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UNITED STATES
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 5, 1998
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Commission File Number 000-23353
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Denali Incorporated
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(Exact Name of Registrant in its Charter)
Delaware 76-0454641
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1360 Post Oak Blvd., Suite 2250, Houston, Texas 77056
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(Address of Principal Executive Officers) (Zip Code)
713-627-0933
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(Registrant's Telephone Number, Including Area Code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 5, 1998, pursuant to the terms of the Stock Purchase Agreement
(the "Agreement") by and between William I. Koch, Joan Granlund, Richard P.
Callahan, as Custodian for Wyatt I. Koch, under the Florida Uniform Transfer to
Minors Act, Richard A. Bird ("the Sellers"), Fibercast Company ("Fibercast") and
Denali Incorporated ("Denali"), Denali purchased 100 percent of the outstanding
stock of Fibercast from the Sellers for a cash purchase price of $17,511,000. In
addition, Denali paid down $1,089,000 of bank and seller debt and assumed
$3,500,000 of bank debt. The purchase price for this stock was determined by
arms length negotiations between the Sellers, Fibercast and Denali. The funds
used to pay the purchase price and debt payments in this acquisition were
borrowed by Denali Incorporated under its $29 million revolving credit facility
with NationsBank of Texas, N.A. Fibercast is a leading manufacturer of
fiberglass-reinforced plastic piping systems, which are typically used in
environments where corrosion resistance is of paramount concern. Fibercast will
remain an autonomous operation within the Specialty Solutions Group.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
As of the date of filing this Current Report on Form 8-K, the
financial statements required by this Item 7(a) are not
available. In accordance with Item 7(a)(4) of the Form 8-K,
such financial statements will be filed no later than August
19, 1998.
(b) Pro Forma Financial Information
As of the date of filing this Current Report on Form 8-K, the
pro forma financial information required by this Item 7(b) is
not available. In accordance with Item 7(b)(2) of Form 8-K,
such financial statements will be filed no later than August
19, 1998.
(c) Exhibits
10.1 Stock Purchase Agreement dated May 11, 1998 by and
between William I. Koch, Joan Granlund, Richard P.
Callahan, as Custodian for Wyatt I. Koch, under the
Florida Uniform Transfer to Minors Act, Richard A.
Bird, Fibercast Company and Denali Incorporated
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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 thereunto duly authorized.
DENALI INCORPORATED
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(Registrant)
Date: June 19, 1998 /s/ R. KEVIN ANDREWS
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R. Kevin Andrews
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
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<S> <C>
10.1 Stock Purchase Agreement dated May 11, 1998 by and between William I. Koch, Joan Granlund, Richard P.
Callahan, as Custodian for Wyatt I. Koch, under the Florida Uniform Transfer to Minors Act, Richard A.
Bird, Fibercast Company and Denali Incorporated
</TABLE>
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of
the 11th day of May, 1998, by and between WILLIAM I. KOCH ("KOCH"), JOAN
GRANLUND ("GRANLUND"), RICHARD P. CALLAHAN, AS CUSTODIAN FOR WYATT I. KOCH
UNDER THE FLORIDA UNIFORM TRANSFER TO MINORS ACT ("CALLAHAN") and RICHARD A.
BIRD ("BIRD") ("KOCH, GRANLUND, CALLAHAN and BIRD" are sometimes hereinafter
each referred to individually as "Seller" or collectively referred to as the
"Sellers"), FIBERCAST COMPANY, a Delaware corporation (the "Company") and
DENALI INCORPORATED, a Delaware corporation (hereinafter referred to as the
"Buyer").
W I T N E S S E T H
WHEREAS, the Sellers are the record and beneficial owner of 1,000
shares of Common Stock, $0.00 par value being all of the issued and outstanding
shares (the "Shares") of the Company which is in the business of developing,
producing, manufacturing and selling fiberglass pipe and fittings (the
"Business"); and
WHEREAS, Buyer desires to purchase from Sellers, and Sellers desire to
sell to Buyer, the Shares on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties hereto agree as follows:
SECTION 1 PURCHASE AND SALE OF SHARES
1.1 Sale of Shares. Upon the terms and subject to the conditions
set forth in this Agreement, Buyer will purchase and acquire from each Seller,
and each Seller will sell, transfer, convey and assign to Buyer, at the Closing
(as defined in Section 1.2 hereof), all of the Shares owned by each Seller.
1.2 Time and Place of Closing. Subject to the provisions of
Sections 9.3 and 10.3, the purchase and sale of the Shares (herein the
"Closing") shall take place in Tulsa, Oklahoma, at the offices of GABLE GOTWALS
MOCK SCHWABE KIHLE GABERINO, 2000 NationsBank Center, 15 West 6th Street,
Tulsa, Oklahoma 74119-5447, or such other place designated by the parties in
writing on or before 11:00 A.M., C.D.S.T., June 27, 1998, (the "Closing Date").
1.3 Purchase Price and Payment. The purchase price ("Purchase
Price") for the Shares shall be a sum equal to Eighteen Million Dollars
($18,000,000.00) payable by Buyer as follows:
(a) One Million Dollars ($1,000,000.00), which shall be
deposited on or before 5:00 P.M. C.D.S.T., May 13, 1998, in the trust
account of Gable Gotwals Mock
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Schwabe Kihle Gaberino as earnest money and part payment of the
Purchase Price (the "Earnest Money"), provided Sellers accept and
execute this Agreement no later than May 11, 1998, 5:00 P.M. C.D.S.T.
If Sellers do not meet this deadline, Buyer has the option of
withdrawing its offer and thereby terminating this Agreement and all
obligations hereunder. If Sellers meet this deadline, Buyer must
deposit the Earnest Money on or before 5:00 P.M. C.D.S.T. on May 13,
1998, unless Buyer fails to obtain approval of Buyer's execution of
this Agreement from the Board of Directors of Denali Incorporated on
or before May 13, 1998, as provided above;
(b) The balance of the Purchase Price shall be paid in
accordance with Section 1.4(b)(i) hereto; and
(c) The Purchase Price shall be reduced by the excess of
any outstanding indebtedness of the Company owing to Bank of Oklahoma,
N.A. or to any shareholder of the Company under any subordinated note
(the "Debt") to the extent such Debt exceeds FOUR MILLION ONE HUNDRED
THOUSAND DOLLARS ($4,100,000.00).
1.4 Closing.
(a) At the Closing, the Sellers shall deliver or cause to
be delivered to Buyer the following:
(i) A certificate or certificates representing
all of the Shares of the Company owned by each Seller, duly
endorsed in blank for transfer or with stock powers attached
duly executed in blank, together with any such documents as
may be required to transfer to Buyer good and marketable title
to such Shares free and clear of any and all liens, security
interests, restrictions, encumbrances, pledges, claims or
charges of any nature.
(ii) The minute books, stock records and corporate
seal of the Company, certified as complete and correct as of
the Closing Date by the Secretary or any Assistant Secretary
of the Company.
(iii) A certificate from the Secretary of the State
of Delaware, dated not more than ten (10) business days prior
to the Closing Date, certifying as to the good standing and
corporate existence of the Company.
(iv) A certificate from the President and Senior
Vice-President of Finance of the Company to the effect of
Section 9.8.
(v) Resignations of all directors of the Company
and its President, Secretary, Assistant Secretary and
Treasurer from their offices and employment effective
immediately following the Closing.
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(b) At the Closing, Buyer shall deliver to Sellers the
following:
(i) The Earnest Money, any accrued interest
thereon and the balance of the Purchase Price as provided in
Section 1.3 hereof payable by certified check, or cashier's
check to GABLE GOTWALS MOCK SCHWABE KIHLE GABERINO or by wire
transfer to GABLE GOTWALS MOCK SCHWABE KIHLE GABERINO's trust
account.
(ii) A copy of the resolutions of the Board of
Directors of Buyer authorizing the execution, delivery and
performance by Buyer of this Agreement, certified by the
President or Vice President of Buyer.
(iii) A certificate from the Secretary of State of
the State of Delaware, dated not more than ten (10) business
days prior to the Closing Date, certifying as to the good
standing and corporate existence of the Buyer.
1.5 Earnest Money. If, after the Sellers have performed Sellers'
obligations under this Agreement, and after the date specified for Closing as
provided in Section 1.2 hereto, Buyer fails to make the payments or to perform
any obligation of the Buyer under this Agreement for any reason, including the
timely deposit of the Earnest Money as specified in Section 1.3(a), other than
(i) failure to obtain required approval, if any, under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), or (ii) a default by the
Sellers under Section 9 of this Agreement; or (iii) failure to obtain approval
of Buyer's execution of this Agreement from the Board of Directors of Denali
Incorporated and communicate such fact to Sellers on or before 5:00 P.M.
C.D.S.T. on May 13, 1998; or (iv) Buyer's becoming aware of any liens,
mortgages or encumbrances on the Company's assets in excess of Twenty-five
Thousand Dollars ($25,000.00) that were not disclosed on the Financial
Statements or revealed to Buyer from the information maintained by Sellers at
the offices of GABLE GOTWALS MOCK SCHWABE KIHLE GABERINO, 2000 NationsBank
Center, 15 West Sixth Street, Tulsa, Oklahoma 74119-5447 (the "Data Room"),
then the Sellers may, at their option, cancel and terminate this Agreement and
retain the Earnest Money and any accrued interest thereon as liquidated
damages, or pursue any other legal or equitable remedy for the breach of this
Agreement by the Buyer. The Sellers and Buyer agree that such amount is a
reasonable amount for liquidated damages and that it would be impracticable and
extremely difficult to determine actual damages. If the Buyer shall perform
all the obligations of Buyer hereunder and (a) upon the occurrence of any
events set forth in (i) - (iv) above, or (b) if Sellers shall breach this
Agreement, or (c) upon Seller's failure to perform any of Sellers' obligations
hereunder, then Buyer shall be entitled to cancel and terminate this Agreement
and receive a refund of the Earnest Money, together with all interest accrued
thereon, which shall be Buyer's sole remedy.
1.6 Transfer Taxes. All transfer, excise or similar taxes arising
out of the delivery of the Shares to Buyer pursuant to this Agreement, if any,
shall be paid or provided for by the Buyer.
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1.7 Hart-Scott-Rodino Act. Any filing fees required to be paid in
compliance with the HSR Act, if applicable, shall be borne solely by the
Buyer.
SECTION 2 REPRESENTATIONS AND WARRANTIES OF THE SELLERS
2.1 Making of Representations and Warranties. Except as otherwise
provided herein, the Sellers, hereby make the representations and warranties
contained in this Section 2 as of the date of this Agreement and as of the
Closing Date. Each representation and warranty hereunder is limited solely to
the best of Seller's knowledge, information and belief. Except for the
representations and warranties contained in Sections 2.3(c) and 2.4 which are
made severally by each Seller, each of the representations and warranties
contained in this Agreement are made jointly and severally by each Seller.
2.2 Organization and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware with full corporate power and authority to own or lease its
properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is conducted by it. The
copies of the Certificate of Incorporation of the Company, as amended or
restated to date and certified by the Secretary of State of the State of
Delaware, and of the Bylaws of the Company, as amended to date and certified by
the Secretary or any Assistant Secretary of the Company and delivered to Buyer,
are complete and correct, the Company is not in violation of any of the
provisions of its Certificate of Incorporation or Bylaws and neither the
Company nor any Seller is a party to or bound by any agreement to change or
modify any term thereof. The Company has elected to be an S corporation under
Section 1362 of the Internal Revenue Code of 1986, as amended.
2.3 Capital Stock.
(a) The authorized capital stock of the Company consists
of 100,000 shares of Common Stock, $0.00 par value, of which 1,000
Shares are duly authorized, validly issued, outstanding, fully paid
and non-assessable. Sellers own all of the Shares of the issued and
outstanding capital stock of the Company.
(b) As of the Closing Date, there will be no outstanding
subscriptions, options, warrants, rights, agreements or commitments
which obligate Sellers or the Company to issue, sell or transfer any
shares of Common Stock of the Company.
(c) As of the Closing Date, each Seller owns beneficially
and of record the Shares set forth opposite his name in column (A) of
Exhibit "A" free and clear of any liens, security interests,
restrictions, encumbrances, pledges, claims or charges of any nature
whatsoever, and upon delivery to Buyer of the certificates
representing such Shares duly endorsed in blank or with stock powers
attached duly executed in blank, in proper form for transfer, good and
marketable title thereto shall be transferred to Buyer,
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free and clear of any liens, security interests, restrictions,
encumbrances, pledges, claims or charges of any nature whatsoever.
2.4 Authority of the Sellers. Each of the Sellers has full right,
authority, power and capacity to enter into this Agreement and shall have at
Closing full right, authority and power to carry out the transactions
contemplated hereby. Any shareholder of the Company having a right of first
refusal to purchase another shareholder's stock in the Company, hereby waives
any such rights during the term of this Agreement. This Agreement constitutes,
or when executed and delivered will constitute, valid and binding obligations
of each Seller enforceable in accordance with its terms. The execution,
delivery and performance by each Seller of this Agreement: does not and will
not violate any United States law or other law of any jurisdiction applicable
to such Seller or require such Seller to obtain any approval, consent or waiver
of, or make any filing with, any person that has not been obtained or made.
2.5 Financial Statements.
(a) The financial statements for the Company as of
December 31 in each of the years 1994 through 1997 attached hereto as
Exhibit "B" ("Audited Financial Statements") have been prepared in
accordance with generally accepted accounting principles applied
consistently during the periods covered thereby. The copy of the
letter from Arthur Andersen & Co. ("Auditors") incorporated in the
Audited Financial Statements and expressing the Auditors' opinion on
the Audited Financial Statements is a true copy of an original letter
from the Auditors expressing their opinion on the Audited Financial
Statements as presented in Exhibit "B".
(b) The financial statements attached hereto as Exhibit
"C" ("Base Financial Statements") are unaudited interim financial
statements fairly presenting (among other things) the financial
condition of the Company as of March 31, 1998 and the results of
operations and cash flows of the Company for the three-month period
then ended. The Base Financial Statements are the only financial
statements upon which the officers, directors and stockholders of the
Company have relied to assess the Company's financial condition as of
March 31, 1998 and its results of operations and cash flows for the
three-month period then ended. (The directors and officers of the
Company also may have scrutinized and relied upon the underlying books
and records of the Company and upon analyses prepared therefrom in
order to make such assessment). The Base Financial Statements have
been prepared on the basis of the books and records of the Company,
kept in accordance with the Company's usual accounting procedures.
These books and records are the basis upon which were prepared
unaudited financial statements presenting the financial condition of
the Company as of December 31, 1997 and the results of operations and
cash flows of the Company for the year then ended ("Unaudited
Financial Statements"). The Audited Financial Statements reflect no
entries in the books and records of the Company (whether so-called
audit adjustments or otherwise) that were not reflected in the
Unaudited Financial Statements.
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2.6 Finder's Fee. Each Seller shall pay his or her pro rata share
of the fee to be paid to Richard A. Bird as set forth in a written agreement
dated April 3, 1998. The Company shall not pay any of such fee. With the
exception of the foregoing, no broker, finder, agent or similar intermediary
has acted on behalf of the Company or any Sellers in connection with this
Agreement or the transactions contemplated hereby and there are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
therewith other than the fees payable by Sellers to Richard A. Bird.
2.7 Litigation. Except as set forth on Schedule 2.7 hereto, to
Sellers' knowledge, there are no material claims, actions, suits, proceedings
or investigations pending or threatened against or affecting the Company or any
of its properties, at law or in equity or before or by any court or federal,
state, municipal or other governmental department, commission, board, agency or
instrumentality. To Sellers' knowledge, neither Sellers nor Company are
subject to any court or administrative order, injunction or similar decree, the
enforcement of which would adversely affect the value of the Company.
2.8 S Corporation. The Company has been an S corporation, as
defined in Section 1361(a) of the Internal Revenue Code of 1986, as amended,
for every taxable year of the Company since its incorporation.
2.9 Limitation on Representations and Warranties by Seller.
(a) Except as and to the extent expressly set forth in
this Agreement, included on any Schedule or in any Exhibit or included
in any writing delivered by Sellers and/or the Company to Buyer
currently herewith or subsequent hereto expressly pursuant to the
provisions of this Agreement, Sellers make no other representation or
warranty and disclaim all liability and responsibility for any
representation, warranty, statement or information (financial or
otherwise) made or communicated (orally or in writing) to Buyer or any
of its affiliates or representatives. In particular, Sellers make no
representation or warranty to Buyer with respect to any information
set forth in the Confidential Descriptive Memorandum, dated April 8,
1998, or the accuracy thereof.
(b) Sellers make no representation or warranty to Buyer
regarding the probable success or profitability of the Company.
SECTION 3 COVENANTS OF THE SELLERS
3.1 Making of Covenants and Agreements. The Sellers hereby
severally covenant and agree as set forth in this Section 3.
3.2 Breach of Representations and Warranties. Promptly upon the
occurrence of, or promptly upon becoming aware of the impending or threatened
occurrence of any event which would cause or constitute a breach, or would have
caused or constituted a breach had such event occurred or been known prior to
the date hereof, of any of the representations and warranties of
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the Sellers contained in or referred to in this Agreement or in any Exhibits or
Schedules referred to in this Agreement, the Sellers shall give prompt,
detailed written notice thereof to Buyer.
3.3 HSR Act. Seller will (i) file on or before May 19, 1998, with
the Department of Justice ("DOJ") and the Federal Trade Commission ("FTC") the
notification and report form required for the transactions contemplated
hereunder by the HSR Act, requesting early termination of the waiting period
hereunder, (ii) respond promptly to inquiries in connection with such filings,
and (iii) cooperate with Buyer in providing any required information necessary
for Buyers' filing.
3.4 Expenses. All expenses of the Sellers in connection with the
negotiation and performance of this Agreement and the transactions contemplated
hereby including the fees to be paid as disclosed in Section 2.6, shall be paid
by the Sellers out of the proceeds of the sale of the Shares or otherwise, and
no such expenses shall be payable by the Company, Buyer or any affiliate of
Buyer or included in any account of the Company.
3.5 Notification. Each Seller hereby agrees to give Buyer written
notice of any change of such Seller's address within thirty (30) days after
such change, specifying such Seller's new address, and to give Buyer written
notice of the death of any other Seller within five (5) days after the
occurrence thereof.
3.6 Trade Secrets. From and after the Closing Date, Sellers will
not use or divulge to any competitor or unauthorized person any confidential
information, and they will use all reasonable and proper efforts to insure that
their agents do not use or divulge any confidential information, trade secrets,
processes, formulate or know-how relating to the Company.
3.7 Non-Competition. SELLERS AGREE THAT DURING A TWO-YEAR PERIOD
COMMENCING ON THE CLOSING DATE, THEY WILL NOT DIRECTLY, FOR THEIR OWN ACCOUNT
OR FOR THE ACCOUNT OF OTHERS, WHETHER AS PRINCIPAL OR AGENT OR THROUGH THE
AGENCY OF ANY CORPORATION, PARTNERSHIP, ASSOCIATION OR OTHER BUSINESS ENTITY,
ENGAGE IN ANY ACTIVITY COMPETITIVE WITH THE COMPANY'S BUSINESS AS CONDUCTED AS
OF THE CLOSING DATE IN THE GEOGRAPHIC AREA WHERE THE COMPANY IS CURRENTLY DOING
BUSINESS. THE FOREGOING AGREEMENT NOT TO COMPETE SHALL NOT BE HELD INVALID OR
UNENFORCEABLE BECAUSE OF THE SCOPE OF THE TERRITORY OR THE ACTIONS RESTRICTED
THEREBY, OR THE PERIOD OF TIME WITHIN WHICH SUCH AGREEMENT IS OPERATIVE; BUT
ANY JUDGMENT OF A COURT OF COMPETENT JURISDICTION MAY DEFINE THE MAXIMUM
TERRITORY AND ACTIONS SUBJECT TO AND RESTRICTED BY THIS PARAGRAPH AND THE
PERIOD OF TIME DURING WHICH SUCH AGREEMENT IS ENFORCEABLE.
3.8 Non-Solicitation. SELLERS AGREE THAT DURING A TWO-YEAR PERIOD
COMMENCING ON THE CLOSING DATE, THEY WILL NEITHER CALL UPON OR SOLICIT ANY
CUSTOMERS OF THE COMPANY NOR INFLUENCE OR ATTEMPT TO INFLUENCE ANY EMPLOYEE,
AGENT OR CONSULTANT OF THE COMPANY TO TERMINATE HIS OR HER EMPLOYMENT OR
BUSINESS RELATIONSHIP WITH THE COMPANY.
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SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Making of Representations and Warranties. The Buyer hereby
makes the representations and warranties contained in this Section 4 as of the
date of this Agreement and as of the Closing Date.
4.2 Organization of Buyer. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full corporate authority to own or lease its properties and to conduct its
business in the manner and in the places where such properties are owned or
leased or such business is conducted by it. Buyer is not in violation of any
of the provisions of its charter or Bylaws and is duly qualified or licensed to
do business as a foreign corporation in good standing in each jurisdiction
where the character of its property is owned, operated or leased or the nature
or its activities make such qualification or license necessary except to the
extent that the failure to be so qualified would not have a material adverse
effect on the business, assets, results of operations, financial condition or
prospects of Buyer.
4.3 Investment Intent. Buyer is acquiring the Shares for its own
account for investment and not with any present intention to effect a
distribution or resale of any thereof. Buyer acknowledges that the shares are
not registered securities under any state or federal law and hereby agrees to
indemnify Sellers from any expense, damage or liability incurred by Buyer
subsequent to its acquisition of the shares. This indemnity will survive the
Closing.
4.4 Authority. Buyer has full right, authority, power and
capacity to enter into this Agreement and each agreement, document and
instrument to be executed and delivered by it pursuant to this Agreement and to
carry out the transactions contemplated hereby and thereby. All necessary
corporate action has been taken by Buyer to authorize the execution, delivery
and performance of this Agreement and each agreement, document and instrument
executed and delivered by Buyer pursuant to this Agreement. This Agreement and
each agreement, document and instrument to be executed and delivered by Buyer
pursuant to this Agreement (to the extent it contains obligations to be
performed by Buyer) constitutes, or when executed and delivered by Buyer will
constitute, valid and binding obligations of Buyer enforceable in accordance
with their respective terms. The execution, delivery and performance by Buyer
of this Agreement and each such agreement, document and instrument:
(a) does not and will not violate any provisions of the
Certificate of Incorporation or Bylaws of Buyer, as amended;
(b) does not and will not violate any United States law
or law of the jurisdiction of incorporation of Buyer or of any other
jurisdiction applicable to Buyer, or
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require Buyer to obtain any approval, consent or waiver of, or to make
any filing with, any person or entity that has not been obtained or
made; and
(c) does not and will not violate any provision of,
result in a breach of, constitute a default under, accelerate any
obligation under or give rise to a right of termination of any
indenture or loan or credit agreement or any other agreement,
contract, instrument, mortgage, lien, lease, permit, authorization,
order, writ, judgment, injunction, decree, determination of
arbitration award to which Buyer is a party or by which the property
of Buyer is bound or affected, or result in the creation or imposition
of any mortgage, pledge, lien, security interest or other charge or
encumbrance on any property or asset owned by Buyer.
4.5 Finder's Fee. No broker, finder, agent or similar
intermediary has acted on behalf of Buyer in conjunction with this Agreement or
the transactions contemplated hereby and there are no brokerage commissions,
finder's fees or similar fees or commissions payable in connection therewith.
SECTION 5 COVENANTS OF THE BUYER
5.1 Making of Covenants and Agreements. The Buyer hereby
covenants and agrees as set forth in this Section 5.
5.2 HSR Act. Buyer will (i) file on or before May 19, 1998, with
the Department of Justice ("DOJ") and the Federal Trade Commission ("FTC") the
notification and report form required for the transactions contemplated
hereunder by the HSR Act, requesting early termination of the waiting period
hereunder, (ii) respond promptly to inquiries in connection with such filings,
and (iii) cooperate with Sellers in providing any required information
necessary for Sellers' filing.
5.3 Breach of Representations and Warranties. Promptly upon the
occurrence of, or promptly on becoming aware of the impending or threatened
occurrence of any event which would cause or constitute a breach, or would have
caused or constituted a breach had such event occurred or been known prior to
the date hereof, of any of the representations and warranties of the Buyer
contained in or referred to in this Agreement or in any Exhibits or Schedules
referred to in this Agreement, the Buyer shall give prompt, detailed written
notice to Sellers.
5.4 Expenses. All expenses of the Buyer in connection with the
negotiation and performance of this Agreement and the transactions contemplated
hereby shall be paid by the Buyer.
5.5 Notification. Buyer hereby agrees to give Sellers written
notice of any change of the Buyer's address within thirty (30) days after such
change, specifying Buyer's new address.
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SECTION 6 CONDUCT OF THE COMPANY PENDING CLOSING
6.1 Operation of the Business of the Company. Between the date of
the Base Financial Statements and the Closing Date, Sellers have caused, and
shall cause, the Company to (i) conduct the Business and operations of the
Company only in the ordinary course of business of the Company and in material
compliance with all applicable laws, (ii) use its reasonable commercial efforts
to preserve, maintain and protect the assets of the Company in as good repair
and condition as on the date of this Agreement, ordinary wear and tear
excepted, (iii) use its reasonable commercial efforts to preserve intact the
current business organization of the Company and to maintain existing
relationships and good will with licensors, licensees, suppliers, contractors,
distributors, customers, landlords, creditors, employees, agents and other
persons having business relationships with the Company, (iv) keep in full force
and effect insurance and bonds comparable in amount and scope of coverage to
that maintained by, or for the benefit of, the Company on the date of this
Agreement, (v) promptly notify Buyer of any written notice of (a) any default,
termination or cancellation under any applicable material contract, or (b) the
Company becoming subject to any claim or liability for any alleged damages or
damages for negligence or tort which might adversely affect the value of the
Company; (vi) confer with Buyer concerning operational matters of a material
nature, and (vii) otherwise report periodically to Buyer concerning the status
of the business, operations and finances of the Company.
6.2 Restrictions on Certain Actions. From and after the date of
the Base Financial Statements and prior to the Closing, except (i) as
otherwise provided in this Agreement and made available in the Data Room or,
(ii) pursuant to applicable law, or (iv) with the prior written consent of
Buyer, Sellers have not caused and shall not cause the Company to:
(a) amend its Certificate of Incorporation or Bylaws;
(b) issue, sell or deliver (whether through the issuance
or granting of options, warrants, commitments, subscriptions, rights
to purchase or otherwise) any equity securities of the Company, or
amend in any respect any of the terms of any equity securities of the
Company;
(c) (i) split, combine, reclassify or change any shares
of the capital stock of the Company, (ii) declare, set aside or pay
any dividend or other distribution (whether in cash, stock or property
or any combination thereof) in respect of such capital stock, (iii)
grant any registration rights, (iv) purchase, redeem, retire or
otherwise acquire any of its securities, or (v) adopt a plan of
complete or partial liquidation or resolutions providing for, or
authorizing, any liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the
Company;
(d) acquire (by merger, consolidation or acquisition of
stock or assets or otherwise), form, organize, or invest in, any
person;
(e) make any change in the accounting methods, principles
or procedure, of the Company;
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(f) take any action which would, or might, (i) make any
of the representations or warranties of the Sellers set forth in this
Agreement untrue or inaccurate as of any time from the date of this
Agreement to the Closing, or (ii) result in any of the conditions set
forth in this Agreement not being satisfied; or
(g) authorize or propose, or agree in writing or
otherwise to take, any of the actions described in this Section 6.2.
SECTION 7 ADDITIONAL AGREEMENTS
7.1 General. Prior to the Closing, and after execution of this
Agreement, each of the parties shall refrain from taking any action that would
(i) prevent or invalidate the consummation of the transactions contemplated by
this Agreement, or (ii) cause this Agreement or the transactions contemplated
hereby to violate any law. Each of the parties shall endeavor in good faith to
cause the conditions (a) to its obligations to close, and (b) to the
obligations of the other party to close, to be fulfilled at or prior to the
Closing.
7.2 Required Consents. Each of the parties shall use its
reasonable commercial efforts to obtain all consents of, and to effect all
declarations, filings and registrations with, all persons (including
governmental bodies) that are necessary or required for the consummation by
such party of the transactions contemplated herein. Each of the parties shall
cooperate with the other party with respect to all such (i) consents to be
obtained by such party, or (ii) declarations, filings or registrations to be
make by such party.
7.3 Access to Information. Between the date of this Agreement and
the Closing, Sellers shall furnish, and shall cause the Company and its
representatives to furnish, Buyer and such representatives with such additional
financial, operating, and other data and information, as Buyer may reasonably
request.
7.4 Books and Records.
(a) Inspection. Each party agrees that, for a period of
five years following the Closing Date, such party shall take all
necessary action to ensure that (i) all corporate books and records of
the Company with respect to periods ending on or before the Closing
Date and in the possession or control of such party or any of its
affiliates shall be open for inspection by representatives of the
other party at any time during regular business hours, and (ii) such
other party may during such period at its expense make such excerpts
therefrom as it may reasonably request.
(b) Destruction and Cooperation. For a period of five
years following the Closing Date (or for such longer period as may be
required by law), no party or any of its affiliates shall destroy or
give up possession of any original or any copy of any of the books and
records relating to any matter for which a party shall have any
continuing
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responsibility under this Agreement without first offering to the
other party the opportunity, at its expense, to obtain such original
or a copy thereof. During such period, each party shall use its
reasonable commercial efforts to cooperate with the other party and
make available such records and books to the employees and
representatives of such party to the extent that such party may
reasonably require for its corporate and other business purposes
(including attendance at depositions or legal proceedings, or audits
requested by such party to be performed by such party's independent
accountants for any period through the Closing Date).
7.5 Litigation Support. In the event and for so long as any party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection with
(i) any transaction contemplated by this Agreement, or (ii) any fact,
situation, circumstance, status, condition, activity, practice, occurrence,
event, incident, acting failure to act, or transaction on or prior to the
Closing Date and involving the Company, the other party will cooperate with
such party and its counsel in such contest or defense, make available the
personnel of such other party, and provide such testimony and access to its
books and records as shall be necessary in connection with such contest or
defense, all at the sole cost and expense of the contesting or defending party.
SECTION 8 TAX MATTERS
8.1 Tax Returns.
(a) Prior to the Closing, Sellers shall cause to be
prepared, and timely filed or cause to be timely filed by the Company,
all U.S. federal income tax returns and corresponding state income tax
returns and returns required by applicable law to be filed by the
Company for all taxable periods prior to, the Closing Date, without
regard to extensions, and all such tax returns are or will be true,
complete and correct in all respects.
(b) Subsequent to the Closing Date, Buyer shall provide
Sellers with any and all information necessary for the preparation of
any income tax returns required under Section 8.1(a) hereof or
otherwise.
(c) Sellers shall provide Buyer with copies of all tax
returns of the Company, including tax returns prepared pursuant to
Section 8.1(a) of this Agreement.
8.2 Tax Elections. Sellers shall not make any tax elections in
the Company's tax returns for any taxable period ending on, prior to, or
commencing prior to and ending after, the Closing Date, which could be binding
upon the Company or increase the amount of taxes for which the Company may be
liable without Buyer's express, written approval. Buyer and each of the
Sellers will negotiate in good faith the terms under which they will make a
simultaneous joint election under Treas. Reg. Section 1.338(h)(10)-(d) and (2)
on Form 8023. Provided, however, that each of the Parties retains the right in
their sole discretion to make their own independent
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judgment as to whether to join in the filing of such joint election. The
failure of either party to join in the joint election shall not constitute a
default or breach of this Agreement.
8.3 Cooperation. Buyer or Sellers as the case may be shall
provide Sellers or Buyer as the case may be with such cooperation and
information as any of them may reasonably request in connection with the
preparation or filing or review by any tax authority of any tax return filed by
the Company for any period ending on or before the Closing Date. Such
cooperation shall include, but not be limited to, making employees available on
a mutually convenient basis to provide explanation of any documents or
information provided herein or otherwise as required in the conduct of any
audit or other proceeding. Buyer shall retain all tax returns, schedules and
work papers and all material records or other documents relating to matters of
the Company relating to taxes for a period of time consistent with the records
retention policy of the Company in effect on the date hereof, and at the
expiration of such period either party shall have the right to dispose of any
such tax returns or other documents after providing 90 days' notice to the
other party. At no time shall this provision require any Seller or Sellers or
Buyer to execute any additional consents or similar documents pertaining to
matters of taxation. Any information obtained under this Section 8.3 shall be
kept confidential, except as may be otherwise necessary in connection with the
filing of tax returns or claims for refund or in conducting an audit or other
proceeding.
SECTION 9 CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived in
writing by Buyer in whole or in part):
9.1 Accuracy of Representations. The representations and
warranties made by Sellers in this Agreement shall be true and correct in all
material respects as of the Closing with the same effect as though such
representations and warranties had been made as of the Closing (except (i) to
the extent that such representations and warranties expressly relate to an
earlier date, and (ii) as provided in this Agreement).
9.2 Performance by Sellers. Sellers shall have performed, and
complied with, all of the covenants, conditions and obligations required by
this Agreement to be performed and complied with by Sellers, on or prior to the
Closing.
9.3 HSR Act. All waiting periods under the HSR Act applicable to
the transactions contemplated by this Agreement shall have expired, by passage
of time or by valid early termination by the FTC or the DOJ; no representative
of either the FTC or the DOJ shall have taken the position that any of such
waiting periods has not commenced to run or has not expired for any reason; and
no representative of either the FTC or the DOJ shall have requested a delay
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<PAGE> 14
of the Closing Date for a period which has not expired, which request has not
been withdrawn; provided, however that if all waiting periods under the HSR Act
have not expired on or before July 20, 1998, either Buyer or Sellers, in their
sole discretion shall have the right to terminate this Agreement.
9.4 No Proceedings or Orders. No proceeding or order shall, on
the Closing Date, be pending, threatened or in effect that (i) challenges, or
that may have the effect of preventing, restraining, prohibiting, delaying,
making illegal, obtaining damages or other relief in connection with, or
otherwise interfering with, this Agreement or any of the transactions
contemplated hereby, or (ii) would impose any material limitation on the
ability of Buyer to exercise full rights of ownership of the Company shares or
of the ownership and operation of the assets.
9.5 Consents. All consents of, and declarations, filings or
registrations with, all persons (including governmental bodies) required to be
obtained or made by or on behalf of the parties in connection with the
execution, delivery or performance by the parties of this Agreement, or
otherwise reasonably required for the consummation of the transactions
contemplated hereby, shall have been obtained or made, and all thereof shall be
in full force and effect at the Closing.
9.6 Delivery of Documents. Sellers shall have delivered to Buyer
each of the certificates, instruments, documents and other items to be
delivered by Sellers to Buyer pursuant to the provisions of Section 1.4(a).
9.7 Legal Matters. All actions, proceedings, instruments and
other documents required to consummate the transactions contemplated by this
Agreement, and all other related legal matters, shall be reasonably
satisfactory to counsel of Buyer.
9.8 Certificate of Officers of Company. A certificate from each
of the President and Senior Vice-President of Finance of Company to the effect
that to the best of their knowledge (i) except as disclosed to the Buyer in the
data room, there are no facts in existence on the date hereof which might
reasonably serve as the basis for any liabilities or obligations of the Company
and which would materially adversely affect the value of the Company.
SECTION 10 CONDITIONS TO OBLIGATIONS OF THE SELLERS
The obligation of the Sellers to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (any of which may be
waived by the Sellers, in whole or in part):
10.1 Accuracy of Representations. The representations and
warranties made by Buyer in this Agreement shall be true and correct in all
material respects as of the Closing with the same effect as though such
representations and warranties had been made as of the Closing (except (i) to
the extent that such representations and warranties expressly relate to an
earlier date, and (ii) as provided in this Agreement).
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10.2 Performance by Buyer. Buyer shall have performed, and
complied with, all of the covenants, conditions and obligations required by
this Agreement to be performed and complied with by Buyer, on or prior to the
Closing.
10.3 HSR Act. All waiting periods under the HSR Act applicable to
the transactions contemplated by this Agreement shall have expired, by passage
of time or by valid early termination by the FTC or the DOJ; no representative
of either the FTC or the DOJ shall have taken the position that any of such
waiting periods has not commenced to run or has not expired for any reason; and
no representative of either the FTC or the DOJ shall have requested a delay of
the Closing Date for a period which has not expired, which request has not been
withdrawn; provided, however that if all waiting periods under the HSR Act have
not expired on or before July 20, 1998, either Buyer or Sellers, in their sole
discretion shall have the right to terminate this Agreement.
10.4 No Proceedings or Orders. No proceeding or order shall, on
the Closing Date, be pending, threatened or in effect that challenges, or that
may have the effect of preventing, restraining, prohibiting, delaying, making
illegal, obtaining damages or other relief in connection with, or otherwise
interfering with, this Agreement or any of the transactions contemplated
hereby.
10.5 Consents. All consents of, and declarations, filings or
registrations with, all persons (including governmental bodies) required to be
obtained or made by or on behalf of the parties in connection with the
execution, delivery or performance by the parties of this Agreement, or
otherwise reasonably required for the consummation of the transactions
contemplated hereby, shall have been obtained or made, and all thereof shall be
in full force and effect at the Closing.
10.6 Delivery of Documents. Buyer shall have delivered to Sellers
each of the certificates, instruments, documents and other items to be
delivered by Sellers to Buyer pursuant to the provisions of Section 1.4(b).
10.7 Legal Matters. All actions, proceedings, instruments and
other documents required to consummate the transactions contemplated by this
Agreement, and all other related legal matters, shall be reasonably
satisfactory to counsel of Sellers.
SECTION 11 MISCELLANEOUS
11.1 Representative. William I. Koch is hereby appointed as a
representative on behalf of the Sellers (the "Representative") for purposes of
handling any and all actions required on behalf of the Sellers hereunder, and
all communications relating to such actions pursuant to this Agreement shall be
sent to such Representative. The appointment of the Representative shall be
irrevocable, except that a successor to the Representative may be appointed by
a written instrument signed and acknowledged by each of the Sellers or their
legal Representatives, in
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form and substance reasonably satisfactory to Buyer, delivered to Buyer. The
Representative or any such successor shall have full power and authority to act
in the name or on behalf of the Sellers in any matter relating to the Agreement
and the transactions contemplated by this Agreement. The Sellers shall give
Buyer prompt written notice of any change in the Representative.
11.2 Exclusivity. During the term of this Agreement, Sellers shall
not, and shall cause the Company not to engage in any negotiations with or
solicit or entertain any offer of or from another person or entity regarding
the sale or transfer of all or any portion of their Shares of the Company or
the Company's assets (whether as a stock transaction, asset transaction, merger
or otherwise).
11.3 Confidentiality. Unless such disclosure is required by law,
Buyer and Sellers shall hold, and shall cause their affiliates, employees,
agents, accountants, legal counsel and other representatives to hold in strict
confidence (i) the names and/or identities of each Seller or the Sellers or
Buyer, (ii) the amount of the Purchase Price paid to Sellers hereunder, and
(iii) any information with respect to the Sellers or Buyer not generally
available to the public which may come to the attention of the Buyer or Sellers
in connection with the transactions contemplated in this Agreement.
11.4 Press Releases and Public Announcements. Prior to the
Closing, the parties shall not permit, and shall not permit any of their
respective affiliates, to issue any press release or other public announcement
relating to the subject matter of this Agreement (other than presentations to
security analysts and financial institutions) except (i) with the prior
approval of the other parties, (ii) when, on the advice of legal counsel, such
release or announcement is required by the federal securities laws (in which
case the disclosing Party shall consult with the other Parties prior to making
the disclosure), and (iii) either Seller or Buyer may, upon execution of this
Agreement, issue a press release and file any report required by such laws,
rules or regulations disclosing, in each case, such execution, the anticipated
Closing Date and the terms of the transactions contemplated by this Agreement
set forth in Sections 1.1 and 1.2. Each party will consult with the other
parties concerning the means by which the employees, customers and suppliers of
the Company and other persons having dealings with the Company will be informed
of the transactions contemplated by this Agreement.
11.5 Law Governing. This Agreement shall be construed under and
governed by the internal laws of the State of Oklahoma applicable to contracts
made and performed in Oklahoma.
11.6 Notices. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given if delivered
personally or mailed by registered or certified mail, postage prepaid, return
receipt requested, as follows:
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To Buyer: Denali Incorporated
1360 Post Oak Boulevard, Suite 2250
Houston, Texas 77056
Attn: Stephen T. Harcrow
Chairman, CEO
Telephone: (713) 627-0933
Facsimile: (713) 627-0937
To any Seller: William I. Koch, as Representative
for the Sellers
c/o Oxbow Corporation
1601 Forum Place
West Palm Beach, Florida 33401
Telephone: (561) 697-4300
Facsimile: (561) 640-8812
with a copy to: Gable Gotwals Mock Schwabe Kihle Gaberino
2000 NationsBank Center
15 West 6th Street
Tulsa, Oklahoma 74119-5547
Attn: John R. Barker, Esq.
Jeffrey C. Rambach, Esq.
Telephone: (918) 582-9201
Facsimile: (918) 586-8383
or to such other address of which any party may notify the other parties as
provided above.
11.7 Prior Agreements Superseded. This Agreement supersedes all
prior understandings and agreements among the parties relating to the subject
matter hereof.
11.8 Assignability. This Agreement shall not be assignable by any
party, except by Buyer to an affiliate of Buyer, without the prior written
consent of the other parties hereto; provided that in the event of such
assignment, Buyer shall remain primarily responsible for its obligations
herein. This Agreement (including without limitation the provisions of Section
7) shall be binding upon and enforceable by, and shall inure to the benefit of,
the parties hereto and their respective successors, heirs, executors,
administrators and permitted assigns.
11.9 Attorney's Fees. In the event either party is required to
institute legal action to enforce any of the terms or provisions of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees
and costs.
11.10 Captions and Gender. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun
in reference to a party hereto shall be deemed to include the feminine or
neuter pronoun, as the context may require.
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11.11 Execution in Counterparts. For the convenience of the parties
and to facilitate execution, this Agreement may be executed in one or more
counterpart copies, each of which shall be deemed an original, but all of which
shall constitute one and the same document. Signatures on this Agreement and
any related documents may be by facsimile, with original signatures to follow.
11.12 No Third-Party Beneficiaries. NOTHING CONTAINED IN THIS
AGREEMENT, EXPRESS OR IMPLIED, IS INTENDED TO CONFER UPON ANY PERSON, OTHER
THAN THE PARTIES AND THEIR RESPECTIVE SUCCESSORS AND PERMITTED ASSIGNS, ANY
RIGHTS, REMEDIES OR OBLIGATIONS UNDER, OR BY REASON OF, THIS AGREEMENT.
11.13 Expenses. Except as otherwise provided herein, the Sellers
and the Buyer, respectively, will bear all of their respective costs and
expenses (including, without limitation, the fees and expenses of legal counsel
and other advisors), incurred in connection with this Agreement and the
transactions contemplated hereby and whether or not the Closing shall have
occurred.
11.14 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be set forth in an instrument in
writing signed by each party. Each of the parties may waive (i) any
inaccuracies in the representations and warranties of the other party contained
in this Agreement or in any document, certificate or writing delivered pursuant
hereto, or (ii) compliance by such other party with any of the agreements of
such party or the fulfillment of any of the conditions to its own obligations
set forth herein. Any agreement on the part of any party to any such waiver
shall be valid only if set forth in an instrument in writing signed by such
party. No waiver by either party of any default, misrepresentation, breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, breach of
warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence. Neither the failure nor any
delay by any party in exercising any right, power or privilege under this
Agreement will operate as a waiver of such right, power or privilege, and no
single or partial exercise of any such right, power or privilege will preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege.
11.15 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
11.16 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event any ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any of the provisions of this Agreement. Personal pronouns, when used in this
Agreement, whether in the
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masculine, feminine or neuter gender, shall include all other genders, and the
singular shall include the plural, and vice versa. All references in this
Agreement or any Schedule attached hereto to (i) Sections or subsections shall
refer to the corresponding Section or subsection of this Agreement, unless
specific reference is made to an Article or a Section or subsection of another
document or instrument, and (ii) a Schedule or an Exhibit shall refer to the
corresponding Schedule or Exhibit to this Agreement, unless specific reference
is made to a Schedule or Exhibit to another document or instrument. Any
reference in this Agreement to any Law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. The word "including" shall mean "including, without limitation."
11.17 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
11.18 Acceptance by Sellers. In the event any of the Sellers fail
to execute and deliver a copy this Agreement to Buyer on or before 5:00 P.M.
C.D.S.T. on May 11, 1998, Buyer may at its option, terminate this Agreement and
neither party shall have any further liability or obligation hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date set forth above by their duly authorized
representatives.
/S/ WILLIAM I. KOCH
------------------------------------------------
WILLIAM I. KOCH
/S/ JOAN GRANLUND
-------------------------------------------------
JOAN GRANLUND
/S/ RICHARD P. CALLAHAN
-------------------------------------------------
RICHARD P. CALLAHAN, As Custodian for
WYATT I. KOCH, Under the Florida Uniform
Transfer To Minors Act
/S/ RICHARD A. BIRD
-------------------------------------------------
RICHARD A. BIRD
("Sellers")
FIBERCAST COMPANY,
a Delaware corporation
By: /S/ ZACHARY SHIPLEY
---------------------------------------------
Name: ZACHARY SHIPLEY
Title: TREASURER
("Company")
DENALI INCORPORATED,
a Delaware corporation
By: /S/ STEPHEN T. HARCROW
--------------------------------------------
Name: STEPHEN T. HARCROW
Title: CHAIRMAN AND CEO
("Buyer")
23
