EXHIBIT 2.1
VENTURES EDUCATION SYSTEMS CORPORATION
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel. No. (000) 000-0000
Fax No. (000) 000-0000
August 31, 1998
ADDvantage Media Group, Inc.
Meridian Tower, Suite 1080
0000 Xxxx Xxxxxx Xxxxx
Xxxxx, XX 00000
Gentlemen:
The undersigned, Ventures Education Systems Corporation, a Delaware
corporation (the "Company"), hereby agrees with you as follows, effective as of
the date above written:
1. AUTHORIZATION AND SALE OF THE SHARES
1.1 Authorization. The Company has authorized the issuance pursuant to
the terms and conditions hereof of 550,000 shares of its common stock par value
$0.01 per share ("Common Stock").
1.2 Sale. Subject to the terms and conditions hereof, the Company will
issue and sell to you and you will purchase from the Company, 550,000 shares of
Common Stock (the "Securities") at a purchase price of $1.80 per share, or an
aggregate of $990,000.
2. CLOSING DATE; DELIVERY
2.1 Closing Date. The closing of the purchase and sale of the Purchased
Securities to you and to the Other Purchasers shall be held at the offices of
the Company, at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on August 31, 1998
or at such other time and place as the Company and you may agree in writing.
The closing referred to in this Section 2.1 is hereinafter referred to as a
"Closing" and the date of the Closing is hereinafter referred to as a "Closing
Date."
2.2 Delivery. At the Closing, subject to the terms of this Agreement, the
Company will deliver to you the Securities to be purchased by you from the
Company, against payment at the Closing of the purchase price therefor by a
check or checks, payable to the order of the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to you as follows:
3.1 Organization and Standing; Articles and Bylaws. The Company is a
corporation duly organized and existing under, and by virtue of, the laws of the
State of Delaware and is in good standing under such laws. The Company has the
requisite corporate power to own and operate its properties and assets, and to
carry on its business as presently conducted and as proposed to be conducted.
The Company is qualified, licensed or domesticated as a foreign corporation in
all jurisdictions where the nature of its business conducted or the character of
its properties owned or leased makes such qualification, licensing or
domestication necessary at this time except in those jurisdictions where the
failure to be so qualified or licensed and in good standing does not and will
not have a materially adverse effect on the Company, the conduct of its business
or the ownership or operation of its properties. The Company has furnished you
with copies of its Certificate of Incorporation and Bylaws. Said copies are
true, correct and complete and contain all amendments through the date of this
Agreement.
3.2 Corporate Power. The Company has now, and will have at the Closing
Date, all requisite legal and corporate power to enter into this Agreement, to
sell the Securities hereunder, and to carry out and perform its obligations
under the terms of this Agreement.
3.3 Subsidiary. The Company has no subsidiaries other than Heuer, Inc.
(the "Subsidiary") The Company does not own, directly or indirectly, shares of
stock or other interests in any other corporation, association, joint venture,
or business organization. All of the issued and outstanding stock of the
Subsidiary is owned by the Company. There are no outstanding warrants, options,
contracts, calls, or other rights of any kind or restriction on the right to
transfer with regard to the issued and outstanding, authorized and unissued, or
issued but not outstanding, shares of the common stock or other security of the
Subsidiary of any kind. The Subsidiary is a corporation duly organized and
existing under, and by virtue of, the laws of the State of Delaware and is in
good standing under such laws. The Subsidiary has the requisite corporate power
to own and operate its properties and assets, and to carry on its business as
presently conducted and as proposed to be conducted. The Subsidiary is
qualified, licensed or domesticated as a foreign corporation in all
jurisdictions where the nature of its business conducted or the character of its
properties owned or leased makes such qualification, licensing or domestication
necessary at this time except in those jurisdictions where the failure to be so
qualified or licensed and in good standing does not and will not have a
materially adverse effect on the Subsidiary, the conduct of its business or the
ownership or operation of its properties. The Company has furnished you with
copies of the Certificate of Incorporation and Bylaws of the Subsidiary. Said
copies are true, correct and complete and contain all amendments through the
date of this Agreement.
3.4 Capitalization. The authorized capital stock of the Company consists
solely of 6,000,000 shares of Common Stock and 90,000 shares of Preferred Stock,
par value $1.00 per share. There are issued and outstanding 1,441,000 shares of
Common Stock and no shares of preferred
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stock. The issued and outstanding shares of Common Stock are duly authorized,
validly issued, fully paid and nonassessable. Except for the Stockholders
Agreement listed on Schedule I hereto and the warrants to purchase up to 55,000
shares of Common Stock to be granted to Xxxxxxxxxx & Co., there are no
outstanding options, warrants or other rights, including preemptive rights,
entitling the holder thereof to purchase or acquire shares of the Common Stock
or Preferred Stock of the Company.
3.5 Authorization
(a) All corporate action on the part of the Company, its officers,
directors, and shareholders necessary for the sale and issuance of the
Securities pursuant thereto and the performance of the Company's
obligations hereunder has been taken or will be taken prior to the Closing.
This Agreement is a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws of general application affecting enforcement of creditors' rights, and
except as limited by application of legal principles affecting the
availability of equitable remedies.
(b) The Securities, when issued in compliance with the provisions of
this Agreement, will be validly issued, fully paid and nonassessable, and
will be free of any liens or encumbrances; provided, however, that such
shares will be subject to restrictions on transfer under state and/or
federal securities laws as set forth herein, and as may be required by
future changes in such laws.
(c) No shareholder of the Company has any right of first refusal or
any preemptive rights in connection with the issuance of the Securities or
of any other capital stock of the Company.
3.6 Disclosure Materials. The Company has provided to you a copy of a
Private Offering Memorandum dated as of July 23, 1998 prepared in connection
with a proposed private placement of shares of Common Stock (the "Offering
Memorandum"), the financial statements referred to in Section 3.12 below and the
other documents, instruments and agreements listed in Schedule I hereto. The
said offering circular and materials listed in Schedule I hereto are referred to
herein collectively as the "Disclosure Materials."
3.7 Compliance with Other Instruments. The Company is not in violation of
any terms of its Certificate of Incorporation or Bylaws, or in any material
respect of any mortgage, indenture, contract, agreement, instrument, or, to the
best knowledge of the Company, any judgment, decree, order, statute, rule, or
regulation applicable to it. The execution, delivery, and performance by the
Company of this Agreement, and the issuance and sale of the Securities pursuant
hereto, will not result in any such violation or be in conflict with or
constitute a default under any such term, or cause the acceleration of maturity
of any loan or material obligation to which the Company is a party or by which
it is bound or with respect to which it is an obligor or guarantor, or result in
the creation
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or imposition of any material lien, claim, charge, restriction, equity or
encumbrance of any kind whatsoever upon, or, to the best knowledge of the
Company, give to any other person any interest or right (including any right of
termination or cancellation) in or with respect to any of the material
properties, assets, business or agreements of the Company.
3.8 Litigation, etc. Except as described in the Disclosure Materials,
there are no actions, proceedings or investigations pending which might result
in any material adverse change in the business, prospects, conditions, affairs,
or operations of the Company or in any of its properties or assets, or in any
impairment of the right or ability of the Company to carry on its business as
proposed to be conducted, or in any material liability on the part of the
Company, or which question the validity of this Agreement or any action taken or
to be taken in connection herewith.
3.9 Registration Rights. Other than registration rights granted to you
pursuant hereto, the Company is not under any obligation to register, within the
meaning of the Securities Act of 1933, as amended (the "Securities Act") any of
its presently outstanding securities.
3.10 Governmental Consent, etc. No consent, approval, or authorization of,
or designation, declaration, or filing with, any governmental unit is required
on the part of the Company in connection with the valid execution and delivery
of this Agreement, or the offer, sale or issuance of the Securities or the
obtaining of the consents, permits and waivers specified in subsection 5.1(c)
hereof, or the consummation of any other transaction contemplated hereby.
3.11 Proprietary Rights. The Company possesses full ownership of, or
adequate and enforceable licenses or other rights to use, all Proprietary Rights
used or proposed to be used in its business. The Company has not received any
notice of conflict which asserts the rights of others with respect thereto; and
the Company has in all material respects performed all of the obligations
required to be performed by it, and is not in default in any material respect,
under any agreement relating to any Proprietary Right. As used herein, the
term "Proprietary Rights means and includes trade secrets, copyrights, patents,
trademarks, service marks, customer lists, and all similar types of intangible
property developed, created, or owned by the Company, or used or proposed to be
used by the Company in connection with its business, whether or not the same are
entitled to legal protection.
3.12 Financial Statements. The Company has delivered to you:(a) its
unaudited consolidated balance sheet as at June 30, 1998 and the related
unaudited consolidated statements of income, changes in stockholders' equity,
and cash flow for each of the fiscal year then ended, Such financial statements
and notes fairly present the financial condition and the results of operations,
changes in stockholders' equity, and cash flow of the Company and the Subsidiary
as at the date of and for the period referred to in such financial statements,
all in accordance with generally accepted accounting principles ("GAAP"). No
person other than the Company and the Subsidiary are required by GAAP to be
included in the consolidated financial statements of the Company.
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3.13 Untrue Statements. The Disclosure Materials do not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they are made, not misleading.
3.14 No Adverse Change. There has been no material adverse change in the
Company's business, operations and assets since June 30, 1998.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND RESTRICTIONS ON TRANSFER
IMPOSED BY THE SECURITIES ACT
4.1 Representations and Warranties by Purchaser. You represent and
warrant to the Company as follows:
(a) You acknowledge that you have received, have thoroughly read, are
familiar with and understand the Offering Memorandum, and in particular
you acknowledge that you have read and understand the section contained in
the Offering Memorandum entitled "Risk Factors"; and understand and
acknowledge that the Securities being offered involve a high degree of
risk.
(b) You represent and warrant that the Securities are being acquired
for your own account without a view to public distribution or resale and
that you have no contract, undertaking, agreement or arrangement to sell or
otherwise transfer or dispose of any of the Securities or any portion
thereof to any other person.
(c) You and your officers, directors or equity owners have sufficient
knowledge and experience in investments similar to the Securities to
evaluate the merits and risks of an investment in the Securities because of
the background and employment experience of your officers, directors or
employees. You have received and have had access to material and relevant
information enabling you to make an informed investment decision, and all
data you have requested has been furnished to you; and your officers,
directors and employees have had the opportunity to ask questions regarding
the Common Stock and all questions asked have been satisfactorily answered.
(d) You understand and acknowledge that the Company has a limited
financial and operating history, that no assurances have been given about
the amounts of revenue or net income, if any, that will ever be realized by
the Company in the future, and that an investment in the Company is highly
speculative and involves a risk of loss by you of your entire investment in
the Company.
(e) You acknowledge and understand that holders of the Securities will
only be able to resell the Securities pursuant to secondary trading
exemptions under applicable securities laws of the states in which you
reside and pursuant to an exemption from
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registration under the Act. Further, under the securities laws of certain
states, holders of Securities may be required to sell their Securities
through a registered broker-dealer.
(f) You are an accredited investor as that term is defined in Rule
501(a) of Regulation D promulgated by the Securities and Exchange
Commission.
5. CONDITIONS TO CLOSING
5.1 Conditions to Your Obligations. Your obligation to purchase the
Securities at the Closing is subject to the fulfillment to your reasonable
satisfaction on or prior to the Closing Date of the following conditions (any of
which may, at your discretion, be waived):
(a) Representations and Warranties Correct; Performance of
Obligations. The representations and warranties made by the Company in
Section 3 hereof shall be true and correct when made, and shall be true and
correct on the Closing Date with the same force and effect as if they had
been made on and as of said date; the Company's business, operations and
assets shall not have been adversely affected in any material way prior to
the Closing Date; and the Company shall have performed all obligations and
conditions herein required to be performed or observed by it on or prior to
the Closing Date.
(b) Opinion of Company's Counsel. You shall have received from Xxxxxx
& Xxxx, P.C., counsel to the Company, a favorable opinion addressed to you,
dated the Closing Date, substantially the same, in form and content, as
that attached hereto as Exhibit A.
(c) Consents and Waivers. The Company shall have obtained any and all
consents, permits, and waivers necessary or appropriate for consummation of
the transactions contemplated by this Agreement. The Company covenants to
use its best efforts to obtain such consents, permits and waivers.
(d) Legal Investment. At the time of the Closing, the purchase of the
Securities by you hereunder shall be legally permitted by all laws and
regulations to which you and the Company are subject. You shall be
responsible for determining the applicability of all such laws and
regulations to you in connection with your purchase of the Securities.
(e) Compliance Certificate. The Company shall have delivered to you a
Certificate, executed by the President or any Vice President of the
Company, dated the Closing Date, certifying to the fulfillment of the
conditions specified in subparagraphs (a), (c) and (d) of this Section 5.1.
(f) Voting Agreement. You and current the stockholders of the Company
holding a minimum of 1,000,000 shares of the outstanding Common Stock will
have entered into a Voting Agreement in form and substance reasonably
acceptable to you pursuant to which,
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among other things, one designee of yours will be elected to the Company's
board of directors.
5.2 Conditions to Obligation of the Company. The Company's obligation to
sell and issue the Securities to you at the Closing is subject to the
fulfillment to the Company's reasonable satisfaction on or prior to the Closing
Date of the following conditions, any of which may be waived by the Company in
writing signed by an authorized officer:
(a) The representations and warranties made by you in Section 4 hereof
shall be true and correct when made, and shall be true and correct on the
Closing Date with the same force and effect as if they had been made on and
as of said date.
(b) The conditions set forth in subsections 5.1(c) and 5.1(d) hereof
shall have been fulfilled.
6. REGISTRATION RIGHTS
6.1 Registration of Securities. As used in this Agreement, the term
"Registration Securities" means (i) any and all of the shares of the Company's
Common Stock received by you pursuant to this Agreement and (ii) any other
securities of the Company may hereafter issue in exchange therefor or in respect
thereof in the form of a stock split, dividend, reorganization, merger or
similar event. As to any particular Registration Securities, once issued, such
Registration Securities shall cease to be Registration Securities when (i) they
have been registered under the Securities Act, in accordance with the terms of
this Agreement, the registration statement in connection therewith has been
declared effective, and they have been disposed of by you pursuant to such
effective registration statement, (ii) they are distributed to the public
pursuant to and in accordance with Rule 144 (or any similar provisions then in
force under the Securities Act), (iii) they are otherwise transferred and the
Company has delivered new certificates evidencing ownership and are not subject
to legal or other restriction, (iv) they have ceased to be subject to
restrictions on the public offer and sale thereof by virtue of the application
of Rule 144(k) promulgated by the Commission pursuant to the Securities Act, or
(v) they have ceased to be outstanding.
6.2 Piggy-Back Registration. If the Company proposes to file a
registration statement under the Securities Act with respect to any class of
security (other than a registration statement on Form S-4 or S-8, or any form
substituting therefor), the Company shall give written notice of such proposed
filing to you at least twenty days before the anticipated filing date, and such
notice shall offer you the opportunity to register such amount of Registration
Securities as you may request (said registration hereinafter referred to as
"Piggy-Back Registration"). The Company shall use its best efforts to cause the
managing underwriter or underwriters of a proposed underwritten offering to
permit you to include such Registration Securities as you may propose in such
offering on the same terms and conditions as any similar securities of the
Company included therein. Notwithstanding the foregoing, if the managing
underwriter or underwriters of such offering delivers a written opinion to you
that the total amount or kind of securities which it and any other persons or
entities intend to
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include in such offering would adversely affect the success of such offering
(and it is otherwise reasonably impractical to cause the Piggy Back Registration
to include a best efforts offering of the Registration Securities), then the
amount of securities to be offered for your account shall be reduced pro rata
with all other persons, if any, for whom securities are being registered to the
extent necessary to reduce the total amount of securities to be included in such
offering to the amount recommended by such managing underwriter or excluded in
its entirety, as the case may be. In the event that the contemplated
distribution does not involve an underwritten public offering, such
determination that the inclusion of such Registration Securities shall adversely
affect the success of the offering shall be made by the Company in its
reasonable discretion; and
6.3 The Company's Obligations with Respect to Piggy-Back Registration. To
facilitate the sale of Registration Securities in accordance with the provisions
of this Agreement, the Company shall:
(a) supplement or make amendments to the Piggy-Back Registration, if
required by the registration form utilized by the Company for such Piggy-
Back Registration, the instructions applicable to such registration form,
the Securities Act, or the rules and regulations promulgated by the
Commission under the Securities Act;
(b) furnish to you copies in such numbers as may be reasonably
requested by you of any such supplement or amendment prior to its being
used or filed with the Commission;
(c) use reasonable efforts to register or qualify the Registration
Securities under such other securities or "Blue Sky" laws of such
jurisdictions in the United States as any Purchaser shall request (and
maintain such registration and qualifications effective until all
Registration Securities covered by the Shelf Registration have been sold
pursuant to the Shelf Registration or are no longer outstanding) and do any
and all other acts and things that may be necessary to enable such
Purchaser to consummate the disposition in such jurisdictions of the
Registration Securities, provided however, that the Company shall in no
event be required to qualify to do business as a foreign corporation in any
jurisdiction where it is not so qualified, conform the composition of its
assets at the time to the securities or "Blue Sky" laws or such
jurisdiction, execute or file any general consent to service of process
under the laws of any jurisdiction, take any action that would subject it
to service of process in suits other than those arising out of the offer or
sale of the Registration Securities, or subject itself to taxation in any
jurisdiction where it has not heretofore done so;
(d) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission and shall make generally available to its
security holders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, commencing not later than the first day of
the fiscal quarter next succeeding the effective date of such Shelf
Registration, which earnings statement will satisfy the provisions of
Section 11(a) of the Securities Act; and
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(e) indemnify you for any losses, liability, costs, expenses,
judgments, settlements, payments and other amounts (including attorneys'
fees and other defenses costs) incurred by reason of any misrepresentation,
or alleged misrepresentation, of a material fact in the Piggy-Back
Registration, or the omission therefrom of any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading, or any other
violation of federal or state securities laws in connection with the
offering and sale of the securities that are the subject of the Piggy-Back
Registration.
6.4 Expenses of Piggy-Back Registration. The Company shall pay all costs
and expenses incident to the performance of or compliance with this Article 6
specifically including, without limitation, in connection with the Piggy-Back
Registration, all registration and filing fees, fees and expenses of compliance
with securities or "Blue Sky" laws, and fees and disbursements of counsel and
special experts retained by the Company, but specifically excluding fees and
expenses of counsel to you incurred in connection with the Piggy-Back
Registration and any commissions, underwriting discounts or other fees or
charges payable strictly by virtue of the sale of your Registration Securities.
7. MISCELLANEOUS
7.1 Involvement in the Company's Sales, Marketing and Financing Efforts.
It is agreed that your officers and key employees shall be provided the
opportunity to become involved in and advise the Company with respect to its
sales and marketing and its financial planning efforts; provided however, that
unless agreed to by the Company, such services shall be provided without
compensation to your officers and key employees other than the reimbursement of
reasonable out-of-pocket or third party costs and expenses incurred by them in
the performance of such services. In addition, in the event that the Company
intends to seek additional equity financing, a business combination, merger,
asset acquisition or other transaction involving the Company's equity securities
or the equity securities of another party, or a business alliance or
affiliation, the Company will provide AMG with written notice of its intent and
proposal and give AMG the opportunity, if it elects to do so, to make a proposal
to the Company or otherwise work with the Company to achieve its objectives.
7.2 Waivers and Amendments. This Agreement or any provision hereof may be
changed, waived, discharged or terminated only by a statement in writing signed
by the party against which enforcement of the change, waiver, discharge or
termination is sought.
7.3 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of New York.
7.4 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
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7.5 Entire Agreement. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties hereto with regard to the subjects hereof and thereof.
7.6 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first class mail,
postage prepaid, addressed (a) if to you, at your address set forth in the first
page of this Agreement, or at such other address as such Purchaser shall have
furnished to the Company in writing, or (b) if to the Company, at its address
set forth below, or at such other address as the Company shall have furnished to
you in writing in accordance with this Section 7.5.
7.7 Separability. In case any provision of this Agreement not material
to the benefits intended to be conferred hereby shall be invalid, illegal, or
unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
7.8. Finder's Fees. Each of the Company and you (i) represents and
warrants to the other that no finder or broker has been retained by it in
connection with the transactions contemplated by this Agreement except that the
Company has retained Xxxxxxxxxx & Co. Inc. to assist it in this transaction and
such firm will receive a commission of 8% of the total proceeds of this offering
payable out of such proceeds and (ii) each hereby agrees to indemnify and to
hold the other, and its respective officers, directors and controlling persons,
harmless of and from any liability for any commission or compensation in the
nature of a finder's fee to any broker or other person or firm (and the costs
and expenses of defending against such liability or asserted liability) for
which it, or any of its employees or representatives, are responsible except for
such commission payable to Xxxxxxxxxx & Co. Inc.
7.9. Other Documents. The parties to this Agreement shall in good faith
execute such other and further instruments, assignments or documents as may be
necessary or advisable to carry out the transactions contemplated by this
Agreement.
7.10. Titles and Subtitles. The titles of the Sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement. References herein to exhibits to this
Agreement shall be deemed to incorporate such exhibits by reference.
7.11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument, and which shall become effective when there
exist copies signed by the Company and by you.
7.12 Notice of and Right to Attend Board Meetings. For so long as the
Voting Agreement referred to in Section 5.1(f) is effective and Xxxxxxx X. Xxxx
is an officer or director of AMG, the Company shall provide notice of all
regular and special meetings of the Company's Board of Directors to Xx. Xxxx and
provide Xx. Xxxx with the opportunity to attend each such meeting,
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it being understood that Xx. Xxxx shall not be a director of the Company and
shall have no vote with respect to matters presented to the Board of Directors
of the Company.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their duly authorized representatives effective as of the date set
forth on the first page hereof.
VENTURES EDUCATION SYSTEMS CORPORATION
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Xxxxxx X. Xxxxxx, President
Accepted and agreed to this 31st day of August, 1998.
ADDvantage Media Group, Inc.
By /s/ Xxxxxxx X. Xxxx
--------------------------------------------------
Xxxxxxx X. Xxxx, President
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SCHEDULE I
The following is a list of the corporate documents of the Company provided
to ADDvantage Media Group, Inc. in connection with its review of the
Company and the proposed investment in the Common Stock of the Company:
. Certificate of Incorporation
. Bylaws
. Stock Records
. Copies of all minutes of meetings of stockholders and directors since
incorporation of the Company and all written consents in lieu of such
meetings.
. Employee Stock Option Plan
. Certificate of insurance
. The most current drafts of the proposed License Agreements between the
Company and Ventures in Education, Inc.
. Copies of Stockholders' Agreements
. Heuer Certificate of Incorporation and Bylaws
. Loan or credit agreements, mortgages, security agreements and other
financing documents
I-1
EXHIBIT A
August 31, 1998
ADDvantage Media Group, Inc.
Meridian Tower, Suite 1080
0000 Xxxx Xxxxxx Xxxxx
Xxxxx, XX 00000
Gentlemen:
We have acted as counsel for Ventures Education Systems Corporation, a
Delaware corporation (the "Company"), in connection with the offer and sale of
550,000 shares of its Common Stock, par value $.01 per share (the "Common
Stock"), such shares of the Common Stock being referred to herein as the
"Securities"), to you. This opinion is being furnished to you pursuant to
Section 5.1(b) of the Stock Purchase Agreement between you and the Company dated
August 31, 1998 (the "Agreement"). Unless otherwise expressly provided herein,
capitalized terms used herein shall have the meanings assigned to them in the
Stock Purchase Agreement.
In so acting, we have examined such certificates of public officials and
officers of the Company and originals or copies certified to our satisfaction of
all such corporate documents and records of the Company and of all such other
documents and have made such inquiry of officers and representatives of the
Company as we have deemed relevant and necessary as a basis for our opinion
hereinafter expressed.
In giving our opinion, we have relied, to the extent we deem appropriate,
upon such certificates of public officials and officers of the Company and
statements and information furnished by officers of the Company, with respect to
the accuracy of material factual matters contained therein which were not
independently established. In our examination, we have assumed the genuineness
of all signatures, the accuracy, authenticity and completeness of all documents,
certificates and records submitted to us as originals, and the conformity with
the originals of all documents, certificates and records submitted to us as
copies.
On the basis of the foregoing and subject to the qualifications and
limitations set forth herein, it is our opinion that:
A-1-
1. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the state of Delaware and has all
requisite legal and corporate power and authority to own, operate and lease
its properties and assets and to carry on its business as now being
conducted.
2. The Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware and has all
requisite legal and corporate power and authority to own, operate and lease
its properties and assets and to carry on its business as now being
conducted. All of the issued and outstanding voting securities of the
Subsidiary are owned of record and beneficially by the Company.
3. All corporate action on the part of the Company, its officers,
directors, and stockholders necessary for the sale and issuance of the
Securities pursuant to the Agreement and the performance of the Company's
obligations thereunder has been taken. The Agreement is a legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application affecting
enforcement of creditors' rights, and except as limited by application of
legal principles affecting the availability of equitable remedies.
4. The Securities to be issued to you, when issued in compliance with
the provisions of the Agreement, will be validly issued, fully paid and
nonassessable and will be free of any liens or encumbrances; provided,
however, that such Securities will be subject to restrictions on transfer
under state and/or federal securities laws as set forth therein, and as may
be required by future changes in such laws.
This opinion is being rendered pursuant to Section 5.1(b) of the Agreement
and is for your sole benefit and is not to be used, circulated or otherwise
referred to in connection with any transactions other than those contemplated by
the Agreement.
Very truly yours,
XXXXXX and XXXX, P.C.
A-2-
