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Exhibit: 2.1FT
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
THIS AGREEMENT is made and entered into as of the 30th day of September,
1997 by and between XXXX PUBLISHING, a California Corporation ("Seller"), XXXXX
X. and XXXXX X. XXXX (the "Gicks"), and FUTECH EDUCATIONAL PRODUCTS, INC., an
Arizona Corporation ("Buyer").
RECITALS
A. Seller owns and operates a distribution business (the "Business")
distributing crafts, stationary, toys and greeting cards under the trade names
"The Xxxx Companies", "Xxxx Crafts", "Quack-Ups!", "Magickal Ink", and "Future
Crafts Today" (the "Trade Names"). The Business is operated at the following
address: 0 Xxxxxxxxxx Xxxxx, Xxxxxx, XX.
B. Gicks have filed a patent application which is now pending.
C. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller the Business and assets of the Business, and Gicks desire to sell and
assign to Buyer all of Gicks' rights under the pending patent application, 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:
TERMS
1. Purchase and Sale. Seller hereby agrees to sell to Buyer, and Buyer
agrees to purchase from Seller, the following (collectively the "Assets"):
1.1 All fixtures, furniture, notes receivable (other than the notes
receivable from the Gicks), accounts receivable, all prepaid items, equipment,
vehicles, machinery, inventory (all finished and unfinished goods,
work-in-process, inventories, and materials of Seller are sometimes collectively
referred to here-in as the "Inventory"), supplies and all other property
currently used by Seller in connection with the operation of the Business
(excluding Seller's cash).
Upon execution of this Agreement, Seller shall provide Buyer with a
list of all assets of Seller other than Inventory, cash, office supplies, and
accounts receivable. The list shall include, but not be limited to, all
furniture, fixtures,
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equipment, dies, molds, toolings, prepaids, intangible rights, notes receivable,
and deposits (the "Other Assets"). Seller shall be obligated to transfer the
Other Assets to Buyer at the Closing.
1.2 All of Seller's interest in any leases of real and/or personal
property, including all of Seller's interest in any and all leasehold
improvements located on leased real property (but not the leasehold improvements
at 0 Xxxxxxxxxx Xxxxx). The Lease on 00 Xxxxxxxxxx Xxxxx expires in early 1998.
Seller will determine whether or not to renew that Lease, in Seller's sole
discretion.
1.3 All rights to the Trade Names and any and all other trade names used
by Sellers in connection with the Business, along with any and all trademarks,
service marks, logos and designs relating thereto. As soon as is practicable
after the Closing, Seller with change its corporate name to eliminate use of any
of the names transferred to Buyer.
1.4 Any and all deposits associated with the operation of the Business,
including but not limited to all deposits on lease, insurance contracts
transferred to Buyer, utility deposits and license deposits.
1.5 All of Seller's books and records, computer programs. software,
drawings, and customer vendor files pertaining to Seller's products (exclusive
of Seller's financial and tax records).
1.6 All contracts and other accounts which remain unperformed as of the
Closing.
1.7 All other contracts, licenses, accounts and other general intangibles
currently held by Seller.
1.8 All patents, copyrights, trade secrets, customer and supplier lists,
promotional materials, and other tangible rights used in connection with the
operation of the Business.
1.9 The Gicks have currently pending in the United States Patent office an
application of applications for certain patents relating to the Business. As
part of the Transaction, the Gicks shall convey to Buyer (without any assurance
that the patent will be issued) any and all interest they have in such
patent(s), application(s), idea(s) and right(s).
1.10 The phone numbers and all phone and other advertising associated with
the Business.
1.11 All warranties and all warranty claims of Seller.
1.12 All other assets utilized by Seller in the conduct of its business,
other than that certain building and its
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appurtenances, consisting of approximately 16,066 square feet, located at 0
Xxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx (the "Xxxx Building"), and the life
insurance policy on the life of Xxxxx X. Xxxx (including cash surrender value)
which shall not be included in the assets.
2. Purchase Price. The purchase price for the Assets shall be the sum of
$1,900,000.00, payable in full in cash or cash equivalent at the time of
closing, plus the assumption by Buyer of the liabilities set forth in Section 3
below.
3. Liabilities.
3.1 Buyer will at the closing, in addition to paying the $1,900,000.00
purchase price, assume Seller's liabilities, as follows:
3.1.1 Upon execution of this Agreement, Seller shall provide Buyer with a
list of all agreements, including leases, to which Buyer is subject. At that
time, Seller shall also deliver to Buyer copies of all of the documents relating
to said agreements.
3.1.2 The parties acknowledge and agree that at the Closing Buyer shall
assume all of the agreements and leases disclosed by Seller under 3.1.1. above,
together with the following liabilities (the "Assumed Liabilities"):
(a) Trade payables for services and products received or receivable by
Seller incurred in the ordinary course of business.
(b) Bank, finance company and other third party debt, whether secured or
unsecured, represented by Note or on open account, including the $60,000.00
prepayment fee on Seller's line of credit with Fremont and $150,000.00 Note
payable to Litho Sales.
(c) Payroll and payroll tax obligations for employees for not more than
the most recent pay period prior to the Closing, plus only the employee benefits
obligations identified on Exhibit "C" attached hereto and hereby made a part
hereto.
(d) Any sales tax liability which may arise as a result of the
Transaction.
3.1.3 Specifically, but not in limitation of the foregoing, Buyer shall
not be assuming the following liabilities:
(a) Any federal, state or local income taxes;
(b) Any labor, discrimination, harassment. or similar claims;
(c) Any environmental liability claims;
(d) Any negligence, conversion, tortious, interferences or
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other tort claims, or claims for infringement of trade name, patent, or
copyright, or other tangible right;
(e) Any liability associated with any litigation or other proceeding
pending or threatened at the time of the Closing;
(f) Any contractual liability not reflected in Seller's books and records,
or not disclosed to Buyer by Seller, or not discovered by Buyer during the
course of Buyer's due diligence investigation, or any liability to or for
employees or employee benefits not expressly agreed upon by Buyer.
(g) Any obligation, debts or liabilities to the Gicks.
(h) Any obligations secured by a lien on land or buildings including the
mortgage debt on the real property at 0 Xxxxxxxxxx Xxxxx, Xxxxxx, XX.
(i) Any unfunded employee benefit obligations except as assumed under
paragraph 3.1.2(d).
3.2 All liabilities of Seller other than those expressly assumed by Buyer
as identified in Section 3.1 above shall be remain the obligations of Seller,
and Seller shall indemnify, defend and hold Buyer harmless from and against any
and all such liabilities.
3.3 The following expenses of the Business will be prorated to the close
of escrow: utilities and phone expenses, advertising expense, insurance premiums
on any insurance transferred to the Buyer, personal property taxes, and other
normal operating expenses of the Business.
3.4 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, and except as arise in
the ordinary course of business, such as issuing refunds for return merchandise,
and normal operating obligations of a similar nature. Buyer hereby agrees to
indemnify, defend and hold Seller harmless 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. Employees. Buyer shall have the right to cancel the Agreement if: (i)
the employment of any two of the five highest paid employees of the Business is
terminated prior to the closing; or (ii) there is a significant reduction in
the number of employees prior to the Closing, which impairs the operations of
the Business in Buyer's reasonable discretion.
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5. Buyer's Nominee. Buyer, or a successor to Buyer (Buyer intends to
convert its operations, through corporate formations and mergers, to a Delaware
corporation - it is now an Arizona corporation), will form a wholly owned
subsidiary to purchase the Business, and will assign Buyer's rights under this
Agreement to said entity. The subsidiary so formed will acquire the assets and
assume the liabilities as provided for herein.
6. Interim Events. Seller agrees that Seller will take no action prior to
the Closing, other than in the ordinary course of the Business, which would or
might have a material adverse effect upon the financial condition of Seller, and
no unreasonable benefits will be paid or incurred to shareholders, officers, or
directors of Seller between the date hereof and the Closing. 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.
7. Conditions of Closing. Buyer's and Seller's obligations to close the
Transaction shall be conditioned upon (each of the conditions may be waived by
Buyer in writing only):
7.1 Buyer obtaining the consent of the lessors of the leases assumed by
Buyer, and the consent of the other parties to any other contracts assumed by
Buyer, to the extent said consents are required;
7.2 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;
7.3 Seller having maintained the Assets in the same condition as of the
date of this Agreement (subject to ordinary wear and tear only);
7.4 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;
7.5 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;
7.6 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;
7.7 Buyer obtaining adequate financing for this Transaction.
7.8 The Gicks entering into a Consulting Agreement in the
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form of Exhibit "A" attached hereto, and a Confidentiality Agreement in the form
of Exhibit "B" attached hereto. The Glicks agree to sign said Agreements;
7.9 Buyer obtaining executed Employment Agreements from key employees as
determined by Buyer, with terms and content acceptable to Buyer;
7.10 Buyer and Seller agreeing as to the manner in which the purchase
price shall be allocated among the various assets transferred pursuant to this
Agreement. The parties agree to execute and complete such forms as are required
by the Internal Revenue Service to evidence such allocation. At this time it is
contemplated that more than one half of the purchase price shall be allocated to
Gicks pending patent rights.
7.11 Buyer and Seller executing a Lease for the Xxxx Building in the form
attached as Exhibit "D", at an initial rate of rent of $12,049.50 per month,
triple net, subject to annual C.P.I. increases.
7.12 Buyer confirming that Seller did not omit any known material
liabilities from its June 30, 1997 Balance Sheet (Exhibit "E").
8. Closing. The closing of the Transaction (the "Closing") shall be as
follows:
8.1 The Closing shall occur on or before December 31, 1997, at Seller's
office, located at 0 Xxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx. The Transaction shall
be consummated without the use of an independent escrow company.
8.2 If the Buyer is not ready, willing and able to close the Transaction
on or before December 31, 1997, Buyer shall have the option of extending the
Closing to on or before January 31, 1998. The option may be exercised by paying
the sum of $25,000.00 to Seller on or before December 15, 1997. The $25,000.00
sum shall be fully earned by Seller upon receipt, solely as consideration for
the granting of an extension of time to Buyer to close the Transaction. Buyer
shall not have acquired any equitable interest in Seller's business or assets as
a result of the payment of the option price. The $25,000.00 sum shall be
retained by Seller, whether or not Buyer thereafter completes the purchase
Transaction. However, if Buyer pays the option price and thereafter completes
the purchase Transaction on or before January 31, 1998, the purchase price shall
then be reduced to $1,875,000.00. By accepting Buyer's $25,000.00 option
payment, Seller shall have no obligations not otherwise imposed by seller under
the terms of this Agreement, and shall have no greater duties of good faith and
fair dealing than would have been imposed upon Seller had Buyer not exercised
its option.
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8.3 If the Buyer is not ready, willing and able to close the Transaction
on or before January 31, 1998, Buyer shall have the option of extending the
Closing to on or before March 31, 1998. The option may be exercised by paying
the sum of $100,000.00 to Seller on or before January 15, 1998. The $100,000.00
sum shall be fully earned by Seller upon receipt, solely as consideration for
the granting of an extension of time to Buyer to close the Transaction. Buyer
shall not have acquired any equitable interest in Seller's business or assets as
a result of the payment of the option price. The $100,000.00 sum shall be
retained by Seller, whether or not Buyer thereafter completes the purchase
Transaction. However, if Buyer pays the option price and thereafter completes
the purchase Transaction or or before March 31, 1998, the purchase price shall
then be reduced to $1,775,000.00. By accepting Buyer's $100,000.00 option
payment, Seller shall have no obligations not otherwise imposed by Seller under
the terms of this Agreement, and shall have no greater duties of good faith and
fair dealing then would have been imposed upon Seller had Buyer not exercised
its option.
9. Restrictive Covenants.
9.1 Seller and Gicks shall not, except as representatives of and as
directed by Buyer, without the prior written consent of Buyer, which consent may
be withheld for any or no reason, for a period of 2 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
anywhere in the world, in any business competitive with the Business (which is
defined as being limited to crafts, stationary, toys, and greeting cards).
However, if Gicks conceive a new or improved product, and if Buyer fails to
exercise its right of first refusal to acquire the idea, as set forth in the
Consulting Agreements (Exhibit "A"), Gicks may thereupon market the ideas
rejected by Buyer to competitors of Buyer, or Xxxx may enter into direct
competition with Buyer in order to exploit the ideas.
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 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
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shall be construed as prohibiting Buyer from pursuing any other available
remedies for Agreement for Purchase and Sale of Assets Page 9 such breach or
threatened breach, including pursuing a recovery for damages.
9.2 Seller and the Gicks 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.
9.3 Seller and the Gicks shall not, at any time within two (2) years after
the Closing, without 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.
9.4 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 restrictions 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.
9.5 The parties acknowledge and agree that the covenants in this Section
shall be construed as an agreement independent of any
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other provision of this Agreement, so that the existence of any claim or cause
of action by Seller (or the Gicks) against Buyer, whether predicated on this
Section or otherwise, shall not constitute a defense to the enforcement of this
Section.
10. Access to Customer Files and Other Records. For a period of 5 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 (or its
principals) is or may become a party, Seller (and its principals) shall be
granted access, at reasonable times and after reasonable notice, and at Seller's
cost to all customer files and other records transferred to Buyer pursuant to
this Agreement.
11. Due Diligence Investigation. Buyer shall have until THE date of
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 commercial 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 shall indemnify Seller from and
against any and all liabilities, costs, claims and losses incurred by Seller as
a result of Buyer's conduct of its due diligence investigation. Buyer shall
conduct its due diligence investigation in a discreet manner and will avoid
interrupting Seller's normal daily business activities.
Buyer and its representatives will 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.
Buyer agrees that, should it elect not to close the Transaction at any
time, any and all information acquired by it as a result of its investigation of
Seller shall remain confidential and shall not be disclosed to any third party
or used by Buyer for any purpose whatsoever.
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12. Representations and Warranties. Seller and the Gicks each hereby
represent and warrant as follows, as of the date hereof and as of the date of
the Closing.
12.1 Authority. Seller has the power and authority to enter into and
perform its obligations under this Agreement, and Board of Directors of Seller
has approved, authorized, and ratified the execution and delivery of this
Agreement, and of the documents herein required to consummate the transaction
contemplated herein.
12.2 Financial Information. Seller has furnished Buyer with true,
correct and complete copies of the financial statements utilized by Seller in
the ordinary course of its business. The statements warranted by Seller shall be
identified during the Due Diligence Period and attached as Exhibit "E".
12.3 Taxes. The Assets shall be free of lien for any taxes, except
personal property taxes which are the subject of proration between Buyer and
Seller.
12.4 Ordinary Course of Business. The Business has been conducted in the
ordinary course from the date of this Agreement to the date of Closing.
12.5 Litigation. To the knowledge of Seller of Xxxx, there is no
litigation, proceeding, or investigation pending against Seller or the Business,
and neither Seller nor Xxxx have any reasonable grounds to know any basis for
such litigation, proceeding or investigation.
12.6 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.
12.7 Hazardous Materials. The Business has not dealt in any manner with
any hazardous or toxic materials or waste other than Seller's process for mixing
some of its dyes.
12.8 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.
12.9 Complete Sale. The assets to be transferred under this Agreement are
of the assets used by Seller in the operation of the Business.
12.10 Bulk Sales Provisions. Buyer and Seller shall comply with any
applicable Bulk Sales Law.
12.11 Vendor Accounts. Sellers will use Seller's best efforts to cause a
transfer to Buyer of all of Seller's supplier and other
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vendor accounts without adverse changes in the account terms.
All representations and warranties in this Section 12 shall survive the
Closing of the Transaction.
13. Bulk Sale Provisions. The parties shall comply with and all bulk sale
laws applicable to the Transaction.
14. Expenses. Buyer shall bear all costs and expenses of Seller 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, to be paid by
Buyer on a monthly basis as incurred and billed by Seller.
15. 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 claim incurred in connection with such fees or commissions.
16. Governing Law; Jurisdiction. The courts of the State of California
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 arising from the interpretation or enforcement
of this Agreement shall be in the Superior Court for the State of California for
the County of Orange, and for this purpose each party to this Agreement (and
each person who shall become a party hereby expressly and revocably consent to
the jurisdiction and venue of such courts.
17. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.
18. Entire Agreement. Except as otherwise set forth herein this Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof, and supersedes all prior understandings, if any, with respect
thereto.
19. Jointly Drafted. This Agreement shall be deemed to have been jointly
drafted by Buyer, Seller and Gicks. No presumption or inference shall arise in
favor of or against any party as a result of the drafting of this Agreement.
20. 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 bound by the modification or waiver.
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21. 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.
22. 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.
23. 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 attorney's fees and expert witness
fees incurred by the prevailing party(s) in connection with such action or
proceeding.
24. 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: Xxxxx X. Xxxx
0 Xxxxxxxxxx Xxxxx
Xxxxxx, XX. 00000
If to Xxxx: Xxxxx X. Xxxx
0 Xxxxxxxxxx Xxxxx
Xxxxxx, XX. 00000
With copy to: W. Xxxxxxx X'Xxxxx, Xx., Esq.
0000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, XX. 00000
If to Buyer: Futech Educational Products, Inc.
Attention: Xxxxxxx X. Xxxxx
0000 X. 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
With a copy to: Xxxxxx X. Xxxxxxxxx, Esq.
Xxxxxx, Xxxxxx & Xxxxxxx, P.C.
0000 X. Xxxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
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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.
25. 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.
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.
XXXX PUBLISHING, INC., a
California corporation
"Seller" By: /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx, President
FUTECH EDUCATION PRODUCTS, INC.,
an Arizona corporation
"Buyer" By: /s/ Xxxxxxx X. Xxxxx
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XXXXXXX X. XXXXX, President
/s/ Xxxxx X. Xxxx
---------------------------
XXXXX X. XXXX
"Gicks" /s/ Xxxxx X. Xxxx
---------------------------
XXXXX X. XXXX
List of Exhibits:
-----------------
Consulting Agreement "A"
Confidentiality Agreement "B"
Assumed Employee Benefits Obligations "C"
Lease "D"
Financial Statements "E"
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CONSULTING AGREEMENT
THIS AGREEMENT is made as of the ________ day of _______________ , 1997,
by and between Xxxxx X. Xxxx (collectively "Consultant") and Futech Educational
Products, Inc., an Arizona corporation ("Futech").
RECITALS
A. Consultant frequently creates inventions, new ways of combining
existing products and technology, and generally improved ways of doing things.
B. Futech desires to acquire certain rights in connection with future
inventions, and Consultant is willing to grant those rights, all upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
TERMS
1. Definitions. The following terms shall have the following meanings when
used in this Agreement.
1.1 "Completion" means the processing and refinement of an Invention to
the state of creation of a useable prototype.
1.2 "Disclosure Materials" means all drawings, prototypes, and
manufacturing, marketing, distributing and sales plans and/or projections
associated with an Invention, a detailed list of all Development Costs for the
Invention, and any and all other information regarding the Invention in the
possession of or available to Consultant which would be useful in evaluating the
commercial viability of the Invention.
1.3 "Futech Field" means any products or services in the field, area, or
industry of any product manufactured, marketed, distributed or sold, or any
service marketed or sold, by Futech, or any subsidiary of Futech, or any such
product or service which Futech or any subsidiary of Futech contemplates
manufacturing, marketing, distributing or selling.
1.4 "Invention" means each and every idea, concept or development
involving an invention, a new way of combining existing products and/or
technology, and/or an improved way of doing things, pursued during the term of
this Agreement by Consultant, in the Futech Field, including ideas, etc. which
have been pursued prior to commencement of this Agreement but which have not yet
reached completion prior to commencement of this Agreement, and includes all
ideas, etc. pursued during the term of this Agreement but which reach completion
after the expiration of this Agreement. Any and all alterations and/or
improvements to an
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Invention shall be included within the definition of "invention" hereunder.
2. Right of Refusal. Consultant hereby grants to Futech and Futech shall
have the right of first refusal with respect to all inventions in the craft,
stationary, toy and greeting card field worked on by Consultant during the term
of this Agreement. Upon completion of an Invention, Consultant shall present to
Futech the completed Invention, and all Disclosure Materials relating to the
Invention, and Futech shall have ninety (90) days from receipt of said
Disclosure Materials to determine whether or not to acquire the Invention upon
the terms and at the price demanded by Consultant.
If Futech does not exercise its right to acquire the Invention, then
Consultant shall be entitled to enter into a transaction, independently, or with
a third party for the manufacturing, marketing, distribution and/or sales of the
Invention, and Futech shall not be obligated to pay any Development Costs or
other expenses associated with the Invention.
3. Term. The term of this Agreement shall be three (3) years.
4. Compensation. Futech shall pay to Consultant $25,000.00 per year in
four quarterly installments, plus any out-of-pocket expenses incurred by
Consultant in performing this Agreement.
5. Consulting Services. During the term of this Agreement, Consultant
shall meet, confer, advise, consult and otherwise counsel Futech in matters
relating to crafts, stationary, toys and greeting cards. Consultant shall
provide such consulting services as and when needed, at times that are
convenient to Consultant and which shall not interfere with Consultant's full
time employment. Consultant shall not be required, however, to provide any
service under this paragraph 5 in excess of 20 hours in any calendar month.
6. Entire Agreement. Except as otherwise set forth herein this Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior understandings, if any, with respect
thereto. The parties do not intend to confer any benefit hereunder on any
person, firm, or corporation other than the parties hereto. No representation,
warranty, or agreement herein may be relied upon by any person not a party to
this Agreement. There are no oral promises, conditions, representations,
understandings, interpretations, or terms of any kind as conditions or
inducement to the execution hereof, or in effect between the parties, except as
may otherwise be expressly provided herein.
7. Further Assurances. The parties agree to do such further acts and
things and to execute and deliver such additional agreements and instruments as
either party may reasonably require to consummate, evidence, or confirm the
agreement contained herein in the manner contemplated hereby.
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8. Construction. Each party and its counsel have reviewed and revised this
Agreement, or had an opportunity to review and revise this Agreement, and 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 amendment or exhibits hereto.
9. 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.
10. Partial Invalidity. 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 part of this
Agreement. Further, any court striking any portion of this Agreement shall
modify the stricken terms as narrowly as possible to give as much effect as
possible to the intentions of the parties, as such intentions existed at the
time of the execution of this Agreement.
11. Authority. Each party for itself, its heirs, personal representatives,
successors, and assigns hereby represents and warrants that it has the full
capacity and authority to enter into, execute, deliver, and perform this
Agreement, that such execution, delivery and performance does not violate any
contractual or other obligation by which it is bound, and that this Agreement
constitutes an agreement binding upon, and enforceable against, that party.
12. Successors and Assigns. This agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.
13. Governing Law. This Agreement shall be governed by, interpreted under,
and construed and enforced in accordance with the laws of the State of
California. The parties agree that any litigation or arbitration arising from
the interpretation or enforcement of this Agreement shall be in the Orange
County Superior Court, and for this purpose each party to this Agreement (and
each person who shall become a party) hereby expressly and irrevocably consents
to the exclusive jurisdiction of such courts.
14. Attorney's Fees. In the event of any litigation or other proceeding
concerning this Agreement, the prevailing party(s) shall be entitled to recover
its costs, reasonable attorney's fees, and other reasonable expenses.
15. Titles and Headings. Titles and headings of sections of this Agreement
are for the convenience of reference only, are not intended to define, limit or
describe the scope or intent of any
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provision of this Agreement, and shall not affect the construction of any
provision of this Agreement.
16. Time. Time is of the essence of each and every provision of this
Agreement.
DATED the date first hereinabove written.
____________________________________
XXXXX X. XXXX
FUTECH EDUCATION PRODUCTS, INC.
By:____________________________________
XXXXXXX X. XXXXX, President
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