EXHIBIT 2.5
FIRST AMENDMENT
TO
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
THIS AMENDMENT, which is effective immediately upon execution by all
parties, is made as of the 28th day of April, 2000, by and between Futech
Interactive Products, Inc., an Arizona corporation ("Seller"), and Janex
International, Inc., a Delaware corporation ("Buyer").
R E C I T A L S:
A. The parties identified above entered into an Agreement for Purchase
and Sale of Assets, Dated February 25, 2000 (the "Sale Agreement"). Capitalized
terms used in this Amendment shall have the same meanings given those terms in
the Sale Agreement.
B. The parties desire to amend the Sale Agreement on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and conditions
contained herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
T E R M S:
1. Section 2.1.1 of the Sale Agreement is hereby deleted in its
entirety.
2. Section 2.1.2 of the Sale Agreement is hereby deleted in its
entirety and replaced with the following:
2.1.2 Sixteen Million (16,000,000) shares of Buyer's
common stock. Buyer will use its best efforts to register said
shares under the Securities Act within 150 days after the
Closing. If a Registration Statement is not effective within
150 days after the Closing, then for each 30 day period
thereafter during which the Registration Statement is not
effective, Buyer will issue Seller an additional 10,000 shares
of Buyer's common stock. Seller will not sell during any 3
month period more than the greater of: (i) 5% of Buyer's
outstanding common stock, and (ii) 200% of the average weekly
reported trading volume during the 4 weeks preceding the sale.
Notwithstanding the foregoing, if the publicly traded price of
Buyer's common tock is not at least $1.00 per share on the
date of the Closing, and said stock does not
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reach said price (adjusted as necessary to take into account
transactions such as stock splits) within twenty-four (24)
months thereafter, then Buyer shall issue additional shares
of Buyer's common stock to Seller, as soon as is practicable
after the date which is twenty-four (24) months after the
date of Closing, and the number of shares to be so issued
shall be calculated as follows: divide (x) the difference
between (i) $16,000,000.00 and (ii) the highest publicly
traded closing price of Buyer's common stock during the 24
month period from the Closing through the date which is 24
months thereafter, times the 16,000,000 shares of stock
issued pursuant to this Section (including the value of all
splits and other rights relating thereto), by (y) the
publicly traded closing price on the date which is 24 months
after the date of the Closing.
Notwithstanding the foregoing, Five Million (5,000,000) shares
of Buyer's stock to be issued to Seller as called for above
shall be held by Buyer and not issued to Seller until two (2)
years after the Closing. Buyer may deduct from the number of
shares to be issued one share for each $1.00 of liability
(including interest thereon) owing from Seller to Buyer at any
time prior to the expiration of said two (2) year period
(unless said debt is paid in some other manner), and said
liability shall be reduced and deemed paid at the rate of
$1.00 per share of stock so deducted from the number of shares
to be issued. The liabilities for which said deductions may be
made include any and all liabilities of any kind, including
but not limited to liabilities for indemnification as called
for in this Agreement.
Seller agrees, and will confirm said agreement by executing
one or more documents so confirming, in form and with content
acceptable to Buyer, that: (A) the stock to be issued under
this Agreement will be a restricted security, issued pursuant
to one or more exemptions to the registration requirements of
the Securities Act; (B) Buyer's obligation to issue the stock
is subject to Buyer determining to Buyers' satisfaction that
these transactions are in compliance with the Securities Act
and all other applicable federal and state laws; and (C)
Seller will execute such documents as are necessary and/or
appropriate to insure compliance with applicable federal and
state laws. Buyer obtaining documentation as to the foregoing
shall be a condition to the obligation of Buyer to close the
Transaction, or to issue the stock.
3. Section 2.2 of the Sale Agreement is hereby deleted in its entirety.
4. Section 3.1.1 of the Sale Agreement is hereby deleted in its
entirety and replaced with the following:
3.1.1 Seller's obligations under the contracts
identified on EXHIBIT 3.1.1-1 attached hereto (said
assumptions shall include only obligations arising after and
relating to the time period after the Closing).
EXHIBIT 3.1.1-2 is no longer part of the Sale Agreement. There are no
liabilities of Seller which Buyer is assuming other than as called for on
EXHIBIT 3.1.1-1 or in new Section 3.1.2 appearing below.
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5. A new Section 3.1.2 is hereby added to Section 3 of the Sale
Agreement, as follows:
3.1.2 Seller's obligations to U.S. Bank, not to exceed in the
aggregate however the sum of $10,000,000.00. As part of the
consideration for this transaction and for Buyer assuming the
U. S. Bank debt, the open account debt owing by Buyer to
Seller as of the Closing (in the approximate amount of
$1,645,000.00) will as of the Closing, without additional
documentation or consideration being required, be and be
deemed for all purposes to be fully paid and forever
discharged.
6. The following is hereby added at the end of Section 3.3 of the Sale
Agreement:
The parties understand and agree that Buyer has no obligation
to pay any debt of Seller, other than as expressly called for
in Sections 3.1.1 and 3.1.2 of this Agreement.
7. New Sections 5.12 and 5.13 are hereby added to Section 5 of the Sale
Agreement, as follows:
5.12 Approval of the Transaction by all of Buyer's creditors; and
5.13 Approval by the shareholders of Buyer of an amendment to
Buyer's governing documents authorizing an increase in the
authorized number of shares of stock of Buyer to 125,000,000.
8. The date in Section 6 of the Sale Agreement is hereby changed
to August 30, 2000.
9. Except as expressly called for in this Amendment, the Sale Agreement
continues unmodified and in full force and effect.
10. This Amendment may be executed by the parties in one or more
counterparts, and any number of counterparts signed in the aggregate by the
parties shall constitute a single instrument. The parties authorize and agree to
accept facsimile signatures in counterparts to this Amendment, and that said
facsimile signatures shall for all purposes be binding upon the parties as if
the same were originals.
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DATED the date first hereinabove written.
SELLER: Futech Interactive Products, Inc., an Arizona corporation
By /S/ VINCENT W. GOETT
--------------------------------
Vincent W. Goett, President
BUYER: Janex International, Inc., a Delaware corporation
By /S/ VINCENT W. GOETT
--------------------------------
Vincent W. Goett, President
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AGREEMENT
FOR
PURCHASE AND SALE
OF
ASSETS
THIS AGREEMENT is made as of the 25th day of February, 2000, by and
between Futech Interactive Products, Inc., an Arizona corporation ("SELLER"),
and Janex International, Inc., a Colorado corporation ("BUYER").
R E C I T A L S:
A. Seller owns and operates a business (the "BUSINESS") which, among
other things, owns and licenses to third parties certain intellectual property
rights and manufactures, markets, distributes and sells toys, games, books,
stationery and other products under the tradename "Futech Interactive Products."
B. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, the Business and the assets of the Business, all in accordance with the
terms and conditions set forth below (the "TRANSACTION").
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
T E R M S:
1. PURCHASE AND SALE. Seller hereby agrees to sell to Buyer, and Buyer agrees to
purchase from Seller, the following (collectively the "ASSETS") (the assets
identified on EXHIBIT 1 attached hereto (the "EXCLUDED ASSETS") are not included
in the assets sold pursuant to this Agreement).
1.1 All furniture, fixtures, vehicles, machinery and equipment
used in connection with the operation of the Business (other than that
leased under the Equipment Leases (defined below)), including but not
limited to the assets identified on EXHIBIT 1.1 attached hereto (all of
the foregoing are collectively referred to below as the "FIXED
ASSETS").
1.2 All notes receivable, accounts receivable, prepaid items,
supplies and all other property currently used by Seller in connection
with the operation of the Business.
1.3 All finished and unfinished goods, work-in-process,
inventories, and materials of Seller.
1.4 All of Seller's interest in the leases identified on
EXHIBIT 1.4 attached hereto (the "EQUIPMENT LEASES.")
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1.5 All rights to the trade names "Futech Interactive
Products" and any and all other trade names used by Seller in
connection with the Business, along with any and all trademarks,
service marks, logos and designs relating hereto, including all
internet domain names used in the Business. As soon as practicable
after the Closing, Seller will change its corporate name to eliminate
the use of any of the names transferred to Buyer.
1.6 Any and all deposits associated with the operation of the
Business, including but not limited to all deposits on leases,
insurance contracts transferred to Buyer, utility deposits and license
deposits.
1.7 All of Seller's books and records (or copies thereof),
computer programs, software, drawings, financial and tax information
(or copies thereof), and all customer and vendor files.
1.8 All contracts and other accounts which remain unperformed
as of the Closing.
1.9 All other contracts, licenses, accounts and other general
intangibles currently held by Seller.
1.10 All patents, copyrights, trade secrets, customer and
supplier lists, promotional materials, and other intangible rights
used in connection with the operation of the Business, including but
not limited to those described on EXHIBIT 1.10 attached hereto.
1.11 The phone numbers and all phone and other advertising
associated with the Business.
1.12 All warranties and all warranty claims of Seller.
1.13 All assets of the Business, including but not limited to
those identified on EXHIBIT 1.13 attached hereto.
2. PURCHASE PRICE AND MANNER OF PAYMENT.
2.1 The purchase price for the Assets shall, subject to
adjustments as described below, be and be payable as follows:
2.1.1 Thirteen Million Four Hundred Thousand Six
Hundred Dollars ($13,400,600.00), payable with interest on the
outstanding balance calculated at the rate of six percent (6%)
per annum, from the Closing until paid in full, with principal
and interest being payable in full on the date which is
eighteen (18) months after the Closing. This Agreement shall
at the Closing and without further act being required, act as
a security agreement wherein Buyer grants Seller a security
interest in the Assets as collateral for payment of said
amount. Buyer will provide Seller at the Closing with an
executed UCC-1 Financing Statement evidencing said lien.
Seller will subordinate the debt described in this Section
2.1.1 to one or more liens securing new or replacement asset
financing of Buyer, created
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after the Closing. If Buyer consummates a public offering or
a private offering before the debt described in this Section
2.1.1 is paid in full, then Seller may at its election
participate in the offering by converting its debt then owed
under this Section 2.1.1 into equity, at a conversion rate
based on 100% of the value of the stock acquired in the
conversion.
2.1.2 Seven Million Six Hundred Twenty-Four Thousand
(7,624,000) shares of Janex Stock (defined below), which will
be stock newly issued at the Closing (additional to shares
currently issued), and will be issued at the Closing to
Seller.
The term "JANEX STOCK" as used herein means the publicly
traded common stock of Buyer, subject to all terms and restrictions
relating thereto.
2.2 The amount described in Section 2.1.1 above shall be paid
as follows:
(a) At the Closing, Seller will provide Buyer with a
certified affidavit listing all of Seller's creditors and the
balances owing to the creditors (all creditors shall be
listed, including any with disputed claims). To the extent of
the cash payable under Section 2.1.1, at the Closing Buyer
shall pay the creditors on said list the amounts owing as
shown on said list, except for the following: (i) debts
assumed by Buyer under Section 3 below need not be paid at the
Closing; (ii) amounts owing on disputed claims will be paid by
Buyer to Thomas R. Lofy ("HOLDER") to be held by Holder in
escrow in Holder's Bar Trust Account for the benefit of Buyer
and Seller until Buyer and Seller agree as to the amounts to
be paid to the creditors or until a Court orders distribution
of the amounts so held.
Holder shall deposit the amount received under this
Section into an interest bearing account. Interest earned in
the account will be applied in the same manner as principal is
applied as called for in this Section.
Holder shall be relived of all responsibility for
funds held upon surrendering them or tendering surrender of
them pursuant to this Agreement. The parties hereby authorize
Holder, in the event any demand is made upon Holder concerning
this Agreement, at Holder's election, to hold the money and
any documents deposited with Holder until an action shall be
brought in a Court of competent jurisdiction to determine the
rights of the parties, or to interplead the parties by an
action brought in any Court. Deposit by Holder of all of said
funds and documents, after deducting therefrom Holder's
charges and expenses and attorneys' fees incurred in
connection with any such Court action or incurred in
connection with Holder's duties hereunder, shall relieve
Holder from all further liability and responsibility in
connection therewith.
Seller and Buyer agree to indemnify and defend and
hold Holder harmless against all claims, demands or damages,
including attorneys' fees, expenses, and liabilities that
Holder may incur or sustain in connection with this Agreement
or
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any court action arising therefrom, and will pay the same
upon demand. If not paid upon demand, such amounts shall
accrue interest at the rate of 12% per annum until paid in
full.
Solely at Holder's election, Holder may resign as
Holder by sending written notice thereof to the parties to
this Agreement. The resignation shall be effective ten (10)
days after the notice is deposited into the United States
mail, or such other date as selected by Holder. All documents
and monies held by Holder after such resignation shall be
returned to the proper parties or held by Holder at Holder's
discretion until the parties shall have named a successor
Holder.
(b) The remainder shall be paid in full in cash
equivalent at the Closing, in accordance with the Schedule of
Sources and Uses of Funds attached hereto as EXHIBIT 2.2.
2.3 The purchase price shall be allocated in accordance with
EXHIBIT 2.3 attached hereto.
2.4 The purchase price includes assumption of liabilities as
set out in Section 3 below.
3. LIABILITIES.
3.1 Buyer at the Closing will assume only the following of
Seller's obligations (the assumed obligations being referred to in this
Agreement as the "ASSUMED LIABILITIES"):
3.1.1 Seller's obligations under the contracts
identified on EXHIBIT 3.1.1-1 attached hereto and Seller's
obligations under the other liabilities which are identified
on EXHIBIT 3.1.1-2 attached hereto (unless otherwise
designated on EXHIBIT 3.1.1-1 or EXHIBIT 3.1.1-2, said
assumptions shall include only obligations arising after and
relating to the time period after the Closing).
3.2 All liabilities of Seller other than those identified in
Section 3.1 above shall be and remain the obligations of Seller, and
Seller shall indemnify, defend and hold Buyer harmless from and against
any and all such liabilities. Without limiting the generality of the
foregoing, it is expressly understood and agreed that Buyer is not
assuming any tort liability, any environmental liability, any
contractual liability for contracts not disclosed to and agreed upon by
Buyer, or any liability to or for employees or employee benefits. The
indemnities set forth in this Section shall survive the Closing.
3.3 Buyer may offset against the purchase price any and all
liabilities associated with the Business which are not expressly
assumed by Buyer but which Buyer pays.
3.4 The following expenses of the Business will be prorated to
the close of escrow: utilities and phone expenses, advertising expense,
insurance premiums on any
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insurance transferred to Buyer, personal property taxes, and other
normal operating expenses of the Business. If any of said expense
allocations or credits cannot be determined by the parties at the
Closing, then the parties will calculate the prorations and credits as
soon as practicable thereafter and pay each other any amounts owing as
a result thereafter within five (5) days after the determination is
made.
3.5 Seller will, to the extent requested by Buyer, deliver to
Buyer prior to the Closing, estoppel letters or certificates, in form
acceptable to Buyer, from the lessors under the Equipment Leases.
3.6 Seller hereby agrees to indemnify, defend and hold Buyer
harmless from and against any and all liabilities, claims, expenses and
other costs arising from Seller's operations of the Business prior to
the Closing, except as expressly assumed by Buyer pursuant to this
Section 3. Buyer hereby agrees to indemnify, defend and hold harmless
Seller from and against any and all liabilities, claims, expenses or
other costs arising from Buyer's operations of the Business from and
after the Closing. The indemnities set forth in this Section shall
survive the Closing.
4. INTERIM EVENTS. Seller agrees that Seller will take no action prior
to the Closing, other than in the ordinary course of Business, which would or
might have a material adverse effect upon the financial condition of Seller, and
no benefits will be paid or incurred to shareholders, officers, or directors of
Seller between the date hereof and the Closing, other than as is consistent with
past activities and practices. Seller will use Seller's best efforts to preserve
for Buyer the present relationships of Seller with Seller's employees, customers
and others having business relations with Seller.
5. CONDITIONS TO CLOSING. Buyer's obligation to close the Transaction
shall be conditioned upon (each of the conditions may be waived by Buyer in
writing only):
5.1 Buyer obtaining from the lessors of the Equipment Leases
their consents to the transfer of those leases to Buyer on terms
acceptable to Buyer;
5.2 Buyer having obtained, or having obtained the appropriate
consents or approvals to the assignment of, all permits, licenses and
contracts necessary to continue the operations of the Business;
5.3 Seller having maintained the Assets in the same condition
as of the date of this Agreement (subject to ordinary wear and tear
only);
5.4 Seller having conducted the Business diligently and
substantially in the same manner as prior to the execution of this
Agreement and not having entered into any contract, commitment or
transaction not in the usual and ordinary course of business;
5.5 The operations of the Business not having changed in a
material and adverse manner between the date of this Agreement and the
date of Closing;
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5.6 There being no governmental investigations or suits
pending or threatened with respect to the operations of the Business,
except as may otherwise be agreed to in writing by Buyer;
5.7 Approval for the Transaction by the Board of Directors and
the shareholders of Buyer;
5.8 Buyer's approval of an appraisal of Seller's intellectual
property rights, with Seller to obtain and pay the costs of that
appraisal;
5.9 Buyer's approval of Seller's most recent Financial
Statements prior to the Closing;
5.10 Buyer obtaining for use by Buyer, based solely upon the
strength of the assets of the Business, revolving credit lines and
other debt instruments satisfactory to Buyer; and
5.11 Buyer obtaining from the lenders under the debts to be
assumed by Buyer under this Agreement their consents to the transfer of
those debts to Buyer on terms acceptable to Buyer.
Seller's obligation to close the Transaction shall be conditioned upon
Seller obtaining, by _____________, 2000, approval of the Transaction from
Seller's shareholders and Seller's lenders.
6. CLOSING. The closing of the Transaction (the "Closing") shall occur on April
1, 2000 at 10:00 a.m. M.S.T. at the Business. The Transaction shall be
consummated without the use of an independent escrow company.
7. RESTRICTIVE COVENANTS.
(a) Seller agree not to, without the prior written consent of
Buyer, which consent may be withheld for any or no reason, for a period
of 3 years following the Closing, directly or indirectly, own, manage,
operate, control, be employed by, participate in, render services to,
make loans to, or be connected in any manner with the ownership,
management, operation, or control of any business located within the
United States of America, in any business competitive with the Business
(which shall be deemed to include all business operations, publishing,
manufacturing, and/or distributing books, toys or games, or electronic
or other parts or components thereof).
In the event of any actual or threatened breach of
the provisions of this Section, Buyer shall be entitled to an
injunction restraining the actual or threatened breach. The parties
further agree that should there be a violation of the provisions of
this Section, the violating party shall be liable to Buyer for, in
addition to amounts pursuant to other remedies available against that
party, two (2) times the greater of the amount of profit earned by the
violating party as a result of the violation and the amount of profit
which
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would have been earned by Buyer from the activities causing the
violation had Buyer conducted said activities, plus interest on said
greater amount calculated at eighteen percent (18%) per annum from the
date of the violating activities until paid, as liquidated damages for
only Buyer's loss of potential profits. Nothing in this paragraph
shall be construed as prohibiting Buyer from pursuing any other
available remedies for such breach or threatened breach, including
pursuing a recovery for damages.
(b) Seller shall not at any time, without the prior written
consent of Buyer, which consent may be withheld for any or no reason,
disclose, in any fashion other than as required in the day to day
affairs of Buyer, to any person or entity: (i) the names of customers
of Buyer or the Business, or the names of other persons or entities
having business dealings with Buyer or the Business, or (ii) any of the
business methods or confidential information of Buyer or the Business,
including but not limited to its customer lists, prospective customers,
customers purchasing habits, customer contact personnel, marketing and
servicing techniques, financial matters, sales and marketing systems
and methods, marketing development and business expansion plans and
projections, personnel training and development programs, customer and
supplier relationships, and trade secrets.
(c) Seller shall not, at any time within two (2) years after
the Closing, without the prior written consent of Buyer, which consent
may be withheld for any reason or no reason, directly or indirectly
induce, encourage or solicit or assist any person who was or is
employed (whether as an employee or as an independent contractor) by
the Business during the two years preceding the Closing, to leave the
employ of the Business.
(d) The parties acknowledge and agree that the restrictions
contained herein, including but not limited to the time period and
geographical area restrictions, are fair and reasonable and necessary
for the successful operation of the Business, that violation of any of
them would cause irreparable injury, and that the restrictions
contained herein are not unreasonably restrictive of any party's
ability to earn a living. If the scope of any restriction in this
Section is too broad to permit enforcement of such restriction to its
fullest extent, then such restriction shall be enforced to the maximum
extent permitted by law, and all parties hereto consent and agree that
such scope shall be modified judicially or by arbitration in any
proceeding brought to enforce such restriction. The parties hereto
acknowledge and agree that remedies at law for any breach or violation
of the provisions of this Section would alone be inadequate, and agree
and consent that temporary and permanent injunctive relief may be
granted in connection with such violations, without the necessity of
proof of actual damage, and such remedies shall be in addition to other
remedies and rights the parties may have at law or in equity. The
parties agree that no party shall be required to give notice or post
any bond in connection with applying for or obtaining any such
injunctive relief.
(e) The parties acknowledge and agree that the covenants in
this Section shall be construed as an agreement independent of any
other provision of this Agreement, so that the existence of any claim
or cause of action by Seller against Buyer, whether predicated on this
Section or otherwise, shall not constitute a defense to the enforcement
of this Section.
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8. DUE DILIGENCE INVESTIGATION. Buyer shall have until the Closing (the
"Due Diligence Period") in which to conduct any due diligence investigations,
including UCC-1 searches, which Buyer may deem necessary or appropriate to
ascertain the financial viability and value of the Business. Throughout the Due
Diligence Period, Buyer (and its agents) shall have the right to inspect: (i)
all books, records and computer systems maintained by Seller, in order to
authenticate and audit all financial information provided to Buyer, (ii) all
equipment and machinery used in the Business to verify that it is in an
acceptable state of repair, (iii) all agreements to which Seller is a party, and
(iv) all facilities and physical operations of Seller, including facilities
warehousing inventory. Seller shall provide access to Seller's federal and state
income tax returns, sales tax returns, financial statements (internal and those
issued to third parties), personal property tax returns, and all other
governmental filings, for the three previous years, for the purpose of
conducting due diligence investigations. Buyer may, in Buyer's sole discretion,
terminate this Agreement at any time prior to the Closing for any reason deemed
appropriate by Buyer.
Buyer and its representatives will further have the authority to
communicate with Seller's creditors, debtors, suppliers, agents and employees.
Seller agrees to aid Buyer and its representatives in Buyer's investigations and
evaluations of the Business and the Assets, and to provide whatever information
and documents Buyer reasonably deems necessary or appropriate to the making of
an informed decision regarding the Transaction.
9. ACCESS TO CUSTOMER FILES AND OTHER RECORDS. For a period of three (3) years
following the Closing, where there is a legitimate purpose not injurious to
Buyer, or if there is an audit by any taxing authority, other governmental
inquiry, or litigation or prospective litigation, to which Seller is or may
become a party, then Seller shall be granted access, at reasonable times and
after reasonable notice, to all customer files and other records transferred to
Buyer pursuant to this Agreement.
10. REPRESENTATIONS AND WARRANTIES. Seller hereby represents and warrants as
follows, as of the date hereof and as of the date of the Closing:
10.1 AUTHORITY. As of the date of execution of this Agreement,
Seller has the power and authority to enter into and perform its
obligations under this Agreement, the Board of Directors of Seller has
recommended and resolved that the Transaction is to move forward
subject to shareholder approval, and the Board of Directors of Seller
have authorized and ratified the execution and delivery of this
Agreement. As of the Closing, all of the foregoing are true, and the
shareholders of Seller have approved the Transaction, and the Board of
Directors of Seller has approved of the documents herein required to
consummate the Transaction.
10.2 FINANCIAL INFORMATION. Seller has furnished Buyer with
true, correct and complete copies of Seller's financial statements and
other books and records relating to the operation of the Business,
which statements fairly present the financial condition of the Business
as of their respective dates.
10.3 TAXES. All federal and state income, excise, franchise,
payroll, property, sales, and other tax returns required to be filed by
or with respect to the Business (except
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returns not yet due) have been filed, are complete and accurately
reflect in all material respects all matters therein required to be
reflected, and all taxes shown on such returns to be due, and any
assessments received by Seller with respect thereto, have been paid in
full. Seller shall pay all such future taxes relating to periods prior
to the Closing, when and as the same shall become due and payable.
Seller shall provide Buyer with such certificates and other evidence
of payment of all taxes due in connection with the Assets and the
Business as Buyer shall request.
10.4 MATERIAL CHANGES. From the date of the most recent
financial statements provided by Seller to Buyer, and through the day
hereof, and through the date of Closing, the Business has been
conducted only in the ordinary course, there have been no material
adverse changes in the financial condition or operations of the
Business, and there has been no damage, destruction or other occurrence
(whether or not insured against) which materially adversely affects the
financial condition or operations of the Business.
10.5 LIENS. All property to be transferred by Seller to Buyer
pursuant to this Agreement is, at the time of this Agreement, or will
be at the Closing, free and clear of any and all liens and
encumbrances.
10.6 LITIGATION. To the knowledge of Seller or Shareholder,
there is no litigation, proceeding, or investigation pending against
Seller or the Business, and Seller has no reasonable grounds to know
any basis for such litigation, proceeding or investigation.
10.7 LICENSES. Seller has any and all licenses, permits, and
contracts necessary and/or appropriate to operate the Business in the
manner in which the Business is currently operated.
10.8 HAZARDOUS MATERIALS. The Business has not dealt in any
manner with any hazardous or toxic materials or waste.
10.9 COMPLETE DISCLOSURE. Seller has disclosed to Buyer all
facts and papers which would or might be important to Buyer in making
the decision to purchase the Business as called for in this Agreement.
10.10 JUDGMENTS AGAINST SELLER AND/OR BUSINESS. Neither Seller
nor the Business is under any governmental investigation, no such
investigation has been threatened, and there are no judgments against
Seller, the Business or the Assets.
10.11 COMPLETE SALE. The assets to be transferred under this
Agreement are all of the assets used by Seller in the operation of the
Business, other than the Excluded Assets.
10.12 ASSETS IN GOOD CONDITION. Each of the Assets which is a
tangible asset is and will be at the Closing in good working order and
condition.
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10.13 DISCLOSURE MATERIALS. The financial condition of the
Business is at least as favorable as presented in the financial
information, including tax returns and financial statements, and books
and records provided by Seller to Buyer. Those materials and the other
materials disclosed to Buyer are true, complete and accurate in all
respects, and fairly represent the information they purport to provide.
All the information disclosed, as a whole, does not contain any
statement that, as of the date hereof, or as of the Closing, is false
or misleading, and does not omit to state any material fact (i)
necessary to make the statements made, in light of the circumstances
under which they were made, not false or misleading, or (ii) necessary
to provide Buyer with complete and accurate information as to the
assets and financial standing of the Business.
10.14 DEFAULTS. There are no defaults or events with which the
giving of notice or the passage of time would constitute defaults under
any document under which Seller is obligated, including but not limited
to the Equipment Leases.
10.15 BULK SALES PROVISIONS. Seller shall indemnify and hold
Buyer harmless from any liability resulting from any failure to comply
with any applicable Bulk Sales provisions with respect to any and all
liabilities of Seller.
10.16 VENDOR ACCOUNTS. Seller will use Seller's best efforts
to cause a transfer to Buyer of all of Seller's supplier and other
vendor accounts without adverse changes in the account terms.
10.17 OUTSTANDING LIABILITIES. There are no liabilities of
Seller other than as are shown on the most recent financial statement,
other than liabilities arising in the normal course of business out of
purchases and sales of goods. There are no liabilities relating to the
Business which are more than _______ (__) days past due.
10.18 INVENTORY. Seller's inventory is useable and in good
condition, with not more than 1% thereof being obsolete, and all of the
inventory is owned by Seller, none of it being held by Seller on
consignment.
10.19 LOSSES. There are no unrealized or anticipated losses on
any commitment or contract of Seller.
10.20 PATENTS. There is no litigation pending or threatened
with respect to the patents of Seller, there is no outstanding order,
judgment, decree or stipulation affecting the validity or
enforceability of said patents, there exits no outstanding notices of
infringement given by Seller regarding the patents, there are no
pending interferences or other contested proceedings pending, or that
are in the process of being instituted, in the United States Patent
Office or in the courts, relating to said patents, and, to the best
knowledge of Seller, none of Seller's patents are being presently
infringed.
10.21 RECEIVABLES. All accounts receivable arose in the
regular course of business, and, to the best knowledge to Seller, are
collectable and subject to no defenses or counterclaims.
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The representations and warranties in this Section shall survive the Closing of
the Transaction.
11. SELLER'S CORPORATE NAME. At the Closing, Seller will deliver to Buyer
appropriate executed originals of an Amendment to Seller's Articles of
Incorporation changing Seller's corporate name to a name which does not contain
the words "Futech Interactive Products" and is not a deceptively similar name.
Such executed documents shall be in the number and in such form as are
acceptable for filing with the Arizona Corporation Commission, and shall be
accompanied by Seller's check in the appropriate amount necessary for filing and
publishing said documents.
12. BULK SALE PROVISIONS. At Buyer's option, the parties will comply with any
and all bulk sale laws applicable to the Transaction. Seller warrants and
covenants to pay and discharge when due all claims of creditors which could be
asserted against Buyer by reason of any non-compliance with applicable bulk
sales laws to the extent that such liabilities are not specifically assumed by
Buyer under this Agreement.
13. EXPENSES. Each party shall bear its own expenses in completing the
Transaction. "Expenses" shall mean any expense of any nature incurred in
connection with the Transaction, including without limitation attorneys' fees,
accounting fees, filing fees and other costs.
14. BROKERAGE COMMISSIONS. Seller shall be solely responsible for the
payment of any and all brokerage fees or commissions in connection with the
Transaction and shall indemnify and hold harmless Buyer from and against any
liabilities or claims incurred in connection with such fees or commissions.
15. GOVERNING LAW; JURISDICTION. The courts of the State of Arizona shall have
the sole and exclusive jurisdiction and venue in any case or controversy arising
under this Agreement or by reason of this Agreement. The parties agree that any
litigation or arbitration arising from the interpretation or enforcement of this
Agreement shall be only in either Maricopa County Superior Court or in the
United States Federal District Court for the District of Arizona, and for this
purpose each party to this Agreement (and each person who shall become a party)
hereby expressly and irrevocably consents to the jurisdiction and venue of such
courts.
16. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon andinure to the
benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns, but may not be assigned by Seller.
17. ENTIRE AGREEMENT. Except as otherwise set forth herein, this Agreement
constitutes the entire agreement between the parties which respect to the
subject matter hereof, and supersedes all prior understandings, if any, with
respect thereto.
18. FURTHER ASSURANCES. The parties agree to do such further acts and things and
to execute and deliver such additional agreements and instruments as any party
may reasonably require to consummate, evidence, or confirm any agreement
contained herein in the manner contemplated hereby.
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19. MODIFICATION. Any modification or waiver of any term of this Agreement,
including a modification or waiver of this term, must be in writing and signed
by the parties to be bound by the modification or waiver.
20. SEVERABILITY. In the event any portion of this Agreement shall be declared
by any court of competent jurisdiction to be invalid, illegal, or unenforceable,
such portion shall be deemed severed from this Agreement, and the remaining
parts hereof shall remain in full force and effect as fully as though such
invalid, illegal or unenforceable portion had never been a part of this
Agreement.
21. COUNTERPARTS, FACSIMILE SIGNATURES. This Agreement may be executed by the
parties in one or more counterparts, and any number of counterparts signed in
the aggregate by the parties shall constitute a single instrument. The parties
authorize and agree to accept facsimile signatures in counterparts to this
Agreement, and that said facsimile signatures shall for all purposes be binding
upon the parties as if the same were original signatures.
22. ATTORNEY'S FEES. Should any party institute any action or proceeding to
enforce this Agreement or any provision hereof, or for damages by reason of any
alleged breach of this Agreement, or of any provision hereof, or for a
declaration of rights hereunder, the prevailing party(s) of such action or
proceeding shall be entitled to receive from the other involved party or parties
all costs and expenses, including reasonable attorneys' fees and expert witness
fees incurred by the prevailing party(s) in connection with such action or
proceeding.
23. NOTICES. Any notice or communication given under the terms of this
Agreement ("Notice") shall be in writing and shall be delivered in person or
mailed by certified mail, return receipt requested, in the United States Mail,
postage pre-paid, addressed as follows:
If to Seller: Futech Interactive Products, Inc.
2999 North 44th Street, Suite 225
Phoenix, Arizona 85018
If to Buyer: Janex International, Inc.
2999 North 44th Street, Suite 225
Phoenix, Arizona 85018
or at such other address as a person may from time to time designate by Notice
hereunder. Notice shall be effective upon delivery in person, or if mailed, at
midnight on the third business day after the date of mailing.
24. PARAGRAPH TITLES AND HEADINGS. The titles and headings of sections of this
Agreement are for the convenience of reference only, and are not intended to
define, limit, or describe the scope or intent of any provision of this
Agreement, and shall not affect the construction of any provision of this
Agreement.
25. PUBLICITY. Seller and Buyer agree that no public release or announcement
concerning the Transaction shall be issued by any party prior to the Closing
without the prior
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consent (which consent shall not be unreasonably held) of the other party,
except: (i) any document utilized in connection with Buyer's financing for the
Transaction; and (ii) as such release or announcement may be required by law, in
which case the party required to make the release or announcement shall allow
the other party reasonable time to comment on such release or announcement in
advance of such issuance. Buyer shall have the sole right to determine what, if
any, public announcement shall be made after the Closing; provided, however,
that Buyer will prior to the release of its initial public announcement, deliver
a copy thereof to Seller for Seller's review and comment.
26. MISCELLANEOUS. The parties agree that each party and its counsel have
reviewed and revised this Agreement, or had an opportunity to review and revise
this Agreement, and that any rule of construction to the effect that ambiguities
are to be resolved against the drafting party shall not apply to the
interpretation of this Agreement or any amendments or exhibits hereto. In the
event of default by Seller hereunder, Buyer shall, in addition to its other
remedies under this Agreement and in law or equity, be entitled to specific
performance of Seller's obligations under this Agreement. The parties do not
intend to confer any benefit upon any person, firm, or corporation other than
the parties hereto. No representation or warranty herein may be relied upon by
any person not a party to this Agreement. The Exhibits attached hereto are
incorporated into and are part of this Agreement. The parties agree that the
Assets and the Business as a going concern constitute unique property, that
there is no adequate remedy at law for the damage which might be sustained for
the failure of a party to this Agreement to consummate the Transaction, and,
accordingly, that each party hereto shall be entitled to the remedy of specific
performance to enforce such consummation. The parties agree that time is of the
essence of each and every provision of this Agreement.
DATED the date first hereinabove written.
SELLER: Futech Interactive Products, Inc., an Arizona corporation
By /S/ VINCENT W. GOETT
------------------------------------
Vincent W. Goett, President
BUYER: Janex International, Inc., a Colorado corporation
By /S/ VINCENT W. GOETT
------------------------------------
Vincent W. Goett, President
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LIST OF EXHIBITS:
Excluded Assets 1
List of Specific Furniture, Fixtures and Equipment 1.1
Assumed Leases 1.4
List of Specifically Included Intellectual Property Rights 1.10
List of Specifically Listed Other Assets 1.13
Schedule of Sources and Uses of Funds 2.2
Purchase Price Allocation 2.3
Assumed Contracts 3.1.1-1
Other Assumed Liabilities 3.1.1-2
18
EXHIBIT 1
(EXCLUDED ASSETS)
N/A
19 Exhibit 1, Page 1 of 1
EXHIBIT 1.1
(LIST OF SPECIFIC FURNITURE, FIXTURES AND EQUIPMENT)
20 Exhibit 1.1, Page 1 of 1
EXHIBIT 1.4
(ASSUMED LEASES)
STONERIDGE OF PEWAUKEE, L.L.C. AND FUTECH INTERACTIVE PRODUCTS, INC.
N16 W23390 STONERIDGE DRIVE
WAUKESHA WI 53188
(SEE ATTACHED)
21 Exhibit 1.4, Page 1 of 1
EXHIBIT 1.10
(LIST OF SPECIFICALLY INCLUDED INTELLECTUAL PROPERTY RIGHTS)
(SEE ATTACHED)
22 Exhibit 1.10, Page 1 of 1
EXHIBIT 1.13
(LIST OF SPECIFICALLY LISTED OTHER ASSETS)
1. Any real estate leases to which Seller is a party, and any leasehold
improvements affixed to the real estate and not subject to removal by
Seller.
2. Any contracts with third parties to which Seller is a party, other than
those identified on EXHIBIT "3.1.1-1" attached hereto.
3. Seller's cash.
23 Exhibit 1.13, Page 1 of 1
EXHIBIT 2.2
(SCHEDULE OF SOURCES OF USES OF FUNDS)
(SEE ATTACHED)
24 Exhibit 2.2, Page 1 of 1
EXHIBIT 2.3
(PURCHASE PRICE ALLOCATION)
Furniture, fixtures and equipment Note #1
Inventory $_________
Accounts Receivable Note #2
Goodwill The Balance
Note 1: ____________________.
Note 2: The net face amount of the accounts receivable acquired, as of the
Closing.
25 Exhibit 2.3, Page 1 of 1
EXHIBIT 3.1.1-1
(ASSUMED CONTRACTS)
(SEE ATTACHED)
26 Exhibit 3.1.1-1, Page 1 of 1
EXHIBIT 3.1.1-2
(OTHER ASSUMED LIABILITIES)
N/A
27