EXHIBIT 4.1
CONSULTING AGREEMENT
AGREEMENT (the "Agreement") is made and entered into this 24th day of July,
2002, by and between Pacific Magtron International Corp., a Nevada corporation
(the "Company"), and Brien X. Xxxxx (the "Consultant").
R E C I T A L S :
WHEREAS, the Company desires to obtain Consultant's consulting services in
connection with the evaluation of the Company's business and management,
identification and assistance in evaluating future business opportunities and
acquisitions, and the other matters set forth in this Agreement; and
WHEREAS, Consultant desires to provide such services to the Company
directly for a fee that will compensate Consultant for time spent for services
rendered and costs advanced by Consultant as contemplated in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and conditions hereinafter set forth, the parties agree as follows:
1. RETENTION OF CONSULTANT. The Company hereby engages and retains
Consultant and Consultant hereby agrees to use Consultant's best efforts to
render to the Company the consulting services for a period of one hundred eighty
(180) days from the date of this Agreement or such additional periods as agreed
upon in writing by the parties.
2. CONSULTANT'S SERVICES. Consultant's services under this Agreement shall
consist of the following:
2.1 Review and analyze strategic business and financial plans relating
to the Company;
2.2 Review and analyze the Company's operations, business, financial
condition and prospects;
2.3 Review and analyze the advisability, price or structure of an
acquisition or of the disposition of any of the Company's assets; and
2.4 Participate, advise and assist in negotiations between the Company
and prospective acquisition candidates.
3. PAYMENT FOR SERVICES. The Company shall pay Consultant for the services
to be rendered hereunder by issuing Consultant two options exercisable to
purchase Common Stock (each an Option, collectively, the "Options"). The Options
shall have the following terms:
3.1 The first Option shall be exercisable to purchase one hundred
thousand (100,000) shares of the Company's Common Stock, par value $.001 per
share, at $.65 per share. The Option will expire on September 22, 2002, at 5:00
p.m. PST and shall be deemed to have a value of $1,000.
3.2 The second Option shall be exercisable to purchase one hundred
thousand (100,000) shares of the Company's Common Stock, par value $.001 per
share, at $1.00 per share. This Option shall vest and become exercisable
beginning 30 days from the date of this Agreement and shall expire on October
22, 2002 at 5:00 p.m. PST. This Option shall be deemed to have a value of
$1,000.
3.3 The Options may be exercised in whole or in part from time to time
by delivering written notice, via facsimile, with original by next day delivery,
along with full payment of the exercise price for any exercise, to the Company.
The Consultant may pay the exercise price in cash or by cashless exercise. In
the case of a cashless exercise, the Consultant will surrender the Option to be
exercised to the Company together with a notice of cashless exercise, in which
event the Company will issue to the Consultant the number of shares of Common
Stock underlying the Option to be exercised determined as follows and otherwise
in accordance with the terms of the Option to be exercised:
X = Y(A-B)/A
Where
X = the number of shares of Common Stock to be issued to the
Consultant.
Y = the number of shares of Common Stock with respect to which
the Option is being exercised.
A = the average of the closing prices of the Common Stock for the
five (5) Trading Days immediately prior to (but not
including) the date of exercise.
B = the exercise price of the Option to be exercised.
3.4 The issuance of the Options shall be deemed full and complete
consideration for the services to be rendered by Consultant under this
Agreement. The Company will reimburse Consultant for all direct expenses
incurred by Consultant in performing such services. Consultant shall obtain the
approval of the Company prior to incurring any expenses. Consultant will tender
requests for reimbursement to the Company and the Company will make the
reimbursement to Consultant within ten (10) days after its receipt of written
notification.
4. CONSULTANT'S TIME COMMITMENT. Consultant shall devote such time as
reasonably requested by the Company for consultation, advice and assistance on
matters described in this Agreement and provide the same in such form as the
Company requests. The Company agrees that Consultant shall not be prevented or
barred from rendering services similar or dissimilar in nature for and on behalf
of any person, firm or corporation other than the Company.
5. INDEPENDENT CONTRACTOR. The relationship created under this Agreement is
that of Consultant acting as an independent contractor. The parties acknowledge
and agree that Consultant shall have no authority to, and shall not, bind the
Company to any agreement or obligation with any third party. The parties also
acknowledge that Consultant is not providing legal or accounting services or
services as a broker/dealer and such services must be obtained by the Company
from other parties.
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6. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Consultant shall maintain as
secret and confidential all valuable information heretofore or hereafter
acquired, developed or used by the Company relating to its business, operations,
employees and customers that may give the Company a competitive advantage in its
industry (all such information is hereinafter referred to as "Confidential
Information"). The parties recognize that, by reason of Consultant's duties
under this Agreement, Consultant may acquire Confidential Information.
Consultant recognizes that all such Confidential Information is the property of
the Company. During the term of Consultant's engagement by the Company,
Consultant shall exercise all due and diligent precautions to protect the
integrity of any or all of the Company's documents containing Confidential
Information. In consideration of the Company entering into this Agreement,
Consultant shall not, directly or indirectly, use, publish, disseminate or
otherwise disclose any Confidential Information obtained during Consultant's
engagement by the Company without the prior written consent of the Company. The
parties agree that this Paragraph 6 shall survive the termination of this
Agreement.
7. COMMUNICATIONS WITH CONSULTANT. Consultant will not independently
conduct a due diligence review of the Company and will, to a great extent, be
relying upon information provided by the Company in rendering services under
this Agreement.
8. EXCULPATION OF LIABILITY AND INDEMNIFICATION. All decisions with respect
to consultations or services rendered by Consultant for transactions negotiated
for and presented to the Company by Consultant shall be those of the Company,
and Consultant shall have no liability with respect to such decisions. In
connection with the services Consultant renders under this Agreement, the
Company indemnifies and holds Consultant harmless against any and all losses,
claims, damages and liabilities and the expense, joint and several, to which
Consultant may become subject and will reimburse Consultant for any legal and
other expenses, including attorney's fees and disbursements incurred by
Consultant in connection with investigating, preparing or defending any actions
commenced or threatened or claim whatsoever, whether or not resulting in the
liability, insofar as such are based upon the information the Company has
supplied to Consultant under this Agreement. In connection with the services
Consultant renders under this Agreement, Consultant indemnifies and holds the
Company harmless against any and all losses, claims, damages and liabilities and
the expense, joint and several, to which Company may become subject and will
reimburse Company for any legal and other expenses, including attorney's fees
and disbursements incurred by the Company in connection with investigating,
preparing or defending any actions commenced or threatened or claim whatsoever,
whether or not resulting in the liability, insofar as such are based upon or in
connection with the services Consultant has rendered under this Agreement.
9. S-8 REGISTRATION. The Company will prepare an S-8 Registration covering
the shares of Common Stock issuable upon exercise of the Options and will use
its best efforts to file the Registration Statement within thirty (30) days of
the execution of this Agreement and to keep the Registration Statement effective
for the shorter of (i) the term of the Options, (ii) Consultant has sold all of
the shares issuable under the Options, or (iii) all of the shares issued under
the Options are eligible for sale under Rule 144.
10. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
contained herein. There are no representations or warranties other than as shall
be set forth in this Agreement.
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11. WAIVER. No waiver or modification of this Agreement shall be valid
unless in writing and signed by the parties to this Agreement.
12. NOTICES. All notices, consents, requests, demands and offers required
or permitted to be given under this Agreement will be in writing and will be
considered properly given or made when personally delivered to the party
entitled thereto, or when mailed by certified United States mail, postage
prepaid, return receipt requested, addressed to the addresses appearing in this
Agreement. A party may change his address by giving notice to the other party to
this Agreement.
13. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, but all of which, taken
together, shall constitute one agreement. It shall not be required that any
single counterpart hereof be signed by the parties, so long as each party signs
any counterpart of this Agreement.
14. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
15. ATTORNEYS' FEES. In case of any action or proceeding to compel
compliance with, or for a breach of, any of the terms and conditions of this
Agreement, the prevailing party shall be entitled to recover from the losing
party all costs of such action or proceeding, including, but not limited to,
reasonable attorneys' fees.
IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
effective as of the day and year first above written.
PACIFIC MAGTRON INTERNATIONAL CORP.,
a Nevada corporation
By /s/ Xxxxxxxx X. Xx
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Its Chairman and Chief Executive Officer
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Address: 0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
/s/ Xxxxx X. Xxxxx
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Brien X. Xxxxx
Address: 000 Xxx Xxxxx Xxx
X. Xxxxxxx, XX, 00000
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