SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 6, 1996
DSI Industries, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-15784 13-3273041
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
5211 Brownfield Highway, Suite 230, Lubbock, Texas 79407
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 806-785-8400
(Former name or former address, if changed since last report)
Exhibit Index is on page 3<PAGE>
Item 5. Other Events.
On June 6, 1996, the registrant effected the closing (the
"Closing") of a Stock Purchase and Settlement Agreement (the
"Agreement"), dated as of May 30, 1996, by and between D. Brian Hew
("Brian Hew"), Peter Hew ("Peter Hew") and Everbloom Growers, Inc.,
a Florida corporation whose sole stockholders are Brian Hew and
Peter Hew ("Everbloom") and the registrant and the following direct
and indirect wholly owned subsidiaries of the registrant
(collectively, the "DSI Affiliates"): Sunny's Plants, Inc., a
Florida corporation ("Sunny's"), Sunshine Botanicals, Inc., a
Florida corporation ("Sunshine"), Interior Plant Supply, Inc.
("Interior"), a Florida corporation, Sunny's Trucking, Inc., a
Florida corporation ("Trucking" and together with Sunny's, Sunshine
and Interior, the "Nursery Group"), Norton Drilling Company, a
Delaware corporation ("NDC"), and Lobell Corp., a Delaware
corporation. The Agreement, a copy of which is attached as Exhibit
10.31 to this Current Report on Form 8-K, is incorporated in its
entirety herein by reference.
Pursuant to or in accordance with the Agreement, effective
upon the Closing, the following occurred:
(a) The registrant purchased 1,083,096 shares of common
stock, par value $.01 per share, of the registrant from
Everbloom in consideration of the payment of $86,647.68;
(b) Each of Brian Hew, Peter Hew and Robert Hew ("Robert
Hew") resigned from the board of directors of the registrant
and Brian Hew and Peter Hew resigned from all offices held by
them with the registrant and the DSI Affiliates;
(c) The registrant delivered $30,000 to be used to assist in
the resolution of certain pending tax claims (the "Tax
Claims") against the Nursery Group;
(d) The registrant received the Indemnification Agreement, a
copy of which is attached as Exhibit 10.32 to this Current
Report on Form 8-K and is incorporated in its entirety herein
by reference, with respect to the Tax Claims; and
(e) The registrant and Brian Hew, Peter Hew and Robert Hew
agreed to certain releases and indemnification.
<PAGE>
Item 7. Financial Statements and Exhibits.
Exhibit No. Name Page
10.31 Stock Purchase and Settlement 5
Agreement, dated as of May 30, 1996,
by and between D. Brian Hew ("Brian
Hew"), Peter Hew ("Peter Hew") and
Everbloom Growers, Inc., a Florida
corporation whose sole stockholders
are Brian Hew and Peter Hew and the
registrant and the following direct
and indirect wholly owned
subsidiaries of the registrant:
Sunny's Plants, Inc., a Florida
corporation, Sunshine Botanicals,
Inc., a Florida corporation,
Interior Plant Supply, Inc., a
Florida corporation, Sunny's
Trucking, Inc., a Florida
corporation, Norton Drilling
Company, a Delaware corporation, and
Lobell Corp., a Delaware
corporation.
10.32 Indemnification Agreement, dated as 23
of June 6, 1996 by Tuttle's Design-Build, Inc. and Brian and
Merja Tuttle in favor of the registrant.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
DSI Industries, Inc.
(Registrant)
Date: June 7, 1996 /s/ Sherman H. Norton
Sherman H. Norton, Jr., President
<PAGE>
Exhibit 10.31
Stock Purchase and Settlement Agreement
Stock Purchase and Settlement Agreement, dated as of May
30, 1996, by and between D. Brian Hew ("BH"), Peter Hew ("PH" and
together with BH, the "Hews") and Everbloom Growers, Inc., a
Florida corporation whose sole stockholders are BH and PH
("Everbloom") and DSI Industries, Inc. ("DSI") and the following
direct and indirect wholly owned subsidiaries of DSI (collectively,
the "DSI Affiliates"): Sunny's Plants, Inc., a Florida corporation
("Sunny's"), Sunshine Botanicals, Inc., a Florida corporation
("Sunshine"), Interior Plant Supply, Inc. ("Interior"), a Florida
corporation, Sunny's Trucking, Inc., a Florida corporation
("Trucking" and together with Sunny's, Sunshine and Interior, the
"Nursery Group"), Norton Drilling Company, a Delaware corporation
("NDC"), and Lobell Corp., a Delaware corporation.
WHEREAS, the Hews are each directors and officers of DSI
and certain of the DSI Affiliates;
WHEREAS, the focus of the business of DSI has been
narrowed to the operations of NDC;
WHEREAS, such narrowing of focus has made the continued
board participation of the Hews unnecessary;
WHEREAS, there are certain liabilities related to the
Nursery Group which DSI, BH and PH desire to be settled;
WHEREAS, Everbloom is the owner of 1,083,096 shares (the
"Shares") of common stock, par value $.01 per share, of DSI; and
WHEREAS, Everbloom desires to sell, and DSI wishes to
purchase, upon the terms and subject to the conditions hereafter
set forth, the Shares;
NOW, THEREFORE, in order to implement the foregoing and
in consideration of the mutual agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as
follows:
I. Purchase of Shares.
1.1. Agreement to Purchase and Sell. DSI hereby agrees to
purchase the Shares from Everbloom and Everbloom hereby agrees to
sell the Shares to DSI for $86,647.68 (the "Purchase Amount").
1.2. Closing. The closing of the purchase and sale of the
Shares (the "Closing") shall take place on June 6, 1996 (or such
later date by which all documents and instruments required by this
Agreement have been received and all conditions precedent to the
Closing have occurred), at such place as the parties hereto shall
agree. At the Closing:
(a) Everbloom will deliver to DSI the Shares, duly
endorsed for transfer or accompanied by stock powers duly
executed in blank;
(b) The Hews and Everbloom will deliver to DSI (i) a copy
of the agreement between Robert Hew and DSI in the form set
forth as Exhibit A hereto duly executed by Robert Hew and (ii)
a copy of the agreement between DSI and Brian and Merja Tuttle
and Tuttle's Design-Build, Inc. (collectively, the "Tuttles")
in the form set forth as Exhibit B hereto duly executed by
each of the Tuttles;
(c) DSI will deliver to Everbloom a certified check for
the Purchase Amount; and
(d) DSI will cause to be delivered to Nason, Gildan,
Yeager, Gerson & White, as escrow agent, $30,000 (the "Tax
Amount").
II. Representations and Warranties of the Hews and Everbloom.
Everbloom and the Hews each hereby represent and warrant
that:
2.1. Due Authorization. Each of Everbloom and the Hews has
full legal capacity to execute, deliver and perform this Agreement
and, in the case of Everbloom, to sell the Shares. This Agreement
has been duly executed and delivered by Everbloom and the Hews and
constitutes a valid and binding agreement of Everbloom and the
Hews, enforceable against Everbloom and the Hews in accordance with
its terms.
2.2. No Consents; No Contravention. The execution, delivery
and performance by Everbloom and the Hews of this Agreement does
not require any authorization, consent, approval or action by or in
respect of, or filing with, any governmental body, agency, official
or other person and does not contravene, or constitute a default
under, any provision of applicable law or regulation or of any
agreement, judgment, order, decree or other instrument binding upon
any of Everbloom, the Hews or the Shares.
2.3. Good and Marketable Title. Everbloom has good and
marketable title to the Shares, free and clear of any lien, pledge,
mortgage, charge, security interest or encumbrance of any kind
(each, an "Encumbrance"). Everbloom is not a party to any
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agreement or arrangement which will impose any Encumbrance upon the
Shares as a result of the transactions contemplated hereby.
2.4. Tax Claims. The entire amount of the trust fund portion
of the payroll taxes owed by the Nursery Group (the "Trust
Portion") is $254,000. Other than the Tax Amount, which DSI has
agreed to pay in consideration of the agreements of the Hews
contained in this Agreement, DSI does not have any responsibility
for the Trust Portion or, to the knowledge of the Hews, any other
taxes related to the Nursery Group.
III. Representations and Warranties of the DSI.
DSI represents and warrants that:
3.1. Due Authorization. DSI has full legal capacity to
purchase the Shares and to execute, deliver and perform this
Agreement. This Agreement has been duly executed and delivered by
DSI and constitutes a valid and binding agreement of DSI,
enforceable against DSI in accordance with its terms.
3.2. No Consents; No Contravention. The execution, delivery
and performance by DSI of this Agreement does not require any
authorization, consent, approval or action by or in respect of, or
filing with, any governmental body, agency, official or other
person and does not contravene, or constitute a default under, any
provision of applicable law or regulation or of any agreement,
judgment, order, decree or other instrument binding upon DSI.
IV. Additional Agreements.
4.1. Board of Directors.
(a) Resignation of BH. BH hereby resigns, effective as
of the close of business on the date of the Closing (the "Closing
Date"), from his positions as Director and Officer of DSI and from
any and all positions which he may hold with any of the DSI
Affiliates.
(b) Resignation of PH PH hereby resigns, effective as
of the Closing Date, from his positions as Director, Officer and
Secretary of DSI, and from any and all positions which he may hold
with any of the DSI Affiliates.
4.2. Tax Claims.
(a) At or promptly following the Closing, DSI shall
deliver to Nason, Gildan, Yeager, Gerson & White, as escrow agent,
(the "Escrow Agent"), $30,000 (the "Tax Escrow Amount"), to be
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distributed in accordance with the provision of the agreement the
form of which is attached hereto as Exhibit B.
(b) Each of BH and PH acknowledge that they or persons
other than DSI are responsible for the all other amounts owed in
connection with the Trust Portion and agree to indemnify, defend,
and hold harmless, DSI and each DSI Affiliate against any amounts
(including reasonable attorney's fees, judgments and settlement
amounts) paid or incurred in connection with any threatened,
pending, or contemplated action, suit or proceeding to which they
are or are threatened to be made a party to or witness or other
participant in connection with the Trust Portion.
4.3. Arbitration. Any dispute, controversy or claim arising
under, out of, in connection with, or in relation to this
Agreement, or the breach, termination, validity or enforceability
of any provision of this Agreement, will be settled by final and
binding arbitration conducted before a single arbitrator chosen
according to the rules of the American Arbitration Association (the
"Arbitrator"). Unless otherwise mutually agreed upon by the
parties, the arbitration hearings shall be held in the City of New
York, New York. Such arbitration shall be conducted in accordance
with the rules of the American Arbitration Association. The
parties hereto hereby agree that the designated Arbitrator has full
power and authority to hear and determine the controversy and make
an award in writing in the form of a reasoned judicial opinion.
The parties hereby stipulate in advance that the award is binding
and final. The parties hereto also agree that judgment upon the
arbitration award may be entered in any federal or state court
having jurisdiction thereof. Such court may make an order vacating
the award upon the application of any party to the arbitration when
the award was procured by corruption, fraud, or undue means or
there was evident partiality by the arbitrator or corruption in the
arbitrator. The parties hereto waive their rights to appeal except
from an order vacating an award without directing a rehearing.
Furthermore, the parties undertake to carry out the award without
delay, subject to the provisions of this Agreement. The prevailing
party in any arbitration or other action pursuant to this Section
4.3 shall be entitled to recover its reasonable legal fees and out-of-pocket
expenses.
4.4. Confidentiality. Unless prior written consent is
obtained from DSI, each of the Hews shall keep confidential and
refrain from using for their benefit any material document or
information obtained from DSI, or from any DSI Affiliate (other
than the Nursery Group), or from others in the course of fulfilling
their positions with DSI, concerning the properties, operations or
business of DSI, or any DSI Affiliate (unless such document or
information is readily ascertainable from public published
information or trade sources) until the same ceases to be material
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(or becomes so ascertainable); provided, however that nothing in
this Paragraph 4.4 shall prevent any of the Hews, with or without
DSI's consent, from participating in or disclosing documents or
information in connection with any judicial or administrative
investigation, inquiry or proceeding to the extent that such
participation or disclosure is required by a competent authority,
provided further, however, any of the Hews will give DSI as much
advance notice as is reasonably practicable under the circumstances
to enable DSI to seek an appropriate protective order taking into
account, among other things, the need to promptly comply with any
such request for disclosure.
4.5. Return of Property. Within 30 business days following
the date of this Agreement, the Hews will return to DSI all
property of DSI and the DSI Affiliates in their possession or
control.
4.6. GrahamCo Note. It shall be a condition to the Closing
under this Agreement that the obligation of DSI to GrahmCo Limited
shall be terminated and arrangements thereto shall be reasonably
satisfactory to each party hereto.
V. Indemnification and Release.
5.1. Indemnification
(a) DSI shall to the fullest extent provided by Delaware
law at all times indemnify, defend, and hold harmless, each of the
Hews (collectively referred to as the "Indemnified Party" or
"Indemnified Parties"), against any amounts (including reasonable
attorney's fees, judgments and settlement amounts) paid or incurred
in connection with any threatened, pending, or contemplated action,
suit or proceeding to which they are or are threatened to be made
a party to or witness or other participant in by reason of the fact
that such as persons are or were a director, officer, employee or
agent of DSI or its affiliates; provided, however, DSI shall have
no obligation to indemnify the Indemnified Parties with respect to
any Trust Portion.
(b) DSI agrees that all expenses (including
attorney's fees) incurred by an Indemnified Party in defending any
civil, criminal, administrative or investigative action, suit or
proceeding (other than in connection with the Trust Portion) will
be paid by DSI in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf
of such Indemnified Party substantially in the form attached hereto
as Exhibit A; provided, however, that in any action in which an
Indemnified Party and DSI are parties, a single defense counsel may
be chosen by DSI and reasonably approved by the Indemnified Party;
provided, further, the Indemnified Party will have the right to
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retain its own separate counsel at DSI's expense in the event that
either DSI fails within reasonable time to retain counsel
reasonably satisfactory to the Indemnified Party or the
representation of the Indemnified Party and any other named party
in such claim by the same counsel could be inappropriate due to
actual or potential conflict of interests between such parties.
(c) If at any time the Board of Directors of DSI
shall decline to indemnify, defend and hold harmless the
Indemnified Party or shall demand a return of any expense
advancement following receipt of undertaking signed substantially
in the form attached hereto as Exhibit A, then such Indemnified
Party may request that the issue of whether the applicable standard
of conduct set forth in Section 145(a) or 145(b) of the Delaware
law has been satisfied be determined by independent counsel
selected by and paid for by DSI and reasonably satisfactory to the
Indemnified Party; provided, that if no counsel is selected and
agreed to within 30 days, the parties shall each select a counsel
and such counsel shall select the independent counsel. Any
determinations made by such independent counsel shall be final and
binding on DSI and such Indemnified Party.
(d) Following the Closing Date, DSI shall at all
times provide coverage for the Hews for events occurring prior to
the Closing Date under any and all directors and officers liability
insurance policies to the same extent that and upon terms and
conditions no less favorable than the terms and conditions under
which officers and directors of DSI are covered.
(e) DSI undertakes to keep the Hews, and the Hews
each undertake to keep DSI, informed concerning all developments in
any litigation or proceedings relating to any of the Hews in the
performance of their duties as director, officer or employee of DSI
or its affiliates.
5.2. Release of DSI and its Affiliates. In consideration of
the execution and performance of this Agreement by DSI and all the
undertakings and benefits provided for hereunder, the Hews, for
themselves and their respective heirs, distributees, executors,
administrators, successors and assigns, hereby release and forever
discharge DSI and the DSI Affiliates and the officers, directors,
employees, principals and agents of each of them acting in such
capacities, and their respective heirs, distributees, executors,
administrators, successors and assigns, of and from any and all
debts, dues, demands, actions, causes of action, suits, accounts,
reckonings, sums of money, bonds, bills, covenants, contracts,
controversies, agreements, promises, variance, trespasses, damages,
judgments, extents, executions and any and all claims, obligations,
costs, expenses, losses, exposures and liabilities whatsoever of
every name and nature, both at law and in equity or created by
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statute, known or unknown; provided, however, the foregoing release
shall not apply to: (i) the rights to indemnification provided
under this Agreement; (ii) any claims relating to the performance
of the parties' obligations pursuant to this Agreement; and (iii)
the rights of any of the Hews to seek contribution from DSI if any
of them is found liable in any third party suit or proceeding for
acts or events with respect to which DSI was materially involved
and had responsibility (other than relating to the Trust Portion).
5.3. Release by DSI and its Affiliates. In consideration
of the execution and performance of this Agreement by each of the
Hews and the releases and covenants undertaken by them hereunder,
DSI and each of the DSI Affiliates for themselves and their
respective officers, directors, employees, principals and agents of
each of them, acting in such capacities, and their respective
heirs, distributees, executors, administrators, successors and
assigns, release and forever discharge each of the Hews
individually and the Hews collectively, their heirs, distributees,
executors, administrators, successors and assigns, of and from any
and all debts, dues, demands, actions, causes of action (including
a derivative action), suits, accounts, reckonings, sums of money,
bonds, bills, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, extents,
executions and any and all claims, obligations, costs, expenses,
losses, exposures, and liabilities whatsoever of every name and
nature, both at law and in equity or created by statute, known or
unknown, which, as against any of the Hews, any of them now has or
ever had on or before the date of this Agreement; provided,
however, the foregoing release shall not apply to: (i) the
performance of the parties' obligations pursuant to this Agreement;
(ii) DSI's right to seek contribution from any of the Hews (but
only such of the Hews as is applicable) in the event that (a) it is
finally judicially determined in a third party suit that any of the
Hews was found to have willfully engaged in fraudulent misconduct
while serving as, and in connection with the performance of his
duties as, a director or officer of DSI or any of the DSI
Affiliates or (b) DSI is found liable in any third party suit or
proceeding for acts or events with respect to which any of the Hews
was materially involved and had responsibility; provided, that DSI
shall in each case continue to advance expenses to any of the Hews
in any action or suit seeking such contribution in accordance with
the terms of this Agreement; and (iii) liabilities related to the
Trust Portion.
VI. Miscellaneous.
6.1. Binding Effect; Assignment. This Agreement shall apply
to, and shall be binding upon the parties hereto, their respective
successors and assigns, and all persons claiming by, through, or
under any of the aforesaid persons.
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6.2. Survival. All representations, warranties and agreements
made in this Agreement shall survive the Closing hereunder.
6.3. Entire Agreement. This Agreement supersedes any and all
prior contracts, understandings, discussions and agreements between
the Hews and Everbloom and DSI and the DSI Affiliates and
constitutes the complete understanding between the parties with
respect to the subject matters hereof. No statement,
representation, warranty or covenant has been made by any party
with respect thereto except as expressly set forth therein.
6.4. Modification; Waiver This Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by all the undersigned, or in
the case of a waiver, by the party against whom the waiver is to be
effective. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided
shall be cumulative and shall not be exclusive to any rights or
remedies by law or at equity.
6.5. Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
New York, regardless of the law that might be applied under
principles of conflicts of law.
6.6. Severability. In the event that any one or more of the
provisions contained in this Agreement, or the application thereof
in any circumstances, is held invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of
the remaining provisions contained in this Agreement shall not be
in any way impaired, it being intended that all rights, powers and
privileges of the parties hereto shall be enforceable to the
fullest extent permitted by law.
6.7. Further Assurances. From time to time, at the request of
any party hereto or as required under applicable law and without
further consideration, each party hereto will execute and deliver
to such requesting party or other person or persons, as
appropriate, such documents and take such other action (but without
incurring any financial obligation except as otherwise required by
this Agreement) as such requesting party may reasonably request in
order to consummate more effectively and in accordance with
applicable law the transactions contemplated hereby.
6.8. Cooperation. The Hews each agree to cooperate with DSI
and respond promptly to all reasonable requests of DSI for
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information relating to their positions with, and employment by DSI
and the DSI Affiliates prior to the Closing; provided, however,
that such requests shall not materially interfere with the ability
of the Hews to perform services as an employee, or engage in self-employment,
on a full-time basis; and provided, further, that the Hews shall have no
obligation to respond to any request involving potential expense, exposure
or liability on their part unless first indemnified therefor in a manner
reasonably satisfactory to them. Each of the parties shall execute such
documents and other papers and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby.
6.9. Public Comment. Each of the parties agrees that they
will not participate in discussion with or make any comment to any
third party concerning the other without first obtaining the
other's prior written consent unless required by law.
6.10. Joint and Several Liability. It is understood and
agreed, notwithstanding any provision herein to the contrary, that
any and all obligations imposed on (a) DSI or the DSI Affiliates
shall be the joint and several obligations of each of them and (b)
the Hews shall be the joint and several obligations of each of
them; provided, however, RH shall not have any obligations related
to the Trust Portion.
6.11. Notices. All notices and other communications provided
for herein shall be in writing and shall be deemed to have been
duly given when received.
(a) If to DSI or any of the DSI Affiliates at:
5211 Brownfield Highway
Suite 230
Lubbock, Texas 79407
(b) If to BH at:
17920 Southwest 268th Street
Homestead, Florida 33031
(b) If to PH at:
17850 Southwest 268th Street
Homestead, Florida 33031
6.12. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original and all of which together shall be deemed to be one and
the same instrument.
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IN WITNESS WHEREOF, the parties
hereto have each executed this Agreement as of the 26th day of April, 1996.
DSI INDUSTRIES, INC. EVERBLOOM GROWERS, INC.
By: /s/ By: /s/
SUNNY'S PLANTS,INC. /s/
D. BRIAN HEW
By: /s/
SUNSHINE BOTANICALS, INC. /s/
PETER HEW
By: /s/
INTERIOR PLANT SUPPLY, INC.
By: /s/
SUNNY'S TRUCKING, INC.
By: /s/
NORTON DRILLING COMPANY
By: /s/
LOBELL CORP.
By: /s/
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Exhibit A
Agreement between Robert Hew and DSI Industries, Inc.
Agreement, dated as of June 6, 1996, by and between
Robert Hew ("RH") and DSI Industries, Inc. ("DSI") and the
following direct and indirect wholly owned subsidiaries of DSI
(collectively, the "DSI Affiliates"): Sunny's Plants, Inc., a
Florida corporation ("Sunny's"), Sunshine Botanicals, Inc., a
Florida corporation, Interior Plant Supply, Inc., a Florida
corporation, Sunny's Trucking, Inc., a Florida corporation, Norton
Drilling Company, a Delaware corporation ("NDC"), and Lobell Corp.,
a Delaware corporation.
WHEREAS, RH is a director of DSI and an officer of
certain of the DSI Affiliates;
WHEREAS, the focus of the business of DSI has been
narrowed to the operations of NDC;
WHEREAS, such narrowing of focus has made the continued
board participation of RH and certain person related to RH
unnecessary; and
WHEREAS, DSI and certain persons related to RH are
parties to a Stock Purchase and Settlement Agreement (the
"Settlement Agreement") which provides, in part, that RH deliver
this Agreement at the closing of the Settlement Agreement.
NOW, THEREFORE, in order to implement the foregoing and
in consideration of the mutual agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as
follows:
I. Representations and Warranties of RH.
RH hereby represents and warrants that:
1.1. Due Authorization. RH has full legal capacity to
execute, deliver and perform this Agreement. This Agreement has
been duly executed and delivered by RH and constitutes a valid and
binding agreement of RH enforceable against RH in accordance with
its terms.
1.2. No Consents; No Contravention. The execution, delivery
and performance by RH of this Agreement does not require any
authorization, consent, approval or action by or in respect of, or
filing with, any governmental body, agency, official or other
person and does not contravene, or constitute a default under, any
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provision of applicable law or regulation or of any agreement,
judgment, order, decree or other instrument binding upon RH.
II. Representations and Warranties of the DSI.
DSI represents and warrants that:
2.1. Due Authorization. DSI has full legal capacity to
execute, deliver and perform this Agreement. This Agreement has
been duly executed and delivered by DSI and constitutes a valid and
binding agreement of DSI, enforceable against DSI in accordance
with its terms.
2.2. No Consents; No Contravention. The execution, delivery
and performance by DSI of this Agreement does not require any
authorization, consent, approval or action by or in respect of, or
filing with, any governmental body, agency, official or other
person and does not contravene, or constitute a default under, any
provision of applicable law or regulation or of any agreement,
judgment, order, decree or other instrument binding upon DSI.
III. Agreements.
3.1. Board of Directors. RH, hereby resigns, effective as of
the date hereof, from his position as Director of DSI and from any
and all positions which he may hold with any of the DSI Affiliates.
3.2. Arbitration. Any dispute, controversy or claim arising
under, out of, in connection with, or in relation to this
Agreement, or the breach, termination, validity or enforceability
of any provision of this Agreement, will be settled by final and
binding arbitration conducted before a single arbitrator chosen
according to the rules of the American Arbitration Association (the
"Arbitrator"). Unless otherwise mutually agreed upon by the
parties, the arbitration hearings shall be held in the City of New
York, New York. Such arbitration shall be conducted in accordance
with the rules of the American Arbitration Association. The
parties hereto hereby agree that the designated Arbitrator has full
power and authority to hear and determine the controversy and make
an award in writing in the form of a reasoned judicial opinion.
The parties hereby stipulate in advance that the award is binding
and final. The parties hereto also agree that judgment upon the
arbitration award may be entered in any federal or state court
having jurisdiction thereof. Such court may make an order vacating
the award upon the application of any party to the arbitration when
the award was procured by corruption, fraud, or undue means or
there was evident partiality by the arbitrator or corruption in the
arbitrator. The parties hereto waive their rights to appeal except
from an order vacating an award without directing a rehearing.
Furthermore, the parties undertake to carry out the award without
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delay, subject to the provisions of this Agreement. The prevailing
party in any arbitration or other action pursuant to this Section
3.2 shall be entitled to recover its reasonable legal fees and out-of-pocket
expenses.
3.3. Confidentiality. Unless prior written consent is
obtained from DSI, RH shall keep confidential and refrain from
using for his benefit any material document or information obtained
from DSI, or from any DSI Affiliate, or from others in the course
of fulfilling his position with DSI, concerning the properties,
operations or business of DSI, or any DSI Affiliate (unless such
document or information is readily ascertainable from public
published information or trade sources) until the same ceases to be
material (or becomes so ascertainable); provided, however that
nothing in this Paragraph 3.3 shall prevent RH, with or without
DSI's consent, from participating in or disclosing documents or
information in connection with any judicial or administrative
investigation, inquiry or proceeding to the extent that such
participation or disclosure is required by a competent authority,
provided further, however, RH will give DSI as much advance notice
as is reasonably practicable under the circumstances to enable DSI
to seek an appropriate protective order taking into account, among
other things, the need to promptly comply with any such request for
disclosure.
3.4. Return of Property. Within 30 business days following
the date of this Agreement, RH will return to DSI all property of
DSI and the DSI Affiliates in their possession or control.
IV. Indemnification and Release.
4.1. Indemnification
(a) DSI shall to the fullest extent provided by Delaware
law at all times indemnify, defend, and hold harmless, RH (the
"Indemnified Party"), against any amounts (including reasonable
attorney's fees, judgments and settlement amounts) paid or incurred
in connection with any threatened, pending, or contemplated action,
suit or proceeding to which he is or is threatened to be made a
party to or witness or other participant in by reason of the fact
that he is or was a director, officer, employee or agent of DSI or
its affiliates.
(b) DSI agrees that all expenses (including
attorney's fees) incurred by the Indemnified Party in defending any
civil, criminal, administrative or investigative action, suit or
proceeding will be paid by DSI in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking
by or on behalf of such Indemnified Party substantially in the form
attached hereto as Exhibit 1; provided, however, that in any action
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in which the Indemnified Party and DSI are parties, a single
defense counsel may be chosen by DSI and reasonably approved by the
Indemnified Party; provided, further, the Indemnified Party will
have the right to retain its own separate counsel at DSI's expense
in the event that either DSI fails within reasonable time to retain
counsel reasonably satisfactory to the Indemnified Party or the
representation of the Indemnified Party and any other named party
in such claim by the same counsel could be inappropriate due to
actual or potential conflict of interests between such parties.
(c) If at any time the Board of Directors of DSI
shall decline to indemnify, defend and hold harmless the
Indemnified Party or shall demand a return of any expense
advancement following receipt of undertaking signed substantially
in the form attached hereto as Exhibit 1, then such Indemnified
Party may request that the issue of whether the applicable standard
of conduct set forth in Section 145(a) or 145(b) of the Delaware
law has been satisfied be determined by independent counsel
selected by and paid for by DSI and reasonably satisfactory to the
Indemnified Party; provided, that if no counsel is selected and
agreed to within 30 days, the parties shall each select a counsel
and such counsel shall select the independent counsel. Any
determinations made by such independent counsel shall be final and
binding on DSI and such Indemnified Party.
(d) Following the Closing Date, DSI shall at all
times provide coverage for RH for events occurring prior to the
Closing Date under any and all directors and officers liability
insurance policies to the same extent that and upon terms and
conditions no less favorable than the terms and conditions under
which officers and directors of DSI are covered.
(e) DSI undertakes to keep RH, and RH undertakes to
keep DSI, informed concerning all developments in any litigation or
proceedings relating to RH in the performance of his duties as a
director of DSI.
4.2. Release of DSI and its Affiliates. In consideration of
the execution and performance of this Agreement by DSI and all the
undertakings and benefits provided for hereunder, RH, for himself
and his heirs, distributees, executors, administrators, successors
and assigns, hereby releases and forever discharges DSI and the DSI
Affiliates and the officers, directors, employees, principals and
agents of each of them acting in such capacities, and their
respective heirs, distributees, executors, administrators,
successors and assigns, of and from any and all debts, dues,
demands, actions, causes of action, suits, accounts, reckonings,
sums of money, bonds, bills, covenants, contracts, controversies,
agreements, promises, variance, trespasses, damages, judgments,
extents, executions and any and all claims, obligations, costs,
-4-
expenses, losses, exposures and liabilities whatsoever of every
name and nature, both at law and in equity or created by statute,
known or unknown; provided, however, the foregoing release shall
not apply to: (i) the rights to indemnification provided under this
Agreement; (ii) any claims relating to the performance of the
parties' obligations pursuant to this Agreement; and (iii) the
rights of RH to seek contribution from DSI if he is found liable in
any third party suit or proceeding for acts or events with respect
to which DSI was materially involved and had responsibility.
4.3. Release by DSI and its Affiliates. In consideration
of the execution and performance of this Agreement by RH and the
releases and covenants undertaken by him hereunder, DSI and each of
the DSI Affiliates for themselves and their respective officers,
directors, employees, principals and agents of each of them, acting
in such capacities, and their respective heirs, distributees,
executors, administrators, successors and assigns, release and
forever discharge RH, his heirs, distributees, executors,
administrators, successors and assigns, of and from any and all
debts, dues, demands, actions, causes of action (including a
derivative action), suits, accounts, reckonings, sums of money,
bonds, bills, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, extents,
executions and any and all claims, obligations, costs, expenses,
losses, exposures, and liabilities whatsoever of every name and
nature, both at law and in equity or created by statute, known or
unknown, which, as against RH, any of them now has or ever had on
or before the date of this Agreement; provided, however, the
foregoing release shall not apply to: (i) the performance of the
parties' obligations pursuant to this Agreement; or (ii) DSI's
right to seek contribution from RH in the event that (a) it is
finally judicially determined in a third party suit that RH was
found to have willfully engaged in fraudulent misconduct while
serving as, and in connection with the performance of his duties
as, a director of DSI or any of the DSI Affiliates or (b) DSI is
found liable in any third party suit or proceeding for acts or
events with respect to which RH was materially involved and had
responsibility; provided, that DSI shall in each case continue to
advance expenses to RH in any action or suit seeking such
contribution in accordance with the terms of this Agreement.
V. Miscellaneous.
5.1. Binding Effect; Assignment. This Agreement shall apply
to, and shall be binding upon the parties hereto, their respective
successors and assigns, and all persons claiming by, through, or
under any of the aforesaid persons.
5.2. Survival. All representations, warranties and agreements
made in this Agreement shall survive the delivery of this
Agreement.
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5.3. Entire Agreement. This Agreement supersedes any and all
prior contracts, understandings, discussions and agreements between
RH and DSI and the DSI Affiliates and constitutes the complete
understanding between the parties with respect to the subject
matters hereof. No statement, representation, warranty or covenant
has been made by any party with respect thereto except as expressly
set forth therein.
5.4. Modification; Waiver This Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by all the undersigned, or in
the case of a waiver, by the party against whom the waiver is to be
effective. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided
shall be cumulative and shall not be exclusive to any rights or
remedies by law or at equity.
5.5. Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
New York, regardless of the law that might be applied under
principles of conflicts of law.
5.6. Severability. In the event that any one or more of the
provisions contained in this Agreement, or the application thereof
in any circumstances, is held invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of
the remaining provisions contained in this Agreement shall not be
in any way impaired, it being intended that all rights, powers and
privileges of the parties hereto shall be enforceable to the
fullest extent permitted by law.
5.7. Further Assurances. From time to time, at the request of
any party hereto or as required under applicable law and without
further consideration, each party hereto will execute and deliver
to such requesting party or other person or persons, as
appropriate, such documents and take such other action (but without
incurring any financial obligation except as otherwise required by
this Agreement) as such requesting party may reasonably request in
order to consummate more effectively and in accordance with
applicable law the transactions contemplated hereby.
5.8. Cooperation. RH agrees to cooperate with DSI and respond
promptly to all reasonable requests of DSI for information relating
to his activities related to DSI prior to the date hereof;
provided, however, that such requests shall not materially
interfere with his ability to perform services as an employee, or
-6-
engage in self-employment, on a full-time basis; and provided,
further, that RH shall have no obligation to respond to any request
involving potential expense, exposure or liability on their part
unless first indemnified therefor in a manner reasonably
satisfactory to them. Each of the parties shall execute such
documents and other papers and take such further actions as may be
reasonably required or desirable to carry out the provisions hereof
and the transactions contemplated hereby.
5.9. Public Comment. Each of the parties agrees that they
will not participate in discussion with or make any comment to any
third party concerning the other without first obtaining the
other's prior written consent unless required by law.
5.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original and all of which together shall be deemed to be one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have each executed
this Agreement as of the ___ day of June, 1996.
DSI INDUSTRIES, INC.
By: __________________________
Sherman H. Norton, Jr. Robert Hew
Chief Executive Officer
<PAGE>
Exhibit 1 to Exhibit A
Form of Undertaking
The undersigned, a former Director of DSI INDUSTRIES, INC.
(the "Company"), hereby (i) acknowledges that expenses incurred by
the undersigned in defending all actions, suits and proceedings
have been and will in the future be paid by the Company in advance
of the final disposition of such actions, suits and proceedings and
(ii) undertakes to repay the Company the amount of expenses so
advanced if it shall ultimately be determined that the undersigned
is not entitled to be indemnified by the Company as authorized by
Section 145 of the Delaware General Corporation Law and the certain
letter agreement, dated April 26, 1996, between the Company and the
undersigned.
<PAGE>
Exhibit 10.32
Exhibit B
Indemnification Agreement
This Indemnification Agreement is made and entered into
as of June 6, 1996 by and between Tuttle's Design-Build, Inc., a
Florida corporation ("Tuttle Design"), and Brian and Merja Tuttle
(together with Tuttle Design, "Tuttle"), jointly and severally, and
DSI Industries, Inc., a Delaware corporation ("DSI").
WHEREAS, DSI is the corporate parent of Sunny's Plants,
Inc., a Florida corporation ("Sunny's"), Sunshine Botanicals, Inc.,
a Florida corporation ("Sunshine"), Interior Plant Supply, Inc.
("Interior"), a Florida corporation, Sunny's Trucking, Inc., a
Florida corporation ("Trucking" and together with Sunny's, Sunshine
and Interior, the "Nursery Group");
WHEREAS, certain employees of Tuttle Design (the
"Employees") may have personal liability with respect to the trust
fund portion of the payroll taxes owed by the Nursery Group
totalling approximately $255,000 (the "Trust Portion");
WHEREAS, in connection with a prior agreement between
Tuttle Design and DSI, Tuttle Design agreed, among other things, to
indemnify DSI for up to $140,000 of the Trust Portion; and
WHEREAS, Tuttle has agreed to assist the Employees in
connection with their possible liability relating to the Trust
Portion.
NOW, THEREFORE, in order to implement the foregoing and
in consideration of the mutual agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as
follows:
1. Indemnification. Tuttle agrees to indemnify, defend
and hold harmless DSI and its subsidiaries (other than the Nursery
Group) and their respective directors, officers, employees and
agents (collectively referred to as the "Indemnified Party" or
"Indemnified Parties"), against and in respect of any amounts
(including reasonable attorney's fees, judgments and settlement
amounts) paid or incurred in connection with any threatened,
pending, or contemplated action, suit or proceeding to which they
are or are threatened to be made a party to or witness or other
participant in by reason of or in connection with the Trust
Portion, including, without limitation, any action to enforce this
Agreement.
2. Notice. (a) If at any time an Indemnified Party
shall be subject to a claim for which indemnification may be made
under this Agreement, the Indemnified Party shall send Tuttle
written notice thereof and shall permit Tuttle to defend against,
or join in the Indemnified Party's defense against, such claim at
Tuttle's own expense in good faith and by appropriate proceedings,
provided that Tuttle shall employ counsel reasonably satisfactory
to the Indemnified Party in connection therewith (Nason, Gildan,
Yeager, Gerson & White shall be deemed reasonably satisfactory).
The Indemnified Party shall have the right, but not the obligation,
to settle any claim subject to indemnity hereunder; provided, that
(i) the Indemnified Party gives Tuttle fifteen (15) business days'
notice of such proposed settlement and (ii) no such settlement
shall be made if (x) Tuttle objects thereto within the fifteen-day
notice period and (y) Tuttle has assumed the defense of the claim
as provided above and has given the Indemnified Party reasonable
assurances that any such claim, if determined adversely to the
Indemnified Party, will be paid promptly and in full by Tuttle.
(b) In the event that there may be a conflict of interest
between Tuttle and the Indemnified Party in the defense of any
claim, Tuttle shall not have the right to assume and direct the
defense of such claim on behalf of an Indemnified Party.
(c) The failure by an Indemnified Party to send any notice
required by this Agreement shall not relieve Tuttle from any
obligation to indemnify the Indemnified Parties hereunder except to
the extent such delay has caused actual damages to Tuttle through
prejudice to Tuttle's rights or ability to defend against any
claim.
3. Information. Tuttle undertakes to keep DSI informed
concerning all material developments relating to the Trust Portion
and DSI agrees to provide Tuttle all information reasonably
requested by Tuttle related to the Trust Portion.
4. DSI Contribution. Promptly following the delivery of
this Agreement, DSI shall deliver to Nason, Gildan, Yeager, Gerson
& White, as escrow agent (the "Escrow Agent"), $30,000 (the
"Contribution") for use in connection with payment of the Trust
Portion. DSI and Tuttle acknowledge that the Contribution is being
made by DSI solely in consideration of certain agreements between
DSI and the Employees and should not be construed as implying that
DSI has any responsibility regarding the Trust Portion. DSI hereby
instructs the Escrow Agent to deliver the Contribution to the
Internal Revenue Service as part of any final settlement (including
any reasonable payment schedule) of the Trust Portion obligation
reached by, or on behalf of, Tuttle and the Employees. If no such
settlement is reached by July 15, 1996, DSI hereby instructs the
Escrow Agent to return the Contribution to DSI.
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5. Miscellaneous.
(a) Binding Effect; Assignment. This Agreement shall apply
to, and shall be binding upon the parties hereto, their respective
successors and assigns, and all persons claiming by, through, or
under any of the aforesaid persons.
(b) Modification; Waiver This Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by all the parties hereto, or
in the case of a waiver, by the party against whom the waiver is to
be effective. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided
shall be cumulative and shall not be exclusive to any rights or
remedies by law or at equity.
(c) Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Delaware, regardless of the law that might be applied under
principles of conflicts of law.
(d) Severability. In the event that any one or more of the
provisions contained in this Agreement, or the application thereof
in any circumstances, is held invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of
the remaining provisions contained in this Agreement shall not be
in any way impaired, it being intended that all rights, powers and
privileges of the parties hereto shall be enforceable to the
fullest extent permitted by law.
(e) Further Assurances. From time to time, at the request of
any party hereto or as required under applicable law and without
further consideration, each party hereto will execute and deliver
to such requesting party or other person or persons, as
appropriate, such documents and take such other action (but without
incurring any financial obligation except as otherwise required by
this Agreement) as such requesting party may reasonably request in
order to consummate more effectively and in accordance with
applicable law the transactions contemplated hereby.
(f) Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original and all of which together shall be deemed to be one and
the same instrument.
-3-
(g) Authority. The execution, delivery and performance of
this Agreement has been duly authorized by all appropriate
corporate action on behalf of the corporations party hereto and is
a valid and binding obligation of each party hereto.
IN WITNESS WHEREOF, the parties hereto have each executed
this Agreement as of the 6th day of June, 1996.
DSI INDUSTRIES, INC.
By: __________________________
Sherman H. Norton, Jr. Brian Tuttle
Chief Executive Officer
TUTTLE DESIGN-BUILD, INC.
By: __________________________ ___________________________
Brian Tuttle, President Merja Tuttle
<PAGE>
Exhibit 1
Form of Undertaking
The undersigned, a [former] [position of undersigned] of DSI
INDUSTRIES, INC. (the "Company"), hereby (i) acknowledges that
expenses incurred by the undersigned in defending all actions,
suits and proceedings have been and will in the future be paid by
the Company in advance of the final disposition of such actions,
suits and proceedings and (ii) undertakes to repay the Company the
amount of expenses so advanced if it shall ultimately be determined
that the undersigned is not entitled to be indemnified by the
Company as authorized by Section 145 of the Delaware General
Corporation Law and the certain letter agreement, dated April __,
1996, between the Company, the undersigned and other parties
thereto.
