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EXHIBIT 10.2
Exhibit 10. Consulting Agreement between the Company and Richard E. Stahl.
CONSULTING AGREEMENT
CONSULTING AGREEMENT, dated this 6th day of September, 1996, by and
among DMI, Inc., a Colorado corporation (the "Company"), with a principal place
of business at 2501 West Fifth Street, Santa Ana, California, and Mr. Richard E.
Stahl with a principal address of lOB Inwood Road, Port Washington, New York,
hereinafter referred to as the ("Consultant").
WITNESSETH;
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WHEREAS, the Consultant is in the business of providing management and financial
consulting services to public companies;
WHEREAS, the Company desires to engage the services of Consultant to provide
management and financial consulting services to the Company, and the Consultant
is willing to provide such services, on the terms and conditions stated herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this agreement, the parties hereto agree as follows:
I. Consulting Services
A. Upon the terms and subject to the conditions contained in this Agreement, the
Company hereby agrees to engage the Consultant, and the Consultant hereby agrees
to perform financial management and consulting services in order to assist the
Company in meeting its short term and long-term financial and strategic goals.
B. The Consultant and the Company shall agree on the scope and extent of the
services to be performed by the Consultant. The Consultant shall perform such
services subject to Federal and state securities laws and regulations, and
applicable rules, regulations and policies of the National Association of
Securities Dealers, Inc. (the"NASD"), and the Securities and Exchange Commission
(the "Commission").
C. Without limiting the generality of the foregoing, the Consultant's services
shall include the following:
1. attending meetings of the Company's Board of Directors of committees thereof,
when requested by the Company;
2. at the request of the Company, reviewing, analyzing and reporting on proposed
business opportunities, and attending meetings regarding the same;
3. consulting with the Company concerning on-going strategic corporate planning
and long-term investment policies; and
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4. Consulting with the Company and advising and assisting the Company in
identifying, studying and evaluating merger, acquisition, joint venture,
strategic alliance, recapitalization and restructuring proposals.
D. The Consultant agrees that, during the term of this Agreement, the Consultant
shall devote sufficient time and effort on behalf of the Company as shall be
necessary to effect the intents and purposes of this Agreement. The Consultant
will, at all times, faithfully and to the best of the Consultant's experience
and abilities, perform all duties that may be required of the Consultant
pursuant to the terms of this Agreement. The Company expressly acknowledges and
agrees that the Consultant's efforts shall be on a "best-efforts" basis and the
Consultant has not, cannot, and does not, guarantee that the Consultant's
efforts will have any impact on the Company's business or that any subsequent
financial improvement will result from his efforts.
E.. The Consultant agrees that the Consultant is not the agent of the Company
and has no power or authority to bind the Company to any agreement, transaction,
or other commitment, and the Consultant shall not represent or warrant to the
contrary to any third party. The Company has the sole right, in the exercise of
its business judgment and discretion, to approve or disapprove of any agreement,
transaction or commitment introduced by the Consultant.
F. The Consultant shall not issue any press releases or other public statements
regarding the Company without the Company's prior written approval.
II. Term. The Agreement shall be for a term of two (2) years from the date
hereof, unless earlier terminated. The Company may terminate this agreement, at
any time, upon 20 days' prior written notice to the Consultant.
III. Compensation. As full compensation for its services, the Company shall
cause to be issued to the Consultant as promptly as practicable after the
execution of this Agreement, 1,300,000 shares of its common stock (the
"Shares").
The Company agrees, at its sole cost and expense, to prepare and file a
registration statement on Form S-8, or on such other form as may be appropriate
therefore (the 'Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), registering the Shares with the Commission. The
Company shall use its best efforts to maintain the effectiveness of the
Registration Statement for up to nine (9) months thereafter, pursuant to which,
any of the Shares are being offered, and from time to time will amend or
supplement such Registration Statement and the prospectus contained therein as
and to the extent necessary to comply with the Securities Act and any state
securities statute or regulation.
IV. Expenses. Unless otherwise approved in writing by the Company, the
Consultant shall bear all expenses incurred in connection with the services to
be rendered to the Company.
V. Representations and Warranties of the Consultant. Mr. Stahl represents and
warrants, to the Company, as follows:
A. There is not litigation, action, claim or proceeding pending, or to
the knowledge of the Consultant threatened, which arises out of, or is based
upon, any alleged violation or breach of Federal or state securities laws or
regulations or the regulations or policies of the NASD or any stock exchange.
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B. The Consultant has received and reviewed copies of the Company's
most recent reports under the Securities Exchange of 1934, as amended. The
Consultant acknowledges and agrees that the receipt of capital stock of the
Company as compensation under this Agreement involves a high degree of risk,
including the risk that the shares may substantially decrease in value. The
Consultant expressly acknowledges and accepts this risk, and is cognizant of the
financial condition and operations of the Company. The Consultant has had the
opportunity to discuss with the management of the Company the financial
condition and operations of the Company and has had the opportunity to receive
all information which it has deemed necessary in entering into this Agreement.
Accordingly, the Consultant has been able to evaluate the merits and risks of
the Consultant's investment in the Shares. In entering into this agreement, the
Consultant has not in any manner directly or indirectly relied on any warranty
or representation by the company, its officers, directors, agents, legal counsel
or accountants concerning the Company and/or its securities as to matters past,
present or future.
VI. Representations and Warranties of the Company. The Company represents and
warrants to the Consultant that:
A. The Company is duly organized, validly existing and in good standing under
the laws of the State of Colorado. The Company has the corporate power and
authority to enter into this Agreement.
B. This Agreement has been duly authorized by all necessary corporate action of
the Company. This Agreement constitutes the legal, valid and binding obligation
of the Company, subject to applicable bankruptcy, insolvency, moratorium and
other laws affecting creditors' rights generally and to general principles of
equity. The execution, delivery and performance of this Agreement does not and
will not conflict with the Certificate of Incorporation or by-laws of the
Company, or any agreement, law, order or regulation to which the Company is
subject.
C. The Company is current in its reporting obligations under the Securities
Exchange Act of 1934, as amended.
VII. Non-Exclusive Services; Non-Competition
A. The Company understands that the Consultant is currently providing certain
advisory and financial consulting services to other individuals and companies
and agrees that the Consultant is not prevented or barred from rendering such
services to such other entities, subject to paragraph (b) hereof. In addition,
the Consultant understands and agrees that the Company shall not be prevented or
barred from retaining other persons or entities to provide services of the same
or similar nature as those provided by the Consultant.
B. The Consultant shall not, during the term of this agreement, directly or
indirectly, engage or consult with any business substantially similar to the
business of the Company The term "engage" shall include, but shall not be
limited to activities as proprietor, partner, principal shareholder, principal
agent, employee or consultant. The Consultant acknowledges that during the term
of this Agreement, the Consultant shall have access to information, materials,
and/or processes confidential and proprietary to the Company and the Consultant
and its employees, agents, attorneys and accountants shall at all times during
the term of this agreement and thereafter, maintain the secrecy and
confidentiality of all such information, materials and/or processes acquired or
revealed to them under, pursuant or in connection with this
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Agreement, except as to such information which enters the public domain other
than through the actions or omissions of the Consultant, pursuant to requests
from governmental authorities with applicable jurisdiction, or pursuant to
judicial subpoena. Upon termination of this agreement, the Consultant will
promptly return to the Company all non-public, proprietary information of the
Company, and all copies thereof.
VIII. Indemnification.
A. The Company agrees to indemnify and hold harmless the Consultant from and
against any and all losses, claims, damages, liabilities and expenses (including
without limitation to attorney's fees and costs incurred in the investigation,
defense, and settlement of the matter), suffered or incurred by the Consultant
which arises out of this Agreement or otherwise out of the performance by the
Consultant of its obligations hereunder, unless such losses, claims, damages,
liabilities or expenses are found by a final determination of a court of
competent jurisdiction to have arisen out of gross negligence or malfeasance of
the Consultant in performing its services hereunder. If, for any reason, the
foregoing indemnification is unavailable to the Consultant, or insufficient to
hold it harmless, then the Company shall contribute to the amount paid or
payable by the Consultant as a result of such loss, claim, damage or liability
in such proportion as is appropriate to reflect not only the relative benefits
received by the Company on the one hand and the Consultant on the other hand,
but also the relative fault of the Company and the Consultant, as well as any
other relevant equitable considerations. The reimbursement, indemnity and
contribution obligations of the Company under this section shall be in addition
to any liability which the Company may otherwise have and shall be binding and
inure to the benefit of any respective successors, assigns, heirs and personal
representatives of the Company and the Consultant.
B. The Company will, to the extent permitted by law, indemnify and hold harmless
the Consultant, its officers and directors (including any broker or dealer
through whom Shares may be sold) from and against any and all losses, claims,
damages, expenses, liabilities, joint or several, to which they or any of them
become subject under the Securities Act or any equivalent foreign act or any
rule or regulation of any securities exchange or under the Securities Act or any
equivalent foreign act or any rule or regulations of any securities exchange or
under any other statute or at common law or otherwise, and, except as
hereinafter provided, will reimburse the Consultant or other person, if any, for
any legal or other expenses reasonably incurred by it or any of them in
connection with investigating or defending any actions whether or not resulting
in any liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, in any
preliminary or amended preliminary prospectus or in the prospectus (or the
Registration Statement or prospectus as from time to time may be amended or
supplemented by the company) or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein not misleading or any
violation by the Company of any rule or make the statements therein not
misleading or any violation by the Company of any rule or regulation promulgated
under the Securities Act or any equivalent foreign act or any rule or regulation
of any securities exchange applicable to the company and relating to action or
inaction required of the Company in connection with such registration, unless
such untrue statement or omission was made in such Registration Statement,
preliminary or amended, preliminary prospectus or prospectus in reliance upon
and in conformity with information furnished in writing to the Company in
connection therewith by the Consultant, expressly for use therein. Promptly
after receipt by the Consultant (including any broker or dealer through whom
such shares may be sold) of notice of commencement of any
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action in respect of which indemnity may be sought against the Company,
Consultant will notify the company in writing of the commencement thereof and,
subject to the provisions hereinafter stated, the Company shall assume the
defense of such action (including the employment of counsel, who shall be
counsel reasonably satisfactory to the Consultant), and the payment of expenses
insofar as such action shall relate to any alleged liability in respect of which
indemnity may be sought against the Company. The Consultant shall have the right
to employ separate counsel in any such action and to participate in the defense
thereof but the fees and expenses of such counsel shall not be at the expense of
the Company unless the employment of such counsel has been specifically
authorized by the Company. The Company shall not, except with the approval of
the Consultant or any other persons indemnified under this section, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff, of a full
release to the parties being so indemnified.
C. The Consultant agrees to indemnify and hold harmless the Company (and the
Company's officers, directors and agents, and their respective heirs, successors
and assigns) from and against any and all losses, claims, damages, liabilities
and expenses (including, without limitation attorneys' fees and costs incurred
in the investigation, defense and settlement of the matter), suffered or
incurred by the Company (or such other persons) which arises out of this
Agreement or otherwise out of performance by the Consultant of its obligations
hereunder or the failure of the Consultant to perform in accordance with the
terms hereof or the breach by the Consultant of any of its representations and
warranties as of the date such representations and warranties were made. If, for
any reason, the foregoing indemnification is unavailable to the Company (or such
other persons), or insufficient to hold it harmless, then the Consultant shall
contribute to the amount paid or payable by the Company (or such other persons)
as a result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the Consultant
on the one hand and the Company (and such other person) on the other hand, but
also the relative fault of the Consultant and the Company, as well as any other
relevant equitable considerations. The reimbursement, indemnity and contribution
obligations of the Consultant under this section shall be in addition to any
liability which the Consultant may otherwise have and shall be binding and inure
to the benefit of any respective successors, assigns, heirs and personal
representatives of the Consultant and the Company.
D. The Consultant will, to the extent permitted by law, indemnify and hold
harmless the Company (including any broker or dealer through whom the Shares may
be sold and officers, directors and agents of the Company), from and against any
and all losses, claims, damages, expenses, liabilities, joint or several, to
which they or any of them become subject under the Securities Act or any
equivalent foreign act or any rule or regulation of any securities exchange or
under any statute or at common law or otherwise, and, except as hereinafter
provided, will reimburse the Company or other person, if any, for any legal or
other expenses reasonably incurred by it or any of them in connection with
investigating or defending any actions whether or not resulting in any
liability, insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, in any
preliminary or amended preliminary prospectus or in the prospectus (or the
Registration Statement or prospectus as from time to time may be amended or
supplemented by the company) or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein not misleading but only
insofar as such statement or omission was made in reliance upon and in
conformity with information furnished in writing to the company in connection
therewith by the Consultant expressly for the use therein. The obligations of
the Consultant to indemnify the Company shall
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be limited to the obligations set forth in the immediately preceding sentence.
Promptly after receipt by the Company (including any broker or dealer through
whom such shares may be sold) of notice of the commencement of any such action
in respect of which indemnity may be sought against the Consultant, the Company
will notify the Consultant in writing of the commencement thereof, and, subject
to the provisions hereinafter stated, the Consultant shall assume the defense of
such action (including the employment of counsel, who shall be counsel
reasonably satisfactory to the Company) and the payment of expenses insofar as
such action shall relate to any alleged liability in respect of which indemnity
may be sought against the Consultant. The Company shall have the right to employ
separate counsel in any such action and to participate in the defense thereof
but the fees and expenses of such counsel shall not be at the expense of the
Consultant unless the employment of such counsel has been specifically
authorized by the Consultant. The Consultant shall not be liable to indemnify
any person for any settlement of any such action effected without Consultant's
consent.
E. The obligations of the Consultant pursuant to this Section VIII shall
constitute the obligations of Mr. Stahl.
F. The provisions of this Section VIII shall survive the termination and
expiration of this Agreement.
IX. Entire Agreement. This Agreement contains the entire agreement among the
parties with respect to the subject matter hereof and supersedes all prior
agreements, written or oral, with respect thereto.
X. Waivers and Amendments. This Agreement may be amended, modified, superseded,
canceled, renewed or extended, and the terms and conditions hereof may be
waived, only by a written instrument signed by the parties or, in the case of a
waiver, by the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right, power or
privilege hereunder, nor any single or partial exercise of any right, power or
privilege hereunder, preclude any other or further exercise thereof or the
exercise of any other right, power or further exercise thereof or the exercise
of any other right, power or privilege hereunder. The rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies which
any party may otherwise have at law or in equity.
XI. Successors and Assigns: No Assignment by the Consultant. This Agreement
shall inure to the benefit of and be binding upon, the Company, its successors
and assigns. This Agreement is not assignable by the Consultant as it is
intended to secure the personal services of the Consultant.
XII. Headings. The headings in this Agreement are for reference purpose only and
shall not in any way affect the meaning or interpretation of this Agreement.
XIII. Severability of Provision. The invalidity or unenforceability of any term,
phrase, clause, paragraph, restriction, covenant, agreement or other provision
of this Agreement shall in no way affect the validity or enforcement of any
other provision or any part thereof.
XIV. Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed, shall constitute an original copy hereof, but
all of which together shall consider but one and the same document.
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XV. Notices. All notices to be given hereunder shall be in writing, with fax
notices being an acceptable substitute for mail and/or and delivery to:
(i) the Company, at:
DMI, Inc.
2501 West Fifth Street,
Santa Ana, CA 92703
(ii) the Consultant, at:
Mr. Richard F. Stahl
10 B Inwood Road
Port Washington, New York 11050
XVI. Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the State of New York applicable to agreements made and to be
performed entirely within such state.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
DMI, Inc.
By /s/ Elvin Rose
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Elvin Rose
Chairman, CEO
By /s/ Duncan MacDonald
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Duncan MacDonald
President, Secretary
By /s/ Richard E. Stahl
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Richard E. Stahl