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) OCTOBER 1, 1997
FEDERATED PURCHASER, INC.
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation)
0-7235 22-1589344
(Commission File Number) (IRS Employer Identification No.)
268 CLIFFWOOD AVENUE, CLIFFWOOD, NEW JERSEY 07721
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (908) 290-2900
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS
Federated Purchaser, Inc. ("Federated") announced on October 1, 1997 that it
has signed an agreement with Wise Components, Inc. ("Wise"), and its chairman
and sole shareholder, Martin L. Blaustein ("Blaustein"), under which Federated
will issue approximately 4.5 million shares of its common stock to Blaustein in
a tax-free exchange for all of the outstanding shares of Wise's stock. Upon
closing, Wise will become a wholly-owned subsidiary of Federated and Blaustein
will become Federated's principal shareholder, owning approximately 74% of
Federated's common stock. The remaining 26% will continue to be held by
current shareholders of Federated.
The exchange will be treated as a pooling of interests. When the transaction
is completed, the combined entity will have annual sales of over $15 million.
The agreement has been approved by the boards of directors of both companies,
and is subject to the approval of Federated's shareholders and other
conditions. It is expected to close no later than January 31, 1998.
In addition, also on October 1, 1997, Federated issued a press release
announcing the execution of the Agreement, which press release is attached
hereto as Exhibit 99.1 and is incorporated herein by reference.
* * * * *
FORWARD-LOOKING STATEMENTS
This report, and the press release incorporated herein, contain
forward-looking statements regarding the business and industry of Federated
Purchaser, Inc. including, without limitation, those regarding the transactions
contemplated by the Agreement, integration of the businesses of its
subsidiaries and with Wise Components, Inc., the growth and financing
strategies of Federated, the effective implementation of Federated's business
or growth strategy, and other statements regarding trends relating to the
electronics distribution industry and various other items. Such statements
involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance and achievements of Federated to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include:
conditions precedent set forth in the Agreement (including the affirmative vote
of Federated's shareholders); industry trends towards consolidation and
intensifying competition; relationships with customers, distributors or
dealers; the availability, terms and development of capital; and any failure to
fully assimilate the operations of Wise with those of Federated.
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
2.1 Agreement dated October 1, 1997, by and among Federated Purchaser,
Inc., Wise Components, Inc. and Martin L. Blaustein.
99.1 Press Release dated October 1, 1997.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Federated Purchaser, Inc.
By:
Name:Harry J. Fallon
Title:President
Date: October 1, 1997
<PAGE>
EXHIBIT 2.1
AGREEMENT
THIS AGREEMENT (this "Agreement") entered into on this ______ day of
October, 1997, by and among Wise Components, Inc., a New York corporation
("Wise"), Federated Purchaser, Inc., a New York corporation ("Federated"), and
Martin L. Blaustein ("Blaustein"). Wise, Federated and Blaustein are sometimes
individually or collectively referred to herein as "Party" or "Parties," as
appropriate.
RECITALS
WHEREAS, Blaustein and Federated wish to effect a tax-free exchange
(the "Exchange") of all of the outstanding capital stock of Wise, which
following the Exchange shall be held by Federated, for which Blaustein, being
the holder of all of such outstanding capital stock of Wise, will receive such
number of shares of common stock of Federated as is herein specified; and
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, the parties hereto agree as follows:
ARTICLE 1
THE EXCHANGE
1.1 THE EXCHANGE. Each share of capital stock of Wise issued and
outstanding prior to consummation of the Exchange shall be delivered to
Federated, in exchange for the right to receive, as of the Closing Date,
4,491,988 shares of Federated Common Stock (the "Federated Common Shares").
1.2 EFFECT OF THE EXCHANGE. By virtue of the Exchange and upon
consummation of the Exchange, all of the capital stock of Wise will be held by
Federated; consequently, Wise shall become a wholly owned subsidiary of
Federated.
1.3 FRACTIONAL SHARES. No fractional Federated Common Shares shall
be issued in the Exchange. Any fractional Federated Common Shares shall be
rounded down.
1.4 EXCHANGE PROCEDURES.
(a) On or before the consummation of the Exchange, Federated will
deliver to a financial institution appointed by Federated with the consent of
Wise (the "Exchange Agent"), certificates representing the Federated Common
Shares and funds representing a sufficient amount of cash payable in lieu of
fractional shares.
(b) Upon surrender to Federated of one or more certificates for
shares of capital stock of Wise ("Wise Certificates"), accompanied by stock
powers duly endorsed in blank, the Exchange Agent shall, promptly after the
Exchange, deliver to Blaustein new certificates representing the Federated
Common Shares together with checks for payment of cash in lieu of fractional
interests.
(c) Until Wise Certificates have been surrendered to Federated and
exchanged as herein provided, each outstanding Wise Certificate shall
represent, on and after the consummation of the Exchange, solely the right to
receive Federated Common Shares as provided herein.
(d) No transfer taxes shall be payable by Wise or Blaustein in
respect of the issuance of new certificates.
(e) The Exchange Agent shall not be entitled to vote or exercise any
other rights of ownership with respect to any Federated Common Shares held from
time to time and will hold any dividends received with respect to the new
certificates for the benefit of the holder of such new certificates.
1.5 CLOSING DATE. Subject to the terms and conditions set forth in
this Agreement and the satisfaction of all conditions precedent specified
herein, the closing of the Exchange shall take place on the Closing Date, which
shall be on or before January 31, 1998.
1.6 DOCUMENTS TO BE DELIVERED. At the closing, the Parties shall
deliver, or cause to be delivered, such documents or certificates as may be
necessary, in the reasonable opinion of the Parties, to effect the transactions
contemplated by this Agreement. From and after the date of this Agreement,
each of the Parties hereby covenants and agrees, without the necessity of any
further consideration whatsoever, to execute, acknowledge and deliver any and
all other documents and instruments and take any and all such other action as
may be reasonably necessary or desirable to more effectively carry out the
intent and purpose of this Agreement, and the officers and directors of the
Parties shall execute and deliver, or cause to be executed and delivered, all
such documents as may be reasonably necessary or desirable to more effectively
carry out the intent and purpose of this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF FEDERATED
Federated represents and warrants to Wise and Blaustein that the
statements contained in this Article II are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date
of this Agreement throughout this Article II) except as set forth in the
corresponding section of the Federated Disclosure Schedule.
2.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Federated is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. Federated is duly authorized to
conduct business and is in good standing under the laws of New York, New Jersey
and Pennsylvania.
2.2 CHARTER, BY-LAWS, ETC. True and complete copies of the
certificate or articles of incorporation (as the case may be) and by-laws, each
of the foregoing as amended to the date hereof, and the minute books and all
stock books and stock transfer records of Federated shall have been delivered
to Wise prior to the Closing Date. On the Closing Date, such minute books will
contain the true and complete minutes and records of any meetings, proceedings
and other actions of the shareholders and the Board of Directors of Federated
from the date of its incorporation to and including the Closing Date.
2.3 ISSUANCE OF THE SHARES; CAPITALIZATION. Upon the issuance of
the Federated Common Shares as provided herein, such shares will be duly
authorized and validly issued, fully paid and non-assessable. The Federated
Common Shares, when issued and delivered to Blaustein, will not be subject to
preemptive rights. The issuance of the Federated Common Shares is subject to
the registration requirements of the Securities Act of 1933, and the
requirements of applicable state securities laws. As of the date of this
Agreement, the authorized capital stock of Federated is as set forth in
Federated's most recent Quarterly Report on Form 10-Q.
2.4 AUTHORIZATION OF TRANSACTION. Following approval by Federated's
Board of Directors and shareholders, Federated shall have full power, authority
and capacity to execute and deliver this Agreement and any related agreement
and to perform its obligations hereunder and thereunder. Following approval by
Federated's Board of Directors and shareholders, this Agreement and any related
agreement shall constitute valid and legally binding obligations of Federated,
enforceable in accordance with their terms and conditions, except in each case,
as limited by the effect of bankruptcy, insolvency, reorganization, moratorium
and similar laws relating to or affecting creditors' rights generally, and
general equity principles.
2.5 NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement and any related agreement, nor the consummation of the
transactions contemplated hereby and thereby, will (i) conflict with, result in
a breach of, constitute a default under, result in the acceleration of, or
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice or consent under (A) any agreement, contract, lease or
commitment affecting the authority of Federated to perform its obligations
hereunder or (B) any related agreement, license, instrument, or other
arrangement (including any shareholder agreement) to which Federated is a party
or by which it is bound or to which any of its assets is subject (or will
result in the imposition of any mortgage, pledge, lien, encumbrance, charge or
other security interest upon any of its assets); or (ii) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, or other restriction of any governmental entity or court to which
Federated is subject; or (iii) conflict with or result in a breach of any
provision of the articles of incorporation or by-laws of Federated.
2.6 CONSENTS AND APPROVALS. No consent, approval or authorization
of, or declaration, filing or registration with, any governmental entity, or
any other person or entity, is required to be made or obtained by Federated in
connection with the execution, delivery and performance of this Agreement or
any related agreement and the consummation of the transactions contemplated
hereby and thereby, except for approval by Federated's Board of Directors and
shareholders, and any consents, approvals, authorizations, declarations,
filings and registrations required pursuant to the federal securities laws and
the securities or blue sky laws of the various states, which Federated shall
make.
2.7 EVENTS SUBSEQUENT TO JULY 31, 1997. Since July 31, 1997, there
has not been, individually or in the aggregate, any Federated Material Adverse
Effect.
2.8 SECURITIES REPORTS; FINANCIAL STATEMENTS.
(a) Federated has provided to Blaustein true and correct copies of
the following, including all exhibits thereto: (i) Federated's Annual Report on
Form 10-K for the years ended on October 31 of each of 1992, 1993, 1994, 1995
and 1996, (ii) Federated's Quarterly Reports on Form 10-Q for the quarters
ended January 31, April 30, and July 31 of 1997, (iii) Federated's Annual
Reports to the Shareholders for the years ended on October 31 of each of 1992,
1993, 1994, 1995 and 1996, and (iv) Federated's proxy statements filed on Form
14A in each of 1993, 1994, 1995, 1996 and 1997. The foregoing (i) comply in
all material respects with, and were filed with the U.S. Securities and
Exchange Commission ("SEC") in accordance with, the requirements of the
Securities Act of 1933 and the Securities Exchange Act of 1934, as applicable,
and the rules and regulations of the SEC promulgated thereunder applicable
thereto, and (ii) did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) The audited financial statements of Federated for the year ended
October 31, 1996, included in Federated's Annual Report on Form 10-K filed with
the SEC, fairly present in all material respects, the financial condition and
the results of operations and cash flows of Federated as of October 31, 1996.
(c) Except as disclosed in Federated's Quarterly Reports on Form 10-
Q, there has not been any Federated Material Adverse Effect since the date of
the financial statements contained in its Annual Report on Form 10-K for the
year ended October 31, 1996.
2.9 LITIGATION. There are no Actions pending or, to the knowledge
of Federated, threatened or anticipated, against or involving Federated or an
Affiliate of Federated relating to or affecting the transactions contemplated
by this Agreement or any related agreement.
2.10 BOOKS AND RECORDS. Federated's books and records have been
fully, properly and accurately maintained in all material respects, and there
are no material inaccuracies or discrepancies of any kind contained or
reflected therein, and they fairly present the financial position of Federated
in all respects. None of the records, systems, controls, data or information
of Federated are recorded, stored, maintained, operated or otherwise wholly or
partly dependent on or held by any means (including any electronic, mechanical
or photographic process, whether computerized or not) which (including all
means of access thereto and therefrom) are not under the exclusive ownership
and direct control of Federated or accountants retained by Federated.
2.11 NO MATERIAL ADVERSE EFFECT. There exist no facts, conditions or
circumstances that would be required to be disclosed under any other Section of
this Article II, except for such facts, conditions and circumstances which,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Federated Material Adverse Effect.
2.12 BROKERS' FEES. Federated has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Blaustein or Wise could
become liable or obligated.
2.13 DISCLOSURE. No representation or warranty by Federated in this
Article II contains any untrue statement of a material fact, or omits to state
any material fact necessary to make the statements or facts contained therein
not misleading. The copies of all documents furnished to Blaustein hereunder
are true and complete copies of the originals thereof.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES CONCERNING WISE
Wise represents and warrants to Federated that the statements
contained in this Article III are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article III), except as set forth in the
corresponding section of the Wise Disclosure Schedule.
3.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Wise is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. Wise is duly authorized to
conduct business and is in good standing under the laws of New York, New Jersey
and Connecticut.
3.2 CHARTER, BY-LAWS, ETC. True and complete copies of the
certificate or articles of incorporation (as the case may be) and by-laws, each
of the foregoing as amended to the date hereof, and the minute books and all
stock books and stock transfer records of Wise shall have been delivered to
Federated prior to the Closing Date. On the Closing Date, such minute books
will contain the true and complete minutes and records of any meetings,
proceedings and other actions of the shareholders and the Board of Directors of
Wise from the date of its incorporation to and including the Closing Date.
3.3 CAPITALIZATION.
(a) The entire authorized capital stock of Wise is set forth in
Exhibit A of this Agreement. All of the issued and outstanding shares of
common stock of Wise have been duly authorized, are validly issued, fully paid
and nonassessable, and are held of record only by Blaustein. On the Closing
Date, all of the issued and outstanding shares of capital stock of Wise will be
held by Blaustein and there will be no options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange or exercise) any of
such capital stock. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require Wise to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Wise.
(b) Wise is not obligated to any person, including, but not limited
to Blaustein, to make any payments based upon or relating to the results of
operations or other financial performance of Wise.
3.4 AUTHORIZATION OF TRANSACTION. Following approval by Wise's
Board of Directors and shareholders, Wise shall have full corporate power,
authority and capacity to execute and deliver this Agreement and any related
agreement and to perform its obligations hereunder and thereunder. Following
approval by Wise's Board of Directors and shareholders, this Agreement and any
related agreement shall constitute the valid and legally binding obligations of
Wise, enforceable in accordance with their terms and conditions, except in each
case, as limited by the effect of bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors' rights
generally, and general equity principles.
3.5 NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement and any related agreement, nor the consummation of the
transactions contemplated hereby and thereby, will (i) conflict with, result in
a breach of, constitute a default under, result in the acceleration of, or
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice or consent under (A) any agreement, contract, lease or
commitment affecting the authority or ability of Wise to perform its
obligations hereunder or (B) any related agreement, license, instrument, or
other arrangement (including any shareholder agreement) to which Wise is a
party or by which it is bound or to which any of its assets is subject (or will
result in the imposition of any mortgage, pledge, lien, encumbrance, charge or
other security interest upon any of its assets); (ii) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, or
other restriction of any governmental entity or court to which Wise is subject;
or (iii) conflict with or result in a breach of any provision of the articles
of incorporation or by-laws of Wise.
3.6 CONSENTS AND APPROVALS. No consent, approval or authorization
of, or declaration, filing or registration with, any governmental entity, or
any other person or entity, is required to be made or obtained by Wise in
connection with the execution, delivery and performance of this Agreement or
any related agreement and the consummation of the transactions contemplated
hereby and thereby, except for approval by Wise's Board of Directors and
shareholders, and any consents, approvals, authorizations, declarations,
filings and registrations required pursuant to the federal securities laws and
the securities or blue sky laws of the various states, which Federated shall
make.
3.7 EVENTS SUBSEQUENT TO JUNE 30, 1997. Since June 30, 1997, there
has not been, individually or in the aggregate, any Wise Material Adverse
Effect.
3.8 FINANCIAL STATEMENTS. Attached hereto as Exhibit B are the
following financial statements (collectively the "Financial Statements"): (i)
audited balance sheets as of December 31, 1996, 1995, 1994, 1993 and 1992 and
the related statements of income, shareholders' equity, and cash flows
(including the notes thereto) for the fiscal years ended December 31, 1996,
1995, 1994, 1993 and 1992 for Wise, and (ii) compiled balance sheets as of June
30, 1997 and related statements of income, shareholders' equity, and cash flows
for six months ended June 30, 1997 for Wise. The Financial Statements
(including the notes thereto) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby and
present fairly in all material respects the financial condition of Wise as of
such dates and the results of operations of Wise for such periods.
3.9 LITIGATION. There are no Actions pending or, to the knowledge
of Wise, threatened or anticipated, against or involving Wise or an Affiliate
of Wise relating to or affecting the transactions contemplated by this
Agreement or any related agreement.
3.10 BOOKS AND RECORDS. Wise's books and records have been fully,
properly and accurately maintained in all material respects, and there are no
material inaccuracies or discrepancies of any kind contained or reflected
therein, and they fairly present the financial position of Wise in all
respects. None of the records, systems, controls, data or information of Wise
are recorded, stored, maintained, operated or otherwise wholly or partly
dependent on or held by any means (including any electronic, mechanical or
photographic process, whether computerized or not) which (including all means
of access thereto and therefrom) are not under the exclusive ownership and
direct control of Wise or accountants retained by Wise.
3.11 NO MATERIAL ADVERSE EFFECT. There exist no facts, conditions or
circumstances that would be required to be disclosed under any other Section of
this Article III, except for such facts, conditions and circumstances which,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Wise Material Adverse Effect.
3.12 BROKERS' FEES. Wise has no liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which Federated could become
liable or obligated.
3.13 DISCLOSURE. No representation or warranty by Wise in this
Article III contains any untrue statement of a material fact, or omits to state
any material fact necessary to make the statements or facts contained therein
not misleading. The copies of all documents furnished to Federated hereunder
are true and complete copies of the originals thereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BLAUSTEIN
Blaustein hereby represents and warrants to Federated that the
statements contained in this Article IV are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date
of this Agreement throughout this Article IV), except as set forth in the
corresponding section of the Wise Disclosure Schedule.
4.1 AUTHORIZATION OF TRANSACTION. Blaustein has full power,
authority and capacity to execute and deliver this Agreement and each related
agreement to which he is a party, and to perform his obligations hereunder and
thereunder. This Agreement and any such related agreement constitute valid and
legally binding obligations of Blaustein, enforceable in accordance with their
terms and conditions, except in each case, as limited by the effect of
bankruptcy, insolvency, reorganization, moratorium and similar laws relating to
or affecting creditors' rights generally, and general equity principles.
4.2 NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement and any related agreement, nor the consummation of the
transactions contemplated hereby and thereby, will (i) conflict with, result in
a breach of, constitute a default under, result in the acceleration of, or
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice or consent under (A) any agreement, contract, lease or
commitment affecting the authority or ability of Blaustein or Wise to perform
his or its obligations hereunder or (B) any related agreement, license,
instrument, or other arrangement (including any shareholder agreement) to which
Blaustein or Wise is a party or by which he or it is bound or to which any of
his or its assets is subject (or will result in the imposition of any mortgage,
pledge, lien, encumbrance, charge or other security interest upon any of his or
its assets); (ii) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, or other restriction of any
governmental entity or court to which Blaustein or Wise is subject; or (iii)
conflict with or result in a breach of any provision of the articles of
incorporation or by-laws of Wise.
4.3 CONSENTS AND APPROVALS. No consent, approval or authorization
of, or declaration, filing or registration with, any governmental entity, or
any other person or entity, is required to be made or obtained by Blaustein in
connection with the execution, delivery and performance of this Agreement or
any related agreement and the consummation of the transactions contemplated
hereby and thereby, except for any consents, approvals, authorizations,
declarations, filings and registrations required pursuant to the federal
securities laws and the securities or blue sky laws of the various states,
which Federated shall make.
4.4 WISE SECURITIES. Blaustein owns beneficially and holds of
record good and marketable title to all of the shares of common stock of Wise,
free and clear of any lien, pledge, claim, option, charge, easement, security
interest, transfer or voting restriction, right-of-way, or other encumbrance of
any kind or nature whatsoever (other than transfer restrictions under the
Securities Act of 1933 and state securities laws), and taxes. Blaustein is not
a party to any option, warrant, purchase right, agreement, contract, lease or
commitment that could require Blaustein to sell, transfer, or otherwise dispose
of any capital stock of Wise (other than this Agreement). Blaustein is not a
party to any voting trust, proxy, or other agreement or understanding with
respect to the voting of any capital stock of Wise.
4.5 LITIGATION. There are no Actions pending or, to the knowledge
of Blaustein, threatened or anticipated, against or involving Blaustein or an
Affiliate of Blaustein relating to or affecting the transactions contemplated
by this Agreement or any related agreement.
4.6 NO MATERIAL ADVERSE EFFECT. There exist no facts, conditions or
circumstances that would be required to be disclosed under any other Section of
this Article IV, except for such facts, conditions and circumstances which,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Wise Material Adverse Effect.
4.7 BROKERS' FEES. Blaustein has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for whichFederated could become
liable or obligated.
4.8 DISCLOSURE. No representation or warranty by Blaustein in this
Article IV contains any untrue statement of a material fact, or omits to state
any material fact necessary to make the statements or facts contained therein
not misleading.
ARTICLE 5
COVENANTS OF THE PARTIES
The Parties jointly and severally agree as follows with respect to
the period between the execution of this Agreement and the closing.
5.1 GENERAL. Each of the Parties will use his or its best efforts
to take all action and to do all things necessary, proper, or advisable in
order to consummate and make effective the transactions contemplated by this
Agreement.
5.2 NOTICES AND CONSENTS. Each Party will use its best efforts to
give notices to, and obtain consents from, any third party, which notice or
consent the other Party or Parties may reasonably require in connection with
the matters referred to in Articles II, III and IV above.
5.3 FULL ACCESS; CONFIDENTIALITY.
(a) Each of Wise and Federated will permit the other and its
respective representatives to have full access at all reasonable times, and in
a manner so as not to interfere with the normal business operations of each
other, to all premises, properties, personnel, books and records, contracts,
and documents of or pertaining to Wise or Federated.
(b) Each such Party covenants and agrees that it and its
representatives will hold in strict confidence all documents and information
concerning Wise or Federated so obtained (except to the extent that such
documents or information are a matter of public record or require disclosure in
any of the public information or any applications required to be filed with any
governmental or regulatory agency to obtain the approvals and consents required
to effect the transactions contemplated hereby), and if the transactions
contemplated herein are not consummated, such confidence shall be maintained
and, upon written request of a Party all such documents shall be returned to
said Party.
5.4 EXCLUSIVITY.
(a) Neither Wise nor Federated shall, directly or indirectly,
solicit, initiate, encourage or otherwise facilitate any inquiries or the
submission of any proposal or offer from any person relating to the acquisition
of all or substantially all of the capital stock or assets of Wise or Federated
(a "Competing Transaction," which term shall include any acquisition structured
as a merger, consolidation, share exchange or similar transaction).
(b) Notwithstanding paragraph (a), Federated may (i) enter into
discussions or negotiations or provide information in connection with a
Competing Transaction if its Board of Directors, after consulting with counsel,
determines that such discussions or negotiations should be commenced in the
exercise of its fiduciary responsibilities or such information should be
furnished in the exercise of its fiduciary responsibilities; and (ii) respond
to inquiries from its shareholders in the ordinary course of business.
(c) Each Party agrees to notify the other Parties immediately if any
such inquiries, proposals or offers are received by, any such information is
requested from, or any such discussions or negotiations are sought to be
initiated or continued with, any of its representatives indicating, in
connection with such notice, the name of such person and the material terms and
conditions of any proposals or offers and thereafter shall keep the other
Parties informed, on a current basis, on the status and terms of any such
proposals or offers and the status of any such negotiations or discussions.
5.5 STANDSTILL. Each of Blaustein and Wise acknowledges that he and
it are aware of the provisions of the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder relating to insider trading, and
that if either Blaustein or Wise is privy to material, non-public information
regarding Federated, neither Blaustein nor Wise can trade in Federated Common
Shares or other securities of Federated. Blaustein agrees and undertakes to
Federated that at no time prior to the closing will Blaustein or Wise buy, sell
or engage in any transaction (except the closing under this Agreement)
involving any securities issued by Federated (including any securities
convertible into, or exchangeable for, or warrants, options or rights to
purchase or sell, such securities), or induce any other person to do any of the
foregoing.
5.6 CONDUCT OF BUSINESS. During the period from the date hereof to
the Closing Date, each Party will operate only in the ordinary course of
business, except to the extent that the other Parties provide prior written
consent to do otherwise, or as expressly permitted or required by this
Agreement. Without limiting the generality of the foregoing, each Party agrees
that, except as permitted by the other Parties (which permission shall be
deemed granted if the other Parties do not object in writing within 5 business
days of written notification to them of the Party's intention to take any such
action), that Party shall not take any action which would cause the
representations set forth in Sections 2.7 and 3.7 hereof to fail to be true and
correct as of the Closing Date.
5.7 REGISTRATION STATEMENT. Each of the Parties agrees to cooperate
in the preparation of a registration statement on Form S-4 (the "Registration
Statement") to be filed by Federated with the SEC in connection with the
issuance of the Federated Common Shares, including the proxy statement and
prospectus constituting a part of said Registration Statement. Each of the
Parties agrees to use all reasonable efforts to cause the Registration
Statement to be declared effective under the Securities Act of 1933 as promptly
as reasonably practicable after filing thereof. Each of Wise and Blaustein
agrees to furnish to Federated all information concerning Wise, its
subsidiaries, officers, directors, shareholders and Blaustein as may be
reasonably requested in connection with the foregoing.
5.8 SHAREHOLDER MEETING.
(a) Federated shall (i) take all steps reasonably necessary duly to
call, give notice of, convene and hold a meeting of Federated's shareholders as
soon as reasonably practicable for the purpose of securing the approval by such
shareholders of an amendment to Federated's Certificate of Incorporation (the
"Amendment"), which shall increase the number of authorized shares of
Federated's common stock, such that the transactions contemplated under this
Agreement may be consummated, and (ii) subject to the qualification set forth
in Section 5.4 hereof, recommend to the shareholders of said Party the approval
of the Amendment, and use its best efforts to obtain, by January 31, 1998, such
approval.
(b) Each Party shall cooperate and consult with the other Parties as
to each of the foregoing matters. In connection therewith, each director of
Federated agrees to vote the shares he or she owns in Federated in favor of
this Agreement.
5.9 FINANCIAL SUPPORT. From and after the date hereof, Wise will
use its best efforts, and Blaustein will cause Wise to use its best efforts, to
provide such financial assistance to Federated (which may include purchases of
Federated's inventory) as Federated may request in the continued conduct of its
business, PROVIDED THAT (a) the Board of Directors of Wise shall determine in
good faith that said assistance shall be in the best interests of Wise,
including post-closing considerations, and (b) Fleet Bank, N.A. shall have
provided any requisite consent under the $400,000 Revolving Line of Credit and
$600,000 Term Loan by and between Fleet Bank, N.A. and Wise dated June 12,
1997, which consent Wise shall use its best efforts to secure.
5.10 NOTICES. Each Party shall promptly notify the others of (a) any
Wise or Federated Material Adverse Effect and (b) any developments causing any
of the representations and warranties of the Parties in this Agreement not to
be true.
5.11 FILINGS, APPLICATIONS. The Parties will prepare promptly, and
Federated will file, any statements or applications necessary to obtain the
regulatory approvals required to consummate the transactions contemplated by
this Agreement.
ARTICLE 6
OTHER AGREEMENTS
The Parties agree as follows with respect to the period following the
closing.
6.1 GENERAL. In case at any time after the closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, all at the sole cost and expense of the requesting
Party.
6.2 TAX-FREE REORGANIZATION TREATMENT. Neither Blaustein, Wise nor
Federated will take or cause to be taken any action which would, or is
reasonably likely to, prevent or impede the Exchange from qualifying as a
reorganization within the meaning of Section 368 of the Internal Revenue Code
of 1986.
ARTICLE 7
CONDITIONS TO FEDERATED'S OBLIGATIONS
The obligation of Federated to consummate the transactions to be
performed by it in connection with the closing is subject to satisfaction of
the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in Articles III and IV above or in any related agreement
shall be true and correct at and as of the Closing Date as though such
representations and warranties were made or given on and as of the Closing Date
(other than the representations and warranties made as of a particular date,
which shall be true as of such date).
7.2 COVENANTS. Blaustein shall have performed and complied with all
of his covenants hereunder in all material respects through the closing.
7.3 CERTIFICATES. Blaustein shall have delivered to Federated a
certificate to the effect that each of the conditions specified above in
Sections 7.1 and 7.2 is satisfied in all respects.
7.4 INJUNCTIONS. There shall not be any injunction, judgment,
order, decree, ruling, or charge in effect, or any litigation that has been
commenced or threatened, preventing consummation of any of the transactions
contemplated by this Agreement.
7.5 CONSENTS. Blaustein and Wise shall use their best efforts to
obtain all authorizations, consents and approvals as required under Section
3.5, 3.6, 4.2 or 4.3 above, or any schedule thereto, prior to the closing.
Each such authorization, consent and approval shall be in form and substance
reasonably acceptable to Federated. Any filing required by any governmental
entity prior to the closing, including, without limitation, the Registration
Statement described in Section 5.7 above, shall have been made to said entity
in conformity with applicable law and regulations, and any such filing that is
material shall have been accepted by said entity prior to the closing.
Federated shall have received from the SEC a declaration of effectiveness as to
the Registration Statement.
7.6 CORPORATE APPROVALS. The Agreement and the transactions
contemplated hereby shall have been approved by the Board of Directors of Wise
within 30 days of the date of this Agreement.
7.7 ADDITIONAL DELIVERIES. All actions to be taken by Blaustein and
Wise in connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably satisfactory in
form and substance to Federated.
7.8 NO MATERIAL ADVERSE CHANGE. No Wise Material Adverse Effect
shall have occurred.
7.9 FALLON CONSULTING AGREEMENT. The Parties shall have entered
into a Consulting Agreement with Harry Fallon, on terms mutually agreed upon,
which agreement shall be for a term of not less than 2 years, and for cash
compensation of not less than $60,000 per year, and which shall provide Mr.
Fallon with health insurance and other benefits, as agreed upon between Mr.
Fallon and the Parties.
7.10 BOARD OF DIRECTORS. Blaustein shall cause the designees of Harry
Fallon (who shall comprise not be less than 25% of the Board at any given time)
to be elected to the Board of Directors of Federated on the Closing Date for a
period of not less than 2 years. It is presently anticipated that Fallon will
constitute one such designee, and will serve as Vice Chairman of the Board of
Directors for a period of not less than 2 years, having such duties and
responsibilities as shall be mutually agreed upon by Fallon and the Parties.
7.11 EXECUTIVE EMPLOYMENT AGREEMENTS AND OTHER EMPLOYEE ARRANGEMENTS.
(a) Federated shall have entered into an employment agreement with
Jane A. Christy, on terms mutually agreed upon by the Parties and Ms. Christy,
under which Ms. Christy shall continue to perform such services as she
currently performs for Federated, and shall have the title of Vice President --
Operations, and which shall further provide: a term of one year, cash
compensation of $62,500, an incentive cash bonus of $15,000 payable on the
first anniversary of said employment agreement, and benefits including health
insurance, lease payments on the car currently leased by Federated for her, and
such other benefits as are mutually agreed upon by Ms. Christy and the Parties.
(b) Federated shall have entered into an employment agreement with
Donald Butz, on terms mutually agreed upon by the Parties and Mr. Butz, which
agreement shall be for a 1-year term, and which shall provide cash compensation
of not less than the amount he currently receives as an employee of Federated,
and benefits including health insurance and such other benefits as are mutually
agreed upon by Mr. Butz and the Parties.
(c) In addition, Federated shall have entered into employment and
non-compete agreements, in substantially the form of those used by Wise with
certain of its sales personnel, with each of Michael Bachman, Raymond D'Amato,
Diane D'Amato and Steven Parker.
7.12 NEW JERSEY FACILITY. The Parties shall maintain an office
facility in New Jersey on terms mutually agreed upon by the Parties.
ARTICLE 8
CONDITIONS TO BLAUSTEIN'S OBLIGATIONS
Blaustein's obligation to consummate the transactions to be performed
by him in connection with the closing is subject to satisfaction of the
following conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in Article II above or in any related agreement shall be
true and correct in all material respects at and as of the Closing Date as
though such representations and warranties were made and given on and as of the
Closing Date (other than the representations and warranties made as of a
particular date, which shall be true as of such date).
8.2 COVENANTS. Federated shall have performed and complied with all
of its covenants hereunder in all material respects through the closing.
8.3 CERTIFICATES. Federated shall have delivered to Blaustein a
certificate to the effect that each of the conditions specified above in
Sections 8.1 and 8.2 is satisfied in all respects.
8.4 INJUNCTIONS. There shall not be any injunction, judgment,
order, decree, ruling, or charge in effect, or any litigation that has been
commenced or threatened, preventing consummation of any of the transactions
contemplated by this Agreement.
8.5 CONSENTS. Federated shall use its best efforts to obtain all
authorizations, consents and approvals as required under Sections 2.5 and 2.6
above, or any schedule thereto, prior to the closing. Each such authorization,
consent and approval shall be in form and substance reasonably acceptable to
Blaustein. Any filing required by any governmental entity prior to the
closing, including, without limitation, the Registration Statement described in
Section 5.7 above, shall have been made to said entity in conformity with
applicable law and regulations, and any such filing that is material shall have
been accepted by said entity prior to the closing. Federated shall have
received from the SEC a declaration of effectiveness as to the Registration
Statement.
8.6 CORPORATE APPROVALS.
(a) The Agreement and the transactions contemplated hereby shall
have been approved by the Board of Directors of Federated within 30 days of the
date of this Agreement.
(b) The Amendment, as defined in Section 5.8, shall have been
approved by the shareholders of Federated not later than January 31, 1998.
8.7 ADDITIONAL DELIVERIES. All actions to be taken by Federated in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to Blaustein.
8.8 NO MATERIAL ADVERSE CHANGE. No Federated Material Adverse
Effect shall have occurred.
8.9 RESIGNATION BY FEDERATED'S CURRENT BOARD OF DIRECTORS AND
EXECUTIVE OFFICERS. Except as provided in Sections 7.10 and 7.11 above, by the
Closing Date all members of Federated's Board of Directors and all executive
officers of Federated shall have resigned, and Federated shall have accepted
such resignations.
8.10 FEDERATED NET WORTH. On the Closing Date, Federated's
shareholders' equity, as determined by the accounting firm of Bederson &
Company, L.L.P., shall not be less than $400,000.
8.11 AUDITORS' OPINION. The accounting firm of Bederson & Company,
L.L.P., shall have delivered to Blaustein an opinion reasonably satisfactory in
form and substance to Blaustein (based on certain assumptions and
representations of Blaustein, Wise, and Federated), to the effect that the
Exchange qualifies as a reorganization under Section 368 of the Code and that
generally no income or gain will be recognized by Blaustein for federal income
tax purposes as a result of the transactions contemplated by this Agreement.
8.12 EXECUTIVE EMPLOYMENT AGREEMENTS AND OTHER EMPLOYEE ARRANGEMENTS.
(a) Federated shall have entered into an employment agreement with
Jane A. Christy, on terms mutually agreed upon by the Parties and Ms. Christy,
under which Ms. Christy shall continue to perform such services as she
currently performs for Federated, and shall have the title of Vice President --
Operations, and which shall further provide: a term of one year, cash
compensation of $62,500, an incentive cash bonus of $15,000 payable on the
first anniversary of said employment agreement, and benefits including health
insurance, lease payments on the car currently leased by Federated for her, and
such other benefits as are mutually agreed upon by Ms. Christy and the Parties.
(b) Federated shall have entered into an employment agreement with
Donald Butz, on terms mutually agreed upon by the Parties and Mr. Butz, which
agreement shall be for a 1-year term, and which shall provide cash compensation
of not less than the amount he currently receives as an employee of Federated,
and benefits including health insurance and such other benefits as are mutually
agreed upon by Mr. Butz and the Parties.
(c) In addition, Federated shall have entered into employment and
non-compete agreements, in substantially the form of those used by Wise with
certain of its sales personnel, with each of Michael Bachman, Raymond D'Amato,
Diane D'Amato and Steven Parker.
Blaustein may waive any condition specified in this Article VIII if
he executes a writing so stating at or prior to the closing.
ARTICLE 9
TERMINATION
9.1 TERMINATION OF AGREEMENT. Certain of the Parties may terminate
this Agreement as provided below:
(a) Federated and Blaustein may terminate this Agreement by mutual
written consent at any time prior to the closing;
(b) Blaustein may terminate this Agreement by giving written notice
to Federated at any time prior to the closing if any of the following events
shall have occurred:
(i) FEDERATED'S BREACH. Federated has breached any
representation, warranty, or covenant contained in this Agreement in any
material respect, and Blaustein has notified Federated of the breach, and the
breach has continued without cure for a period of 10 days after the notice of
breach.
(ii) FAILURE TO CLOSE BECAUSE FEDERATED FAILS TO MEET
OBLIGATIONS. The closing shall not have occurred on or before January 31,
1998, by reason of the failure of any provision of Article VIII (conditions
precedent to Blaustein's performance), unless said failure shall have resulted
primarily from Blaustein's breaching any representation, warranty, or covenant
contained in this Agreement.
(c) Federated may terminate this Agreement by giving written notice
to Blaustein at any time prior to the closing if any of the following events
shall have occurred:
(i) BLAUSTEIN'S BREACH. Blaustein has breached any
representation, warranty, or covenant contained in this Agreement in any
material respect, and Federated has notified Blaustein of the breach, and the
breach has continued without cure for a period of 10 days after the notice of
breach.
(ii) FAILURE TO CLOSE BECAUSE BLAUSTEIN FAILS TO MEET
OBLIGATIONS. The closing shall not have occurred on or before January 31,
1998, by reason of the failure of any provision of Article VII (conditions
precedent to Federated's performance), unless said failure shall have resulted
primarily from Federated's breaching any representation, warranty, or covenant
contained in this Agreement.
(d) Federated may terminate this Agreement if its Board of
Directors determines in good faith that a written proposal for a Competing
Transaction under Section 5.4 above is more favorable from a financial point of
view to its shareholders than the transactions contemplated by this Agreement
(including any adjustment to the terms and conditions of the transactions under
this Agreement, proposed by the other Parties in response to such Competing
Transaction), and is in said shareholders' best interests. Federated may
terminate this Agreement and enter into an agreement with respect to such
Competing Transaction, PROVIDED THAT it has complied with the provisions of
Section 5.4(c) concerning notice to the other Parties of negotiations, and at
least 2 business days prior to any such termination, Federated has provided the
other Parties written notice that it intends to terminate this Agreement
pursuant to this Section 9.1(b), which notice shall identify the Competing
Transaction then determined to be more favorable.
9.2 EFFECT OF TERMINATION. Except as provided in Section 9.3 below,
and except for any liability of any Party then in breach, if any Party
terminates this Agreement pursuant to Section 9.1 above, all rights and
obligations of the Parties hereunder shall terminate without any liability of
any Party to any other Party; PROVIDED, HOWEVER, that the provisions of Section
5.3(b) (confidentiality), Article X (Indemnification) and Section 12.13
(expenses) of this Agreement shall survive termination.
9.3 PAYMENT UPON TERMINATION. If Federated terminates this
Agreement pursuant to clause (d) of Section 9.1, then Federated shall pay to
Blaustein the reasonable documented out-of-pocket expenses incurred by
Blaustein in connection with the transactions contemplated hereby, including
the negotiation and execution of this Agreement, up to a maximum of $50,000.
ARTICLE 10
INDEMNIFICATION
10.1 GENERAL. Subject to the limitations set forth in this Article
X, Federated agrees to indemnify, defend and hold Blaustein (the "Indemnified
Party") harmless from and against any and all claims, actions, suits, demands,
assessments, judgments, losses, liabilities, damages, costs and expenses
(including, without limitation, fines, penalties and, to the extent permitted
by law, reasonable attorneys' fees) ("Indemnity Claims") suffered by said
Indemnified Party resulting from the inaccuracy or incorrectness of any
representation or breach of any warranty made by Federated under this
Agreement, if, but only if, and then only to the extent that, the inaccuracy or
incorrectness or breach, as the case may be, was knowing, intentional and
deliberate on the part of Federated, AND FURTHER PROVIDED THAT the Indemnity
Notice described at Section 10.2 below shall have been received within six
months of the Closing Date. Except as provided otherwise under Article IX
(Termination), the provisions of this Article X shall be the sole remedy
available to the Parties for the breach of this Agreement. In no event shall
Federated's directors, officers, employees, or agents have any liability
arising out of this Agreement.
10.2 NOTICE; PAYMENT OF VALID CLAIMS. Subject to the limitations set
forth in this Article X, in the event that an Indemnified Party shall assert an
Indemnity Claim, said Indemnified Party shall have sent written notice thereof
(the "Indemnity Notice") to an independent committee of directors (the
"Independent Committee"), consisting of Harry J. Fallon, Steven Fried, and a
representative of Federated's independent auditors. The Indemnity Notice shall
provide (i) an identification of the particular representation claimed to be
incorrect or inaccurate, the warranty, covenant or agreement claimed to have
been breached and/or the basis of the claim for indemnification, (ii) a
statement in reasonable detail of the facts giving rise to such alleged
inaccuracy, incorrectness or breach and/or claim for indemnification, (iii) a
statement that the incorrectness or inaccuracy or breach, as the case may be,
was knowing, deliberate, and intentional by Federated, and (iv) the amount in
dollars by which the Indemnified Party claims to have been damaged by reason of
the alleged inaccuracy, incorrectness or breach and/or the amount by which the
Indemnified Party is or may be entitled to indemnification pursuant to this
Article X (said written notice of claim from the Indemnified Party being
hereinafter called an "Indemnity Notice"). Except as provided in Section 10.3
(Third-Party Claims) below, upon receipt of an Indemnity Notice, the
Independent Committee shall, in not less than three (3) business days, appoint
a single arbitrator, who, in accordance with the rules of the American
Arbitration Association, shall determine the validity of the Indemnity Claims
described therein. The decision by said arbitrator shall be final and binding
on the Parties. If the arbitrator determines that such Indemnity Claims are
valid, Federated shall immediately issue to Blaustein a number of shares of
Federated Common Stock, valued at $.36 per share (the "Indemnity Shares"),
equal in value to the total amount by which such valid Indemnity Claims,
aggregated with all other Indemnity Claims found valid in accordance with this
Section 10.2, exceed $25,000; PROVIDED, HOWEVER, THAT the number of Indemnity
Shares issued under this Section 10.2 shall be limited to an amount that, when
aggregated with the Federated Common Shares described at Section 1.1, shall not
exceed 80% of the total shares of Federated's common stock issued and
outstanding as of the Closing Date.
10.3 THIRD-PARTY CLAIMS. Notwithstanding any provision to the
contrary in Section 10.2 above, if an Indemnity Claim should involve the
proposed settlement of litigation or threatened litigation against Federated,
Wise or Blaustein, the approval of the Independent Committee, acting in its
sole discretion by majority vote, without referral to an arbitrator, shall be
required. The decision by the Independent Committee shall be final and binding
on the Parties.
10.4 DEDUCTIBLE. In no event shall Federated be liable to an
Indemnified Party to the extent that all Indemnity Claims found valid under
this Article X do not exceed $25,000 in the aggregate, such that the
Indemnified Party shall absorb a total of the first $25,000 of losses, costs,
expenses or damages sustained by it relating to valid Indemnity Claims made
hereunder and after said Indemnified Party shall have absorbed such total of
$25,000 in respect to valid Indemnity Claims generally, the balance of all such
valid Indemnity Claims shall be subject to indemnification as provided in this
Article X, it being understood by the Parties that said $25,000 deductible
amount is a cumulative aggregate deductible and is not applicable as a
deduction to each Indemnity Claim individually.
10.5 CONFORMITY WITH ARTICLE X. In no event shall an Indemnified
Party's right to reimbursement in respect of any one or more Indemnity Claims
be enforced or realized except in conformity with this Article X. The
Indemnified Party hereby acknowledges that this Article X has been expressly
bargained for in this transaction.
ARTICLE 11
DEFINITIONS
11.1 DEFINED TERMS. As used herein, the terms below shall have the
following meanings:
"ACTIONS" means (i) any outstanding criminal, civil or administrative
injunction, judgment, order, decree, ruling, or charge, contingent or otherwise
and whether or not required to be disclosed, or (ii) any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
administrative agency of any federal, state, local, or foreign jurisdiction.
"AFFILIATE" means, with respect to any person, any person directly or
indirectly controlling, controlled by, or under common control with such other
person. For purposes of this definition, "control" (including with correlative
meaning, the terms "controlled by" and "under common control with") as used
with respect to any person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such person, whether through ownership of voting securities, by contract or
otherwise.
"FEDERATED MATERIAL ADVERSE EFFECT" means a material adverse change
in or effect on the consolidated financial condition, properties, business or
results of operations of Federated, taken as a whole.
"WISE MATERIAL ADVERSE EFFECT" means a material adverse change in or
effect on the consolidated financial condition, properties, business or results
of operations of Wise, taken as a whole.
ARTICLE 12
MISCELLANEOUS
12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Parties contained in Articles II, III and
IV shall survive for six months following the Closing Date.
12.2 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue
any press release or make any public announcement relating to the subject
matter of this Agreement prior to the closing without the prior written
approval of Federated and Blaustein; PROVIDED, HOWEVER, that any Party may make
any public disclosure it believes in good faith is required by applicable law
or any listing or trading agreement concerning its publicly-traded securities
(in which case the disclosing Party will use its best efforts to advise the
other Parties prior to making the disclosure).
12.3 THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
12.4 ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they have related in any way to the
subject matter hereof.
12.5 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of Federated and Blaustein.
12.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
12.7 PRONOUNS. Whenever the context requires, the use in this
Agreement of a pronoun of any gender shall be deemed to refer also to any other
gender, and the use of the singular shall be deemed to refer also to the
plural.
12.8 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
12.9 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
IF TO BLAUSTEIN:
Martin L. Blaustein, Chairman
Wise Components, Inc.
28 Henry Street
Greenwich, Connecticut 06830
Fax: (203) 531-7956
and copy to:
Smith, Ranscht, Connors, Mutino,
Nordell & Sirignano, P.C.
235 Main Street
White Plains, NY 10601
Attn: Michael Nordell, Esq.
Fax: (914) 946-8861
IF TO FEDERATED:
Federated Purchaser, Inc.
268 Cliffwood Avenue
Cliffwood, New Jersey 07721
Attn: Harry J. Fallon, Chairman
Fax: (908) 290-8008
and copy to:
Sills Cummis Zuckerman Radin
Tischman Epstein & Gross
One Riverfront Plaza
Newark, NJ 07102-5400
Attn: Victor H. Boyajian, Esq.
Fax: (973) 643-6500
IF TO WISE:
Wise Components, Inc.
28 Henry Street
Greenwich, Connecticut 06830
Attn: Martin L. Blaustein, Chairman
Fax: (203) 531-4859
and copy to:
Smith, Ranscht, Connors, Mutino,
Nordell & Sirignano, P.C.
235 Main Street
White Plains, NY 10601
Attn: Michael Nordell, Esq.
Fax: (914) 946-8861
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Parties notice in the manner herein set forth.
12.10 JURISDICTION. Each of the Parties hereto, including all
persons joining in this Agreement, hereby expressly agrees that jurisdiction
respecting any dispute between or among them arising out of this Agreement,
shall be in the appropriate State Courts of New York, or the United States
District Court for the Southern District of New York.
12.11 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Federated, Blaustein and Wise. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
12.12 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
12.13 EXPENSES. Each party will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby; PROVIDED, HOWEVER, that Federated
shall pay 50%, and Wise shall pay 50%, of all legal and professional fees
relating to the preparation and filing of the Registration Statement.
12.14 CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an 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. Any reference to any federal, state,
local, or foreign statute or 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.
12.15 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Disclosure Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
on the date first above written.
FEDERATED PURCHASER, INC.
By:
Harry J. Fallon
Title: Chairman
WISE COMPONENTS, INC.
By:
Martin L. Blaustein
Title: Chairman
MARTIN L. BLAUSTEIN
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Exhibit 99.1
PRESS RELEASE
Cliffwood, New Jersey, Wednesday, October 1, 1997 -- FEDERATED PURCHASER, INC.
announced today that it has signed an agreement with Wise Components, Inc., and
its chairman and sole shareholder, Martin L. Blaustein, under which Federated
will issue approximately 4.5 million shares of its common stock to Blaustein in
a tax-free exchange for all of the outstanding shares of Wise's stock. Upon
closing, Wise will become a wholly-owned subsidiary of Federated and Blaustein
will become Federated's principal shareholder, owning approximately 74% of
Federated's common stock. The remaining 26% will continue to be held by
current shareholders of Federated.
The exchange will be treated as a pooling of interests. When the transaction
is completed, the combined entity will have annual sales of over $15 million,
thereby strengthening its marketing power and financial resources.
The agreement has been approved by the boards of directors of both companies,
and is subject to the approval of Federated's shareholders and other
conditions. It is expected to close on or about January 31, 1998.
Harry J. Fallon, president of Federated, commented, "By combining the
resources of Federated and Wise, we will enhance our competitiveness in an
increasingly dynamic market. Each of the companies will contribute long-
standing expertise in the electronics distribution industry, and together will
make a strong player for the future. It's a good deal for our shareholders, our
employees and our company."
Martin L. Blaustein, chairman and sole shareholder of Wise, said "I look
forward to working with Federated to expand our business as a team. By taking
the two companies' experience, initiative and access to capital markets
together, we have the potential to create a market leader."
Federated Purchaser, Inc., is a publicly-held distributer of electronic
components based in Cliffwood, NJ. Wise Components, Inc. of Greenwich, CT, also
an electronics distributer, is privately held.
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FEDERATED ACTUAL WISE ACTUAL PRO FORMA
--------------------------- --------------------------- ----------------------------
Nine Months Six Months Nine months
ended Fiscal Year ended Fiscal Year ended Fiscal Year
July 31, 1996 1996 June 30, 1977 1996 July 31, 1997 1997
------------- ----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Sales $2,515,054 $3,980,500 $6,212,380 $14,863,476 $8,727,434 $15,665,882
Gross Profit 595,231 852,541 1,629,381 3,984,317 2,224,612 3,889,612
Net Income (Loss) (164,015) (414,826) 95,101 470,906 (10,013) 182,982
Net Income (Loss) (.10) (.26) n/a n/a (.00) .03
per share
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