<PAGE> 1
As filed with the U.S. Securities and Exchange Commission on September 9, 1997
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
DMI, Inc.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in Its Charter)
Colorado 95-3500183
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
2501 W. Fifth Street, Santa Ana, California 92703
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices, including ZIP Code)
Consulting Agreements with Daniel Luciano,
Richard E. Stahl, William Hayde, and Richard O. Weed
- --------------------------------------------------------------------------------
(Full title of the plan)
Duncan MacDonald, Chief Financial Officer, 2501 W. Fifth Street,
Santa Ana, California 92703
- --------------------------------------------------------------------------------
(Name and address of agent for service)
(714) 571-1900
- --------------------------------------------------------------------------------
(Telephone number, including area code, of agent for service)
<PAGE> 2
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF SECURITIES AMOUNT OF SHARES MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED TO BE REGISTERED PRICE PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
no par value
common stock 38,000 $0.10 $3,800 $1.15
- -------------------------------------------------------------------------------------------------------------
no par value
common stock 697,508 $0.10 $69,751 $21.14
- -------------------------------------------------------------------------------------------------------------
no par value
common stock 697,508 $0.10 $69,751 $21.14
- -------------------------------------------------------------------------------------------------------------
no par value
common stock 350,000 $0.10 $35,000 $10.61
- -------------------------------------------------------------------------------------------------------------
TOTALS 1,783,016 N/A $178,302 $54.04
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Total Number of Pages: 36
Exhibit Index on Page No.: 14
(1) This calculation is made solely for the purposes of determining the
registration fee pursuant to the provisions of Rule 457(h) under the
Securities Act and is calculated on the basis of either (a) the average
of the high and low prices per share of the Common Stock as of a date
within five business days prior to the filing of this Registration
Statement.
2
<PAGE> 3
FRONT OF REGISTRATION STATEMENT AND OUTSIDE FRONT COVER OF PROSPECTUS
REOFFER PROSPECTUS
DMI, INC.
2501 W. Fifth Street, Santa Ana, California 92703
1,783,016 SHARES OF COMMON STOCK
This Prospectus relates to the offer and sale by certain Selling
Security Holders of DMI, Inc., a Colorado corporation (the "Company"), of shares
of the Company's no par value common stock (the "Common Stock"). The Common
Stock offered by the Selling Security Holders was issued to certain consultants
(collectively the "Consultants") pursuant to agreements entered into between the
Company and the Consultants. The Company is registering, on behalf of the
Selling Security Holders, 1,783,016 shares of Common Stock.
THE RISK FACTORS SECTION OF THIS PROSPECTUS IS FOUND ON PAGE 6.
The Common Stock is listed on the OTC bulletin board under the symbol
"DMIN".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING DISCOUNTS AND PROCEEDS TO ISSUER OR
PER UNIT TOTAL PRICE TO PUBLIC COMMISSIONS OTHER PERSONS
-------------- --------------- -------------------------- ---------------------
<S> <C> <C> <C>
Per Share Market Price -0- Market Price
</TABLE>
THE PURCHASE OF THESE SHARES INVOLVES A HIGH DEGREE OF RISK. PRIOR TO PURCHASE
EACH PROSPECTIVE INVESTOR SHOULD CONSIDER VERY CAREFULLY THE INFORMATION
PRESENTED UNDER THE CAPTION RISK FACTORS AS WELL AS THE OTHER INFORMATION SET
FORTH HEREIN.
The date of this Prospectus is September 9, 1997.
3
<PAGE> 4
INSIDE FRONT AND OUTSIDE BACK COVER PAGES OF PROSPECTUS
This Prospectus is part of a Registration Statement which was filed and
became effective under the Securities Act of 1933, as amended (the "Securities
Act"), and does not contain all of the information set forth in the Registration
Statement, certain portions of which have been omitted pursuant to the rules and
regulations promulgated by the U.S. Securities and Exchange Commission (the
"Commission") under the Securities Act. The statements in this Prospectus as to
the contents of any contracts or other documents filed as an exhibit to either
the Registration Statement or other filings by the Company with the Commission
are qualified in their entirety by the reference thereto.
A copy of any document or part thereof incorporated by reference in
this Prospectus but not delivered herewith will be furnished without charge upon
written or oral request. Requests should be addressed to: DMI, Inc. 2501 W.
Fifth Street, Santa Ana, California 92703, Telephone (714) 571-1900.
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith files reports and other information with the Commission. These
reports, as well as the proxy statements, information statements and other
information filed by the Company under the Exchange Act may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W. Washington D.C. 20549. Copies may be obtained at the
prescribed rates. In addition, the Common Stock is quoted on the automated
quotation system maintained by the National Association of Securities Dealers,
Inc. ("NASD"); thus, copies of these reports, proxy statements, information
statements and other information may also be examined at the offices of the NASD
at 1735 K. Street, N.W. Washington, D.C. 20549.
No person has been authorized to give any information or to make any
representation, other than those contained in this Prospectus, and, if given or
made, such other information or representation must not be relied upon as having
been authorized by the Company. This Prospectus does not constitute an offer or
a solicitation by anyone in any state in which such is not authorized or in
which the person making such is not qualified or to any person to whom it is
unlawful to make an offer or solicitation.
Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has not been a
change in the affairs of the Company since the date hereof.
4
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<S> <C>
FRONT OF REGISTRATION STATEMENT AND OUTSIDE FRONT COVER OF PROSPECTUS.............................................3
INSIDE FRONT AND OUTSIDE BACK COVER PAGES OF PROSPECTUS...........................................................4
PART I INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS.......................................................6
SUMMARY INFORMATION AND RISK FACTORS..............................................................................6
THE COMPANY.......................................................................................................6
RISK FACTORS......................................................................................................6
USE OF PROCEEDS...................................................................................................6
DETERMINATION OF OFFERING PRICE...................................................................................6
DILUTION..........................................................................................................6
SELLING SECURITY HOLDERS..........................................................................................7
PLAN OF DISTRIBUTION..............................................................................................7
DESCRIPTION OF THE SECURITIES TO BE REGISTERED....................................................................8
INTERESTS OF NAMED EXPERTS AND COUNSEL............................................................................8
MATERIAL CHANGES..................................................................................................8
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.................................................................8
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES...............................9
PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT........................................................9
INCORPORATION OF DOCUMENTS BY REFERENCE...........................................................................9
DESCRIPTION OF SECURITIES.........................................................................................9
INTERESTS OF NAMED EXPERTS AND COUNSEL...........................................................................10
INDEMNIFICATION OF DIRECTORS AND OFFICERS........................................................................10
EXEMPTION FROM REGISTRATION CLAIMED..............................................................................11
EXHIBITS.........................................................................................................11
UNDERTAKINGS.....................................................................................................11
SIGNATURES.......................................................................................................13
EXHIBIT INDEX....................................................................................................14
</TABLE>
5
<PAGE> 6
PART I INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
SUMMARY INFORMATION AND RISK FACTORS
THE COMPANY
The Company has its principal executive offices at: 2501 W. Fifth
Street, Santa Ana, California 92703, Telephone (714) 571-1900.
RISK FACTORS
The Company has not had any profit from operations in the last 3 fiscal
years.
The Company has a poor financial position.
The Company has minimal revenue from operations.
The Company recently acquired a new operating subsidiary that has a
history of operating losses and a poor financial condition.
The securities offered are speculative and involve a high degree of
risk.
USE OF PROCEEDS
The Company will not receive any of the proceeds from this offering.
DETERMINATION OF OFFERING PRICE
The Selling Security Holders have indicated that they intend to sell
the securities covered by this Registration Statement and Prospectus from time
to time at prevailing market prices.
DILUTION
Not applicable.
6
<PAGE> 7
SELLING SECURITY HOLDERS
<TABLE>
<CAPTION>
NAME OF EACH SELLING THE POSITION, OFFICE, OR THE AMOUNT OF EACH THE AMOUNT THE AMOUNT AND (IF ONE
SECURITY HOLDER OTHER MATERIAL CLASS OF SECURITIES TO BE PERCENT OR MORE) THE
RELATIONSHIP WHICH THE OWNED BY SUCH OFFERED FOR PERCENTAGE OF THE
SELLING SECURITY HOLDER SELLING SECURITY THE SECURITY CLASS TO BE OWNED BY
HAS HAD WITHIN THE PAST HOLDER BEFORE THE HOLDER'S SUCH SECURITY HOLDER
THREE YEARS WITH THE OFFERING ACCOUNT AFTER THE OFFERING IS
COMPANY OR ANY OF ITS COMPLETE
PREDECESSORS OR
AFFILIATES, IF ANY
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Daniel Luciano Lawyer 38,000 38,000 ---
Richard E. Stahl Public Relations 1,300,000 697,508 602,492
William Hayde Public Relations 1,000,000 697,508 302,492
Richard O. Weed Lawyer 350,000 350,000 ----
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Security Holders that they
may offer the Shares for sale at any time or from time to time. Such sales may
be made in the over-the-counter market, or in privately negotiated transactions.
Sales of shares in the over-the-counter market may be by means of one or more of
the following: (a) a block trade in which a broker or dealer will attempt to
sell the Shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a dealer as principal
and resale by such dealer for its account pursuant to this prospectus; and (c)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers. In effecting sales, brokers or dealers engaged by the Selling
Security Holders may arrange for other brokers or dealers to participate.
The Selling Security Holders have advised the Company that they have
made no agreement or arrangements with any underwriters, brokers or dealers
regarding the resale of the shares prior to the date of this Prospectus. Shares
may be sold from time to time to purchasers directly by any of the Selling
Security Holders. Alternatively, subject to the overriding requirements of Rule
144, if applicable, the Selling Security Holders may from time to time offer the
shares through underwriters, dealers or agents, who may receive compensation in
the form of discounts and commissions. Such compensation, which may be in excess
of ordinary brokerage commissions, may be paid by the Selling Security Holders
and/or the purchasers of the shares for whom such underwriters, dealers or
agents may act. The Selling Security Holders and any dealers or agents that
participate in the distribution of the shares may be deemed to be "underwriters"
as defined in the 1933 Act and any profit on the sale of the shares by them and
any discounts, commissions or concessions received by any such dealers or agents
might be deemed to be underwriting discounts and commissions under the 1933 Act.
7
<PAGE> 8
Shares may be sold from time to time in one or more transactions at a
fixed offering price, which may be changed, or at varying prices determined at
the time of sale or at negotiated prices. The Company will pay all of the
expenses incident to the offering and sale of the shares to the public other
than commissions and discounts of underwriters, dealers or agents, if any.
If the Company is notified by the Selling Security Holders that any
material arrangement has been entered into with an underwriter for the sale of
shares a supplemental prospectus will be filed, if required, disclosing such of
the following information as the Company believes appropriate; (i) the name of
the participating underwriter; (ii) the number of shares involved; (iii) the
price at which such shares are sold; (iv) the commissions paid or discounts or
concessions allowed to such underwriter; and (v) other facts material to the
transaction.
DESCRIPTION OF THE SECURITIES TO BE REGISTERED
No description of the class of securities (i.e. the no par value Common
Stock) is required under this item because the Common Stock is registered under
Section 12 of the Exchange Act.
INTERESTS OF NAMED EXPERTS AND COUNSEL
The financial statements for the year ended December 31, 1996,
incorporated by reference in this prospectus, have been audited by Haskell &
White LLP, independent certified public accountants, to the extent set forth in
their report incorporated herein by reference, and are incorporated herein in
reliance upon such report given upon the authority of said firm as experts in
auditing and accounting.
The financial statements for the year ended December 31, 1995,
incorporated by reference in this prospectus, have been audited by Coopers &
Lybrand, L.L.P., independent certified public accountants, to the extent set
forth in their report incorporated herein by reference, and are incorporated
herein in reliance upon such report given upon the authority of said firm as
experts in auditing and accounting.
MATERIAL CHANGES
None.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company hereby incorporates by reference (i) its annual report on
Form 10-KSB for the year ended December 31, 1996, filed pursuant to Section 13
of the Exchange Act, (ii) any and all Forms 10-Q (or 10-QSB) filed under the
Securities or Exchange Act subsequent to any filed Form 10K (or 10-KSB), as well
as all other reports filed under Section 13 of the Exchange Act, and the
Company's Form 8-A filings, and (iii) its annual report, if any, to shareholders
delivered pursuant to Rule 14a-3 of the Exchange Act. In addition, all further
documents filed by the
8
<PAGE> 9
Company pursuant to Section 13, 14, or 15(d) of the Exchange Act prior to the
termination of this offering are deemed to be incorporated by reference into
this Prospectus and to be a part hereof from the date of filing. All documents
which when together, constitute this Prospectus, will be sent or given to
participants by the Registrant as specified by Rule 428(b)(1) of the Securities
Act.
A copy of any document or part thereof incorporated by reference in
this Registration Statement but not delivered with this Prospectus or any
document required to be delivered pursuant to Rule 428(b) under the Securities
Act will be furnished without charge upon written or oral request. Requests
should be addressed to: DMI, Inc. 2501 W. Fifth Street, Santa Ana, California
92703, Telephone (714) 571-1900.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, or persons controlling the Company,
the Company has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
INCORPORATION OF DOCUMENTS BY REFERENCE
Registrant hereby states that (i) all documents set forth in (a)
through (c), below, are incorporated by reference in this registration
statement, and (ii) all documents subsequently filed by registrant pursuant to
Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended, prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of filing of such
documents.
(a) Registrant's latest Annual Report, whether filed pursuant to
Section 13(a) or 15(d) of the Exchange Act;
(b) All other reports filed pursuant to Section 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year covered by annual
report referred to in (a), above; and
(c) The latest prospectus filed pursuant to Rule 424(b) under the
Securities Act.
DESCRIPTION OF SECURITIES
No description of the class of securities (i.e. the no par value Common
Stock) is required under this item because the Common Stock is registered under
Section 12 of the Exchange Act.
9
<PAGE> 10
INTERESTS OF NAMED EXPERTS AND COUNSEL
The financial statements for the year ended December 31, 1996,
incorporated by reference in this prospectus, have been audited by Haskell &
White LLP, independent certified public accountants, to the extent set forth in
their report incorporated herein by reference, and are incorporated herein in
reliance upon such report given upon the authority of said firm as experts in
auditing and accounting.
The financial statements for the year ended December 31, 1995,
incorporated by reference in this prospectus, have been audited by Coopers &
Lybrand, L.L.P., independent certified public accountants, to the extent set
forth in their report incorporated herein by reference, and are incorporated
herein in reliance upon such report given upon the authority of said firm as
experts in auditing and accounting.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Colorado Corporation Code ("Code") provides that an officer and
director of the Company shall not be held personally liable for any injury to
any person or property arising out of a tort committed by an employee of the
Company unless the officer and director was personally involved in the situation
giving rise to the litigation or unless the officer or director committed a
criminal offense. This section of the Code does not restrict other common law
protection and rights the officer or director may have. The Code further
provides that company may eliminate or limit the personal liability of a
director to the corporation or to its shareholders for monetary damages
resulting from a breach of fiduciary responsibility as a director.
Article VI of the By Laws of the Company provides as follows:
Each Director and Officer of this Corporation, and each person who
shall serve at its request as a Director or Officer of another corporation in
which this corporation owns shares or capital stock or of which it is a
creditor' whether or not then in office. and his personal representatives' shall
he indemnified by the Corporation against all costs and expenses actually and
necessarily incurred by him in connection with the defense of any action suit or
proceeding in which he may be involved or to which he may be a party by reason
of his being or having been such Officer or Director. except in relation to
matters as to which he shall be finally adjudged in such action suit or
proceeding to be liable for negligence or misconduct in the performance of duty.
Such costs and expenses shall include amounts reasonably paid in settlement for
(he purposes of curtailing costs of litigation but only if the Corporation is
advised in writing by its counsel that in his opinion the person indemnified did
not commit such negligence or misconduct. The foregoing right of indemnification
shall not be exclusive of other rights to which he may be entitled to as a
matter of' law or by agreement."
10
<PAGE> 11
EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
EXHIBITS
(A) The following exhibits are filed as part of this registration
statement pursuant to Item 601 of Regulation S-K and are specifically
incorporated herein by this reference:
<TABLE>
<CAPTION>
EXHIBIT NO. TITLE
- ----------- -----
<S> <C>
10.A. Engagement for Legal Services between Daniel H. Luciano and the Company
10.B. Consulting Agreement between the Company and Richard E. Stahl
10.C. Consulting Agreement between the Company and William Hayde
10.D. Fee Agreement with Richard O. Weed
24.1 Consent of Haskell & White LLP
24.2 Consent of Coopers & Lybrand, L.L.P.
</TABLE>
UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
registrant pursuant to the foregoing provisions, or otherwise, registrant has
been advised that in the opinion of the Securities and Exchange 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 registrant of expenses
incurred or paid by a director, officer or controlling person of 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, registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification is against public policy
as expressed in the Act and will be governed by the final adjudication of such
issue.
Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to:
(I) include any prospectus required by Section 10 (a) (3) of the
Securities Act;
(II) reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represents a fundamental change in the
information set forth in the registration statement; and
11
<PAGE> 12
(III) include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
provided, however, paragraphs (i) and (ii) shall not apply if
the information required to be included in a post-effective
amendment by those paragraph is incorporated by reference from
period reports filed by the registrant small business issuer
under the Exchange Act.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment to the registration
statement 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.
(4) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual
report to security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the requirements
of Rule 14a-3 or Rule 14e-3 under the Securities Exchange Act of
1934; and, where interim financial information require to be
presented by Article 3 of Regulation S-X is not set forth in the
prospectus, to deliver, or cause to be delivered to each person to
whom the prospectus is sent or given, the latest quarterly report
that is specifically incorporated by reference in the prospectus to
provide such interim financial information.
Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of registrant's annual
report pursuant to Section 13(a) of the Securities Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement 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.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 thereunto duly
authorized in the City of Santa Ana, State of California on the 4th day of
September, 1997.
DMI, INC.
(Registrant)
By: /s/ DUNCAN MACDONALD
--------------------------------
Name: Duncan MacDonald
Title: Chief Financial Offier
Pursuant to the requirements of the 1933 Act, this registration
statement or amendment has been signed by the following persons in the
capacities and on the dates indicated:
Signatures Title Date
---------- ----- ----
/s/ DUNCAN MACDONALD
----------------------- Chief Financial Offier September 9, 1997
Duncan MacDonald and Director
/s/ ELVIN A. ROSE
----------------------- Director September 9, 1997
Elvin A. Rose
13
<PAGE> 14
EXHIBIT INDEX
The following Exhibits are filed as part of this registration statement
pursuant to Item 601 of Regulation S-K and are specifically incorporated herein
by this reference:
<TABLE>
<CAPTION>
EXHIBIT NUMBER IN
REGISTRATION NUMBERED
STATEMENT DESCRIPTION PAGE
- --------- ----------- ----
<S> <C> <C>
10.1 Engagement for Legal Services between Daniel H. Luciano
and the Company
10.2 Consulting Agreement between the Company and Richard E. Stahl
10.3 Consulting Agreement between the Company and William Hayde
10.4 Fee Agreement with Richard O. Weed
24.1 Consent of Haskell & White LLP
24.2 Consent of Coopers & Lybrand, L.L.P.
</TABLE>
14
<PAGE> 1
EXHIBIT 10.1
Exhibit 10. Engagement for Legal Services between Daniel H. Luciano and the
Company
Daniel H. Luciano
ATTORNEY AT LAW
242A WEST VALLEY BROOK ROAD
CALIFON, NEW JERSEY 07830
Telephone (908) 832-5546
FACSIMILE (908) 832-9601
December 5, 1995
E. Al Rose
Chairman
DMI, Inc.
1 Hughes
Irvine, California 92718 VIA FACSIMILE
-------------
AND REGULAR MAIL
----------------
Re: Engagement for Legal Services DMI, Inc. ("Company )
Dear Al:
This letter will confirm and memorialize our conversation yesterday as it
relates to our agreement as to the manner in which I am to be compensated for
future legal services.
As consideration for the legal services rendered by the undersigned from and
after yesterday, I will continue to bill for such services under our prior
arrangement, namely, one-half (1/2) of the fee will be paid in cash and one-half
(1/2) payable in stock under the same format. I will have registration rights
under Form S-8 for such stock.
However, in the event the merger agreement with Unicomp, Inc. ("Unicomp") is
terminated for any reason or is not completed under existing terms prior to
March 1, 1996, then, I shall have the option to rebill the Company for the
remaining one-half (1/2) fee for such invoices (from and after yesterday) which
will be paid in cash by the Company. Payment by the Company will be made within
ten (10) days of submittal of the revised invoice. Upon payment of the revised
invoice, I automatically surrender my rights to such stock compensation.
Sincerely,
/s/ Daniel H. Luciano
Daniel H. Luciano
Agreed and accepted this 6th day of December, 1995.
/s/ E. Al Rose
E. Al Rose
Chairman
<PAGE> 1
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;
-----------
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
<PAGE> 2
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.
<PAGE> 3
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
<PAGE> 4
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
<PAGE> 5
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
<PAGE> 6
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.
<PAGE> 7
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
------------------------------
Elvin Rose
Chairman, CEO
By /s/ Duncan MacDonald
------------------------------
Duncan MacDonald
President, Secretary
By /s/ Richard E. Stahl
------------------------------
Richard E. Stahl
<PAGE> 1
EXHIBIT 10.3
Exhibit 10. C. Consulting Agreement between the Company and William Hayde
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. William Hayde with a
principal address of 14 Fourth Street, Farmingville, New York, hereinafter
referred to as the ("Consultant").
WITNESSETH;
-----------
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
<PAGE> 2
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, 1,000,000 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. Hayde 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.
<PAGE> 3
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
<PAGE> 4
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
<PAGE> 5
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 be limited to the
<PAGE> 6
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. Hayde.
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 anyparty 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.
<PAGE> 7
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. William Hayde
14 Fourth Street
Farmingville, NY 11738
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 _______________
Elvin Rose
Chairman, CEO
By ________________
Duncan MacDonald
President, Secretary
By ________________
William Hayde
<PAGE> 1
EXHIBIT 10.4
Exhibit 10. Fee Agreement with Richard O. Weed
FEE AGREEMENT
This Fee Agreement is between Client and Lawyer as follows:
Client:
Name: DMI, Inc., a Colorado corporation
Address 2501 West Fifth Street
Santa Ana, CA 97703
Telephone (714) 571-1900
Facsimile (714)
Lawyer:
Richard O. Weed
Archer & Weed Special Project Counsel
5140 Birch Street, Suite 100
Newport Beach, CA 92660
Telephone (714) 760-7424
Facsimile (714) 475-9087
Lawyer has agreed to provide services to Client with respect to the following
matters. Legal research, strategy conferences and document preparation in
connection with proposed merger between Client and another company. Other
proposed activities include: preparation and filing with the SEC of the
company's proxy statement, preparation and filing of two Form S-8 registration
statements; electronic filing of June 30, 1996 Form 10-Q via Edgar; amendment to
Articles of Incorporation to implement reverse split of common stock; review and
prepare as necessary corporate minutes; and preparation of definitive Stock
Purchase Agreement and related documents between Client and target company.
Client and Lawyer have agreed to a fixed fee for these services with all such
services to be rendered before December 15, 1996. Out of pocket expenses will be
paid by Client at cost.
Lawyer may perform additional services for Client from time to time at Client's
request. Client agrees to pay Lawyer $160 per hour for these services. Out of
pocket expenses will be paid by Client at cost.
Lawyer and Client agree that Client, in its discretion, may elect to compensate
Lawyer in common stock of DMI, Inc., a Colorado corporation, instead of cash. As
payment for services, Client has suggested and Lawyer has agreed, that Client
place a block of 350,000 shares of free trading stock in Lawyer's name with a
national securities broker. Client has agreed to promptly register such blocks
of stock pursuant to Form S-8 at its own expense and deliver such stock to the
brokerage firm upon the filing and effectiveness of the Form S-8 Registration
Statement.
<PAGE> 2
At all times the fees will be based upon the reasonable value of Lawyer's
services as determined in accordance with the American Bar Association Model
Code of Professional Responsibility and the California State Code of
Professional Responsibility.
Costs and Expenses
Client understands that in the course of representation, it may be necessary for
Lawyer to incur certain costs or expenses. Client will reimburse Lawyer for
certain costs or expenses actually incurred and reasonably necessary for
completing the assigned matter, as long as the charges for costs and expenses
are competitive with other sources of the same products or services. More
particularly, Client will reimburse Lawyer in accordance with the following
guidelines:
1. Computer-Related Expenses - Client will reimburse Lawyer for computerized
research and research services. However, any charges over $500 per month will
require approval. Client also encourages Lawyer to utilize computer services
which will enable Lawyer to more efficiently manage this matter.
2. Travel - Client will reimburse Lawyer for expenses in connection with
out-of-town travel. However, Client will only reimburse for economy class travel
and, where necessary, for the reasonable cost of a rental car. All related
travel expenses, i.e., lodging and meals, must be reasonable under the
circumstances.
3. Filing Fees & Court Costs - Client will reimburse Lawyer for expenses
incurred in connection with filing fees and court costs, if any, but will not be
responsible for sanctions or penalties imposed due to the conduct of Lawyer.
Billing
Client expects to receive a statement monthly or at the conclusion of the
project. All bills will include a summary statement of the kinds of services
rendered during the relevant period. Client expects that Lawyer will maintain
back-up documentation for all expenses.
Involvement of Client
Client expects to be kept closely involved with the progress of Lawyer's
services in this matter. Lawyer will keep Client apprised of all material
developments in this matter, and, in the case of litigation or administrative
proceedings, will provide sufficient notice to enable a representative to attend
meetings, conferences, hearings and other proceedings. A copy of all
correspondence in the course of Lawyer's services will be forwarded to Client.
There may be times when Lawyer will need to obtain information from Client. All
requests for access to documents, employees, or other information shall be
granted without unreasonable delay. At the conclusion of this matter, all
documents obtained shall be returned.
<PAGE> 3
Termination
Client shall have the right to terminate Lawyer's engagement by written notice
at any time. Lawyer has the same right to terminate this engagement, subject to
an obligation to give Client reasonable notice to permit it to obtain
alternative representation or services and subject to applicable ethical
provisions. Lawyer will be expected to provide reasonable assistance in
effecting a transfer of responsibilities to the new firm
Disputes
The laws of the State of California shall govern the interpretation of this
agreement, including all rules or codes of ethics which apply to the provision
of services. All disputes between us arising out of this engagement which cannot
be settled, shall be resolved through binding arbitration in Orange County,
California in accordance with the rules for resolution of commercial disputes,
then in effect, of the American Arbitration Association, and judgment upon the
award may be entered in any Court having jurisdiction thereof. It is further
agreed that the arbitrators may, in their sole discretion, award attorneys' fees
to the prevailing party.
Facsimile Copies
A facsimile, telecopy or other reproduction of this Agreement may be executed by
one or more parties hereto and such executed copy may be delivered by facsimile
of similar instantaneous electronic transmission device pursuant to which the
signature of or on behalf of such party can be seen, and such execution and
delivery shall be considered valid, binding and effective for all purposes. At
the request of any party hereto, all parties agree to execute an original of
this Agreement as well as any facsimile, telecopy or other reproduction hereof
Dated: October 7, 1996
Client
DMI, Inc.
/s/ Duncan MacDonald
- --------------------
By: Duncan MacDonald
Its: President
Lawyer
/s/ Richard O. Weed
- -------------------
Richard O. Weed
<PAGE> 1
Exhibit 24.1 Consent of Haskell & White LLP
HASKELL & WHITE LLP
CERTIFIED PUBLIC ACCOUNTANTS
4901 Birch Street
Newport Beach, California 92660
Telephone (714) 833-8312
Fax (714) 833-9421
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement of DMI, Inc. on Form S-8 of our report dated August 8, 1997, appearing
in the Annual Report on Form 10-KSB of DMI, Inc. for the year ended December 31,
1996 and to the reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
HASKELL & WHITE LLP
Certified Public Accountants
Newport Beach, CA
September 4, 1997
<PAGE> 1
Exhibit 24.2 Consent of Coopers & Lybrand, L.L.P.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Form S-8 Registration
Statement of DMI, Inc. of our report dated February 16, 1996, of our audit of
the financial statements of DMI, Inc. as of and for the year ended December 31,
1995, included in the DMI, Inc. Annual Report on Form 10-K for the year ended
December 31, 1996. We also consent to the reference to our firm under the
caption "Experts"
Coopers & Lybrand, L.L.P.
Newport Beach, California
September 4, 1997
