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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 29, 1999
Focus Affiliates, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
001-12571 95-4467726
(Commission File Number) (I.R.S. Employer Identification No.)
9314 Eton Avenue, Chatsworth, CA 91311
(Address of principal executive offices) (Zip Code)
(818) 709-2300
Registrant's telephone number, including area code
Intellicell Corp.
Former name or former address, if changed since last report.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 29, 1999 (the "Closing Date"), Focus Affiliates, Inc.
("Focus") completed its acquisition of Cellular Wholesalers, Inc. ("CWI"), a
privately held wholesale distributor of wireless phone products. The
acquisition was accomplished through a merger (the "Merger") of CWI into
Intellicell Merger Sub, Inc., a wholly-owned subsidiary of Focus ("Merger
Sub"), pursuant to the Amended and Restated Agreement and Plan of Merger,
dated as of July 23, 1999 (the "Merger Agreement") among Focus, CWI, the
principal stockholders of CWI, and Merger Sub.
Under the terms of the Merger, CWI's stockholders were entitled to
receive $5,000,000 in cash and 2,250,000 shares of Focus' common stock (the
"Base Consideration") plus an additional amount (the "Additional
Consideration") in the event the total stockholders' equity of CWI as of the
Closing Date (the "Closing Date Equity") exceeds $177,667. The Additional
Consideration, if any, will consist of an additional number of shares of
Focus common stock (the "Additional Shares") as equals the amount by which
the Closing Date Equity exceeds $177,667 divided by $4; provided, that in no
event will the number of Additional Shares exceed 2,250,000 shares.
Notwithstanding the foregoing, the cash portion of the Base Consideration
will be reduced by the amount, if any, by which the Closing Date Equity is
less than $1,177,667. Of the $5,000,000 cash portion of the Base
Consideration, $500,000 was reserved in escrow pending the determination of
the Closing Date Equity. The Closing Date Equity will be determined within
30 days following the Closing Date by Focus' and CWI's independent certified
public accountants. On the date the Merger Agreement was executed, Focus
received a written opinion from its financial advisor that the consideration
to be paid for CWI was fair to Focus from a financial point of view.
To fund the cash payment by Focus to the CWI stockholders and related
Merger closing expenses, Focus sold:
(1) $5,152,400 of convertible subordinated notes (the "Notes") in a
private placement. Each Note is a one-year unsecured and
subordinated obligation of Focus that bears interest at the rate of
4% per annum, which is payable at the maturity of the Note. If and
when the Focus stockholders approve the conversion of the Notes,
each $4.00 of Convertible Notes will automatically convert into one
share of Focus common stock and one redeemable warrant to purchase
one-half share of Focus common stock. These warrants have an
exercise price of $4.00 and expire five years from the Closing Date.
(2) $1,000,000 of subordinated debt (the "Debt") together with 150,000
warrants to Critical Capital Growth Fund, L.P. The Debt bears
interest at 12% per annum, which matures in five years. The
warrants have an exercise price of $5.55 and expire five years
from the Closing Date.
In connection with the Merger, Focus and Merger Sub agreed to appoint
several designees of the CWI stockholders as directors of Focus and Merger
Sub and several former CWI officers as officers of Focus and Merger Sub.
Upon the closing of the Merger, Ronald
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Goldberg, Cary Maimon, and David Segneri, as CWI's designees, were appointed
as directors of Focus and Merger Sub, and the following former CWI officers
were appointed as officers of Focus and Merger Sub in the capacities
specified: Ronald Goldberg (Senior Vice President--U.S. Operations), Melvyn
Cohen (Vice President - Finance and Administration), and Cary Maimon (Vice
President - General Manager).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
Audited financial statements of CWI (incorporated by reference to
Page 27 and Appendix C of the definitive proxy statement filed
with the SEC on August 26, 1999 and first mailed to the
stockholders of Focus on August 27, 1999).
(b) Pro Forma Financial Information
Unaudited pro forma combined financial information of Focus and
CWI (incorporated by reference to Appendix D of the definitive
proxy statement filed with the SEC on August 26, 1999 and first
mailed to the stockholders of Focus on August 27, 1999).
(c) Exhibits
2.1 Amended and Restated Agreement and Plan of Merger, dated as
of July 23, 1999, among Focus, Merger Sub, CWI and Principal
CWI Stockholders (incorporated by reference to Exhibit 10 of
Focus' Form 8-K filed on August 26, 1999).
2.2 Certificate of Merger, as filed with the Delaware Secretary
of State on October 29, 1999 (filed herewith).
99 Page 27 and Appendices C and D of the definitive proxy
statement filed with the SEC on August 26, 1999 and first
mailed the stockholders of Focus on August 27, 1999
(incorporated by reference).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Focus has duly caused this report to be signed on it s behalf by the
undersigned hereunto duly authorized.
FOCUS AFFILIATES, INC.
Date: November 5, 1999 By: /s/ David Kane
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David Kane, Chief Financial Officer
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INDEX TO EXHIBITS
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<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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2.2 Certificate of Merger, as filed with the Delaware Secretary
of State on October 29, 1999.
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EXHIBIT 2.2
CERTIFICATE OF MERGER
OF
CELLULAR WHOLESALERS, INC.
INTO
INTELLICELL MERGER SUB, INC.
(UNDER SECTION 252 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE)
INTELLICELL MERGER SUB, INC. hereby certifies that:
(1) The name and state of incorporation of each of the constituent
corporations are:
(a) Cellular Wholesalers, Inc, a Illinois corporation; and
(b) Intellicell Merger Sub, Inc., a Delaware corporation.
(2) An agreement of merger has been approved, adopted, certified, executed,
and acknowledged by Cellular Wholesalers, Inc. and by Intellicell Merger Sub,
Inc. in accordance with the provisions of subsection (c) of Section 252 of
the General Corporation Law of the State of Delaware, and in the case of
Intellicell Merger Sub, Inc. by written consent of its sole stockholder
pursuant to Section 228 of the General Corporation Law of the State of
Delaware.
(3) The name of the surviving corporation is Intellicell Merger Sub, Inc.
(4) The certificate of incorporation of Intellicell Merger Sub, Inc. shall
be the certificate of incorporation of the surviving corporation.
(5) The surviving corporation is a corporation of the State of Delaware.
(6) The executed agreement of merger is on file at the principal place of
business of Intellicell Merger Sub, Inc. at 9314 Eton Street, Chatsworth,
California 91311.
(7) A copy of the agreement of merger will be furnished by Intellicell
Merger Sub, Inc., on request and without cost, to any stockholder of
Intellicell Merger Sub, Inc. or Cellular Wholesalers, Inc.
(8) The authorized capital stock of Cellular Wholesalers, Inc. is 10,000
shares of Common Stock, $1.00 par value.
IN WITNESS WHEREOF, Intellicell Merger Sub, Inc. has caused this
certificate to be signed by Michael Hedge, its authorized officer, on the
29th day of October 1999.
INTELLICELL MERGER SUB, INC.
By: /s/ Michael Hedge
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Michael Hedge
Chief Executive Officer
