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EXHIBIT 10.1
CONTRIBUTION AGREEMENT
The undersigned Xxxxxx X. Xxxxxxxxx, Xxxxxx Xxxxxxx, Xxxx Xxxxxx and
Xxxxx Xxxxxxx (hereinafter jointly and severally referred to as "Members")
hereby tender a total of one hundred percent (100%) of the membership interests
of Dental/Medical Diagnostic Systems LLC, a California limited liability
company ("DMD") to Edudata Corporation, a Delaware corporation ("Edudata")
under the following terms and conditions:
1. Edudata shall deliver forthwith to the Members, in exchange
for their one hundred percent (100%) of the membership interests of DMD, a
total of four million (4,000,000) shares of common stock of Edudata. Said
shares of Edudata shall be allocated among the Members in proportion to their
membership interests in DMD.
2. This transaction is expressly conditioned upon the concurrent
issuance by Edudata of a total of one million (1,000,000) shares of common
stock of Edudata to the shareholders of Bavarian Dental Instruments, Inc., a
California close corporation ("Bavarian").
3. The Members represent and warrant as follows:
a. The Members are the sole members of DMD. Xxxxxx
Xxxxxxxxx owns 50%, Xxxxxx Xxxxxxx owns 40%, Xxxx Xxxxxx owns 5% and Xxxxx
Xxxxxxx owns 5%. The Members contributed approximately Five Hundred Forty
Three Thousand Dollars ($543,000) to DMD for their membership interests or as
paid-in-capital.
b. DMD is a limited liability company duly organized,
validly existing, and in good standing under the laws of the State of
California, has all requisite power and authority to own, lease, and operate
its properties and to carry on its business as it is now conducted, and has
authority to enter into this agreement.
c. All issued and outstanding membership interests of
DMD have been duly authorized and validly issued and are fully paid and
nonassessable. There are no outstanding rights, options, warrants,
subscriptions, calls, convertible securities, or agreements of any character or
nature under which DMD is or may become obligated to issue or to transfer any
membership interests or other securities of any kind.
d. Each Member is acquiring his shares of common stock
of Edudata solely for his own account for investment and does not intend to
divide his shares with others or to resell or otherwise dispose of all or any
part of said shares.
e. Each Members acknowledges that, unless the acquired
shares are registered or the transaction is qualified
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under the appropriate state and federal securities laws, he may not resell,
hypothecate, transfer or assign, or make other disposition of the Edudata
shares, except in transaction excepted or exempted from the registration or
qualification requirements of such laws.
f. Each Member acknowledges that the acquired shares of
Edudata will be "restricted shares" as said term is defined in the Rules and
Regulations promulgated by the Securities and Exchange Commission under the
Securities Act of 1993, as amended. Each Member acknowledges that the acquired
shares shall have a legend upon them stating that the shares are restricted
shares, which legend shall be in such form as is ordinary and usual for this
type of transaction.
g. Each Member: (1) has reviewed this transaction with a
professional advisor (who is unaffiliated with and who is not compensated by
Edudata, or any affiliate or selling agent of Edudata, directly or indirectly)
who by reason of his or her business or professional experience has the
capacity to protect the Member's interests in connection with this transaction,
and/or (2) had during each of the preceding three (3) years: individual annual
income in excess of Two Hundred Thousand Dollars ($200,000); or joint annual
income (together with his spouse) in excess of Three Hundred Thousand Dollars
($300,000); or net worth (individually or jointly with his spouse) in excess of
One Million Dollars ($1,000,000).
h. Each Member has received a copy of the latest
available financial statements of Edudata and has been afforded (with his
attorneys and investment advisors, if any) to obtain any information related to
the business and financial condition of Edudata or necessary to verify the
accuracy of the financial statements of Edudata.
i. Each Member acknowledges that Edudata is relying on
exemptions from state and federal securities laws for the issuance of the
Edudata shares and is basing its reliance in part upon the foregoing
representations and warranties.
j. To the best of each Member's actual present knowledge
all of the following are true and correct:
i. DMD owes Xxxxxx X. Xxxxxxxxx $132,000 and
owes Xxxxxx Xxxxxxx $150,000, which amounts are due and payable on or before
March 31, 1998, bear interest at the rate of six percent (6%) per annum, any
may be prepaid at anytime without penalty. Repayment of these loans is subject
to the provisions of paragraph 5(a) of this Agreement.
ii. There are no contracts or other transactions
between DMD, on the one hand, and any Member, on the other hand, except that
the Members are employees of DMD. The annual salary
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paid to Xxxxxx X. Xxxxxxxxx by DMD and Bavarian together was less than
$240,000.
k. Each Member, separately from the other Members,
believes that the following statements are true and correct and has no actual
present knowledge that they are untrue or not correct:
i. The financial statements of DMD as of
December 31, 1995, delivered to Edudata are true and correct as of their date
(except for the loans described in paragraph j(i) which were not included in
said financial statements), there have been no material negative changes or
events to DMD since the time of the financial statements, and the Member does
not know of any event which with the passage of time will cause a material
negative change.
ii. Returns of products sold by DMD have not
exceeded three percent (3%) of sales.
iii. DMD has no uncollectible receivables.
iv. The budget dated February 2, 1996, fairly
depicts the anticipated results of DMD and Bavarian for the year 1996. Edudata
acknowledges that said budget is an estimate and that the Members are not
warranting that the projections shall be obtained.
v. In the event DMD merges into a C Corporation
that is wholly owned by Edudata in accordance with applicable State law
following normal procedures for a tax-exempt merger, Edudata will not incur any
tax liability as a result of said merger.
vi. DMD has no tax liability other than such
liabilities as arise from the ordinary course of its business operations.
There are no liabilities, contingent or absolute, that are not disclosed in the
financial statements referred to in (i) above.
vii. DMD has all agreements, licenses, consents
and regulatory approval necessary to conduct its business as it is now
conducted, and is in compliance with all material laws, rules or regulations
known to be applicable to such business as it is now conducted.
l. Each Member acknowledges that this agreement was
prepared by the law firm of Xxxxxxxxx & Xxxxxx, a Professional Corporation, who
are counsel for DMD and who do not represent the undersigned Members or
Edudata. Each Member further acknowledges that the law firm is relying upon
the above representations of the Members, has not rendered any tax advice with
respect to this transaction and did urge the Members to
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obtain independent advice about this transaction from independent attorneys,
tax specialists and financial advisers.
4. Edudata represents and warrants as follows:
a. Edudata is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority (1) to own, lease, and operate its
properties and to carry on its business as it is now conducted; and (2) to
enter into, perform, and carry out the terms of this Agreement; and (3) to
issue and sell the four million (4,000,000) shares of common stock of Edudata.
b. The four million (4,000,000) shares of common stock
of Edudata to be issued to the Members shall, when issued, have been duly
authorized and validly issued and be fully paid and nonassessable.
c. Edudata has two million five hundred nine thousand
nine hundred (2,509,900) shares of common stock presently outstanding. All of
said shares have been duly authorized and validly issued and are fully-paid and
nonassessable. There are no outstanding rights, options, warrants,
subscriptions, calls, convertible securities, or agreements of any character or
nature under which Edudata is or may become obligated to issue or to transfer
any shares of its securities of any kind.
d. Edudata has cash and cash equivalents on hand of Six
Hundred Fifty Thousand Dollars ($650,000), net of all liabilities.
e. Edudata acknowledges that this agreement was prepared
by the law firm of Xxxxxxxxx & Xxxxxx, a Professional Corporation, who are
counsel for DMD and who do not represent the undersigned Members or Edudata,
and further acknowledges that the law firm is relying upon the above
representations of Edudata, has not rendered any tax advise with respect to
this transaction, and has urged Edudata to obtain independent advice about this
transaction from independent attorneys, tax specialists and financial advisers.
5. All parties agree on the following provisions that are to
govern Edudata after the issuance of the four million (4,000,000) shares of
Edudata common stock to the Members.
a. Any loan obligation of Edudata payable to any
shareholder or member of DMD, Edudata or Bavarian or to any affiliate of such
shareholder or member, shall be paid solely from, and to the extent of,
positive cash flow of the combined businesses.
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b. Edudata shall not issue options to acquire more than
seven hundred fifty thousand (750,000) shares of common stock of Edudata at any
time prior to March 1, 1997.
c. No later than March 1, 1996, all three present
members of the Board of Directors of Edudata shall resign or be removed, and
the following four persons shall be elected in their stead: Xxxxxx X.
Xxxxxxxxx, Xxxxxx Xxxxxxx, Xxxxxx X. Xxxxxxxxx, and Xxxxxx X. Xxxxxx.
d. Xxxxxx X. Xxxxxxxxx shall not receive a salary from
Edudata for the twelve-month period ending March 1, 1997, in excess of Two
Hundred Forty Thousand Dollars ($240,000).
e. After the consummation of the purchase contemplated
by this Agreement and until March 1, 1997, Edudata shall not, without the prior
written consent of Sun Equities Corporation or its designee:
i. Make any payment or distribution to a related
party (other than compensation to employees or the repayment of loans as
permitted by paragraph 5 a above) except in a distribution to all shareholders
of Edudata;
ii. Enter into any contract or other transaction
with any related party (other than agreeing to employ such a person);
iii. Pay a salary or any fee to Xxxxxx X.
Xxxxxxxxx or to any affiliate or associate of Xxxxxx X. Xxxxxxxxx, other than
the Members, Shareholders of Bavarian and Xx. Xxxxxx Xxxxxxx, in excess of
$240,000 per annum;
iv. Pay salaries or fees to Xxxxxx X. Xxxxxxxxx,
Xxxxxx Xxxxxxx, Xxxx Xxxxxx, Xxxxx Xxxxxxx and Xx. Xxxxxx Xxxxxxx in the
aggregate in excess of $700,000; and
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v. Issue any securities other than options to
acquire no more than 750,000 share of Edudata common stock.
6. As soon as practicable after the Closing, Edudata will send to
its shareholders the information statement required by Section 14f of the
Securities Exchange Act of 1934 and make such other filings required under
Federal securities law. This agreement may be executed in counterparts, all of
which taken together shall constitute a single agreement.
/s/ XXXXXX X. XXXXXXXXX
Dated: February 29, 1996 -------------------------
XXXXXX X. XXXXXXXXX
Dated: February 29, 1996 /s/ XXXXXX XXXXXXX
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XXXXXX XXXXXXX
Date: February 29, 1996 /s/ XXXX XXXXXX
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XXXX XXXXXX
Dated: February 29, 1996 /s/ XXXXX XXXXXXX
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XXXXX XXXXXXX
Dated: February 29, 1996 EDUDATA CORPORATION
By: /s/ XXXX X. XXXXXXXX, XX.
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Its: Treasurer
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