As filed with the Securities and Exchange Commission on February 9, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
Under the Securities Act of 1933
MAGNITUDE INFORMATION SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2228828
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Identification No.)
Code Number)
50 Tannery Road
Branchburg, New Jersey 08876
(908) 534-6400
(Address and Telephone Number of
Registrant's Principal Executive Office)(Zip Code)
Agreement with Isidor D. Friedenberg dated February 4, 1999
(100,000 shares of common stock)
Amendment to Employment Agreement
with Michael G. Martin dated February 4, 1999
(685,000 shares of common stock)
Agreement with Jerry Swon dated December 1, 1998
(150,000 shares of common stock)
Agreement with Bruce Deichl dated January 15, 1998
(100,000 shares of common stock)
Agreement with B. Michael Pisani dated February 4, 1999
(125,000 shares of common stock)
Agreement with Paul Chernis dated February 4, 1999
(40,000 shares of common stock)
Consulting Agreement with Rolf J. Haefeli dated February 5, 1999
(48,000 shares of common stock)
<PAGE>
Consulting Agreement with Michael Zanoni dated November 30, 1998
(41,000 shares of common stock)
Consulting Agreement with Gregory Palmacci dated February 4, 1999
(15,000 shares of common stock)
(full title of the plans)
Steven Rudnik, President
50 Tannery Road
Branchburg, New Jersey 08876
(908) 534-6400
(Name, Address and 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
2
<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) 1,304,000 $.968 $1,262,272 $382.51
- --------------------------------------------------------------------------------
(1) Calculated in accordance with 457(c) using the closing price for the common
stock on February 4, 1999.
3
<PAGE>
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 II of this form taken together constitute a
prospectus that meets the requirements of Section 10(a) of the Securities Act of
1933.
4
<PAGE>
MAGNITUDE INFORMATION SYSTEMS, INC.
1,304,000 shares of common stock
------------------------
Certain officers, directors, employees and consultants of Magnitude
Information Systems may sell up to 1,304,000 shares of common stock.
Magnitude Systems will not receive any proceeds from this offering.
------------------------
Please see the risk factors beginning on page 7 to read about certain
factors you should consider before buying shares of common stock.
------------------------
Magnitude Information Systems's common stock is quoted on the OTC
Bulletin Board under the symbol PRFX. On February 4, 1999 the last sale price of
the common stock as reported on the Bulletin Board was $.968.
The mailing address of our principal executive offices is 50 Tannery
Road, Branchburg, New Jersey 08876.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is February 9, 1999.
5
<PAGE>
TABLE OF CONTENTS
Page
The Company....................................................................6
Risk Factors...................................................................7
Available Information.........................................................10
Incorporation of Certain Documents by Reference...............................10
Selling Securityholders.......................................................12
Plan of Distribution..........................................................13
Description of Securities.....................................................14
Transfer Agent and Registrar..................................................14
Legal Matters.................................................................15
Experts.......................................................................15
Indemnification of Directors and Officers.....................................15
6
<PAGE>
The Company
Magnitude Information Systems, Inc., f/k/a Proformix Systems, Inc., was
incorporated as a Delaware corporation on April 19, 1988 under the name
Fortunistics Inc. In 1993, we changed our name to Whitestone Industries, Inc. In
June 1997, we acquired approximately 90% of Proformix, Inc., a private Delaware
company, and changed our name to Proformix Systsems, Inc. In December 1998,
after the sale of certain of our assets and a reorganization of our product
lines, we changed our name to Magnitude Information Systems, Inc.
We are a research based software company, delivering the science of
ergonomics to the computerized workplace. Computer ergonomics focuses on
optimizing the design of technology that allows people to successfully interact
with computers. A successful technology delivery system improves the comfort,
productivity, job satisfaction and safety of the computer user, while reducing
the costs of absenteeism and work related disability. Through scientifically
testing, evaluating and verifying new design concepts and systems, we marry
human biology and computer technology to provide both financial and workplace
health benefits to our clients.
We have researched, developed, patented and marketed a variety of
ergonomic hardware products including keyboard tray systems. Starting in
February 1998, we acquired two ergonomic software companies, including Rolina
Corporation (formerly Magnitude LLC) and Vanity Software. Later in November
1998, we entered into a strategic alliance with Office Specialty, a Canadian
corporation, whereby Office Specialty acquired all of our hardware product
rights and related assets. The initial payment plus ongoing participation may
amount to approximately $6.25 million in income for us over the first four years
of the strategic alliance provided certain benchmarks are met.
The Company markets a unique, proprietary, windows-compatible software
suite under the name EMS(TM). EMS is composed of several software products which
provide a system for evaluation and management of ergonomic risk factors in the
workplace. The software assists in training people working on computers,
monitors computer-use related activities and evaluates a user's risk exposure
and propensity towards injury or loss of effectiveness in connection with
his/her day-to-day work.
In late 1998, Magnitude Information Systems and Aon Ergonomic Resources, a
division of Aon Worldwide Resources, entered into a joint venture agreement to
market and sell our EMS software product. Aon Worldwide Resources is a division
of Aon Group, the worldwide insurance brokerage and consulting arm of Aon
Corporation.
Currently, approximately 100 prospective corporate, government,
educational and military organizations are evaluating EMS for organization-wide
use.
7
<PAGE>
Risk Factors
Substantial Competition.
The computer software industry and products developed for the computer
workplace face intense competition. We 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 us. There can be no assurance that we will be able to meet the
competition and operate profitably.
Possible Loss of Entire Investment.
The commons stock offered hereby is highly speculative, involves 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 our common stock in this offering
would be unsuitable for a person who cannot afford to sustain such a loss.
Dependence Upon Key Personnel.
We are substantially dependent upon the continued services of Steven
Rudnik, our President and Chief Executive Officer. The loss of the services of
Mr. Rudnik through incapacity or otherwise would have a material adverse effect
upon our business and prospects. To the extent that his services become
unavailable, we will be required to retain other qualified personnel, and there
can be no assurance that we will be able to recruit and hire qualified persons
upon acceptable terms. We do not maintain key person life and disability
insurance on the life of Mr. Rudnik.
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 us or our competitors, as well as
variations in our results of operations and market conditions in general. The
market price may also be affected by movements in prices of stocks in general.
The relatively limited amount of publicly trading shares (float) renders our
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 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
8
<PAGE>
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 our securities to sell their securities
in the secondary marketplace. Our common stock is currently considered a penny
stock.
The Year 2000.
State of Readiness
We are dependent upon computers to operate our business and therefore are
exposed to Year 2000 ("Y2K") problems. In the fall of 1998, we initiated a Y2K
compliance program with the following objectives: (i) updating and/or replacing
aging hardware; and (iii) assuring company-wide Y2K compliance.
With the assistance of outside consultants, we have identified that the
computer systems used for accounting purposes are not Y2K compliant. In order to
make these systems compliant, we elected to replace the software utilized. The
new software will be installed during the second quarter of 1999.
Cost
The total costs for achieving Y2K compliance are estimated to be between
$10,000 and $15,000. Most of the cost is due to the acquisition of Y2K compliant
software and replacement of certain computer hardware.
Risks
The failure to correct a material Y2K problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could affect our operations, however, management
believes that any such interruptions would not have a material impact on our
liquidity or financial condition.
Risks Associated with Forward Looking Statements.
This prospectus contains "forward-looking statements" which can be
identified by the use of words such as "intend," "anticipate," "believe,"
"estimate," "project," or "expect" or similar statements. The statements in
"Risk Factors" are cautionary statements. They identify important factors, with
respect to forward-looking statements, that could cause actual results to differ
9
<PAGE>
materially from those forecasted in such statements. All forward-looking
statements in this prospectus are expressly qualified in their entirety by the
cautionary statements in this paragraph.
10
<PAGE>
Available Information
We are subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith, files reports, proxy
statements and other information with the Securities and Exchange 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. Information on the operation of the Public Reference
Room can be obtained by calling the Commission at 1-800-SEC-0330. Such reports
and other information may also be inspected without charge at a website
maintained by the Commission. The address of the website is http://www.sec.gov.
This prospectus does not contain all of the information set forth in the
registration statement of which this prospectus is a part and which we have
filed with the Commission. For further information with respect to us 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 us may be provided in the future by means of appendices or
supplements to the prospectus.
We hereby undertake 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 Magnitude Information Systems, Inc., 50 Tannery
Road, Branchburg, New Jersey 08876 (908) 534-6400.
Incorporation of Certain Documents by Reference
We hereby refer to the following documents previously filed by Magnitude
Information Systems with the Securities and Exchange Commission, and incorporate
these documents in this prospectus:
(a) Annual Report on Form 10-KSB for its fiscal year ended December 31,
1997;
(b) Quarterly Report on Form 10-QSB for the periods ended March 31,
1998, June 30, 1998 and September 30, 1998;
(c) All other reports filed pursuant to Section 13(a) and 15(d) of the
Exchange Act since our fiscal year ended December 31, 1997.
11
<PAGE>
All documents filed by us 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.
12
<PAGE>
Selling Securityholders
This prospectus covers common stock that has been issued to the selling
securityholders, or may be acquired upon exercise of stock options held by the
selling securityholders, named herein or to be supplementally named, as of
February 5, 1999.
The following table sets forth as of February 5, 1999 certain information
with respect to Michael G. Martin. Michael G. Martin has been our chairman of
the board of directors since July 2, 1997. Magnitude Information Systems will
not receive any of the proceeds from the sale of the common stock.
Securities Securities
Owned Prior Securities Owned
to Offering(1) Offered Herein After Offering(2)
-------------- -------------- -----------------
Name of Selling
Securityholder Common Stock Common Stock Amount %
- -------------- ------------ ------------ ------ -----
Michael G. Martin, 2,095,153(3) 685,000(4) 1,410,153 19.6%
Chairman
Isidor D. Friedenberg 105,500 100,000 5,500 **
Jerry Swon, 1,608,601(5) 150,000 1,458,601 18.6%
former president
Bruce Deichl, 100,000 100,000 0 0
former director of
Strategic Business
Development
B. Michael Pisani, 502,567 125,000 377,567 5.9%
Consultant
Paul Chernis 50,000 40,000 10,000 **
Rolf J. Haefeli, 48,000 48,000 0 0
Consultant
Michael Zanoni, 41,000 41,000 0 0
Consultant
Gregory Palmacci, 15,000 15,000 0 0
Consultant
- --------------------
** less than 1%
(1) For purposes of this table, each person listed above is deemed to own
shares of common stock if he has the right to acquire the common stock
within 60 days of February 5, 1999. For purposes of computing the
percentage of outstanding shares of common stock held by
13
<PAGE>
each selling securityholder, any security which they have the right to
acquire within such date is deemed to be outstanding. Except as indicated
in the footnotes to this table and pursuant to applicable community
property laws, we believe, based on information supplied by selling
securityholder, that they have sole voting and investment power with
respect to all the shares of common stock which they own.
(2) For purposes of this table, the number and percentage of common stock
owned after the offering presumes the sale of all the common stock offered
herein.
(3) Includes stock options to purchase to purchase 750,000 shares of common
stock.
(4) Includes 535,000 stock options exercisable during the seven year period
commencing February 5, 1999 exercisable at $.50 per share.
(5) Includes 58,757 shares of common stock and stock options to purchase
1,399,866 shares of common stock owned by Jane Swon, Mr. Swon's wife.
(6) Includes stock options to purchase 10,000 shares of common stock.
Plan of Distribution
Each selling securityholder may offer and sell the shares of common stock
from time to time at their discretion on the OTC Bulletin Board, or otherwise,
at prices and at terms then prevailing or at prices related to the then current
market price, or at negotiated prices. The distribution of the shares of common
stock may be effected from time to time in one or more transactions including,
without limitation: (a) a block trade in which the broker-dealer so engaged will
attempt to sell the common stock as agent, but may position and resell a portion
of the block as principal to facilitate the transaction; (b) purchases by a
broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (d) face-to-face or
other direct transactions between the selling securityholder and purchasers
without a broker-dealer or other intermediary. In effecting sales,
broker-dealers or agents engaged by a selling securityholder may arrange for
other broker-dealers or agents to participate. From time to time, the selling
securityholder may pledge, hypothecate or grant a security interest in some or
all of the common stock owned by him, and the pledgees, secured parties or
persons to whom such securities have been hypothecated shall, upon foreclosure
in the event of default, be deemed to be selling securityholders hereunder. In
addition, the selling securityholder may from time to time sell short the common
stock, and in such instances, this prospectus may be delivered in connection
with such short sale and the common stock offered hereby may be used to cover
such short sale.
Sales of the common stock may also be made pursuant to Rule 144 under the
Securities Act of 1933, as amended, where applicable. The selling
securityholders' shares may also be offered in one or more underwritten
offerings, on a firm commitment or best efforts basis. Magnitude Information
Systems will not receive proceeds from the sale of the selling securityholders'
common stock.
14
<PAGE>
From time to time, the selling securityholder may transfer, pledge, donate
or assign its common stock to lenders, family members and others and each of
such persons will be deemed to be a selling securityholder for purposes of this
prospectus. The plan of distribution for the selling securityholders' shares of
common stock sold hereunder will otherwise remain unchanged, except that the
transferees, pledgees, donees or other successors will be selling
securityholders hereunder.
Including, and without limiting the foregoing, in connection with
distributions of the common stock, selling securityholders may enter into
hedging transactions with broker-dealers and the broker-dealers may engage in
short sales of the common stock in the course of hedging the positions he
assumes. They may also enter into option or other transactions with
broker-dealers that involve the delivery of the common stock to the
broker-dealers, who may then resell or otherwise transfer such common stock. The
selling securityholder may also loan or pledge the common stock to a
broker-dealer and the broker-dealer may sell the common stock so loaned or upon
default may sell or otherwise transfer the pledged common stock.
Under applicable rule and regulations under the Exchange Act, any person
engaged in the distribution of the common stock may not bid for or purchase
shares of common stock during a period which commences one business day (5
business days, if Magnitude Information Systems' float is less than $25 million
or its average daily trading volume is less than $100,000) prior to the selling
securityholder's participation in the distribution, subject to exceptions for
certain passive market making activities. In addition and without limiting the
foregoing, the selling securityholders will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, including, without
limitation, Regulation M which provisions may limit the timing of purchases and
sales of shares of the common stock by them.
Magnitude Information Systems is bearing all costs relating to the
registration of the shares of common stock (other than fees and expenses, if
any, of counsel or other advisors to the selling securityholders). Any
commissions, discounts or other fees payable to broker-dealers in connection
with any sale of the shares of common stock will be borne by them.
Description of Securities
Our authorized capital stock consists of (i) 30,000,000 shares of common
stock, $.001 par value per share; (ii) 3,000,000 shares of preferred stock, of
which 2,500 shares have been designated as cumulative preferred stock, $.01 par
value.
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
15
<PAGE>
to elect our entire board of directors. Our board of directors have authority,
without action by our shareholders, to issue all or any portion of the
authorized but unissued shares of common stock, which would have the effect of
reducing our shareholders percentage of ownership and diluting the book value of
the common stock.
Shareholders 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 our liquidation, the holders
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 our board of
directors may from time to time declare out of funds legally available for such
payment and after the cumulative dividend rights of the cumulative preferred
stock have been satisfied. We have never paid cash dividends on our common stock
and do not anticipate that we will pay dividends in the future.
Preferred Stock
We have authorized 2,500 shares of cumulative preferred stock, of which 10
shares are outstanding. The cumulative preferred stock does not have voting
rights. The cumulative preferred stock ranks above the common stock with respect
to dividend rights, liquidation, dissolution and redemption.
Our shareholders 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 our liquidation, 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
our board of directors may from time to time declare out of funds legally
available for the payment thereof. We have never paid cash dividends on our
common stock and do not anticipate that we will pay such dividends in the
future.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock Securities Transfer
Corp., 16910 Dallas Parkway, Suite 100, Dallas, Texas 75248.
Legal Matters
The legality of the shares offered hereby has been passed upon by
Silverman, Collura, Chernis & Balzano, P.C. ("SCCB"), 381 Park Avenue South,
Suite 1601, New York, New York 10016. Paul Chernis, a partner in SCCB, is a one
of our directors and owns 10,000 stock options to acquire common stock.
16
<PAGE>
Experts
Our consolidated financial statements incorporated in this registration
statement by reference to our 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 our Certificate of Incorporation contain provisions for
indemnification of our officers, directors, employees and agents. The
Certificate of Incorporation requires us to indemnify such persons to the
fullest 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, our best interests. 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 our directors, officers, and controlling persons, we
have 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 us of expense incurred or paid by one of
our directors, officers, or controlling persons 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, we 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.
17
<PAGE>
PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
The documents listed below have been filed by us with the Commission and
are incorporated herein by reference:
(a) Annual Report on Form 10-KSB for its fiscal year ended December 31,
1997;
(b) Quarterly Report on Form 10-QSB for the periods ended March 31,
1998, June 30, 1998 and September 30, 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 us 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
Our authorized capital stock consists of (i) 30,000,000 shares of common
stock, $.001 par value per share; and (ii) 3,000,000 shares of preferred stock,
of which 2,500 shares have been designated as cumulative preferred stock, $.01
par value.
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 our entire board of
directors. Our board of directors have authority, without action by our
shareholders, to issue all or any portion of the authorized but unissued shares
of common stock, which would have the effect of reducing our shareholders
percentage of ownership and diluting the book value of the common stock.
18
<PAGE>
Shareholders 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 our liquidation, the holders
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 our board of
directors may from time to time declare out of funds legally available for such
payment and after the cumulative dividend rights of the cumulative preferred
stock have been satisfied. We have never paid cash dividends on our common stock
and do not anticipate that we will pay dividends in the future.
Preferred Stock
We have authorized 2,500 shares of cumulative preferred stock, of which 10
shares are outstanding. The cumulative preferred stock does not have voting
rights. The cumulative preferred stock ranks above the common stock with respect
to dividend rights, liquidation, dissolution and redemption.
Our shareholders 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 our liquidation, 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
our board of directors may from time to time declare out of funds legally
available for the payment thereof. We have never paid cash dividends on our
common stock and do not anticipate that we will pay such dividends in the
future.
Item 5. Interests of Named Experts and Counsel
The legality of the shares offered hereby has been passed upon by
Silverman, Collura, Chernis & Balzano, P.C. ("SCCB"), 381 Park Avenue South,
Suite 1601, New York, New York 10016. Paul Chernis, a partner in SCCB, is a
director of the Company.
Item 6. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of Delaware and
Article 7 of our Certificate of Incorporation contain provisions for
indemnification of our officers, directors, employees and agents. The
Certificate of Incorporation requires us to indemnify such persons to the
fullest 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, our best interests. 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 our directors, officers, and controlling persons, we
have been advised that in the opinion of the
19
<PAGE>
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 us of
expense incurred or paid by one of our directors, officers, or controlling
persons 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, we 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
5.1 Opinion of Silverman, Collura, Chernis & Balzano, P.C.
10.1 Agreement with Isidor D. Friedenberg dated February 4, 1999
10.2 Amendment to Employment Agreement with Michael G. Martin dated
February 4, 1999
10.3 Agreement with Jerry Swon dated December 1, 1998
10.4 Agreement with Bruce Deichl dated January 15, 1998
10.5 Agreement with B. Michael Pisani dated February 4, 1998
10.6 Agreement with Paul Chernis dated February 4, 1999
10.7 Consulting Agreement with Rolf J. Haefeli dated February 5, 1999
10.8 Consulting Agreement with Michael Zanoni dated November 30, 1998
10.9 Consulting Agreement with Gregory Palmacci dated February 4, 1999
23.1 Consent of Silverman, Collura, Chernis & Balzano, P.C. (included in
Exhibit 5.1)
23.2 Consent of Rosenberg, Rich, Baker, Berman & Company
20
<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;
(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 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
21
<PAGE>
is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
22
<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 February 9, 1999.
MAGNITUDE INFORMATION SYSTEMS, INC.
By: /s/ Steven D. Rudnik
--------------------------------
Steven D. Rudnik, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below, hereby constitutes and appoints Steven D. Rudnik, 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 Magnitude Information Systems, Inc. and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Steven D. Rudnik President, CEO February 9, 1999
- ---------------------- (Principal Executive Officer)
Steven D. Rudnik
/s/ Joerg H. Klaube Chief Financial Officer February 9, 1999
- ---------------------- (Principal Financial Officer)
Joerg H. Klaube
/s/ Michael G. Martin Chairman of the Board February 9, 1999
- ----------------------
Michael G. Martin
/s/ Jerry Swon Director February 9, 1999
- ----------------------
Jerry Swon
Director February ____, 1999
- ----------------------
Paul Chernis
/s/ Bruce L. Deichl Director February 9, 1999
- ----------------------
Bruce L. Deichl
Director February ____, 1999
- ----------------------
Peter J. Buscetto
23
[LETTERHEAD OF SILVERMAN, COLLURA, CHERNIS & BALZANO, P.C.]
February 9, 1999
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 February 9, 1999 ("Registration
Statement"), covering 1,304,000 shares of the Company's Common Stock, $.0001 par
value ("Common Stock") issued pursuant to certain 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.
<PAGE>
Proformix Systems, Inc.
February 9, 1999
Page 2
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.
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.
February 4, 1999
Mr. Steve Rudnik, CEO
MAGNITUDE INFORMATION SYSTEMS, INC.
50 Tannery Road
Branchburg, New Jersey 08876
Re: Legal Services Agreement
Dear Mr. Rudnik:
This letter will memorialize our agreement regarding the payment of
heretofore outstanding balances due the undersigned for legal services provided
during calendar year 1998 by the undersigned to Magnitude Information Systems,
Inc., previously known as Proformix Systems, Inc. (the "Company").
In consideration of the aforesaid services heretofore provided during
calendar year 1998 and in lieu of payment in cash for such services rendered
during 1998, the undersigned shall receive from the Company, immediately upon
the execution of this Agreement, 100,000 shares of the Company's shares of
common stock to be registered by the Company immediately pursuant to Form S-8
Registration Statement in satisfaction of all financial obligations owed by the
Company to the undersigned arising from any heretofore outstanding invoices for
legal services rendered during 1998.
If the forgoing properly reflects our understanding, please so indicate
and date this agreement in the space provided below and return one fully execute
copy for our files. After the counter-execution of this Agreement, kindly issue
and forward the necessary Company stock certificates as recited above.
An additional copy of this agreement is enclosed for your convenience.
Very truly yours,
BY: /s/ Isidor D. Friedenberg
--------------------------
Isidor D. Friedenberg
AGREED AND ACCEPTED BY:
MAGNITUDE INFORMATION SYSTEMS, INC.
BY: /s/ Steve Rudnik, CEO
-------------------------------
Steve Rudnik, CEO
Dated: 2/5/99
February 4, 1999
Mr. Steve Rudnik, CEO
MAGNITUDE INFORMATION SYSTEMS, INC.
50 Tannery Road
Branchburg, New Jersey 08876
Re: Additional Compensation Agreement Modification
Dear Mr. Rudnik:
This letter will set forth our agreement regarding the modification of my
existing employment agreement with Magnitude Information Systems, Inc. formerly
known as Proformix Systems, Inc. (the "Company") for service rendered during
1998 and the provision for additional compensation to be paid to the undersigned
arising thereunder.
In consideration of the services heretofore rendered by the undersigned to
the Company during 1998, the undersigned shall receive 150,000 shares of the
Company's common shares of stock and shall additionally receive vested options
to purchase from the Company 535,000 shares of the Company's common shares of
stock at purchase price of $.50 per share payable in cash or in kind upon option
exercise. The foregoing options shall be exercisable for a period of five (5)
years from the date hereof. Except for the foregoing, the existing employment
agreement shall remain unchanged.
If the forgoing properly reflects our understanding, please so indicate
and date this agreement in the space provided below and return one fully execute
copy for my files. After the counter-execution of this Agreement, kindly issue
and forward the necessary Company stock certificates and options as recited
above.
An additional copy of this agreement is enclosed for your convenience.
Very truly yours,
BY: /s/ Michael G. Martin
-----------------------------
Michael G. Martin
AGREED AND ACCEPTED BY:
MAGNITUDE INFORMATION SYSTEMS, INC.
BY: /s/ Steve Rudnik, CEO
-------------------------------
Steve Rudnik, CEO
Dated: 2/5/99
December 1, 1998
Mr. Michael G. Martin, Chairman
MAGNITUDE INFORMATION SYSTEMS, NC.
50 Tannery Road
Branchburg, New Jersey 08876
Re: Additional Compensation Agreement
Dear Mr. Martin:
This letter will set forth our agreement regarding the additional
compensation to be paid to the undersigned resulting from the undersigned acting
as President and Chief Executive Officer of Magnitude Information Systems, Inc.
(the "Company") during 1998.
In consideration of the services heretofore rendered and to be so rendered
as President and CEO of the Company during the balance of 1998, the undersigned
shall receive 150,000 shares of the Company's common shares of stock to be
registered by the Company as soon as may be practicable pursuant to Form S-8
Registration Statement. Except for the foregoing, the undersigned shall not
receive any additional compensation for such services.
If the forgoing properly reflects our understanding, please so indicate
and date this agreement in space provided below and return one fully execute
copy for my files. After the counter-execution of this Agreement, kindly issue
and forward the necessary Company stock certificates as recited above.
An additional copy of this agreement is enclosed for your convenience.
Very truly yours,
BY:/s/ Jerry Swon
------------------------------
Jerry Swon
AGREED AND ACCEPTED BY:
MAGNITUDE INFORMATION SYSTEMS, INC.
BY:/s/ Michael G. Martin
-------------------------------
Michael G. Martin, Chairman
Dated:
---------
January 15, 1998
Mr. Jerry Swon, President
PROFORMIX SYSTEMS, INC.
50 Tannery Road
Branchburg, New Jersey 08876
Re: Employment Agreement
Dear Mr. Swon:
This letter will set forth our agreement regarding the provision of
services by the undersigned to Proformix Systems, Inc. (the "Company") and the
payment therefore by the Company.
In consideration of the undersigned serving as the Company's Director of
Strategic Business Development for the period commencing on 1/1/98 and ending
5/31/98, the undersigned shall receive 100,000 shares of the Company's common
shares of stock to be registered by the Company as soon as may be practicable
pursuant to Form S-8 Registration Statement. Except for the foregoing, the
undersigned shall not receive any additional compensation for such services
which in all cases such services shall automatically terminate on May 31, 1998.
If the forgoing properly reflects our understanding, please so indicate
and date this agreement in the space provided below and return one fully execute
copy for my files. After the counter-execution of this Agreement, kindly issue
and forward the necessary Company stock certificates as recited above.
An additional copy of this agreement is enclosed for your convenience.
Very truly yours,
BY: /s/ Bruce Deichl
------------------------------
Bruce Deichl
AGREED AND ACCEPTED BY
PROFORMIX SYSTEMS, NC.
BY:/s/ Jerry Swon
-------------------------------
Jerry Swon, President
Dated: 1/16/98
[LETTERHEAD OF MAGNITUDE INFORMATION SYSTEMS, INC.]
February 4, 1999
B. Michael Pisani
44 Lake Road
Short Hills, NJ 07078
Re: Consulting Agreement dd. October 31, 1996
Dear Michael:
As verbally agreed, in consideration for your services under the above agreement
during 1998 and in addition to the shares awarded you pursuant to our May 15,
1998, agreement, we shall be issuing additional 125,000 shares of the Company's
common stock, to be registered by the Company as soon as practicable pursuant to
Form S-8 Registration Statement. Such shares shall constitute remuneration in
full for your services.
This action has been duly authorized by the board of directors of the Company.
Please acknowledge this arrangement 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
February 4, 1999
Mr. Steve Rudnik, CEO
MAGNITUDE INFORMATION SYSTEMS, NC.
50 Tannery Road
Branchburg, New Jersey 08876
Re: Legal Services Agreement
Dear Mr. Rudnik:
This letter will memorialize our agreement regarding the payment of
certain outstanding balances due the undersigned and/or his affiliates for legal
services heretofore provided by the undersigned or his affiliates to Magnitude
Information Systems, Inc., previously known as Proformix Systems, Inc. (the
"Company").
In consideration of such services heretofore provided and in lieu of
payment in cash for such services rendered, the undersigned shall receive from
the Company, immediately upon the execution of this Agreement, 40,000 shares of
the Company's common stock to be registered by the Company immediately pursuant
to Form S-8 Registration Statement in satisfaction of related financial
obligations owed by the Company to the undersigned and/or his affiliates arising
from any heretofore legal services rendered.
If the forgoing properly reflects our understanding, please so indicate
and date this agreement in the space provided below and return one fully
execute copy for our files. After the counter-execution of this Agreement,
kindly issue and forward the necessary Company stock certificates as recited
above.
An additional copy of this agreement is enclosed for your convenience.
Very truly yours.
BY: /s/ Paul Chernis
---------------------------
Paul Chernis
AGREED AND ACCEPTED BY:
MAGNITUDE INFORMATION SYSTEMS, INC.
BY: /s/ Steve Rudnik
-------------------------------
Steve Rudnik, CEO
Dated:
--------
[LETTERHEAD OF HAFELI ASSET MANAGEMENT]
Hirschthal, den 5. Februer 1999
Mr. Michael G. Martin, Chairman
MAGNITUDE INFORMATION SYSTEMS, INC.
50 Tannery Road
Branchburg, New Jersey 08876
Re: Consulting Agreement
Dear Mr. Martin
This letter will set forth our agreement regarding the provision of marketing,
consulting and translation services in Switzerland by me ("Haefeli") to
Magnitude Information Systems, Inc. (the "Company").
Haefeli will endeavor to acquaint himself with the business of the Company
including, but not limited to its background, management, financial history,
prospects, operational history and organization.
Based upon the foregoing, Haefeli will use its best efforts, resources and
contacts, including those of his associates, to try to help bring the Company's
concept into a reality while attempting to obtain local acceptance for the
Company's concept and products. Haefeli shall be solely responsible for the
payment of all his own expenses incurred in connection with this Agreement,
including travel, entertainment, telephone, mailings and presentations and shall
devote such time as he feels is necessary for his endeavor.
It is agreed that under no circumstances is it incumbent upon the Company to
accept any offer or proposal presented by or through Haefeli and therefore the
Company reserves the full right to refuse or accept any offer or proposal, or
part thereof or in the making of any counter-offer.
In consideration of the aforesaid services heretofore or to be provided
hereafter during the calendar year 1999 an in lieu of both a retainer and
expense reimbursement, Haefeli shall receive, immediately upon the execution of
this Agreement, $ 24,000 (U.S.) for 1999 and $24,000 (U.S.) for 1998 or, at the
Company's option, 48,000 shares of the Company stock to be registered by the
Company as soon as may be practicable pursuant to Form S-8 Registration
Statement in lieu of the foregoing $48,000.
The Company agrees to furnish to Haefeli and its representatives complete copies
of all relevant public documents, contracts and such other data, materials and
other information as Haefeli shall reasonably request in connection with its
activities as a marketing consultant hereunder. The Company recognises that
Haefeli will be using and relying on data, materials and other information
furnished to him by the Com-
1
<PAGE>
pany and the Company's accountants and Company representatives, and upon
information contained in reports and statements relating to the Company. The
Company confirms that Haefeli may rely upon such data, materials and information
without independent verification and Haefeli does not assume responsibility for
the accuracy, completeness of fairness of such information whether or not he
makes any independent verification.
The Company agrees that it shall make its principals available upon reasonable
notice for meetings, presentations and demonstrations and further agrees that
the Company's principals shall give their cooperation to Haefeli to make this
project successful. This agreement shall not be deemed to provide Haefeli with
any exclusivity or other rights unless expressly set forth herein.
If the forgoing properly reflects our understanding, please so indicate and date
this agreement in the space provided below and return one fully execute copy
for our files. Upon receipt of a fully executed copy of this agreement, Haefeli
will assign his due diligence team and one or his principals to this project.
After the counter-execution of this Agreement, kindly issue and forward the
necessary Company stock certificates as recited above.
An additional copy of this agreement is enclosed for your convenience.
Very truly yours,
BY: /s/ Rolf J. Haefeli
---------------------------
Rolf J. Haefeli
AGREED AND ACCEPTED BY:
MAGNITUDE INFORMATION SYSTEMS, INC.
BY: /s/ Michael G. Martin, Chairman
--------------------------------
Michael G. Martin, Chairman
Dated: 2/5/99
2
November 30, 1998
Mr. Jerry Swon, CEO
PROFORMIX SYSTEMS, INC.
50 Tannery Road
Branchburg, New Jersey 08876
Re: Consulting Agreement
Dear Mr. Swon:
This letter will set forth our agreement regarding the provision of
marketing, consulting and public relations services for the balance of the
entire calendar year of 1998 by me ("Consultant") to Proformix Systems, Inc.
(the "Company").
Consultant will endeavor to acquaint himself with the business of the
Company including, but not limited to its background, management, financial
history, prospects, operational history and organization.
Based upon the foregoing, Consultant will use its best efforts, resources
and contacts, including those of his associates, to try to help bring the
Company's concept into a reality while attempting to obtain local acceptance for
the Company's concept and products. Consultant shall be solely responsible for
the payment of all his own expenses incurred in connection with this Agreement,
including travel, entertainment, telephone, mailings and presentations and shall
devote such time as he feels is necessary for this endeavor.
It is agreed that under no circumstances is it incumbent upon the Company
to accept any offer or proposal presented by or through Consultant and therefore
the Company reserves the full right to refuse or accept any offer or proposal,
or part thereof or in the making of any counter-offer.
In consideration of the aforesaid services heretofore or to be provided
hereafter during calendar year 1998 by Consultant and in lieu of both a retainer
and expense reimbursement, Consultant shall receive 41,000 shares of the Company
stock to be registered by the Company as soon as may be practicable pursuant to
Form S-8 Registration Statement whereupon such Registration any and all Company
obligations to Consultant or its affiliates arising under any circumstances
shall be discharged in full.
The Company agrees to furnish to Consultant and its representatives
complete copies of all relevant public documents, contracts and such other data,
materials and other information as Consultant shall reasonably request in
connection with its activities hereunder. The Company recognizes that Consultant
will be using and relying on data, materials and other information furnished to
him by the Company and the Company's accountants and Company representatives,
and upon information contained in reports and statements relating to the
Company. The Company confirms that Consultant may rely upon such data,
materials and information without independent verification and Consultant does
not assume responsibility for the accuracy, completeness or fairness of such
information whether or not he makes any independent verification.
The Company agrees that it shall make its principals available upon
reasonable notice for meetings, presentations and demonstrations and further
agrees that the Company's principals shall give
1
<PAGE>
their cooperation to Consultant to make this project successful. This agreement
shall not be deemed to provide Consultant with any exclusivity or other rights
unless expressly set forth herein.
If the forgoing properly reflects our understanding, please so indicate
and date this agreement in the space provided below and return one fully
execute copy for our files. Upon receipt of a fully executed copy of this
agreement, Consultant will assign his due diligence team and one of his
principals to this project. After the counter-execution of this Agreement,
kindly issue and forward the necessary Company stock certificates as recited
above.
An additional copy of this agreement is enclosed for your convenience.
Very truly yours,
BY:
----------------------------
Michael Zanoni
AGREED AND ACCEPTED BY:
PROFORMIX SYSTEMS, INC.
BY:
------------------------
Jerry Swon, CEO
Dated:
-------------
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
February 8, 1999
