EXHIBIT 4.1
COMPENSATORY SERVICE AGREEMENT
This Consulting Agreement is made effective this 2nd day of June,
1997, by and between Xxxxxxx Xxxxx ("Consultant") and Proformix Systems, Inc.
("Client") with respect to the following:
WHEREAS, Consultant has been rendering valuable services to Client in
connection with financial advice and locating business opportunities; and
WHEREAS, Client desires to compensate Consultant for his services.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and adequacy of which is expressly acknowledged, Client and Consultant
agree as follows:
1. Engagement of Consultant.
Client hereby retains Consultant to continue to
assist Client in general financial activities, including coordinating relations
with market makers, shareholders, investment analysts and stockbrokers. The
foregoing services collectively are referred to herein as the "Consulting
Services".
2. Compensation.
Client shall issue to Consultant, upon execution of
this Agreement, 110,000 shares of the Client's Common Stock. The Client agrees
to register the shares of Client's Common Stock under the Securities Act of
1933, as amended, pursuant to a Registration Statement on Form S-8 or other
appropriate form, to be filed with the Securities and Exchange Commission.
3. Term of Agreement, Extensions and Renewals.
This Agreement shall have a term of twelve months
from the date hereof.
Client can terminate this Agreement in the event Consultant fails to follow
Client's instructions. Client must advise Consultant that his actions or
inactions are unacceptable and give Consultant a reasonable time to comply. If
Consultant fails to comply, or at later times makes the same unacceptable action
or inaction he can be terminated hereunder by Client' service of notice of
termination to Consultant. In addition, Client can terminate this Agreement if
in the reasonable judgment of its Board of Directors, Consultant's actions or
conduct would make it unreasonable to require Client to retain Consultant. Such
acts are limited to dishonesty, illegal activities, activities harmful to the
reputation of the Client, activities which create civil or criminal liability
for the Client. In the event of termination pursuant to this paragraph, the
Consultant shall be entitled to exercise the Warrant and the Client will be
responsible to reimburse costs and expenses to Consultant as set forth in this
Agreement.
4. Nondisclosure of Confidential Information.
In consideration for the Client entering into this
Agreement, Consultant agrees that the following items used in the Clients
business are secret, confidential, unique, and valuable, were developed by
Client at great cost and over a long period of time, and disclosure of any of
the items to anyone other than Client's officers, agents, or authorized
employees will cause Client irreparable injury.
A. Non public financial information, accounting
information, plans of operations, possible
mergers or acquisitions prior to the public
announcement.
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B. Customer lists, call lists, and other
confidential customer data;
C. Memoranda, notes, records concerning the
technical processes conducted by Client;
D. Sketches, plans, drawings and other
confidential research and development data
or;
E. Manufacturing processes, chemical formulae,
and the composition of Client's products.
5. Best Efforts Basis.
Consultant agrees that he will at all times
faithfully and to the best of his experience, ability and talents, perform all
the duties that may be required of and from Consultant pursuant to the terms of
this Agreement. Consultant does not guarantee that his efforts will have any
impact on Client's business or that any subsequent financial improvement will
result of Consultant's efforts. Client understands and acknowledges that the
success or failure of Consultant's efforts will be predicated on Client's assets
and operating results.
5. Client's Right to Approve Transactions.
Client expressly retains the right to approve, in its
sole discretion, each and every transaction introduced by Consultant that
involves Client as a party to any agreement. Consultant and Client mutually
agree that Consultant is not authorized to enter into agreements on behalf of
Client.
6. Place of Services.
The Consulting Services contemplated to be performed
by Consultant will be performed at locations selected by Consultant.
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7. Costs and Expenses.
Client shall be responsible for all reasonable
out-of-pocket expenses, travel expenses, third party expenses, filing fees, copy
and mailing expenses that Consultant may incur in performing Consulting Services
under this Agreement, provided that such expenses are authorized by the Client.
8. Work Stoppage or Early Termination.
Notwithstanding anything to the contrary contained
herein, Client shall have the right at any time to direct Consultant to cease
work or abandon its efforts on Client's behalf, and to refrain from commencing
any new work or providing any further Consulting Services hereunder.
9. Non-Exclusive Services.
Client acknowledges that Consultant is currently
providing services of the same or similar nature to other parties and Client
agrees that Consultant is not prevented or barred from rendering services of the
same nature or a similar nature to any other individual or entity. Consultant
understands and agrees that Client shall not be prevented or barred from
retaining other persons or entities to provide services of the same or similar
nature as those provided by Consultant. Consultant will advise Client of its
position with respect to any activity, employment, business arrangement or
potential conflict of interest which may be relevant to this Agreement.
10. All Prior Agreements Terminated.
This Agreement constitutes the entire understanding
of the parties with respect to the engagement of Consultant for the services set
forth in Article 1 hereof and all
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prior agreements and understandings with respect thereto are hereby terminated
and shall be of no force or effect.
11. Representations and Warranties of Client.
Client hereby represents and warrants to Consultant
that:
A. Corporate Existence. Client is a corporation
duly organized and validly existing, under
the laws of the State of Delaware, with
corporate power to own property and carry on
its business as it is now being conducted.
B. No Conflict. This Agreement has been duly
executed by Client and the execution and
performance of this Agreement will not
violate, or result in a breach of, or
constitute a default in any agreement,
instrument, judgment, decree or order to
which Client is a party or to which Client
is subject, nor will such execution and
performance constitute a violation or
conflict of any fiduciary duty to which
Client is subject.
C. Validity of Shares. The shares of Common
Stock are and will be when issued, duly
authorized, validly issued, fully paid, non-
assessable, and free and clear of all liens
and encumbrances.
D. Authority. Client has the full legal right,
power, authority and approval required to
enter into, execute and deliver the shares
of Common Stock and to fully perform all of
its obligations hereunder.
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12. Representations and Warranties of Consultant.
Consultant hereby represents and warrant to Client
that:
A. Form S-8. Consultant hereby represents that
he has not engaged in any direct or indirect
capital raising activities on behalf of the
Client and/or its affiliates.
B. Prior Experience. Consultant has extensive
experience in the areas of the services he
is to perform hereunder and has performed
the services contemplated by this Agreement
for the benefit of other client-companies.
C. Information. No representation or warranty
contained herein, nor a statement in any
document, certificate or schedule furnished
or to be furnished pursuant to this
Agreement by Consultant, or in connection
with the transaction contemplated hereby,
contains or contained any untrue statement
of material fact.
D. Inside Information - Securities Laws
Violations. In the course of the performance
of his duties, Consultant may become aware
of information which may be considered
"inside information" within the meaning of
the Federal Securities Laws, Rules and
Regulations. Consultant acknowledge that his
use of such information to purchase or sell
securities of Client, or its affiliates, or
to transmit such information to any other
party with a view to
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buy, sell or otherwise deal in Client's
securities is prohibited by law and would
constitute a breach of this Agreement.
E. Agreement Does not Contemplate Corrupt
Practice, Domestic or Foreign. All payments
under this Agreement constitute compensation
for services performed and this Agreement
any all payments, and the use of the
payments by Consultant, do and shall not
constitute an offer, payment or promise or
authorization of payment of any money or
gift to an official or political party of,
or candidate for political office in any
jurisdiction within or outside the United
States. These payments may not be used to
influence any act or decision of an
official, party, or candidate to use
his/her/its influence with a government to
assist Client in obtaining, retaining, or
directing business to Client or any person
or other corporate entity. As used in this
paragraph, the term "official" means any
officer or employee of a government, or any
person acting in an official capacity for or
on behalf of any government; the term
"government" includes any department,
agency, or instrumentality of a government.
F. Reliance upon Representations. The
information provided pursuant to this
Agreement may be relied upon by Client, as
true and correct as of the date hereof.
Further, Consultant represents as follows:
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(a) by reason of Consultant's knowledge
and experience of financial and
business matters in general, and
investments in particular
Consultant is capable of evaluating
the merits and risks of this
transaction and in bearing the
economic risks of an investment in
the Common Stock and the Client in
general and fully understand the
speculative nature of such
securities and the possibility of
such loss; and
(b) Consultant has had the opportunity
to ask questions and receive
answers concerning the terms and
conditions of the shares to be
issued hereby and reserved for
issuance pursuant hereto, and to
obtain any additional information
which Client possess or can acquire
without reasonable effort or
expense that is necessary to verity
the accuracy of information
furnished; and
(c) Consultant has been furnished with
a copy of Client's most recent
Annual Report on Form 10-KSB and
all reports or documents required
to be filed under Section 13(a),
14(a) and 15(d) of the Securities
Exchange Act of 1934, including but
not limited to quarterly reports on
Form 10-QSB; and,
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in addition, that Consultant has
been furnished with a brief
description of the Client's capital
structure and any material changes
in Client's affairs that may not
have been disclosed in the
aforementioned documents.
G. Subsequent Events. Consultant will notify
Client if, subsequent to the date hereof,
either party incurs obligations which could
compromise its efforts and obligations under
this Agreement.
13. Consultant is not an Agent or Employee.
Consultant's obligations under this Agreement consist
solely of the Consulting Services described herein. In no event shall Consultant
be considered to act as the employee or agent of Client or otherwise represent
or bind Client. For the purposes of this Agreement, Consultant is an independent
contractor. All final decisions with respect to acts of Client or its
affiliates, whether or not made pursuant to or in reliance on information or
advice furnished by Consultant hereunder, shall be those of Client or such
affiliates and Consultant shall under no circumstances be liable for any expense
incurred or loss suffered by Client as a consequence of such action or
decisions.
14. Miscellaneous.
A. Authority. The execution and performance of
this Agreement have been duly authorized by
all requisite corporate action. This
Agreement constitutes a valid and binding
obligation of the parties hereto.
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B. Amendment. This Agreement may be amended or
modified at any time and in any manner only
by an instrument in writing executed by the
parties hereto.
C. Waiver. All the rights and remedies of
either party under this Agreement are
cumulative and not exclusive of any other
rights and remedies provided by law. No
delay or failure on the part of either party
in the exercise of any right or remedy
arising from a breach of this Agreement
shall operate as a waiver of any subsequent
right or remedy arising from a subsequent
breach of this Agreement. The consent of any
party where required hereunder to any act of
occurrence shall not be deemed to be a
consent to any other act of occurrence.
D. Assignment.
(i) Neither this Agreement nor
any obligation created by
it shall be assignable by
either party without the
prior written consent of
the other.
(ii) Nothing in this Agreement,
expressed or implied, is
intended to confer upon any
person, other than the
parties and their
successors, any rights or
remedies under this
Agreement.
E. Notices. Any notice or other communication
required or permitted by this Agreement must
be in writing and shall be
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deemed to be properly given when delivered
in person to an officer of the other party,
when deposited in the United States mails
for transmittal by certified or registered
mail, postage prepaid, or when deposited
with a public telegraph company for
transmittal or when sent by facsimile
transmission, charges prepared provided that
the communication is addressed to the
respective party at the place indicated on
the first page of this Agreement or to such
other person or address designed by the
parties to receive notice.
F. Headings and Captions. The headings of
paragraph are included solely for
convenience. If a conflict exists between
any heading and the text of this Agreement,
the text shall control.
G. Entire Agreement. This Agreement annexed as
an exhibit hereto contain the entire
Agreement between the parties with respect
to the transaction contemplated by the
Agreement. This Agreement may be executed in
any number of counterparts but the aggregate
of the counterparts together constitute only
one and the same instrument.
H. Effect of Partial Invalidity. In the event
that any one or more of the provisions
contained in this Agreement shall for any
reason be held to be invalid, illegal, or
unenforceable in any respect, such
invalidity, illegality or unenforceability
shall not affect any
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other provisions of this Agreement, but this
Agreement shall be constructed as if it
never contained any such invalid, illegal or
unenforceable provisions.
I. Controlling Law. The validity,
interpretation, and performance of this
Agreement shall be controlled by and
construed under the laws of the State of New
York.
J. Attorney's Fees. If any action at law or in
equity, including an action for declaratory
relief, is brought to enforce or interpret
the provisions of this Agreement, the
prevailing party shall be entitled to
recover actual attorney's fee from the other
party. The attorney's fees may be ordered by
the court in the trial of any action
described in this paragraph or may be
enforced in a separate action brought for
determining attorney's fees.
K. Time is of the Essence. Time is of the
essence of this Agreement and of each and
every provision hereof.
L. Mutual Cooperation. The parties hereto shall
cooperate with each other to achieve the
purpose of this Agreement, and shall execute
such other and further documents and take
such other and further actions as may be
necessary or convenient to effect the
transactions described herein.
M. Further Actions. At any time and from tie to
time, each party agrees, at its or their
expense, to take actions and to execute and
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deliver documents as may be reasonably
necessary to effectuate the purpose of this
Agreement.
N. Indemnification. Client and Consultant agree
to indemnify, defend and hold each other
harmless form and against all demands,
claims, actions, losses, damages,
liabilities, costs and expenses, including
without limitation, interest, penalties and
attorneys' fees and expenses asserted
against or imposed or incurred by either
party by reason of or resulting from a
breach of any representation, warranty,
covenant condition or agreement of the other
party to this Agreement.
O. No Third Party Beneficiary. Nothing in this
Agreement, expressed or implied, is intended
to confer upon any person, other than the
parties hereto and their successors, any
rights or remedies under or by reason of
this Agreement, unless this Agreement
specifically states such intent.
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P. Facsimile Counterparts. If a party signs
this Agreement and transmits an electronic
facsimile of the signature page to the other
party, the party who receives the
transmission may rely upon the electronic
facsimile a signed original of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date herein above written.
PROFORMIX SYSTEMS, INC.
By: /s/ Xxxxxx X. Xx
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Xxxxxx X. Xx, President
/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
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