CONSULTING AGREEMENT
CONSULTING AGREEMENT dated as of September 19, 1997 between
AFP IMAGING CORPORATION, a New York corporation with offices at 000 Xxxxxxxxxx
Xxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "Company") and Xxxxxx X. Xxxxx, with a
business office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Consultant").
W I T N E S S E T H :
WHEREAS, the Company desires following the termination of
Xxxxxx X. Xxxxx'x services as a director of the Company to receive advisory
services in connection with (a) assisting in determining the financial needs of
the Company, including evaluation of commercial and investment banking
activities, (b) evaluating future mergers and acquisitions, (c) long term
planning and (d) assessing different ventures which the Company may enter
(collectively, the "Objectives"); and
WHEREAS, the Consultant has established his expertise in the
areas comprising the Objectives and desires to provide advisory services as
provided herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements, and upon the terms and subject to the conditions hereinafter set
forth, the parties do hereby covenant and agree as follows:
Section 1. Retention of Consultant. The Company shall
engage the Consultant for the Term (as defined below), subject to the terms and
conditions of this Agreement.
Section 2. Services. (a) At such times as are mutually
convenient to the Consultant and the Company during the Term, the Consultant
shall provide such advisory services to the Company and its subsidiaries
(collectively hereinafter referred to as the "Company") as the Company shall
reasonably request in connection with the Objectives. The Consultant shall not
be obligated to spend any minimum hours of services per month. Notwithstanding
anything contained herein to the contrary, Consultant shall only perform such
services as the Company expressly directs Consultant to perform and in no event
shall the Consultant be required to identify merger or acquisition targets or
financing sources or assist in the structuring of such mergers, acquisitions or
financings.
Section 3. Compensation. For services rendered by the
Consultant pursuant to this Agreement, the Company shall pay Consultant the
following:
(a) $200,000, payable in 12 equal monthly payments of $16,667
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commencing on the first business day of the Term.
(b) a four-year option to purchase 150,000 common shares of
the Company equal to the average of the closing prices of the Company's common
shares during each of the ten trading days ending on October 12, 1997 and each
of the ten trading days commencing on the first trading day after October 12,
1997 (whether or not the Term has then commenced).
The parties hereto acknowledge that Consultant is not entitled to any other
compensation for any services rendered by Consultant in any capacity as at the
date hereof other than any fees that may be due Consultant in his capacity as a
director of the Company and is not and shall not be entitled to any other
additional compensation from the Company except as otherwise provided in a
writing executed by the parties hereto after the date hereof. In the event the
Consultant is requested during the Term to identify merger or acquisition
targets or financing sources or to assist in the structuring of such mergers,
acquisitions or financings, the Company and the Consultant shall first reach
written agreement on acceptable terms and conditions for such additional
services.
Section 4. Expenses. The Company shall pay the Consultant, on a
monthly basis, all reasonable costs and out-of-pocket expenses incurred by the
Consultants in connection with its obligations and duties under this Agreement;
provided, however, that the Consultant shall obtain the prior written consent of
the Company for any single item of expense in excess of $500.
Section 5. Non-Disclosure Covenant
The Consultant acknowledges that his position with the Company is one
of trust and confidence and that during the course of his engagement hereunder,
he may become acquainted with Confidential Information, as hereinafter defined.
The Consultant further acknowledges that the provisions of this Section 5 are
essential to the terms of its continued engagement hereunder, and that this
Section 5 shall be binding upon the Consultant during the Term and after the
termination of this Agreement, irrespective of whether this Agreement is
terminated by the Company or by the Consultant for any reason. The Consultant
covenants and agrees that he will not at any time during the Term or subsequent
to the termination of this Agreement, use, reveal, divulge, or make known to any
person, firm or corporation, any Confidential Information made known to him or
of which he has become aware, regardless of whether developed, prepared, devised
or otherwise created in whole or in part by the efforts of the Consultant. The
Consultant further covenants and agrees that he will retain all Confidential
Information in trust for the sole benefit of the Company and will not divulge or
deliver or show any Confidential Information to any unauthorized person,
including without limitation, any other employer or employee or affiliate of the
Consultant, and the Consultant will not make use of, or in any manner seek to
convert for his own use, any Confidential Information in an independent business
however
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unrelated to the business of the Company. The Consultant agrees to use his best
efforts to cause his employees who have any access to the Confidential
Information or third parties he may engage with respect to the Company or
otherwise discuss Company matters in connection with his services hereunder to
keep such information confidential, and if requested by the Company, have third
parties execute similar confidentiality agreements.
For purposes herein, the term "Confidential Information" shall mean any
information and material that the Company regards as confidential, including
without limitation, formulas, processes, ingredients, drawings, methods,
manufacturing, trade secrets, knowhow, inventions, product developments,
engineering, plans, notebooks, research, reports, memoranda, information and
material received by the Company in confidence from third parties, information
and material relating to charterers, vendors, suppliers, customers, costs,
prices, sources of supply, royalties or distribution and other commercial,
financial, business, technical and scientific information and material that is
not available to the general public. The foregoing provisions of this Section 5
shall not apply to information or material that:
(a) was known by the Consultant before the disclosure by the
Company and was not received or derived directly or indirectly
from the Company or in violation of any restrictions on
disclosure or use of such information; or
(b) was generally publicly known prior to the disclosure or after
the time of disclosure becomes generally publicly known
through no act or failure to act of the Consultant; or
(c) was made known to the Consultant by a third party entitled to
disclose the information to the Consultant, which third party
(i) did not derive it directly or indirectly from the Company
and (ii) was not subject to any restrictions on disclosure or
use of such information or material that benefit the Company;
(d) was specifically approved for disclosure by prior written
consent by the Company; or
(e) was disclosed pursuant to a Court Order or pursuant to any
other legal requirement.
Section 6. Remedies
The Consultant acknowledges that the restrictive covenants set forth in
Section 5 hereof are essential terms and conditions of its continued engagement
with the Company and that the Company will have no adequate remedy at law in the
event of any actual or threatened violation of any such covenants. The
Consultant, therefore, agrees that the Company shall be entitled to a decree or
order by any court located in
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Xxxxx Xxxxxx, Xxx Xxxx or New York City enjoining such threatened or actual
violation of any of such covenant. Such decree or order, to the extent
appropriate, shall specifically enforce the full performance of any such
covenant by the Consultant, and the Consultant hereby consents to the
jurisdiction of the aforementioned courts. Enforcement of any remedy under this
Section 6 shall not reduce or adversely affect any other remedy which may be
available to the Company in law or in equity, and nothing herein shall prevent
the Company from seeking injunctive or other relief hereunder, even if a
subsequent employer of the Consultant is joined as a party defendant or
co-defendant in any proceeding hereunder.
Section 7. Indemnification.
The Company shall indemnify and hold harmless the Consultant for
services as a consultant against any losses, claims, damages, liabilities and
expenses, including reasonable attorneys' fees, arising out of the Consultant's
services pursuant to this Agreement, performed during the term hereof. However,
the Company will not be liable under this Section to the extent that any loss,
claim, damage, liability or expense is found in a final judgment by a court of
competent jurisdiction to have resulted from the Consultant's (i) fraud, (ii)
gross negligence to the extent such is deemed to constitute bad faith, or (iii)
willful misconduct. It shall be deemed conclusively established that for
purposes of this Agreement, the Consultant is acting in good faith with respect
to actions taken by him on the advice of legal counsel. The Company agrees to
notify the Consultant promptly of the assertion of any claim or the commencement
of any action or proceeding relating to any matter which involved the Consultant
and the Company and the Consultant agrees to notify the Company promptly of the
assertion of any claim or the commencement of any action or proceeding relating
to any matter which involved the Company and the Consultant. The Company will
handle the defense of any matter which it may be required to indemnify
Consultant hereunder.
Section 8. Term. This Agreement shall be for a term
commencing on the first business day following the termination of Xx. Xxxxx'x
services as a director of the Company and terminating on the first anniversary
of such date (the "Term").
Section 9. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the internal laws of the State of New
York. Any dispute between the parties hereto arising from or relating to the
terms of this Agreement shall be submitted to arbitration in New York, New York
under the auspices of the American Arbitration Association.
Section 10. Waiver of Breach.
The failure by the Company to exercise any rights or powers hereunder
shall not be construed as a waiver thereof. The waiver by the Company of a
breach of any provision of this Agreement by the Consultant shall not operate
nor be construed as a waiver of any subsequent breach by the Consultant.
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Section 11. Entire Agreement; Amendments. This Agreement
contains the entire agreement and understanding between the parties and
supersedes and preempts any prior understandings or agreements, whether written
or oral. The provisions of this Agreement may be amended or waived only with the
prior written consent of the Company and the Consultant.
Section 12. Successors and Assigns. This Agreement shall be
binding upon, inure to the benefit of, and shall be enforceable by the
Consultant and the Company and their respective successors and assigns;
provided, however, that the rights and obligations of the Consultant under this
Agreement shall not be assignable.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
AFP IMAGING CORPORATION
By:_________________________
Name:
Title:
.
:-------------------------
Xxxxxx X. Xxxxx
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