Exhibit B
GENEVE CORPORATION
Ninety-Six Xxxxxxxx Point Road Stamford, CT 06902
November 14, 1999
American Educational Products, Inc.
0000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xx 00000-0000
Attn: Xx. Xxxxxx X. Xxxxx, Chairman
Gentlemen:
This letter sets forth the intent of Geneve Corporation to
offer to purchase all of the assets and substantially all of the
liabilities of American Educational Products, Inc. and its
subsidiaries (collectively, "Seller"), subject to the following:
1. Geneve Corporation or one of its subsidiaries ("Buyer")
shall, on the closing date, acquire all of Seller's assets,
including, without limitation, the following: inventory,
equipment, sales orders and contracts, intangible assets
(including the names "Xxxxxxx Scientific," "National Teaching
Aids," "Xxxxx Resources", "Summit Learning", and "To Sew"),
records and documents (including mailing lists and catalogs) and
accounts receivable. Buyer shall assume all of Seller's
liabilities, except Buyer shall not assume any indebtedness of
Seller.
2. Based on the latest financial information available to
Buyer, Buyer shall pay, at closing, $17,000,000 cash; provided,
this amount may be adjusted based on Buyer's due diligence review
and Seller's audited financial statements. We assume that the
purchase price would be allocated to the Company's outstanding
indebtedness, common stock, warrants and stock options. The
closing shall take place as soon as practicable after
satisfaction of all of the conditions set forth in paragraph 4.
We are amenable, if beneficial to both parties, to restructuring
the transaction as a cash merger or similar stock transaction;
the purchase price would, of course, be adjusted accordingly.
3. For a period of five years from and after the closing date,
Seller shall not, directly or indirectly, engage in the United
States, Canada or Mexico in any business which is competitive
with Seller's business or own in excess of 5% of the equity of
any company which engages in a business substantially similar to
that of Seller, or solicit or do any business with any existing
customers of Seller. For a period of two years from and after the
closing date, Seller shall cause certain of its existing senior
management (as identified by Buyer) not to, directly or
indirectly, engage in the United States, Canada or Mexico in any
business which is competitive with Seller's business or own in
excess of 5% of the equity of any company which engages in a
business substantially similar to that of Seller, or solicit or
do any business with any existing customers of Seller.
4. The transaction referred to in this letter is subject to and
expressly conditioned upon: (1) satisfactory completion by Buyer
of its due diligence review of Seller's business, assets and
liabilities, (2) approval of the Board of Directors of Buyer, and
(3) execution and delivery of a definitive purchase agreement and
such other documentation as may be appropriate or desirable. In
addition to the terms and conditions set forth herein, the
definitive purchase agreement shall contain such other terms and
conditions as may be mutually agreed upon, and such
representations, warranties, covenants and indemnities of Buyer
and Seller as are customarily provided therein. This letter shall
expire if not executed by Seller on or before 12:00 noon (EST) on
November 24, 1999.
5. We understand that your board over the course of the past
several months has been engaged in a process of evaluation of the
assets of Seller, and is in a position to make an informed
judgment with respect to considering whether to negotiate with a
third party. Accordingly, in order to induce Buyer to undertake
the extensive due diligence and expense that will be required,
Buyer must insist that from the date of execution of this letter
by Seller until the closing date, Seller shall not, and shall not
authorize or permit any officer, director or employee of Seller,
or any attorney, accountant, investment banker or other
representative of Seller to, directly or indirectly, encourage,
solicit, initiate or entertain inquiries or proposals from, or
provide confidential information to, or participate in any
discussions or negotiations with, any person or entity (other
than Buyer and its affiliates and their respective directors,
officers, employees and representatives) concerning any proposed
(i) merger, consolidation, business combination or other similar
transaction with Seller, (ii) sale, transfer or other disposition
of all or a substantial portion of the assets of Seller or (iii)
transaction in which any person would acquire beneficial
ownership of, or the right to acquire beneficial ownership of,
any voting capital stock of Seller; provided, however, Seller
shall not be precluded (on and after 14 days from the date of
execution of this letter by Seller) from entertaining any such
inquiries or proposals or taking such other action if in the good
faith judgment of Seller's Board of Directors a proposal shall be
forthcoming which is superior to that of Buyer and if, based upon
the written opinion of counsel, the same shall be required under
applicable law in the exercise of its fiduciary duties. Seller
shall immediately upon receipt of any inquiry or proposal provide
Buyer with the identity of such inquirer and a copy of such
proposal. In the event that the transaction contemplated hereby
does not close because Seller's Board of Directors elects to
pursue an offer that it deems to be superior, Seller shall pay
Buyer a fee of $475,000. If the transaction does not close for
any reason other than the failure of Buyer to close after
satisfaction of all conditions precedent, Seller shall reimburse
Buyer for all of its expenses.
6. It is understood that either of the parties hereto may, at
any time prior to the execution of definitive agreements,
withdraw from the transactions contemplated herein without
obligation to the other, and that this letter is not a binding or
enforceable agreement of either party but is solely intended as a
good faith expression of their intentions; provided, however,
that the obligation of Seller set forth in Section 5 hereof shall
be binding and enforceable against Seller from the date of
execution of this letter by Seller until the closing date.
Other than as set forth in Section 5 hereof, Buyer and
Seller will each pay its respective costs and expenses incurred
in connection with the transactions contemplated herein.
IN WITNESS WHEREOF, this letter has been executed as of this
14th day of November, 1999.
GENEVE CORPORATION
By: /s/ Xxxxxx Xxxxxx
-----------------
AGREED TO AND ACKNOWLEDGED BY:
AMERICAN EDUCATIONAL PRODUCTS, INC.
By: _______________________________
Dated: ____________________________
