STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT is made and entered into effective this
13th day of April 1998, between and among AMERICAN EDUCATIONAL PRODUCTS, INC.,
a Colorado corporation having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ("AMEP"), ▇▇▇▇▇▇▇ SCIENTIFIC, INC., a
Colorado corporation and wholly-owned subsidiary of AMEP ("▇▇▇▇▇▇▇" or the
"Buyer") and LEISURE AND LEARNING, INC., a New York corporation having its
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
("L&L"), NATIONAL TEACHING AIDS, INC., a New York corporation and wholly-owned
subsidiary of L&L ("NTA"), VISUAL SYSTEMS FOR LEARNING, INC., a New York
corporation and wholly owned subsidiary of L&L ("VSL") and ▇▇▇▇▇ ▇▇▇▇▇▇, an
individual, ▇▇▇▇▇ ▇▇▇▇▇, an individual, ▇▇▇▇▇▇ ▇▇▇▇▇▇, an individual, ▇▇▇▇▇▇
▇▇▇▇▇▇, an individual, ▇▇▇▇▇ ▇▇▇▇▇▇, an individual, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇, as Joint Tenants, constituting all of the shareholders of L&L,
("Shareholders" or "Seller") and NEWCO, INC., a New York corporation to be
formed by the Shareholders ("Newco").
WITNESSETH
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WHEREAS, NTA is engaged in the development, manufacture, distribution and
sale of various supplemental educational products; and
WHEREAS, ▇▇▇▇▇▇▇ wishes to acquire the business operations of NTA; and
WHEREAS, NTA is a wholly-owned subsidiary of L&L; and
WHEREAS, Shareholders are the actual and beneficial owners of shares of
capital stock, constituting one hundred percent (100%) of the issued and
outstanding shares of Common Stock of L&L, together with any options, warrants
and other rights exercisable to purchase or convertible into shares of Common
Stock of L&L (hereafter collectively the "L&L Shares"); and
WHEREAS, Buyer desires to acquire all of the issued and outstanding L&L
Shares owned by Shareholders, subject to the terms and conditions set forth in
this Agreement; and
WHEREAS, Shareholders desire to sell all of their L&L Shares, subject to
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, and other good and
valuable consideration, the receipt and adequacy whereof is hereby
acknowledged, the parties agree as follows:
SECTION 1: GENERAL DEFINITIONS
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For purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
1.1 BEST KNOWLEDGE. "Best Knowledge" shall mean both what a Person knew
as well as what the Person should have known had the Person exercised
reasonable diligence. When used with respect to a Person other than a natural
person, the term "Best Knowledge" shall include matters that are known to the
current directors, officers and managers or what such persons should have
known had they exercised reasonable diligence.
1.2 CLOSING DATE. "Closing Date" shall mean the date referred to in
Section 5.2 of this Agreement.
1.3 CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.4 ERISA. "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
1.5 EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
1.6(a) FISCAL YEAR OF AMEP. "Fiscal Year of AMEP" shall mean a
twelve-month period beginning January 1;
1.6(b) FISCAL YEAR OF L&L. "Fiscal Year of L&L" shall mean a twelve-
month period beginning November 1.
1.7 GOVERNMENTAL AUTHORITY. "Governmental Authority" shall mean any and
all foreign, federal, state or local governments, governmental institutions,
public authorities and governmental entities of any nature whatsoever, and any
subdivisions or instrumentalities thereof, including, but not limited to,
departments, boards, bureaus, commissions, agencies, courts, administrations
and panels, and any division or instrumentalities thereof, whether permanent
or ad hoc.
1.8 GOVERNMENTAL REQUIREMENT. "Governmental Requirement" shall mean any
and all laws (including, but not limited to, applicable common law
principles), statutes, ordinances, codes, rules regulations, interpretations,
guidelines, directions, orders, judgments, writs, injunctions, decrees,
decisions or similar items or pronouncements, promulgated, issued, passed or
set forth by any Governmental Authority.
1.9 LEGAL REQUIREMENTS. "Legal Requirements" shall mean applicable
common law and any statute, ordinance, code or other laws, rule, regulation,
order, technical or other standard, requirement, judgment, or procedure
enacted, adopted, promulgated, applied or followed by any Governmental
Authority, including, without limitation, any order, decree, award, verdict,
findings of fact, conclusions of law, decision or judgment, whether or not
final or appealable, of any court, arbitrator, arbitration board or
administrative agency.
1.10 PERSON. "Person" shall mean any natural person, any Governmental
Authority and any entity the separate existence of which is recognized by any
Governmental Authority or Governmental Requirement, including, but not limited
to, corporations, partnerships, joint ventures, joint stock companies, limited
liability companies, trusts, estates, companies and associations, whether
organized for profit or otherwise.
1.11 RIGHTS. "Rights" shall mean any right to acquire capital stock or
any ownership or profits interest in an entity or an affiliate of such entity
including, but not limited to, options, warrants, and instruments or
obligations convertible into capital stock, ownership or profits interest.
1.12 SECTION. Unless otherwise stated herein, the term "Section" when
used in this Agreement shall refer to the Sections of this Agreement.
1.13 SECURITIES ACT. "Securities Act" shall mean the Securities Act of
1933, as amended.
1.14 TAXES. "Tax" and "Taxes" shall mean any and all income, excise,
franchise or other taxes and all other charges or fees imposed or collected by
any Governmental Authority or pursuant to any Governmental Requirement, and
shall also include any and all penalties, interest, deficiencies, assessments
and other charges with respect thereto.
SECTION 2: SALE OF STOCK AND CONSULTING AGREEMENT
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2.1 PURCHASE AND SALE. Subject to the terms and conditions hereafter
set forth, on the Closing Date, Shareholders shall sell, assign, transfer and
deliver to Buyer, and Buyer shall purchase and acquire from Shareholders, the
L&L Shares. The purchase price ("Purchase Price") to be paid by Buyer to
Shareholders on the Closing Date for the L&L Shares is a total of One Million
Two Hundred Thousand dollars ($1,200,000.00), to be paid as follows:
(a) The sum of Two Hundred Fifty Thousand dollars ($250,000.00),
payable to the Seller by certified funds or wire transfer on the Closing Date;
(b) The sum of Nine Hundred Fifty Thousand dollars ($950,000) shall
be payable in the form of a Non-Marketable Convertible Promissory Note ( the
"Note"), made by Buyer in favor in favor of Seller, substantially in the form
of Exhibit 2.1(b) hereto. The Note shall be payable, together with interest
at the rate of 7 1/2% per annum in four equal annual principal installments of
Two Hundred Thirty-Seven Thousand Five Hundred ($237,500) each on each of the
four consecutive anniversary dates from the Closing Date. The outstanding
principal balance of the Note, together with any and all accrued and unpaid
interest, shall be convertible in whole or in part at any time or from time to
time, at the option of AMEP, into shares of AMEP Common Stock, $.05 par value
("AMEP Common Stock"), at a conversion value of $10.00 per share of AMEP
Common Stock, immediately upon written notice from AMEP to Seller. It shall
be a condition precedent to AMEP's exercise of the conversion option that the
public trading price of the AMEP Common Stock on the over-the-counter market
equals or exceeds $11.00 per share for twenty (20) or more consecutive trading
days. Unless the shares of AMEP Common Stock issuable upon conversion of the
Note (the "Conversion Stock") are eligible to be sold in market transactions
pursuant to Rule 144(k) under the Securities Act, in the event AMEP exercises
the conversion option under the Note, AMEP shall exercise reasonable efforts
to cause to be prepared and filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (the "Registration
Statement"), registering for resale under the Securities Act the shares of
Conversion Stock so issued. AMEP shall notify Seller, in writing, of the date
upon which the Registration Statement is declared effective by the Commission
(the "Registration Statement Effective Date"). All costs and expenses
incurred in connection with such registration shall be borne solely by AMEP.
(c) PUT OPTION. Upon the issuance of the Conversion Stock, AMEP
shall simultaneously issue to each Shareholder a put option substantially in
the form of Exhibit 2.1(c) attached hereto and incorporated herein by this
reference ("Put") which will grant to each Shareholder the right and option to
sell to AMEP for redemption, subject to the terms and conditions set forth
herein, any or all of the number of shares of Conversion Stock owned by each
Shareholder. The Put shall require AMEP to purchase and redeem any and all
shares tendered at a price of $10.00 per share. The Puts will be exercisable
only in the event that the shares of Conversion Stock are not eligible to be
sold in reliance upon Rule 144(k) under the Securities Act and either: (1) the
Registration Statement is not declared effective by the Commission within
sixty (60) days following AMEP's exercise of its conversion option (the
"Registration Period"), or (2) the closing bid price of the AMEP Common Stock
on the over-the-counter market is less than $10.00 per share on the
Registration Statement Effective Date. The Puts will be exercisable for a
period of thirty (30) days following the earlier of the expiration of the
Registration Period, or the Effective Date.
2.2 LICENSE AGREEMENT. At Closing, Newco shall execute and deliver to
Buyer a License Agreement substantially in the form of Exhibit 2.2 hereto,
pursuant to which Buyer shall be granted exclusive worldwide right to utilize
certain intangible assets of Seller, including copyrights and trademarks of
Seller necessary for the conduct of the business operations of NTA. In
consideration of such license, Buyer shall pay a license fee in the aggregate
amount of Four Hundred Thousand dollars ($400,000), payable in equal annual
installments of One Hundred Thousand dollars ($100,000) each, payable on each
of the four consecutive anniversaries following execution of the License
Agreement. Upon payment in full of the license fee and the Purchase Price,
Buyer shall convey by ▇▇▇▇ of Sale or other instrument of conveyance good and
marketable title to all of the intangible assets covered by the License
Agreement, free of any claim of Seller's or any third party.
2.3 CONSULTING AGREEMENTS. At closing, ▇▇▇▇▇▇▇ shall enter into the
following consulting agreements:
(a) ▇▇▇▇▇ ▇▇▇▇▇▇: a two-year agreement providing for an annual fee
of Eighty-One Thousand Four Hundred Fifty dollars ($81,450), payable
quarterly, substantially in the form of Exhibit 2.3(a).
(b) ▇▇▇▇▇ ▇▇▇▇▇: a two-year agreement providing for an annual fee
of Sixty-Eight Thousand Five Hundred Fifty dollars ($68,550), payable
quarterly, substantially in the form of Exhibit 2.3(b).
2.4 PURCHASE PRICE ADJUSTMENT. Within 75 days following the Closing
Date, AMEP shall engage its independent accountants to prepare audited
consolidated financial statements of L&L (the "L&L Audited Financial
Statements") as of and for the two-year period ending December 31, 1997, or
such other date as AMEP shall determine, and as of and for the interim period
ending March 31, 1998. Such Audited Financial Statements shall include a
consolidated balance sheet, statements of income, statements of cash flows and
statements of stockholders' equity. Based upon the L&L Audited Financial
Statements, the Purchase Price provided for in Section 2.1 above shall be
subject to the following adjustments:
2.4.1 INCOME ADJUSTMENT. The Purchase Price shall be increased
or decreased as the case may be, by the amount that the consolidated income
from operations of L&L for the twelve-month period ending March 31, 1998, is
greater than or less than the sum of One Hundred Ten Thousand and Nine Hundred
dollars ($110,900). Furthermore, Seller warrants that L&L consolidated net
tangible assets at October 31, 1997 were Five Hundred Forty-Five Thousand
Seven Hundred dollars ($545,700). Since October 31, 1997 and until the
Effective Date, there shall have been no reduction in L&L consolidated net
tangible assets other than resulting from net income or loss from operations
in the normal course of business and the reduction, if any, has been included
in the income adjustment described above. The Purchase Price shall be reduced
by the amount of reduction, if any, to L&L consolidated net tangible assets as
of the Effective Date that is not reflected in the above income adjustment.
2.4.2 INVENTORY ADJUSTMENT. On or before April 30, 1998, Buyer
shall inspect, on Sellers' premises, the inventory that had been included in
the actual Effective Date inventory at March 31, 1998, as reflected on L&L
Audited Financial Statements, and Buyer shall provide Seller with an
accounting setting forth all damaged, returned or obsolete inventory that had
been included in the actual Effective Date inventory at March 31, 1998, as
reflected on the L&L Audited Financial Statements. The Purchase Price shall
be reduced by the amount of inventory deficiency determined in accordance with
such accounting. In the event Seller disagrees with Buyer's determination of
the inventory value differential, final determination may be submitted for
resolution by arbitration in accordance with this Agreement.
2.4.3 ACCOUNTS RECEIVABLE ADJUSTMENT. As soon as practicable
following September 30, 1998, Buyer shall prepare and deliver to Seller a
schedule (the "Receivables Schedule"), certified as to accuracy by Buyer's
Chief Financial Officer, setting forth the amount of receivables collected and
not collected by Buyer following the Closing Date. As to any and all
uncollected receivables, the Receivables Schedule shall identify the customer,
the amount uncollected and the number of collection contacts made by Buyer in
an effort to recover same. The Purchase Price shall be reduced by the amount
of the Receivables remaining uncollected as set forth on the Receivables
Schedule. Buyer shall assign to Seller any Receivables remaining uncollected
to the extent that the Purchase Price has been reduced in accordance with the
provisions of this subsection. From and after the time of such Receivables
adjustment, if and to the extent Buyer thereafter receives and collects any
such Receivable included in the adjusted amount, Buyer shall pay to Seller any
revenue thereafter collected.
2.4.4 PAYMENT OF PURCHASE PRICE ADJUSTMENTS. If after giving
effect to the aggregate Purchase Price adjustments provided for in this
Section 2.4 there results a net increase in the Purchase Price, any such
increase shall be promptly paid by Buyer to Seller. In the event the
aggregate net Purchase Price adjustments provided for in this Section 2.4
result in a Purchase Price reduction, such reduction may be offset by Buyer
against any future payments due by Buyer to Seller under the License
Agreement.
2.5 LABOR MATTERS. Buyer shall acquire NTA subject only to payroll
costs, including medical insurance and any accrued vacation, accruing on or
after April 1, 1998. It is understood that, except as provided in this
Section 2.5, Buyer is not assuming and and NTA shall not be subject to, as of
the Effective Date, any union contracts, pension liabilities, workmen's
compensation commitments, or any employee obligations of L&L or NTA. Without
limitation the generality of the foregoing, neither L&L nor NTA shall have any
accrued or unpaid liability for severance, accrued vacation (accruing prior to
April 1, 1998) or other obligations for salary, benefits, compensation or
liability for or under employment or consulting agreements, whether verbal or
written. All such matters shall be and remain the obligation of Seller, and
Seller agrees to indemnify and hold harmless Buyer, L&L and NTA from any
liability with respect thereto. Further, Seller acknowledges that following
the Closing Date, it is Buyer's intention to terminate the employment of all
current NTA employees in connection with Buyer's relocation of the NTA
business to Buyer's facilities in the State of Wisconsin. In connection with
that relocation and the termination of NTA's employees following the Closing
Date, Seller shall be solely and exclusively liable for any and all
obligations or liabilities of whatsoever kind or description to the NTA
employees so terminated, whether arising under any express or implied
contract, statutory, regulatory or at common law, arising from or in
connection with such termination, and Seller agrees to indemnify, defend and
hold harmless Buyer, NTA and their respective affiliates with respect to any
liability therefor. Such liabilities may include, without limitation,
liability for post termination compensation, benefits such as health,
severance, vacation and related payroll taxes as well as liability under
workers' compensation laws, unemployment compensation laws and the like.
2.6 TAXES AND OTHER COSTS. All stock transfer, sales and conveyance
taxes related to the sale of the L&L shares shall be payable by Seller, and
Seller shall indemnify, defend and hold harmless Buyer with respect thereto.
Buyer will be responsible for any expenses incurred solely by Buyer.
SECTION 3: CLOSING
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3.1 GENERAL PROCEDURE. At the Closing each party shall deliver such
documents, instruments and materials as may be reasonably required in order to
effectuate the intent and provisions of this Agreement, and all such
documents, instruments and materials shall be satisfactory in form and
substance to counsel for the other parties.
3.2 TIME AND PLACE. The Closing shall take place in the offices of
L&L, as soon as practicable but in no event later than (i) five (5) business
days from the date of the satisfaction or waiver of all conditions precedent
set forth in Sections 3.5 and 3.6, and/or (ii) April 30, 1998, or such time
and place as shall be mutually acceptable to the parties.
3.3 EFFECTIVE DATE OF CLOSING. The parties stipulate and agree that the
effective date of Closing shall be April 1, 1998, (the "Effective Date").
3.4 COVENANTS REGARDING CLOSING. The Parties hereby covenant and agree
that they shall (i) use reasonable efforts to cause each of their respective
Exhibits not already attached to this Agreement on the date of execution to be
prepared and exchanged with the other party, and its legal counsel, within ten
(10) business days following the execution of this Agreement, except to the
extent the express terms of this Agreement provide for a different time period
for such delivery to be accomplished, (ii) use reasonable efforts to cause all
of their respective representations and warranties set forth in this
Agreement, and Exhibits hereto, to be true on and as of the Closing Date,
(iii) use reasonable efforts to cause all of their respective obligations that
are to be fulfilled on or prior to the Closing Date to be so fulfilled,
(iv) use reasonable efforts to cause all conditions to the Closing set forth
in this Agreement to be satisfied on or prior to the Closing Date, and (v) use
reasonable efforts to deliver to each other at the Closing the certificates,
updated lists, notices, consents, authorizations, approvals, agreements,
transfer documents, receipts and amendments contemplated hereby (with such
additions or exceptions to such items as are necessary to make the statements
set forth in such items accurate and acceptable, provided that if any such
additions or exceptions cause any of the conditions to the Parties'
obligations hereunder as set forth hereinbelow not to be fulfilled, such
additions and exceptions shall in no way limit the rights of the Parties
hereunder to terminate this Agreement or refuse to consummate the transactions
contemplated hereby).
3.5 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
complete the Purchase and Sale on the Closing Date on the terms set forth in
this Agreement is, at the option of Buyer, subject to the satisfaction or
waiver by Buyer of each of the following conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by Shareholders and L&L in this Agreement
shall be correct in all material respects on and as of the Closing Date with
the same force and effect as though such representations and warranties had
been made on the Closing Date.
(b) COMPLIANCE WITH COVENANTS. All covenants which Shareholders
and L&L are required to perform or comply with on or before the Closing Date
shall have been fully complied with or performed in all material respects.
(c) CORPORATE APPROVALS. The Boards of Directors of AMEP and L&L
shall have approved and ratified this Agreement and shall have authorized the
appropriate officers of each to execute same and fully perform its terms.
(d) CONSENTS AND APPROVALS. To the extent that any material lease,
mortgage, deed of trust, contract or agreement to which NTA, VSL or L&L is a
party shall require the consent of any person to the Sale or any other
transaction provided for herein, such consent shall have been obtained;
provided, however, that Shareholders shall not make, as a condition for the
obtaining of any such consent, any agreements or undertakings not approved in
writing by Buyer to the extent that such condition otherwise has an effect on
Buyer.
(e) REVIEW AND DUE DILIGENCE. Buyer, its legal counsel and/or
auditors shall have had the opportunity to complete, and shall have completed
on or before June 1, 1998, a satisfactory due diligence investigation of L&L,
VSL and NTA, together with a satisfactory review of NTA's, VSL's and L&L's
corporate status and the marketability of title to L&L's property, together
with the marketability of Shareholders' title to the L&L Shares.
(f) NO GOVERNMENTAL ACTIONS. No action or proceeding before any
Governmental Authority shall have been instituted or threatened to restrain or
prohibit the transactions contemplated by this Agreement, and the Parties
shall have delivered to each other certificates dated as of the Closing Date
and executed by such parties, stating that to their Best Knowledge, no such
actions or proceedings exist. No Governmental Authority shall have taken any
other action as a result of which the management of any of the Parties, in its
sole discretion, reasonably deems it inadvisable to proceed with the
transactions contemplated by this Agreement.
(g) NO MATERIAL ADVERSE CHANGE. No material adverse change in the
business, property or assets of NTA or VSL shall have occurred, and no loss or
damage to any of the assets, whether or not covered by insurance, with respect
to NTA or VSL hereto shall have occurred, and the Parties shall have delivered
to each other certificates dated as of the Closing Date and executed by Seller
to all such effects.
(h) UPDATE OF CONTRACTS. NTA and VSL shall have delivered to Buyer
an accurate list, as of the Closing Date, showing (i) all agreements,
contracts and commitments of the type listed on Exhibit 4.22 entered into
prior to the date of this Agreement; (ii) all agreements, contracts and
commitments of the type listed on Exhibit 4.22 entered into since the date of
this Agreement; and (iii) all other agreements, contracts and commitments
related to the business or the assets of NTA and VSL entered into since the
date of this Agreement, together with true, complete and accurate copies of
all such documents (the "New Contracts"). Buyer shall have had the
opportunity to review and approve the New Contracts, and Buyer shall have the
right to delay the Closing for up to ten (10) days if it in its sole
discretion deems such delay necessary to enable it to adequately review the
New Contracts.
(i) NO ADVERSE INFORMATION. The investigations with respect to the
Parties, the assets and the respective businesses performed by each Company's
respective professional advisors and other representatives shall not have
revealed any information concerning the other Company, its assets or its
business that has not been made known to the discovering Company, in writing
prior to the date of this Agreement and that, in the opinion of such party and
its advisors, materially and adversely affects the business or assets of the
other party or the viability of the transaction contemplated by this
Agreement.
(j) ORDINARY COURSE OF BUSINESS. During the period from November
1, 1997 until the Closing Date, NTA and VSL shall have carried on its business
in the ordinary and usual course, and shall have delivered to Buyer a
certificate to that effect.
(k) LIENS. L&L, VSL and NTA shall have delivered to Buyer a
reasonably current lien and judgment search (both state and county levels in
each jurisdiction where the party is qualified to or is doing business or owns
material assets) confirming the absence of any judicial liens, security
interests, tax liens and similar such liens affecting any of its business or
assets, except for Permitted Liens as defined in Section . Each and every
lien or encumbrance of any nature, if any, relating to the assets, business,
or the shares of common stock of such Company shall have been terminated and
released, and proof thereof delivered to the other (except for Permitted
Liens).
(l) OTHER DOCUMENTS. The parties shall have delivered or caused to
be delivered all other documents, agreements, resolutions, certificates or
declarations as each respective party or its attorneys may have reasonably
requested.
(m) FINANCIAL STATEMENTS. Prior to Closing, L&L, VSL and NTA shall
have delivered to Buyer their consolidated unaudited financial statements
containing unaudited balance sheets of March 31, 1998, together with
statements of operations for both the twelve (12) month period ending March
31, 1998 and the five (5) month period ending March 31, 1998, and which
financial statements shall be in all respects satisfactory to Buyer and its
legal counsel.
(n) AUDIT CONFIRMATION. Prior to Closing, Buyer shall have
received confirmation from its independent public accountants that they have
examined the books and records of L&L, VSL and NTA and have determined that
such books and records will permit the preparation of the L&L Audited
Financial Statements, together with report of independent public accountant,
in conformity with generally accepted accounting principles consistently
applied and in compliance with all requirements of Regulation SB under the
Securities Act.
(o) NONCOMPETITION AGREEMENT. At closing, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇ shall each execute and deliver to Buyer a Noncompetition Agreement
substantially in the form of Exhibit 3.5(o) hereto.
(p) OTHER OBLIGATIONS. Seller shall have delivered to Buyer an
accurate list, as of the Closing Date, showing all other commitments and/or
obligations of NTA, VSL or L&L not otherwise disclosed to Buyer in writing,
including, but not limited to, any and all obligations to Shareholders and
automobile leases. It is understood that Buyer is not assuming any such
commitments and/or obligations, all of which shall be and remain the
obligation of Seller, and Seller agrees to indemnify and hold harmless Buyer,
L&L, VSL and NTA from any liability with respect thereto.
(q) PREMISES LEASES. Seller shall have delivered to Buyer an
accurate list, as of the Closing Date, showing any and all premises or
commercial leases to which NTA, VSL and/or L&L is a party, or which otherwise
constitute a liability, obligation or commitment of NTA, VSL and/or L&L. It
is understood that Buyer is not assuming any premises or commercial lease
which cannot be terminated without liability, at the sole election of Buyer,
upon thirty (30) days advance written notice, or any liability, commitment
and/or obligation related thereto, all of which shall be and remain the sole
obligation of Seller, and Seller agrees to indemnify and hold harmless Buyer,
L&L, VSL and NTA from any liability with respect thereto.
3.6 CONDITIONS TO OBLIGATION OF SHAREHOLDERS. The obligation of
Shareholders to complete the Purchase and Sale on the Closing Date on the
terms set forth in this Agreement is, at the option of Shareholders subject to
the satisfaction or waiver by Shareholders of each of the following
conditions:
(a) NO GOVERNMENTAL ACTIONS. No action or proceeding before any
Governmental Authority shall have been instituted or threatened to restrain or
prohibit the transactions contemplated by this Agreement, and the Parties
shall have delivered to each other certificates dated as of the Closing Date
and executed by such parties, stating that to their Best Knowledge, no such
actions or proceedings exist. No Governmental Authority shall have taken any
other action as a result of which the management of any of the Parties, in its
sole discretion, reasonably deems it inadvisable to proceed with the
transactions contemplated by this Agreement.
(b) OTHER DOCUMENTS. The parties shall have delivered or caused to
be delivered all other documents, agreements, resolutions, certificates or
declarations as each respective party or its attorneys may have reasonably
requested.
3.7 SPECIFIC ITEMS TO BE DELIVERED AT THE CLOSING. The parties shall
deliver the following items to the appropriate party at the Closing of the
transactions contemplated by this Agreement.
(a) To be delivered by L&L:
(1) Copy of corporate resolutions authorizing the execution of
this Agreement, and the consummation by L&L of the
transactions contemplated by this Agreement.
(2) A certificate of the President of L&L stating that the
representations and warranties of L&L set forth in this
Agreement are true and correct. Said certificate shall
further verify and affirm that all consents or waivers, if
any, which may be necessary to execute and deliver this
Agreement have been obtained and are in full force and
effect.
(3) A certificate dated the Closing Date, signed by the Chief
Executive Officer and the Chief Financial Officer of L&L
in form and substance satisfactory to the other parties
and their legal counsel, certifying that all conditions
precedent set forth in this Agreement to the obligations
of L&L to close, have been fulfilled, and that no event of
default hereunder and no event which, with the giving of
notice or passage of time, or both, would be an event of
default, has occurred as of such date.
(4) Certificates dated the Closing Date, signed by the
Secretary of L&L, (i) certifying resolutions duly adopted
by the Board of Directors and Shareholders of L&L,
authorizing the execution of this Agreement and all of the
other transactions to be consummated pursuant thereto;
(ii) certifying the names and incumbency of the officers
of L&L who are empowered to execute the foregoing
documents for and on behalf of such company; (iii)
certifying the authenticity of copies of the Articles of
Incorporation and Bylaws of L&L; and (iv) certifying the
authenticity of a reasonably current Certificate of Good
Standing in New York.
(5) All accounting books and records of L&L, VSL and NTA and
such other business records as Buyer may reasonably
request.
(6) Certificate or certificates representing 100% of the
issued and outstanding shares of Common Stock of NTA and
VSL, which stock certificates shall be endorsed in favor
of Buyer.
(7) The resignations of all directors and officers of L&L, VSL
and NTA, effective as of the Closing Date.
(b) To be delivered by Shareholders:
(1) Certificate or certificates representing 100% of the
issued and outstanding L&L Shares, which stock
certificates shall be endorsed in favor of Buyer.
(2) Certificate of each Shareholder in which each states that
he owns the L&L Shares free and clear of all liens,
encumbrances, security interests and limitations on
transfer whatsoever.
(3) Certificate of ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ confirming the
accuracy, to such Shareholder's Best Knowledge, as of the
Closing Date, of the representations and warranties of
Shareholders set forth in this Agreement.
(4) License Agreements substantially in the form of Exhibit
2.2.
(5) Noncompetition Agreements substantially in the form of
Exhibit 3.5(o).
(6) Consulting Agreements, substantially in the form of
Exhibits 2.3(a) and (b).
(c) To be delivered by Buyer:
(1) Copy of corporate resolution authorizing the execution of
this Agreement and the consummation by Buyer of the
transactions contemplated by this Agreement; and
(2) The sum of Two Hundred Fifty Thousand dollars ($250,000)
in cash or certified funds payable to Shareholders
pursuant to the provisions of Section 3.4 hereof.
(3) The Note, substantially in the form of Exhibit 2.1(b)
hereto.
3.8 CONDITION SUBSEQUENT. As soon as practicable following the Closing
Date, Buyer shall engage its independent public accountants to perform the
preparation and completion of the L&L Audited Financial Statements. In the
event it is determined that the independent public accountants are unable to
prepare and deliver the L&L Audited Financial Statements within 75 days
following the Closing Date and in form and substance that complies with the
requirements of Regulation SB under the Securities Act and other applicable
federal and state securities regulations, Buyer may, at its option, rescind
the purchase of the L&L shares, retroactive to the Closing Date. In the event
the Buyer elects to rescind the purchase of the L&L shares, such rescission
shall be deemed to have the effect of amending the Agreement as follows.
(a) Concurrently with the election to rescind the Closing, the
Parties shall execute and deliver a Management Agreement substantially in the
form of Exhibit 3.7(a) hereto. Under the terms of the Management Agreement,
agents and employees of the Buyer shall continue to manage the day-to-day
operations of NTA and VSL until a subsequent Closing Date, as hereinafter
defined. In consideration of its management of the business operations of NTA
and VSL, Buyer shall be entitled to receive any operating income generated by
the business operations of NTA and VSL during the management period.
(b) The Closing Date of the Agreement shall be deemed to be
extended to a date immediately following the completion by Buyer of
consolidated audited financial statements of L&L, VSL and NTA for such
periods as are required to be included in audited financial statements that
must accompany the current report on Form 8-K to be filed by AMEP in
connection with the transactions provided for herein.
(c) Each and every provision of Sections 4 and 5 of this Agreement
shall be deemed satisfied or waived by Buyer.
SECTION 4: REPRESENTATIONS AND WARRANTIES BY SELLER
As a material inducement to Buyer to enter into this Agreement and with
the understanding and expectation that Buyer will be relying thereon in
consummating the Stock Sale contemplated hereunder, Shareholders jointly and
severally hereby represent and warrant as follows:
4.1 ORGANIZATION AND STANDING. L&L ,VSL and NTA (hereafter collectively
the "Corporations" for the purposes of this Section 4) are each corporations
duly organized, validly existing and in good standing under the laws of the
State of New York and have all requisite corporate power and authority to own
its assets and properties and to carry on its business as it is now being
conducted.
4.2 SUBSIDIARIES, ETC. Except as set forth below, the Corporations do
not have any direct or indirect ownership interest in any corporation,
partnership, joint venture, association or other business enterprise.
4.3 QUALIFICATION. The Corporations are qualified to engage in business
in New York. There is no other jurisdiction wherein the character of the
properties presently owned by the Corporations or the nature of the activities
presently conducted by the Corporations makes necessary the qualification,
licensing or domestication of the Corporations as a foreign corporation.
4.4 CORPORATE AUTHORITY. Except as set forth on Exhibit hereto,
neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby nor compliance by the Corporations with
any of the provisions hereof will
(a) conflict with or result in a breach of any provision of its
Articles of Incorporation or By-Laws;
(b) result in a default (or give rise to any right of termination,
cancellation, or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which either Corporation is a party, or by which
any of its properties or assets may be bound except for such default (or right
of termination, cancellation, or acceleration) as to which requisite waivers
or consents shall either have been obtained by the Corporation prior to the
Closing Date or the obtaining of which shall have been waived by the other
parties hereto; or
(c) violate any order, writ, injunction, decree or, to the
Corporation's Best Knowledge, any statute, rule or regulation applicable to
the Corporation or any of its properties or assets. No consent or approval by
any Governmental Authority is required in connection with the execution and
delivery by the Corporation of this Agreement or the consummation by the
Corporation of the transactions contemplated hereby, except for possible
notice under plant closing laws.
4.5 FINANCIAL STATEMENTS. The following statements are attached to this
Agreement as Exhibit 4.5:
(a) Unaudited, consolidated financial statements of the Corporation
and its subsidiaries containing unaudited, consolidated balance sheets as of
March 31, 1998, together with unaudited, consolidated statements of operations
from November 1, 1997 to and including March 31, 1998;
Such financial statements, together with and subject to the
disclosures and notes thereto, (i) are in accordance with the books and
records of the Corporations; (ii) present fairly and accurately the financial
condition of the Corporations as of the dates of the balance sheets; (iii)
present fairly and accurately the results of operations for the periods
covered by such statements; (iv) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis; and
(v) include all adjustments (consisting of only normal recurring accruals)
which are necessary for a fair presentation, on a consolidated basis, of the
financial condition of the Corporations, and of the results of operations of
the Corporations for the periods covered by such statements.
As of the date hereof, and as of Closing, the Corporations do not
have any liabilities or payables (absolute or contingent, known or unknown)
except for liabilities or payables set forth on L&L's financial statements or
otherwise disclosed in writing to Buyer.
4.6 CAPITALIZATION OF THE CORPORATIONS. The authorized capital stock of
the L&L consists entirely of 11,017 shares, all of which are designated Common
Stock having no par value, and none are designated preferred stock. As of the
date of this Agreement, and as of the Closing Date 11,017 shares of Common
Stock and no shares of preferred stock are issued and outstanding. The names
of the legal and beneficial owners of the issued and outstanding Common Stock
immediately prior to the Closing are set out in Exhibit 4.6. The authorized
capital stock of NTA consists entirely of 100 shares, all of which are
designated Common Stock having no par value, and none are designated Preferred
Stock. As of the date of this Agreement, and as of the Closing Date, 100
shares of Common Stock and no shares of Preferred Stock of NTA are issued and
outstanding. The authorized capital stock of VSL consists entirely of 100
shares, all of which are designated Common Stock having no par value, and none
are designated Preferred Stock. As of the date of this Agreement, and as of
the Closing Date, 100 shares of Common Stock and no shares of Preferred Stock
of VSL are issued and outstanding. The sole shareholder of NTA and VSL is
L&L. All issued and outstanding shares of the Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable. All
voting power is vested exclusively in the holders of the Common Stock. There
are no outstanding rights, options, warrants, subscriptions, calls,
convertible securities, or agreement of any character or nature under which
the Company is or may become obligated to issue any shares of its capital
stock of any kind, other than those shares indicated in this Section as
presently outstanding, and shares issuable in accordance with the terms of
this Agreement.
4.7 NO DEFAULTS. Except as set forth on the attached Exhibit 4.7, each
of the leases, contracts, agreements and insurance policies to which NTA or
VSL is a party is in full force and effect as of the date hereof with no
material defaults existing thereunder.
4.8 FINANCIAL INFORMATION. In connection with the investigations
performed by an audit to be undertaken by Buyer, Seller has furnished certain
financial information and data including, without limitation, tax and
accounting records, financial records, statements, worksheets and other
information requested by the Buyer and its auditors necessary to undertake and
complete the audited financial examinations. Seller represents and warrants
that any and all such information furnished in connection with the conduct of
such investigations and audits shall be true, accurate and complete in all
material respects and shall not contain any material misstatements nor any
material omissions of fact or information respecting the financial condition
or results of operations of L&L, VSL or NTA for the respective periods covered
by the audits.
4.9 TAXES. Except as set forth in Exhibit 4.9:
(a) The Corporations have filed (or have obtained extensions for
filing) all income, excise, sales, corporate franchise, property, payroll and
other tax returns or reports required to be filed by it, as of the date hereof
by the United States of America, any state or other political subdivision
thereof or any foreign country and has paid all Taxes or assessments relating
to the time periods covered by such returns or reports;
(b) The Corporations have paid all tax liabilities imposed or
assessed by any governmental authority for all periods prior to the Closing
Date for which such taxes have become due and payable and has received no
notice from any such governmental authority of any deficiency or delinquency
with respect to such obligation. The Corporations are not currently
undergoing any audit conducted by any taxing authority and have received no
notice of audit covering any prior period for which taxes have been paid or
are or will be due and payable prior to the Closing Date. There are no
present disputes as to taxes of any nature payable by Seller.
4.10 NO ACTIONS, PROCEEDINGS, ETC. Except as listed on the attached
Exhibit 4.10, there is no action or proceeding (whether or not purportedly on
behalf of the Corporations) pending or threatened by or against the
Corporations which might result in any material adverse change in the
condition, financial or otherwise, of the Corporations' business or assets. No
order, writ or injunction or decree has been issued by, or requested of any
court or governmental agency which does nor may result in any material adverse
change in the Corporations' assets or properties or in the financial condition
or the business of the Corporations. Except for liabilities referred to in
attached Exhibit 4.10, the Corporations are not liable for damages to any
employee or former employee as a result of any violation of any state, federal
or foreign laws directly or indirectly relating to such employee or former
employee.
4.11 POST BALANCE SHEET CHANGES. Except as set forth on the attached
Exhibit 4.11, since the date of the latest financial statements through the
date of this Agreement, the Corporations have not (a) issued, bought, redeemed
or entered into any agreements, commitments or obligations to sell, buy or
redeem any shares of its capital stock; (b) incurred any obligation or
liability (absolute or contingent), other than current liabilities incurred,
and obligations under contracts entered into, in the ordinary course of
business; (c) discharged or satisfied any lien or encumbrance or paid any
obligation or liability (absolute or contingent), other than current
liabilities incurred in the ordinary course of business; (d) mortgaged,
pledged or subjected to lien charges, or other encumbrance any of its assets,
other than the lien of current or real property taxes not yet due and payable;
(e) waived any rights of substantial value, whether or not in the ordinary
course of business; (f) suffered any damage, destruction or loss, whether or
not covered by insurance, materially and adversely affecting its assets or its
business; (g) made or suffered any amendment or termination of any material
contract or any agreement which adversely affects its business; (h) received
notice or had knowledge of any labor trouble other than routine grievance
matters, none of which is material; (i) increased the salaries or other
compensation of any of its directors, officers or employees or made any
increase in other benefits to which employees may be entitled, other than
employee salary increases made in the ordinary course of business and
reflected on an Exhibit hereto; (j) sold, transferred or otherwise disposed of
any of its assets, other than in the ordinary course of business; (k) declared
or made any distribution or payments to any of its shareholders, officers or
employees, other than wages and salaries made to employees in the ordinary
course of business; (l) revalued any of its assets; or (m) entered into any
transactions not in the ordinary course of business.
4.12 NO BREACHES. The Corporations are not in violation of, and the
consummation of the transactions contemplated hereby do not and will not
result in any material breach of, any of the terms or conditions of any
mortgage, bond, indenture, agreement, contract, license or other instrument or
obligation to which either Corporation is a party or by which its assets are
bound; nor will the consummation of the transactions contemplated hereby cause
NTA, VSL or L&L to violate any statute, regulation, judgment, writ, injunction
or decree of any court, threatened or entered in a proceeding or action in
which either Corporation is, was or may be bound or to which any of the
Corporations' assets are subject.
4.13 CONDITION OF THE CORPORATION'S ASSETS. L&L's and its subsidiaries'
assets are currently in good and usable condition and there are no defects or
other conditions which, in the aggregate, materially and adversely affect the
operation or values of such assets. Except as disclosed on the attached
Exhibit 4.13, no third party (including any officer or employee of the
Corporation) has any proprietary interest in any know-how or other intangible
assets used by either Corporation in the conduct of its business.
4.14 INVENTORY. Except as otherwise set forth on Exhibit 4.14, all
inventories reflected in the Corporations' latest financial statements in
excess of the reserves for excess or obsolete inventories are stated at the
lowest of cost, replacement cost or market, and, as so stated, are in good
condition and usable or salable in the category in which they are inventoried,
in the ordinary course of business of the Corporations, without discounts
other than normal trade discounts regularly offered by the Corporations, for
prompt payment or quantity purchase.
4.15 ACCOUNTS RECEIVABLE. The accounts receivable of the Corporations
represent valid and enforceable obligations due to the Corporation and its
subsidiaries, and shall be collectible by the Corporation and its subsidiaries
in the ordinary course of business. Except as set forth on the attached
Exhibit 4.15, the Corporations have not received any notice of any material
counterclaim or set-off with respect to such accounts receivable.
4.16 CORPORATE ACTS AND PROCEEDINGS. This Agreement has been duly
authorized by all necessary corporate action on behalf of L&L, has been duly
executed and delivered by authorized officers of L&L, and is a valid and
binding Agreement on the part of L&L that is enforceable against Sellers, NTA,
VSL and L&L in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and to
judicial limitations on the enforcement of the remedy of specific performance
and other equitable remedies.
4.17 REGISTERED RIGHTS AND PROPRIETARY INFORMATION.
(a) Exhibit 4.17 hereto contains a true and complete list of all
service marks, trademark and service ▇▇▇▇ registrations and applications,
copyright, copyright registrations and applications, grants of licenses and
rights to the Corporation and its subsidiaries with respect to the foregoing,
both domestic and foreign, claimed by the Corporation or its subsidiaries or
used or proposed to be used by the Corporation and/or its subsidiaries in the
conduct of their business including, without limitation, the name "National
Teaching Aids," (collectively herein, "Registered Rights"). Exhibit 4.17
hereto also contains a true and complete list of all and every trade secret,
know-how, process, formula, discovery, development, research, design,
technique, customer and supplier list, contracts, product development plans,
product development concepts, author contracts, marketing and purchasing
strategy, invention, and any other matter required for, incident to, or
related to the conduct of their businesses (hereafter collectively the
"Proprietary Information"). Except as described in Exhibit 4.17 hereto, the
Corporation and/or its subsidiaries are not obligated or under any liability
whatever to make any payments by way of royalties, fees or otherwise to any
owner or licensor of, or other claimant to, any Registered Right or
Proprietary Information with respect to the use thereof in the conduct of
their businesses or otherwise.
(b) Except as described in Exhibit 4.17 hereto, to the
Corporation's Best Knowledge after reasonable inquiry, the Corporation owns
and has the unrestricted right to use the Registered Rights and Proprietary
Information required for or incident to the design, development, manufacture,
operation, sale and use of all products and services sold or rendered or
proposed to be sold or rendered by the Corporation and/or its subsidiaries or
relating to the conduct or proposed conduct of their businesses free and clear
of any right, title, interest, equity or claim of others. Except as described
in Exhibit 4.17 hereto, the Corporation and/or its subsidiaries have taken all
necessary steps (including without limitation entering into appropriate
confidentiality, assignment of rights and non-competition agreements with all
officers, directors, employees and consultants of the Corporation and/or its
subsidiaries and others with access to or knowledge of the Proprietary
Information) to safeguard and maintain the secrecy and confidentiality of, and
its proprietary rights in, the Proprietary Information and all related
documentation and intellectual property rights therein necessary for the
conduct or proposed conduct of their businesses.
(c) Except as described in Exhibit 4.17 hereto, the Corporation
and/or its subsidiaries have not sold, transferred, assigned, licensed or
subjected to any right, lien, encumbrance or claim of others, any Proprietary
Information, including without limitation any Registered Right, or any
interest therein, related to or required for the design, development,
manufacture, operation, sale or use of any product or service currently under
development or manufactured, or proposed to be developed, sold or
manufactured, by them. Exhibit 4.17 contains a true and complete list and
description of all licenses of Proprietary Information granted to the
Corporation by others or to others by the Corporation and/or its subsidiaries.
Except as described in Exhibit 4.17 hereto, there are no claims or demands of
any person pertaining to, or any proceedings that are pending or threatened,
which challenge the rights of the Corporation and/or its subsidiaries in
respect of any Proprietary Information used in the conduct of their
businesses.
(d) Except as described in Exhibit 4.17 hereto, the Corporation
and/or its subsidiaries own and on the Closing Date shall own, have, and hold,
exclusively all right, title and interest in the Registered Rights, free and
clear of all liens, encumbrances, restrictions, claims and equities of any
kind whatsoever, has and shall have the exclusive right to use, sell, license
or dispose of, and has and shall have the exclusive right to bring action for
the infringement of the Registered Rights and the Proprietary Information. To
the Best Knowledge of Corporation, the marketing, promotion, distribution or
sale by the Corporation and/or its subsidiaries of any products or services
subject to the Registered Rights or making use of Proprietary Information
shall not constitute an infringement of any patent, copyright, trademark,
service ▇▇▇▇ or misappropriation or violation of any other party's proprietary
rights or a violation of any license or agreement by the Corporation and/or
its subsidiaries. Except as described in Exhibit 4.17 hereto, to the
knowledge of the Corporation after due inquiry no facts or circumstances exist
that could result in the invalidation of any of the Registered Rights.
4.18 CHANGES IN SUPPLIERS AND CUSTOMERS. Except as disclosed on Exhibit
4.18, the Corporation is not aware of any fact which indicates that any of the
suppliers supplying products, services, components or materials to the
Corporation or its subsidiaries intends to cease selling such products or
providing such services to the Corporation or its subsidiaries nor is the
Corporation aware of any fact which indicates that any major customer of the
Corporation or its subsidiaries intends to terminate its business relations
with the Corporation or its subsidiaries.
4.19 NO LIENS OR ENCUMBRANCES. The Corporation and/or its subsidiaries
have good and marketable title to all of the property and assets, tangible and
intangible, employed in the operations of their businesses, free of any
material mortgages, security interests, pledges, easements or encumbrances of
any kind whatsoever except as set forth on the attached Exhibit 4.19 and
except for such property and assets as may be leased by the Corporation.
4.20 EMPLOYEE MATTERS. Exhibit 4.20 attached hereto contains a true,
complete and accurate list of all employees of the Corporation and its
subsidiaries and the remuneration of each (including wages, salaries and
fringe benefits). The Corporation has no information or facts indicating that
any employee listed on Exhibit 4.20 intends to terminate his/her employment
relationship with the Corporation or its subsidiaries prior or subsequent to
the Closing Date, except as may be required by this Agreement. Except as
specifically described on Exhibit 4.20, the Corporation has no employee
benefit plans (including, but not limited to, pension plans and health or
welfare plans), arrangements or understandings, whether formal or informal.
The Corporation does not now and has never contributed to a "multi-employer
plan" as defined in Section 400(a)(3) of ERISA. The Corporation has complied
with all applicable provisions of ERISA and all rules and regulations
promulgated thereunder, and neither the Corporation nor any trustee,
administrator, fiduciary, agent or employee thereof has at any time been
involved in a transaction that would constitute a "prohibited transaction"
within the meaning of Section 406 of ERISA as to any covered plan of the
Corporation. The Corporation is not a party to any collective bargaining or
other union agreement. The Corporation has not, within the past five (5)
years had, or been threatened with, any union activities, work stoppages or
other labor trouble with respect to its employees which had or might have had
a material adverse effect on the Corporation, its business or assets. Except
as set forth in Exhibit 4.10, since the date of the financial statements
provided for in this Agreement, the Corporation has not made any commitment or
agreements to increase the wages or modify the conditions or terms of
employment of any of the employees of the Corporation used in connection with
its business, and between the date of this Agreement and the Closing Date, the
Corporation will not make any agreement to increase the wages or modify the
conditions or terms of employment of any of the employees of the Corporation
used in the conduct of its business, without the prior written consent of all
parties hereto.
4.21 LEGAL PROCEEDINGS AND COMPLIANCE WITH LAW. Except as set forth in
Exhibit 4.21, there is no legal, administrative, arbitration or other
proceeding or governmental investigation pending or threatened (including
those relating to the health, safety, employment of labor, or protection of
the environment) pertaining to L&L or its subsidiaries which might result in
the aggregate in money damages payable by L&L or its subsidiaries in excess of
insurance coverage or which might result in a permanent injunction against L&L
or its subsidiaries. Except as set forth in such Exhibit, L&L and its
subsidiaries have substantially complied with, and are not in default in any
respect under any laws, ordinances, requirements, regulations, or orders
applicable to the business of L&L or its subsidiaries, the violation of which
might materially and adversely affect them. Except as set forth in such
Exhibit, L&L and its subsidiaries are not parties to any agreement or
instrument, nor are they subject to any charter or other corporate restriction
or any judgment, order, writ, injunction, decree, rule, regulation, code or
ordinance which materially and adversely affects, or might reasonably be
expected materially and adversely to affect the business, operations,
prospects, property, assets or condition, financial or otherwise, of L&L or
its subsidiaries.
4.22 CONTRACT SCHEDULES. Attached as Exhibits 4.22 hereto is an accurate
list and summary description of the following:
(a) All contracts, leases, agreements, covenants, licenses,
instruments or commitments of L&L and its subsidiaries pertaining to the
business of L&L and its subsidiaries calling for the payment of $5,000 or more
or which is otherwise material to the business of L&L and its subsidiaries,
including, without limitation, the following:
(i) Executory contracts for the sale of products and services;
(ii) Executory contracts for the purchase, sale or lease of any
assets;
(iii Management or consulting contracts;
(iv) Patent, trademark and copyright applications,
registrations or licenses, and know-how, intellectual
property and trade secret agreements or other licenses;
(v) Note agreements, loan agreements, indentures and the like,
other than those entered into and executed in the ordinary
course of business;
(vi) All sales, agency, distributorship, license or franchise
agreements; and
(vii) Any other contracts not in the ordinary course of
business.
(b) There are no labor contracts, employment agreements and
collective bargaining agreements related to L&L and its subsidiaries.
(c) All instruments evidencing any liens or security interest
securing any indebtedness of L&L and its subsidiaries covering any asset of
L&L and its subsidiaries.
(d) There are no obligations of NTA, VSL or L&L under any profit
sharing, pension, stock option, severance pay, retirement, bonus, deferred
compensation, group life and health insurance or other employee benefit plans,
agreements, arrangements or commitments of any nature whatsoever, whether or
not legally binding, and there are no agreements with any present or former
officer, director or shareholder of L&L, VSL or NTA or their subsidiaries save
and except for those obligations set forth in this Agreement. It is understood
that neither NTA, VSL nor L&L shall be subject to, and Buyer is not assuming,
any such commitments and/or obligations, all of which shall be and remain the
obligation of Seller, and Seller agrees to indemnify and hold harmless Buyer,
L&L, VSL and NTA from any liability with respect thereto.
(e) Any and all documents, instruments and other writings not
listed in any other schedule hereto which are material to the business
operations of L&L and/or its subsidiaries.
Except as set forth in Exhibit 4.22, all of such contracts,
agreements, leases, licenses, plans, arrangements and commitments and all
other such items set forth above are valid, binding and in full force and
effect in accordance with their terms and conditions, and there is no existing
default thereunder or breach thereof by the Corporation, or by any party to
such contracts, or any conditions which, with the passage of time or the
giving of notice or both, might constitute such a default by the Corporation
or by any other party to the contracts.
4.23 LABOR MATTERS. There are no strikes, slowdowns, stoppages,
organizational efforts, discrimination charges or other labor disputes pending
or, to the knowledge of Shareholders or any of its agent or employees,
threatened against L&L or its subsidiaries.
4.24 INSURANCE. L&L and its subsidiaries maintain in full force and
effect insurance coverage on their assets and businesses in such amounts and
against such risks and losses as set forth in Exhibit 4.23.
4.25 ENVIRONMENTAL. Except as disclosed on Exhibit 4.25, and except for
normal office and consumer products utilized in the ordinary course of
business, the conduct and operation of the businesses of L&L and its
subsidiaries have not and do not:
(a) Involve or require the storage, disposal, generation,
manufacture, refinement, transportation, production or treatment of toxic
wastes, hazardous wastes, or hazardous substances;
(b) Resulted in any spill, discharge, leak, emission, injection,
escape, dumping, or release of any kind onto the business premises, or into
the environment surrounding the business premises, of any toxic wastes or
hazardous substances; or
(c) Involve or require the treatment, collection, storage or
disposal of any refuse or objectionable wastes so as to require a permit or
approval from the United States Environmental Protection Agency, or otherwise
subject to the regulation of the United States Environmental Protection Agency
or any state regulatory agency.
Seller represents and warrants that
(i) to the Best Knowledge of Seller, no real property ( or the
subsurface soil and the ground water thereunder) now or previously owned or
leased by Seller (the "Property") either contains any Hazardous Substance (as
hereinafter defined) or has underneath it any underground fuel or liquid
storage tanks;
(ii) to the Best Knowledge of Seller, there has been no
generation, transportation, storage, treatment or disposal of any Hazardous
Substance on or beneath the Property, now or in the past;
(iii) Seller is not aware of any pending or threatened
litigation or proceedings before any court or administrative agency in which
any person alleges, or threatens to allege, the presence, release, threat of
release, placement on or in the Property, or the generation, transportation,
storage, treatment or disposal at the Property, of any Hazardous Substance;
(iv) Seller has not received any notice and has no knowledge
that any Governmental Authority or any employee or agent thereof has
determined or alleged, or is investigating the possibility, that there is or
has been any presence, release, threat of release, placement on or in the
Property, or any generation, transportation, storage, treatment or disposal at
the Property, of any Hazardous Substance;
(v) To Seller's Best Knowledge, there have been no
communications or agreements with any Governmental Authority or agency
(federal, state or local) or any private person or entity (including, without
limitation, any prior owner of the Property and any present or former occupant
or tenant of the Property) relating in any way to the presence, release,
threat of release, placement on or in the Property, or any generation,
transportation, storage, treatment or disposal at the Property, of any
Hazardous Substance. Seller further agrees and covenants that Seller will not
store or deposit on, otherwise release or bring onto or beneath, the Property
any Hazardous Substance prior to the Closing Date; and
(vi) there is no litigation, proceeding, citizen's suit or
governmental or other investigation pending, or, to Seller's Best Knowledge,
threatened, against Seller, and Seller knows of no facts or circumstances
which might give rise to any future litigation, proceeding, citizen's suit or
governmental or other investigation, which relate to Seller's compliance with
environmental laws, regulations, rules, guidelines and ordinances.
For purposes of this Section 4.25, "Hazardous Substance" shall mean
and include (1) a hazardous substance as defined in 42 U.S.C. Section
9601(14), the Regulations at 40 C.F.R. Part 302, (2) any substance regulated
under the Emergency Planning and Community Right to Know Act (including
without limitation any extremely hazardous substances listed at 40 C.F.R. Part
355 and any toxic chemical listed at 40 C.F.R. Part 372), (3) hazardous wastes
and hazardous substances as specified under any Florida state or local
Governmental Requirement governing water pollution, groundwater protection,
air pollution, solid wastes, hazardous wastes, spills and other releases of
toxic or hazardous substances, transportation of hazardous substances,
materials and wastes and occupational or employee health and safety, and (4)
any other material, gas or substance known or suspected to be toxic or
hazardous (including, without limitation, any radioactive substance, methane
gas, volatile hydrocarbon, industrial solvent, and asbestos) or which could
cause a material detriment to, or materially impair the beneficial use of the
Property, or constitute a material health, safety or environmental risk to any
person exposed thereto or in contact therewith. For purposes of this Section
4.25, "Hazardous Substance" shall not mean and shall not include the
following, to the extent used normally and required for everyday uses or
normal housekeeping or maintenance: (A) fuel oil and natural gas for heating,
(B) lubricating, cleaning, coolant and other compounds customarily used in
building maintenance, (C) materials routinely used in the day-to-day
operations of an office, such as copier toner, (D) consumer products, (E)
material reasonably necessary and customarily used in construction and repair
of an office project, and (F) fertilizers, pesticides and herbicides commonly
used for routine office landscaping.
The terms "hazardous wastes" and "hazardous substances" shall have
the meaning specified by any applicable local, state, or federal statute or
regulation concerning or governing water pollution, groundwater protection,
air pollution, solid wastes, hazardous wastes, spills, and other releases of
toxic or hazardous substances, transportation of hazardous substances,
materials, and wastes and occupational or employee health and safety.
4.26 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Seller contained in this Agreement shall be true on and as of the
Closing Date with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date. Such representations
and warranties shall survive the Closing Date and shall remain operative in
full force and effect for the period of time set forth in Section 11.8 hereof
regardless of any investigation at any time made by or on behalf of the Buyer
and shall not be deemed merged in any document or instrument so executed or
delivered by the Buyer.
4.27 DISCLOSURE OF INFORMATION. The Corporations represent and warrant
that all statements, data and other written information provided by it to any
party hereto as well as their respective consultants and representatives have
been true, accurate and correct in all material respects as of the date
provided and have been provided with the knowledge of the Corporation that the
receiving party will rely upon same in connection with that party's decision
to consummate the transactions provided for in this Agreement. The
Corporations represent and warrant that, (i) there exists no material
information concerning the Corporations which have not been disclosed to or
made available to the other parties and their representatives or consultants
and which would be material to a decision to consummate the transactions
provided for in this Agreement and (ii) in the aggregate, such information
does not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made in them, in light
of the circumstances under which they are made, not misleading.
SECTION 5: COVENANTS OF SELLER
-------------------
5.1 PRESERVATION OF BUSINESS. Until Closing, Sellers shall use its best
efforts to:
(a) preserve intact the present business organization of L&L, VSL
and NTA;
(b) maintain its Property and assets, and those of its
subsidiaries, in their present state of repair, order and condition,
reasonable wear and tear excepted;
(c) preserve and protect the goodwill and advantageous
relationships of and its subsidiaries with their customers and all other
persons having business dealings with L&L and its subsidiaries;
(d) preserve and maintain in force all licenses, permits,
registrations, franchises, patents, trademarks, trade names, trade secrets,
service marks, copyrights, bonds and other similar rights of L&L and its
subsidiaries; and
(e) comply with all laws applicable to the conduct of its business
5.2 ORDINARY COURSE. L&L, VSL and NTA shall conduct their business only
in the usual, regular and ordinary course, in substantially the same manner as
previously, and shall not make any substantial change to its methods of
management or operation in respect of such business or property. Without
limiting the foregoing, L&L, VSL or NTA shall not:
(a) sell, mortgage, pledge or encumber or agree to sell, mortgage,
pledge or encumber, any of its property or assets, other than in the ordinary
course of business;
(b) incur any obligation (contingent or otherwise) or purchase,
acquire, transfer, or convey, any material assets or property or enter into
any contract or commitment, except in the ordinary course of business;
(c) discuss, solicit, negotiate or enter into an agreement
concerning any merger, consolidation or sale of all or substantially all of
its assets except as contemplated by this Agreement.
5.3 NEGATIVE COVENANTS. Except as disclosed in Exhibits to this
Agreement, from the date hereof until the Closing Date, unless and until Buyer
otherwise consents in writing, L&L will not (a) change or alter the physical
contents or character of the inventories of its business, so as to materially
affect the nature of L&L's business or materially and adversely change the
total dollar valuation of such inventories from that reflected on the
financial statements referred to in Section 4.5 other than in the ordinary
course of business; (b) incur any obligations or liabilities (absolute or
contingent) other than current liabilities incurred and obligations under
contracts entered into in the ordinary course of business; (c) mortgage,
pledge or voluntarily subject to lien, charge or other encumbrance any assets,
tangible or intangible, other than the lien of current property taxes not due
and payable; (d) sell, assign or transfer any of its assets or cancel any
debts or claims, other than in the ordinary course of business; (e) waive any
right of any substantial value; (f) declare or make any payment or
distribution to shareholders or issue, purchase or redeem any shares of its
capital stock or other equity securities or issue or sell any rights to
acquire the same; (g) grant any increase in the salary or other compensation
of any of its directors, officers, or employees or make any increase in any
benefits to which such employees might be entitled; (h) institute any bonus,
benefit, profit sharing, stock option, pension, retirement plan or similar
arrangement, or make any changes in any such plans or arrangements presently
existing; or (i) enter into any transactions or series of transactions other
than in the ordinary course of business.
5.4 ACCESS TO BOOKS AND RECORDS, PREMISES, ETC. From the date of this
Agreement through the Closing Date, L&L and its subsidiaries will grant Buyer
and its authorized representatives access to their books and records,
premises, products, employees and customers and other parties with whom they
have contractual relations during reasonable business hours and in a manner
not to disrupt or interfere with their business relationships for purposes of
enabling Buyer to fully investigate the business of L&L and its subsidiaries.
5.5 COMPENSATION. L&L shall not enter into or agree to enter into any
employment contract or agreement for consulting, professional, or other
services which will adversely and materially affect the operation of NTA or
VSL prior to the Closing Date.
5.6 TAXES AND OTHER LIABILITIES. L&L, VSL and NTA will promptly pay and
discharge before the same become delinquent and before penalties accrue
thereon, all lawful taxes, assessments and governmental charges or levies
imposed upon it or income or profits, or upon or against any of its property,
real, personal or mixed, and all of its other liabilities except to the extent
that the same are being contested in good faith and by appropriate proceedings
in such manner as not to cause any materially adverse affect upon its
financial condition or the loss of any right of redemption from any sale
thereunder, and it shall have set aside on its financial statements delivered
to Buyer, reserves (segregated to the extent required by sound accounting
principles) adequate with respect thereto; provided, further, that Seller
shall pay all such taxes, assessments, charges or levies forthwith in excess
of such reserves whenever final judgment is entered thereon, or as the result
of proceedings to foreclose any lien which attached as security therefor,
foreclosure on such lien appears imminent, unless a surety bond or such other
measure can be taken to prevent such foreclosure.
5.7 NO SOLICITATION.
(a) Except in connection with the transactions contemplated by this
Agreement, Seller shall not, nor shall it permit any of its subsidiaries to,
nor shall it authorize or permit any officer, director or employee of or any
investment banker, attorney or other advisor or representative of, Seller or
any of its subsidiaries to, (i) solicit, initiate or encourage the submission
of, any takeover proposal, (ii) enter into any agreement with respect to any
takeover proposal or (iii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take
any other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any takeover
proposal. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth in the preceding sentence by any executive
officer of Seller or any of its subsidiaries or any investment banker,
attorney or other advisor or representatives of Seller or any of its
subsidiaries or otherwise, shall be deemed to be a breach of this Section by
Seller. For purposes of this Agreement, "takeover proposal" means any
proposal for a merger, consolidation or reorganization or other business
combination involving Seller or any of its subsidiaries or any proposal or
offer to acquire in any manner, directly or indirectly, an equity interest in,
any voting securities of, or options, rights, warrants or other interests
convertible or exercisable for or into such voting securities, or a
substantial or material portion of the assets or business of Seller or any of
its subsidiaries, other than the transactions contemplated by this Agreement.
(b) Except upon a material breach of this Agreement by Buyer or
following termination hereof, except for action permitted or contemplated by
this Agreement, including a party's right to terminate this Agreement under
certain circumstances, neither the Board of Directors of Seller nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Buyer, the approval or recommendation by such
Board of Directors of any such committee of this Agreement or (ii) approve or
recommend, or propose to approve or recommend, any takeover proposal.
(c) Seller promptly shall advise Buyer orally and in writing of any
takeover proposal or any inquiry with respect to or which could lead to any
takeover proposal and the identity of the person making any such takeover
proposal or inquiry. Seller will keep Buyer fully informed of the status and
details of any such takeover proposal or inquiry.
(d) The provisions of this Section 6.6 shall not be construed to
prevent any investment banker, attorney or other advisor or representative of
Seller to engage in discussions with third parties in the ordinary course of
business with respect to transactions not involving the parties to this
Agreement.
SECTION 6: REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
----------------------------------------------
Each Shareholder shall severally represent and warrant to Buyer that as
of the date of Closing, the following are true and accurate with respect to
such Shareholder:
6.1 SHARE OWNERSHIP. The Shareholders owns the number of shares of the
common stock, if any, of L&L, a New York corporation, set forth in Section
hereof, which shares are fully paid, nonassessable and are transferred and
assigned to Buyer free and clear of any claims, liens, and encumbrances or
other restrictions which would in any way impair their right to effectively
sell or transfer such shares.
6.2 RIGHTS. The Shareholders do not own or hold any rights, options,
warrants, subscriptions, calls, convertible securities, or agreements of any
character or nature under which L&L is or may become obligated to issue any
shares of its capital stock of any kind other than those described as
outstanding in Section 9.1 above.
6.3 RESTRICTION ON FUTURE TRANSFER. There are no restrictions on the
transferability of the L&L Shares being transferred to Buyer imposed by or
pursuant to L&L's Articles of Incorporation, Bylaws or by any other agreements
to which such Shareholder is a party, except for restrictions imposed by or on
account of federal and state securities laws.
SECTION 7: TERMINATION
-----------
7.1 GROUNDS FOR TERMINATION. This Agreement may be terminated and
abandoned solely as follows:
(a) At any time until the Closing Date by the unanimous mutual
agreement of the Shareholders and the Boards of Directors of AMEP and L&L.
(b) By any party hereto, if for any reason the parties have failed
to close this Agreement on or before April 30, 1998, provided that the party
requesting termination is not then in default thereunder.
In the event of any termination pursuant to Section 13.1(b) written
notice setting forth the reasons therefor shall forthwith be given by the
terminating party to all of the other parties hereto.
7.2 EFFECT OF TERMINATION. If the Exchange is terminated and abandoned
as provided for in this Section, this Agreement shall forthwith become wholly
void and of no effect without liability to any party to this Agreement except
for breach of this Agreement.
SECTION 8: INDEMNIFICATION AND REMEDIES FOR BREACH
---------------------------------------
8.1 INDEMNIFICATION BY BUYER.
(a) Buyer shall defend, indemnify and hold the other parties hereto
harmless against and in respect of any damage, loss, liability, cost or
expense, including expert witness fees and reasonable attorneys' fees, whether
or not recoverable under applicable state law, resulting or arising from or
incurred in connection with:
(i) any misrepresentation or nonfulfillment or nonperformance
of any agreement on the part of Buyer under this
Agreement, or any misrepresentation or omission from any
exhibit, schedule, list, certificate or other instrument
furnished or to be furnished by it under this Agreement,
or any noncompliance on the part of Buyer with applicable
law.
(ii) any and all claims against or liabilities of Buyer of any
nature whatsoever, whether accrued, absolute, contingent
or otherwise and whether known or unknown, except to the
extent that any such liability arises from another party's
failure to perform or discharge, when due, that party's
future obligations; and
(iii) any actions, suits, proceedings, damages, assessments,
judgments, costs or expenses incident to any of the
foregoing.
8.2 INDEMNIFICATION BY SELLER.
(a) Shareholders shall defend, indemnify and hold the other parties
hereto harmless against and in respect of any damage, loss, liability, cost or
expense, including expert witness fees and reasonable attorneys' fees, whether
or not recoverable under applicable state law, resulting or arising from or
incurred in connection with:
(i) any misrepresentation, breach of warranty, or
nonfulfillment or nonperformance of any agreement on the
part of Seller under this Agreement, or any
misrepresentation or omission from any exhibit, schedule,
list, certificate or other instrument furnished or to be
furnished by it under this Agreement.
(ii) any and all liabilities of L&L of any nature whatsoever,
whether accrued, absolute, contingent or otherwise and
whether known or unknown, except to the extent that any
such liability arises from another party's failure to
perform or discharge, when due, that party's future
obligations;
(iii) any actions, suits, proceedings, damages, assessments,
judgments, costs or expenses incident to any of the
foregoing.
8.3 NOTICE. Promptly after the receipt by any party hereto of notice
of any claim asserted by a third party that may give rise to the liability of
any party for which the right to indemnification may be claimed under this
Section, such party shall give to each other party written notice of such
claim as soon as practicable.
8.4 DETERMINATION OF DAMAGES AND RELATED MATTERS.
(a) Upon the occurrence of any event which would give rise to a
claim by a party (the "Claimant Party") against, or to a right of defense and
indemnity against a party (the "Indemnifying Party") pursuant to this
Section , or in the event that any suit, action, investigation, claim or
proceeding is begun, made or instituted as a result of which a party (the
"Indemnifying Party") may become obligated to another party hereunder, the
Claimant Party shall give notice to the Indemnifying Party of the occurrence
of such event and shall identify the Claimant Party's choice of counsel to
represent such investigation, claim or proceedings, provided that the failure
of the Claimant Party to give notice shall not affect the indemnification
obligations of the Indemnifying Party hereunder. The Claimant Party shall
have the non-exclusive right to so defend, contest or protect against such
matter utilizing the counsel of the Claimant Party's choice (who shall be
reasonably acceptable to a representative of the Indemnifying Party). The
Indemnifying Party shall have the right, but not the obligation, to
participate, at its own expense, in the defense thereof by counsel of their
choice. In addition, the Indemnifying Party shall have the right to elect to
assume the defense of any such matter in the name of the Claimant Party with
counsel who shall be reasonably satisfactory to the Claimant Party. If the
Indemnifying Party shall elect to assume the defense in the name of the
Claimant Party, it shall provide written notice of such election to the
Claimant Party and from and after the giving of such notice to the Claimant
Party, the Indemnifying Party shall not be liable to the Claimant Party for
any legal or other expenses subsequently incurred by the Claimant Party in
connection with the defense, other than reasonable costs of investigation.
The Indemnifying Party shall not be liable to the Claimant Party on account of
any settlement of any claim, action or proceeding effected without the
Indemnifying Party's consent, provided that any such consent shall not be
unreasonably withheld or delayed.
(b) Provided that the Indemnifying Party has not elected to assume
the defense of the matter in accordance with the provisions of Section , as
the Claimant Party incurs expenses for which indemnification hereunder is
provided and prior to any final judgment or award shall have been rendered by
a court, arbitration board or administrative agency of competent jurisdiction,
and the expiration of the time in which to appeal therefrom, or a settlement
shall have been consummated, the Claimant Party shall forward to the
Indemnifying Party notice of any sums due and owing by them pursuant to this
Agreement with respect to such matter and they shall be required to pay all of
the sums so due and owing to the Claimant Party by certified or bank cashier's
check within ten (10) days of such notice.
(c) Each of the parties shall fully cooperate with the others in
connection with any proceeding for which a claim of indemnification may be
made hereunder. If any dispute shall arise with respect to the obligations of
any party to the other parties under this Section , and the parties shall be
unable to resolve such dispute after good faith negotiations, the parties
shall, upon the request of any party involved, submit the dispute to
arbitration in accordance with Section .
8.5 REMEDIES FOR BREACH. In the event of any breach of any of the
provisions of this Agreement, including but not limited to any breach of any
covenant, warranty or representation made by any party hereto, the breaching
or defaulting party shall be liable pursuant to the provisions of 8.1, 8.2,
14,3, and 14.5 above. In the event of any material breach by any party of
any provision under this Agreement, any party may commence arbitration in
accordance with Section 17.13 hereof; provided, however, that nothing
contained in this Agreement shall be deemed to preclude a party to ▇▇▇ for or
seek specific performance of the provisions of this Agreement in the
appropriate circumstance pursuant to Section 17.15.
SECTION 9: NONDISCLOSURE OF CONFIDENTIAL INFORMATION
-----------------------------------------
Each of the Parties recognizes and acknowledges that it has and will have
access to certain nonpublic information of the others which shall be deemed
the confidential information of the other Parties (including, but not limited
to, business plans, costs, trade secrets, licenses, research projects,
profits, markets, sales, customer lists, strategies, plans for future
development, financial information and any other information of a similar
nature) that after the consummation of the transactions contemplated hereby
will be valuable, special and unique property of the respective company.
Information shall not be deemed Confidential Information and afforded the
protections of this Section if, on the Closing Date, such information has
been (i) developed by the receiving party independently of the disclosing
party, (ii) rightfully obtained without restriction by the receiving party
from a third party, provided that the third party had full legal authority to
possess and disclose such information, (iii) publicly available other than
through the fault or negligence of the receiving party, (iv) released without
restriction by the disclosing party to anyone, including the United States
government, or (v) properly and lawfully known to the receiving party at the
time of its disclosure, as evidenced by written documentation conclusively
established to have been in the possession of the receiving party on the date
of such disclosure. Each of the Parties agrees that it will not disclose, and
that they will use its best efforts to prevent disclosure by any other Person
of, any such confidential information to any Person for any purpose or reason
whatsoever, except to authorized representatives of the respective company.
Notwithstanding, a party may use and disclose any such confidential
information to the extent that a party may become compelled by Legal
Requirements to disclose any such information; provided, however, that such
party shall use all reasonable efforts and shall have afforded the other
Parties the opportunity to obtain an appropriate protective order or other
satisfactory assurance of confidential treatment for any such information
compelled to be disclosed. In the event of termination of this Agreement,
each party shall use all reasonable efforts to cause to be delivered to the
other parties, and to retain no copies of, any documents, work papers and
other materials obtained by such party or on such party's behalf during the
conduct of the matters provided for in this Agreement, whether so obtained
before or after the execution hereof. Each of the Parties recognizes and
agrees that violation of any of the agreements contained in this Section will
cause irreparable damage or injury to the respective company, the exact amount
of which may be impossible to ascertain, and that, for such reason, among
others, each company shall be entitled to an injunction, without the necessity
of posting bond therefor, restraining any further violation of such
agreements. Such rights to any injunction shall be in addition to, and not in
limitation of, any other rights and remedies each company may have against
each other.
SECTION 10: EXPENSES
--------
Each of the parties will pay all costs and expenses of its or his
performance and compliance with this Agreement. Notwithstanding the
foregoing, if the Agreement is not consummated by reason of a default of one
of the Parties, then the expenses of each of the Parties in connection with
the transaction contemplated herein shall be paid by such defaulting Company.
SECTION 11: MISCELLANEOUS
-------------
11.1 ATTORNEYS' FEES. In any action authorized hereunder to be brought
or in any arbitration proceeding, for declaratory relief or to enforce any of
the provisions or rights or obligations under this Agreement, the unsuccessful
party to such proceeding, shall pay the successful party or parties all
statutorily recoverable costs, expenses and reasonable attorneys' fees
incurred by the successful party or parties including without limitation
costs, expenses, and fees on any appeals and the enforcement of any award,
judgment or settlement obtained, such costs, expenses and attorneys' fees
shall be included as part of the judgment. The successful party shall be that
party who obtained substantially the relief or remedy sought, whether by
judgment, compromise, settlement or otherwise.
11.2 SURVIVAL AND INCORPORATION OF REPRESENTATIONS. All statements
contained in any certificate or other document delivered by any party
hereunder at or in connection with the Closing shall be deemed to constitute
representations and warranties made by that party to this Agreement. The
representations, warranties, covenants and agreements made herein or any
certificates or documents executed in connection herewith, shall survive the
execution and delivery thereof and shall remain operative in full force and
effect for the period of time set forth in Section 11.8 hereof regardless of
any investigation at the time made by or on behalf of such party and shall not
be deemed merged in any document or instrument so executed or delivered by the
party.
11.3 INCORPORATION BY REFERENCE. All Exhibits to this Agreement and all
documents delivered pursuant to or referred to in this Agreement are herein
incorporated by reference and made a part hereof.
11.4 PARTIES IN INTEREST. Nothing in this Agreement, whether express or
implied, is intended to, or shall, confer any rights or remedies under, or by
reason of, this Agreement, on any person other than the parties hereto and
their respective and proper successors and assigns. Nor shall anything in
this Agreement act to relieve or discharge the obligation or liability of any
third persons to any party to this Agreement.
11.5 AMENDMENTS AND WAIVERS. This Agreement may not be amended, nor may
compliance with any term, covenant, agreement, condition or provision set
forth herein be waived (either generally or in a particular instance and
either retroactively or prospectively) unless such amendment or waiver is
agreed to in writing by all parties hereto.
11.6 WAIVER. No waiver of any breach of any one of the agreements,
terms, conditions, or covenants of this Agreement by the parties shall be
deemed to imply or constitute a waiver of any other agreement, term,
condition, or covenant of this Agreement. The failure of any party to insist
on strict performance of any agreement, term, condition, or covenant, herein
set forth, shall not constitute or be construed as a waiver of the rights of
either or the other thereafter to enforce any other default of such agreement,
term, condition, or covenant; neither shall such failure to insist upon strict
performance be deemed sufficient grounds to enable either party hereto to
forego or subvert or otherwise disregard any other agreement, term, condition,
or covenants of this Agreement.
11.7 GOVERNING LAW - CONSTRUCTION. This Agreement, and the rights and
obligations of the respective parties, shall be governed by and construed in
accordance with the laws of the State of Colorado, excluding conflict of law
provisions which would act to apply the laws of another state.
Notwithstanding the preceding sentence, it is acknowledged that each party
hereto is being represented by, or has waived the right to be represented by,
independent counsel. Accordingly, the parties expressly agree that no
provision of this Agreement shall be construed against any party on the ground
that the party or its counsel drafted the provision. Nor may any provision of
this Agreement be construed against any party on the grounds that party caused
the provision to be present.
11.8 LIMITATION OF ACTIONS. No action may be brought by any party to
this Agreement to enforce any covenant made by any party hereto or to seek
damages or equitable relief arising from any claimed breach or nonperformance
of a covenant, representation, warranty or other performance provided for
herein unless such action is commenced within five (5) years of the date of
Closing. The parties hereto agree to be bound by the aforesaid limitation of
actions notwithstanding the provisions of any applicable statutory limitation
of actions to the contrary.
11.9 NOTICES. Any notice, communication, offer, acceptance, request,
consent, reply, or advice (herein severally and collectively, for convenience,
called "Notice"), in this Agreement provided or permitted to be given, served,
made, or accepted by any party or person to any other party or parties, person
or persons, hereunder must be in writing, addressed to the party to be
notified at the address set forth below, or such other address as to which one
party notifies the other in writing pursuant to the terms of this Section, and
must be served by (1) telefax or other similar electronic method, or
(2) depositing the same in the United States mail, certified, return receipt
requested and postage paid to the party or parties, person or persons to be
notified or entitled to receive same, or (3) delivering the same in person to
such party.
Notice shall be deemed to have been given immediately when sent by
telefax or other electronic method and seventy-two hours after being deposited
in the United States mail, or when personally delivered in the manner
hereinabove described. Notice provided in any manner not specified above
shall be effective only if and when received by the party or parties, person
or persons to be, or provided to be notified.
All notices, requests, demands and other communications required or
permitted under this Agreement shall be addressed as set forth below:
If Buyer, to: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
American Educational Products, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With copy to: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If Shareholders, to: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇ ▇▇. ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Any party receiving a facsimile transmission shall be entitled to
rely upon a facsimile transmission to the same extent as if it were an
original. Any party may alter the address to which communications or copies
are to be sent by giving notice of such change of address in conformity with
the provisions of this Section for the giving of notice.
11.10 FAX/COUNTERPARTS. This Agreement may be executed by telex,
telecopy or other facsimile transmission, and such facsimile transmission
shall be valid and binding to the same extent as if it were an original.
Further, this Agreement may be signed in one or more counterparts, all of
which when taken together shall constitute the same documents. For all
evidentiary purposes, any one complete counter set of this Agreement shall be
considered an original.
11.11 CAPTIONS. The caption and heading of various sections and
paragraphs of this Agreement are for convenience only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
11.12 SEVERABILITY. Wherever there is any conflict between any
provision of this Agreement and any statute, law, regulation or judicial
precedent, the latter shall prevail, but in such event the provisions of this
Agreement thus affected shall be curtailed and limited only to the extent
necessary to bring it within the requirement of the law. In the event that
any part, section, paragraph or clause of this Agreement shall be held by a
court of proper jurisdiction to be invalid or unenforceable, the entire
Agreement shall not fail on account thereof, but the balance of the Agreement
shall continue in full force and effect unless such construction would clearly
be contrary to the intention of the parties or would result in unconscionable
injustice.
11.13 ARBITRATION. All disputes arising out of the interpretation of
this Agreement or any alleged breach of any terms hereof or of any agreement
provided for herein shall be submitted to and resolved by mandatory, binding
arbitration. Arbitration shall be commenced and maintained only in the State
of Colorado or the State of New York, at the election of the initiating party,
and all provisions of the Commercial Rules of Arbitration of the American
Arbitration Association pertaining to the rules of conduct, and scope of,
discovery, shall apply.
11.14 GOOD FAITH COOPERATION AND ADDITIONAL DOCUMENTS. The parties
shall use their best good faith efforts to fulfill all of the conditions set
forth in this Agreement over which it has control or influence. Each party
covenants and agrees to cooperate in good faith and to enter into and deliver
such other documents and papers as the other party reasonably shall require in
order to consummate the transactions contemplated hereby, provided in each
instance, any such document is in form and substance approved by the parties
and their respective legal counsel.
11.15 SPECIFIC PERFORMANCE. The obligations of the parties under
Section are unique. If either party should default in its obligations under
said section(s), the parties each acknowledge that it would be extremely
difficult and impracticable to measure the resulting damages; accordingly, the
non-defaulting party, in addition to any other available rights and remedies,
may ▇▇▇ in equity for injunction (mandatory or prohibitive) or specific
performance (all without the need to post a bond or undertaking of any
nature), and the parties each expressly waive the defense that a remedy at law
in damages is adequate.
11.16 ASSIGNMENT. No party may directly or indirectly assign or
delegate, by operation of law or otherwise, all or any portion of
its/their/his rights, obligations or liabilities under this Agreement without
the prior written consent of all parties other than the Shareholders, which
consent may be withheld in their respective sole and absolute discretion.
11.18 ENTIRE AGREEMENT - AMENDMENT. For purposes of this Section,
the term "Agreement" shall include this Agreement and the Exhibits and other
documents attached hereto or described in this Section 11 . This Agreement,
and other documents delivered pursuant to this Agreement, contain all of the
terms and conditions agreed upon by the parties relating to the subject matter
of this Agreement and supersede all prior and contemporaneous agreements,
letters of intent, representations, warranties, disclosures, negotiations,
correspondence, undertakings and communications of the parties, oral or
written, respecting that subject matter.
11.19 AUTHORITY TO SIGN. Each of the persons signing below on behalf
of any party hereby represents and warrants that s/he or it is signing with
full and complete authority to bind the party on whose behalf of whom s/he or
it is signing, to each and every term of this Agreement.
11.20 EXECUTION OF DOCUMENTS. The parties hereto agree to execute
and deliver any and all other documents necessary and convenient to effectuate
the Exchange herein provided for, and each party as an inducing condition,
represents that it has the authority to enter into this Agreement and to make
the foregoing commitments for itself.
11.21 TIME. Time is of the essence of this Agreement and each of its
provisions.
IN WITNESS WHEREOF, the parties have signed the Agreement the date and
year first above written.
AMERICAN EDUCATIONAL PRODUCTS, INC., a
Colorado corporation
ATTEST:
/s/ Secretary By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------ -------------------------------------
Secretary ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
▇▇▇▇▇▇▇ SCIENTIFIC, INC., a Colorado
corporation
ATTEST:
/s/ Secretary
------------------------------ By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Secretary -------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
LEISURE AND LEARNING, INC., a New York
corporation
ATTEST:
/s/ Secretary
------------------------------ By: /s/ President
Secretary -------------------------------------
President
NATIONAL TEACHING AIDS, INC., a New York
corporation
ATTEST:
/s/ Secretary
------------------------------ By: /s/ President
Secretary -------------------------------------
President
VISUAL SYSTEMS FOR LEARNING, INC., a New
York corporation
ATTEST:
/s/ Secretary By: /s/ President
------------------------------ -------------------------------------
Secretary President
SHAREHOLDERS:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------ -------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------ -------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------ -------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇