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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
May 17, 1996
(Date of earliest event reported)
BLUE JAY ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Commission File No. 0-10372
DELAWARE 23-2154902
(State of incorporation) (I.R.S. Employer
Identification No.)
11835 West Olympic Boulevard
East Tower Suite 705
West Los Angeles, CA 90064
(Address of principal executive offices) (Zip Code)
(310) 208-5589
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On May 17, 1996 Blue Jay Enterprises, Inc. (the "Company") executed
definitive agreements to acquire all of the issued and outstanding stock of
United Dynamatics, Inc., a Delaware corporation, ("UDI") and to acquire certain
assets of Capital Idea, Inc., a Colorado corporation which is one of the UDI
shareholders ("Capital Idea"), in exchange for issuance to UDI shareholders and
Capital Idea of newly issued stock that will equal approximately 90 percent of
Blue Jay outstanding common stock.
The transactions are contingent on the satisfaction of certain
conditions, and the closing is expected to occur within the next two months.
Following the closing, the Company intends to change its name to
UNIDYNE Corporation, with headquarters in Exton, Penn.
The Company announced that a new board of directors, consisting of
UDI's executive management and directors, will be installed at the closing.
Future directors and the offices they will occupy are C. Eugene Hutcheson,
chairman and chief operating officer; Laurence M. Wilson, President and Chief
Operating Officer; Charlotte E. Doremus, chief administrative officer and
secretary, and the following two persons will be independent directors; David
M. Barrett, senior partner in the Washington, D.C.-based law firm of Barrett &
Schuler; and Dr. Frank B. Holze, president of Holze International Investment, a
Monaco-based investment consulting firm.
UDI, through its wholly owned subsidiary Dynamatic Corporation,
manufactures specialized electric motors and variable speed drives and controls
utilizing the Eddy Current Drive (ECD) operating principal to control motor
speed. The variable speed drives are used in a variety of products, including
conveyors, stamping presses, pumps and special process equipment.
Dynamatic Corporation also manufactures engine dynamometers and
transmission dynamometers for a variety of large industrial customers,
primarily in the automotive and heavy equipment industries.
UDI employs approximately 125 persons at facilities in Kenosha, Wisc.
and Exton, Penn., and the Kenosha operation and management will continue
unchanged following the transaction.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit
99.1 Purchase and Sale Agreement dated May 17, 1996, between the Company,
Robert M. Bernstein, Vintage Enterprises, Inc., Capital Idea, Inc.,
EETC, Inc., Frank B. Holze and David M. Barrett.
99.2 Purchase and Sale Agreement dated May 17, 1996 between the Company and
Capital Idea, Inc.
99.3 Press Release issued by the Company.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BLUE JAY ENTERPRISES, INC.
Date: May 23, 1996 By: /s/ ROBERT M. BERNSTEIN
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Robert M. Bernstein, President
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EXHIBIT 99.1
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (the "Agreement") is entered into
this 17th day of May, 1996 by and between Blue Jay, Enterprises, Inc., a
Delaware corporation ("Blue Jay"), Robert M. Bernstein ("Bernstein"), and the
following shareholders of United Dynamatics Inc., a Delaware corporation
("UDI"): Vintage Enterprises Inc., a Delaware corporation; Capital Idea, Inc., a
Colorado corporation; and EETC Inc., a Delaware corporation, Frank B. Holze and
David M. Barrett (hereinafter the foregoing shareholders collectively are
referred to as "Shareholders" and individually referred to as a "Shareholder").
WHEREAS, Shareholders own 1,500 shares (the "UDI Shares") of common
stock, no par value per share, of UDI (the "UDI Common Stock"), which
constitute all of the issued and outstanding UDI Common Stock.
WHEREAS, UDI owns all of the issued and outstanding stock of Dynamatic
Corporation ("Dynamatic") and Kenosha Corporation ("Kenosha"), each a Delaware
corporation.
WHEREAS, Shareholders and Blue Jay desire that Blue Jay acquire the
UDI Shares in exchange for shares of common stock, $.001 par value per share,
of Blue Jay ("Blue Jay Common Stock") that, together with the transfer of
certain assets of Capital Idea, Inc. ("Capital Idea") to Blue Jay pursuant to
a Purchase and Sale Agreement of even date herewith between Blue Jay and
Capital Idea (the "Capital Idea Agreement") is intended to qualify as a tax-free
transfer under Section 351(a) of the Internal Revenue Code of 1986, as amended,
and upon completion of which UDI will be a wholly-owned subsidiary of Blue Jay;
and
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
AGREEMENT:
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale. Subject to the terms and conditions set
forth herein, on the Final Closing Date (as hereinafter defined), the
Shareholders, severally and individually, shall sell and deliver to Blue Jay,
and Blue Jay shall purchase and accept from each Shareholder, the UDI Shares.
ARTICLE II
CONSIDERATION: CLOSING
2.1 Consideration. The consideration to be paid by Blue Jay
for the UDI Shares shall be in the form of shares of Blue Jay Common Stock in
the ratio of 3258.27 shares of newly issued Blue Jay Common Stock for each
outstanding share of UDI Common Stock, or an aggregate 4,887,398 shares of Blue
Jay Common Stock (the "Blue Jay Shares").
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2.2 Escrow Arrangement. The Shareholders, Blue Jay and Firstar
Trust Company, as escrow agent (the "Escrow Agent"), have entered into an
escrow agreement in the form attached hereto as Exhibit A ("the Escrow
Agreement") pursuant to which, concurrently with the execution of this
Agreement, (a) the Shareholders are delivering to the Escrow Agent the UDI
Shares and (b) Blue Jay is delivering to the Escrow Agent the Blue Jay Shares,
all of which shares shall be held by the Escrow Agent in accordance with the
Escrow Agreement.
2.3 Closing. The closing in escrow of the transactions
contemplated hereby ("Escrow Closing") shall be held at Trafalgar Financial
Services, Inc., 126 State Street, Boston, Massachusetts at 1:00 P.M. May 17,
1996. The "Final Closing Date" shall mean the date on which the Escrow Agent
releases the documents pursuant to Section 3.1(a) of the Escrow Agreement which
shall be the first business day following satisfaction of all closing
conditions set forth in Article VIII and IX hereof.
2.4 Deliveries on the Final Closing Date. On the Final Closing
Date:
(a) UDI, as representative of the Shareholders (in such capacity,
the "Representative"), and Blue Jay shall deliver to the Escrow Agent the
Notice of Release referred to in the Escrow Agreement;
(b) The Escrow Agent shall deliver to Blue Jay certificates
representing the UDI Shares, duly endorsed for transfer or in blank; and
(c) The Escrow Agent shall deliver to the Representative
certificates representing the Blue Jay Shares in the amounts set forth on
Schedule 2.4 hereto.
ARTICLE III
INDIVIDUAL AND SEVERAL REPRESENTATIONS OF THE SHAREHOLDERS
In order to induce Blue Jay to enter into this Agreement, each of the
Shareholders, severally and individually, makes the following representations
and warranties to Blue Jay.
3.1 Ownership of Shares. Such Shareholder is the record and
beneficial owner of the kind and number of UDI Shares as are set forth opposite
such Shareholder's name on Schedule 3.1 hereto. Such Shareholder owns such
shares free and clear of all liens, encumbrances, pledges, claims and other
security interests and all such shares are validly issued, fully paid and
nonassessable (except to the extent otherwise provided by Section
180.0622(2)(b) of the Wisconsin Statutes). None of the UDI Shares owned by such
Shareholder is subject to any marital property or other agreement, judgment,
order, voting trust or proxy or other agreement which either limits or
restricts such Shareholder's absolute authority to
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transfer its UDI Shares as herein provided or requires the holder thereof to
vote such shares in any particular manner.
3.2 Enforceability; Conflicting Obligations. Such Shareholder has
all necessary power and authority to enter into and consummate the transactions
contemplated by this Agreement in accordance with its terms and to sell to Blue
Jay the number of UDI Shares set forth opposite such Shareholder's name on
Schedule 3.1 hereto. This Agreement has been duly authorized by such
Shareholder and is such Shareholder's valid and binding obligation, enforceable
against such Shareholder in accordance with its terms. The execution and
delivery by such Shareholder of this Agreement do not, and the consummation of
the sale of the UDI Shares by such Shareholder contemplated hereby will not,
conflict with or violate the provisions of any order, writ, decree, agreement,
contract, restriction or organizational documents to which such Shareholder is
a party or to which such Shareholder is bound.
ARTICLE IV
JOINT AND SEVERAL REPRESENTATIONS OF THE SHAREHOLDERS
In order to induce Blue Jay to enter into this Agreement, the
Shareholders, jointly and severally, make the following representations and
warranties to Blue Jay.
4.1 Organization and Qualification. Each of UDI, Dynamatic and
Kenosha is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
4.2 Capitalization.
(a) Company. The entire authorized capital stock of UDI consists
of 1,500 shares of UDI Common Stock, all of which are issued and outstanding
and owned by the Shareholders. Except as set forth on Schedule 4.2 hereof,
there are no outstanding options, warrants, convertible securities or other
rights to subscribe for or acquire any capital stock or securities convertible
into capital stock of UDI.
(b) Subsidiaries. Dynamatic and Kenosha (the "Subsidiaries")
constitute the only wholly-owned subsidiaries of UDI. The authorized capital
stock of Dynamatic consists of 1,500 shares of common stock, no par value per
share, of which all 1,500 shares are issued and outstanding, and the authorized
capital stock of Kenosha consists of 1,500 shares of common stock, no par
value, of which all 1,500 shares are issued and outstanding. All such issued
and outstanding shares of Dynamatic and Kenosha are owned by UDI free and clear
of all liens, encumbrances, pledges, claims and other security interests.
4.3 Litigation. Except as set forth on Schedule 4.3, there are no
claims, suits, actions, arbitrations, administrative proceedings or
investigations, pending or, to UDI's knowledge,
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threatened against UDI or either Subsidiary that could have a material adverse
effect on the financial condition of UDI and the Subsidiaries, taken as a
whole, or restrict the ability of the Shareholders to consummate the
transaction contemplated by this Agreement.
4.4 Financial Information. The financial information of UDI that
has been previously provided to Bernstein fairly presents in all material
respects the financial position of UDI as of the dates indicated, all in
conformity with generally accepted accounting principles consistently applied
during the periods involved, except as otherwise noted therein.
4.5 Investment Intent. The Blue Jay Shares being acquired by the
Shareholders hereunder are being acquired for investment and not with a view
toward distribution thereof. The Shareholders acknowledge that such shares
have not been registered under the Securities Act of 1933, as amended (the
"1933 Act"), or any state securities laws and may be resold only pursuant to
an effective registration covering such shares or pursuant to an available
exemption from registration. The Shareholders further acknowledge that the
certificates representing the Blue Jay Shares shall bear the following legend:
The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), or the
securities laws of any state, but have been issued in reliance upon
exemptions therefrom. The securities may not be offered, sold,
pledged or otherwise transferred without registration under the Act or
the opinion of counsel satisfactory to the Corporation that an
exemption from registration is available or that such transfer may
otherwise lawfully be made.
4.6 Brokers. Neither the Shareholders, UDI, nor either of the
Subsidiaries has incurred or made commitments for any brokerage, finders' or
similar fees in connection with the transactions contemplated by this
Agreement, except the engagement letter, dated April 15, 1996, among Trafalgar
Financial Services, Inc., UDI and Capital Idea, Inc.
4.7 Representations and Warranties True and Correct. The
representations and warranties contained herein, and all other documents,
certifications, materials and written statements or written information
concerning UDI or the Subsidiaries given to Blue Jay by or on behalf of the
Shareholders do not include any untrue statement of a material fact or omit to
state a material fact required to be stated herein or therein in order to make
the statements herein or therein, in light of the circumstances under which
they are made, not misleading.
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ARTICLE V
REPRESENTATIONS OF BLUE JAY
In order to induce the Shareholders to enter into this Agreement, Blue
Jay and Robert M. Bernstein, jointly and severally, make the following
representations and warranties to the Shareholders.
5.1 Organization. Blue Jay is duly organized, validly existing
and in good standing under the laws of the State of Delaware with all requisite
power and authority to own, lease and operate its properties and to conduct its
business as currently operated and conducted.
5.2 Capitalization of Blue Jay. The authorized capital stock of
Blue Jay consists of 50,000,000 shares of Common Stock, $.001 par value per
share, of which 724,059 shares are issued and outstanding. All of such
outstanding shares have been issued pursuant to and in accordance with
effective registration statements under the 1933 Act and in compliance with
applicable state securities laws or pursuant to valid exemptions from
registration under the 1933 Act and any applicable state securities laws and
rules and regulations under such laws. All of the outstanding shares of Blue
Jay Common Stock are duly authorized, validly issued, fully paid and
nonassessable, and are free of preemptive rights. There are no other shares of
capital stock or other equity securities (or debt securities with any voting
rights or convertible into securities with any voting rights) of Blue Jay
outstanding and no outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, shares of capital stock of Blue Jay, except for an
option ("Option") granted to Bernstein pursuant to an Option Agreement (the
"Option Agreement") of even date herewith in the form of Exhibit C hereto,
5.3 Authorization. Blue Jay has full power and authority to enter
into this Agreement and to carry out its obligations hereunder. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by Blue Jay's Board of Directors
and no other corporate proceedings on the part of Blue Jay are necessary to
authorize this Agreement or the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Blue Jay and is the legal,
valid and binding obligation of Blue Jay, enforceable against Blue Jay in
accordance with its terms. The Blue Jay Common Stock to be issued hereunder and
under the Capital Idea Agreement, when issued in accordance with the terms of
this Agreement and the Capital Idea Agreement, respectively, will be validly
issued, fully paid and nonassessable.
5.4 Reports and Financial Statements. Blue Jay has filed all
reports on Form 10-Q, Form 10-QSB and Form 10-K required to be filed with the
Securities and Exchange Commission (the "SEC") pursuant to the Securities
Exchange Act of 1934, as amended (the
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"1934 Act") since 1986 (collectively, the "SEC Reports"). Each of the balance
sheets (including the related notes) included in the SEC Reports fairly
presents in all material respects the financial position of Blue Jay as of the
date thereof, and each of the income statements and statements of cash flow
(including the related notes) included therein fairly present in all material
respects the results of operations and cash flows of Blue Jay for the period or
as of the date set forth therein, all in conformity with generally accepted
accounting principles consistently applied during the periods involved, except
as otherwise noted therein and subject, in the case of unaudited interim
financial statements, to normal year-end adjustments and any other adjustments
described therein.
5.5 Litigation. There are no claims, suits, actions,
arbitrations, administrative proceedings or investigations, pending or, to Blue
Jay's or Bernstein's knowledge, threatened against Blue Jay or Bernstein that
could have a material adverse effect on Blue Jay or restrict the ability of
Blue Jay to consummate the transactions contemplated by this Agreement or the
other agreements referred to herein.
5.6 Investment Intent. The UDI Shares are being acquired for
investment and not with a view toward distribution thereof. Blue Jay
acknowledges that such shares have not been registered under the 1933 Act or
any state securities laws and may be resold only pursuant to an effective
registration covering such shares or pursuant to an available exemption from
registration. Blue Jay further acknowledges that the certificates representing
the UDI Shares shall bear the legend set forth in Section 4.5 hereof:
5.7 Brokers. Neither Blue Jay nor Bernstein has incurred or made
commitments for, any brokerage, finders' or similar fees in connection with the
transactions contemplated by this Agreement,
5.8 Representations and Warranties True and Correct. The
representations and warranties contained herein, and all other documents,
certifications, materials and written statements or written information given
to the Shareholders by or on behalf of Blue Jay, do not include any untrue
statement of a material fact or omit to state a material fact required to be
stated herein or therein in order to make the statements herein or therein, in
light of the circumstances under which they are made, not misleading.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
6.1 Survival of Representations. None of the representations or
warranties made by any party to this Agreement shall survive the Final Closing
Date, unless the party making the representation or warranty knew such
representation or warranty was false at the time it was made or as of the Final
Closing Date.
6.2 Agreement to Indemnify.
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(a) Bernstein shall indemnify, defend and hold harmless the
Shareholders, UDI, the Subsidiaries, and each officer, director, employee and
agent thereof (collectively the "Indemnified Parties"), from and against all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including interest, penalties and reasonable
attorneys, fees expenses (collectively, "Damages"), asserted against,
resulting to, imposed upon or incurred by any Indemnified Party, directly or
indirectly, during the one-year period following the Closing, by reason of or
resulting from any claims by stockholders of Blue Jay challenging the fairness
of the transactions contemplated by this Agreement or any claims by
stockholders of Blue Jay arising out of any transaction by or activities of
Blue Jay prior to the Closing Date.
(b) The obligations of Bernstein set forth in paragraph (a) above
shall be secured by and limited to a pledge by Bernstein to UDI, as
representative of the Indemnified Parties, of shares of Blue Jay Common Stock
and the Option Agreement pursuant to the Pledge Agreement in substantially the
form of Exhibit D attached hereto (the "Pledge Agreement").
(c) For purposes of satisfying any claim for Damages under this
Section 6.2, the value of the Blue Jay Common Stock pledged shall be the
average of the daily market prices of the Blue Jay Common Stock for the 10
trading days immediately preceding final agreement between Bernstein and the
Indemnified Parties, or final adjudication by a court of competent
jurisdiction, of such claim. For purposes of this Section 6.2(c), the market
price for each trading day shall be the closing price on such day on the
principal securities exchange or market in which the Blue Jay Common Stock is
then traded or, if no sale takes place on such day, the average of the closing
bid and asked prices on such day.
ARTICLE VII
COVENANTS PENDING THE FINAL CLOSING DATE
7.1 Operation of Business. From the date hereof and until the
Final Closing Date, without the prior written consent of the Representative,
Blue Jay shall not:
(a) Increase Compensation. Grant or promise any increase in
compensation to any shareholder, officer or director or employee, nor, by means
of any bonus, profit-sharing, incentive compensation payment, pension,
retirement, medical hospitalization, life insurance or other insurance plan or
plans, or otherwise, increase in any amount the benefits or compensation of any
such employees, directors or officers;
(b) Employment and Labor Contracts. Enter into, amend or renew or
extend any employment contract or collective bargaining agreement;
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(c) Disposition of Assets. Sell or dispose of, or encumber,
mortgage or pledge any asset;
(d) Capital Expenditures. Make any capital expenditures or enter
into any lease of capital equipment or real estate;
(e) Contracts. Enter into any contract, except as contemplated by
this Agreement;
(f) Create or Incur Indebtedness. Enter into any transaction, or
create, assume, incur or guarantee any indebtedness;
(g) Issue Stock; Distributions on Stock. Except for the Option
Agreement and any Blue Jay Common Stock to be issued thereunder, authorize or
issue any shares of capital stock or other securities convertible into or
exercisable for capital stock, or declare or pay any dividend or make any sale
of, or distribution with respect to, any capital stock or directly or
indirectly redeem, purchase or otherwise acquire any capital stock;
(h) Accounting Procedures. Change any accounting procedures or
practices or its financial structure;
(i) Charter Amendments. Make any amendments to or changes in its
certificate of incorporation or bylaws;
(j) Breach of Contract. Perform any act, or attempt to do any act,
or permit any act or omission to act, which will cause a breach of any
contract, agreement, instrument, document, lease, license, permit, indenture or
other obligation to which it is a party or to which it is bound,
7.2 Access Prior to Final Closing. Blue Jay shall permit the
Shareholders and their counsel, accountants and other representatives full
access during normal business hours to all of the offices, properties, books
and records and contracts of Blue Jay in order that the Shareholders may have
full opportunity to make such investigations as they shall desire of Blue Jay
in connection with the transactions contemplated by this Agreement, and shall
furnish the Shareholders during such period with all such additional financial
and operating data and other information as the Shareholders or their
representatives may from time to time reasonably request.
7.3 Blue Jay Acquisition Proposals. From and after the date
hereof and until the earlier of the consummation of the transactions
contemplated by this Agreement or the termination of this Agreement, neither
Blue Jay nor Bernstein shall (a) solicit or authorize any person to solicit,
directly or indirectly, any inquiries, proposals or offers from any person
relating to any acquisition or purchase of all or substantially all the assets
of, or any equity interest in, or any merger, consolidation or business
combination with, Blue Jay (a "Blue Jay Acquisition Transaction"), (b) enter
into any agreement with respect to any Blue Jay
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Acquisition Transaction, or (c) participate in any negotiations regarding,
cooperate with, facilitate or encourage a Blue Jay Acquisition Transaction or
furnish to any other person any non-public information concerning Blue Jay in
connection therewith. Blue Jay shall immediately notify the Shareholders if
any proposal or offer with respect to a Blue Jay Acquisition Transaction is
received by Blue Jay and communicate to the Representative the terms of any
such proposal or offer.
7.4 UDI Acquisition Proposals. From and after the date hereof and
until the earlier of the consummation of the transactions contemplated by this
Agreement or the termination of this Agreement, UDI shall not (a) solicit or
authorize any person to solicit, directly or indirectly, any inquiries,
proposals or offers from any person relating to any acquisition or purchase of
all or substantially all the assets of, or any equity interest in, or any
merger, consolidation or business combination with, UDI (a "UDI Acquisition
Transaction"), (b) enter into any agreement with respect to any UDI
Acquisition Transaction, or (c) participate in any negotiations regarding,
cooperate with, facilitate or encourage a UDI Acquisition Transaction or
furnish to any other person any non-public information concerning UDI in
connection therewith, UDI shall immediately notify Blue Jay if any proposal or
offer with respect to a UDI Acquisition Transaction is received by UDI and
communicate to Blue Jay the terms of any such proposal or offer.
ARTICLE VIII
CONDITIONS OF SHAREHOLDERS' OBLIGATION TO CLOSE
The obligation of the Shareholders to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction and
fulfillment, prior to the Final Closing Date of each of the following express
conditions precedent:
8.1 Representation and Warranties. The representations and
warranties in this Agreement made by Blue Jay and Bernstein shall be true and
correct in all respects as of and on the Final Closing Date,
8.2 Performance of Covenants and Obligations. Blue Jay shall have
performed and complied with all of its covenants, agreements and obligations
under this Agreement which are to be performed or complied with by Blue Jay
prior to or on the Final Closing Date,
8.3 Closing of Capital Idea, Inc, Agreement. The transactions
contemplated by the Capital Idea Agreement shall have been consummated prior to
or concurrently with the Final Closing Date,
8.4 Bernstein Agreements. Bernstein shall have cancelled Blue
Jay's Convertible Note dated January 16, 1988 in the principal amount of
$10,000 for Blue Jay's agreement to pay all liabilities of Blue Jay to
Bernstein and others as of the date hereof in an
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amount not to exceed $25,000 which will be paid within 60 days of the Final
Closing Date and (ii) executed a Consulting Agreement in the form attached
hereto as Exhibit E.
8.5 Pledge Agreement. Bernstein shall have executed and delivered
to the Representative the Pledge Agreement.
8.6 Investigation of Blue Jay. The Shareholders shall have
completed their review of such books, records, accounts, contracts and
documents of or relating to the financial condition, liabilities, results of
operations, business and prospects of Blue Jay and such other inquiries or
investigations as they deem necessary or advisable and the results of such
review and investigation shall be satisfactory to the Shareholders in their
sole discretion. Without limiting the generality of the foregoing, the
Shareholders shall be satisfied that (a) Blue Jay has no liabilities or
obligations, whether absolute, accrued, contingent or otherwise and whether due
or to become due, that are not fully reflected on the balance sheet of Blue Jay
as of March 31, 1996, (b) there are no claims, suits, actions, arbitrations,
administrative proceedings or investigations pending or threatened against Blue
Jay that could have a material adverse effect on Blue Jay, (c) that the Blue
Jay Common Stock to be issued pursuant to this Agreement and the Capital Idea
Agreement when issued will be validly issued, fully paid and nonassessable and
(d) there is no reasonable basis for the assertion against Blue Jay of any
liability or obligation or for the assertion or commencement of any such claim,
suit, action, arbitration,, administrative proceeding or investigation.
ARTICLE IX
CONDITIONS TO BLUE JAY'S OBLIGATION TO CLOSE
The obligation of Blue Jay to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction and fulfillment, prior
to and on the Final Closing Date:
9.1 Representations and Warranties. The representations and
warranties in this Agreement made by the Shareholders shall be true and correct
in all respects as of and on the Final Closing Date.
9.2 Performance of Covenants and Obligations. The Shareholders
shall have performed and complied with all of their material covenants and
obligations under this Agreement.
9.3 Closing of the Capital Idea Agreement. The transactions
contemplated by the Capital Idea Agreement shall have been consummated prior to
or on the Final Closing Date.
9.4 Investigation of UDI. Blue Jay shall have completed its review of
such books, records, accounts, contracts and documents of or relating to the
financial condition, liabilities, results of operations, business and prospects
of UDI and such other inquiries or investigations as it deems necessary or
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advisable and the results of such review and investigation shall be
satisfactory to Blue Jay in its sole discretion,
ARTICLE X
OTHER AGREEMENTS
10.1 Cooperation: Public Announcements. The Shareholders and
Blue Jay shall cooperate fully with each other and their respective counsel and
accountants in connection with any actions that may be required to be taken in
order to satisfy their respective obligations under this Agreement. The
Shareholders and Blue Jay shall cooperate with each other in the preparation of
any press releases in connection with the transactions contemplated by this
Agreement and in the preparation and filing of any documents with the
Securities and Exchange Commission or any state securities agency required as a
result of such transactions. Except upon the advice of counsel or as may be
required by law (and in either case upon notice to the other party), neither
the Shareholders nor Blue Jay will, without prior consultation with the other,
make any press release or announcement to the public concerning the
transactions contemplated by this Agreement.
10.2 Confidentiality. Each party to this Agreement understands
that certain information which it has been furnished and will be furnished in
connection with this Agreement is confidential and proprietary, and agrees that
it will maintain the confidentiality of such information and will not disclose
it to others or use it, except in connection with the transaction contemplated
hereby, without the consent of the party furnishing such information.
Information which is generally known in the industry concerning a party or
among such party"s creditors, generally, or which has been disclosed to the
other party by third parties which have right to do so, shall not be deemed
confidential or proprietary information for these purposes. In the event that a
party is at any time requested or required (by oral questions, interrogatories,
requests for information or documents, subpoena or similar process) to disclose
any information supplied to such party in connection with such transaction,
such party agrees to provide the party furnishing such information with prompt
notice of such request(s) so that the party furnishing such information may
seek an appropriate protective order and/or waive compliance of the party
receiving such information with the terms of this Section 10.2. Notwithstanding
the terms of this Section 10,2, if, in the absence of a protective order or the
receipt of a waiver hereunder, the party receiving such information is
nonetheless, in the opinion of its counsel,, required to disclose information
obtained in connection with such transaction or else stand liable for contempt
or suffer other censure or penalty, the party receiving such information may
disclose such information, to the extent and in the manner so required, without
liability hereunder, In the event that such transaction is not consummated,
each party agrees to promptly return all confidential materials (and all copies
thereof) which have been furnished to him regarding the business and financial
condition of the other party, including all financial statements,
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reports, contracts, customer lists, accounts, records, tax returns, data,
plans, processes and trade secrets except to the extent any such documents
shall otherwise be publicly available.
10.3 Directors. On or prior to the Closing Date, the Board of
Directors of Blue Jay shall take all action necessary (including amending the
bylaws of Blue Jay) to elect to the Board of Directors five persons designated
by the Shareholders. Immediately upon consummation of the Closing, all
directors of Blue Jay, other than the persons designated by the Shareholders,
shall resign as directors.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated in the
following circumstances:
(a) By mutual consent of the Shareholders and Blue Jay;
(b) By the Shareholders in the event the conditions in Article
VIII of this Agreement are not satisfied or waived on or before July 31, 1996,
1996;
(c) By Blue Jay in the event the conditions in Article IX of
this Agreement are not satisfied or waived on or before July 31, 1996.
11.2 Effect of Termination. In the event this Agreement is
terminated pursuant to this Article XI, this Agreement shall be void and have
no further force and effect.
ARTICLE XII
MISCELLANEOUS
12.1 Notices. Etc. All notices, requests, demands, and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, telegram, telex or
telecopy (receipt confirmed) or seventy-two hours after being mailed, first
call, certified mail, postage prepaid:
(a) To Blue Jay:
Blue Jay Enterprises, Inc.
11835 West Olympic Boulevard
East Tower 705
Los Angeles, CA 90064
(310)208-5589, Fax: (310)473-3177
Attention: Robert M. Bernstein
-12-
<PAGE> 13
With copies to:
Joseph M. Berl
Baker & Hostetler
1050 Connecticut Ave,, N.W.
Washington, DC 20036-5304
(202) 861-1500; Fax:
Timothy Smoot, Esq.
7002 Moody Street
Suite 112
LaPalma, CA 90623
(310)402-1801, Fax: (310)402-0643
(b) To Bernstein:
Robert M. Bernstein
c/o Blue Jay Enterprises, Inc.
11835 West Olympic Boulevard
East Tower 705
Los Angeles, CA 90064
(310)208-5589, Fax: (310)473-3177
With a copy to:
C. Timothy Smoot, Esq.
Suite 112
7002 Moody Street
LaPalma, CA 90623-1181
(310)402-1801, Fax: (310)402-0643
(c) To Shareholders:
United Dynamatics, Inc.
118 Pickering Way, Suite 104
Exton, Pennsylvania 19341
(610)363-8237; Fax: (610)524-8715
Attention: C. Eugene Hutcheson
With copies to:
Peggy E. Brever, Esq.
Michael Best & Friedrich
100 East Wisconsin Avenue
Milwaukee, WI 53202
(414)271-6560: Fax: (414)277-0656
Barrett & Schuler
1000 Thomas Jefferson Street
Suite 305
Washington, DC 20007
Attention: David M. Barrett
(202)728-0888: Fax: (202) 296-7490
-13-
<PAGE> 14
12.2 Entire Agreement. This Agreement supersedes any other
discussions and agreement between the parties hereto with respect to the matters
contained herein, and this Agreement and the agreements to be executed and
delivered pursuant hereto and thereto contain the sole and entire agreement
between the parties hereto with respect to the transactions contemplated herein
and therein.
12.3 Amendments and Waivers. This Agreement may be amended only by
an instrument in writing executed by the party against whom enforcement of the
amendment is sought. The president or any vice president of any corporate party
may by a signed writing give any consent, take any action, waive any
inaccuracies in representations or other compliance by any other party to any
of the covenants or conditions herein, modify the terms of this Agreement to
take any other action deemed by him to be necessary or appropriate to
consummate the transactions contemplated by this Agreement.
12.4 Counterparts; Headings. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument. The headings herein set out
are for convenience of reference only and shall not be deemed a part of this
Agreement.
12.5 Binding Effect; Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, successors and assigns. The Shareholders shall have the right to assign
all or any portion of their rights under this Agreement to any of their
affiliates at any time without the consent of Blue Jay or Bernstein; provided,
however, that notwithstanding such assignment, the assigning Shareholder(s)
shall remain obligated to Blue Jay pursuant to the terms and conditions of this
Agreement.
12.6 Governing Law. The validity and effect of this Agreement shall
be governed by and construed and enforced in accordance with the laws of the
Commonwealth of Pennsylvania.
-14-
<PAGE> 15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BLUE JAY ENTERPRISES, INC.
By:
--------------------------------
Robert M. Bernstein
President
--------------------------------
Robert M. Bernstein
VINTAGE ENTERPRISES, INC.
By:
--------------------------------
Laurence W. Wilson
President
E.E.T.C., Ltd.
By:
--------------------------------
Frank B. Holze
President
--------------------------------
Frank B. Holze
CAPITAL IDEA, INC.
By:
--------------------------------
C. Eugene Hutcheson
President
--------------------------------
Charlotte E. Doremus
Secretary
--------------------------------
David M. Barrett
-15-
<PAGE> 1
EXHIBIT 99.2
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (the "Agreement") is entered into
this 17th day of May, 1996 by and between Blue Jay, Enterprises, Inc., a
Delaware corporation ("Blue Jay"), Robert M. Bernstein ("Bernstein") and
Capital Idea, Inc, a Colorado corporation ("Seller").
WHEREAS, Seller is the owner of that certain 11% Subordinated Note due
2002 of Maxwell Dynamometer Systems, Inc. ("Maxwell") dated May 19, 1994 in the
principal amount of $542,000 and that certain Revenue Note Agreement of Maxwell
dated May 19, 1994 (collectively, the "Notes").
WHEREAS, Seller is the owner of 27O,OOO shares of the issued and
outstanding capital stock of Maxwell (the "Maxwell Shares").
WHEREAS, Seller desires to sell and Blue Jay desires to purchase the
Notes and an option (the "Option") to purchase the Maxwell Shares on the terms
and conditions hereinafter set forth for consideration of shares of common
stock, $.001 par value per share, of Blue Jay ("Blue Jay Common Stock").
WHEREAS, this transaction, together with the transactions contemplated
by that Purchase and Sale Agreement of even date herewith between Blue Jay and
the shareholders of United Dynamatics, Inc, (the "UDI Agreement"), is intended
to qualify as a tax free exchange under Section 351(a) of the Internal Revenue
Code of 1986, as amended.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
AGREEMENT:
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale. Subject to the terms and conditions
hereinafter set forth, on the Final Closing Date (as hereinafter defined),
Seller shall sell and deliver to Blue Jay, and Blue Jay shall purchase from
Seller, the Notes and the Option.
ARTICLE II
CONSIDERATION: CLOSING
2.1 Consideration. The consideration to be paid by Blue Jay for
the Notes and the Option shall be 1,629,133 shares of newly issued Blue Jay
Common Stock (the "Blue Jay Shares").
<PAGE> 2
2.2 Escrow Arrangement. The Seller, Blue Jay and Firstar Trust
Company, as escrow agent (the "Escrow Agent"), have entered into an escrow
agreement in the form attached hereto as Exhibit B ("the Escrow Agreement")
pursuant to which, concurrently with the execution of this Agreement, (a)
Seller is delivering to the Escrow Agent the Notes and the Option and (b) Blue
Jay is delivering to the Escrow Agent the Blue Jay Shares, all of which shares
shall be held by the Escrow Agent in accordance with the Escrow Agreement.
2.3 Closing. The closing in escrow of the transactions
contemplated hereby ("Escrow Closing") shall be held at Trafalgar Financial
Services, Inc., 126 State Street, Boston, Massachusetts at 1:00 P.M. May 17,
1996. The "Final Closing Date" shall mean the date on which the Escrow Agent
releases the documents pursuant to Section 3.1(a) of the Escrow Agreement which
shall be the first business day following satisfaction of all closing
conditions set forth in Article VII and VIII hereof.
2.4 Deliveries on the Final Closing Date. On the Final Closing
Date:
(a) Seller and Blue Jay shall deliver to the Escrow Agent the
Notice of Release referred to in the Escrow Agreement;
(b) The Escrow Agent shall deliver to Blue Jay the Notes and the
Option; and
(c) The Escrow Agent shall deliver to Seller certificates
representing the Blue Jay Shares in the amounts set forth on Schedule 2.4
hereto.
ARTICLE III
REPRESENTATIONS OF SELLER
In order to induce Blue Jay to enter into this Agreement, Seller makes
the following representations and warranties to Blue Jay,
3.1 Organization and Qualification. Seller is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Colorado.
3.2 Enforceability; Conflicting Obligations. Seller has all
necessary power and authority to enter into and consummate the transactions
contemplated by this Agreement in accordance with its terms and to sell and
transfer the Note to Blue Jay. This Agreement has been duly authorized by
Seller, constitutes Seller's valid and binding obligation, and is enforceable
against Seller in accordance with its terms. The
2
<PAGE> 3
execution and delivery of this Agreement do not, and the consummation of the
sale of the Notes and the Option will not, conflict with or violate the
provisions of any order, writ, decree, agreement, contract, restriction or
organizational documents to which Seller is a party, or to which such Seller is
bound.
3.3 Investment Intent. The Blue Jay Common Stock being acquired
by Seller hereunder is being acquired for investment and not with a view toward
distribution thereof. Such shares have not been registered under the Securities
Act of 1933 or any state securities laws and may be resold only pursuant to an
effective registration covering such shares or pursuant to an available
exemption from registration. Certificates representing Blue Jay Common Stock
shall bear the following legend:
The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended, or the Securities Laws
of any state, but have been issued in reliance upon exemptions
therefrom. The Securities may not be offered, sold, pledged or
otherwise transferred without registration under the Act or the
opinion of counsel satisfactory to the Corporation that an exemption
from registration is available or that such transfer may otherwise
lawfully be made.
3.4 Brokers. Seller has not incurred or made commitments for, any
brokerage, finders, or similar fees in connection with the transactions
contemplated by this Agreement except as set forth in that engagement letter
dated April 15, 1996 between Trafalgar Securities, Inc, United Dynamatics,
Inc, and Seller.
3.5 Representations and Warranties True and Correct. The
representations and warranties contained herein, and all other documents,
certifications, materials and written statements or written information given
to Blue Jay by or on behalf of Seller, do not include any untrue statement of a
material fact or omit to state a material fact required to be stated herein or
therein in order to make the statements herein or therein, in light of the
circumstances under which they are made, not misleading.
ARTICLE IV
REPRESENTATIONS OF BLUE JAY
In order to induce Seller to enter into this Agreement, Blue Jay makes
the following representations and warranties to the Shareholders.
3
<PAGE> 4
4.1 Organization. Blue Jay is duly organized, validly existing
and in good standing under the laws of the State of Delaware with all requisite
power and authority to own, lease and operate its properties and to conduct its
business as currently operated and conducted.
4.2 Capitalization of Blue Jay. The authorized capital stock of
Blue Jay consists of 50,000,000 shares of Common Stock, $.001 par value per
share, of which 724,059 shares are issued and outstanding. All of such
outstanding shares have been issued pursuant to and in accordance with
effective registration statements under the 1933 Act and in compliance with
applicable state securities laws or pursuant to valid exemptions from
registration under the 1933 Act and any applicable state securities laws and
rules and regulations under such laws. All of the outstanding shares of Blue
Jay Common Stock are duly authorized, validly issued, fully paid and
nonassessable, and are free of preemptive rights. There are no other shares
of capital stock or other equity securities (or debt securities with any voting
rights or convertible into securities with any voting rights) of Blue Jay
outstanding and no outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, shares of capital stock of Blue Jay, except for
400,000 shares of Blue Jay Common Stock to be issued to Bernstein upon exercise
of the Option Agreement.
4.3 Authorization. Blue Jay has full power and authority to enter
into this Agreement and to carry out its obligations hereunder. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by Blue Jay's Board of Directors
and no other corporate proceedings on the part of Blue Jay are necessary to
authorize this Agreement or the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Blue Jay and is the legal,
valid and binding obligation of Blue Jay, enforceable against Blue Jay in
accordance with its terms,
4.4 Reports and Financial Statements. Blue Jay has filed all
reports on Form 10-Q, Form 10-QSB and Form 10-K required to be filed with the
Securities and Exchange Commission (the "SEC") pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act") since 1986 (collectively,
the "SEC Reports"). Each of the balance sheets (including the related notes)
included in the SEC Reports fairly presents in all material respects the
financial position of Blue Jay as of the date thereof, and each of the income
statements and statements of cash flow (including the related notes) included
therein fairly present in all material respects the results of operations and
cash flows of Blue Jay for the period or as of the date set forth therein, all
in conformity with generally accepted accounting principles consistently
applied during the periods involved,
4
<PAGE> 5
except as otherwise noted therein and subject, in the case of unaudited interim
financial statements, to normal year-end adjustments and any other adjustments
described therein.
4.5 Litigation. There are no claims, suits, actions,
arbitrations, administrative proceedings or investigations, pending or, to Blue
Jay's or Bernstein's knowledge, threatened against Blue Jay or Bernstein that
could have a material adverse effect on Blue Jay or restrict the ability of
Blue Jay to consummate the transactions contemplated by this Agreement or the
other agreements referred to herein,
4.6 Brokers. Neither Blue Jay nor Bernstein has incurred or made
commitments for, any brokerage, finders' or similar fees in connection with the
transactions contemplated by this Agreement.
ARTICLE V
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
5.1 Survival of Representations. None of the representations or
warranties made by any party to this Agreement shall survive the Final Closing
Date, unless the party making the representation or warranty knew such
representation or warranty was false at the time it was made or as of the Final
Closing Date.
5.2 Agreement to Indemnify.
(a) Bernstein shall indemnify, defend and hold harmless Capital
Idea and each officer, director, employee or agent (collectively the
"Indemnified Parties"), from and against all demands, claims, actions or causes
of action, assessments, losses, damages, liabilities, costs and expenses,
including interest, penalties and reasonable attorneys' fees and expenses
(collectively, "Damages"), asserted against, resulting to, imposed upon or
incurred by any Indemnified Party, directly or indirectly, during the one-year
period following the Closing, by reason of or resulting from any claims by
stockholders of Blue Jay challenging the fairness of the transactions
contemplated by this Agreement or any claims by stockholders of Blue Jay
arising out of any transaction by or activities of Blue Jay prior to the Closing
Date.
(b) The obligations of Bernstein set forth in paragraph (a) above
shall be secured by and limited to a pledge by Bernstein to Seller, of shares
of Blue Jay Common Stock and an option to purchase shares of Blue Jay Common
Stock pursuant to the Pledge Agreement in substantially the form of Exhibit C
attached hereto (the "Pledge Agreement").
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<PAGE> 6
(c) For purposes of satisfying any claim for Damages under this
Section 5.2, the value of the pledged Blue Jay Common Stock shall be the
average of the daily market prices of the Blue Jay Common Stock for the 10
trading days immediately preceding final agreement between Bernstein and the
Indemnified Parties, or final adjudication by a court of competent
jurisdiction, of such claim. For purposes of this Section 5.2(c), the market
price for each trading day shall be the closing price on such day on the
principal securities exchange or market in which the Blue Jay Common Stock is
then traded or, if no sale takes place on such day, the average of the closing
bid and asked prices on such day.
ARTICLE VI
COVENANTS PENDING THE CLOSING DATE
6.1 Operation of Business. From the date hereof and until the
Closing Date, without the prior written consent of the Seller, Blue Jay shall
not:
(a) Increase Compensation. Grant or promise any increase
in compensation to any shareholder, officer, employee or director, nor, by
means of any bonus, profit-sharing, incentive compensation payment, pension,
retirement, medical hospitalization, life insurance or other insurance plan or
plans, or otherwise, increase in any amount the benefits or compensation of any
such employees, directors or officers;
(b) Employment and Labor Contracts. Enter into, amend or
renew or extend any employment contract or collective bargaining agreement;
(c) Disposition of Assets. Sell or dispose of, or
encumber, mortgage or pledge any asset;
(d) Capital Expenditures. Make any capital expenditures,
or enter into any lease of capital equipment or real estate;
(e) Contracts. Enter into any contract, except as
contemplated by this Agreement.
(f) Create or Incur Indebtedness. Enter into any
transaction, or create, assume, incur or guarantee any indebtedness;
(g) Issue Stock; Distributions on Stock. Except for the
option referred to in Section 5.2(b) hereof, authorize or issue any shares of
capital stock or other securities convertible into or exercisable for capital
stock, or declare or pay any dividend or make any sale of, or distribution with
respect to,
6
<PAGE> 7
any capital stock or directly or indirectly redeem, purchase or otherwise
acquire any capital stock;
(h) Accounting Procedures. Change any accounting
procedures or practices or its financial structure;
(i) Charter Amendments. Make any amendments to or
changes in its certificate of incorporation or bylaws;
(j) Breach of Contract. Perform any act, or attempt to do
any act, or permit any act or omission to act, which will cause a breach of any
contract, agreement, instrument, document, lease, license, permit, indenture or
other obligation to which it is a party or to which it is bound.
6.2 Access Prior to Closing. Blue Jay shall permit the Seller and
its counsel, accountants and other representatives full access during normal
business hours to all of the offices, properties, books and records and
contracts of Blue Jay in order that the Seller may have full opportunity to
make such investigations as it shall desire of Blue Jay in connection with the
transactions contemplated by this Agreement, and shall furnish the Seller
during such period with all such additional financial and operating data and
other information as the Seller or its representatives may from time to time
reasonably request.
6.3 Acquisition Proposals. From and after the date hereof and
until the earlier of the consummation of the transactions contemplated by this
Agreement or the termination of this Agreement, neither Blue Jay nor Bernstein
shall (a) solicit or authorize any person to solicit, directly or indirectly,
any inquiries, proposals or offers from any person relating to any acquisition
or purchase of all or substantially all the assets of, or any equity interest
in, or any merger, consolidation or business combination with, Blue Jay (an
"Acquisition Transaction"), (b) enter into any agreement with respect to any
Acquisition Transaction, or (c) participate in any negotiations regarding,
cooperate with, facilitate or encourage an Acquisition Transaction or furnish
to any other person any non-public information concerning Blue Jay in
connection therewith. Blue Jay shall immediately notify the Seller if any
proposal or offer with respect to an Acquisition Transaction is received by
Blue Jay and communicate to the Representative the terms of any such proposal
or offer.
ARTICLE VII
CONDITIONS OF SELLER'S OBLIGATION TO CLOSE
The obligation of Seller to consummate the transactions contemplated
by this Agreement shall be subject to the
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<PAGE> 8
satisfaction and fulfillment, prior to or on the Final Closing Date, of each of
the following conditions:
7.1 Representation and Warranties. The representations and
warranties in this Agreement made by Blue Jay and Bernstein shall be true and
correct in all respects as of and at the Final Closing Date,
7.2 Performance of Covenants and Obligations. Blue Jay shall have
performed and complied with all of its covenants and obligations under this
Agreement which are to be performed or complied with by Blue Jay prior to or on
the Final Closing Date.
7.3 Closing of UDI, Inc. Agreement. The transactions contemplated
by the UDI Agreement shall have been consummated prior to or on the Final
Closing Date.
7.4 Bernstein Agreements. Bernstein shall have cancelled Blue
Jay's Convertible Note dated January 16, 1988 in the principal amount of
$10,000 for Blue Jay's agreement to pay all liabilities of Blue Jay to
Bernstein as of the date hereof in an amount not to exceed $25,000 and (ii)
executed a Consulting Agreement in the form attached hereto as Exhibit D.
7.5 Pledge Agreement. Bernstein shall have executed and delivered
to Seller the Pledge Agreement.
7.6 Investigation of Blue Jay. The Seller shall have completed
its review of such books, records, accounts, contracts and documents of or
relating to the financial condition, liabilities, results of operations,
business and prospects of Blue Jay and such other inquiries or investigations
as it deems necessary or advisable and the results of such review shall be
satisfactory to the Seller in its sole discretion. Without limiting the
generality of the foregoing, the Seller shall be satisfied that (a) Blue Jay
has no liabilities or obligations, whether absolute, accrued, contingent or
otherwise and whether due or to become due, that are not fully reflected on the
balance sheet of Blue Jay as of March 31, 1996, (b) there are no claims, suits,
actions, arbitrations, administrative proceedings or investigations pending or
threatened against Blue Jay that could have a material adverse effect on Blue
Jay, (c) that the Blue Jay Common Stock to be issued pursuant to that Agreement
and the UDI Agreement when issued will be validly issued, fully paid and non
assessable and (d) there is no reasonable basis for the assertion against Blue
Jay of any such liability or obligation or for the assertion or commencement of
any such claim, suit, action, arbitration, administrative proceeding or
investigation.
8
<PAGE> 9
ARTICLE VIII
CONDITIONS TO BLUE JAY'S OBLIGATION TO CLOSE
The obligation of Blue Jay to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction and fulfillment, prior
to or on the Final Closing Date of each of the following conditions:
8.1 Representations and warranties. The representations and
warranties in this Agreement made by the Shareholders shall be true and correct
in all respects as of and at the Final Closing Date.
8.2 Performance of Covenants and Obligations. The Seller shall
have performed and complied with all of its material covenants and obligations
under this Agreement,
8.3 Closing of the UDI Agreement. The transactions contemplated by
the UDI Agreement shall have been consummated prior to or on the Final Closing
Date.
ARTICLE IX
OTHER AGREEMENTS
9.1 Cooperation: Public Announcements. Seller and Blue Jay shall
cooperate fully with each other and their respective counsel and accountants in
connection with any actions that may be required to be taken in order to
satisfy their respective obligations under this Agreement. Seller and Blue Jay
shall cooperate with each other in the preparation of any press releases in
connection with the transactions contemplated by this Agreement and in the
preparation and filing of any documents with the Securities and Exchange
Commission or any state securities agency required as a result of such
transactions. Except upon the advice of counsel or as may be required by law
(and in either case upon notice to the other party), neither Seller nor Blue
Jay will, without prior consultation with the other, make any press release or
announcement to the public concerning the transactions contemplated by this
Agreement.
9.2 Confidentiality. Each party to this Agreement understands
that certain information which it has been furnished and will be furnished in
connection with this Agreement is confidential and proprietary, and agrees that
it will maintain the confidentiality of such information and will not disclose
it to others or use it, except in connection with the transaction contemplated
hereby, without the consent of the party furnishing such information.
Information which is generally known in the
9
<PAGE> 10
industry concerning a party or among such party's creditors, generally, or
which has been disclosed to the other party by third parties which have right
to do so, shall not be deemed confidential or proprietary information for these
purposes, In the event that a party is at any time requested or required (by
oral questions, interrogatories, requests for information or documents,
subpoena or similar process) to disclose any information supplied to such party
in connection with such transaction, such party agrees to provide the party
furnishing such information with prompt notice of such request(s) so that the
party furnishing such information may seek an appropriate protective order
and/or waive compliance of the party receiving such information with the terms
of this Section 9.2. Notwithstanding the terms of this Section 9.2, if, in the
absence of a protective order or the receipt of a waiver hereunder, the party
receiving such information is nonetheless, in the opinion of its counsel,
required to disclose information obtained in connection with such transaction
or else stand liable for contempt or suffer other censure or penalty, the party
receiving such information may disclose such information, to the extent and in
the manner so required, without liability hereunder. In the event that such
transaction is not consummated, each party agrees to promptly return all
confidential materials (and all copies thereof) which have been furnished to
him regarding the business and financial condition of the other party,
including all financial statements, reports, contracts, customer lists,
accounts, records, tax returns, data, plans, processes and trade secrets except
to the extent any such documents shall otherwise be publicly available.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated in the
following circumstances:
(a) By mutual consent of Seller and Blue Jay;
(b) By Seller in the event the conditions in Article VII
of this Agreement are not satisfied or waived on or before July 31, 1996;
(c) By Blue Jay in the event the conditions in Article
VIII of this Agreement are not satisfied or waived on or before July 31, 1996,
10.2 Effect of Termination. In the event this Agreement is
terminated pursuant to this Article X, this Agreement shall be void and have no
further force and effect.
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<PAGE> 11
ARTICLE X
MISCELLANEOUS
10.1 Notices, Etc. All notices, requests, demands, and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, telegram, telex or
telecopy (receipt confirmed) or seventy-two hours after being mailed, first
call, certified mail, postage prepaid:
(a) To Blue Jay:
Blue Jay Enterprises, Inc.
11835 West Olympic Boulevard
East Tower 705
Los Angeles, CA 90064
(310)208-5589, Fax: (310)473-3177
Attention: Robert M. Bernstein
With copies to:
Joseph M. Berl
Baker & Hostetler
1050 Connecticut Ave,, N.W.
Washington, DC 20036-5304
(202) 861-1500, Fax: (202)861-1783
Timothy Smoot, Esq,
7002 Moody Street
Suite 112
La Palma, CA 90623
(310)402-1801, Fax: (310)402-0643
(b) To Bernstein:
Robert M. Bernstein
c/o Blue Jay Enterprises, Inc.
11835 West Olympic Boulevard
East Tower 705
Los Angeles, CA 90064
(310)208-5589, Fax: (310)473-3177
(c) To Seller:
Capital Idea, Inc.
118 Pickering Way, Suite 104
Exton, Pennsylvania 19341
(610)363-8237, Fax: (610)524-8715
Attention C. Eugene Hutcheson
11
<PAGE> 12
With copies to:
Peggy E. Brever, Esq.
Michael Best & Friedrich
100 East Wisconsin Avenue
Milwaukee, WI 53202
(414)271-6560, Fax: (414)277-0656
Barrett & Schuler
1000 Thomas Jefferson Street
Suite 305
Washington, DC 20007
Attention; David M. Barrett
(202)728-0888, Fax: (202) 296-7490
10.2 Entire Agreement. This Agreement supersedes any other
discussions and agreement between the parties hereto with respect to the matters
contained herein, and this Agreement and the agreements to be executed and
delivered pursuant hereto and thereto contain the sole and entire agreement
between the parties hereto with respect to the transactions contemplated herein
and therein.
10.3 Amendments and Waivers. This Agreement may be amended only by
an instrument in writing executed by the party against whom enforcement of the
amendment is sought. The president or any vice president of any corporate
party may by a signed writing give any consent, take any action, waive any
inaccuracies in representations or other compliance by any other party to any
of the covenants or conditions herein, modify the terms of this Agreement to
take any other action deemed by him to be necessary or appropriate to
consummate the transactions contemplated by this Agreement.
10.4 Counterparts; Headings. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument. The headings herein set out
are for convenience of reference only and shall not be deemed a part of this
Agreement,
10.5 Binding Effect: Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, successors and assigns. The Shareholders shall have the right to assign
all or any portion of their rights under this Agreement to any of their
affiliates at any time without the consent of Blue Jay or Bernstein; provided,
however, that notwithstanding such assignment, the assigning Shareholder(s)
shall remain obligated to Blue Jay pursuant to the terms and conditions of this
Agreement.
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<PAGE> 13
10.6 Governing Law. The validity and effect of this Agreement shall
be governed by and construed and enforced in accordance with the laws of the
Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above,
BLUE JAY ENTERPRISES, INC,
By: ROBERT M. BERNSTEIN
--------------------------------
Robert M. Bernstein
President
By: HARVEY KRAVETZ
--------------------------------
Harvey Kravetz
Secretary
CAPITAL IDEA, INC.
By: C. EUGENE HUTCHESON
--------------------------------
C. Eugene Hutcheson
President
CHARLOTTE E. DOREMUS
--------------------------------
Charlotte E. Doremus
Secretary
ROBERT M. BERNSTEIN
--------------------------------
Robert M. Bernstein
13
<PAGE> 1
EXHIBIT 99.3
[LETTERHEAD]
FOR IMMEDIATE RELEASE Contact: C. Eugene Hutcheson
Chairman of the Board
United Dynamatics, Inc.
(610)363-8237
or
Robert M. Bernstein
President and Director
Blue Jay Enterprises, Inc.
(310)208-5589
or
Brian Edwards, Angela Klinske
Seyferth & Associates, Inc.
(616)776-3511
KENOSHA MAKER OF ELECTRIC MOTORS, DYNAMOMETERS TO GO PUBLIC
IN TRANSACTION WITH LOS ANGELES COMPANY
EXTON, Pennsylvania, May 20, 1996 -- Blue Jay Enterprises, Inc. (Blue
Jay) (OTC: BJEC), a Delaware corporation based in Los Angeles, today announced
it has executed a definitive agreement to acquire Kenosha, Wisc.-based United
Dynamatics, Inc. and assets of a related company, in exchange for issuance to
United Dynamatics stockholders of newly issued stock that will equal
approximately 90 percent of Blue Jay's outstanding common stock.
The transaction is contingent on the satisfaction of certain
conditions, and the closing is expected to occur within the next two months.
The Company said that following the closing, it will change its name to
UNIDYNE Corporation, with headquarters in Exton, Penn.
-more-
<PAGE> 2
UNIDYNE/page 2
The Company announced that a new board of directors, consisting of
United Dynamatics' executive management and directors, will be installed at the
closing. Future directors and the offices they will occupy are C. Eugene
Hutcheson, chairman and chief executive officer of UNIDYNE; Laurence M. Wilson,
president and chief operating officer of UNIDYNE; Charlotte E. Doremus, chief
administrative officer and secretary of UNIDYNE; David M. Barrett, Esq., senior
partner in the Washington, D.C.-based law firm of Barrett & Schuler; and Dr.
Frank B. Holze, president of Holze International Investment, a Monaco-based
investment consulting firm.
"We look forward to making the transition from privately owned to
publicly held," Hutcheson said. "The flexibility of being a public company
will provide us with a number of options as we pursue enhanced market share for
our existing products, as well as entry into new markets such as the vehicle
emission testing business."
United Dynamatics, through its wholly owned subsidiary Dynamatic
Corporation, manufactures specialized electric motors and variable speed drives
and controls utilizing the Eddy Current Drive (ECD) operating principal to
control motor speed. The variable speed drives are used in a variety of
products, including conveyors, stamping presses, pumps and special process
equipment.
Dynamatic Corporation also manufactures engine dynamometers and
transmission dynamometers for a variety of large industrial customers,
primarily in the automotive and heavy equipment industries.
The Company employs approximately 125 persons at facilities in Kenosha,
Wisc. and Exton, Penn., and the Kenosha operation and management will continue
unchanged following the transaction.
-more-
<PAGE> 3
UNIDYNE/page 3
Dynamatic Corporation, which has been in operation for 65 years, was
founded in Kenosha by two brothers, Tony and Martin Winther. The Company's
initial product was an Eddy Current coupling system installed on Pullman
railroad cars to keep the railcar's air-conditioning systems running at a
constant speed.
The Company was later acquired by Eaton Corporation, and the assets of
the Kenosha manufacturing operation were acquired by the current stockholders
in September 1995.
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