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
January 22, 1996
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Date of Report
Forestry International, Inc.
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(Exact name of registrant as specified in its charter)
Colorado
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(State or other jurisdiction of incorporation)
0-023310 84-1116284
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(Commission File Number) (IRS Employer ID Number)
3573 East Sunrise Drive, Suite 225, Tucson, Arizona 85718
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(Address of principal executive offices including zip code)
Not Applicable
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(Former address, if changed since last report)
Item 1. Changes in Control of Registrant
Not Applicable
Item 2. Acquisition or Disposition of Assets.
Not Applicable
Item 3. Bankruptcy or Receivership.
Not Applicable
Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable
Item 5. Other Events.
On December 16, 1996, Forestry International, Inc. (the "Company")
entered into a share purchase agreement (the "Agreement") with Dixieland
Forest Products, Inc., a Mississippi corporation, and Mr. Randy Pope ("Pope)
a resident of Mississippi. The Agreement provided, inter alia, that as
at December 16, 1996, the Company would acquire all of the business,
operations and prospects of Dixieland Forest Products, Inc. (Dixieland).
Under the terms of the Agreement, the purchase price to be paid for
Dixieland by the Company is One Million Eight Hundred Thousand dollars
($1,850,000). The consideration given by Pope consists of the following,
subject to adjustments as hereinafter described:
(I) As of December 16, 1996, payment of the sum of Four Hundred
Thousand dollars ($400,000) in cash; and;
(II) On or prior to January 3, 1997, Two Hundred Fifty Thousand
dollars ($250,000) through the delivery by the Company to Pope of
250,000 shares of the $0.0001 par value per share restricted stock
of the Company (the "Purchase Shares").
(III) An agreement whereby a third party would supply 400,000 shares
of free trading common stock which is subject to the terms and conditions
of a stock repurchase agreement between Pope and a non-affiliated third
party. Such agreement provides as follows:
(A) On or prior to January 16, 1997, Two Hundred Thousand
dollars ($200,000) would be provided to Mr. Pope by way of the provision
by a third party of a pledge to acquire two hundred thousand shares of
the Company's common stock held by Mr. Pope at $1.00 per share, and;
(B) On or prior to April 1, 1997, Two Hundred Fifty Thousand
dollars ($250,000) would be provided by Mr. Pope by way of the provision
by the third party of a pledge to acquire two hundred thousand shares of
the Company's commons stock held by Mr. Pope at $1.25 per share. Mr.
Pope has the option to sell the shares for $1.00 per share and receive
50,000 restricted common shares, or sell all of the shares for $1.25
per share and the Company would provide 50,000 restricted common shares
to the non-affiliated third party, and;
(C) As of December 16, 1996, Seven Hundred Fifty Thousand
dollars by way of the provision of a promissory note (the "Note") and
secured by a stock pledge agreement.
The note provides for, inter alia, payment of the principal sum
of $750,000 plus interest calculated thereon at the rate of seven
percent (7%) per annum, calculated monthly and compounded into principal
at a rate equal to one=twelfth (1/12th) the annual rate. All payments
of principal and interest shall be made quarterly and ratably in forty
(40) equal installments, with the first such installment being due and
payable on April 1, 1997, in the amount of $26,762.29, and each
succeeding installment in a like amount shall be due and payable on
the first day of each third month thereafter.
The aforementioned stock pledge agreement (the "Stock Pledge
Agreement") provides, inter alia, that until all required payments
have been made under the Note, Pope, as the pledgee, shall have the
exclusive right to exercise all voting rights connected to the shares
of Dixieland which have been pledged by the Company pursuant to the
Stock Pledge Agreement. Further, once all requaired payments have
been made under the Note, the Company shall be entitled to receive
andy dividends or other distributions payable in respect to the
aforementioned Dixieland shares.
The Agreement provides, inter alia, that on or prior to March 31,
1997, the Company shall obtain the full and complete release of Pope
from his personal quarantees on the debt of Dixieland as are reflected
in the disclosure schedule to be provided by Dixieland and to be
attached to and form a part of the Agreement.
Pope has, as a term of the Agreement, entered into an employment
agreement (the "Employment Agreement") with the Company. The
Employment Agreement is for a term of two years, commencing December
16, 1996 and may be extended by either Pope or the Company for further
one year periods. Pope shall receive an annual gross base salary of
$100,000. Pope shall further be entitled to an amount equal to 1%
of the gross sales fo Dixieland subject toa minimum requirement of
annual sales in excess of $8,000,000 and 10% of the pre-tax profits
of Dixieland ("onus Payments") for disstribution to Pope and members
of his management and operational "teams", as such are constituted by
Pope and in such amounts and proportions as are determined by Pope.
Bonus Payments shall be in addition to Pope's gross base salary and the
normal and customary salaries of the teams and shall be awarded by the
105th day following the fiscal year end of the Company. The Bonus
Payments shall be made 50% in cash and 50% in the restricted common
stock of the Company, which stock shall be valued at 50% of the
average closing bid price during the 30 days following the fiscal year
end in which minimum sales requirements have been met or profits have
been made.
The Employment Agreement also provides that Pope shall receive an
annual four week vacation, an automobile similar to his existing
vehicle and health and medical coverage substantially identical to
Pope's present coverage.
Under the terms of the Employment Agreement, Pope is restricted
from competing with Dixieland, either directly or indirectly, for a
period of three years following the termination of the Employment
Agreement for any reason or cause whatsoever.
Pursuant to the Agreement, during the period commencing December
16, 1996, through April 1, 1997, dixieland shall, at the request of
Pope, distribute to Pope certain asssets free and clear (the "Excluded
Assets") comprised of (i) all interest in real property and
improvements to real property (other than interests in timberland held
by Dixieland as inventory) owned or retained by Dixieland on December
16, 1996, (ii) all taxidermy work and art work, and (iii) cash, in
the amunt in all accounts of Dixieland as of December 16, 1996.
Pursuant to the Agreement, Pope has also agreed to lease various
office premises to Dixieland, effective December 16, 1996 through
December 15, 2001. Such leases shall provide for the lease of property
utilized by Dixieland in the operation of its business, including
three office buildings and a woodyard for a combined annual lease of
$100,000 per year triple net.
Forestry International, Inc. completed the acquisition of Dixieland
and its subsidiaries on December 1, 1995 and file a Form 8-K for the
acquisition on December 13, 1995. The Company was unable to arrange
all required financing to complete that transaction and defaulted on the
payment of the notes required in those agreements. This report is for
the acquisition on December 16, 1996 of the same company as the
December 13, 1995 report at a reduced purchased price. The
previously reported purchase price was $2,500,000 as compared to the
current purchase price of $1,850,000.
FINANCING OF THE ACQUISITION
The financing of the acquisition was provided from various sources as
follows:
1) Four hundred thousand dollars cash was provided by a Regulation
"S" transaction with a foreign individual for shares of commons stock
priced at $.75 per share for a total of amount of 533,333 shares.
2) Two hundred thousand dollars cash provided for the purchase of
collateral shares on January 13, 1997 was provided by a Regulation "S"
transaction with a foreign individual for shares of common stock priced at
$1.00 per share for a total of 200,000 shares.
3) Tow hundred fifty thousand dollars cash will be provided on
April 1, 1997 for the purchase of the second collateral shares by a
Regulation "S" transaction with a foreign individual for shares of common
stock priced at $1.25 per share if Mr. Pope elects to sell the shares
provided as collateral.
4) Other requirements for collateral deposits and working capital
were provided from the proceeds of a Regulation "S" transaction in the
amount of $1,125,000 with a foreign institution for 1,500,000 shares of
common stock priced at $.75 per share.
5) An additional 620,000 shares were issued to individuals and
institutions for commissions, consulting and services related to the
provision of collateral shares, the completion of the funding and
assistance with the negotiations. all of these shars were Regulation "S"
shares except 50,000 which were restricted shares issued to an individual
who is an affiliate of the Company.
Not Applicable
Item 6. Resignation of Registrant's Directors.
Not Applicable
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
The Company has not yet received financial statments of Dixieland
Forest Products, Inc. for December 31, 1996 and is preparing its
financial statements for the same date. As soon as such has occurred,
the Company will prepare the financial statements required hereunder and
attend to the filing thereof.
EXHIBITS TO FORM 8-K
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/ IN ACCORDANCE WITH RULE 202 OF REGULATION /
/ S-T, THE EXHIBITS INDEXED BELOW ARE BEING /
/ FILED IN PAPER PURSUANT TO A CONTINUING /
/ HARDSHIP EXEMPTION WITH THE EXCEPTION OF /
/ EXHIBITS 7 AND 8 WHICH ARE FILED HEREIN /
/ AS CONFIRMING COPIES /
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1. Share Purchase Agreement 12/16/96
2. Promissory Note 12/16/96
3. Stock Pledge Agreement
4. Irrevocable Power of Attorney - Transfer of Stock - Dixieland to Pope
5. Irrevocable Power of Attorney - Transfer of Stock - Dixieland to
Forestry International, Inc.
6. Employement Agreement 12/16/96
7 . Butler, Snow, O'Mara, Stevens & Cannada, PLLC (attorney's opinion letter)
8. Patrick Tobin (attorney's opinion letter) 12/16/96
9. Lease 12/16/96 Randy Pope and Dixieland Forest Products, Inc.
10. Exhibit 1.04 (B) Sublease
11. Stock Purchase Agreement 12/16/96 Pope - Turp
12. Turp - 12/16/96 Notice of Intent
13. Assumption Agreement - R. Pope $10.00 dated 10/14/96
14. Assumption Agreement - R. Pope $10.00 dated 10/15/96
15. Assumption Agreement - R. Pope $10.00 dated 7/29/96
16. Agreemenst to Defend
17. Escrow Agreement 12/16/96
18. Escrow Agreement 12/18/96 (two page 8's)
19. Durable General Power of Attorney
20. Exhibit 1.04 Excluded Assets
21. Forestry International, Inc. Disclosure Schedule
22. Forestry International, Inc. Form 10K (Draft)
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EXHIBIT 6
(Confirming Copy)
Butler, Snow, O'Mara, Stevens & Cannada, PLLC
Attorneys at Law
17 Floor
Deposit Guaranty Plaza
210 E. Capital St.
Jackson, Mississippi 39225-2567
(601) 948-5711
December 16, 1996
Forestry International, Inc.
3573 E. Sunrise Dr., Suite 225
Tucson, AZ 85718
Re: Share Purchase Agreement among Forestry International, Inc.,
Dixieland Forest Products, Inc. and Mr. Randy Pope dated
December 16, 1996.
Gentlemen:
We have acted as counsel to Dixieland Forest Products, Inc., a
Mississippi corporation ("DFP") and Mr. Randy Pope ("Pope") in connection
with the execution an delivery of the Share Purchase Agreement dated as
of December 16, 1996 (the "Agreement") between and among Forestry
International, Inc., a Colorado corporation ("FII"), DFP and Pope. All
capitalized terms used herin which are not otherwise defined herein shall
have the respective meanings assigned to them in the Agreement.
In rendering this opinion we have, with your approval and without
independent investigation, assumed the legal capacity of all natural
persons, the genuineness of al signatures (other than those of Pope and
the officers of DFP) the authenticity of all documents purporting to be
originals, the confirmity to original documents of all documents furnished
to us as copies, and the authenticity of the originals of such copies.
In rendering this opinion, we have further assumed, with your approval
and without independent investigation, that each of the parties to the
Agreement (other than Pope and DFP) has the requisite power and authority
to execute, deliver and perform the Agreement and has duly authorized,
validly executed and deliverd the Agreement.
With respect to questions of fact material to the opinions expressed
herein, we have, with your consent and without independent investigation,
relied upon the accuracy of the representations and warranties of Pope and
DFP in the Agreement and upon the certificates of public officials and
officers of DFP.
Based and in reliance upon the foregoing and subject to the
qualifications and limitations set forth below, and such other
considerations as we deem relevant, we are of the opinion that:
1. DFP and Dixieland Trucking, Inc. ("DTI") are corporations duly
organized, validly existing and in good standing under the laws of the
State of Mississippi. Each has the requisite corporate power to conduct
its business as now being conducted and to own and operate the property
now owned and operated by it.
2. The Agreement has been duly authorized, executed and delivered
by Pope and DFP and is a valid and binding obligation of Pope and DFP
and enforeceable against Pope and DFP in accordance with its terms.
3. Except as herein provided, all corporate proceedings required
to be taken by DFP at or before th Closing in connection with the
Agreement and the transaction contemplated thereby have been duly taken.
This opinion assumes there are only 999 shares of stock of DFP
outstanding, all of which are owned by Pope. As indicated in paragraph
2.05 of Dixieland Disclosure Schedule stock certificates were prepared
evidencing ownership of stock by Gary Futch and James Hancock. DFP has
taken the position that the rights of such individuals in the stock was
terminated with their termination of employment and all outstanding
stock of the corporation is owned by Pope. We express no opinion as to
the validity or correctness of this position and if the stock is owned
by either of both of these individuals, then the shareholder and/or
board of dirctors' actions taken by consent to authorize the corporate
proceedings are deficient for lack of unanimous consent thereto.
4. The execution and delivery of the Agreement by DFP and the
consummation of the transaction provided for in the Agreement will not
violate or conflict with any provision of the Articles of Incorporation or
Bylaws of DFP or DTI or, to the best of our knowledge, except as disclosed
in the Share Purchase Agreement, result in a breach of any contract or any
agreement to which Pope, DFP or DTI are a party or by which Pope, DFP or
DTI are bound.
With respect ot statements in our opinions herein expressed as "to
the best of our knowledge", such statements are intended to convey that,
during our participation in the preparation, negotiation and execution of
the Agreement, but without making andy independent investigation, no
information has come to the attention of the attorneys of our firm that
have had substantial involvement in the preparation and negotiation of
such agreements to give any such attorney actual knowledge of any facts
contrary to the opinions so expressed.
The opinions contained herein are subject ot the following limitations
and qualifications:
(a) The validity, binding effect and enforceability of, and the rights
and remedies set forth in and the effect of, the Agreement may be limited
by and subject to:
(1) The effect of bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the rights and remedies of
creditors;
(2) The effect of general principles of equity, whether applied by
a court of law or equity;
(3) The possible unenforceability of provisions purporting to require
arbitration of disputes;
(4) The possible unenforeceability of provisions prohibiting
competition, the solicitation or acceptance of customers, of
business relationships, or of employees, the use or disclosure
of information, or other activities in restraint of trade.
(5) The effect of course of dealing, course of performance, or the
like, that would modify the terms of any agreement or the
respective rights or obligations of the parties under an
agreement;
(6) The possible unenforeceability of provisions that enumerated
remedies are not exclusive or that a party has the right to
pursue multiple remedies without regard to other remedies
elected or that all remedies are cumulative;
(7) The possible unenforceability of provisions mermitting
modifications of an agreement only in writing;
(8) The possible unenforceability of provisions that the provisions
of an agreement are severable; and
(9) The possible unenforceability of provisions permitting the
excercise, under certain circumstances, of rights without notice
or without providing opportunity to cure failures to perform.
(b) In addition, we express no opinion as to the specific remedy
that any court, other governmental authority, or arbitrator may grant,
impose or render (including without limitation, specific performance or
other equitable relief, whether sought in a proceeding atlaw or in
equity) for noncompliance with the Agreement.
We express no opinion as to any matters of law other than with respect
to laws of the United States and the State of Mississippi in effect on the
date hereof, and no opinion is expressed herin as to the laws of any other
jurisdiction.
The pinions expresse herin are specific to the matters and documents
referred to herein, and no opinion may be inferred beyond the opinions
stated. The opinions expressed herin are as of the date hereof, and we
disclaim andy obligation to update or modify such opinions because of
any changes in the law or represented facts relevant thereto. This
opinion is furnished to you solely for your benefit in connection with
the consummation of the closing of the transactions contemplated by the
Agreement and mya no be relied upon in any manner, for any other purpose
or by any other person or entity, without the prior written consent of this
firm.
Sincerely,
BUTLER, SNOW, O'MARA, STEVENS & CANNADA, PLLC
/s/ James S. Overstreet, Jr.
James S. Overstreet, Jr.
JSO:bgk
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Exhibit 8
(Confirming Copy)
PATRICK J. TOBIN
Attorney at Law
December 16, 1996
Dixieland Forest Products, Inc.
Mr. Randy Pope
3415 South Frontage Road
Meridian, Mississippi 39301
RE: Share Purchase Agreement among Forestry International, Inc.,
Dixieland Forest Products, Inc. and Randy Pope Dated December 16,
1996
Gentlemen:
The undersigned acts as corporate cousel to Forestry International,
Inc., a Colorado corporation ("FII"). The opinion is rendered in
connection with that certain Share Purchase Agreement by and between FII,
Dixieland Forest Products, Inc., a Mississippi corporation ("DFP") and
Randy Pope ("Pope") dated as of December 16, 1996 (the "Agreement"). In
rendering this opinion I have reviewed the Agreement to be executed by the
parties. I have not represeted FII in connection with either the
negotiation or closing of the Agreement and the transaxtions contemplated
thereunder. The opinions rendered herin assume the execution of the
Agreement in the identical form that I have reviewed.
In rendering this opinion I have, with your approval and without
independent investigation, assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all
documents purporting to be originals, the conformity to original documents
of all documents furnished to me as copies, and the authenticity of the
originals of such copies. I have further asumed, without independent
investigation, that each of the parties to the Agreement other than FII
has the requisite power and authority to execute, deliver and perform
the Agreements and has duly authorized, validly executed and delivered
the Agreement.
No opinion is expressed berby as to the status of shares to be
delivered by FII pursuant to the Agreement as either restricted or freely
tradeable shares.
With respect to questions of fact material to the opinions expressed
herein, I have without independent investigation, relied upon the accuracy
of the representations and warranties of FII in the Agreement and upon the
certificates of public officials and officers of FII.
Based and in reliance upon the foregoing and subject to the
qualifications and limitations set forth below, and such other
considerations as I have deemed relevant, I am of the opinion that:
1. FII is a corporations duly organized, validly existing and
in good standing under the laws of the State of Colorado and has the
requisite corporate power to conduct its business as now being conducted
and to own and operate the property now owned and being owned by it.
2. The Agreement has been duly authorized, executed and delivered
by FII and is a valid and binding obligation of FII and enforceable
against FII in accordance with its terms.
3. Except as herein provided, all corporate proceedings required
to be taken by FII at or before the Closing in connection with the
Agreement and the transacton contemplated thereby have been duly taken.
4. The execution and delivery of the Agreement by FII and the
consummation of the transaction provided for in the Agreement will not
violate or conflict with any provision of the Articles of Incorporation
or Bylaws of FII or, to the best of my knowledge, except as disclosed
in the Share Purchase Agreement, result in a breach of any contract or
any agreement to which FII is a party or by which FII is bound.
With respect to statements made herin expressed as "to the best of my
knowledge", such statements are intended to convey that in connection with
my review of the Agreement, but without making andy independent
investigation, not information has come to my attention to give me actual
knowledge of any facts contrary to the opinions so expressed.
The opinions contained herin are subject to the following limitations
and qualifications:
(a) The validity, binding effect and enforceability of, and the
rights and remedies set forth in and the effect of, the Agreement may be
limited by and subject to :
(1) The effect of bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the rights and remedies of
creditors;
(2) The effect of general principles of equity, whether applied by
a court of law or equity;
(3) The possible unenforceability of provisions purporting to
require arbitration of disputes;
(4) The possible unenforeceability of provisions prohibiting
competition, the solicitation or acceptance of customers,
of business relationships, or of employees, the use or
disclosure of information, or other activities in restraint
of trade;
(5) The effect of course of dealing, course of performance, or the
like, that would modify the terms of any agreement or the
respective rights or obligations of the parties under an
agreement;
(6) The possible unenforceability of provisions that enumerated
remedies are not exclusive or that a party has the right to
pursue multiple remedies without regard to other remedies
elected or that all remedies are cumulative.
(7) The possible unenforeceability of provisions permitting
modifications of an agreement only in writing;
(8) The possible enenforceability of provisions that enumerated
remedies are not exclusive or that a party has the right to
pursue multiple remedies without regard to other remedies
elected or that all remedies are cumulative;
(b) In addition, I express no opinion as to the specific remedy
that any court, other governmental authority, or arbitrator may grant,
impose, or render (including without limitation, specific performance
or other equitable relief, whether sought in a proceeding at law or in
equity) for noncompliance with the Agreement.
No pinion i hereby expressed as to the matters of law other than
with respect to laws of the United States and the State of Colorado in
effect on the date hereof, and no opinion is expressed herein as to the
laws of any other jurisdiction.
The opinions expressed herein are specific to the matters and
documents referred to herein, and no opinion may be inferred beyond the
opinions stated. The opinions expressed herein are as of the date hereof,
and I disclaim any obligation to update or modify such opinions because
of any changes in the law or represented facts relevant thereto. This
opinion is furnished to you solely for your benefit in connection with
the consummation of the closing of the transactions contemplated by the
Agreement and may not be relied upon in any manner, for any other purpose
or by any othe person or entity, without the prior written consent fo the
undersigned.
Sincerely,
/s/ Patrick J. Tobin
Patrick J. Tobin
Attorney at Law
PJT
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, Registant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
FORESTRY INTERNATIONAL, INC.
(Registrants)
By:/s/David L. Shorey
DATED: January 22, 1996 -------------------------------
David L. Shorey, Chairman & CEO
