Deferred  Compensation  and
Contingent Compensation.
         6.       Withholding of Taxes.
                  Payment of all taxes on compensation paid under this Agreement
shall be the sole liability and responsibility of the Consulting Firm, provided,
however, if any tax or other laws or regulations require the Company to withhold
any amounts from  compensation paid under this Agreement to the Consulting firm,
or its assignee, such amounts may be so withheld.
         7.       Records and Reports.
                  The  Consulting  Firm  hereby  agrees to render to the Company
such reports of the activities undertaken by it or conducted under its direction
during the term of this Agreement as the Company may reasonably request.
         8.       Covenant Not to Compete.
                  (a) The  Consulting  Firm covenants and agrees that during the
term  of  this  Agreement  it will  not,  directly  or  indirectly,  whether  as
principal, agent, officer, director, partner, employee,  independent contractor,
consultant, stockholder, licensor or otherwise, alone or in association with any
other person, firm, corporation or other business organization,  carry on, or be
engaged,  concerned  or take part in, or render  services  or advice to, or own,
share in the earnings of or invest in the stock,  bonds or other  securities  of
any person,  firm,  corporation  or other business  organization  engaged in the
United States of America in the business of designing,  assembling and marketing
hyperthermia treatment systems for cancer, other tumors, and prostate disorders,
except

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for any joint venture partner of the Company;  provided,  however,  that each of
the Consulting Firm and the Designated Consultant may invest in stocks, bonds or
other securities of any business  organization  which is in competition with the
Company or any of its Affiliate  (but without  otherwise  participating  in such
business) if (i) such  investment  would not in any way limit the transaction of
business  by the  Company  or  any  of its  Affiliates  by  virtue  of any  law,
regulation,  or  administrative  practice  and (ii) such  stock,  bonds or other
securities are listed on a national or regional securities exchange or have been
registered  under Section 12(g) of the Securities  Exchange Act of 1934 and such
investment in any class of such securities does not exceed 1% of the outstanding
shares of such  class or 1% of the  aggregate  principal  amount  of such  class
outstanding, as the case may be.
                  (b) The  Consulting  Firm  hereby  agrees  that the  covenants
contained in Section are  reasonable  and valid.  If for any reason any court of
competent  jurisdiction shall have deemed the provisions of Section unreasonable
in duration or in geographic scope or otherwise unenforceable,  the prohibitions
herein  contained shall be restricted to such time and geographic areas or shall
otherwise be reformed in such manner as the curt determines to be reasonable.
         9.       Confidential Information.
                  The  Consulting  Firm and the Designated  Consultant  agree to
execute and be bound by a  confidentiality  agreement  substantially  similar to
that executed by employees of the Company.
         10.      Ownership of Trade Secrets.
                  If, during the term of this Agreement,  the Consulting Firm or
any of its employees conceives, devises or develops any trade secret, invention,
improvement, formula, design, process, patent, patent application or writing, or
any program,  system,  or novel  technique  based upon technology or information
derived  from  the  Company  (whether  or  not  capable  of  being  trademarked,
copyrights   or  patented)   ("Proprietary   Information"),   such   Proprietary
Information shall be and remain the property of the Company. Provided,  however,
Proprietary  Information  shall not include U.S. Patent  Application  Serial No.
08/703648 and any other proprietary  information developed by Consulting Firm or
Designated  Consultant with Vladislav  Oleynik and/or Vladimir Popov, so long as
on or before December 31, 1997, the parties achieve a satisfactory resolution of
the Company's $40,000 investment in the patent and related technology.
         11.      Compliance with other Agreements.
                  The  Consulting  Firm hereby  represents  and  warrants to the
Company that the execution and delivery of this Agreement by the Consulting Firm
and the performance of its  obligations  hereunder will not, with or without the
giving of notice

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or the passage of time, (a) violate any judgment,  writ,  injunction or order of
any court,  arbitrator or governmental  agency applicable to the Consulting Firm
or  (b)  conflict  with,  result  in the  breach  of any  provision  of,  or the
termination  of, or  constitute  a default  under,  any  agreement  to which the
Consulting Firm is a party or by which the Consulting Firm is or may be bound.
         12.      Remedies.
                  In the event that any action  shall be brought by the  Company
or the  Consulting  Firm to  restrain  any  breach or  threatened  breach of any
provision of this  Agreement,  the Company and the Consulting  Firm hereby agree
that the prevailing  party shall be reimbursed by the  non-prevailing  party for
all costs and expenses,  including  reasonable  lawyers'  fees,  incurred by the
prevailing party by reason of such breach or threatened breach.
         13.      Binding Effect; Assignment.
                  This  Agreement  shall  inure to the  benefit of, and shall be
binding  upon,  the  Company  and  the  Consulting  Firm  and  their  respective
successors,  assigns,  heirs  and  legal  representatives,  including  any firm,
corporation  or other  business  organization  with  which  the  Company  or the
Consulting   Firm  may  merge  or  consolidate  or  to  which  it  may  transfer
substantially all of its assets.
         14.      Severability.
                  The  provisions  of this  Agreement  are  severable and if any
provision of this Agreement shall be invalid or  unenforceable  to any extent or
in any  application,  then the remainder of such  provision and this  Agreement,
except to such extent or in such application, shall not be affected thereby, and
each and every provision of this Agreement shall be valid and enforceable to the
fullest extent and in the broadest application permitted by law.
         15.      Amendments and Waivers.
                  This  Agreement  may not be modified  or amended  except by an
instrument  or   instruments  in  writing  signed  by  the  party  against  whom
enforcement of any such modification or amendment is sought.  Either the Company
or the Consulting Firm may, by an instrument in writing, waive compliance by the
other party with any term or  provision  of this  Agreement  on the part of such
other party  hereto to be performed  or complied  with.  The waiver by any party
hereto  of a breach  of any term or  provision  of this  Agreement  shall not be
construed as a waiver of any subsequent breach.
         16.      Notice.
                  Any notice, demand,  approval or other communication which may
be or is required to be given under this Agreement shall be in writing and shall
be deemed to have been given on the earlier of the day  actually  received or on
the close of business

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on the fifth  business day next  following the day when  deposited in the United
States mail, postage prepaid, registered or certified,  addressed to the Company
or the Consulting Firm at their respective address set forth below or such other
address as such party may specify by notice given pursuant to this Section :
                  If to the Consulting Firm:
                  NACE Resources, Inc.
                  2323 Sheridan Road
                  Highland Park, IL  60035
                  Attn: Stuart Fuchs

                  with a copy (which shall not constitute notice)
                  to:

                  Altheimer & Gray
                  10 South Wacker Drive
                  Chicago, IL  60606
                  Attn: Norman M. Gold

                  If to the Company:

                  Cheung Laboratories, Inc.
                  10220-1 Old Columbia Road
                  Columbia, MD  21046-1705
                  Attn: Dr. Augustine Cheung

                  with a copy (which shall not constitute notice)
                  to:

                  Ballard Spahr Andrews & Ingersoll
                  201 S. Main Suite 1200
                  Salt Lake City, UT  84111
                  Attn: Richard Beard

         17.      Section and Other Headings.
                  The section and other headings contained in this Agreement are
for  reference  purposes  only  and  shall  not be  deemed  to be a part of this
Agreement or to affect the meaning or interpretation of this Agreement.

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         18.      Entire Agreement.
                  This  Agreement  contains  the entire  agreement  between  the
Company and the  Consulting  Firm  pertaining  to the subject  matter hereof and
supersede all prior agreements and understandings,  oral or written, between the
Company and the Consulting Firm with respect to the subject matter hereof.
         19.      Governing Law.
                  This  Agreement  shall be construed and governed in accordance
with the law of the State of Illinois,  without giving effect to the conflict of
laws principles thereof.

         20.      Counterparts.
                  This Agreement may be executed in counterparts.

         IN WITNESS  WHEREOF,  the Company and the Consulting Firm have executed
this Agreement as of the date first above written.
                                        CHEUNG LABORATORIES, INC.

                                        By:____________________________
                                            Name:______________________
                                            Title:_____________________


DESIGNATED CONSULTANT                       NACE RESOURCES, INC.



By:____________________                     By:____________________
   Stuart Fuchs                                Stuart Fuchs, President



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