As filed with the Securities and Exchange Commission on June 17, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-8
REGISTRATION STATEMENT
Under the Securities Act of 1933
PROFORMIX SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2228828
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation Industrial Classification Identification No.)
or organization) Code Number)
50 Tannery Road
Branchburg, New Jersey 08876
(908) 534-6400
(Address and Telephone Number of Registrant's
Principal Executive Office)(Zip Code)
2,264,866 Shares of Common Stock Issued
Pursuant to Written Compensation Contracts
(full title of the plans)
Jerry Swon, President
50 Tannery Road
Branchburg, New Jersey 08876
(908) 534-6400
(Name, Address & Telephone number, including area code, of agent for service)
Copies to:
Michael H. Freedman, Esq.
Silverman, Collura, Chernis & Balzano, P.C.
381 Park Avenue South - Suite 1601
New York, New York 10016
(212) 779-8600
<PAGE>
CALCULATION OF REGISTRATION FEE
- - --------------------------------------------------------------------------------
Proposed Proposed
Title of Amount maximum maximum Amount of
securities to to be offering price aggregate registration
be registered registered per share(1) offering price(1) fee
- - --------------------------------------------------------------------------------
Common Stock(1) 2,264,866 $4.75 $10,758,113.50 $3,260.03
- - --------------------------------------------------------------------------------
(1) Calculated in accordance with 457(c) using the average of the bid and asked
price for the Common Stock on June 12, 1998.
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PART I - INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing information specified in Part 1 (plan information
and registrant information) will be sent or given to the consultants as
specified by Rule 428(b)(1). Such documents need not be filed with the
Securities and Exchange Commission either as part of this registration statement
or as prospectuses or prospectus supplements pursuant to Rule 424. These
documents and the documents incorporated by reference in this registration
statement pursuant to Item 3 of Part 2 of this form taken together constitute a
prospectus that meets the requirements of Section 10(a) of the Securities Act of
1933.
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PROFORMIX SYSTEMS, INC.
Cross-Reference Sheet Showing Location in Prospectus
of Information Required by Items of Form S-3
Form S-3 Items and Heading Location in Prospectus
- - -------------------------- ----------------------
1. Forepart of the Registration Statement
and Outside Front Cover Page of Prospectus.........Front cover Page
2. Inside Front And Outside Back Cover................Inside Front cover Page
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges.......................The Company
4. Use of Proceeds....................................Not Applicable
5. Determination of Offering Price....................Not Applicable
6. Dilution...........................................Not Applicable
7. Selling Securityholders............................Selling Securityholders
8. Plan of Distribution...............................Plan of Distribution
9. Description of Securities to be Registered .......Description of Securities
10. Interest of Named Experts and Counsel..............Legal Matters
11. Material Changes...................................Not Applicable
12. Incorporation of Certain Information by
Reference..........................................Incorporation of
Certain Documents by
Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities........................................Indemnification of
Directors and Officers
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RE-OFFER PROSPECTUS
PROFORMIX SYSTEMS, INC.
50 Tannery Road
Branchburg, New Jersey 08876
This Prospectus relates to offers and sales by certain officers, directors
and key consultants ("Selling Securityholders") of Proformix Systems, Inc., a
Delaware corporation ("Company") of shares of the Company's Common Stock, $.0001
par value ("Common Stock"), that have either been granted to such persons or
that may be acquired by such persons pursuant to the exercise of stock options.
The Company is registering the following securities granted pursuant to the
following agreements: (i) 115,000 shares of Common Stock granted to B. Michael
Pisani pursuant to a consulting agreement dated October 31, 1996, as amended May
15, 1998 ("Pisani Agreement"); (ii) 750,000 shares of Common Stock underlying
stock options granted to Michael G. Martin pursuant to an employment agreement
dated July 18, 1997, as amended ("Martin Agreement"); and (iii) 1,399,860 shares
of Common Stock underlying stock options to Jerry Swon pursuant to an employment
agreement ("Swon Agreement")(the Pisani Agreement, Martin Agreement and Swon
Agreement are collectively referred to herein as the "Plans"). The shares of
Common Stock that have been or will be acquired by such persons pursuant to the
Plans are herein referred to as the "Shares".
The Shares may be offered hereby from time to time by any and all of the
Selling Securityholders named herein, for their own benefit. The Company will
receive no portion of the proceeds of sales made hereunder. All expenses of
registration incurred in connection with this offering are being borne by the
Company, but all selling and other expenses incurred by the Selling
Securityholders will be borne by such Selling Securityholders.
All or a portion of the shares of Common Stock offered hereby may be
offered for sale, from time to time, on the OTC Bulletin Board ("Bulletin
Board"), or otherwise, at prices and terms then obtainable. All brokers'
commissions, concessions or discounts will be paid by the Selling
Securityholders.
The Selling Securityholders and any broker executing selling orders on
behalf of the Selling Securityholders may be deemed to be an "underwriter"
within the meaning of the Securities Act, in which event commissions received by
such broker may be deemed to be underwriting commissions under the Securities
Act.
The Company's Common Stock is quoted on the OTC Bulletin Board ("Bulletin
Board") under the symbol PRFX. On June 12, 1998 the last sale price of the
Common Stock as reported on the Bulletin Board was $4.75.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is June 17, 1998.
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TABLE OF CONTENTS
Page
Available Information....................................................... 7
The Company................................................................. 8
Risk Factors................................................................ 9
Selling Securityholders..................................................... 11
Plan of Distribution........................................................ 13
Incorporation of Certain Documents by Reference............................. 13
Description of Securities................................................... 14
Transfer Agent and Registrar................................................ 15
Legal Matters............................................................... 15
Experts..................................................................... 15
Indemnification of Directors and Officers................................... 15
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No person is authorized to give any information or to make any
representation, other than those contained in this Prospectus, in connection
with the offering described herein, and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or the Selling Securityholders. This Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, nor shall there be any sale of these
securities by any person in any jurisdiction in which it is unlawful for such
person to make such offer, solicitation or sale. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any circumstances create an
implication that the information contained herein is correct as of any time
subsequent to the date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices at Room 1204, Everett McKinley Dirksen Building,
219 South Dearborn Street, Chicago, Illinois 60604; and 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of such material can also be
obtained at prescribed rates from the Public Reference Section of the Commission
at its principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
This Prospectus does not contain all of the information set forth in the
Registration Statements of which this Prospectus is a part and which the Company
has filed with the Commission. For further information with respect to the
Company and the securities offered hereby, reference is made to the Registration
Statement, including the exhibits filed as a part thereof, copies of which can
be inspected at, or obtained at prescribed rates from the Public Reference
Section of the Commission at the address set forth above. Additional updating
information with respect to the Company may be provided in the future by means
of appendices or supplements to the Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus is delivered, upon written or oral request of
such person, a copy of any and all of the information that has been or may be
incorporated herein by reference (other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into such documents).
Requests should be directed to Proformix Systems, Inc., 50 Tannery Road,
Branchburg, New Jersey 08876 (908) 534-6400.
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THE COMPANY
Proformix Systems, Inc. ("Company") was incorporated as a Delaware
corporation on April 19, 1988 under the name Fortunistics Inc. On March 4, 1993
the Company changed its name to Whitestone Industries, Inc. On July 14, 1997,
the Company changed its name to Proformix Systems, Inc.
On July 2, 1997, the Company submitted a stock exchange offer to the
shareholders of Proformix, Inc., a Delaware corporation. Prior to this stock
exchange, the Company spun off the shares of its wholly owned subsidiary Golden
Bear Entertainment Corporation to its then current shareholders in the form of a
stock dividend. This distribution effectively eliminated all assets and
liabilities from the books of the Company prior to the acquisition of Proformix,
Inc. Holders of approximately 97% of Proformix, Inc. common stock have agreed to
tender their respective common shares in exchange for the Company's common
shares. On June 24, 1997,
For accounting purposes, the reorganization has been treated as Proformix,
Inc.'s acquisition of the Company and a recapitalization of Proformix, Inc.
Subsequent to the reorganization, Proformix, Inc. operates as a subsidiary of
the Company, however, the operations of the newly combined entity are currently
comprised solely of the operations of Proformix, Inc.
The Company designs, develops, manufactures, markets and distributes
ergonomically designed computer keyboard trays, peripheral items and accessories
(together, "Keyboarding System") designed to alleviate and prevent certain
health problems believed to be related to the use of computers. The Company also
markets a unique proprietary software suite under the name EMS(TM) which
represents a comprehensive ergonomic-based productivity solution developed to
train people working on computers, monitor computer-use related activities and
evaluate a user's risk exposure and propensity towards injury or loss of
effectiveness in connection with his/her day-to-day work.
The Company's wholly-owned subsidiary, Corporate Ergonomic Solutions, Inc.
("Ergonomics") was incorporated in the State of New Jersey during October 1992.
Ergonomics, which commenced operations in September 1997, was formed primarily
to market the Company's products.
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RISK FACTORS
The following factors should be considered carefully in evaluating the
Company's business and before making any investment in the Company.
Substantial Competition
Products developed for the computer workplace face intense competition.
The Company will be at a competitive disadvantage in seeking to compete with
other companies having more assets, larger technical staffs, established market
shares and greater financial and operational resources than the Company. There
can be no assurance that the Company will be able to meet the competition and
operate profitably.
Possible Loss of Entire Investment
The Shares offered hereby are highly speculative, involve a high degree of
risk and should not be purchased by any person who cannot afford the loss of his
entire investment. A purchase of the Company's stock in this Offering would be
"unsuitable" for a person who cannot afford to sustain such a loss.
Dependence Upon Key Personnel
The Company is substantially dependent upon the continued services of
Michael G. Martin, its Chairman. The loss of the services of Mr. Martin through
incapacity or otherwise would have a material adverse effect upon the Company's
business and prospects. To the extent that his services become unavailable, the
Company will be required to retain other qualified personnel, and there can be
no assurance that it will be able to recruit and hire qualified persons upon
acceptable terms. The Company maintains key person life and disability insurance
on the life of Mr. Martin in the amount of $1,000,000.
Possible Volatility of Stock Price
There can be no assurance that a public market price for the Common Stock
will continue. The market prices of the Common Stock may be significantly
affected by factors such as announcements by the Company or its competitors, as
well as variations in the Company's results of operations and market conditions
in general. The market prices may also be affected by movements in prices of
stocks in general. The relatively limited amount of publicly trading shares
(float) renders the Company's securities especially susceptible to sharp price
fluctuations.
Penny Stock Regulations
The Securities Enforcement Penny Stock Act of 1990 requires specific
disclosure to be made available in connection with trades in the stock of
companies defined as "penny stocks. The Commission has adopted regulations that
generally define a penny stock to be any equity
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security that has a market price of less than $5.00 per share, subject to
certain exceptions. Such exceptions include any equity security listed on NASDAQ
and any equity security issued by an issuer that has (i) net tangible assets of
at least $2,000,000, if such issuer has been in continuous operation for three
years; (ii) net tangible assets of at least $5,000,000, if such issuer has been
in continuous operation for less than three years; or (iii) average annual
revenue of at least $6,000,000, if such issuer has been in continuous operation
for less than three years. Unless an exception is available, the regulations
require the delivery, prior to any transaction involving a penny stock, of a
disclosure schedule explaining the penny stock market and the risk associated
therewith as well as the written consent of the purchaser of such security prior
to engaging in a penny stock transaction. The regulations on penny stocks may
limit the ability of the purchasers of the Company's securities to sell their
securities in the secondary marketplace. The Company's Shares are currently
considered a penny stock.
No Cumulative Voting
Holders of the Shares of Common Stock are not entitled to accumulate their
votes for the election of directors or otherwise. Accordingly, the holders of a
majority of the shares present at a meeting of shareholders will be able to
elect all of the directors of the Company, and the minority shareholders will
not be able to elect a representative to the Company's board of directors.
No Foreseeable Dividends
The Company does not anticipate paying dividends on its Common Stock in
the foreseeable future but plans instead to retain earnings, if any, for the
operation and expansion of its business.
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SELLING SECURITYHOLDERS
The Prospectus covers shares of Common Stock that have either been granted
to the Selling Securityholders, named herein or to be supplementally named, or
that may be acquired by such Selling Securityholders pursuant to the exercise of
stock options, as of June 9, 1998.
The following table sets forth the name of each Selling Securityholder,
the nature of his or her position, office, or other material relationship with
the Company, the number of shares of Common Stock beneficially owned by each
Selling Securityholder prior to the offering, and the number of shares and (if
one percent or more) the percentage of the class to be beneficially owned by
such Selling Securityholder after the offering. Non-affiliate Selling
Securityholders who hold less than 1,000 shares of Common Stock issued under the
Plans and not named below may use this Prospectus for reoffers and resales of
such Common Stock.
<TABLE>
<CAPTION>
Shares owned
After Offering(2)
Shares Owned Number of Shares ------------------
Name Prior to Offering(1) Offered Herein Number Percent
- - ---- -------------------- -------------- ------ -------
<S> <C> <C> <C> <C>
B. Michael Pisani, 225,244(3) 115,000(4) 140,244 2.8%
Consultant
Michael G. Martin, 1,410,153 750,000(5) 660,153 13.1%
Chairman
Jerry Swon, 1,589,866(7) 1,399,866(6) 190,000 3.8%
President, CEO and Director
</TABLE>
- - --------------------
** less than 1%
(1) For purposes of this table, a person is deemed to have "beneficial
ownership" of any shares of Common Stock when such person has the right to
acquire within 60 days of June 9, 1998. For purposes of computing the
percentage of outstanding shares of Common Stock held by each person named
above, any security which such person has the right to acquire within such
date is deemed to be outstanding but is not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person.
Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the Company believes based on
information supplied by such persons, that the persons named in this table
have sole voting and investment power with respect to all shares of Common
Stock which they beneficially own.
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(2) For purposes of this table, the number and percentage of Shares owned
after the offering presumes the sale and/or exercise of all Shares offered
herein. The percentages are based on 5,044,659 shares of Common Stock
outstanding.
(3) Includes (i) 57,677 shares of Common Stock due to be issued to Mr. Pisani
pursuant to a debt assumption agreement dated April 17, 1997; and (ii)
15,000 shares of Common Stock to be issued pursuant to a consulting
agreement.
(4) Includes 15,000 shares of Common Stock to be issued.
(5) Represents 750,000 shares of Common Stock underlying a stock option
exercisable at $4.00 per share and expiring on May 15, 2008.
(6) Includes 190,000 shares of Common Stock held by Jane Swon, Mr. Swon's
wife.
(7) Represents (i) 900,000 shares of Common Stock underlying a stock option
exercisable at $4.00 per share and expiring May 15, 2008; (ii) 166,622
shares of Common Stock underlying a stock option exercisable at $1.7338
and expiring on May 15, 1999; (iii) 166,622 shares of Common Stock
underlying a stock option exercisable at $3.4676 per share and expiring on
May 15, 1999; and (iv) 166,622 shares of Common Stock underlying a stock
option exercisable at $5.6175 per share and expiring on May 15, 2000.
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PLAN OF DISTRIBUTION
The Selling Securityholders may sell shares of Common Stock in any of the
following ways (i) through dealers; (ii) through agents; or (iii) directly to
one or more purchasers. The distribution of the shares of Common Stock may be
effected from time to time in one or more transactions (which may involve
crosses or block transactions) (A) on Nasdaq or the BSE (or on such other
national stock exchanges on which the shares of Common Stock may be traded from
time to time) in transactions which may include special offerings, exchange
distributions and/or secondary distributions pursuant to and in accordance with
rules of such exchanges, (B) in the over-the-counter market, or (C) in
transactions other than on such exchanges or in the over-the-counter market, or
a combination of such transactions. Any such transaction may be effected at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices, at negotiated prices or fixed prices. The Selling
Securityholders may effect such transactions by selling shares of Common Stock
to or through broker-dealers, and such broker-dealers may receive compensation
in the form of discounts, concessions, or commissions from Selling
Securityholders and/or commissions from purchasers of shares of Common Stock for
whom they may act as agent. The Selling Securityholders and any broker-dealers
or agents that participate in the distribution of shares of Common Stock by them
might be deemed to be underwriters, and any discounts, commissions or
concessions received by any such broker-dealers or agents might be deemed to be
underwriting discounts and commissions, under the Securities Act.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company with the
Commission and are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-KSB for its fiscal year ended
December 31, 1997;
(b) The Company's Quarterly Report on Form 10-QSB for the period ended
March 31, 1998;
(c) All other reports filed by the Company pursuant to Section 13(a) and
15(d) of the Exchange Act since the Company's fiscal year ended December 31,
1997.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent hereto, but
prior to the termination of the offering of securities made by this Prospectus
shall be deemed to be incorporated by reference herein and to be part hereof
from their respective dates of filing.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus, to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be
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incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
DESCRIPTION OF SECURITIES
The Company is authorized to issue 30,000,000 shares of Common Stock,
$.0001 par value ("Common Stock") and 3,000,000 shares of preferred stock, $.001
par value. 2,500 shares of preferred stock have been designated Cumulative
Preferred Stock, $.001 par value, of which 10 shares are outstanding.
Common Stock
Holders of Common Stock are entitled to one vote per share on each matter
submitted to vote at any meeting of shareholders. Shares of Common Stock do not
carry cumulative voting rights and therefore, holders of a majority of the
outstanding shares of Common Stock will be able to elect the entire board of
directors of the Company. The Company's board of directors has authority,
without action by the Company's shareholders, to issue all or any portion of the
authorized but unissued shares of Common Stock, which would have the effect of
reducing the percentage of securities ownership of the Company's shareholders
and diluting the book value of the Common Stock.
Shareholders of the Company have no preemptive rights to acquire
additional shares of Common Stock. The Common Stock is not subject to redemption
and carries no subscription or conversion rights. In the event of liquidation of
the Company, the holders of shares of Common Stock are entitled to share equally
in corporate assets after the holders, if any, of Preferred Stock and after
satisfaction of liabilities. Holders of Common Stock are entitled to receive
such dividends as the Company's board of directors may from time to time declare
out of funds legally available for the payment thereof. The Company has never
paid cash dividends on its Common Stock and does not anticipate that it will pay
such dividends in the future.
Cumulative Preferred Stock
Holders of Cumulative Preferred Stock are entitled to receive out of the
surplus or net profits of the Company, cumulative dividends at the rate of 9%
per annum, payable as and when declared by the Board of Directors of the
Company, before any dividends shall by declared or paid upon Common Stock. The
Cumulative Preferred Stock ranks, with respect to dividend rights, rights on
liquidation, winding up and dissolution, and rights upon redemption, prior to
all classes of Common Stock. Holders of Cumulative Preferred Stock are not
entitled to any voting rights.
In the event of liquidation, dissolution, or winding up of the affairs of
the Company, after payment of debts and other liabilities of the Company,
holders of Cumulative Preferred Stock are entitled to receive out of the
remaining net assets of the Company the amount of $100,000
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for each share of Cumulative Preferred Stock held ("Liquidation Price"). The
Company may redeem the Cumulative Preferred Stock by paying to the holders
thereof the Liquidation Price for each share of Cumulative Preferred Stock held,
together with any accrued and unpaid dividends.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock of the Company is
Securities Transfer Corp., 16910 Dallas Parkway, Suite 100, Dallas, Texas 75248.
LEGAL MATTERS
The legality of the shares offered hereby has been passed upon for the
Company by Silverman, Collura, Chernis & Balzano, P.C., 381 Park Avenue South,
Suite 1601, New York, New York 10016. Paul Chernis, Anthony M. Collura and
Ronald Balzano, partners in the law firm Silverman, Collura, Chernis & Balzano,
P.C., the Company's securities counsel, are holders of an aggregate of 40,000
stock options for the purchase of the Company's common stock at $2.00 per share.
The stock options are exercisable during the four year period commencing October
15, 1998 and vests at 25% per year.
EXPERTS
The Company's consolidated financial statements incorporated in this
Registration Statement by reference from the Company's Annual Report on Form
10-KSB for the year ended December 31, 1997 have been audited by Rosenberg,
Rich, Baker, Berman & Company, independent auditors, as stated in their report,
which is incorporated herein by reference (which report expresses an unqualified
opinion) and have been so incorporated in reliance upon the report of such firm,
given upon their authority as experts in accounting and auditing.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware and
Article 7 of the Company's Articles of Incorporation contain provisions for
indemnification of officers, directors, employees and agents of the Company. The
Articles of Incorporation require the Company to indemnify such persons to the
full extent permitted by Delaware law. Each person will be indemnified in any
proceeding if he acted in good faith and in a manner which he reasonably
believed to be in, or not opposed to, the best interest of the Company.
Indemnification would cover expenses, including attorney's fees, judgments,
fines and amounts paid in settlement.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Company, the Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore unenforceable. In the event that a claim for
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indemnification against such liabilities (other than the payment by the Company
of expense incurred or paid by a director, officer, or controlling person of the
Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person of the Company in connection
with the securities being registered, the Company will, unless in the opinion of
its counsel the matter has been settled by a controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issues.
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PART II
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company with the
Commission and are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-KSB for its fiscal year ended
December 31, 1997;
(b) The Company's Quarterly Report on Form 10-QSB for the period ended
March 31, 1998;
(c) All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since the Company's fiscal year ended December 31,
1996.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent hereto, but
prior to the termination of the offering of securities made by this Prospectus
shall be deemed to be incorporated by reference herein and to be part hereof
from their respective dates of filing.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus, to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
ITEM 4. DESCRIPTION OF SECURITIES
The Company is authorized to issue 30,000,000 shares of Common Stock,
$.0001 par value ("Common Stock") and 3,000,000 shares of preferred stock, $.001
par value. 2,500 shares of preferred stock have been designated Cumulative
Preferred Stock, $.001 par value, of which 10 shares are outstanding.
Common Stock
Holders of Common Stock are entitled to one vote per share on each matter
submitted to vote at any meeting of shareholders. Shares of Common Stock do not
carry cumulative voting rights and therefore, holders of a majority of the
outstanding shares of Common Stock will be able to elect the entire board of
directors of the Company. The Company's board of directors has authority,
without action by the Company's shareholders, to issue all or any portion of the
authorized but unissued shares of Common Stock, which would have the effect of
reducing the
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percentage of securities ownership of the Company's shareholders and diluting
the book value of the Common Stock.
Shareholders of the Company have no preemptive rights to acquire
additional shares of Common Stock. The Common Stock is not subject to redemption
and carries no subscription or conversion rights. In the event of liquidation of
the Company, the holders of shares of Common Stock are entitled to share equally
in corporate assets after the holders, if any, of Preferred Stock and after
satisfaction of liabilities. Holders of Common Stock are entitled to receive
such dividends as the Company's board of directors may from time to time declare
out of funds legally available for the payment thereof. The Company has never
paid cash dividends on its Common Stock and does not anticipate that it will pay
such dividends in the future.
Cumulative Preferred Stock
Holders of Cumulative Preferred Stock are entitled to receive out of the
surplus or net profits of the Company, cumulative dividends at the rate of 9%
per annum, payable as and when declared by the Board of Directors of the
Company, before any dividends shall by declared or paid upon Common Stock. The
Cumulative Preferred Stock ranks, with respect to dividend rights, rights on
liquidation, winding up and dissolution, and rights upon redemption, prior to
all classes of Common Stock. Holders of Cumulative Preferred Stock are not
entitled to any voting rights.
In the event of liquidation, dissolution, or winding up of the affairs of
the Company, after payment of debts and other liabilities of the Company,
holders of Cumulative Preferred Stock are entitled to receive out of the
remaining net assets of the Company the amount of $100,000 for each share of
Cumulative Preferred Stock held ("Liquidation Price"). The Company may redeem
the Cumulative Preferred Stock by paying to the holders thereof the Liquidation
Price for each share of Cumulative Preferred Stock held, together with any
accrued and unpaid dividends.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL
Paul Chernis, Anthony M. Collura and Ronald Balzano, partners in the law
firm Silverman, Collura, Chernis & Balzano, P.C., the Company's securities
counsel, are holders of an aggregate of 40,000 stock options for the purchase of
the Common Stock at $2.00 per share. The stock options are exercisable during
the four year period commencing October 15, 1998 and vests at 25% per year.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware and
Article 7 of the Company's Articles of Incorporation contain provisions for
indemnification of officers, directors, employees and agents of the Company. The
Articles of Incorporation require the Company to indemnify such persons to the
full extent permitted by Delaware law. Each person
18
<PAGE>
will be indemnified in any proceeding if he acted in good faith and in a manner
which he reasonably believed to be in, or not opposed to, the best interest of
the Company. Indemnification would cover expenses, including attorney's fees,
judgments, fines and amounts paid in settlement.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Company, the Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expense
incurred or paid by a director, officer, or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person of the Company in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by a controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issues.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
4.1 Consulting Agreement between B. Michael Pisani and the Company dated
October 31, 1996, as amended May 15, 1998.
4.2 Employment Agreement between Jerry Swon and the Company.**
4.3 Employment Agreement between Michael G. Martin and the Company dated
July 17, 1998. Amendment to be filed.**
5.1 Opinion of Silverman, Collura, Chernis & Balzano, P.C.
23.1 Consent of Silverman, Collura, Chernis & Balzano, P.C. (included in
Exhibit 5.1)
23.2 Consent of Rosenberg, Rich, Baker, Berman & Company
** to be filed by amendment.
19
<PAGE>
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes;
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or any
material change of such information in the Registration Statement;
Provided however that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply
to information contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof
(3) To remove from registration by means of a post effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling
20
<PAGE>
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
21
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, therewith duly
authorized, on June 16, 1998.
PROFORMIX SYSTEMS, INC.
By: /s/ Jerry Swon
-----------------------------
Jerry Swon, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below, hereby constitutes and appoints Jerry Swon, his true and lawful
attorney-in-fact, with full power of substitution and resubstitution, for his
and in his name, place and stead, in any and all capacities, to sign any or all
amendments or supplements to this Registration Statement and to file the same
with all exhibits thereto and other documents in connection therewith, with the
Commission, granting unto said attorney-in-fact full power and authority to do
and perform each and every act and thing necessary or appropriate to be done
with respect to this Registration Statement or any amendments or supplements
hereto and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in their respective
capacities with Proformix Systems, Inc. and on the dates indicated.
Signature Title Date
- - --------- ----- ----
/s/ Jerry Swon President, Chief Executive June 16, 1998
- - ------------------------------ Officer and Director
Jerry Swon (Principal Executive
Officer)
/s/ Joerg H. Klaube Chief Financial Officer June 16, 1998
- - ------------------------------ (Principal Financial
Joerg H. Klaube Officer)
/s/ Michael G. Martin Chairman of the Board June 16, 1998
- - ------------------------------
Michael G. Martin
Director June , 1998
- - ------------------------------
Peter Buscetto
/s/ Paul Chernis Director June 16, 1998
- - ------------------------------
Paul Chernis
22
EXHIBIT 4.1
B. Michael Pisani
44 LAKE RD
SHORT HILLS, N.J. 07078
(201) 467-0359
October 31, 1996
Michael G. Martin
President
Proformix, Inc.
50 Tannery Road
Branchburg, NJ
Re: Consulting Agreement
Dear Michael:
This letter agreement will establish the terms of our working relationship
which, generally, is a consultancy. We will act as business consultant to
Proformix for the immediate purpose of providing advise and other assistance in
the company's general strategic planning, evaluating advisory relationships
with interested investment banking firms and the management of creditor
relations. We will be compensated with 350,000 shares of the company's stock as
set forth below. Proformix will reimburse us for expenses incurred directly in
connection with this collaboration. The near term goals of this consultancy are
to position the company for its next growth phase, to husband a sound advisory
relationship between Proformix and an established and recognized investment bank
and to communicate with the company's existing creditor group for the purpose of
maintaining their cooperation during the company's growth period. The long term
goal of this consultancy is to prepare the company's operations, governance
mechanism and capital structure for the transition to a publicly owned and
traded company.
Please make your signature below to indicate your agreement with the
foregoing and arrange for the issuance of the shares as specified. Upon
execution this agreement shall govern the entire consultant relationship with
the company and shall supercede all prior agreements regarding such matters. The
company may terminate this consultancy by providing notice of such termination
10 days prior thereto. However, to the extent any of the referenced shares are
not at that time delivered, termination shall not have the effect of
extinguishing the company's obligation to deliver such shares. We look forward
to working with you.
Very truly yours,
/s/ B. Michael Pisani
------------------------------
B. Michael Pisani
Acknowledged, Accepted and Agreed to, this 31st day
of October, 1996, in witnesseth whereof I affix my signature below.
/s/ Michael G. Martin
- - ---------------------------
Michael G. Martin
President, Proformix, Inc.
<PAGE>
[LETTERHEAD OF PROFORMIX SYSTEMS, INC.]
May 15, 1998
B. Michael Pisani
44 Lake Road
Short Hills, NJ 07078
Re: Consulting Agreement dd. October 31, 1996
Dear Michael:
This will confirm our verbal agreement as follows;
In consideration of your services under the above consulting agreement you will
receive an additional 15,000 (fifteen thousand) shares of the common stock of
Performix Systems, Inc. Such award shall constitute remuneration in full under
our agreement. This action has been duly authorized by the board of directors of
Proformix Systems, Inc.
Please acknowledge this agreement by signing below and returning a copy to us.
Very truly yours,
/s/ Michael G. Martin
- - --------------------------------
Michael G. Martin
Chairman
Acknowledged and Accepted
/s/ B. Michael Pisani
----------------------------
B. Michael Pisani
EXHIBIT 4.3
EMPLOYMENT AGREEMENT dated as of July 17, 1997 (the "Agreement") between
Proformix Systems, Inc. ("Proformix") and Michael Martin, presently residing at
65 Nicole Terrace, Bridgewater, New Jersey 08807(the "Executive").
WHEREAS, the Executive is presently employed by Proformix, Inc., a
subsidary of Proformix Systems, Inc.; and
WHEREAS, Proformix, Inc. was recently the subject of a business
combination, as of July 18, 1997 with Whitestone Industries, Inc., a Delaware
corporation ("Whitestone"), since renamed Proformix Systems, Inc., pursuant to
which Whitestone sought to acquire all or substantially all of the outstanding
Common Stock of Proformix, Inc. (the "Sale"); and
WHEREAS, in connection with the Sale, the parties desire to enter into this
Agreement in order to insure Executive continued employment by Proformix and
Proformix, Inc. (collectively "the Company"), in his current capacity, and to
insure the Company that it will have the benefit of his continued services for
at least the Term of Employment herein described;
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES
1.1. General. The Company hereby employs the Executive, and the Executive
agrees to serve as President and Chief Executive Officer of Proformix and as a
Director upon the terms and conditions herein contained, and in such capacities
the Executive agrees to serve the Company faithfully and to the best of his
ability under the direction of the Board of Directors of Proformix (the
"Board"). Nothing contained herein shall restrict the Executive from acting
<PAGE>
as a director of or owning shares in other companies not in competition with the
Company, provided that such services and ownership interests do not materially
interfere with the Executive's performance of his duties hereunder.
1.2. Exclusive Services. For so long as the Executive is employed by the
Company, he shall devote his full-time working hours to his duties hereunder.
The Executive shall not, directly or indirectly, render services to any other
person or organization for which he receives compensation without the unanimous
consent of the Board or otherwise engage in activities which would interfere
significantly with his faithful performance of his duties hereunder.
1.3. Term of Employment. The Executive's employment under this Agreement
shall commence on the date of the Sale (the "Effective Date") and shall
terminate on the earliest of (i) the fifth anniversary of the Effective Date,
(ii) the death of the Executive or (iii) the termination of the Executive's
employment pursuant to this Agreement; provided, however, that the term of the
Executive's employment under this Agreement may be extended by mutual agreement
between the parties for a period of up to three years by notice of approval from
the Board to the Executive at least six months prior to the expiration of the
then effective term of employment but not earlier than the fourth anniversary of
the Effective Date, acceptance in writing to be tendered by the Executive within
60 days thereafter. The period commencing on the Effective Date and ending on
the fifth anniversary of the Effective Date, or such later date to which the
term of the Executive's employment shall have been extended, is hereinafter
referred to as the "Employment Term".
2
<PAGE>
2. SALARY
2.1. Base Salary. From the Effective Date, the Executive shall be entitled
to receive a base salary ("Base Salary") at a rate of $108,000 per annum,
payable in equal installments not less frequently than bi-weekly in accordance
with Proformix's payroll practices, with such increases as may be provided by
Proformix' Board of Directors. Once increased, such higher amount shall
constitute the Executive's annual Base Salary. During the term hereof, his
salary shall not be reduced below $108,000 per year.
2.2. Annual Increases. Annual increases will be evaluated and determined by
the Board of Directors.
2.3. Stock Bonuses. Executive shall receive a bonus consisting of 140,000
shares of Proformix's Common Stock, for the first year, and 200,000 shares in
any year thereafter, in any of which years Proformix's after tax net profits
exceed $1,000,000 for each of its first three full fiscal years during the
Employment Term, beginning with calendar year 1998. The bonus shall be paid
during the calendar quarter following completion of the audit of Proformix's
financial statements for the calendar year in question. Net profits shall be
computed using generally accepted accounting principles. There shall be no stock
bonus paid after the first three full fiscal years.
3. EMPLOYMENT BENEFITS
3.1. General Benefits. The Executive shall receive the following benefits
during the Employment Term:
(a) the Executive will be eligible to participate in benefit programs of
the Company
3
<PAGE>
consistent with those benefit programs provided to other senior executives of
the Company excluding any key employee stock option plan that may be adopted by
Proformix so long as the stock bonus programs reflected in Section 2.3 above is
in effect; and
(b) a fully paid medical/hospitalization policy for Executive and his
family.
3.2. Vacation. The Executive shall be entitled to four weeks paid vacation
each year in accordance with company policies and procedures. The Executive must
take at least five (5) consecutive days during each twelve (12) months period.
3.3. Reimbursement of Expenses. The Company will reimburse the Executive
for reasonable, ordinary and necessary business expenses incurred by him in the
fulfillment of his duties hereunder upon presentation by the Executive of an
itemized account of such expenditures, in accordance with Company practices
consistently applied. The Executive will be provided with a car allowance of
$500 per month or such other amount as the Board of Directors may approve from
time to time. The allowance covers a single vehicle to be utilized for Company
business, however the Company will not be required to otherwise pay for the use
of said automobile.
3.4. Non-Renewal of Agreement. In the event this Agreement is not renewed
by the Company as provided in Section 1.3, the Executive shall be entitled to
three (3) months of his Base Salary as severance, payable in equal installments
on the same terms as at the end of the Employment Term ("Severance Pay").
4
<PAGE>
4. TERMINATION OF EMPLOYMENT
4.1. Termination for Cause; Resignation.
4.1.1. General. If, prior to the expiration of the Employment Term,
the Executive's employment is terminated by the Company for Cause, the Executive
shall be entitled only to his Severance Pay, if applicable, unless such
termination is for a Disloyalty Termination Event (as described in Section 4.2
below), in which case the Executive shall be entitled only to payment of his
Base Salary as then in effect through and including the date of termination. If
the Executive resigns from his employment hereunder, the Executive shall be
entitled only to payment of his Base Salary as then in effect through and
including the date of resignation. The Executive shall have no further right to
receive any other compensation, or to participate in any other plan,
arrangement, or benefit, after such termination or resignation of employment,
subject to the terms of such plans or arrangements.
4.1.2. Date of Termination/Resignation. The date of termination for a
Felony Termination Event (as defined in Section 4.2 below) shall be the date of
the written Notice of Termination provided for in Section 4.1.3. The date of
termination for a Conduct, Performance or Disloyalty Termination Event shall be
the date the Event is finally determined through arbitration. The date of
resignation shall be the date specified in the written notice of resignation
from the Executive to the Company, or if no date is specified therein, 10
business days after receipt by the Company of written notice of resignation from
the Executive.
4.1.3. Notice of Termination for Felony Termination Event. Unless
first terminated by a written notice of the Board, termination of the
Executive's employment for a Felony Termination Event (as defined in Section 4.2
below) shall be effected by delivery of a
5
<PAGE>
written notice of termination from Proformix to the Executive, which notice
shall specify the event or events set forth in Section 4.2 giving rise to such
termination (the "Notice of Termination").
4.1.4. Arbitration. All disputes involving termination of the
Executive's employment for a Conduct, Performance or Disloyalty Termination
Event shall be resolved by binding arbitration administered by the American
Arbitration Association (the "AAA") in accordance with the terms of this
Agreement, and the Commercial Arbitration Rules of the AAA. In the event of any
inconsistency between such rules and this Agreement, this Agreement shall
control. The arbitration process shall commence when the Executive has received
written notice by Proformix that the Executive is being dismissed for any of the
above referenced reasons. Either party may then notify the AAA who shall then
supply the parties with a list of three potential arbitrators. Each party shall
then have four (4) business days to object to one of the potential arbitrators.
The remaining potential arbitrator (and if more than one is remaining, then one
shall be selected by lot) shall serve as the single arbitrator. Each party shall
then have sixty (60) days to conduct discovery pursuant to the terms and
provisions of the New Jersey Rules of Civil Procedure. Upon conclusion of the
sixty (60) day period or such earlier time as the parties may agree the parties
shall participate in an arbitration proceeding in accordance the with AAA's then
current policies and procedures. The arbitration proceedings shall be conducted
in New Jersey at the offices of AAA or such other place in New York as the
parties shall mutually agree. The arbitrator shall be empowered to impose
sanctions and take such other actions as the arbitrator deems necessary to the
same extent a judge could do pursuant to the New York Rules of Civil Procedure
and applicable law. Judgment upon the award rendered by
6
<PAGE>
the arbitrator may be entered in any court having jurisdiction. Unless the
termination is decided by the arbitrator to be appropriate, Proformix shall be
liable to the Executive for damages for wrongful termination.
4.2. Cause. Termination for "Cause" shall mean termination of the
Executive's employment because the Executive (a) has engaged in fraudulent or
criminal conduct in connection with the performance of his duties hereunder,
which conduct materially and adversely affects the Company (a "Conduct
Termination Event"), (b) admits to or has been convicted of a crime punishable
by imprisonment for more than one year (a "Felony Termination Event"), (c) has
failed to perform in all material respects (following a written warning
specifying such deficiency) the normal and customary duties required of his
position of employment (a "Performance Termination Event"), (d) has been
disloyal to the Company by assisting competitors of the Company to the
disadvantage of the Company by a breach of Section 6 or by otherwise actively
assisting competitors to the disadvantage of the Company (a "Disloyalty
Termination Event"), or (e) has failed to heed a reasonable directive issued by,
or policy approved by the Board.
5. PERMANENT DISABILITY
In the event the Executive shall fail because of illness, physical or mental
disability or other incapacity, for a period of six consecutive months, or for
shorter periods aggregating six months during any twelve-month period, to render
the services provided for by this Agreement, then the Company may, by written
notice to the Executive after the last day of the six consecutive months of
disability or the day on which the shorter periods of disability equal an
aggregate of
7
<PAGE>
six months, reduce the Executive's compensation hereunder for "Permanent
Disability" as follows:
First Six Months No Reduction
Following 12 months Fifty percent (50%)
(or if less, the of compensation
balance of the
Employment Term)
The Executive will use his reasonable best efforts to cooperate with any
physician practicing in the State of New Jersey selected by the Company to
determine whether or not Permanent Disability exists, and the determination of
such physician made in writing to the Company and the Executive shall be final
and conclusive for all purposes of this Agreement; provided that if such
physician declines to make a determination as to medical disability, the matter
will be referred to arbitration in the manner set forth in Section 4.1.4. Any
payments provided for in this Section 5 shall be reduced to the extent that such
payments, together with any disability payments received by the Executive under
any plan, program or arrangements, exceed the Executive's Base Salary. Except
(i) as to the obligation to continue to pay the Executive's medical insurance
premiums for a period of 18 months following delivery of the written notice of
"Permanent Disability" to the Executive or (ii) as otherwise provided in this
Section 5, upon final determination of permanent disability, the Company shall
have no further obligation to the Executive under this Agreement.
6. NONCOMPETITION/NONSOLICITATION AND CONFIDENTIALITY
6.1. Noncompetition/Nonsolicitation. The Executive shall not, directly or
indirectly,
8
<PAGE>
as a sole proprietor, member of a partnership, stockholder or investor, officer
or director of a corporation, or as an employee, associate, consultant or agent
of any person, partnership, corporation or other business organization or entity
other than the Company: (a) engage in any business that is in competition with
any business actively conducted by Proformix or any of its subsidiaries within
the various states in which Proformix conducts business; (b) solicit or endeavor
to entice away from Proformix or any of its subsidiaries any person who is, or
was during the then most recent 24-month period, employed by or associated with
Proformix or any of its subsidiaries; (c) solicit or endeavor to entice away
from Proformix or any of its subsidiaries any person or entity who is, or was
within the then most recent 24-month period, a customer, client or prospect of
Proformix or any of its subsidiaries; or (d) perform any services in competition
with Proformix for or on behalf of any such customer, client or prospect. The
obligations of this Section 6.1 shall apply for 36 months after termination of
employment of, or resignation by the Executive as well as after the end of the
Term of Employment and during employment and shall be extended by a period of
time equal to any period during which the Executive shall be in breach of such
obligations.
6.2. Confidentiality. The Executive covenants and agrees with the Company
that he will not at any time, except in performance of his obligations to the
Company hereunder or with the prior written consent of the Company, directly or
indirectly, disclose any secret or confidential information that he may learn or
has learned by reason of his association with the Company or any of its
subsidiaries and affiliates. The term "confidential information" includes
information not previously disclosed to the public or to the trade by the
Company's management, or otherwise in the public domain, with respect to the
Company's, or any of its affiliates or
9
<PAGE>
subsidiaries, products, services, facilities, applications and methods, trade
secrets and other intellectual property, systems, procedures, manuals,
confidential reports, product or service price lists, customer lists, technical
information, financial information (including the revenues, costs or profits
associated with any of the Company's products), business plans, prospects or
opportunities.
6.3. Exclusive Property . The Executive confirms that all confidential
information is and shall remain the exclusive property of the Company. All
business records, papers and documents kept or made by the Executive relating to
the business of the Company shall be and remain the property of the Company.
Similarly, all patents and/or inventions or new products developed by the
Executive, alone or with others during the term of this Agreement shall
constitute "work product" as such term is generally used and shall remain the
property of the Company upon termination or expiration of this Agreement.
6.4. Injunctive Relief. Without intending to limit the remedies available
to the Company, the Executive acknowledges that a breach of any of the covenants
contained in this Section 6 may result in material and irreparable injury to the
Company or its affiliates or subsidiaries for which there is no adequate remedy
at law, that it will not be possible to measure damages for such injuries
precisely and that, in the event of such a breach or threat thereof, the Company
shall be entitled to obtain a temporary restraining order and/or a preliminary
or permanent injunction restraining the Executive from engaging in activities
prohibited by this Section 6 or such other relief as may be required
specifically to enforce any of the covenants in this Section 6. If for any
reason a final decision of any court determines that the restrictions under this
Section 6 are not reasonable or that consideration therefor is inadequate, such
10
<PAGE>
restrictions shall be interpreted, modified or rewritten by such court to
include as much of the duration and scope identified in this Section 6 as will
render such restrictions valid and enforceable
6.5 Executive shall immediately receive 60,000 shares of the Company's
Common Stock as consideration for the non-competition clause contained in
Section 6.1 above.
7. MISCELLANEOUS
7.1. Notices. All notices or communications hereunder shall be in writing,
addressed as follows:
To Company:
Chief Financial Officer
or Chairman of The Board
Proformix Systems, Inc.
50 Tannery Road
Branchburg, New Jersey
cc: Paul Chernis, Esq.
Silverman, Collura, Chernis
& Balzano, P.C.
381 Park Avenue South
Suite 1601
New York, New York 10016
To the Executive:
Michael Martin
65 Nicole Terrace
Bridgewater, New Jersey 08807
Any such notice or communication shall be sent certified or registered mail,
return receipt requested, addressed as above (or to such other address as such
party may designate in writing from time to time), and the actual date of
receipt, as shown by the receipt therefor, shall
11
<PAGE>
determine the time at which notice was given.
7.2. Severability. If a court of competent jurisdiction determines that any
term or provision hereof is invalid or unenforceable, (a) the remaining terms
and provisions hereof shall be unimpaired and (b) such court shall have the
authority to replace such invalid or unenforceable term or provision with a term
or provision that is valid and enforceable and that comes closest to expressing
the intention of the invalid or unenforceable term or provision.
7.3. Assignment. This Agreement shall inure to the benefit of the heirs and
representatives of the Executive and the assigns and successors of the Company,
but neither this Agreement nor any rights hereunder shall be assignable or
otherwise subject to hypothecation by the Executive.
7.4. Entire Agreement. This Agreement represents the entire agreement of
the parties and shall supersede any and all previous contracts, arrangements or
understandings between the Company and the Executive, including the Prior
Agreement. The Agreement may be amended at any time by mutual written agreement
of the parties hereto.
7.5. Withholding. The Company shall be entitled to withhold, or cause to be
withheld, from payment any amount of withholding taxes required by law with
respect to payments made to the Executive in connection with his employment
hereunder.
7.6. Governing Law. This Agreement shall be construed, interpreted, and
governed in accordance with the laws of New Jersey without reference to rules
relating to conflict of law.
12
<PAGE>
IN WITNESS WHEREOF, Proformix has caused this Agreement to be duly executed
and the Executive has hereunto set his hand, as of the day and year first above
written.
PROFORMIX SYSTEMS, INC.
By:____________________________________
Name:
Title:
_______________________________________
MICHAEL G. MARTIN
13
EXHIBIT 5.1
[LETTERHEAD OF SILVERMAN, COLLURA, CHERNIS & BALZANO, P.C.]
June 17, 1998
Proformix Systems, Inc.
50 Tannery Road
Branchburg, New Jersey 08876
Re: Registration Statement on Form S-8
Gentlemen:
We have acted as counsel to Proformix Systems, Inc. ("Company"), a
Delaware corporation, pursuant to a Registration Statement on Form S-8, as filed
with the Securities and Exchange Commission on June 17, 1998 ("Registration
Statement"), covering an aggregate of 2,264,866 shares of the Company's Common
Stock, $.0001 par value ("Common Stock") issued pursuant to certain employment
and consulting agreements.
In acting as counsel for the Company and arriving at the opinions as
expressed below, we have examined and relied upon originals or copies, certified
or otherwise identified to our satisfaction, of such records of the Company,
agreements and other instruments, certificates of officers and representatives
of the Company, certificates of public officials and other documents as we have
deemed necessary or appropriate as a basis for the opinions expressed herein.
In connection with our examination we have assumed the genuineness of all
signatures, the authenticity of all documents tendered to us as originals, the
legal capacity of natural persons and the conformity to original documents of
all documents submitted to us as certified or photostated copies.
Based on the foregoing, and subject to the qualifications and limitations
set forth herein, it is our opinion that:
1. The Company has authority to issue the Common Stock in the manner
and under the terms set forth in the Registration Statement.
2. The Common Stock has been duly authorized and when issued,
delivered and paid for by recipients in accordance with their respective terms,
will be validly issued, fully paid and non-assessable.
<PAGE>
Proformix Systems, Inc.
June 17, 1998
Page 2
We express no opinion with respect to the laws other than those of the
State of New York and Federal Laws of the United States of America, and we
assume no responsibility as to the applicability or the effect of the laws of
any other jurisdiction.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and its use as part of the Registration Statement.
We are furnishing this opinion to the Company solely for its benefit
in connection with the Registration Statement. It is not to be used, circulated,
quoted or otherwise referred to for any other purpose. Other than the Company,
no one is entitled to rely on this opinion.
Very truly yours,
SILVERMAN, COLLURA, CHERNIS
& BALZANO, P.C.
EXHIBIT 23.2
[LETTERHEAD OF ROSENBERG RICH BAKER BERMAN & COMPANY]
Independent Auditors' Consent
We hereby consent to the incorporation by reference of Form 10-KSB of our report
dated March 23, 1998 (April 15, 1998 as to Subsequent Events) relating to the
consolidated financial statements of Proformix Systems, Inc. and Subsidiaries in
this Registration Statement on Form S-8, and to the reference to our firm under
the caption "Experts".
/s/ Rosenberg Rich Baker Berman & Company
-----------------------------------------
Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
June 10, 1998
