<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[x] Annual report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee required)
For the fiscal year ended April 30, 1996.
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee required)
For the transition period from ___________ to _____________.
Commission File No.: 0-17414
ADVANTAGE LIFE PRODUCTS, INC.
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(Name of Small Business Issuer in Its Charter)
Delaware 33-0213733
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
13902 N. Dale Mabry Highway, Suite 119
Tampa, Florida 33618
- ---------------------------------------- -----------------------
(Address of Principal Executive Offices) (Zip Code)
(813) 969-2002
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
Name of each Exchange
Title of Each Class on Which Registered
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Securities registered under Section 12(g) of the Exchange Act:
Common Stock
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(Title of Class)
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
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Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]
The issuer's revenues for its most recent fiscal year were:
$4,723,203.
The aggregate market value of the voting stock held by non-affiliates
of the registrant on September 6, 1996 totaled $1,491,190 (computed by
reference to the average closing bid and asked prices as of September 6, 1996
($2.50).
The number of shares outstanding of the issuer's common stock, as of
September 9, 1996, was 6,076,479 shares (1).
____________________
(1) Assumes that George Carras, a former director of the
Company, grants his approval to the issuance of certain shares of the
Company's common stock. See "Executive Compensation".
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
Advantage Life Products, Inc. ("Advantage Life", or the" Company") was
organized under Colorado law on June 19, 1986, under the name Advantage Video,
Inc. The Company changed its name on October 10, 1989 to "Advantage Life
Products, Inc." and continues to do business under that name. On July 1, 1993,
the Company acquired the assets of Lasting Cosmetics, Inc. ("Lasting
Cosmetics"), a privately held, New York based cosmetics marketing company. See
"Business of Advantage Life - Lasting Cosmetics". On August 22, 1994, the
Company reorganized as a Delaware corporation. On July 6, 1995, the Company
formed a new subsidiary, Advantage Acquisition, Inc. ("Advantage Acquisition"),
a New Jersey corporation, for the purpose of acquiring the assets of
Environmental Professionals, Inc. ("Environmental Professionals"). At the time
of the Environmental Professionals acquisition, the Company formed a new wholly
owned subsidiary for the purpose of owning, operating and managing the business
conducted by Advantage Life prior to the acquisition of Environmental
Professionals. See "Business of Advantage Life - Environmental Professionals".
Effective as of September 6, 1996, the Company acquired all of the
assets of Universal Mica Furniture, Inc. ("Universal Mica"), a retail home
furniture store located in Farmingdale, New York. The Company paid $2,000,000
to Universal Mica for the assets of Universal Mica by issuing 480,000 shares of
the Company's common stock(2) and the Company's promissory note in the original
principal amount of $800,000 (the "Universal Mica Note"). The entire principal
amount of the Universal Mica Note is due in one lump sum payment on August 31,
1999. Interest at the rate of 8% per annum, is payable on a monthly basis. The
Universal Mica Note is secured by all of the assets that the Company acquired
from Universal Mica.
The Company's executive offices are located at 13902 N. Dale Mabry
Highway Suite 119, Tampa, Florida, 33618, and its telephone number is (813)
969-2002.
BUSINESS OF ADVANTAGE LIFE
After the Environmental Professionals Acquisition in July 1995, the
Company was engaged in two lines of business: (a) the development and marketing
of consumer products, focusing on cosmetic, beauty and health products; and (b)
the environmental remediation and waste removal business. The
____________________
(2) The issuance of these shares is contingent upon the
Company obtaining the consent of George Carras, a former director of
the Company. See "Executive Compensation".
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Company is in the process of discontinuing both of these businesses and, as a
result of the Universal Mica acquisition, is now engaged in the retail
furniture business.
LASTING COSMETICS
As a result of the Lasting Cosmetics Acquisition during the
Company's 1994 fiscal year, the Company began marketing a line of hair
products, focusing the majority of its resources on distributing
Secret HairTM through (1) direct response television via 30 minute
infomercials, (2) select beauty salons, and (3) international sales
channels. On May 9, 1994 the Company entered into a marketing and
distribution agreement with Guthy-Renker Corporation ("GRC") of Palm
Desert, California for the electronic media distribution of Secret
Hair. Pursuant to the terms of the agreement, the Company and GRC
would each receive 50% of the net profits from the sales of the Secret
Hair product. Effective January 31, 1995, due to difficulties the
Company experienced with GRC, the Company commenced airing the
infomercial itself and began selling directly to salons via direct
marketing methods. See "Legal Proceedings". GRC is a developer and
distributor of infomercials. The Company has decided to discontinue
its "infomercial business" and is in the process of winding up the
affairs of its "infomercial business".
ENVIRONMENTAL PROFESSIONALS
On June 28, 1995, the Company entered into an agreement and
plan of merger (the "Environmental Professionals Merger Agreement")
under which Environmental Professionals a New Jersey-based
environmental services firm ("Environmental Professionals") was merged
into Advantage Acquisition, a newly formed acquisition subsidiary of
the Company. The merger became effective as of July 6, 1995, and
subsequent thereto the name of the surviving entity was changed to
"Environmental Professionals, Inc.".
Environmental Professionals was founded in October 1988, and
since its activation has engaged in the business of disposing of
environmentally sensitive waste. It provided various environmental
remediation services to industrial clients, major oil companies and
environmental consultants. These services consisted principally of
four categories: environmental site remediation, drummed waste
management, transportation and disposal of hazardous and non-hazardous
waste materials, and groundwater treatment service and equipment
supply. Environmental Professional's market area included New Jersey,
New York, Delaware, Maryland, and Eastern Pennsylvania. The Company
has decided to discontinue its "environmental remediation business"
and is in the process of winding up the affairs of its "environmental
remediation business".
UNIVERSAL MICA
The Company has recently acquired the assets of Universal
Mica, a business that operates a retail home furniture store in
Farmingdale, New York and intends to open two additional locations in
the greater New York area during the next twelve months. Universal
Mica, which
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does business under the tradename "Universal Modern Furniture",
currently operates out of an 11,000 square foot showroom, which it
leases.
Principal Products. Universal Mica sells modern and traditional home
furnishings.
Competition. The retail home furniture business is intensely
competitive and their are numerous competitors that have greater
resources than Universal Mica. Universal Mica believes that it will be
successful in implementing its business plan of expanding its home
furnishing business in the greater New York area during the next
twelve months.
Employees. Universal Mica has 7 full time employees.
Proposed Expansion Plans of Universal Mica. Universal Mica
contemplates expanding its business operations by acquiring additional
retail outlets. Universal Mica's operations are currently limited to
Long Island, New York area, however, it is Universal Mica's intention
to expand by opening two additional stores in the next twelve months.
ITEM 2. PROPERTIES
The Company's principal offices are located at 13902 N. Dale Mabry
Highway, Suite 119, Tampa, Florida 33618. These premises, comprising
approximately 600 square feet, are leased by the Company under a two year lease
at an annual lease rate of $7,920.
Universal Mica leases its only current retail outlet, located at 1815
Route 110, Farmingdale New York, pursuant to the terms of a five year "triple
net" lease agreement by and between Universal Mica and Josalco, Inc. The
showroom contains approximately 11,000 square feet and the monthly rental
expense is $12,600. Universal Mica has approximately three years left on this
lease. Property taxes on the leased property are approximately $13,000 per
year. Universal Mica also leases approximately 2,500 square feet of warehouse
space in Bayshore, New York. The annual rental, inclusive of property taxes, is
$8,400. This lease is also a five year lease, with approximately two years
remaining on the lease.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are defendants in various legal
actions which arise in the normal conduct of business. In addition, the Company
is a party in the following legal proceedings:
a. Advantage Life Products, Inc. and Lasting Cosmetics, Inc., a
Delaware Corporation v. Michael Ackerman and Lasting Cosmetics, Inc., a New
York Corporation, Case No. 730085 filed in
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Orange County Superior Court on May 23, 1994. A judgment was entered against
Advantage Life in the approximate amount of $400,000 in July 1996. This
judgment was entered against Advantage Life after its counsel withdrew and
Advantage Life intends to attempt to have this judgment overturned.
Additionally, Advantage Life has begun negotiations with Mr. Ackerman's
counsel to settle the judgment at a considerable discount.
b. More Direct Response, Inc., a California Corporation v.
Advantage Life Products, Inc., Case No. 739343, filed December 1, 1994. A
default judgment was entered against Advantage Life in this matter in the
amount of $458,000 in June 1996. This judgment was entered against Advantage
Life after its counsel withdrew and Advantage Life intends to attempt to have
this judgment overturned. Additionally, Advantage Life intends to settle the
judgment at a considerable discount.
c. Sherry Guimond, a pervious employee of the Company, brought an
action against Advantage Life Products, Inc., Don Danks, Parker Dale, James
Stapleton, Robert Fredericks, and George Carras, Case No. 740250, on December
21, 1994 in the Orange County Superior Court. Advantage Life settled this
lawsuit and agreed to pay Ms. Guimond $85,000, $10,000 of which has been paid
to date. The balance is currently past due.
d. Advantage Life Products, Inc. v. Guthy Renker Corporation;
Tri-Star Products, Inc., Revlon Consumer Products Corporation; Revlon General
Wig, Inc., American Telecast Corporation; First Class Marketing, Inc., case
number BC127193 filed in Los Angeles Superior Court, Central District on May 4,
1995. The claims of Advantage Life against Guthy Renker have been dismissed
with prejudice.
e. Guthy Renker Corporation v. Advantage Life Products, Inc., and
Don Danks, Cross Complaint filed June 16, 1995 in Los Angeles Superior Court,
for Breach of Written Contract, Conversion, Negligent Misrepresentation, Bad
Faith Denial of the Existence of a Contract, Dissolution and Accounting, False
Designation or Origin and False Description, Rescission and Restitution,
Defamation, Declaratory Relief, and Injunctive Relief. Guthy-Renker is seeking
approximately $4,500,000 in damages and reimbursement from Advantage Life.
Advantage Life believes the facts of which it has knowledge of will enable it
to prevail on all claims from Guthy-Renker.
f. There are various lawsuits against Environmental
Professionals, however, Environmental Professionals will be an inactive
subsidiary of Advantage Life and it is the opinion of management that the
claims that any creditor has against Environmental Professionals will not
permit that creditor to obtain any relief against Advantage Life.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Advantage did not submit any matters to a vote of security holders during the
fiscal year covered by this report.
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PART II
ITEM 5. MARKET FOR ADVANTAGE COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock trades on The Nasdaq Small-Cap Market under
the symbol ADVT. The following table sets forth the high and low bid prices of
the Company's common stock on The Nasdaq Small-Cap Market for each of the
fiscal quarters indicated:
FISCAL QUARTER ENDED
<TABLE>
<CAPTION>
7/31/94 10/31/94 1/31/95 4/30/95 7/31/95 10/31/95 1/31/96 4/30/96
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HIGH $1.97 $3.19 $3.63 $2.38 $.81 $6.00 $5.38 $1.06
LOW 1.12 1.31 1.63 .66 .31 1.75 .69 .38
</TABLE>
The foregoing table reflects inter-dealer prices, without retail
mark-ups, mark-downs or commissions and may not necessarily represent actual
transactions. No dividends have been declared or paid since the Company's
inception other than a stock dividend of common stock to the holders of common
stock of record as of August 1, 1995. It is not anticipated that dividends will
be paid in the foreseeable future. As of August 31, 1996, there were 522 record
holders of the Company's common stock.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Plan of Operation
The only operating revenues that the Company currently receives are
those generated by Universal Mica, the Company's wholly owned subsidiary that
is engaged in the business of owning and operating a retail home furniture
store and from the winding down of the Company's infomercial business and
environmental business. It is the intention of Universal Mica to expand its
business operations by acquiring other retail furniture operations. Universal
Mica's operations are currently limited to operating from one location on Long
Island, New York, however, it is Universal Mica's intentions to expand to other
locations in the greater New York area during the next twelve months.
In addition to the Company's plans to acquire additional retail
furniture locations through its wholly owned subsidiary Universal Mica, it is
also the intention of the Company to acquire other businesses. The Company has
had numerous conversations with various business owners, however, the Company
currently has no binding commitments to acquire additional business
opportunities. The Company does not currently have a commitment from an
underwriter to raise capital for the Company, moreover, there can be no
assurance given that the Company will be able to successfully acquire the debt
or equity funding necessary to expand the business of Universal Mica or acquire
other businesses, or if so acquired, successfully operate such businesses at a
profitable level.
Results of Operations
Gross revenues for fiscal 1996 were $5,530,245, down 60% compared to
$13,778,762 for fiscal 1995. Returns and allowances for fiscal 1996 were
$807,042 compared to $3,885,583 for fiscal 1994. After the returns and
allowances, the net sales for fiscal 1996 were $4,723,203, down 52% from fiscal
1995 net revenues of $9,893,179. The significant decrease in both gross and net
revenues was the result of the discontinuance of Secret Hair sales, a product
that was discontinued during the Company's 1996 fiscal year.
The Company lost $3,135,205 from operations during its 1996 fiscal year
compared to losses from operations of $1,705,211 during its 1995 fiscal year.
The Company also wrote down the carrying value of its goodwill by $1,000,000
and also wrote off under intangible assets of $1,099,892.
Financial Condition and Liquidity
The Company has sought to raise capital to expand its business
operations by the sale of its common stock. To that end the Company has sold a
total of 5,400,000 shares of its common stock (adjusted, in part, to give
effect to the Company's reverse stock split declared June 24, 1996) for
$5,500,000. To date, the Company has received cash consideration of $325,000
and has been relieved of liabilities
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totaling $175,000. The balance of the purchase price was paid by the delivery
of the purchasers' promissory notes totaling $5,000,000. The Company agreed to
extend the maturity date of two of the promissory notes with a principal
balance of $2,600,000, for an additional year, until August 31, 1997. In
consideration for granting the extension, the holders of the notes agreed to
pledge additional collateral for the payment of the amounts due under the
notes. The remaining promissory note, in the principal amount of $2,400,000
also matures on August 31, 1997. The Company believes that it will collect the
principal amounts due under the promissory notes prior to their respective
maturity dates. If that assumption is accurate, the Company should have
sufficient working capital to conduct its affairs during the next twelve
months, however, there can be no assurance that the Company will successfully
collect amounts owed under the promissory notes prior to their respective
maturity dates, or, on the maturity dates, as the Company has had the extend
the date for payment on two of the notes that it had received.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The independent auditors report, consolidated financial statements and
schedules listed in the accompanying index are filed as part of this report.
See Index to Financial Statements on page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company's independent accountants for its fiscal year ended April
30, 1995, Corbin & Wertz, resigned on July 16, 1996. The Company's 1995 fiscal
year financial statements contained a "going concern" opinion. The decision to
resign was made by Corbin & Wertz. There were no disagreements with the former
accountants on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure. The Company retained the
firm of Guida & Jimenez, P.A. as the Company's independent accountants on July
30, 1995.
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PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS
The following individuals are the Directors and Officers of the
Company. All Directors are elected annually by the shareholders to serve until
the next annual meeting of shareholders and until their successors are duly
elected and qualified. Officers are elected annually by the Board of Directors
to serve at the pleasure of the Board.
<TABLE>
<CAPTION>
NAME POSITION AGE
<S> <C> <C>
Alan S. Lipstein Chairman of the Board and 48
Director, President and Chief
Executive Officer
Gerard Norton Secretary and Director 60
</TABLE>
Alan S. Lipstein, age 48, is the President, Chief Executive Officer, Chief
Financial Officer and Chairman of the Board of Directors of the Company. Mr.
Lipstein became a director of the Company and its Chief Executive Officer on
July 6, 1995, positions he resigned on January 22, 1996. Mr. Lipstein was
reappointed to the Company's Board of Directors on May 30, 1996, at which time
he resumed the positions of Chief Executive Officer, Chief Financial Officer
and Chairman of the Board of Directors, positions Mr. Lipstein continues to
hold. Mr. Lipstein is also the President, Chief Executive Officer and Chairman
of the Board of Directors of Prentice Capital, Inc., a corporation whose stock
is traded on the NASDAQ OTC Bulletin Board. Mr. Lipstein has served in such
capacity since August 1994. Prentice Capital is engaged in the business of
owning and operating podiatry practices in Tampa, Florida and intends to engage
in the business of owning and operating gaming vessels based in South Florida.
Mr. Lipstein also serves as the Chief Executive Officer and President of
Med-Vax Technologies, Inc. ("Med-Vax Technologies"), a corporation that intends
to offer its stock to the public in a public offering during the fourth quarter
of 1996. Mr. Lipstein has held such position since December 1995. Med-Vax
Technologies plans to engage in the business of selling medical equipment for
the treatment of back pain to doctors, hospitals and other health care
providers. Mr. Lipstein has also served as the Vice President and a Director of
Environmental Professionals since July 1993. Mr. Lipstein also served as the
Chief Executive Officer and President of Eagle Vision, Inc., a corporation that
previously owned Environmental Professionals. Mr. Lipstein has held such
position since 1989.
Dr. Gerard Norton, age 60, is Vice President-Finance, Secretary and a Director
of the Company. Dr. Norton became a director and an officer of the Company on
July 6, 1995, positions he resigned on
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January 22, 1996. Dr. Norton was reappointed to the Company's Board of
Directors on May 30, 1996, at which time he resumed the positions of director,
Vice President-Finance, and Secretary, positions Dr. Norton continues to hold.
Dr. Norton is also a Vice President and a Director of Prentice Capital, Inc.,
a corporation whose stock is traded on the NASDAQ OTC Bulletin Board. Dr.
Norton has served in such capacity since August 1994. Prentice Capital is
engaged in the business of owning and operating podiatry practices in Tampa,
Florida and intends to engage in the business of owning and operating gaming
vessels based in South Florida. While serving as the Vice President of Prentice
Capital, Inc., Dr. Norton also served as the Vice President of Med-Vax
Technologies, a corporation that intends to offer its stock to the public in a
public offering during the fourth quarter of 1996. Dr. Norton has held such
position since December 1995. Med-Vax Technologies plans to engage in the
business of selling medical equipment for the treatment of back pain to
doctors, hospitals and other health care providers. Dr. Norton has served as
the Vice President and a Director of Environmental Professionals since July
1993. Dr. Norton also served as the Vice President of Eagle Vision, Inc., a
corporation that previously owned Environmental Professionals. Dr. Norton has
held such position since 1989. Previous thereto, Dr. Norton was engaged in
business as a self employed consultant, for the period beginning July 1990 and
ending August 1991, on a full time basis by Great Lakes Environmental, Ltd., a
Canadian corporation ("Great Lakes") that contemplated acquiring the common
stock of Frontier Chemical. Dr. Norton's duties included analyzing, on behalf
of Great Lakes, the economic feasibility of acquiring Frontier Chemical. From
February 1990 to July 1990, Dr. Norton was employed as the President of Xysys
Systems, Inc., a corporation based in Ann Arbor, Michigan, engaged in the
automotive computer aided design ("CAD") software business. Prior thereto, from
January 1989 to February 1990, Dr. Norton worked in England and, as a self
employed consultant, provided managerial consulting services, on a full time
basis, to Ortech, Ltd., an engineering firm specializing in providing services
to the coal mining industry. From August 1988 to December, 1988, Dr. Norton
was employed as the Chairman and Chief Executive Officer of Xysys
International, Inc., the holding company for Xysys Systems, Inc.
SECTION 16 REPORTS
The requirements imposed by Section 16(a) of the Securities Exchange
Act of 1934, as amended, provide that the Company's Officers and Directors, and
persons who own more than ten percent of the Company's Common Stock, file
initial statements of beneficial ownership (Form 3), and statements of changes
in beneficial ownership (Forms 4 or 5) with the Securities and Exchange
Commission ("SEC"). Officers, directors and greater than ten percent
shareholders are required by SEC regulations to furnish the Company with copies
of all such forms they file. Based solely on its review of the copies of such
forms received, the Company believes that all of its officers, directors and
greater than 10% shareholders filed such reports in a timely manner, other than
reports that Mr. Lipstein and Dr. Norton should have filed upon the receipt and
subsequent sale of shares issued to them in August 1995 and reports that should
have been filed by two shareholders of the Company, Vietri Investments and
Roscom, Ltd. that, at the time of the acquisition and disposition of shares of
the Company's common stock, each owned more than 10% of the Company's common
stock, upon the acquisition and disposition of shares that such entities
acquired during the Company's 1996 fiscal year.
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ITEM 11. EXECUTIVE COMPENSATION
Alan Lipstein, the Company's Chief Executive Officer, and Gerry
Norton, the Company's Vice-President of Finance and Secretary, received 300,000
and 100,000 shares of the Company's common stock, respectively, as payment for
services to be rendered to the Company during the five year period beginning
August 1, 1995. George Carras, who served as the Chief Executive Officer of the
Company during a portion of the Company's 1996 fiscal year, was paid a cash
salary of $108,000. Mr. Carras was also issued 50,000 shares of the Company's
common stock during the Company's 1996 fiscal year, and Bob Fredericks, a
director of the Company, was issued 50,000 shares of the Company's common stock
during the Company's 1996 fiscal year.
The Company has entered into employment agreements with each of
Messrs. Lipstein, Norton and Carras. The employment agreements between the
Company and Messrs. Lipstein and Norton expire on July 31, 2000 and provide for
no additional consideration to be paid to Messrs. Lipstein or Norton, other
than the shares that were issued to them on the date the employment agreements
were executed. Mr. Carras's employment agreement was for a three year term
beginning December 1, 1995 and ending November 30, 1998. On May 30, 1996, the
Company redefined the duties of Mr. Carras. As of May 30, 1996, Mr. Carras
resigned as an officer and director of the Company and became a consultant to
the Company, agreeing to provide up to 20 hours per week, of accounting and
other financial services for the Company during the remaining term of the
employment agreement. The Company agreed to pay Mr. Carras $300,000 for
performing such consulting services during the remaining term of his employment
agreement. On or about May 30, 1996, the Company paid Mr. Carras $100,000 of
that amount, and agreed to issue to Mr. Carras shares of its common stock with
a fair market value of $200,000. The Company further agreed to file a
registration statement with the Securities and Exchange Commission, including
therein, the shares to be issued to Mr. Carras (the "Registration Statement").
Until such time as Mr. Carras is able to dispose of the shares to be issued to
him, and until the Company satisifies a debt to one of its creditors, Sherri
Guimond, the Company agreed not to issue any additional shares without the
consent of Mr. Carras.
On May 30, 1996, the Company also agreed to issue additional shares of
its common stock to each of Messrs. Fredericks and Carras, so that the fair
market value of the 50,000 shares previously issued to each of them during the
Company's 1996 fiscal year would had a fair market value of $200,000 ($100,000
for each of Messrs. Carras and Fredericks) on the date that the Company's then
contemplated reverse stock split would be effective (June 24, 1996). The
Company further agreed to include the shares to be issued to Messrs. Carras and
Fredericks in the Registration Statement.
Advantage Life may adopt additional compensation programs at a later date
suitable for its executive personnel. Advantage Life is unable to predict at
this time the format or manner of compensation to be included in any such
program.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table enumerates, as of September 9, 1996, the name,
address and ownership, both by numerical holding and percentage interest, of
Advantage Life's Common Stock by (1) the beneficial owners of more than five
percent of Advantage Life's outstanding Common Stock; (2) the Directors and
Executive Officers of Advantage Life, individually; and (3) the Directors and
Executive Officers as a group. There are no shares which each of the following
could purchase under outstanding stock options, warrants, conversion privileges
or other rights which were exercisable as of September 9, 1996.
In preparing the following tables, Advantage Life has relied upon
statements filed with the Securities and Exchange Commission by beneficial
owners of more than 5 percent of Advantage Life's outstanding Common Stock
pursuant to Section 13(d) or 13(g) of the Securities Act of 1934, unless
Advantage Life knew or had reason to believe that the information contained in
such statements was not complete or accurate, in which case Advantage Life
relied upon information which it considered to be accurate and complete.
<TABLE>
<CAPTION>
Title Percent
Class Name and Address Amount of Class
- ----- ---------------- ------ --------
<S> <C> <C> <C>
Common George Lafauci 480,000 7.90%
c/o Universal Mica
1815 Route 110
Farmingdale, New York 11735
Common Cimtran, Ltd. 5,000,000 82.28%
99 Saltergate
Chesterfield, Derbyshire
401LD5
</TABLE>
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS WITH MANAGEMENT
AND OTHERS
On August 1, 1995, Advantage Life entered into an employment agreement
with Alan S. Lipstein (the "Lipstein Employment Agreement"), wherein Mr.
Lipstein and Advantage Life executed a 5 year employment agreement, pursuant to
which Mr. Lipstein was to serve as the President of Advantage Life. At the time
such employment agreement was executed, Mr. Lipstein was an officer and
director of Advantage Life. Mr. Lipstein received 300,000 shares of the common
stock of Advantage Life as payment for his services to be rendered under the
employment agreement.
On August 1, 1995, Advantage Life entered into an employment agreement
with Gerard Norton (the "Norton Employment Agreement"), wherein Dr. Norton and
Advantage Life executed a 5 year employment agreement, pursuant to which Dr.
Norton was to serve as the Vice-President and Secretary of Advantage Life. At
the time such employment agreement was executed, Dr. Norton was an officer and
director of Advantage Life. Dr. Norton received 100,000 shares of the common
stock of Advantage Life as payment for his services to be rendered under the
employment agreement.
On or about October 31, 1995, Mr. Carras and Bob Fredericks, who were
then directors of the Company, were each issued 50,000 shares of the Company's
common stock for services previously rendered to the Company.
On November 14, 1995, Advantage Life entered into an employment
agreement with George Carras (the "Carras Employment Agreement"), wherein Mr.
Carras and Advantage Life executed a three year employment agreement, pursuant
to which Mr. Carras was to serve as the President and Chief Executive Officer
of Advantage Life. At the time such employment agreement was executed, Mr.
Carras was a director of Advantage Life. Mr. Carras was to be paid $108,000 per
year for his services under the employment agreement.
-14-
<PAGE> 15
ITEM 13. EXHIBITS, LISTS, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
(i) and (ii) Financial statements and schedules:
The Index to Financial Statements appearing on page F-1 are
incorporated herein by this reference.
(iii) Exhibits
<TABLE>
<CAPTION>
Number Description
- --------------------
<S> <C>
3.1 Articles of Incorporation, as amended. Incorporated by reference to Exhibit 3.1 to the Company's Registration
Statement on Form S-18, Registration No. 33-18036-LA ("Registration Statement").
3.2 Certificate of amendment of Articles of Incorporation as filed on October 10, 1989. Incorporated by reference
to Exhibit 1.2 to the Company's Form 10-K report to the Securities and Exchange Commission for the fiscal year
ended April 30, 1990.
3.3 Bylaws. Incorporated by reference to Exhibit 3.2 to the Company's Registration Statement.
10.1 1986 Incentive Stock Option Plan. Incorporated by reference to Exhibit 10.2 to the Company's Registration
Statement.
10.2 1989 Incentive Stock Option, Non-Qualified Option and Restricted Stock Purchase Plan (the "1989 Plan").
Incorporated herein by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-8,
registration No. 33-33648 ("S-8").
10.3 Form of Incentive Stock Option Agreement pertaining to the 1989 Plan. Incorporated herein by reference to
Exhibit 4.3 to the Company's S-8.
10.4 Form of Non-Qualified Stock Option Agreement pertaining to the 1989 Plan. Incorporated herein by reference to
Exhibit 4.4 to the Company's S-8.
10.5 Form of Restricted Common Stock Purchase Agreement pertaining to the 1989 Plan. Incorporated herein by
reference to Exhibit 4.5 to the Company's S-8.
10.6 Agreement - Employment - Danks - December 1, 1986, as amended. Incorporated by reference to Exhibit 10.19 to
the Company's Registration Statement.
10.7 Lease - Manufacturing Facility - York, Nebraska - June 22, 1988. Incorporated by reference to Exhibit 10.53 to
the Company's Registration Statement.
10.8 Agreement - More Direct Response - CigArrest Retail Sales - January 10, 1989. Incorporated by reference to
Exhibit 10.53 to the Company's Form 10-K report to the Securities and Exchange Commission for the fiscal year
ended April 30, 1989.
10.9 Agreement - More Direct Response - CigArrest Gum Retail Sales - January 10, 1989. Incorporated by reference to
Exhibit 10.54 to the Company's Form 10-K report to the Securities and Exchange Commission for the fiscal year
ended April 30, 1989.
10.10 Smoking Alternative Products Marketing Agreement - Daleco/Advantage Partners I, Daleco Capital Corp. - June 4,
1990. Incorporated by reference to Exhibit 10.16 to the Company's Form 1O-K report to the Securities and
Exchange Commission for the fiscal year ended April 30, 1990.
10.11 Borrowing Documents - Security Agreement and Promissory Note - Line of Credit - Sanwa Bank California - August
30, 1990. Incorporated by reference to Exhibit 10.11 to the Company's Form 10-K report to the Securities and
Exchange Commission for the fiscal year ended April 30, 1991.
</TABLE>
-15-
<PAGE> 16
<TABLE>
<S> <C>
10.12 Lease - Administrative Office - Laguna Hills, California - Saddleback II Associates - May 30, 1991.
Incorporated by reference to Exhibit 10.12 to the Company's Form 10-K report to the Securities and Exchange
Commission for the fiscal year ended April 30, 1991.
10.13 Agreement to settle litigation - More Direct Response, Inc. - September 14, 1990. Incorporated by reference to
Exhibit 10.13 to the Company's Form 10-K report to the Securities and Exchange Commission for the fiscal year
ended April 30, 1991.
10.14 Agreement - Balance For Life - Exclusive Marketing For Smokers Choice and QuitPower - September 26, 1991.
Incorporated by reference to Exhibit 10.14 to the Company's Form 1O-K report to the Securities and Exchange
Commission for the fiscal year ended April 30, 1992.
11.15 Agreement - More Direct Response - Amendment To CigArrest Plan And Gum Distribution - October 8, 1991.
Incorporated by reference to Exhibit 10.15 to the Company's Form 10-K report to the Securities and Exchange
Commission for the fiscal year ended April 30, 1992.
11.16 Agreement - Beder Health Associates - QuitPower - December 23, 1991. Incorporated by reference to Exhibit 10.16
to the Company's Form 1O-K report to the Securities and Exchange Commission for the fiscal year ended April 30,
1992.
10.17 Agreement - Cruttenden & Company - Private Placement Of Up To 2,700,000 Shares - December 27, 1991.
Incorporated by reference to Exhibit 10.17 to the Company's Form 1O-K report to the Securities and Exchange
Commission for the fiscal year ended April 30, 1992.
10.18 Agreement - Mr. Kiki Vandeweghe - Be Safe spokesperson - April 1, 1992. Incorporated by reference to Exhibit
10.18 to the Company's Form 10-K report to the Securities and Exchange Commission for the fiscal year ended
April 30. 1992.
10.19 Agreement - The Johns Hopkins School of Hygiene and Public Health - Be Safe - April 20, 1992. Incorporated by
reference to Exhibit 10.19 to the Company's Form 10-K report to the Securities and Exchange Commission for the
fiscal year ended April 30, 1992.
10.20 Agreement: Rockefeller, Rothschild & Steele - Private Placement Of Up To 3,500,000 Shares - June 1, 1992.
Incorporated by reference to Exhibit 10.20 to the Company's Form 10-K report to the Securities and Exchange
Commission for the fiscal year ended April 30, 1993.
10.21 Agreement - Deralee Scanlon - Consulting Agreement - Cholest Control - April 20, 1993. Incorporated by
reference to Exhibit 10.21 to the Company's Form 10-K report to the Securities and Exchange Commission for the
fiscal year ended April 30, 1993.
10.22 Agreement - Lip Stick Saver - Licensing Agreement - April 13, 1993. Incorporated by reference to Exhibit 10.22
to the Company's Form 10-K report to the Securities and Exchange Commission for the fiscal year ended April 30,
1993.
10.23 Agreement - Investor Resource Services - Consulting Agreement - April 12, 1993. Incorporated by reference to
Exhibit 10.23 to the Company's Form 10-K report to the Securities and Exchange Commission for the fiscal year
ended April 30, 1993.
10.24 Agreement - Regal Communications - License Agreement - February 1, 1993. Incorporated by reference to Exhibit
10.24 to the Company's Form 10-K report to the Securities and Exchange Commission for the fiscal year ended
April 30, 1993.
10.25 Agreement - Regal Communications - Escrow & Pledge Agreement - February 1, 1993. Incorporated by reference to
Exhibit 10.26 to the Company's Form 10-K report to the Securities and Exchange Commission for the fiscal year
ended April 30, 1993.
10.27 Agreement - Regal Communications - Promissory Note - February 1, 1993. Incorporated by reference to Exhibit
10.27 to the Company's Form 10-K report to the Securities and Exchange Commission for the fiscal year ended
April 30, 1993.
10.28 Agreement - Sun Gen Lo Sun - Promissory Note & Escrow Agreement - February 11, 1993. Incorporated by reference
to Exhibit 10.28 to the Company's Form 10-K report to the Securities and Exchange Commission for the fiscal
year ended April 30, 1993.
10.29 Agreement - Michael Ackerman - Promissory Note & Security Agreement -June 4, 1993. Incorporated by reference to
Exhibit 10.29 to the Company's Form 10-K report to the Securities and Exchange Commission for the fiscal year
ended April 30, 1993.
</TABLE>
-16-
<PAGE> 17
<TABLE>
<S> <C>
10.30 Agreement - Lasting Cosmetics - Incorporated by reference from Form 8-K -July 23, 1993.
10.31 Agreement - Guthy-Renker Corporation - May 5, 1994. Incorporated by reference to Exhibit 10.31 to the Company's
Form 10-K report to the Securities and Exchange Commission for the fiscal year ended April 30, 1994.
10.32 Lease - office and warehouse - Irvine, California - Irvine Business Center Investors - May 11, 1994.
Incorporated by reference to Exhibit 10.32 to the Company's Form 10-K report to the Securities and Exchange
Commission for the fiscal year ended April 30, 1994.
10.33 Certificate of amendment of Articles of Incorporation as filed on November 10, 1994. Incorporated by reference
to Exhibit 1.2 from Form 8-K - November 10, 1994.
10.34 Agreement and Plan of Merger - Advantage Acquisition, Eagle Vision, Environmental Professionals Incorporated by
reference to Exhibit 2.2 from Form 8-K - July 20, 1995.
10.35 Employment Agreement between the Company and Alan S. Lipstein, dated August 1, 1995.
10.36 Employment Agreement between the Company and Gerald Norton, dated August 1, 1995.
10.37 Employment Agreement between the Company and George M. Carras, dated November 14, 1995.
10.38 Extension Agreement between the Company and Roscom, Ltd., effective as of August 31, 1996.
10.39 Extension Agreement between the Company and Vietri Investments, effective as of August 31, 1996.
10.40 Capital Stock Purchase Agreement between the Company and Cimtran, Ltd., together with promissory note and stock
pledge agreement, effective as of August 31, 1996.
10.41 Agreement and Plan of Reorganization - The Company, Advantage Life Acquisition, Universal Mica Products, Inc.
and George Lafauci, effective September 6, 1996.
22. The Company has three subsidiaries: Lasting Cosmetics, Inc., a Delaware corporation, Environmental Professionals, Inc. and
Universal Mica Products, Inc.
27. Financial Data Schedule (For SEC Use Only)
</TABLE>
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the last quarter of the
period covered by this report.
-17-
<PAGE> 18
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized on this 9th day of September 1996.
Advantage Life Products, Inc.
By: /s/ Alan S. Lipstein
------------------------------
Alan S. Lipstein
Chief Executive Officer
In accordance with the Exchange, this Report has been signed below by
the following persons on behalf of the Registrant, and in the capacities and on
the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/Alan S. Lipstein Chairman of the Board of Directors,
- -------------------------------- Chief Executive Officer,
Alan S. Lipstein Chief Financial Officer and
Principal Accounting Officer September 9, 1996
/s/Gerard Norton Secretary and Director September 9, 1996
- --------------------------------
Gerard Norton
</TABLE>
-18-
<PAGE> 19
[GUIDA & JIMENEZ, P.A. CERTIFIED PUBLIC ACCOUNTANTS LETTERHEAD]
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
and Stockholders of
Advantage Life Products, Inc.
Tampa, Florida
We have audited the consolidated balance sheet of Advantage Life Products, Inc.
and subsidiaries as of April 30, 1996 and the related statements of operations,
stockholders' equity and cash flows for the year ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audit in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Advantage Life Products, Inc.
and subsidiaries of April 30, 1996 and the results of their operations, and
their cash flows for the year ended, in conformity with generally accepted
accounting principles.
/s/ Guida & Jimenez, P.A.
- --------------------------
GUIDA & JIMENEZ, P.A.
September 6, 1996
<PAGE> 20
ADVANTAGE LIFE PRODUCTS, INC. SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 30, 1996 AND 1995
<TABLE>
<CAPTION>
ASSETS 1996 1995
--------- --------
<S> <C> <C>
Current Assets:
Cash $ 204,171 $ 83,538
Accounts Receivable, less allowance for uncollectible
accounts of $175,179 in 1996, $144,567 in 1995 220,082 80,839
Income tax receivable 87,214 ---
Note receivable from stockholder, net of allowance of $185,000 25,000 25,000
Inventory 34,274 180,849
Production costs --- 45,812
Other current assets 40,557 17,434
---------- ----------
Total current assets 611,298 433,472
---------- ----------
Property & Equipment:
Property & equipment, net of accumulated
depreciation of $318,693 in 1996, $419,789 in 1995 582,423 22,131
---------- ----------
Other Assets:
Goodwill, net of accumulated amortization of $1,565,021 1,975,691 1,163,794
Note receivable, related party 15,000 ---
Deferred compensation 900,000 ---
Net deferred tax asset 0 ---
Other 3,563 ---
---------- ----------
Total other assets 2,894,254 1,163,794
---------- ----------
$4,087,975 $1,619,397
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities :
Notes payable $ 376,625 $ 6,625
Accounts payable 1,375,407 480,111
Accrued product returns --- 226,564
Accrued royalties --- 374,255
Other accrued expenses 793,787 209,377
Note payable, current portion 22,400 ---
---------- ----------
Total current liabilities 2,568,219 1,296,932
---------- ----------
Non-current Liabilities:
Note Payable, long-term 33,816 ---
---------- ----------
Stockholder's Equity:
Common stock, $0.16 par value, 25,000,000 shares authorized;
issued and outstanding, 296,476 in 1996 and 19,845 in 1995 47,437 31,752
Additional paid-in capital 12,165,455 6,051,837
Accumulated deficit (7,951,952) (5,761,124)
---------- ----------
Subtotal 4,260,940 322,465
Less Common stock subscribed (2,775,000) ---
---------- ----------
Total Stockholder's equity 1,485,940 322,465
---------- ----------
$4,087,975 $1,619,397
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE> 21
ADVANTAGE LIFE PRODUCTS, INC. SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR EACH OF THE YEARS IN THE TWO YEAR PERIOD ENDED APRIL 30, 1996
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
REVENUES:
Sales $ 5,530,245 $13,778,762
Returns and allowances (807,042) (3,885,583)
----------- -----------
Total Revenues 4,723,203 9,893,179
----------- -----------
COSTS AND EXPENSES:
Cost of goods sold 2,894,693 2,353,164
Selling, general, and administrative 4,963,715 9,245,226
----------- -----------
Total costs and expenses 7,858,408 11,598,390
----------- -----------
LOSS FROM OPERATIONS (3,135,205) (1,705,211)
----------- -----------
OTHER INCOME (EXPENSE):
Other income (1,099,892) 40,897
Write-off of goodwill (1,000,000) ---
----------- -----------
Total other income (expense) (2,099,892) 40,897
----------- -----------
LOSS BEFORE INCOME TAXES (5,235,097) (1,664,314)
INCOME TAX PROVISION 800 800
----------- -----------
NET LOSS $(5,235,897) $(1,665,114)
=========== ===========
LOSS PER COMMON SHARE $ (21.30) $ (83.91)
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 245,807 19,845
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 22
ADVANTAGE LIFE PRODUCTS, INC. SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For Each of the Two-Year Period Ended April 30, 1996
APRIL 30, 1996 AND 1995
<TABLE>
<CAPTION>
(RESTATED)
Common Stock Additional
------------------------ Paid-in Accumulated
Shares Amount Capital Deficit Total
--------- ------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Balances, April 30, 1994 $17,505 $2,801 $5,408,051 $(4,096,010) $1,314,842
Issuance of common stock:
For exercise of options 79 13 23,562 --- 23,575
For offering costs --- - (23,569) --- (23,569)
For services rendered 42 7 19,526 --- 19,533
For conversions of debt 684 110 153,890 --- 154,000
For trade payables 83 13 21,987 --- 22,000
For cash, net of related
commissions and offering
costs of $23,569,
pursuant to private
placements 1,119 179 327,019 --- 327,198
For cash pursuant to
marketing agreement 333 53 149,947 --- 150,000
Net loss for year ended
April 30, 1995 --- --- --- (1,665,114) (1,665,114)
----------------------- ---------- ----------- ---------
Balances, April 30, 1995 $19,845 $3,176 $6,080,413 $(5,761,124) $ 322,465
======= ====== ========== =========== =========
</TABLE>
See accompanying notes to consoldiated financial statements.
F-4
<PAGE> 23
ADVANTAGE LIFE PRODUCTS, INC. SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For each of the Two-Year Period Ended April 30, 1996
<TABLE>
<CAPTION>
Common Stock Additional
----------------------- Paid-in Accumulated
Shares Amount Capital Deficit Total
------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance May 1, 1995 19,845 3,176 6,080,413 (5,761,124) 322,465
Issuance of stock on the acquisition
of Environmental Professional 46,306 7,409 4,066,579 (1,242,876) 2,831,112
Advantage Life Products elimination --- --- (3,438,435) 4,287,945 849,510
Shares issued under employment
agreements and other 26,250 4,200 2,488,750 --- 2,492,950
Stock subscribed 200,000 32,000 2,968,000 --- 3,000,000
Additional acquisition cost 4,075 652 148 --- 800
Net (Loss) for the year --- --- --- (5,235,897) (5,235,897)
------- ------ ---------- --------- ---------
Balance, April 30, 1996 296,476 47,437 12,165,455 (7,951,952) 4,260,940
======= ====== ========== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 24
ADVANTAGE LIFE PRODUCTS, INC. SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For Each Of The Years In The Two Year Period Ended April 30, 1996
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(5,235,897) $(1,645,630)
Adjustments to reconcile net
loss to net cash used
in operating activities:
Depreciation and amortization 1,224,471 147,075
Provision (benefit) for allowance
for uncollectible 248,025 (257,886)
Non-cash charges & other 5,132,027 ---
Non-cash incentives to convert note payable --- 44,000
Changes in operating assets and liabilities:
Accounts receivable (139,243) 1,181,332
Inventory 146,575 223,745
Prepaid expenses and other (60,962) 565,577
Other accrued expenses 17,209 328,635
Notes payable (370,000) 0
Accounts payable (895,296) (1,302,599)
----------- -----------
Net cash (used in) operating activities 67,709 (715,751)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Note receivable from stockholder 15,000 250,000
Cash received from sale of stock 200,000 ---
Capital expenditures (152,233) (22,783)
----------- -----------
Net cash provided by investing activities 62,767 227,217
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payment on note payable (49,899) ---
Advances to affiliates 0 ---
Issuance of note payable 40,056 60,000
Proceeds from issuance of common stock & warrants, net --- 477,204
----------- -----------
Net cash provided by financing activities (9,843) 537,204
----------- -----------
NET CHANGE IN CASH 120,633 48,670
CASH, BEGINNING OF YEAR 83,538 34,868
----------- -----------
CASH, END OF YEAR $ 204,171 $ 83,538
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 25
ADVANTAGE LIFE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For Each Of The Years In The Two-Year Period Ended April 30, 1996
NOTE 1 - GENERAL
Advantage Life Products, Inc. (the Company or Advantage) was formed under
Colorado law on June 19, 1986 under the name Advantage Video, Inc. On January
15, 1987, the Company changed its name to Advantage Entertainment, Inc. and on
October 10, 1989, the Company changed its name to Advantage Life Products,
Inc. On August 22, 1994, the Company reincorporated in the State of Delaware.
On July 1, 1993, the Company acquired Lasting Cosmetics, Inc., which enabled
the Company to obtain rights to market and distribute Secret Hair and Lasting
Kiss Cosmetics (see Note 11). On July 6, 1995, the Company consummated the
acquisition of Environmental Professionals, Inc. (EPI), an environmental
testing and remediation company (see Note 11).
Advantage develops and markets retail consumer products, focusing on cosmetic,
beauty and health products. Advantage's emphasis has been the marketing of
Jose Eber's Secret Hair, primarily through infomercials.
NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. The Company's
losses from operations of $5,235,097 and $1,705,211 for the years ended April
30, 1996 and 1995, respectively, and its negative working capital at April 30,
1996 of $1,956,121, raise substantial doubt about its ability to continue as a
going concern for a reasonable period of time.
Subsequent to the end of the year, the Company entered into an agreement to
sell 5,000,000 shares of its $.16 par value common stock for $2,500,000,
payable $100,000 at closing and a single maturity promissory note in the amount
of $2,400,000, including interest at the rate of 8% per annum due on August 31,
1997 (Note 12). In addition, the Company entered into a merger agreement with
Universal Mica, Inc. (Note 12). Management believes that the infusion of cash
from the sale of stock, and cash from the operations of Universal Mica, Inc.
will provide the Company sufficient funs to remain a going concern. There are
no assurances that the cash from the sale of stock or from the operation of
Universal Mica will be sufficient to fully develop the Company's business plan.
The accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Advantage Life Products, Inc., and its wholly-owned subsidiaries. The
consolidated operations include accounts of EPI from July 6, 1995 (date of
merger) through April 30, 1996. All significant intercompany accounts have
been eliminated in consolidation.
INVENTORY
Inventory is valued at the lower of cost or market. Cost is determined on a
first-in, first-out basis. Inventory is comprised primarily of purchased
finished goods for resale.
F-7
<PAGE> 26
ADVANTAGE LIFE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For Each Of The Years In The Two-Year Period Ended April 30, 1996
NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
PRODUCTION COSTS
Costs related to the production of the Company's direct response televised
advertising programs (infomercials) are capitalized and amortized over the
shorter of the estimated useful life of the production or based on the
percentage of actual sales to projected sales from the production. During the
year ended April 30, 1996, no production costs were capitalized. Amortization
of such costs for 1996 and 1995 amounted to $45,812 and $169,734, respectively.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and are depreciated or amortized
using the straight-line method over their estimated useful lives of three to
five years.
GOODWILL
Goodwill, which represents the excess of the purchase price over the fair value
of net assets acquired, is amortized on a straight-line basis over the expected
periods to be benefited. The Company assesses the recoverability of goodwill
periodically by determining whether the amortization of the goodwill balance
over its remaining life can be recovered through projected undiscounted cash
flows. The amount of goodwill impairment, if any, is charged to operations in
the period in which goodwill impairment is determined by management.
Management has amortized goodwill using the estimated period to be benefited of
10 years through April 30, 1996. Amortization of goodwill for the years ended
April 30, 1996 and 1995, including any charge off based on the determination of
impairment, amounted to $1,224,471 and $147,075, respectively.
REVENUE RECOGNITION
The Company recognizes revenue on the accrual method of accounting at the time
goods are shipped. Estimated future product returns are provided for at the
time units are shipped.
INCOME TAXES
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "ACCOUNTING FOR INCOME TAXES" (Statement No. 109). Under
Statement No. 109, the liability method is used in accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse (see Note 4).
PER SHARE INFORMATION
Per share information is based on the weighted average number of common shares
and common equivalent shares outstanding during the year, giving effect to a 1
for 3 reverse stock split on October 20, 1994 and a 1 for 20 reverse stock
split on June 24, 1996. Common equivalent shares have not been included in the
calculation of net loss per share for fiscal 1996 and 1995 because their effect
would be antidilutive. For purposes of computing the weighted average number
of shares, all common shares outstanding were retroactively adjusted to the
beginning of the periods presented.
RECLASSIFICATIONS
Certain reclassifications have been made to the amounts shown on the 1995
financial statements to conform to the 1996 presentation.
F-8
<PAGE> 27
ADVANTAGE LIFE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For Each Of The Years In The Two-Year Period Ended April 30, 1996
NOTE 3- STOCKHOLDERS' EQUITY
REVERSE STOCK SPLITS
On October 20, 1994, the Company effected a 1 for 3 reverse stock split. On
August 1, 1995, the Company effected a 1 for 20 reverse stock split, and a 100%
stock dividend that was also completed on August 1, 1995. On June 24, 1996 the
Company also effected a 1 for 20 reverse stock split. All common stock
transactions have been retroactively restated for all periods presented as a
result of these reverse stock splits.
PRIVATE PLACEMENTS
In September 1995, the Company engaged a New York based investment banking firm
to sell a private placement of up to 500,000 shares (1,250 shares after the 1
for 20 reverse split on June 24, 1996) of its common stock. The Company issued
166,666 shares (416 shares after the 1 for 20 reverse stock split on June 24,
1996) at $1.44 each, net of commissions of $2,500. In connection with the
private placement, the Company issued 13,334 detachable warrants exercisable at
$1.80 which expire in October 1997.
In October 1995, the Company utilized the services of a New York based capital
management firm to sell common stock through a private placement. In
connection therewith, the Company issued 57,133 shares (143 shares after the 1
for 20 reverse stock split on June 24, 1996) of common stock at $1.57 per
share, net of commissions of $500. In connection with the private placement,
the Company issued 2,857 detachable warrants exercisable at $2.35 per share
which expire in April 1996.
In connection with the marketing agreement with GRC (see Note 8) the Company
issued 66,667 shares (167 shares after the 1 for 20 reverse stock split on June
24, 1996) of common stock at $2.25 per share together with an option to
purchase 133,333 additional shares (333 shares after the 1 for 20 reverse stock
split on June 24, 1996) of common stock at a price of $1.89 per share. No
amount was charged to expense, as the value of the option was not considered
significant. The options expire in September 1999.
STOCK ISSUED IN CONNECTION WITH DEBT CONVERSION
On July 29, 1994, the Company issued 136,889 shares (342 shares after the 1 for
20 reverse stock split on June 24, 1996) with a value of $154,000 to an
investor group to convert certain notes payable with a principal balance of
$110,000 at the date of conversion. The difference between the value of the
shares of common stock issued and the principal balance of the notes payable
was recorded as interest expense in the accompanying consolidated statement of
operations for the year ended April 30, 1995.
COMMON STOCK ISSUED FOR SERVICES
In July 1994, the Company issued a total of 16,667 shares (42 shares after the
1 for 20 reverse stock split on June 24, 1996) of its common stock valued at
$22,000 as payment on certain accounts payable related to investor relations.
On October 3, 1994, the Company issued 8,333 shares (21 shares after the 1 for
20 reverse stock split on June 24, 1996) of common stock with a market value of
$19,533 for certain services in connection with the production of the Secret
Hair infomercial. In connection with these services, options to purchase an
additional 50,000 shares (125 shares after the 1 for 20 reverse stock split on
June 24, 1996) at $1.68 per share were issued by the Company. No amount was
charged to expense, as the value of the warrant was not considered significant.
The options vest equally over a three year period and expire in September
1997.
F-9
<PAGE> 28
ADVANTAGE LIFE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For Each Of The Years In The Two-Year Period Ended April 30, 1996
NOTE 3- STOCKHOLDERS' EQUITY - CONTINUED
CAPITAL STOCK SALES
The Company entered into two separate Capital Stock Purchase Agreements
("Agreements") for the sale of 2,000,00 shares (200,000 shares after the 1 for
20 reverse stock split of June 24, 1996) each to Roscom, Ltd ("Roscom") and
Vietri Investments, Ltd ("Vietri"), unrelated entities for a total
consideration of $3,000,000. Under the term of the Agreements, dated August
15, 1995 with respect to Roscom and October 6, 1995 with respect to Vietri, the
Company was to receive $200,000 in cash and a promissory note from Roscom and
Vietri in the principal amount of $1,300,00 which matured August 15, 1996 with
respect to Roscom and August 31, 1996 with respect to Vietri.
The respective promissory notes were secured by the shares sold to each entity.
There was a scrivener's error in the promissory note issued by Roscom to the
Company as the actual promissory note delivered to the Company by Roscom
indicated that the note matured December 31, 1995, whereas the Agreement
indicated that the note was payable August 15, 1996. The Company has
subsequently asked Roscom to execute a new note reflecting the correct maturity
date, August 15, 1996.
The Agreements further indicated that the shares would have no voting rights
until such time as Roscom and/or Vietri had paid for the shares.
The Agreements contemplated that Roscom would pay $200,000 by August 15, 1995,
and Vietri would pay $200,000 by October 5, 1995, the closing dates of the
transactions. The Company subsequently agreed to extend the date that the cash
portion of the purchase price was payable until December 31, 1995. The amounts
paid by Roscom and Vietri to the Company totaled $225,000 and was paid on or
about December 15, 1995. Additionally, Roscom and Vietri agreed to assume
$175,000 of the Company's and/or its subsidiaries indebtedness owed to two of
the Company's officers and Directors, Alan Lipstein and Gerald Norton and such
persons released the Company of $175,000 of such indebtedness.
While the shares issued to Roscom and Vietri contained restrictive legends, the
Company received an opinion of counsel from Joel Schneider, an attorney
practicing in New York, that the legend could be removed from the certificates
issued to Roscom and Vietri. Messrs. Lipstein and Norton further agreed to
cause the shares owned by Roscom and Vietri to be partially released from the
stock pledge agreement. It was Mr. Lipstein's and Mr. Norton's understanding
that the directors of the Company understood that certain shares would be
released from the Stock Pledge Agreements. Approximately 2,500,00 shares
(125,000 shares after the 1 for 20 reverse stock split of June 24, 1996) of the
Company's common stock was released from the terms of the Stock Pledge
Agreement.
On August 31, 1996, the Company agreed to extend the due date of the promissory
notes until August 31, 1997, provided Roscom and Vietri would pledge additional
collateral to the Company. As additional collateral, Roscom pledged 300,000
shares of stock of Med-Vax Technologies, Inc., with an approximate value of
$1,500,000. As additional collateral, Vietri pledged 300,000 shares of stock
of Prentice Capital, Inc., a public company, with an approximate value of
$1,650,000. Mr. Alan S. Lipstein, the Company's president is also the
president of Med-Vax Technologies, Inc. and Prentice Capital, Inc.
STOCK ISSUANCE TO ADVISORS
The Company issued an additional 81,500 shares (4,075 shares after the 1 for 20
reverse stock split of June 24, 1996) to unrelated advisors who represented the
Company in its acquisition of Environmental Professionals, Inc.
F-10
<PAGE> 29
ADVANTAGE LIFE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For Each Of The Years In The Two-Year Period Ended April 30, 1996
NOTE 3-STOCKHOLDERS' EQUITY - CONTINUED
STOCK OPTIONS AND WARRANTS
The Company has a stock option plan (the Plan) which provides for the issuance
of options to purchase 666,667 shares (1,667 shares after the 1 for 20 reverse
stock split on June 24, 1996) of the Company's common stock. The Plan provides
for two types of options, Incentive Options and Non-qualified Options.
Incentive Options must be issued at greater than or equal to 100% of fair
market value, except where the individual already owns 10% or more of the
Company's common stock, in which case the options must be issued at greater
than or equal to 110% of fair market value. Non-qualified Options may be
issued at any price not less than 85% of fair market value. Fair market value
is defined as the average of the previous day's closing bid-and-ask price.
During the year ended April 30, 1995, the Company granted options to purchase
506,667 shares (and 1,267 shares, respectively, after the 1 for 20 reverse
stock split of June 24, 1996) under the Plan. No options were granted during
the year ended April 30, 1996.
In 1995, the Company granted options to purchase 478,109 shares (1,195 shares
after the 1 for 20 reverse stock split of June 24, 1996) of common stock with
exercise prices ranging from $1.31 to $4.00, expiring in 1997 through 1999.
In fiscal 1995, options to purchase 15,717 shares (39 shares after the 1 for 20
reverse stock split of June 24, 1996) of common stock were exercised in
exchange for services provided for capital raising activities valued at $1.50
per share.
Stock option transactions are summarized as follows:
<TABLE>
<S> <C> <C>
Balance at May 1, 1994 4,614 $262-$1,875
Granted 5,672 $262-$800
Exercised (79) $300
Canceled (1,365) $300-$678
------
Balance at April 30, 1995 8,845 $262-$1,875
------
Granted --
Exercised 3,520
Canceled (2,993)
------
Balance April 30, 1996 9,375
======
</TABLE>
F-11
<PAGE> 30
ADVANTAGE LIFE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For Each Of The Years In The Two-Year Period Ended April 30, 1996
NOTE 4 - INCOME TAXES
The tax effects of temporary differences that give rise to significant
components of the Company's deferred tax assets and liabilities for federal and
state income tax as of April 30, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
Deferred tax assets: 1996 1995
---------- ----------
<S> <C> <C>
Net operating loss carryforward $4,385,097 $1,813,607
Accrued vacation --- 12,639
Accrued royalties --- 150,076
Allowance for product returns --- 90,852
Allowance for doubtful accounts 175,179 ---
Allowance for note receivable from
stockholder --- 74,185
---------- ----------
Total deferred tax assets 4,560,276 2,141,359
Deferred tax liabilities -0- -0-
---------- -----------
Valuation allowance for deferred tax assets (4,560,276) (2,141,359)
---------- -----------
Net deferred taxes $ -0- $ -0-
========== ===========
</TABLE>
The valuation allowance increased by $702,585 and $640,118 during the years
ended April 30, 1996 and 1995.
The provision for income taxes for the year ended April 30, 1996 and 1995 are
comprised of the California minimum state income tax.
The differences between income taxes for financial reporting purposes and the
federal statutory rate of 34% for the years ended April 30, 1996 and 1995 are
as follows:
<TABLE>
<CAPTION>
1996 1995
------------------- -----------------
Amount % Amount %
----------- ----- --------- -----
<S> <C> <C> <C> <C>
Income tax benefit at the
federal statutory rate $(1,779,933) (34.0) $(565,867) (34.0)
Nondeductible expenses 348,560 6.8 7,758 0.5
----------- ----- --------- ----
Valuation allowance for benefit 1,431,372 27.2 (558,109) (33.5)
of current year loss $ 1,432,172 27.2 $ 558,909 33.6
=========== ===== ========= ====
Total $ 800 NIL $ 800 0.1
=========== ===== ========= ====
</TABLE>
At April 30, 1996 and 1995, the Company had available net operating loss
carryforward for Federal and state income tax purposes of approximately
$8,931,526 and $4,721,608, respectively, which expire through 2011.
During December 1993, the Company experienced a change in ownership that
resulted in approximately $2,916,000 of the federal net operating loss
carryforward being subject to an annual utilization limitation of $449,000.
Furthermore, as a result of the Company's acquisition of EPI (see Note 11), the
management anticipates an additional limitation on the use of net operating
loss carryforward due to the change in ownership.
F-12
<PAGE> 31
ADVANTAGE LIFE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For Each Of The Years In The Two-Year Period Ended April 30, 1996
NOTE 5- RELATED PARTY TRANSACTIONS
EMPLOYMENT AGREEMENTS
On August 1, 1995, the Company entered into a employment agreement with Alan S.
Lipstein, the President of the Company, and Gerald Norton, Vice-President of
the Company. The agreements are for an initial period of five years, and can be
automatically extended for unlimited successive one year periods unless they
are terminated during the extension period.
Due to the Company's limited capital resources, Mr. Lipstein and Mr. Norton
agreed to accept, in lieu of cash payments otherwise due under the contracts,
300,000 and 100,000 shares respectively (15,000 shares and 5,000 shares
respectively after the 1 for 20 reverse stock split of June 24, 1996), of the
Company's common stock, provided that the Company agreed to file a registration
statement. On August 4, 1995, the Company filed a registration statement on
Form S-8 registering the shares for sale.
On November 14, 1995, the Company entered into a employment agreement with
George A. Carras, the Company's chief financial officer. The agreement are for
an initial period of three years, and can be automatically extended for
unlimited successive one year periods unless they are terminated during the
extension period.
For the services to be rendered to the Company by Mr. Carras during the term of
the employment agreement, his compensation was $108,000 per annum, payable
monthly in arrears. In addition to his compensation, Mr. Carras was entitle to
three weeks vacations, and other fringe benefits.
On May 17, 1996, the Company elected to terminate Mr. Carras employment
contract with an agreed settlement of $300,000, of which $100,000 was paid on
that date, and the remaining due to be paid within a one year period.
OTHER TRANSACTIONS
On July 29, 1994, the Company converted, debt of $110,000 payable to a firm
whose owners are officers/stockholders of the Company into shares of its common
stock valued at $154,000 (see Note 3).
On June 4, 1993 and July 25, 1993, the Company advanced Mr. Ackerman, its
former chief executive officer, $250,000 and $210,000, respectively. The
$250,000 advance represents a loan in the form of a 10% promissory note. The
$210,000 advance represents borrowings under a line of credit agreement. Both
the note and the line of credit were secured by 489,806 shares (1,225 shares
after the 1 for 20 reverse stock split of June 24, 1996) of the Company's
common stock. During fiscal 1995, the Company sold 323,014 (808 shares after
the 1 for 20 reverse stock split of June 24, 1996) of such common shares held
as collateral and collected approximately $280,000 of which approximately
$30,000 represented accrued interest on the note. Note receivable from
stockholder on the accompanying consolidated balance sheet at April 30, 1995,
represents the remaining balance due the Company, net of an allowance of
$185,000, which is secured by 166,792 shares (417 shares after the 1 for 20
reverse stock split of June 24, 1996) of the Company's common stock. As of
April 30, 1995, the Company is in litigation with Mr. Ackerman (see Note 11).
Effective May 1, 1995 the Company entered into a six month agreement with a
former officer under which the former officer is to be paid monthly fees of
$6,500 for consulting services. In addition, the Company committed to pay the
former officer the first $90,000 of proceeds, if any, from the settlement of
certain litigation in which the Company is the plaintiff.
F-13
<PAGE> 32
ADVANTAGE LIFE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For Each Of The Years In The Two-Year Period Ended April 30, 1996
NOTE 5- RELATED PARTY TRANSACTIONS (CONTINUED)
OTHER TRANSACTIONS (CONTINUED)
During the year ended April 30, 1996, 125,000 shares (6,250 shares after the 1
for 20 reverse stock split of June 24, 1996) were issued to two former
directors and a consultant for services rendered.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
The Company leases certain equipment and office and warehouse/assembly space.
The leases, which expire over the next five years, are classified as operating
leases. Future annual minimum lease payments required under non-cancelable
operating leases at April 30, 1996 are as follows:
<TABLE>
<S> <C>
1997 $13,664
1998 13,664
1999 6,252
2000 3,927
2001 3,927
-------
Total future minimum lease payments $41,434
=======
</TABLE>
Rent expense amounted to $41,041 and $63,588 for the years ended April 30, 1996
and 1995, respectively.
LITIGATION
On May 3, 1995, the Company filed suit in the Superior Court of the State of
California, County of Los Angeles, against Guthy-Renker Corporation (GRC) (see
Note 11) and other parties. The Company is alleging various actions of
wrongful conduct by GRC and these other parties whereby GRC abused the
relationship for their own use, gain, profit and unfair advantage. The Company
seeks compensatory and punitive damages, reimbursement of legal fees and
restraint of GRC activities as they relate to Secret Hair. GRC has filed a
cross complaint seeking damages from the Company. The claims of the Company
against Guthy-Renker have been dismissed with prejudice.
On June 15, 1996, Guthy-Renker Corporation (GRC) filed a cross complaint in the
Superior Court of the State of California, County of Los Angeles against the
Company and Don Danks for breach of written contract, conversion, negligent
misrepresentation, bad faith denial of existence of contract, dissolution and
accounting, false designation or origin and false description, recission and
restitution, defamation, declaratory relief, and injunctive relief. GRC is
seeking approximately $4,500,000 in damage and reimbursement. The Company
believes the facts of which it has knowledge of will enable to prevail on all
claims from GRC.
On December 21, 1994, Sherry Guimond, a previous employee of the Company,
brought an action in the Orange County Superior Court, against the Company, Don
Danks, Parker Dale, James Stapleton, Robert Fredericks, and George Carras. The
suit alleges breach of contract, breach of covenant of good faith and fair
dealing, sex discrimination, fraud and deceit, tortuous inducement of breach of
contract, defamation, specified performance. The Company settled this lawsuit
and agreed to pay Ms. Guimond $85,000, of which $10,000 has been paid to date.
The remaining balance of the settlement is past due.
F-14
<PAGE> 33
ADVANTAGE LIFE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For Each Of The Years In The Two-Year Period Ended April 30, 1996
NOTE 6 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
LITIGATION (CONTINUED)
There are various lawsuits against Environmental Professionals, Inc., (EPI),
one of the Company's subsidiaries, however, EPI is now an inactive subsidiary
of the Company, and it is the opinion of management that the claims that any
creditor has against EPI will not permit that creditor to obtain any relief
against the parent company.
See Notes 7 and 11 for additional matters in which the Company is a defendant.
NOTE 7 - LICENSE ARRANGEMENTS
LICENSEE ARRANGEMENT - CIGARREST PRODUCTS
On October 9, 1991, the Company (as licensee) and More Direct Response, Inc.
(MDR) signed an agreement, as amended, which granted the Company unrestricted
rights to market CigArrest products worldwide in exchange for a royalty of 10%
of net sales of products bearing the CigArrest name. No significant royalties
were paid by the Company through fiscal 1994. On March 28, 1994, the Company
terminated its rights to distribution of CigArrest products, as such, these
rights reverted back to MDR.
During fiscal 1995, MDR filed suit against the Company asserting that Regal
defaulted on a marketing agreement with Advantage related to CigArrest products
which had been previously assigned to a subsidiary of Regal Communications
Corporation, Inc. (see below), and that Advantage had an obligation to fulfill
this obligation. On June 1996, a default judgment was entered against the
Company in the amount of $458,000 after its counsel withdrew. The Company
intends to have this judgment overturned. Additionally, the Company intends to
settle the judgment at a considerable discount. Due to the uncertainty of the
final amount to be paid by the Company, the liability has not been recorded in
the accompanying financial statements.
LICENSOR ARRANGEMENT
On February 3, 1993, the stockholders of the Company (as licensor) approved an
agreement between the Company and Advantage/Regal, a newly-formed subsidiary of
Regal Communications Corporation, Inc., (collectively "Regal"), whereby the
Company licensed to Regal, on a worldwide basis, the exclusive rights to
sublicensee the manufacturing, selling and distribution of the Company's
CigArrest product line; in addition the Company sold to Regal all of its
existing inventory of the licensed product. As consideration, the Company
received 352,000 shares of Regal common stock upon closing of the agreement
with additional incentives if certain sales levels were attained by Regal.
The Company and Regal entered into a management agreement whereby Regal agreed
to pay for certain expenses associated with the sales, marketing and
distribution of the licensed product, including the salaries of certain
employees and other costs, as defined, in the form of a management fee. No
management fees were earned during the year ended April 30, 1996.
In 1994, the shares of common stock of Regal received by the Company were
registered. The Company sold the 352,500 shares of Regal for $1,735,507,
resulting in an insignificant gain.
On September 23, 1994, Regal filed Chapter 11 with the United States Bankruptcy
Court, Eastern District of Pennsylvania. As of April 30, 1995, the Company has
no outstanding obligations due Regal.
F-15
<PAGE> 34
ADVANTAGE LIFE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For Each Of The Years In The Two-Year Period Ended April 30, 1996
NOTE 7 - LICENSE ARRANGEMENTS
ROYALTY ARRANGEMENTS
The Company has entered into various royalty agreements for certain rights to
use names and trademarks which provide for payments at commercial rates based
on revenues generated, among other things. Royalties expense for the years
April 30, 1996 and 1995, are $248,914 and $1,045,062, respectively.
NOTE 8 - MARKETING AND DISTRIBUTION AGREEMENT OF SECRET HAIR
On May 5, 1994, the Company entered into an agreement with GRC wherein the
Company and GRC share the rights to market and distribute the Company's hair
extension products in the United States. Under the terms of the agreement, GRC
was obligated to provide a minimum of $2,000,000 in media expenditures over a
six-month period in exchange for 50 percent of the net profits, as defined, of
all non-retail sales, and between 20 and 50 percent of retail sales, based on
actual media expenditures.
In August 1994, GRC began Secret Hair sales from the infomercial produced by
the Company. In January 1995, management determined that GRC had violated
certain terms of the agreement, and that the contract was unenforceable. The
results of operations include the operations attributable to the agreement
through January 31, 1995. See Note 7 for discussion of litigation currently in
effect with respect to this agreement.
NOTE 9 - SIGNIFICANT CUSTOMERS
During the year ended April 30, 1996, the Company did not have any customers
which represented greater than 10% of total revenues.
NOTE 10 - FOURTH QUARTER ADJUSTMENTS
During the three months ended April 30, 1996 and 1995, the Company recorded the
following significant fourth quarter adjustments:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Write-off of receivable from GRC $ --- $1,093,284
Allowance for doubtful account expensed (reversed) 175,179 (113,319)
Provision for unused advertising credits --- 314,748
Write-off of inventory --- 144,553
Write-off of intangible assets 1,000,000 ----
Accrued royalties reversed --- (181,544)
Accounts payable reversed --- (138,666)
---------- ----------
Total fourth quarter charges $1,175,179 $1,119,054
</TABLE> ========== ==========
F-16
<PAGE> 35
ADVANTAGE LIFE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For Each Of The Years In The Two-Year Period Ended April 30, 1996
NOTE 11 - ACQUISITION
NEW LASTING COSMETICS, INC.
On July 1, 1993, the Company created a wholly-owned subsidiary, Lasting
Cosmetics, Inc. (referred to hereafter as New Lasting Cosmetics), a Delaware
corporation, to acquire intangible assets and certain contracts of Lasting
Cosmetics, Inc., (referred to hereafter as Old Lasting Cosmetics), a privately
held New York corporation, in exchange for 489,889 shares (1,225 shares after
the 1 for 20 reverse stock split of June 24, 1996) of the Company's common
stock valued at $1,201,535 and named Michael Ackerman, the former sole
stockholder of Old Lasting Cosmetics, as Chief Executive Officer of Advantage.
Based on post closing provisions in the agreement, as amended, the Company
issued 77,584 additional shares (194 share after the 1 for 20 reverse stock
split of June 24, 1996), under an arrangement similar to the ratchet provisions
described in the agreement, of its common stock valued at $158,854. The
acquisition is accounted for using the purchase method. The purchase price of
$1,415,334, including acquisition costs of $54,945, was assigned to goodwill
(see Note 2), as no tangible assets were acquired by the Company.
Under the terms of the agreement, Mr. Ackerman could earn up to 2,560,480
additional shares (6,401 shares after the 1 for 20 reverse stock split of June
24, 1996) of the Company's common stock over six years based on pre-tax profits
of New Lasting Cosmetics. Mr. Ackerman was to receive one share of the
Company's common stock for every dollar of pre-tax profit of the New Lasting
Cosmetics for a period of three years and then one share for every two dollars
of pre-tax profit of the subsidiary for the three years thereafter. On March
8, 1994, the Board of Directors terminated Mr. Ackerman as Chief Executive
Officer, due to breach of fiduciary duty.
On May 23, 1994, the Company filed suit in the Orange County Superior Court
against Mr. Ackerman alleging fraud and deceit, among other things. On
December 6, 1994, Mr. Ackerman filed a cross-complaint against the Company.
Mr. Ackerman asserts amounts are due him related to the promissory note and
stock security agreements (see above). A judgment was entered against the
Company in the amount of $400,000 after its counsel withdrew. The Company
intends to have this judgment overturned. Additionally, the Company has begun
negotiations with Mr. Ackerman's counsel to settle the judgment at a
considerable discount.
ENVIRONMENTAL PROFESSIONAL, INC.
On July 6, 1995, the Company acquired Environmental Professionals, Inc.
("EPI"), a wholly-owned subsidiary of Eagle Vision, Inc. In connection with
the acquisition, the Company issued 9,261,130 (23,153 shares after the 1 for 20
reverse stock split of June 24, 1996) shares of its common stock (representing
approximately 70% of the issued and outstanding shares of its common stock).
Current stockholders of the Company's common stock may receive up to 1,017,613
additional shares (2.544 shares after the 1 for 20 reverse stock split of June
24, 1996) of the Company's common stock based on the net recovery, if any, from
certain litigation in which the Company is plaintiff. In addition, each
stockholder of the Company's common stock will receive an unspecified number of
warrants to acquire additional common shares.
The acquisition was accounted for as a reverse acquisition, since the
stockholders of EPI obtained control of the Company. Accordingly, for
financial reporting purposes, the 9,261,130 shares (23,153 shares after the 1
for 20 reverse stock split of June 24, 1996) issued to acquire EPI will be
considered outstanding as of the date of the acquisition. The 3,969,056 shares
(9,923 share after the 1 for 20 reverse stock split of June 24, 1996) retained
by the Company's stockholders on the date of the acquisition are reflected as
consideration to consummate the stock-for-stock exchange. The purchase price
is $930,206, with the excess of cost over the net assets acquired of
approximately $1,868,070 was allocated to goodwill.
F-17
<PAGE> 36
ADVANTAGE LIFE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For Each Of The Years In The Two-Year Period Ended April 30, 1996
NOTE 12 - SUBSEQUENT EVENT
ENVIRONMENTAL PROFESSIONALS OPERATIONS
As the result of the insolvency of a major customer, and the its inability to
obtain other sources of funding, one of the Company's subsidiaries,
Environmental Professionals (EPI) was unable to meet its current obligations
and, therefore, ceased operation on May 17, 1996. EPI had pledged vehicles on
loans to a bank, and in addition, had pledged all other assets, including its
accounts receivable, tangible and intangible assets of that company, on line of
credit to the same bank. The bank filed an action and took possession of EPI's
assets, and has appointed a Receiver. Management believes that EPI's accounts
receivable are sufficient to satisfy the bank loan and therefore anticipates
the ultimate return of its operating assets.
LASTING COSMETICS OPERATIONS
Prior to the acquisition of Environmental Professionals, Inc. on July 6, 1995,
the Company was involved in the sale of cosmetics and hair products. The
Company's sales were derived substantially from the sale of one product. The
Company maintained a policy of money back guarantee for its products and
experienced a consistently high merchandise return, and as a result thereof,
the Company sustained recurring losses from operations. Early in 1996, the
Board of Directors decided to phase out the cosmetics and hair products line of
business.
STOCK SUBSCRIPTION
On August 21, 1996, the Company entered into an agreement to sell 5,000,000
shares of its $.16 par value common stock, restricted under Section 144, to
Cimtran, Ltd., an unrelated entity, for $2,500,000, payable $100,000 in cash,
and the balance in the form of a single maturity promissory note in the amount
of $2,400,000, payable with interest at the rate of 8% per annum. As security
for the performance of its obligation, Cimtran pledged 5,000,000 shares of
Advantage Life Products, Inc. owned by Cimtran. The principal amount and the
accrued interest is due in a single payment on August 31, 1997.
ACQUISITION OF UNIVERSAL MICA, INC.
On August 9, 1996 the Company, through a newly established subsidiary,
Advantage Life Acquisition, Inc., a Florida corporation, entered into an
Agreement and Plan of Reorganization with Universal Mica, Inc., a New York
corporation, and George Lafauci, the sole shareholder of Universal Mica. In
accordance with the merger agreement, all of the outstanding shares of stock of
Universal Mica were exchanged for and converted into 300,000 shares of the
Company's common stock (valued at $1,200,000), and a single maturity promissory
note in the amount of $800,000, with interest at the rate of 8% per annum,
payable monthly. The principal amount of the note is due in a single payment
on August 8, 1999. The note is secured by all of the assets of Advantage Life
Acquisition after the merger.
Immediately after the merger, the name of Advantage Life Acquisition, Inc. was
changed to Universal Mica, Inc. Until such time as all sums due to Mr. Lafauci
are paid in full, he is being appointed Director of Advantage Life Acquisition,
Inc.
Universal Mica entered into an employment agreement with Mr. Lafauci
immediately after the effective date of the merger upon terms and conditions
negotiated by the parties.
F-18
<PAGE> 37
===============================================================================
EXHIBITS TO
THE
ANNUAL REPORT ON FORM 10-KSB
FOR
ADVANTAGE LIFE PRODUCTS, INC.
FOR THE YEAR ENDED
APRIL 30, 1996
September 9, 1996
===============================================================================
<PAGE> 38
Exhibit Index
Advantage Life Products, Inc.
10.35 Employment Agreement between the Company and Alan S. Lipstein, dated
August 1, 1995.
10.36 Employment Agreement between the Company and Gerald Norton, dated
August 1, 1995.
10.37 Employment Agreement between the Company and George M. Carras, dated
November 14, 1995.
10.38 Extension Agreement between the Company and Roscom, Ltd., effective as
of August 31, 1996.
10.39 Extension Agreement between the Company and Vietri Investments,
effective as of August 31, 1996.
10.40 Capital Stock Purchase Agreement between the Company and Cimtran,
Ltd., together with promissory note and stock pledge agreement,
effective as of August 31, 1996.
10.41 Agreement and Plan of Reorganization - The Company, Advantage Life
Acquisition, Universal Mica Products, Inc. and George Lafauci,
effective September 6, 1996.
27 Financial Data Schedule (for SEC use only)
<PAGE> 1
Exhibit 1
to the
Annual Report on Form 10-KSB
for
the year ended April 30, 1996
for
Advantage Life Products, Inc.
Employment Agreement with Alan S. Lipstein
<PAGE> 2
ADVANTAGE LIFE PRODUCTS, INC.
EMPLOYMENT AGREEMENT
Agreement, effective as of August 1, 1995 by and between Advantage
Life Products, Inc., a Delaware corporation (the "Company") having its
principal place of business at 13902 N. Dale Mabry Blvd., Suite 119, Tampa,
Florida 33618, and Alan S. Lipstein (the "Employee") currently residing at 4332
Carrollwood Village Drive, Tampa, Florida 33624.
BACKGROUND INFORMATION
The Company wishes to secure the employment services of the Employee
for a definite period of time and upon the particular terms and conditions
hereinafter set forth. The Employee is willing to be so employed.
Accordingly, the parties agree as follows:
OPERATIVE PROVISIONS
1. Employment and Term.
The Company hereby employs Employee and the latter hereby accepts
employment by the Company for the five year period commencing August 1, 1995
(the "Commencement Date") and expiring July 31, 2000, which employment shall be
automatically extended for unlimited successive one year periods unless it is
terminated during the pendency of any such period, whether initial or extended,
by the occurrence of one of the events described in Section 8. hereof, or at
the end of any such period (subject to extension by operation of the disability
provisions contained in Section 8.) by one party furnishing the other with
written notice, at least 60 days prior to the expiration of such period, of an
intent to terminate this agreement upon the expiration of such period.
2. Duties.
During the term of this Agreement, whether initial or extended, the
Employee shall render to the Company services as President, and shall perform
such duties as may be designated by and subject to the supervision of the
Company's board of directors, and shall serve in such additional capacities
appropriate to his responsibilities and skills as shall be designated by the
Company, through action of its board of directors. During such period, the
Employee shall devote a substantial amount of his attention, time and energies
to the business and affairs of the Company (subject to the terms of
Section 4. below), and will use his best efforts to promote the interests and
reputation of the Company. Hours of service to the Company during the term of
this agreement shall be a minimum of 35 per week and otherwise as determined by
the Company's board of directors. During the pendency of this Agreement,
without his written
EXHIBIT 10.35
<PAGE> 3
consent, the Company shall not remove the Employee's place of business
from Hillsborough County, Florida.
3. Compensation.
For the services to be rendered by the Employee under this agreement
the Company shall pay him, while he is rendering such services and performing
his duties hereunder, and the Employee shall accept as full payment for such
service, 300,000 shares of the Company's common stock (inclusive of any amounts
subject to federal or state employment related withholding requirements),
payable in one lump sum upon execution of this Agreement.
Due to the Company's limited capital resources, the Employee has
agreed to accept, in lieu of the monthly cash compensation payments otherwise
required hereunder, shares of the Company's common stock (the "Shares")
provided that the Company agrees to file a registration statement on Form S-8
registering the Shares for resale as soon as is practicable. The Company and
the Employee acknowledge that the value of the Shares being issued to the
Employee exceeds the payments currently due the Employee under this Agreement.
The excess of the fair market value of the Shares over the amounts currently
due under this Agreement shall be treated as prepaid base compensation and
shall be amortized over the life of this Agreement.
4. Vacation; Fringe Benefits; Reimbursement of Expenses.
The Employee shall be entitled to four weeks of fully paid vacation
during the initial and each extended term of this agreement. He shall not be
entitled to receive monetary or other valuable consideration for vacation time
to which he is entitled but does not take. The timing of vacation periods
shall be within the discretion of the Company, reasonably exercised so as not
to unnecessarily inconvenience the Employee.
During his period of employment hereunder, the Employee shall further
be entitled to (a) such leave by reason of physical or mental disability or
incapacity and to such participation in medical and life insurance, pension
benefits, disability and other fringe benefit plans as the Company may make
generally available to all of its executive employees from time to time;
subject, however, as to such plans, to such budgetary constraints or other
limitations as may be imposed by the Board of Directors of the Company from
time to time; and (b) reimbursement for all normal and reasonable expenses
necessarily incurred by him in the performance of his obligations hereunder,
subject to such reasonable substantiation requirements as may be imposed by
the Company.
5. Proprietary Interests.
During or after the expiration of his term of employment with the
Company, the Employee shall not communicate or divulge to, or use for the
benefit of, any individual, association, partnership, trust, corporation or
other entity except the Company, any proprietary
-2-
<PAGE> 4
information of the Company received by the Employee by virtue of such
employment, without first being in receipt of the Company's written consent to
do so.
6. Restrictive Covenant.
During the term of his employment hereunder and for the two year
period following the termination thereof for any reason other than (a) the
Company's discontinuance of activities; (b) an adjudication of the Company's
material breach of any of its obligations set forth in Sections 1-4, inclusive;
or (c) a termination of the Employee by the Company under the provisions of
subparagraph d.(2) of Section 8. below, the Employee shall not, directly or
indirectly, engage in or become an owner of, render any service to, enter the
employment of, or represent or solicit for any business which competes with any
activity of the Company conducted at any time during the Employee's period of
employment and which is located in any county of the State of Florida in which
the Company shall maintain any activity. The parties expressly agree that the
duration and geographical area of this restrictive covenant are reasonable.
This covenant shall be construed as an agreement independent of any
other provision herein, and the existence of any claim or cause of action of
the Employee against the Company regardless of how arising, shall not
constitute a defense to the enforcement by the Company of its terms. If any
portion of the covenant is held by a court of law to be unenforceable with
respect either to its duration or geographical area, for whatever reason, it
shall be considered divisible both as to time and geographical area, so that
each month of the specified period shall be deemed a separate period of time
and each county within the State of Florida a separate geographical area,
resulting in an intended requirement that the longest lesser period of time or
largest lesser geographical area found by such court to be a reasonable
restriction shall remain an effective restrictive covenant, specifically
enforceable against the Employee.
7. Remedies for Breach of Employee's Obligations.
The parties agree that the services of the Employee are of a personal,
specific, unique and extraordinary character and cannot be readily replaced by
the Company. They further agree that in the course of performing his services,
the Employee will have access to various types of proprietary information of
the Company, which, if released to others or used by the Employee other than
for the benefit of the Company, in either case without the Company's consent,
could cause the Company to suffer irreparable injury. Therefore, the
obligations of the Employee established under Section Section 5. and 6. hereof
shall be enforceable both at law and in equity, by injunction, specific
performance, damages or other remedy; and the right of the Company to obtain
any such remedy shall be cumulative and not alternative and shall not be
exhausted by any one or more uses thereof.
-3-
<PAGE> 5
8. Modification and Termination.
a. Modification. This Agreement may be amended or
modified only with the mutual written consent of the parties, and in
its present form consists of the entire agreement between the parties.
b. Termination - General. This Agreement is subject to
termination prior to the expiration of its initial or any extended
term, if by the Employee upon delivery to the Company of written
notice of such intention, which notice shall be deemed to result in
termination 30 days after its receipt by the Company (the Company
having the right following such receipt to accelerate the effective
date of termination but retaining the obligation to pay Employee his
compensation due for the full 30 day period); and if by the Company
upon the occurrence of any one of the following events: (a) the
complete discontinuance of the Company's activities; (b) the death of
the Employee; (c) the occurrence to Employee of a physical or mental
disability which, in the judgment, reasonably exercised, of the Board
of Directors, renders him unable to perform his normal duties on
behalf of the Company for a continuous period of three months
(measured from the first day of the month immediately following the
occurrence of such disability); or (d) a determination by the Board of
Directors that there is cause (as described in subsection d. below) to
terminate Employee's employment.
c. By Death or Disability. In the event of the
Employee's death, his base compensation otherwise due for the
succeeding three full calendar months following his death shall be
paid to his Beneficiary. In the event of his disability, for the
period ending on the last business day of the third calendar month
following the occurrence of such disability, the Employee shall be
paid his base compensation (reduced by any amount received by the
Employee under the terms of any disability insurance policy maintained
by the Company at its sole expense); thereafter, for the succeeding
three month period, he shall be paid 50% of such compensation
(similarly reduced); and thereafter, until he either returns to
full-time active service or is terminated, he shall be treated as
being on an authorized but unpaid leave of absence.
d. For Cause. In the event of a decision by the Board
of Directors to terminate Employee's employment for cause:
(1) If, in the judgment of the Company's Board of
Directors, reasonably exercised, such termination is due to
(i) the Employee's repeated willful misconduct or gross
negligence; (ii) his repeated conscious disregard of his
obligations hereunder or of any other duties reasonably
assigned him by the Company; (iii) his repeated conscious
violation of any provision of the Company's by-laws or of its
other stated policies, standards or regulations; (iv) his
commission of any act involving moral turpitude; or (v) a
determination that he has demonstrated a dependence upon any
addictive substance, including alcohol, controlled substances,
narcotics or barbiturates; then, upon termination,
-4-
<PAGE> 6
he shall be entitled to receive severance pay in an
amount equal to 10% of his annual base compensation. As a
condition precedent to the Company's right to terminate this
Agreement for one of the causes specified in the preceding
sentence which requires a repeated action or omission by the
Employee (clauses (i), (ii) and (iii)), there shall have been
created by the Company and furnished to the Employee, within
the 60 day period immediately following commission of the
proscribed act or omission, a written description thereof and
a statement advising him that the Company views such conduct
as being of the type which could lead to a termination of this
Agreement under the provisions of Section 8d. Further, if the
Company seeks to terminate this Agreement on the basis of
clause (iii), it must be able to demonstrate that the Employee
has been furnished with a copy of the by-law provision, or of
the policy, standard or regulation, which he is being accused
of having violated, at a time prior to the alleged commission
of the violation.
(2) If such termination is for a cause (the
nature of which may be arbitrarily determined) other than as
specified in subparagraph (1) above, he shall be entitled to
receive an amount equal to 20% of his annual base compensation.
e. Payment of Termination Compensation; Continued
Effectiveness of Certain Obligations. Any compensation due the
Employee as a result of the premature termination of his employment
status shall be paid to him upon termination as one lump sum. No
termination or expiration of this agreement, whether consummated by
action of either party or by operation of the terms hereof, shall
relieve the Employee from his continued performance of the obligations
established under Sections 5. and 6. hereof.
f. Life and Disability Insurance Coverage. If
termination of this Agreement is due to any reason other than death,
the Employee shall have the right, subject to receiving approval of
the Company (which shall not be unreasonably withheld), to purchase
any policy of insurance on his life or insuring against his disability
which is owned by the Company, the exercise of which right shall be
made by notice furnished to the Company within 30 days subsequent to
the date of termination. The purchase price of each policy of life
insurance shall be the sum of its interpolated terminal reserve value
(computed as of the closing date) and the proportional part of the
gross premium last paid before the closing date which covers any
period extending beyond that date; or if the policy to be purchased
shall not have been in force for a period sufficient to generate an
interpolated terminal reserve value, the price shall be an amount
equal to all net premiums paid as of the closing date. The purchase
price of each disability income policy shall be the sum of its cash
value and the proportional part of the gross premium last paid before
the closing date which covers any period extending beyond that date.
The purchase of any insurance policy by the Employee shall be closed
as promptly as may be practicable after the giving of notice, in no
event to exceed 30 days therefrom.
-5-
<PAGE> 7
9. Indebtedness of Employee. If, during the course of his
employment, Employee becomes indebted to the Company for any reason, the
Company shall, if it so elects, have the right to set-off and to collect any
sums due it from the Employee out of any amounts which it may owe to the
Employee for unpaid compensation. In the event that this Agreement terminates
for any reason, all sums owed by the Employee to the Company shall become
immediately due and payable.
10. Miscellaneous Provisions.
a. Nonassignability: Neither this agreement nor any
right or interest hereunder shall be assignable by the
Employee, his Beneficiary of his legal representatives except as
otherwise expressly provided herein.
b. Enforceability: If any term or condition or this
agreement shall be invalid or unenforceable to any extent or in any
application, then the remainder of this agreement, and such term or
condition except to such extent or in such application, shall not be
affected thereby and each and every term and condition of this
agreement shall be valid and enforced to the fullest extent and in the
broadest application permitted by law.
c. Notice: All notices or other communications required
or permitted to be furnished pursuant to this agreement shall be in
writing and shall be considered as properly furnished if hand
delivered, mailed from within the United States by certified or
registered mail, or sent by prepaid telegram to the recipient party at
the address appearing in the preamble to this agreement or to such
other address as any such party may have designated by like notice
forwarded to the other party hereto. Change of address notices shall
be deemed furnished when received. All other notices shall be deemed
furnished when mailed, telegraphed or hand delivered.
d. Application of Florida Law: This agreement, and the
application or interpretation thereof, shall be governed exclusively
by its terms and by the laws of the State of Florida. Venue shall be
deemed located in Hillsborough County, Florida.
e. Counterparts: This agreement may be executed by any
number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
f. Binding Effect: Each of the provisions and
agreements herein contained shall be binding upon and enure to the
benefit of the personal representatives, devisees, heirs, successors,
transferees and assigns of the respective parties hereto.
g. Beneficiary: As used herein, the term "Beneficiary"
shall mean the person or persons (who may be designated contingently
or successively and who may be an entity other than an individual,
including an estate or trust) designated on a written form prescribed
by the Board of Directors to receive the expiration of agreement or
death
-6-
<PAGE> 8
benefits described in Section 8. above. Each Beneficiary
designation shall be effective only when filed with the secretary of
the Company during the Employee's lifetime. Each Beneficiary
designation filed with the Secretary will cancel all designations
previously so filed.
If the Employee fails to properly designate a Beneficiary or
if the Beneficiary predeceases the Employee or dies before complete
distribution of the benefit has been made, the Company shall
distribute the benefit (or balance thereof) to the surviving spouse of
the Employee or if she be then deceased to the Employee's estate.
In witness whereof, the parties have hereunto executed this Agreement.
Attest: Advantage Life Products, Inc.
By: /s/ Alan S. Lipstein By: /s/ Gerald Norton
---------------------------- --------------------------------
Alan S. Lipstein, Secretary Gerald Norton, Vice President
Witnesses: EMPLOYEE
sign /s/ Alan S. Lipstein
-------------------------------- --------------------------------
Alan S. Lipstein
print
-------------------------------
sign
--------------------------------
print
-------------------------------
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<PAGE> 1
Exhibit 2
to the
Annual Report on Form 10-KSB
for
the year ended April 30, 1996
for
Advantage Life Products, Inc.
Employment Agreement with Gerard Norton
<PAGE> 2
ADVANTAGE LIFE PRODUCTS, INC.
EMPLOYMENT AGREEMENT
Agreement, effective as of August 1, 1995 by and between Advantage
Life Products, Inc., a Delaware corporation (the "Company") having its
principal place of business at 13902 N. Dale Mabry Blvd., Suite 119, Tampa,
Florida 33618, and Gerard Norton, whose address is 7000 Hummingbird Lane, New
Port Richey, Florida, 34655 (the "Employee").
BACKGROUND INFORMATION
The Company wishes to secure the employment services of the Employee
for a definite period of time and upon the particular terms and conditions
hereinafter set forth. The Employee is willing to be so employed.
Accordingly, the parties agree as follows:
OPERATIVE PROVISIONS
1. Employment and Term.
The Company hereby employs Employee and the latter hereby accepts
employment by the Company for the five year period commencing August 1, 1995
(the "Commencement Date") and expiring July 31, 2000, which employment shall be
automatically extended for unlimited successive one year periods unless it is
terminated during the pendency of any such period, whether initial or extended,
by the occurrence of one of the events described in Section 8. hereof, or at
the end of any such period (subject to extension by operation of the disability
provisions contained in Section 8.) by one party furnishing the other with
written notice, at least 60 days prior to the expiration of such period, of an
intent to terminate this agreement upon the expiration of such period.
2. Duties.
During the term of this Agreement, whether initial or extended, the
Employee shall render to the Company services as President, and shall perform
such duties as may be designated by and subject to the supervision of the
Company's board of directors, and shall serve in such additional capacities
appropriate to his responsibilities and skills as shall be designated by the
Company, through action of its board of directors. During such period, the
Employee shall devote a substantial amount of his attention, time and energies
to the business and affairs of the Company (subject to the terms of Section 4.
below), and will use his best efforts to promote the interests and reputation
of the Company. Hours of service to the Company during the term of this
agreement shall be a minimum of 35 per week and otherwise as determined by the
Company's board of directors. During the pendency of this Agreement, without
his written
Exhibit 10.36
<PAGE> 3
consent, the Company shall not remove the Employee's place of business from
Hillsborough County, Florida.
3. Compensation.
For the services to be rendered by the Employee under this agreement
the Company shall pay him, while he is rendering such services and performing
his duties hereunder, and the Employee shall accept as full payment for such
service, 100,000 shares of the Company's common stock (inclusive of any amounts
subject to federal or state employment related withholding requirements),
payable in one lump sum upon execution of this Agreement.
Due to the Company's limited capital resources, the Employee has
agreed to accept, in lieu of the monthly cash compensation payments otherwise
required hereunder, shares of the Company's common stock (the "Shares")
provided that the Company agrees to file a registration statement on Form S-8
registering the Shares for resale as soon as is practicable. The Company and
the Employee acknowledge that the value of the Shares being issued to the
Employee exceeds the payments currently due the Employee under this Agreement.
The excess of the fair market value of the Shares over the amounts currently
due under this Agreement shall be treated as prepaid base compensation and
shall be amortized over the life of this Agreement.
4. Vacation; Fringe Benefits; Reimbursement of Expenses.
The Employee shall be entitled to four weeks of fully paid vacation
during the initial and each extended term of this agreement. He shall not be
entitled to receive monetary or other valuable consideration for vacation time
to which he is entitled but does not take. The timing of vacation periods
shall be within the discretion of the Company, reasonably exercised so as not
to unnecessarily inconvenience the Employee.
During his period of employment hereunder, the Employee shall further
be entitled to (a) such leave by reason of physical or mental disability or
incapacity and to such participation in medical and life insurance, pension
benefits, disability and other fringe benefit plans as the Company may make
generally available to all of its executive employees from time to time;
subject, however, as to such plans, to such budgetary constraints or other
limitations as may be imposed by the Board of Directors of the Company from
time to time; and (b) reimbursement for all normal and reasonable expenses
necessarily incurred by him in the performance of his obligations hereunder,
subject to such reasonable substantiation requirements as may be imposed by the
Company.
5. Proprietary Interests.
During or after the expiration of his term of employment with the
Company, the Employee shall not communicate or divulge to, or use for the
benefit of, any individual, association, partnership, trust, corporation or
other entity except the Company, any proprietary
-2-
<PAGE> 4
information of the Company received by the Employee by virtue of such
employment, without first being in receipt of the Company's written consent to
do so.
6. Restrictive Covenant.
During the term of his employment hereunder and for the two year
period following the termination thereof for any reason other than (a) the
Company's discontinuance of activities; (b) an adjudication of the Company's
material breach of any of its obligations set forth in Sections 1-4, inclusive;
or (c) a termination of the Employee by the Company under the provisions of
subparagraph d.(2) of Section 8. below, the Employee shall not, directly or
indirectly, engage in or become an owner of, render any service to, enter the
employment of, or represent or solicit for any business which competes with any
activity of the Company conducted at any time during the Employee's period of
employment and which is located in any county of the State of Florida in which
the Company shall maintain any activity. The parties expressly agree that the
duration and geographical area of this restrictive covenant are reasonable.
This covenant shall be construed as an agreement independent of any
other provision herein, and the existence of any claim or cause of action of
the Employee against the Company regardless of how arising, shall not
constitute a defense to the enforcement by the Company of its terms. If any
portion of the covenant is held by a court of law to be unenforceable with
respect either to its duration or geographical area, for whatever reason, it
shall be considered divisible both as to time and geographical area, so that
each month of the specified period shall be deemed a separate period of time
and each county within the State of Florida a separate geographical area,
resulting in an intended requirement that the longest lesser period of time or
largest lesser geographical area found by such court to be a reasonable
restriction shall remain an effective restrictive covenant, specifically
enforceable against the Employee.
7. Remedies for Breach of Employee's Obligations.
The parties agree that the services of the Employee are of a personal,
specific, unique and extraordinary character and cannot be readily replaced by
the Company. They further agree that in the course of performing his services,
the Employee will have access to various types of proprietary information of
the Company, which, if released to others or used by the Employee other than
for the benefit of the Company, in either case without the Company's consent,
could cause the Company to suffer irreparable injury. Therefore, the
obligations of the Employee established under Section Section 5. and 6. hereof
shall be enforceable both at law and in equity, by injunction, specific
performance, damages or other remedy; and the right of the Company to obtain
any such remedy shall be cumulative and not alternative and shall not be
exhausted by any one or more uses thereof.
-3-
<PAGE> 5
8. Modification and Termination.
a. Modification. This Agreement may be amended or
modified only with the mutual written consent of the parties, and in
its present form consists of the entire agreement between the parties.
b. Termination - General. This Agreement is subject to
termination prior to the expiration of its initial or any extended
term, if by the Employee upon delivery to the Company of written
notice of such intention, which notice shall be deemed to result in
termination 30 days after its receipt by the Company (the Company
having the right following such receipt to accelerate the effective
date of termination but retaining the obligation to pay Employee his
compensation due for the full 30 day period); and if by the Company
upon the occurrence of any one of the following events: (a) the
complete discontinuance of the Company's activities; (b) the death of
the Employee; (c) the occurrence to Employee of a physical or mental
disability which, in the judgment, reasonably exercised, of the Board
of Directors, renders him unable to perform his normal duties on
behalf of the Company for a continuous period of three months
(measured from the first day of the month immediately following the
occurrence of such disability); or (d) a determination by the Board of
Directors that there is cause (as described in subsection d. below) to
terminate Employee's employment.
c. By Death or Disability. In the event of the
Employee's death, his base compensation otherwise due for the
succeeding three full calendar months following his death shall be
paid to his Beneficiary. In the event of his disability, for the
period ending on the last business day of the third calendar month
following the occurrence of such disability, the Employee shall be
paid his base compensation (reduced by any amount received by the
Employee under the terms of any disability insurance policy maintained
by the Company at its sole expense); thereafter, for the succeeding
three month period, he shall be paid 50% of such compensation
(similarly reduced); and thereafter, until he either returns to
full-time active service or is terminated, he shall be treated as
being on an authorized but unpaid leave of absence.
d. For Cause. In the event of a decision by the Board
of Directors to terminate Employee's employment for cause:
(1) If, in the judgment of the Company's Board of
Directors, reasonably exercised, such termination is due to
(i) the Employee's repeated willful misconduct or gross
negligence; (ii) his repeated conscious disregard of his
obligations hereunder or of any other duties reasonably
assigned him by the Company; (iii) his repeated conscious
violation of any provision of the Company's by-laws or of its
other stated policies, standards or regulations; (iv) his
commission of any act involving moral turpitude; or (v) a
determination that he has demonstrated a dependence upon any
addictive substance, including alcohol, controlled substances,
narcotics or barbiturates; then, upon termination,
-4-
<PAGE> 6
he shall be entitled to receive severance pay in an
amount equal to 10% of his annual base compensation. As a
condition precedent to the Company's right to terminate this
Agreement for one of the causes specified in the preceding
sentence which requires a repeated action or omission by the
Employee (clauses (i), (ii) and (iii)), there shall have been
created by the Company and furnished to the Employee, within
the 60 day period immediately following commission of the
proscribed act or omission, a written description thereof and
a statement advising him that the Company views such conduct
as being of the type which could lead to a termination of this
Agreement under the provisions of Section 8d. Further, if the
Company seeks to terminate this Agreement on the basis of
clause (iii), it must be able to demonstrate that the Employee
has been furnished with a copy of the by-law provision, or of
the policy, standard or regulation, which he is being accused
of having violated, at a time prior to the alleged commission
of the violation.
(2) If such termination is for a cause (the
nature of which may be arbitrarily determined) other than as
specified in subparagraph (1) above, he shall be entitled to
receive an amount equal to 20% of his annual base
compensation.
e. Payment of Termination Compensation; Continued
Effectiveness of Certain Obligations. Any compensation due the
Employee as a result of the premature termination of his employment
status shall be paid to him upon termination as one lump sum. No
termination or expiration of this agreement, whether consummated by
action of either party or by operation of the terms hereof, shall
relieve the Employee from his continued performance of the obligations
established under Sections 5. and 6. hereof.
f. Life and Disability Insurance Coverage. If
termination of this Agreement is due to any reason other than death,
the Employee shall have the right, subject to receiving approval of
the Company (which shall not be unreasonably withheld), to purchase
any policy of insurance on his life or insuring against his disability
which is owned by the Company, the exercise of which right shall be
made by notice furnished to the Company within 30 days subsequent to
the date of termination. The purchase price of each policy of life
insurance shall be the sum of its interpolated terminal reserve value
(computed as of the closing date) and the proportional part of the
gross premium last paid before the closing date which covers any
period extending beyond that date; or if the policy to be purchased
shall not have been in force for a period sufficient to generate an
interpolated terminal reserve value, the price shall be an amount
equal to all net premiums paid as of the closing date. The purchase
price of each disability income policy shall be the sum of its cash
value and the proportional part of the gross premium last paid before
the closing date which covers any period extending beyond that date.
The purchase of any insurance policy by the Employee shall be closed
as promptly as may be practicable after the giving of notice, in no
event to exceed 30 days therefrom.
-5-
<PAGE> 7
9. Indebtedness of Employee. If, during the course of his
employment, Employee becomes indebted to the Company for any reason, the
Company shall, if it so elects, have the right to set-off and to collect any
sums due it from the Employee out of any amounts which it may owe to the
Employee for unpaid compensation. In the event that this Agreement terminates
for any reason, all sums owed by the Employee to the Company shall become
immediately due and payable.
10. Miscellaneous Provisions.
a. Nonassignability: Neither this agreement nor any
right or interest hereunder shall be assignable by the Employee, his
Beneficiary of his legal representatives except as otherwise expressly
provided herein.
b. Enforceability: If any term or condition or this
agreement shall be invalid or unenforceable to any extent or in any
application, then the remainder of this agreement, and such term or
condition except to such extent or in such application, shall not be
affected thereby and each and every term and condition of this
agreement shall be valid and enforced to the fullest extent and in the
broadest application permitted by law.
c. Notice: All notices or other communications required
or permitted to be furnished pursuant to this agreement shall be in
writing and shall be considered as properly furnished if hand
delivered, mailed from within the United States by certified or
registered mail, or sent by prepaid telegram to the recipient party at
the address appearing in the preamble to this agreement or to such
other address as any such party may have designated by like notice
forwarded to the other party hereto. Change of address notices shall
be deemed furnished when received. All other notices shall be deemed
furnished when mailed, telegraphed or hand delivered.
d. Application of Florida Law: This agreement, and the
application or interpretation thereof, shall be governed exclusively
by its terms and by the laws of the State of Florida. Venue shall be
deemed located in Hillsborough County, Florida.
e. Counterparts: This agreement may be executed by any
number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
f. Binding Effect: Each of the provisions and
agreements herein contained shall be binding upon and enure to the
benefit of the personal representatives, devisees, heirs, successors,
transferees and assigns of the respective parties hereto.
g. Beneficiary: As used herein, the term "Beneficiary"
shall mean the person or persons (who may be designated contingently
or successively and who may be an entity other than an individual,
including an estate or trust) designated on a written form prescribed
by the Board of Directors to receive the expiration of agreement or
death
-6-
<PAGE> 8
benefits described in Section 8. above. Each Beneficiary
designation shall be effective only when filed with the
secretary of the Company during the Employee's lifetime. Each
Beneficiary designation filed with the Secretary will cancel all
designations previously so filed.
If the Employee fails to properly designate a Beneficiary or
if the Beneficiary predeceases the Employee or dies before complete
distribution of the benefit has been made, the Company shall
distribute the benefit (or balance thereof) to the surviving spouse of
the Employee or if she be then deceased to the Employee's estate.
In witness whereof, the parties have hereunto executed this Agreement.
Attest: Advantage Life Products, Inc.
By: /s/ Gerald Norton By: /s/ Alan S. Lipstein
------------------------------ ----------------------------
Gerald Norton, Secretary Alan S. Lipstein, President
Witnesses: EMPLOYEE
sign /s/ Gerald Norton
----------------------------- -------------------------------
Gerald Norton
print
----------------------------
sign
-----------------------------
print
----------------------------
-7-
<PAGE> 1
Exhibit 3
to the
Annual Report on Form 10-KSB
for
the year ended April 30, 1996
for
Advantage Life Products, Inc.
Employment Agreement with George Carras
<PAGE> 2
ADVANTAGE LIFE PRODUCTS, INC.
EMPLOYMENT AGREEMENT
Agreement, effective as of November 14, 1995, by and between
George M. Carras, an individual currently residing at 181 Long Hill Road,
Little Falls, New Jersey, 07424 (the "Executive"), and Advantage Life Products,
Inc., a Delaware corporation maintaining business offices at 13902 N. Dale
Mabry Highway, Suite 119, Tampa, Florida 33618 (the "Corporation").
BACKGROUND INFORMATION
The Corporation wishes to secure the employment services of the
Executive for a definite period of time and upon the particular terms and
conditions hereinafter set forth. The Executive is willing to be so employed.
Accordingly, the parties agree as follows:
OPERATIVE PROVISIONS
1. Employment and Term.
The Corporation hereby employs Executive and the latter hereby accepts
employment by the Corporation for the three year period commencing December 1,
1995 (the "Commencement Date") and continuing through November 30, 1998 (the
"Initial Term"), which employment shall be automatically extended for unlimited
successive one year periods (each a "Successor Term") unless it is terminated
during the pendency of any such Term, whether Initial or Successor, by the
occurrence of one of the events described in Section 8. hereof, or at the end
of any such Term by one party furnishing the other with written notice, at
least 60 days prior to the expiration of such Term, of an intent to terminate
this Agreement upon the expiration of such Term.
2. Duties.
During the Term of this Agreement, whether Initial or Successor, the
Executive shall render to the Corporation services as its President and Chief
Executive Officer, and shall perform such duties as may be designated by and
subject to the supervision of the Corporation's Board of Directors, and shall
serve in such additional capacities appropriate to his responsibilities and
skills as shall be designated by the Corporation, through action of its Board
of Directors. During such period, the Executive shall devote his full business
attention, time and energies to the operations and affairs of the Corporation
(subject to the terms of Section 5. below), and will use his best efforts to
promote the interests and reputation of the Corporation; provided that he may
pursue such non-competitive activities during weekday evenings and on weekends,
such as teaching, consulting or other remunerative or non-remunerative
activities, as do not interfere, to any degree, with the complete performance
of his obligations hereunder. Any question of interpretation which may arise
under the preceding proviso shall be resolved by majority decision of the
Corporation's Board of Directors. Hours of service to the Corporation during
the Term of this Agreement shall be a minimum of 40 per week and
<PAGE> 3
otherwise as reasonably determined by the Corporation's Board of Directors. The
Corporation shall not, without his consent, remove the Executive's principal
place of business from Orange County, California.
3. Base Compensation.
For the services to be rendered by the Executive under this Agreement
the Corporation shall pay him, while he is rendering such services and
performing his duties hereunder, and the Executive shall accept as periodic
payment for such service, a base compensation (inclusive of any amounts subject
to federal or state employment related withholding requirements) of $108,000
per annum, which amount will be payable in arrears in substantially equal
monthly installments coinciding with the Corporation's normal employment
compensation payment cycle or pursuant to such other arrangements as the
parties may agree upon (the "Base Compensation"). Such Base Compensation shall
be reviewed as of each anniversary of the Commencement Date and may then be
increased to take into account increases, if any, in the annual cost of living,
or in recognition of the Corporation's attainment of operational goals, all as
determined by action of the Corporation's Board of Directors; but under no
condition may the Executive's Base Compensation be decreased below the figure
then being paid him regardless of any change in or diminution of the
Executive's duties owed to the Corporation.
4. Vacation; Fringe Benefits; Reimbursement of Expenses.
The Executive shall be entitled to two weeks of fully paid vacation
during the first annual period of his employment hereunder and to three weeks
during each successive annual period occurring within the Term of this
Agreement, whether Initial or Successor. The timing of vacation periods shall
be within the discretion of the Corporation's Board of Directors, reasonably
exercised so as not to unnecessarily inconvenience the Executive.
During his period of employment hereunder, the Executive shall further
be entitled to (a) such leave by reason of physical or mental disability or
incapacity and to such participation in individual or group medical, health,
disability, dental and life insurance programs; pension, profit sharing and
other retirement benefit plans; and any other fringe benefits, both for the
Executive and his family, as the Corporation may make generally available to
its most senior executive employee from time to time; and (b) reimbursement for
all normal and reasonable expenses necessarily incurred by him in the
performance of his obligations hereunder, subject in each case to such
reasonable substantiation requirements as may be imposed by the Corporation;
(c) an automobile allowance of $500 per month.
5. Proprietary Interests.
During or after the expiration of his term of employment with the
Corporation, the Executive shall not communicate or divulge to, or use for the
benefit of, any individual, association, partnership, trust, corporation or
other entity except the Corporation, any proprietary or confidential
information of the Corporation received by the Executive by virtue
2
<PAGE> 4
of such employment, without first being in receipt of the Corporation's written
consent to do so; provided that nothing contained herein shall restrict the
Executive's use or disclosure of such information known to the public (other
than that which he may have disclosed in breach of this Agreement), or as
required by law (so long as the Executive gives the Corporation prior notice of
such required disclosure).
6. Restrictive Covenant.
a. Scope of Covenant. Subject to the provisions
of Section 8e. below (the occurrence of which shall render this
Section 6. ineffective), the Executive shall not (1) within any
geographical area while employed by the Corporation; or (2) within any
state within which the Corporation is actively engaged in the conduct
of its business, during the two year period following termination of
such employment, engage or become interested in, directly or
indirectly, as owner, shareholder, partner, co-venturer, director,
officer, employee, agent, consultant or otherwise, any activity which
is then engaged in by the Corporation, nor, during the two year
post-termination period, employ or attempt to employ any employee of
the Corporation, or otherwise encourage or attempt to encourage any
employee of the Corporation to leave the Corporation's employ.
b. Confidentiality; Disclosure; Proprietary
Information. The Executive acknowledges that all records with respect
to customers serviced by the Corporation or with respect to employees
of the Corporation ("Associated Employees") and lists of customers or
proposed customers of the Corporation, or of Associated Employees, and
all personal, financial or business information concerning the
customers or proposed customers of the Corporation or of Associated
Employees, obtained by the Executive during the course of the
Executive's employment by the Corporation, are valuable and unique and
are proprietary assets of the Corporation. During the Executive's
employment by the Corporation and following the termination thereof,
the Executive will not at any time disclose any of the records, lists
or information previously described in this subsection, nor utilize
the same for any reason not previously authorized in writing by the
Corporation.
c. Divisibility of Covenant Period. If any
portion of the restrictive covenant contained herein is held to be
unreasonable, arbitrary or against public policy, each covenant shall
be considered divisible both as to time and geographic area, such that
each month within the specified period shall be deemed a separate
period of time and each state shall be deemed a separate geographical
area, resulting in an intended requirement that the longest lesser
time and largest lesser geographic area determined not to be
unreasonable, arbitrary or against public policy shall remain
effective and be specifically enforceable against the Executive.
d. Covenant Independent. Each restrictive
covenant on the part of the Executive set forth in this Agreement
shall be construed as a covenant independent of any other covenant or
provision of this Agreement or any other agreement which the
3
<PAGE> 5
Executive may have, whether fully performed or executory, and the
existence of any claim or cause of action by the Executive against the
Corporation, whether predicated upon another covenant or provision of
this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Corporation of any other covenant.
e. Court Proceedings. In any action or proceeding
by the Corporation relating to or involving the enforcement of this
covenant, the Executive hereby waives any and all right to a trial by
jury with respect to the action, proceeding, or other litigation
resulting from or involving the enforcement of this covenant. Further,
in any action or proceeding by the Corporation to obtain a temporary
restraining order and/or preliminary injunction, the Executive hereby
agrees to waive the necessity of the Corporation posting an injunction
bond in order to obtain a temporary restraining order and/or
preliminary injunction. Should the Corporation's action for a
temporary restraining order and/or motion for preliminary injunction
be granted in whole or in part and should the Corporation be
ultimately unsuccessful in obtaining a permanent injunction to enforce
the covenant, the Executive hereby waives any and all rights the
Executive may have against the Corporation for any injuries or
damages, including consequential damages, sustained by the Executive
and arising directly or indirectly from the issuance of the temporary
restraining order and/or preliminary injunction.
f. Indemnification. The Executive hereby agrees
to indemnify and hold the Corporation harmless from and against any
losses, claims, damages or expenses, and/or all costs of prosecution
or defense of his rights hereunder, whether in judicial proceedings,
including appellate proceedings, or whether out of court, including
without limiting the generality of the foregoing, attorney's fees, and
all costs and expenses of litigation, arising from or growing out of
the Executive's breach or threatened breach of any covenant contained
herein.
g. Extension of Covenant Period. The period of time during
which the Executive is prohibited from engaging in the practices
identified in a. above shall be extended by any length of time during
which the Executive is in breach of such covenants.
h. Survival of Covenants. All restrictive
covenants contained in this Agreement shall survive the termination of
this Agreement.
7. Remedies for Breach of Obligations.
The parties agree that the services of the Executive are of a
personal, specific, unique and extraordinary character and cannot be readily
replaced by the Corporation. They further agree that in the course of
performing his services, the Executive will have access to various types of
proprietary information of the Corporation, which, if released to others or
used by the Executive other than for the benefit of the Corporation, in either
case without the Corporation's consent, could cause the Corporation to suffer
irreparable and continuing injury. Therefore, the obligations of the Executive
established under Section Section 5. and 6. hereof shall be
4
<PAGE> 6
enforceable by the Corporation both at law and in equity, by injunction,
specific performance, damages or other remedy; and the right of the Corporation
to obtain any such remedy shall be cumulative and not alternative and shall not
be exhausted by any one or more uses thereof.
8. Termination of Employment.
a. Death. The Executive's employment hereunder shall terminate
in the event of the Executive's death. Except for any salary and benefits
accrued, vested and unpaid as of the date of any such termination and except
for any benefits to which the Executive or his heirs or personal
representatives may be entitled under and in accordance with the terms of any
employee benefit plan, policy or program maintained by the Corporation, the
Corporation shall be under no further obligation hereunder to the Executive or
to his heirs or personal representatives, and the Executive or his heirs or
personal representatives no longer shall be entitled to receive any payments or
any other rights or benefits under this Agreement.
b. Disability. The Corporation may terminate the Executive's
employment hereunder for disability if an independent physician mutually
selected by the Executive (or his legal representative) and the Board of
Directors or its designee (or, upon an inability of such parties to effect the
selection within a period of ten days, by the independent certified public
accounting firm then serving the Corporation) shall have determined that the
Executive has been substantially unable to render to the Corporation services
of the character contemplated by Section 2. of this Agreement, by reason of a
physical or mental illness or other condition, for more than 30 consecutive
days or for shorter periods aggregating more than 45 days in any period of 12
consecutive months (excluding in each case days on which the Executive shall be
on vacation). In the event of such disability, the Executive shall be entitled
to receive any salary and benefits accrued, vested and unpaid as of the date of
any such termination and any benefits to which the Executive may be entitled
under and in accordance with the terms of any employee benefit plan, policy or
program maintained by the Corporation; and upon the Executive's receipt of such
salary and benefits the Corporation shall be under no further obligation
hereunder to the Executive and the Executive no longer shall be entitled to
receive any payments or any other rights or benefits under this Agreement.
c. Termination by the Corporation for Cause. The Corporation
may terminate the Executive's employment hereunder for "Cause." For purposes of
this Agreement, "Cause" shall mean any of the following:
i. The Executive's repeated willful misconduct
or gross negligence;
ii. The Executive's repeated conscious disregard of his
obligations hereunder or of any other written duties
reasonably assigned to him by the Board of Directors;
iii. The Executive's repeated conscious
violation of any provision of the Corporation's by-laws or of
its other stated policies, standards or regulations;
5
<PAGE> 7
iv. The Executive's commission of any act involving
fraud or moral turpitude; or
v. A determination that the Executive has
demonstrated a dependence upon any addictive substance,
including alcohol, controlled substances, narcotics or
barbiturates;
provided, however, that if the Board of Directors of the Corporation desires to
terminate the Executive for any of the reasons set forth in: (1) clause (i),
(ii) or (iii) of this Section 8c., the Corporation must be able to demonstrate
that, within the 60 day period immediately following the alleged occurrence of
each proscribed act or omission preceding the act or omission upon which it is
basing its right to effect a termination for Cause, it furnished to the
Executive a written description of the allegedly proscribed act or omission and
a statement advising him that the Corporation views such conduct as being of
the type which could lead to a termination of the Executive for Cause; (2)
clause (ii) or (iii) of this Section 8c., the Board must be able to demonstrate
that the Executive has been furnished with a copy of the written duty, by-law
provision, policy, standard or regulation, the violation of which the Executive
is being accused, at a time prior to the alleged commission of the violation;
or (3) clause (iv) or (v) of this Section 8c., the Board shall first be
required to obtain an opinion from Corporation counsel to the effect that there
is an adequate basis upon which either such determination may be made. Except
for any salary and benefits accrued, vested and unpaid as of the date of any
such termination, the Corporation shall be under no further obligation
hereunder to the Executive and the Executive no longer shall be entitled to
receive any payments or any other rights or benefits under this Agreement.
d. Termination by the Corporation Other Than for Cause. The
Corporation may terminate the Executive's employment hereunder upon the
expiration of the Initial Term or any Successor Term, provided that notice of
termination is furnished as set forth in Section 1, or at any time prior to the
expiration of any successor Term, upon 30 days notice to the Executive, and
subject, in either event, to the right of the Executive, within such
notification period, to effect his own Good Reason termination as described in
subsection e. below. In the event of either such termination, the Executive
shall be entitled to receive any salary and benefits accrued, vested and unpaid
as of the date of any such termination and any benefits to which the Executive
may be entitled under and in accordance with the terms of any employee benefit
plan, policy or program maintained by the Corporation, as well as, in the event
that the Executive shall have timely effected a Good Reason termination, those
benefits authorized under the provisions of subsection e.; and following his
receipt of such salary and benefits the Corporation shall be under no further
obligation hereunder to the Executive and the Executive no longer shall be
entitled to receive any payments or any other rights or benefits under this
Agreement.
e. Termination by the Executive for Good Reason.
Notwithstanding anything herein to the contrary, the Executive shall be
entitled to terminate his employment hereunder for "Good Reason" without breach
of this Agreement. For purposes of this Agreement, "Good
6
<PAGE> 8
Reason" shall exist upon the occurrence of any of the following, in each case
without the Corporation first being in receipt of the Executive's written
consent:
i. A material change in the title or a
substantial elimination of the duties and responsibilities
of the Executive;
ii. A material breach by the Corporation of its
obligations hereunder;
iii. A decision by the Corporation to effect an early
termination of the Executive's employment under this Agreement
pursuant to the applicable provisions of Section 8.d. above.
In the event of a Good Reason termination by the Executive, the
Executive shall nonetheless be entitled to continue to receive from the
Corporation his Base Compensation for the succeeding two month period. Except
for such continuing entitlement to compensation following any such termination,
and except for any salary and benefits accrued, vested and unpaid as of the
date of any such termination, the Executive no longer shall be entitled to
receive any payments or any other rights or benefits under this Agreement, and
the Corporation shall have no further obligation hereunder to the Executive
following any such termination.
f. Termination by the Executive for Other Than Good Reason.
The Executive may terminate his employment hereunder upon the expiration of the
Initial Term or any Successor Term, provided that notice of termination is
provided as set forth in Section 1. In the event of such termination, the
Executive shall be entitled to receive any salary and benefits accrued, vested
and unpaid as of the date of any such termination and any benefits to which the
Executive may be entitled under and in accordance with the terms of any
employee benefit plan, policy or program maintained by the Corporation; and
following his receipt of such salary and benefits to the Corporation shall be
under no further obligation hereunder to the Executive and the Executive no
longer shall be entitled to receive any payments or any other rights or
benefits under this Agreement.
g. Life and Disability Insurance Coverage. If termination of
employment is due to any reason other than death, the Executive shall have the
right, subject to receiving approval of the Corporation (which shall not be
unreasonably withheld), to purchase any policy of insurance on his life or
insuring against his disability which is owned by the Corporation, the exercise
of which right shall be made by notice furnished to the Corporation within 30
days subsequent to the date of termination. The purchase price of each policy
of life insurance shall be the sum of its interpolated terminal reserve value
(computed as of the closing date) and the proportional part of the gross
premium last paid before the closing date which covers any period extending
beyond that date; or if the policy to be purchased shall not have been in force
for a period sufficient to generate an interpolated terminal reserve value, the
price shall be an amount equal to all net premiums paid as of the closing date.
The purchase price of each disability income policy shall be the sum of its
cash value and the proportional part of the gross premium last paid before the
closing date which covers any period extending beyond that date. The
7
<PAGE> 9
purchase of any insurance policy by the Executive shall be closed as promptly
as may be practicable after the giving of notice, in no event to exceed 30 days
therefrom.
9. Indebtedness of Executive. If, during the course of his
employment, the Executive becomes indebted to the Corporation for any reason,
the Corporation shall, if it so elects, have the right to set-off and to
collect any sums due it from the Executive out of any amounts which it may owe
to the Executive for unpaid compensation. In the event that this Agreement
terminates for any reason, all sums owed by the Executive to the Corporation
shall become immediately due and payable.
10. Miscellaneous Provisions.
a. Notice: All notices or other communications required or
permitted to be furnished pursuant to this Agreement shall be in writing and
shall be considered as properly furnished if hand delivered, mailed from within
the United States by certified or registered mail, or sent by prepaid telegram
to the recipient party at the address appearing in the preamble to this
Agreement or to such other address as any such party may have designated by
like notice forwarded to the other party hereto. Change of address notices
shall be deemed furnished when received. All other notices shall be deemed
furnished when mailed, telegraphed or hand delivered.
b. Non-Assignability: Neither this Agreement nor any right or
interest hereunder shall be assignable by the Corporation or the Executive, but
shall inure to the benefit of and be binding upon the legal representatives and
successors in interest of each.
c. Entire Agreement: This Agreement, and any other document
referenced herein, constitute the entire understanding of the parties hereto
with respect to the subject matter hereof, and no amendment, modification or
alteration of the terms hereof shall be binding unless the same be in writing,
dated subsequent to the date hereof and duly approved and executed by each of
the parties hereto.
d. Enforceability: If any term or condition or this agreement
shall be invalid or unenforceable to any extent or in any application, then the
remainder of this agreement, and such term or condition except to such extent
or in such application, shall not be affected thereby and each and every term
and condition of this agreement shall be valid and enforced to the fullest
extent and in the broadest application permitted by law.
e. Application of Florida Law, Jurisdiction: This Agreement,
and the application or interpretation thereof, shall be governed exclusively by
its terms and by the laws of the State of Florida. Venue shall be deemed
located in Hillsborough County, Florida. The parties agree that, irrespective
of any wording that might be construed to be in conflict with this paragraph,
this agreement is one for performance in Florida. The parties to this agreement
agree that they waive any objection, constitutional, statutory or otherwise, to
a Florida court's taking jurisdiction
8
<PAGE> 10
of any dispute between them. By entering into this agreement, the parties, and
each of them understand that they might be called upon to answer a claim
asserted in a Florida court.
f. Counterparts: This Agreement may be executed by any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
g. Binding Effect: Each of the provisions and agreements
herein contained shall be binding upon and inure to the benefit of the personal
representatives, devisees, heirs, successors, transferees and assigns of the
respective parties hereto.
h. Legal Fees and Costs: If a legal action is initiated by any
party to this Agreement against another, arising out of or relating to the
alleged performance or non-performance of any right or obligation established
hereunder, or any dispute concerning the same, any and all fees, costs and
expenses reasonably incurred by each successful party or his or its legal
counsel in investigating, preparing for, prosecuting, defending against, or
providing evidence, producing documents or taking any other action in respect
of, such action shall be the joint and several obligation of and shall be paid
or reimbursed by the unsuccessful party(ies).
i. Beneficiary: As used herein, the term "Beneficiary" shall
mean the person or persons (who may be designated contingently or successively
and who may be an entity other than an individual, including an estate or
trust) designated on a written form prescribed by the Board of Directors to
receive the expiration of Agreement or death benefits described in Section 8.
above. Each Beneficiary designation shall be effective only when filed with the
secretary of the Corporation during the Executive's lifetime. Each Beneficiary
designation filed with the Secretary will cancel all designations previously so
filed. If the Executive fails to properly designate a Beneficiary or if the
Beneficiary predeceases the Executive or dies before complete distribution of
the benefit has been made, the Corporation shall distribute the benefit (or
balance thereof) to the Executive's probate estate.
In witness whereof, the parties have executed this Agreement.
ADVANTAGE LIFE PRODUCTS, INC.
By: /s/ Alan S. Lipstein
----------------------------
Alan S. Lipstein, President
EXECUTIVE
/s/ George M. Carras
--------------------------------
George M. Carras
9
<PAGE> 1
Exhibit 4
to the
Annual Report on Form 10-KSB
for
the year ended April 30, 1996
for
Advantage Life Products, Inc.
Extension Agreement with Roscom, Ltd.
<PAGE> 2
EXTENSION AGREEMENT
Extension Agreement, effective as of August 31, 1996, by and by and
between Advantage Life Products, Inc., a Delaware corporation whose principal
place of business is 13902 N. Dale Mabry Blvd., Suite 119, Tampa, Florida 33618
(the "Company") and Roscom, Ltd., a foreign corporation, whose address is
Dunston House, Dunston Road, Sheepbridge, Chesterfield, Derbyshire S41 9QD,
United Kingdom ("Roscom").
BACKGROUND INFORMATION
During 1995, the Company sold 2,000,000 shares of its common stock
(the "Shares") to Roscom in exchange for $200,000 cash and a promissory note in
the original principal amount of $1,300,000 (the "Note"). As security for the
payment of the amounts due under the Note, Roscom pledged the Shares to the
Company. The Company and Roscom, effective August 31, 1996, agreed to amend the
Note by extending the maturity date of the Note until August 31, 1997 provided
that Roscom would pledge additional collateral for the Note to the Company.
Accordingly, in consideration of the foregoing, the parties hereto agree as
follows:
OPERATIVE PROVISIONS
1. Extension of the Maturity Date of the Note. The maturity date
of the Note is extended to August 31, 1997.
2. Stock Pledge Agreement. As additional collateral for the Note,
Roscom agrees to deliver to the Company 300,000 shares of the common stock of
Med-Vax Technologies, Inc. (the "Med-Vax Shares"), to be held by the Company
pursuant to the terms of the Stock Pledge Agreement between the Company and
Roscom, executed in 1995. Roscom owns the Med-Vax Shares free and clear of all
liens and liabilities.
3. Miscellaneous.
a. This Extension Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Extension Agreement
shall be governed by and construed in accordance with the laws of the State of
Florida, without giving effect to conflict of laws.
b. The Company and Roscom irrevocably consent to the jurisdiction
of the courts of the State of Florida and of any federal court located in such
State in connection with any
10.3B
<PAGE> 3
action or proceeding arising out of or relating to this Extension Agreement,
the Note, the Stock Pledge Agreement or any document or instrument delivered
pursuant to, in connection with, or simultaneously with this Extension
Agreement.
c. Venue for all purposes shall be deemed to lie in Hillsborough
County, Florida.
In witness whereof, the parties hereto have caused this Extension
Agreement to be duly executed effective as of the day and year first above
written.
ADVANTAGE LIFE PRODUCTS, INC.
By: /s/ Alan S. Lipstein
-------------------------------
Alan S. Lipstein
President and Chief Executive Officer
R0SCOM, LTD.
By: /s/
--------------------------------
Its:
--------------------------------
2
<PAGE> 4
Exhibit 5
to the
Annual Report on Form 10-KSB
for
the year ended April 30, 1996
for
Advantage Life Products, Inc.
Extension Agreement with Vietri Investments, Ltd.
<PAGE> 5
EXTENSION AGREEMENT
Extension Agreement, effective as of August 31, 1996, by and by and
between Advantage Life Products, Inc., a Delaware corporation whose principal
place of business is 13902 N. Dale Mabry Blvd., Suite 119, Tampa, Florida 33618
(the "Company") and Vietri Investments, whose address is 17 Bond, St. Helier,
Jersey, Channel Islands ("Vietri").
BACKGROUND INFORMATION
During 1995, the Company sold 2,000,000 shares of its common stock
(the "Shares") to Vietri in exchange for $200,000 cash and a promissory note in
the original principal amount of $1,300,000 (the "Note"). As security for the
payment of the amounts due under the Note, Vietri pledged the Shares to the
Company. The Company and Vietri, effective August 31, 1996, agreed to amend the
Note by extending the maturity date of the Note until August 31, 1997 provided
that Vietri would pledge additional collateral for the Note to the Company.
Accordingly, in consideration of the foregoing, the parties hereto agree as
follows:
OPERATIVE PROVISIONS
1. Extension of the Maturity Date of the Note. The maturity date
of the Note is extended to August 31, 1997.
2. Stock Pledge Agreement. As additional collateral for the Note,
Vietri agrees to deliver to the Company 300,000 shares of the common stock of
Prentice Capital, Inc. (the "Prentice Capital Shares"), to be held by the
Company pursuant to the terms of the Stock Pledge Agreement between the Company
and Vietri, executed in 1995. Vietri owns the Prentice Capital Shares free and
clear of all liens and liabilities.
3. Miscellaneous.
a. This Extension Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Extension Agreement
shall be governed by and construed in accordance with the laws of the State of
Florida, without giving effect to conflict of laws.
b. The Company and Vietri irrevocably consent to the jurisdiction
of the courts of the State of Florida and of any federal court located in such
State in connection with any action
10.39
<PAGE> 6
or proceeding arising out of or relating to this Extension Agreement, the Note,
the Stock Pledge Agreement or any document or instrument delivered pursuant to,
in connection with, or simultaneously with this Extension Agreement.
c. Venue for all purposes shall be deemed to lie in Hillsborough
County, Florida.
In witness whereof, the parties hereto have caused this Extension
Agreement to be duly executed effective as of the day and year first above
written.
ADVANTAGE LIFE PRODUCTS, INC.
By:/s/ Alan S. Lipstein
-------------------------------
President and Chief Executive Officer
VIETRI, LTD.
By: /s/
---------------------------------
Its:
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2
<PAGE> 1
Exhibit 6
to the
Annual Report on Form 10-KSB
for
the year ended April 30, 1996
for
Advantage Life Products, Inc.
Capital Stock Purchase Agreement with Cimtran, Ltd.
(together with promissory note and stock pledge agreement).
<PAGE> 2
CAPITAL STOCK PURCHASE AGREEMENT
Capital stock purchase agreement (the "Agreement"), dated _________
__, 1996, by and between Advantage Life Products, Inc., a Delaware corporation
whose principal place of business is 13902 N. Dale Mabry Blvd., Suite 119,
Tampa, Florida 33618 (the "Company") and Cimtran, Ltd., whose principal place
of business is _____________________________________
__________________________________ ("Purchaser").
BACKGROUND INFORMATION
This Agreement sets forth the terms and conditions upon which the
Purchaser is acquiring from the Company and the Company is issuing to the
Purchaser 5,000,000 shares of its authorized, but previously unissued, shares
of common capital stock, no par value (the "Shares"), of the Company. In
consideration of the mutual agreements contained herein, the parties agree as
follows:
OPERATIVE PROVISIONS
ARTICLE 1
Purchase and Sale of Shares
1.1 Shares to be Sold: Subject to the terms and conditions of this
Agreement, at the Closing referred to in Section 1.4 hereof, the Company shall
issue to the Purchaser the Shares, free and clear of all liabilities,
obligations, claims, liens and encumbrances, by delivering to the Purchaser one
or more stock certificates.
1.2 Purchase Price of the Shares: The gross purchase price to be
paid by the Purchaser to the Company for the Shares shall be $2,500,000 (the
"Purchase Price").
1.3 Payment of Purchase Price: Subject to the terms and conditions
of this Agreement, in reliance on the representations, warranties and
agreements of the Company contained herein, and in consideration of the sale
and delivery of the Shares, the Purchaser shall pay the Purchase Price at the
Closing (as defined below). The Purchase Price shall be paid by the Purchaser
by its delivery of $100,000 cash, in United States dollars, at the Closing, and
by the further delivery of its promissory note, in the original principal
amount of $2,400,000 (the "Note"). The Note, a copy of which is attached hereto
as Schedule 1.3(a), shall bear interest at the rate of 8% per annum, and all
principal and accrued interest shall be due and payable in full on August 31,
1997. The Note will be secured by the Purchaser pledging the Shares acquired
pursuant to this Agreement pursuant to the terms of the Stock Pledge Agreement
attached hereto as Schedule 1.3(b). Notwithstanding the above, if the Purchaser
disposes of any of the Shares prior to the maturity of the Note, a pro rata
portion of the principal balance of the Note shall be immediately due and
payable..
10.40
<PAGE> 3
1.4 Closing: The closing of the sale and purchase of the Shares
shall take place at the offices of the Company, as soon as is practicable, at
such time and place agreed to by the parties (the "Closing"). At the Closing,
the Company shall deliver to the Purchaser one or more certificates for the
Shares and the Purchaser shall deliver to the Company the Purchase Price, by
delivering cash of $100,000 and the Note. Each party shall be responsible for
all fees and costs incurred by it or on its behalf in connection with the
negotiation of this Agreement and the Closing.
If at the Closing the Company shall fail to tender the Shares, or if
any of the conditions specified hereunder shall not have been fulfilled, the
Purchaser shall, at its option, be relieved of its obligations under this
Agreement without thereby waiving any rights it may have by reason of such
failure or non-fulfillment.
ARTICLE 2
Representations and Warranties of the Company
The Company represents, warrants and agrees as follows:
2.1 Organization and Standing of the Company: 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 corporate power and
authority to own and operate its properties and to carry on its business as now
conducted and as proposed to be conducted. The Company has furnished to the
Purchaser complete and correct copies of its Articles of Incorporation and
By-Laws as presently in effect.
2.2 Capitalization: The authorized capital stock of the Company
consists of 25,000,000 shares of common stock, $.16 par value. On the date
hereof, 596,476 of those shares are issued and outstanding. The Company holds
no shares of its capital stock in its treasury (any such shares having been
returned to the status of authorized but unissued shares) and all outstanding
shares of capital stock have been duly authorized and validly issued and are
fully paid and non-assessable. Except as set forth on Schedule 2.2, there are
no outstanding rights, options, warrants, conversion privileges or agreements
of any kind for the purchase or acquisition from, or the sale or issuance by,
the Company of any shares of its capital stock and no authorization therefor
has been given.
2.3 Corporate Power: The Company has the corporate power to
conduct its business and to execute and deliver this Agreement and to perform
its obligations under this Agreement.
2.4 Authorization: When executed and delivered by the Company,
this Agreement and any other agreements referenced herein will constitute the
valid and binding obligations of the Company, enforceable in accordance with
their respective terms.
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<PAGE> 4
2.5 Subsidiaries: Except as disclosed in Schedule 2.5 attaching
hereto, the Company does not control (as such term is defined in Section 368(c)
of the Internal Revenue Code of 1986, as amended), directly or indirectly, any
other corporation, association or other business entity, nor does it have any
direct or indirect interest therein.
2.6 Consent: No consent, approval or authorization of or
registration, qualification, designation, declaration or filing with any
governmental authority or private person or entity on the part of the Company
is required in connection with the execution and delivery of this Agreement or
the consummation of any other transaction contemplated hereby, except as shall
have been duly taken or effected prior to the Closing.
2.7 Issuance of Shares: The Company will have full and
unrestricted legal right, power and authority to issue the Shares to the
Purchaser, without obtaining the consent or approval of any other person or
governmental authority, and the Shares, when issued, will constitute duly
authorized, validly issued, fully paid and nonassessable shares of the Company.
The execution of this Agreement and the consummation of the transactions
contemplated hereby will not constitute a default under any provision of any
agreement by which the Company is bound.
2.8 No Breach or Default: The execution and delivery of this
Agreement, the performance by the Company of its obligations under this
Agreement and the exercise by the Company of the rights created by this
Agreement do not (a) violate the Company's Articles of Incorporation or bylaws;
(b) constitute a breach of or a default under any agreement or instrument to
which the Company is a party or by which it or its assets are bound or result
in the creation of a mortgage, security interest or other encumbrance upon the
assets of the Company; (c) violate a judgment, decree or order of any court or
administrative tribunal, which judgment, decree or order is binding on the
Company or its assets; or (d) violate any Federal or Florida law, rule or
regulation.
2.9 Financial Statements. The Company has delivered to the
Purchaser its balance sheets for each of the last two full fiscal years ending
before the date of this Agreement as well as its statement of income and loss
for the same periods. In addition the Company has delivered to the Purchaser
its balance sheet as of January 31, 1996 (the "Interim Balance Sheet") which
has been prepared in accordance with the applicable books and records of the
Company and presents fairly the financial condition of the Company as of
January 31, 1996, and, except as set forth herein, there has been no material
change in such financial condition of the Company since January 31, 1996. The
financial statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved
except as otherwise noted therein, and except for normal year-end adjustments.
2.10 Absence of Undisclosed Liabilities. The Company has no
liabilities or obligations except for those (i) reflected on the Interim
Balance Sheet; (ii) reflecting contractual liabilities or obligations incurred
in the ordinary
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<PAGE> 5
course of business that are not required by generally accepted accounting
principles to be reflected in a balance sheet; (iii) incurred in the ordinary
course of business subsequent to the date of Interim Balance Sheet and not
required to be disclosed pursuant to the terms of this Agreement; and (iv)
specifically disclosed in Schedule 2.10 attached hereto. Except as otherwise
provided in this Agreement, the term "liabilities or obligations" as used in
this Agreement shall include any direct or indirect indebtedness, claim, loss,
damage, deficiency (including deferred income tax and other net tax
deficiencies), cost, expense, obligation, guarantee, or responsibility, whether
accrued, absolute, or contingent, known or unknown, fixed or unfixed,
liquidated or unliquidated, secured or unsecured.
2.11 Litigation; Compliance with Laws. Except as set forth on
Schedule 2.11, there is no suit, action, claim, arbitration, administrative or
legal or other proceeding, or governmental investigation pending or, to the
knowledge of the Company threatened against or related to the Company. There
has been no failure to comply with, nor any default under, any law, ordinance,
requirement, regulation, or order applicable to the Company or its business
operations, nor any violation of or default with respect to any order, writ,
injunction, judgment, or decree of any court or federal, state or local
department, official, commission, authority, board, bureau, agency, or other
instrumentality issued or pending against the Company which might have a
material adverse effect on the financial condition, its business, results of
operations, properties or assets of the Company. The Company has obtained all
permits, licenses, zoning variances, approvals, and other authorization
necessary for the operation of its business. All such permits, licenses,
approvals and authorizations are currently valid and in full force and no
revocation, cancellation or withdrawal thereof has been effected or threatened.
The execution of this Agreement and the performance of the transactions
contemplated hereby have not and will not change in any respect, or result in
the termination of, any such material permits, licenses, certificates, zoning
variances and authorizations. There have been no illegal kickbacks, bribes or
political contributions made by the Company.
2.12 No Changes. Since January 31, 1996, there has not been:
a. Any change in the financial or other condition,
assets, liabilities or business of the Company, except changes
described in Schedule 2.12 hereto;
b. Any damage, destruction or loss (whether or not
covered by insurance) or any condemnation by governmental authorities
which has or may adversely affect the business or assets of the
Company to a material degree;
c. Any strike, lockout, labor trouble or any similar
event or condition of any character adversely affecting the business
of the Company;
d. Except as disclosed in writing to the shareholders
from time to time, any declaration, setting aside or payment of any
dividend or other distribution in respect of any of the Company's
shares or any direct or indirect redemption, purchase or other
acquisition of the Company's shares or any direct or indirect payment
or incurring of management fees or other transactions between the
shareholders of the Company, in their capacity as such, and the
Company; or
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<PAGE> 6
e. Any increase in the compensation payable or to become
payable by the Company to any of its officers, employees or agents, or
any known payment or arrangement made to or with any thereof, except
in the ordinary course of business as disclosed to the Purchaser.
2.13 Veracity of Statements. No representation or warranty by the
Company contained in this Agreement and no statement contained in any
certificate, schedule or other instrument furnished to the Purchaser pursuant
hereto or in connection with the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state a material fact necessary
to make it not misleading.
ARTICLE 3
Representations, Warranties and Covenants of the Purchaser
The Purchaser represents and warrants to, and covenants with, the
Company as follows:
3.1 Authorization: When executed and delivered by the Purchaser,
this Agreement will constitute the valid and binding obligations of the
Purchaser, enforceable in accordance with its terms.
3.2 No Contractual Violation: Neither the execution, delivery nor
performance of this Agreement by the Purchaser, including the consummation by
the Purchaser of the transactions contemplated hereby, will constitute a
violation of or a default under, or conflict with, any term or provision of the
any contract, commitment, indenture or other agreement, or of any other private
restriction of any kind, to which the Purchaser is a party or by which it is
otherwise bound.
3.3 Suitability Standards: The Purchaser has such knowledge and
experience in equity investments and other financial matters as to be capable
of evaluating the risks and merits of an investment in the Company as well as
the economic worth and liquidity to be able to sustain a complete loss with
respect to the Shares.
3.4 Receipt and Review of Documentation: The Purchaser has
received, read and reviewed, and is familiar with this Capital Stock Purchase
Agreement and the Exhibits hereto, and confirms that all corporate and other
documents, records and books pertaining to its prospective investment in the
Shares or to the Company's business affairs requested by the Purchaser have
been made available or delivered to the Purchaser. Purchaser specifically
acknowledges receipt of the Company's reports on: Form 10-KSB for the fiscal
years ended April 30, 1994 and 1995; and Form 10-QSB for the quarters ended
July 31, 1995, October 31, 1995 and January 31, 1996. The Company has informed
the Purchaser of the current financial condition of the Company as of the date
of this Agreement.
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<PAGE> 7
3.5 Questions Answered and Information Made Available: The
Purchaser has had an opportunity to ask questions of and, if asked, to receive
satisfactory answers from the Company, through its representatives acting on
its behalf, concerning the terms and conditions of this Capital Stock Purchase
Agreement and the business affairs and prospects of the Company, and to obtain
any additional information possessed by or available to the Company without
unreasonable effort or expense which appears necessary to verify the accuracy
of such answers.
3.6 No Registration of Shares and Limitation on Transferability:
The Purchaser is aware that the Shares have not been registered under any
federal or state securities law, in each case in reliance upon applicable
federal or state transactional exemptions, and that accordingly, the Shares may
not be offered for sale, sold, pledged or otherwise distributed or encumbered
unless (1) a registration statement with respect to the Shares is effective, or
(2) a transactional exemption from registration applies to the disposition. The
Purchaser is also aware that it is purchasing an equity interest in the Company
without being furnished any prospectus, offering memorandum or other offering
literature except as referenced in this Capital Stock Purchase Agreement.
3.7 Investment Intent: The Shares are being acquired as a result
of private negotiations effected between the Purchaser and the Company without
there having been undertaken by the Company, to the Purchaser's knowledge, any
general solicitation or advertising. Purchaser acknowledges that it is familiar
with the terms of Rule 144, as promulgated by the staff of the Securities and
Exchange Commission, and is aware that if in the future it intends to effect a
resale of any of the Shares in reliance upon the rights granted by such Rule,
it must, among other conditions stated in the Rule, have owned the Shares for a
period of not less than two years.
3.8 Special Factors: The Purchaser is aware of the following:
(a) The purchase of the Shares is a speculative
investment with a high degree of risk of loss to the Purchaser of its
entire investment in the Shares;
(b) There are substantial restrictions on the
transferability of the Shares and accordingly, the Purchaser may have
to hold the Shares indefinitely and may not be able to liquidate its
investment in the Company;
(c) A legend will be placed on each certificate issued by
the Company to evidence Purchaser's ownership of the Shares, which
will describe the restrictions that will be imposed upon any resale
effort the Purchaser might otherwise attempt to make and a notation in
the appropriate records of the Company and its stock transfer agent
will be made with respect to any such restrictions on further transfer
of the Shares.
(d) Except as provided in this Capital Stock Purchase
Agreement, none of the following has ever been represented, guaranteed
or warranted to the Purchaser by the
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<PAGE> 8
Company, the Company, or their respective agents or employees, or
other person, expressly or by implication:
(1) the approximate or exact length of time that the
Purchaser will be required to remain as owner of the Shares;
(2) the amount or type of consideration, profit or loss
(including tax benefits) which reasonably may be expected to
be realized, if any, as a result of activities of the Company;
(3) that the past performance or experience of any entity
or other person associated with this investment, directly or
indirectly, will in any way indicate the predictable results
of the ownership of Shares or of the Company's intended
activities.
3.9 Foreign Status. Purchaser is not a U.S. person and is not
acquiring the Shares for the account of any U.S. person(1), the Company's offer
to sell the Shares was not made in the United States, and at all times relevant
to this transaction Purchaser has been located outside of the United States.
3.10 Restrictions on Resale. Purchaser agrees to resell the Shares
only in accordance with the provisions of Regulation S under the Securities Act
of 1933, as amended (the "Act"), pursuant to registration under the Securities
Act or pursuant to an available exemption under the Securities Act. In addition
to the foregoing representations and warranties, Purchaser agrees that any
proposed disposition of Shares that would constitute a sale thereof under the
Securities Act may be effected only if prior thereto the Company shall have
received a written notice of Purchaser's intention to effect such disposition,
setting forth the manner and circumstances of the proposed disposition in
reasonable detail and being accompanied by (i) an opinion of counsel reasonably
satisfactory to the Company, addressed to the Company, to the effect that the
proposed disposition of the Shares may be effected without registration under
the Securities Act, (ii) one or more representation letters in number, form and
substance reasonably satisfactory to the Company to ensure compliance with the
provisions of the Securities Act, and (iii) a letter
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(1)"U.S. person" means: (i) any natural person resident in the
United States; (ii) any partnership or corporation organized or
incorporated under the laws of the United States; (iii) any estate
of which any executor or administrator is a U.S. person; (iv) any
trust of which any trustee is a U.S. person; (v) any agency or
branch of a foreign entity located in the United States; (vi)
any non-discretionary account or similar account held by a dealer
or other fiduciary for the benefit or account of a U.S. person; (vii)
any discretionary account or similar account held by a dealer or
fiduciary organized, incorporated or resident in the United States;
and (viii) any partnership organized or incorporated under the laws
of any foreign jurisdiction if formed by a U.S. person principally
for the purpose of investing in securities not registered under the
Securities Act.
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<PAGE> 9
in form and substance reasonably satisfactory to the Company from each such
transferee stating such transferee's agreement to be bound by the terms of this
paragraph. Purchaser understands and acknowledges that the certificates
representing the Shares will bear an appropriate legend restricting their free
transferability and that instructions will be given to the Company's stock
transfer agent regarding the conditions of this paragraph.
The foregoing representations and warranties are complete and correct
as of the date hereof and shall be complete and correct and deemed restated up
to and including the date of the Closing, and the same shall survive such date.
If such representations and warranties shall not be complete and correct in all
respects and at all times from the date hereof up to and including the date of
Closing, the Purchaser represents and covenants that it shall give written
notice of such fact to the Company, specifying which representations and
warranties are not complete and correct and the reasons therefor.
ARTICLE 4
Additional Agreements and Covenants
The parties further agree and covenant as follows:
4.1 Delivery of Additional Instruments on Request: Each party
agrees to execute and deliver or cause to be executed and delivered at the
Closing, and at such other times and places as shall be reasonably agreed to,
such additional instruments as the other party may reasonably request for the
purpose of fully effecting the transactions herein contemplated.
4.2 Agreements as to Conditions: Each party agrees to use its best
efforts to satisfy each and every of the conditions set forth in Sections 5.
and 6., respectively, of this Agreement.
4.3 Brokerage Fee: Each of the parties alleges that it has not
engaged or authorized any broker or finder to act in a representative capacity
or otherwise in connection with the transactions contemplated by this
Agreement, and each agrees to indemnify and hold harmless the other from and
against any and all claims, losses, liabilities or expenses which may be
asserted against or suffered by either, or by the Company, as a result of any
broker, finder or other person claiming any fee or commission by reason of
services rendered or alleged to have been rendered for or at the instance of a
particular party hereto with respect to the negotiation or execution of this
Agreement or to the delivery of the consideration herein specified.
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<PAGE> 10
ARTICLE 5
Conditions to Closing by the Purchaser
The obligation of the Purchaser to consummate the transactions herein
contemplated is subject to the satisfaction at or prior to the Closing of each
of the following conditions, and if the Purchaser shall not consummate such
transactions by reason of the failure of any of such conditions to be met as
herein provided, the Purchaser shall have no liability to the Company:
5.1 Truthfulness of Representations and Warranties: Each of the
representations and warranties of the Company contained in this Agreement shall
be true and correct to the best knowledge of the Company as of the Closing with
the same effect as though such representations and warranties had been made on
and as of such date. Each such representation and warranty shall survive the
consummation of the transactions contemplated by this Agreement and shall
remain in full force and effect thereafter.
5.2 Performance: Each of the agreements of the Company to be
performed or complied with at or before the Closing pursuant to the terms
hereof shall have been duly performed or complied with.
5.3 Consents: All consents to the consummation of the transactions
contemplated herein which are required in order to prevent a breach of, or a
default under, the terms of any agreement to which Company is a party or is
bound shall have been obtained.
5.4 No Litigation Threatened: No action or proceeding shall have
been instituted or, to the knowledge of the Company, shall have been threatened
before a court or other governmental body or by any public authority to
restrain or prohibit the transactions contemplated herein. No governmental
agency or body shall have taken any other action or made any request of the
Purchaser or the Company as a result of which the Purchaser deems it
inadvisable to proceed with the transaction.
ARTICLE 6
Conditions to Closing by the Company
The obligation of the Company to consummate the transactions herein
contemplated shall be subject to the satisfaction of the Company on or prior to
the Closing of each of the following conditions, and if the Company shall not
consummate such transactions by reason of the failure of any of such conditions
to be met as herein provided, the Company shall have no liability to the
Purchaser:
6.1 Truthfulness of Representations and Warranties: Each of the
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct to the best
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<PAGE> 11
knowledge of the Purchaser as of the Closing with the same effect as though
such representations and warranties had been made on and as of such date. Each
such representation and warranty shall survive the consummation of the
transactions contemplated by this Agreement and shall remain in full force and
effect thereafter.
6.2 Performance: Each of the agreements of the Purchaser to be
performed or complied with on or before the Closing pursuant to the terms
hereof shall have been duly performed and complied with.
6.3 No Litigation Threatened: No action or proceeding shall have
been instituted or, to the knowledge of the Purchaser, shall have been
threatened before a court or other governmental body or by any public authority
to restrain or prohibit the transactions contemplated herein. No governmental
agency or body shall have taken any other action or made any request of the
Company or Purchaser as a result of which the Company deems it inadvisable to
proceed with the transaction.
ARTICLE 7
Miscellaneous Provisions
7.1 Notices: All notices and other communications hereunder shall
be in writing and shall be given to the person either personally or by sending
a copy thereof by certified mail, express mail, overnight delivery service, by
telecopier (with written acknowledgment of receipt) or courier services, in
each case with charges prepaid, to such party's address set forth in the
preamble hereto (or to such party's telecopier number previously sent to such
party by a means set forth in this paragraph). If the notice is sent by
certified mail it shall be deemed to have been given upon the date the notice
was accepted, if given by express mail, overnight delivery service or courier
services it shall be deemed to have been given to the person entitled thereto
when delivered by the service to that person or, in the case of telecopier, on
written acknowledgement of receipt. Notice of any change in any such address
shall also be given in the manner set forth above. Whenever the furnishing of
notice is required, the same may be waived by the party entitled to receive
such notice.
7.2 Binding Agreements; Non-Assignability: Each of the provisions
and agreements herein contained shall be binding upon and inure to the benefit
of the personal representatives, heirs, devisees and successors of the
respective parties hereto; but none of the rights or obligations attaching to
either party hereunder shall be assignable.
7.3 Entire Agreement: This Agreement, and the other documents
referenced herein, constitute the entire understanding of the parties hereto
with respect to the subject matter hereof, and no amendment, modification or
alteration of the terms hereof shall be binding unless the same be in writing,
dated subsequent to the date hereof and duly approved and executed by each
party.
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<PAGE> 12
7.4 Severability: Every provision of this Agreement is intended to
be severable. If any term or provision hereof is illegal or invalid for any
reason whatever, such illegality or invalidity shall not affect the validity of
the remainder of this Agreement.
7.5 Headings: The headings of this Agreement are inserted for
convenience and identification only, and are in no way intended to describe,
interpret, define or limit the scope, extent or intent hereof.
7.6 Application of Florida Law; Venue: This Agreement, and the
application or interpretation thereof, shall be governed exclusively by its
terms and by the laws of the State of Florida. Venue for any legal action which
may be brought hereunder shall be deemed to lie in Hillsborough County,
Florida.
7.7 Jurisdiction: The parties agree that, irrespective of any
wording that might be construed to be in conflict with this paragraph, this
agreement is one for performance in Florida. The parties to this agreement
agree that they waive any objection, constitutional, statutory or otherwise, to
a Florida court's taking jurisdiction of any dispute between them. By entering
into this agreement, the parties, and each of them understand that they might
be called upon to answer a claim asserted in a Florida court.
7.8 Counterparts: This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.9 Legal Fees and Costs: If a legal action is initiated by any
party to this Agreement against another, arising out of or relating to the
alleged performance or non-performance of any right or obligation established
hereunder, or any dispute concerning the same, any and all fees, costs and
expenses reasonably incurred by each successful party or his, her or its legal
counsel in investigating, preparing for, prosecuting, defending against, or
providing evidence, producing documents or taking any other action in respect
of, such action shall be the joint and several obligation of and shall be paid
or reimbursed by the unsuccessful party(ies).
In witness whereof, the parties have executed this Agreement as of the
day and year first above written.
Advantage Life Products, Inc.
/s/ Alan S. Lipstein
--------------------------------
Alan S. Lipstein, President
Cimtran, Ltd.
Attest:
By: /s/ George Hambleton
----------------------------
By: /s/ George Hambleton, Chairman
------------------------------
Its: ,Secretary
--------------------
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Schedule 1.3(a)
to the
Capital Stock Purchase Agreement
by and between
Advantage Life Products, Inc.
and
Cimtran, Ltd.
Promissory Note
Attached.
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<PAGE> 14
Schedule 1.3(b)
to the
Capital Stock Purchase Agreement
by and between
Advantage Life Products, Inc.
and
Cimtran, Ltd.
Security Agreement
Attached.
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<PAGE> 15
Schedule 2.2
to the
Capital Stock Purchase Agreement
by and between
Advantage Life Products, Inc.
and
Cimtran, Ltd.
Stock Options, Warrants, Conversion Privileges, Etc.
None.
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Schedule 2.5
to the
Capital Stock Purchase Agreement
by and between
Advantage Life Products, Inc.
and
Cimtran, Ltd.
Subsidiaries
1. Environmental Professionals, Inc.
2. Various inactive subsidiaries that were formerly engaged in
the "infomercial" business.
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Schedule 2.10
to the
Capital Stock Purchase Agreement
by and between
Advantage Life Products, Inc.
and
Cimtran, Ltd.
Undisclosed Liabilities
1. None.
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Schedule 2.11
to the
Capital Stock Purchase Agreement
by and between
Advantage Life Products, Inc.
and
Cimtran, Ltd.
Litigation
1. Advantage Life is a party to various lawsuits described in its
quarterly and annual reports on Form 10-QSB and Form 10-KSB, copies of which
have been delivered to the Purchaser.
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<PAGE> 19
Schedule 2.12
to the
Capital Stock Purchase Agreement
by and between
Advantage Life Products, Inc.
and
Cimtran, Ltd.
Changes
1. Advantage Life has discontinued the operations of
Environmental Professionals, Inc.
2. Advantage Life has agreed to purchase all of the assets of
Universal Mica, Inc., a corporation engaged in the business of owning and
operating a retail furniture business in Long Island, New York.
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INTEREST BEARING
SINGLE MATURITY PAYMENT PROMISSORY NOTE
$2,400,000 Chesterfield, Derbyshire
August __, 1996
For value received, the undersigned (the "Maker") promises to pay to the
order of Advantage Life Products, Inc. or its assigns (the "Holder"), the
principal sum of Two Million Four Hundred Thousand Dollars ($2,400,000). The
rights, claims, duties, and liabilities of the parties hereto are subject to
and controlled by the following terms and conditions:
1. Method and Place of Payment.
Payments of principal and interest shall be made in lawful money of the
United States of America at the principal residence of the Holder as specified
below, or at such other location as it may hereafter designate.
2. Principal and Interest Payments.
The entire principal amount of this note shall be payable in full on
August 31, 1997 (the "Maturity Date"). Interest on such principal amount (or
any balance thereof outstanding from time to time) shall accrue at an annual
rate of 8%, and as so accrued, shall be paid in one lump sum on the Maturity
Date. Notwithstanding the above, if the Maker disposes of the shares pledged
as collateral for this Note as more fully set forth herein, then all amounts
due under the Note shall be immediately due and payable.
Nothing herein, nor any transaction related hereto, shall be construed to
operate so as to require the Maker to pay interest at a greater rate than shall
be lawful. Should any interest or other charges paid by the Maker in
connection with the loan evidenced by this Note result in computation or
earning of interest in excess of the maximum contract rate of interest which is
legally permitted under applicable Florida law or federal preemption statute,
then any and all such excess is hereby waived by the Holder and shall be
automatically credited against and in reduction of the balance due hereunder,
and any portion which exceeds such balance shall be paid by the Holder to the
Maker. Anything contained herein to the contrary notwithstanding, if for any
reason the effective rate of interest on this Note should exceed the maximum
lawful rate, the effective rate shall be deemed reduced to and shall be such
maximum lawful rate.
3. Prepayment.
The Maker shall have the privilege and option, without penalty or
forfeiture, to pay the entire principal amount of this note or any part thereof
at any time prior to its due date.
<PAGE> 21
4. Security.
Timely payment of the debt evidenced by this Note is being secured by the
pledge of 5,000,000 shares of the common capital stock of Advantage Life
Products, Inc., pursuant to the terms of a Stock Pledge Agreement of even date
herewith among the Maker and the Holder.
5. Default; Acceleration of Obligation; Interest.
In the event of a failure by the Maker to fully satisfy the single
principal and interest payment on the Maturity Date, or upon the sale of the
Shares, if earlier, the entire obligation of the Maker shall be in default,
the unpaid principal and interest balances shall be immediately due and payable
and interest on the principal balance shall thereafter accrue at the maximum
annual rate allowable by law.
6. Collection.
Should it become necessary to collect this note through an attorney, the
Maker shall pay all costs incurred by or accruing to the Holder in making such
collection, including a reasonable attorney's fee.
7. Waiver.
The Maker expressly waives presentment for payment, notice of non-payment,
protest and notice of protest, and any other notice which might otherwise be
required in connection with the delivery, acceptance, performance, default or
enforcement of the payment of this note. The Holder shall not be deemed by any
act or omission to have waived any right or remedy hereunder unless and only to
the extent expressed in a written instrument dated subsequent to the date
hereof and executed by the Holder, and any such waiver so expressed with
respect to a particular event shall not be interpreted as having a continuing
effect on or as a waiver of any right or remedy with respect to any subsequent
event.
8. Notices.
All notices or other communications required or permitted to be given
pursuant to this note shall be in writing and shall be considered properly
given or made if hand delivered, mailed from within the United States by
certified or registered mail, or sent by prepaid telegram:
a. if to the Holder:
Alan S. Lipstein
Advantage Life Products, Inc.
13902 N. Dale Mabry Blvd., Suite 119
Tampa, Florida 33618
-2-
<PAGE> 22
b. if to the Maker:
Mr. George Hambleton
Cimtran, Ltd.
99 Saltergate
Chesterfield, Derbyshire 5401LD
Fax. No. 011441246450323
or to such other address as either party shall have furnished to the other.
All notices, except of change of address, shall be deemed given when mailed and
notices of change of address shall be deemed given when received.
9. Entire Agreement.
This note and any other document expressly identified herein constitute
the entire understanding of the parties with respect to the subject matter
hereof, and no amendment, modification or alteration of the terms hereof shall
be binding unless the same be in writing, dated subsequent to the date hereof
and duly approved and executed by the Maker and Holder.
10. Governing Law and Venue.
The Maker acknowledges and agrees that irrespective of where executed,
this note shall be construed in accordance with the laws of the State of
Delaware, and venue for any legal action which may brought hereunder shall be
deemed to lie in Tampa, Florida.
11. Jurisdiction.
The parties agree that, irrespective of any wording that might be
construed to be in conflict with this paragraph, this Note is one for
performance in Delaware. The Maker agrees that it will waive any objection,
constitutional, statutory or otherwise, to a Delaware court's taking
jurisdiction of any dispute regarding this Note or any agreement related
hereto. By entering into this Note, the Maker understands that it may be
called upon to answer a claim asserted in a Delaware court.
In witness whereof, the undersigned Maker has executed this Note as of
the date first written above.
Maker
CIMTRAN, LTD.
By: /s/ George Hambleton
--------------------------
George Hambleton, Chairman
-3-
<PAGE> 23
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement (the "Agreement") is made this _____ day
of ______________, 1996, by and between Advantage Life Products, Inc., a
Delaware corporation whose business address is 13902 N. Dale Mabry Highway,
Suite 119, Tampa, Florida 33618 ("Advantage Life"), and Cimtran, Ltd., whose
principal place of business is 99 Saltergate, Chesterfield, Derbyshire 5401LD
("Cimtran").
BACKGROUND INFORMATION
Contemporaneously with the execution of this Agreement, Cimtran
executed and delivered its promissory note in the original principal amount of
$2,400,000 to Advantage Life (the "Note"). As security for the performance of
its obligations hereunder, Cimtran agrees to pledge 5,000,000 shares of the
common stock that it owns of Advantage Life Products, Inc. to Advantage Life.
Accordingly, in exchange for valuable consideration, the receipt of which is
acknowledged by each of the parties to this Agreement, the parties agree as
follows:
OPERATIVE PROVISIONS
SECTION 1
COLLATERAL; GRANT OF SECURITY INTEREST
1.1 STOCK PLEDGE. As security for the Indebtedness (as defined
herein), Cimtran hereby pledges, assigns, hypothecates, delivers and sets over
to Advantage Life all of the Pledged Securities (as defined herein) and grants
to Advantage Life a lien on and security interest in all of the Pledged
Securities and the products and proceeds thereof.
1.2 "PLEDGED SECURITIES"; "ISSUER". The term "Pledged Securities"
as used in this Agreement shall mean and include all of the shares of stock,
listed and described in Exhibit "A" to this Agreement, accompanied by
stock/bond powers or assignments separate from certificates duly endorsed in
blank, together with any securities or other distributions issued as earnings
on, in addition to, substitution of or exchange for, or on account of, any such
Pledged Securities, including but not limited to, interest, premiums,
dividends, stock dividends, liquidating dividends, receivership distributions,
stock rights, rights of conversion or exchange rights, stock split, reverse
stock splits, recapitalization, reclassification, change of name, merger,
consolidation, sale of assets, combination of shares, spinoffs or otherwise,
and any or all proceeds and products thereof, now or hereafter owned or
acquired by Cimtran or by any third party as trustee or nominee for Cimtran.
The term "Issuer" as used in this Agreement shall mean the
corporation, partnership or other person or entity that has issued any Pledged
Securities.
<PAGE> 24
1.3 DELIVERY OF ADDITIONAL PLEDGED SECURITIES. In the event that
Cimtran shall become entitled to receive or shall receive any (i) shares of
stock, notes, bonds, debentures, options, rights, warrants, or other securities
distributed on account of such Pledged Securities; (ii) dividends payable in
property; (iii) dividends or distributions upon the dissolution or in partial
or total liquidation, then Cimtran shall accept any such instruments,
certificates or distributions as Advantage Life's agent and shall hold them in
trust for the benefit of Advantage Life and shall deliver them forthwith to
Advantage Life in the exact form received with, as may be necessary to
negotiate, transfer, hypothecate, pledge or grant a security interest therein,
Cimtran's endorsement, or with stock/bond powers or appropriate stock/bond
powers or assignments separate from certificates duly endorsed in blank or, in
the case of uncertificated securities, a registration of pledge, to be held by
Advantage Life as additional Pledged Securities subject to the terms of this
Agreement.
SECTION 2
INDEBTEDNESS SECURED
2.1 INDEBTEDNESS SECURED. This Agreement and the security interest
it grants Advantage Life in the Pledged Securities secure payment of all
obligations of Cimtran under the Note of even date herewith, including any sums
advanced and any expenses incurred by Advantage Life pursuant to this
Agreement, the Note or pursuant to any other loan documents executed in
connection with this Agreement, or any other note or evidence of indebtedness
of Cimtran to Advantage Life (collectively, the "Indebtedness").
SECTION 3
REGISTRATION: VOTING RIGHTS AND DIVIDENDS
3.1 REGISTRATION OF PLEDGED SECURITIES.
a. At any time, and from time to time, after an Event of
Default, Advantage Life may have any or all of the Pledged Securities
registered in its name or in the name of its nominee, and Cimtran hereby
covenants that, upon demand by Advantage Life, Cimtran shall cause the issuer
of such Pledged Securities to effect such registration and shall execute such
documents or instruments as necessary therefor. Cimtran hereby appoints
Advantage Life as its attorney-in-fact to arrange, upon the occurrence of an
Event of Default, for the transfer of any or all of the Pledged Securities on
the books of the issuer thereof in the name of Advantage Life or in the name of
its nominee.
b. Notwithstanding Subparagraph 3.1(a), as long as no
Event of Default shall have occurred and be continuing, Cimtran shall retain
all voting and consensual rights with respect to the Pledged Securities and the
right to receive all interest or dividends (subject to
-2-
<PAGE> 25
Paragraph 3.3(a) hereof), and Advantage Life shall execute and deliver to
Cimtran such proxies as shall be necessary to permit Cimtran's exercise of such
voting rights.
3.2 VOTING RIGHTS.
a. As long as no Event of Default under this Agreement
shall have occurred and be continuing, Cimtran shall be entitled to exercise
all voting and consensual powers with respect to the Pledged Securities.
b. Immediately and without further notice to Cimtran,
upon the occurrence of any Event of Default, Advantage Life or its nominee
shall have the right, at its election, to exercise all voting and consensual
rights with respect to any Pledged Securities, and Cimtran shall execute and
deliver to Advantage Life such proxies as shall be necessary to permit
Advantage Life's exercise of such voting and consensual rights.
3.3 DIVIDENDS AND OTHER DISTRIBUTIONS.
a. As long as no Event of Default under this Agreement
shall have occurred and be continuing, Cimtran shall be entitled to receive and
retain all regular cash dividends paid or declared on any Pledged Securities.
Notwithstanding the preceding sentence, unless Advantage Life shall
specifically consent in writing, Cimtran shall pay, deliver or transfer
directly to Advantage Life immediately upon receipt all other dividends,
premiums and other distributions, in cash, property or otherwise, paid or
distributed by an Issuer of any Pledged Securities as additional collateral
security under this Agreement or to be applied in satisfaction of the
Indebtedness.
b. Immediately and without notice to Cimtran, upon the
occurrence of any Event of Default, Advantage Life shall be entitled to receive
all dividends and other distributions on any Pledged Securities and, in the
event Cimtran shall receive any such dividends and other distributions, Cimtran
shall hold such dividends, interest or distributions in trust for the benefit
of Advantage Life and shall deliver such dividends or distributions to
Advantage Life in the exact form received with, as may be necessary to
negotiate, transfer, hypothecate, pledge or grant a security interest therein,
with appropriate stock powers or assignments separate from certificate duly
endorsed in blank.
SECTION 4
REPRESENTATION AND WARRANTIES
Cimtran represents warrants and, as long as any portion of the
Indebtedness remains unpaid, shall be deemed continuously to so represent and
warrant that:
-3-
<PAGE> 26
4.1 OWNERSHIP OF PLEDGED SECURITIES. Cimtran is the owner of the
Pledged Securities free and clear of all security interests or other
encumbrances and claims of third parties, except the pledge to Advantage Life
under this Agreement.
4.2 TRANSFER RESTRICTIONS. There are no restrictions upon the
voting rights or the transferability of any Pledged Securities other than may
appear on the certificates described and listed on Exhibit "A".
4.3 DUE AUTHORITY. Cimtran is authorized to enter into this
Agreement and pledge the Pledged Securities to Advantage Life hereunder.
4.4 NO VIOLATION. The execution, delivery and performance by
Cimtran of its obligations under this Agreement does not and will not result in
any violation of any agreement, indenture or other instrument, license,
judgment, decree, order, law, statute, ordinance or other governmental rule or
regulation applicable to Cimtran or to the Pledged Securities, including but
not limited to applicable federal and state securities laws.
4.5 VALIDITY OF AGREEMENT. Upon delivery of the Pledged Securities
to Advantage Life or its nominee and execution of this Agreement, this
Agreement shall be a valid and binding agreement of Cimtran enforceable in
accordance with its terms, and shall grant Advantage Life and create a valid
first lien on and perfected security interest in the Pledged Securities.
SECTION 5
COVENANTS OF CIMTRAN
Cimtran covenants that, as long as any Indebtedness remains unpaid,
Cimtran shall:
5.1 FURTHER ASSURANCES. Execute and deliver to Advantage Life, or
cause to be executed and delivered to Advantage Life, all such other stock
powers, assignments separate from certificates, registrations of pledge,
proxies, financing statements, instruments, documents, and take such other
action, as Advantage Life may reasonably request from time to time, to carry
out the provisions and purposes of this Agreement.
5.2 ENDORSEMENTS. Upon request of Advantage Life, endorse,
negotiate, transfer, deliver and/or assign any and all Pledged Securities or
deliver any stock/bond powers, assignments separate from certificates or
registrations of pledge, duly endorsed in blank or in the name of Advantage
Life or its nominee.
5.3 DISPOSITION OF PLEDGED SECURITIES. Not sell, convey or
otherwise dispose of any Pledged Securities or any interest therein, or create,
incur, or permit to exist any pledge, mortgage, lien, charge, encumbrance or
any security interest whatsoever with respect to any of
-4-
<PAGE> 27
the Pledged Securities or the products and proceeds thereof, except the
security interest granted to Advantage Life hereunder.
5.4 DUPLICATE REPLACEMENT CERTIFICATES. Not obtain any duplicate
or replacement certificates for any Pledged Securities from the Issuer thereof.
SECTION 6
EVENTS OF DEFAULT
6.1 EVENTS OF DEFAULT. Any of the following events or conditions
shall constitute an event of default ("Event of Default") under this Agreement:
a. Failure by Cimtran to pay when due, whether at
maturity, on demand, after acceleration or otherwise, any Indebtedness; or
b. Failure by Cimtran to perform any obligations or
covenants under this Agreement; or
c. Filing by or against Cimtran or any Issuer of a
petition in bankruptcy or for reorganization or arrangement under any provision
of the Bankruptcy Code now or hereafter in effect; or the appointment of a
receiver or trustee for Cimtran.
6.2 RIGHTS AND REMEDIES UPON DEFAULT. Advantage Life may declare
Cimtran to be in Default hereunder and all or any part of the Indebtedness to
be immediately due and payable without notice upon the occurrence of any Event
of Default, and, without regard to whether Advantage Life has declared the
Indebtedness immediately due and payable, Advantage Life shall have without
notice those rights described in Paragraphs 3.2(b) and 3.3(b).
6.3 CUMULATIVE REMEDIES. All rights, remedies or recourses of
Advantage Life under this Agreement, under the Uniform Commercial Code or other
law, in equity or otherwise, are cumulative, and exercisable concurrently, and
may be pursued singularly, successively or together and may be exercised as
often as occasion therefor shall arise. No act of commission or omission by
Advantage Life, including, but not limited to, any failure to exercise, or any
delay, forbearance or indulgence in the exercise of, any right, remedy or
recourse hereunder or with respect to any Indebtedness shall be deemed a
waiver, release or modification of that or any other right, remedy or recourse,
and no single or partial exercise of any right, remedy or recourse shall
preclude Advantage Life from any other or future exercise of the right, remedy
or recourse or the exercise of any other right, remedy or recourse. No waiver
or release of any such rights, remedies and recourses shall be effective
against Advantage Life unless in writing and manually signed by on Advantage
Life's behalf, and then only to the extent recited therein. A waiver, release
or modification with reference to any one event shall not be construed as
continuing, nor shall it be construed as a bar to, or as a waiver, release or
-5-
<PAGE> 28
modification of, any subsequent right, remedy or recourse as to a subsequent
event. Advantage Life may cure any default by Cimtran in any reasonable manner
without waiving the default so cured and without waiving any other prior or
subsequent default by Cimtran.
6.4 PUBLIC OR PRIVATE SALE; OTHER DISPOSITION. Advantage Life may
sell any or all of the Pledged Securities or cause the same to be sold at any
broker's board, on any securities exchange or other recognized market, in one
or more sales or lots, at such price(s) as Advantage Life may deem
satisfactory, for cash, and the purchaser of all or any of the Pledged
Securities so purchased shall thereafter hold the same absolutely, free from
any claim, encumbrance or rights of any kind whatsoever.
Unless the Pledged Securities threaten to decline speedily in value,
Advantage Life will give Cimtran reasonable notice of the time after which the
intended disposition is to be made. Any requirements of reasonable notice
shall be met if such notice is given as provided herein, at least three (3)
days before the time of the disposition. Any other requirement of notice,
demand or advertisement for sale is, to the extent permitted by law, hereby
specifically waived. The sale may be in one or more lots, as an entire or in
separate lots as Advantage Life in its sole discretion may determine.
Any sale of all or any Pledged Securities on any securities exchange
or other recognized market on or in which such Pledged Securities are regularly
or otherwise conducted in conformity with reasonable commercial practices of
banks, insurance companies and other financial institutions disposing of
securities similar to the Pledged Securities shall be deemed to be commercially
reasonable.
6.5 APPLICATION OF CASH, DIVIDENDS, INTEREST OR OTHER
DISTRIBUTIONS RECEIVED AND PROCEEDS. The proceeds of any sale of all or any
Pledged Securities and any cash at any time held by Advantage Life under this
Agreement shall be applied first to the payment of expenses incurred or paid by
Advantage Life in connection with any sale, transfer or other disposition of
the Pledged Securities and the enforcement of this Agreement, including but not
limited to brokerage fees, attorneys' fees and the like, second to the payment
of any accrued but unpaid interest on the Indebtedness and finally to payment
of principal.
6.6 DEFICIENCY. In the event that the proceeds of the Pledged
Securities are insufficient to satisfy the entire unpaid Indebtedness, Cimtran
shall be responsible for the deficiency and shall pay the same upon demand.
-6-
<PAGE> 29
SECTION 7
MISCELLANEOUS
7.1 CONTINUING AGREEMENT. This Agreement is a continuing agreement
which shall remain in force until all of the Indebtedness contracted for or
created and any extensions or renewals on that Indebtedness together with all
interest thereon has been paid in full.
7.2 CARE OF PLEDGE TO SECURITIES. Beyond the exercise of
reasonable care to assure the safe custody of the Pledged Securities while held
by Advantage Life under this Agreement, Advantage Life shall have no duty or
liability to preserve any rights of Cimtran in any Pledged Securities
(including, but not limited to, the tendering of any shares of Pledged
Securities in response to any tender offer, the exercise of any conversion or
exchange rights with respect to any Pledged Securities or the exercise of any
options, rights or warrants prior to their expiration), and shall be relieved
of all responsibility for the Pledged Securities upon surrendering them or
tendering surrender of them to the Cimtran.
7.3 NO THIRD PARTY BENEFICIARIES. This Agreement is a contract
between Cimtran and Advantage Life for their mutual benefit and no third party,
shall have any right, claim or interest against either Cimtran or Advantage
Life by virtue of any provision hereof.
7.4 WAIVERS; CONSENTS. Cimtran (a) expressly waives any valuation
and appraisal of the Pledged Securities or any other collateral securing
payment of the Indebtedness, presentment, demand for payment, notice of
dishonor, protest, notice of nonpayment or protest, all other forms of notice
whatsoever and diligence in collection of the Note; (b) consents that Advantage
Life may, from time to time and without notice or demand, (i) extend,
rearrange, renew or postpone any or all payments of any Indebtedness.
7.5 DEFINITIONS; MULTIPLE PARTIES; SECTION HEADINGS. The term
"person" as used in this agreement shall mean any individual, partnership,
corporation, association, joint venture or any other legal entity. The terms
"Cimtran" and "Advantage Life" as used in this Agreement include the heirs,
personal representatives, and successors or assigns of these parties. Whenever
the context so requires, the neuter gender includes the feminine and/or
masculine and the singular number includes the plural, and the plural number
includes the singular. Unless the context requires otherwise, terms used herein
shall have the same meaning as defined in the Uniform Commercial Code as
enacted by the State of Florida. Section headings are used herein for
convenience only and do not alter or limit the meaning of the language
contained in each section or paragraph.
7.6 NOTICES. All notices or demands by any party to the other
relating to this Agreement shall be in writing and sent by mail, either
certified or registered, return receipt requested. Notices shall be deemed
received at the end of the seventh (7th) day following delivery thereof to the
applicable postal service, unless sooner received, addressed to the party to be
notified, as follows:
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<PAGE> 30
if to Advantage Life, at:
Alan S. Lipstein, President
Advantage Life Products, Inc.
13902 N. Dale Mabry Highway, Suite 119
Tampa, Florida 33618
if to Cimtran, at:
Mr. George Hambleton
Cimtran, Ltd.
99 Saltergate
Chesterfield, Derbyshire 5401LD
Fax. No. 011441246450323
or to such other addresses as a party may hereafter designate by written notice
to the other party in the manner prescribed above.
7.7 AMENDMENT; WAIVER. This Agreement may not be modified or
amended nor shall any provision of it be waived except by a written instrument
signed by Advantage Life and by an authorized officer of Cimtran.
7.8 SEVERABILITY. Each provision and part thereof of this
Agreement shall be deemed separate from each other provision or part thereof,
and the invalidity or unenforceability, for any reason or to any extent, of any
such provision or part thereof shall not affect the enforceability of the
remainder of this Agreement or of any other Loan Document, or the application
of such provision or part thereof to other persons or circumstances.
7.9 CHOICE OF LAW. This Agreement shall be construed under
applicable Florida laws in effect from time to time, without giving effect to
principles regarding conflicts of law.
7.10 COSTS; ATTORNEYS' FEES. In case this Agreement or any of the
Loan Documents are enforced by law or through an attorney at law or under
advice therefrom, Cimtran hereby agrees to pay all costs of collection of any
Indebtedness, enforcement of this Agreement, and realization upon any Pledged
Securities, including reasonable attorneys' fees, whether or not suit is
brought, and whether incurred in connection with collection, trial, appeal,
bankruptcy or other creditors' proceedings or otherwise.
7.11 VENUE. Cimtran hereby acknowledges and agrees that, in the
event that legal action is instituted to collect any Indebtedness or other
amounts due Advantage Life or to foreclose on any Collateral or to otherwise
enforce this Agreement, Cimtran consents to and by execution hereof submit to
the jurisdiction of the courts of the State of Florida and, notwithstanding the
principal place of business or residence of either of them or the place of
execution of this Agreement or the location of any item of Collateral, such
litigation, whether
-8-
<PAGE> 31
arising in contract or tort, by statute or otherwise, shall be brought in (and,
if brought elsewhere, may be transferred to) a State court of competent
jurisdiction in Hillsborough County, Florida.
7.12 WAIVER OF RIGHT TO JURY TRIAL. CIMTRAN BY EXECUTING THIS
AGREEMENT WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION, WHETHER ARISING IN
CONTRACT OR TORT, BY STATUTE OR OTHERWISE, IN ANY WAY RELATED TO THIS
AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR ADVANTAGE LIFE'S
EXTENDING CREDIT TO CIMTRAN AND NO WAIVER OR LIMITATION OF ADVANTAGE LIFE'S
RIGHTS UNDER THIS PROVISION SHALL BE EFFECTIVE UNLESS IN WRITING AND MANUALLY
SIGNED ON ADVANTAGE LIFE'S BEHALF.
Cimtran acknowledges the above paragraph has been expressly bargained
for by Advantage Life as part of the transactions contemplated by this
Agreement and the Note and that, but for Cimtran's agreement thereto, Advantage
Life would not have accepted the Note for the term and interest rate provided
in the Note.
In witness whereof, the parties have executed this Agreement the day
and year first above written.
WITNESSES: Cimtran, Ltd.
sign /s/ George Hambleton
--------------------------- -----------------------------
print By: George Hambleton
--------------------------- Its: Chairman
sign
---------------------------
print
---------------------------
sign Advantage Life Products, Inc.
---------------------------
print
---------------------------
sign /s/ Alan S. Lipstein
--------------------------- ----------------------------------
print Alan S. Lipstein, President
---------------------------
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<PAGE> 32
EXHIBIT "A"
TO
STOCK PLEDGE AGREEMENT
<TABLE>
<CAPTION>
Number Corporation Issuing Description of
of Certificate Securities Securities
Shares Number ("Issuer") ("Pledged Securities")
------ ------ ---------- ----------------------
<S> <C> <C>
5,000,000 Advantage Life Products, Inc. common
</TABLE>
-10-
<PAGE> 1
Exhibit 7
to the
Annual Report on Form 10-KSB
for
the year ended April 30, 1996
for
Advantage Life Products, Inc.
Agreement and Plan of Reorganization with Advantage Life Acquisition,
Universal Mica Products, Inc. and George Lafauci.
<PAGE> 2
===========================================================================
AGREEMENT
AND
PLAN OF REORGANIZATION
BY AND AMONG
ADVANTAGE LIFE PRODUCTS, INC.
AND
ADVANTAGE LIFE ACQUISITION, INC.
AND
UNIVERSAL MICA PRODUCTS, INC.
AND
GEORGE LAFAUCI, THE SOLE SHAREHOLDER OF
UNIVERSAL MICA PRODUCTS,INC.
===========================================================================
Dated: September __, 1996
<PAGE> 3
Agreement and Plan of Reorganization ("Agreement"), dated as of
September __, 1996, by and among Advantage Life Products, Inc., a Florida
corporation ("Advantage Life"); Advantage Life Acquisition, Inc., a Florida
corporation ("Advantage Life Acquisition"); Universal Mica Products, Inc., a
New York corporation ("Universal Mica"); and George Lafauci, the sole
shareholder of Universal Mica (the "Shareholder").
BACKGROUND INFORMATION
Advantage Life and Universal Mica deem it advisable that Universal
Mica be merged into Advantage Life Acquisition pursuant to this Agreement and
in accordance with the applicable statutes of the States of Florida and New
York. Advantage Life, Universal Mica and Advantage Life Acquisition desire to
adopt a plan of reorganization within the meaning of Section 368(a)(2)(D) of
the Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, in
consideration of the promises contained herein, Advantage Life, Advantage Life
Acquisition, Universal Mica and the Shareholder adopt this plan of
reorganization and agree as follows:
OPERATIVE PROVISIONS
ARTICLE 1
MERGER
1.1 Transfer of Property and Liabilities. Upon the Effective Date
(as defined in Article 3 hereof) of the merger, the separate existence of
Universal Mica shall cease; all of the outstanding shares of stock of Universal
Mica shall be exchanged for and converted into shares of the common stock of
Advantage Life and a promissory note issued by Advantage Life Acquisition, as
hereinafter provided; and upon the filing of a Certificate of Merger with the
Secretary of State of the State of Florida, Advantage Life Acquisition shall
possess all the rights, privileges, immunities, powers and purposes, and all
property, causes of action and every other asset of Universal Mica and shall
assume and be liable for all the liabilities, obligations and penalties of
Universal Mica, in accordance with Florida law.
1.2 Surviving Corporation. Following the merger, the existence of
Advantage Life Acquisition shall continue unaffected and unimpaired by the
merger, with all the rights, privileges, immunities and powers, and subject to
all the duties, liabilities, of a corporation organized under the laws of
Florida. The Certificate of Incorporation and Bylaws of Advantage Life
Acquisition, as in effect immediately prior to the Effective Date, shall
continue in full force and effect, and, except as provided in Article 1.3,
shall not be changed in any manner by the merger. The directors of Advantage
Life Acquisition immediately prior to the Effective Date shall continue as the
directors of Advantage Life Acquisition, however the Shareholder shall also
become a director of Advantage Life Acquisition immediately after the Effective
Date.
1.3 Name. The name of Advantage Life Acquisition shall be changed as
of the Effective Date to "Universal Mica, Inc."
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ARTICLE 2
CONVERSION OF SHARES.
2.1 Conversion Ratio. As a result of the merger contemplated by this
Agreement, the Shareholder will receive (a) shares of the common capital stock
of Advantage Life having a fair market value of $1,200,000 on the Closing Date
(the "Advantage Life Shares"); and (b) Advantage Life Acquisition's secured
promissory note for $800,000 (the "Note"). In order to effect such conversion,
the shares of Universal Mica's common stock issued and outstanding immediately
prior to the Effective Date (the Universal Mica Shares") shall be converted by
the merger into the Advantage Life Shares and the Note. The Note shall bear
interest at an annual rate of 8%. Principal on the Note shall be due in a
single payment three years from the Closing Date, as defined below, and the
interest due on the Note shall be payable monthly. The Note shall be secured
by all the assets of Advantage Life Acquisition following the merger.
2.2 Shares of Advantage Life Acquisition. None of the issued shares
of Advantage Life Acquisition shall be converted as a result of the merger and
all of such shares shall remain issued shares of capital stock of Advantage
Life Acquisition.
ARTICLE 3.
CLOSING; CERTIFICATE OF MERGER.
3.1 Closing. The Closing contemplated by Section 1.1 shall be held
at the offices of Advantage Life's counsel, Bush Ross Gardner Warren & Rudy,
P.A., 220 South Franklin Street, Tampa, Florida 33602 on September 3, 1996,
unless another place or date is agreed upon in writing by the parties (the
"Closing Date"). At the Closing, all documents called for by this Agreement
(the "Closing Documents") shall be executed by the respective parties.
Advantage Life shall deliver to the Shareholder the stock certificate for the
Advantage Life Shares, the Note and an executed Stock Pledge Agreement in the
form of Schedule 3.1 attached hereto. The Shareholder shall deliver to
Advantage Life Acquisition the stock certificate for the Universal Mica Shares
and the books and records of Universal Mica.
3.2 Certificate of Merger. After the Closing provided for in Section
3.1 above, the Certificate of Merger executed by the parties at Closing shall
be submitted for filing with the Secretary of State of Florida. The date of
the latter of such filing, or such other date as the parties may agree upon in
writing pursuant to applicable law, shall be the effective date of the Merger
(the "Effective Date").
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ARTICLE 4.
RELATED TRANSACTIONS AND ADDITIONAL AGREEMENTS.
4.1 Board of Directors of Advantage Life Acquisition. As of the
Effective Date and continuing until all sums due the Shareholder pursuant to
the Note are paid in full, Advantage Life, in its capacity as the sole
shareholder of Advantage Life Acquisition, shall appoint the Shareholder to the
Board of Directors of Advantage Life Acquisition.
4.2 Employment Agreement. On or after the Effective Date,
Advantage Life Acquisition and the Shareholder will enter into an employment
agreement upon terms and conditions negotiated by the parties.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDER AND UNIVERSAL MICA
Universal Mica and the Shareholder represent and warrant to Advantage
Life and Advantage Life Acquisition as follows:
5.1 Organization, Power, Standing and Qualification. Universal
Mica is a corporation duly organized, validly existing, and in good standing
under the laws in the State of New York and has full corporate power and
authority to carry on its business as it is now being conducted and to own and
operate the properties and assets now owned and operated by it. Universal Mica
is duly qualified to do business and is in good standing in each and every
jurisdiction where the failure to qualify or to be in good standing would have
an adverse effect upon its financial condition, the conduct of its business or
the ownership of its assets.
5.2 Authority. The Shareholder has the power and authority to
execute, deliver and perform this Agreement; and this Agreement is a valid and
binding obligation of the Shareholder, enforceable in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium, or similar laws affecting the enforcement of creditors'
rights generally.
5.3 Validity of Contemplated Transactions; Interference. Other
than as provided in Schedule 5.3, the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby do
not and will not (a) contravene any provision of the Certificate of
Incorporation or Bylaws of Universal Mica; (b) violate, be in conflict with,
constitute a default under, cause the acceleration of any payments pursuant to,
or otherwise impair the good standing, validity, or effectiveness of any
material agreement, contract, indenture, lease, or mortgage to which Universal
Mica is a party; (c) subject the assets of Universal Mica to any indenture,
mortgage, contract, commitment, or agreement, other than this
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Agreement; (d) reasonably interfere with any other agreement to which Universal
Mica is a party; or (e) violate any material provision of law, rule,
regulation, order, permit, or license to which Universal Mica is subject.
5.4 Capitalization of Universal Mica. Universal Mica's authorized
capital stock consists of 1,000 shares of common stock, $1.00 par value, 1,000
of which shares are presently outstanding, validly issued, fully paid and
non-assessable. There are no outstanding options, warrants, conversion
privileges, subscriptions, calls, commitments or rights of any character
relating to any authorized but unissued capital stock of Universal Mica.
5.5 Subsidiaries. Except as disclosed in Schedule 5.5 hereto,
Universal Mica owns no shares of capital stock or other equity interest in any
corporation, partnership, joint venture or other business organization or
enterprise.
5.6 Ownership of Shares. The Shareholder holds all legal and
beneficial ownership of and title to the issued and outstanding shares of the
capital stock of Universal Mica and has full authority to vote such shares in
favor of the transactions contemplated by this Agreement.
5.7 Title to Properties. Except as set forth in Schedule 5.7
hereto, Universal Mica has good, valid and marketable title to all of its
assets, free and clear of all mortgages, liens, pledges, security interests and
other encumbrances, except (a) mortgages, liens, pledges, security interests,
and other encumbrances reflected in the Interim Financial Statements or the
notes thereto [as such term is defined in Section 5.8 herein], (b) liens for
current taxes not delinquent or being contested in good faith by appropriate
proceedings, (c) liens in connection with workmen's compensation, unemployment
insurance or other social security obligations, (d) deposits or pledges to
secure bids, tenders, contracts (other than contracts for the payment of
money), leases, statutory obligations, surety and appeal bonds and other
obligations of like nature arising in the ordinary course of business, (e)
mechanic's, workmen's, materialmen's or other like liens arising in the
ordinary course of business with respect to obligations which are not due or
which are being contested in good faith, and (f) such imperfections of title,
lien, easements and encumbrances, if any, as are not substantial and do not
materially detract from the value, or interfere with the present use, of any of
the properties subject thereto or affected thereby, or otherwise impair the
business, operations or prospects of Universal Mica.
5.8 Financial Statements and Operating Information. Universal
Mica has delivered to Advantage Life its balance sheets as of December 31, 1995
and 1994, and the related statements of income and changes in financial
position for the years ended December 31, 1995 and 1994. In addition,
Universal Mica has delivered to Advantage Life its balance sheet at June 30,
1996 (the "Interim Balance Sheet") and its related statements of income and
changes in financial position for the six month period then ended (collectively
the "Interim Financial Statements"). The financial statements are, to the best
knowledge of Universal Mica and the Shareholder, consistent with the books and
records of Universal Mica and present fairly the financial condition and
results of operations as of the respective dates thereof and the respective
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<PAGE> 7
periods then ended, and there has been no material change in such financial
condition of Universal Mica since June 30, 1996, other than as set forth in
Schedule 5.8.
5.9 Absence of Undisclosed Liabilities. Except as provided in
Schedule 5.9, Universal Mica has no material liabilities or obligations except
for those (i) reflected on the Interim Balance Sheet; (ii) reflecting
contractual liabilities or obligations incurred in the ordinary course of
business that are not required by generally accepted accounting principles to
be reflected in a balance sheet; (iii) incurred in the ordinary course of
business subsequent to the date of the Interim Balance Sheet and not required
to be disclosed pursuant to the terms of this Agreement; and (iv) specifically
disclosed in a schedule to this Agreement. Except as otherwise provided in
this Agreement, the term "liabilities or obligations" as used in this Agreement
shall include any direct or indirect indebtedness, claim, loss, damage,
deficiency (including deferred income tax and other net tax deficiencies),
cost, expense, obligation, guarantee, or responsibility, whether accrued,
absolute, or contingent, known or unknown, fixed or unfixed, liquidated or
unliquidated, secured or unsecured.
5.10 Certain Tax Matters. Universal Mica has duly filed all
federal, state, and local tax returns and reports required to be filed by
Universal Mica for all periods ending on or prior to June 30, 1996 and all
taxes, including income, gross receipts, and other taxes and any penalties with
respect thereto, shown thereon to be due and payable, have been paid, withheld,
or reserved for or are reflected as a liability in the Interim Balance Sheet.
Except as provided in Schedule 5.10, Universal Mica has not entered into any
agreements for the extension of time for the assessment of any tax or tax
delinquency, has received no outstanding or unresolved notices from the
Internal Revenue Service or any taxing body of any proposed examination or of
any proposed deficiency or assessment, and has properly withheld all amounts
required by law to be withheld for income taxes and unemployment taxes,
including without limitation social security and unemployment compensation,
relating to its employees, and remitted such withheld amounts to the
appropriate taxing authority as required by law. Universal Mica has no
permanent establishment located in any tax jurisdiction other than in the
United States and is not liable for the payment of any taxes levied by any
foreign tax jurisdiction.
5.11 Litigation; Compliance with Laws. Except as set forth in
Schedule 5.11 attached hereto, there is no suit, action, claim, arbitration,
administrative or legal or other proceeding, or governmental investigation
pending or, to the knowledge of the Shareholder, threatened against or related
to Universal Mica. Except as set forth in Schedule 5.11 attached hereto, there
has been no failure to comply with, nor any default under, any law, ordinance,
requirement, regulation, or order applicable to Universal Mica or its business
operations, nor any violation of or default with respect to any order, writ,
injunction, judgment, or decree of any court or federal, state or local
department, official, commission, authority, board, bureau, agency, or other
instrumentality issued or pending against Universal Mica which in any such case
would reasonable be expected to have a material adverse effect on the financial
condition, its business, results of operations, properties or assets of
Universal Mica. Except as set forth in Schedule 5.11 attached hereto,
Universal Mica has obtained all permits, licenses, zoning variances, approvals,
and other authorization for which the failure to so obtain would have a
material
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adverse effect of Universal Mica's operations. All such material permits,
licenses, approvals and authorizations are currently valid and in full force
and no revocation, cancellation or withdrawal thereof has been effected or
threatened. The execution of this Agreement and the performance of the
transactions contemplated hereby have not and will not change in any respect,
or result in the termination of, any such material permits, licenses,
certificates, zoning variances and authorizations. There have been no illegal
kickbacks, bribes or political contributions made by Universal Mica.
5.12 ERISA Matters. Schedule 5.12 attached hereto contains a
complete and accurate list of all Benefit Plans (as defined in Section 3 of the
Employee Retirement Income Security Act of 1974, as amended) and insurance
policies relating thereto sponsored by Universal Mica or to which Universal
Mica, is making contributions as of the date hereof with respect to employees
of Universal Mica. Universal Mica has timely paid, or will timely pay as soon
as practicable, all employee benefits due and owing under the Benefit Plans
sponsored by Universal Mica in accordance with the terms of each such Benefit
Plan.
5.13 Insurance. All inventories, machinery, equipment, buildings,
improvements, and other tangible assets owned or leased by Universal Mica are
insured against fire and casualty under the policies and in the amounts and
types of coverage set forth in Schedule 5.13 attached hereto (the "Policies")
and between the date hereof and the Effective Date, Universal Mica shall use
commercially reasonable efforts to maintain all of the Policies, or policies
which are substantially equivalent to the Policies. The Policies are
outstanding and duly in force and the premiums thereon fully paid when and as
the same are due and payable. Schedule 5.13 is a true and correct schedule of
all policies of fire, liability, and other forms of insurance, excluding the
Benefit Plans listed in Schedule 5.12 pursuant to which the assets of Universal
Mica are insured (whether or not held by Universal Mica) or with respect to
which Universal Mica pays all or part of the premium.
5.14 Proprietary Information. Universal Mica owns, possesses or
lawfully uses all patents, patent applications, trademarks, trademark
applications, service marks, service mark applications, trade names, trade
dress, franchises, copyrights, copyright applications and similar intangible
rights used in its business and trade secrets or other proprietary information
similarly used (collectively, the "Patents and Trademarks"), each item of which
is listed in Schedule 5.14 attached hereto, and those Patents and Trademarks
designated on Schedule 5.14 are owned exclusively by Universal Mica, are valid
and enforceable, and none infringe (nor has any claim been made that there is
any such infringement) the patents, trademarks, service marks, trade names,
copyrights or similar intangible rights of others. After due inquiry, to the
best of Universal Mica's knowledge, there is no claim against Universal Mica or
any Shareholder that either is or may be infringing on or otherwise acting
adversely to the rights of any person under or in respect of any patent,
trademark, service mark, trade name, trade dress, copyright, license,
franchise, permission, or other intangible right. Universal Mica is not
obligated or under any liability to make any payments by way of royalties,
fees, or otherwise to any owner or licensee of, or other claimant to, any
patent, trademark, trade name, trade dress, copyright, or other
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<PAGE> 9
intangible asset with respect to the use thereof, in connection with the
conduct of its business or otherwise.
5.15 Labor Disputes. Except as set forth in Schedule 5.15,
Universal Mica is not a party to any contract or other agreement with any labor
union nor is Universal Mica experiencing or the subject of or, to Universal
Mica's knowledge, threatened by, any union organization campaign or any strike,
slowdown, picketing, work stoppage, or other labor disturbance by any labor
union or group of employees.
5.16 Contracts. Except as set forth in Schedule 5.16 or in another
Schedule to this Agreement, Universal Mica is not a party to any material
contract, agreement, commitment, lease, indenture, fringe benefit or other
plan. For purposes of this Section 5.16 "material" shall mean any contract,
agreement, commitment, lease, indenture, fringe benefit or other plan entered
into which is not in the ordinary course of business or, if entered into in the
ordinary course of business, which involves a payment, commitment or
entitlement in excess of $40,000. True and correct copies of all of the
contracts, agreements, commitments, leases, indentures, fringe benefits or
other plans, documents and instruments identified in Schedule 5.16, have been
supplied to Advantage Life Acquisition.
5.17 Other Transactions. Universal Mica has not, since June 30,
1996, (a) operated its business except in the ordinary course of business, (b)
incurred any debts, liabilities or obligations except in the ordinary course of
business, (c) discharged or satisfied any liens or encumbrances, or paid any
liens or encumbrances, or paid any material debts, liabilities or obligations,
except in the ordinary course of business, (d) mortgaged, pledged or subjected
to lien or other encumbrance any of its assets, tangible or intangible, except
in the ordinary course of business and except those permitted by Section 5.7
hereof, (e) sold or transferred any of its tangible assets having a book value
of $25,000 or more, or cancelled any debts or claims, except, in each case, in
the ordinary course of business, or (f) suffered any extraordinary losses or
waived any rights of substantial value.
5.18 Product Liability Insurance Claims. Universal Mica is
identified as an insured party under all policies of insurance relating to
product liability listed on Schedule 5.18 for and against any claim for product
liability on an occurrence basis for events occurring prior to the Closing
Date.
5.19 Bank Accounts. Schedule 5.19. hereto lists the names and
addresses of every bank and other financial institution in which Universal Mica
maintains an account (whether checking, savings or otherwise), lock box or safe
deposit box, and the account numbers and names of persons having signing
authority or other access thereto.
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5.20 No Changes. Except as provided in Schedule 5.20, since June
30, 1996 there has not been:
a. Any change in the financial or other condition,
assets, liabilities or business of Universal Mica, except changes
described in Schedule 5.20 hereto, none of which individually or in
the aggregate has been materially adverse to Universal Mica;
b. Any damage, destruction or loss (whether or not
covered by insurance) or any condemnation by governmental authorities
which has or would reasonably have an adverse affect the business or
assets of Universal Mica to a material degree;
c. Any strike, lockout, labor trouble or any similar
event or condition of any character adversely affecting the business
of Universal Mica;
d. Except as disclosed in writing to Advantage Life
Acquisition from time to time, any declaration, setting aside or
payment of any dividend or other distribution in respect of any of the
shares of capital stock of Universal Mica or any direct or indirect
redemption, purchase or other acquisition of the shares of capital
stock of Universal Mica or any direct or indirect payment or incurring
of management fees or other transactions between the Shareholder and
Universal Mica; or
e. Any increase in the compensation payable or to become
payable by Universal Mica to any of its officers, employees or agents,
or any known payment or arrangement made to or with any thereof,
except in the ordinary course of business as disclosed to Advantage
Life Acquisition.
5.21 Compensation Arrangements. Universal Mica has delivered to
Advantage Life Acquisition a true and correct list showing the names (except
for persons specifically excluded from such list as stated thereon) of all
officers, employees and agents performing services for Universal Mica in
connection with its business and the rate of hourly, monthly or annual
compensation (as the case may be), any accrued sick leave or vacation and any
bonus or similar arrangement with any of them, all as of June 30, 1996.
5.22 Veracity of Statements. To the knowledge of Universal Mica
and the Shareholder, no representation or warranty by Universal Mica or the
Shareholder contained in this Agreement and no statement contained in any
certificate, schedule or other instrument furnished to Advantage Life
Acquisition pursuant hereto or in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact necessary to make it not misleading.
5.23 Copies of Articles and Bylaws and Stock Records. A copy of
Universal Mica's Certificate of Incorporation (certified by the Secretary of
State of New Jersey), Bylaws and stock records (certified by the Secretary of
Universal Mica) has been delivered to Advantage Life
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<PAGE> 11
Acquisition and each is correct and in effect as at the date of this Agreement.
Such books and records have been regularly and properly kept and are complete,
accurate and legally sufficient under applicable law.
5.24 Condition of Tangible Assets. All material tangible portions
of Universal Mica's assets are in a condition sufficient for Universal Mica's
operations.
5.25 Directors and Officers. Universal Mica has delivered to
Advantage Life Acquisition a true and complete list as of the date of this
Agreement showing the names of Universal Mica's directors and officers, each of
whom has been duly elected and/or appointed.
5.26 Accounts Receivable. The accounts receivable of Universal
Mica reflected on the Interim Balance Sheet and those acquired and accrued
thereafter through the date of this Agreement are valid and bona fide accounts
receivable, created in the ordinary course of business, and, except as provided
in Schedule 5.26, the allowance for doubtful accounts with respect thereto has
been prepared in accordance with generally accepted accounting principles. No
part of such accounts receivable is contingent upon performance by Universal
Mica of any obligation, other than any warranty obligation, and no agreements
for deductions or discounts have been made with respect to any part of such
receivables.
5.27 Inventories. All material portions of the inventories of
Universal Mica are fit for their intended use and the net finished goods
portion thereof is saleable in the ordinary course of business, and the
provision for slow and obsolete inventories has been made in accordance with
generally accepted accounting principles.
5.28 Environmental Matters.
a. Schedule 5.28 attached hereto sets forth:
(1) all facts regarding hazardous substances,
hazardous wastes and constituents used, handled,
stored or disposed of on the Premises (as herein
defined) by Universal Mica, and to the knowledge of
Universal Mica of all predecessors in interest and
all prior occupants of the Premises, where such use,
handling, storage or disposal may reasonably be
expected to cause an adverse effect on the business,
assets, or the financial condition of Universal Mica;
(2) all reports, studies or documents regarding
releases of hazardous substances and hazardous wastes
and constituents in, on, under or above the Premises
filed with any governmental agency by Universal Mica,
and to the knowledge of Universal Mica by all
predecessors in interest and all prior occupants of
the Premises; and
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(3) all studies or reports authorized by Universal
Mica, and to the knowledge of Universal Mica by all
predecessors in interest and all prior occupants of
the Premises regarding environmental conditions of
the Premises.
b. Except as set forth in Schedule 5.28 attached hereto,
Universal Mica is not aware of, nor has received notice of any past or
present events, conditions, circumstances, activities, practices,
incidents, actions or plans which may reasonably be expected to
interfere with or adversely affect its business, its assets or the
financial condition of Universal Mica or prevent compliance or
continued compliance with Environmental Laws (as herein defined), or
may reasonably be expected to give rise to any liability, or otherwise
form the basis of any claim, action, demand, suit, proceeding,
hearing, study or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge, release
or threatened release into the environment, of any hazardous substance
or hazardous wastes or constituents by Universal Mica, all
predecessors in interest and all prior occupants of the Premises.
c. Universal Mica has used due diligence to discover the
existence of the information to be disclosed as itemized in Paragraphs
(a) and (b).
d. (1) Advantage Life Acquisition reserves the right
prior to closing, but is not hereby obligated, to undertake an
investigation of the Premises and Universal Mica shall,
cooperate in providing reasonable access to the Premises and
any documents deemed by Advantage Life Acquisition necessary
for such investigation; provided, however, that such
investigation shall not interfere with or cause any damage to
the business or the assets of Universal Mica. All fees, costs
and expenses in connection with such investigation shall be
paid by Advantage Life Acquisition.
(2) If Advantage Life Acquisition discovers that any
of the representations or warranties of Universal
Mica or the Shareholder contained in Section 5.28(a)
of this Agreement are inaccurate in any material
respect and that, except as previously disclosed by
Universal Mica to Advantage Life Acquisition
hazardous wastes, hazardous substances or
constituents, are present in, on, under or above the
Premises, the presence of which has or may reasonably
be expected to have a material adverse effect on the
business, the assets or the financial condition of
Universal Mica, upon notice to Universal Mica to that
effect Advantage Life Acquisition may terminate this
Agreement and shall have no further obligations under
this Agreement.
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e. For purposes of Section 5.28 of this Agreement:
(1) The Terms "hazardous substance" has the
definition set forth in 42 USC Section 9601(1);
(2) The term "hazardous wastes and/or constituents"
has the definition set forth in 42 USC Section
6903(5) and 40 CFR part 261;
(3) The term "Environmental Laws" means the
collective federal, state, and local statutes, rules,
regulations, ordinances and laws relating to
environmental conditions or hazardous substances as
currently in effect, including but not limited to the
Solid Waste Disposal Act, 42 USC Section Section
6901-6991i; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), 42
USC Section Section 9601-9675, as amended by the
Superfund Amendments and Reauthorization Act of 1986
("SARA"); the Hazardous Materials Transportation Act,
49 USC Section 6901 et seq.; the Federal Water
Pollution Control Act, 33 USC Section 1251 et seq.;
the Clean Air Act, 42 USC Section 7401 et seq.; the
Toxic Substance Control Act, 15 USC Section Section
2601-2629; the Safe Drinking Water Act, 42 USC
Section Section 300f-300j, all as amended; all
similar state statutes and local ordinances; and the
regulations, orders, judicial and administrative
decisions presently in effect thereunder; and
(4) The term "Premises" shall mean all of the
leasehold interests held by or property owned by
Universal Mica, together with any improvements
thereon located at or any other property where the
business is or had been operated (the "Premises").
5.29 Acquisition of Advantage Life Shares for Investment. The
Shareholder is acquiring the common stock of Advantage Life for investment
purposes, for his own account and not with a view to the resale or distribution
thereof in violation of any state or federal securities laws. The Shareholder
shall not sell, transfer, pledge or hypothecate any of the Advantage Life
Shares in the absence of registration under or pursuit to an applicable
exception from, federal and all applicable security law.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF ADVANTAGE LIFE
Advantage Life and Advantage Life Acquisition, jointly and severally,
represent and warrant to Universal Mica and the Shareholder as follows:
6.1 Organization, Power, Standing and Qualification. Advantage
Life is a corporation duly organized, validly existing and in good standing
under the laws in the State of Delaware
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and has full corporate power and authority to carry on its business as it is
now being conducted and to own and operate the properties and assets now owned
and operated by it. Advantage Life Acquisition is a corporation duly
organized, validly existing and in good standing under the laws in the State of
Florida and has full corporate power and authority to carry on its business as
it is now being conducted and to own and operate the properties and assets now
owned and operated by it. Advantage Life and Advantage Life Acquisition are
duly qualified to do business and are in good standing in each and every
jurisdiction where the failure to qualify or to be in good standing would have
an adverse effect upon their financial condition, the conduct of their business
or the ownership of their assets.
6.2 Authority. Advantage Life and Advantage Life Acquisition have
the power and authority to execute, deliver and perform this Agreement; and
this Agreement is a valid and binding obligation of Advantage Life and
Advantage Life Acquisition, enforceable in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium, or similar laws affecting the enforcement of creditors' rights
generally.
6.3 Validity of Contemplated Transactions; Interference. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby do not and will not (a) contravene any
provision of the Certificate of Incorporation or Bylaws of either Advantage
Life or Advantage Life Acquisition; (b) violate, be in conflict with,
constitute a default under, cause the acceleration of any payments pursuant to,
or otherwise impair the good standing, validity, or effectiveness of any
material agreement, contract, indenture, lease, or mortgage to which Advantage
Life or Advantage Life Acquisition is a party; (c) subject the assets of
Advantage Life or Advantage Life Acquisition to any indenture, mortgage,
contract, commitment, or agreement, other than this Agreement; (d) reasonably
interfere with any other agreement to which Advantage Life or Advantage Life
Acquisition is a party; or (e) violate any material provision of law, rule,
regulation, order, permit, or license to which Advantage Life or Advantage Life
Acquisition are subject.
6.4 Capitalization of Advantage Life, Inc.. Advantage Life's
authorized capital stock consists of 25,000,000 shares of common stock, $.16
par value, 5,596,476 of which shares are presently outstanding, validly issued,
fully paid and non-assessable. Advantage Life Acquisition's authorized capital
stock consists of 7,500 shares of common stock, $.0001 par value, 100 of which
shares are presently outstanding, validly issued, fully paid and
non-assessable.
6.5 Subsidiaries. Except as disclosed in Schedule 6.5 hereto,
Advantage Life and Advantage Life Acquisition own no shares of capital stock or
other equity interest in any corporation, partnership, joint venture or other
business organization or enterprise.
6.6 Financial Statements. Advantage Life has delivered to
Universal Mica and the Shareholder its balance sheets for each of the last two
full fiscal years ending before the date of this Agreement as well as its
statement of income and loss for the same periods. In addition Advantage Life,
Inc. has delivered to Universal Mica and the Shareholder its balance sheets for
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the period ending July 31, 1996 (the "Advantage Life Interim Balance Sheet")
which has been prepared in accordance with the applicable books and records of
Advantage Life and presents fairly the financial condition of Advantage Life as
of July 31, 1996, and there has been no material change in such financial
condition of Advantage Life since July 31, 1996.
6.7 Absence of Undisclosed Liabilities. Advantage Life has no
liabilities or obligations except for those (i) reflected on the Advantage Life
Interim Balance Sheet; (ii) reflecting contractual liabilities or obligations
incurred in the ordinary course of business that are not required by generally
accepted accounting principles to be reflected in a balance sheet; (iii)
incurred in the ordinary course of business subsequent to the date of the
Advantage Life Interim Balance Sheet and not required to be disclosed pursuant
to the terms of this Agreement; and (iv) specifically disclosed in Schedule 6.7
attached hereto. Except as otherwise provided in this Agreement, the term
"liabilities or obligations" as used in this Agreement shall include any direct
or indirect indebtedness, claim, loss, damage, deficiency (including deferred
income tax and other net tax deficiencies), cost, expense, obligation,
guarantee, or responsibility, whether accrued, absolute, or contingent, known
or unknown, fixed or unfixed, liquidated or unliquidated, secured or unsecured.
6.8 Certain Tax Matters. Advantage Life has duly filed all
federal, state, and local tax returns and reports required to be filed by
Advantage Life for all periods ending on or prior to July 31, 1996 and all
taxes, including income, gross receipts, and other taxes and any penalties with
respect thereto, shown thereon to be due and payable, have been paid, withheld,
or reserved for or are reflected as a liability in the Advantage Life Interim
Balance Sheet. The returns and reports are, to the best knowledge of Advantage
Life, correct and complete. Advantage Life has not entered into any agreements
for the extension of time for the assessment of any tax or tax delinquency, has
received no outstanding or unresolved notices from the Internal Revenue Service
or any taxing body of any proposed examination or of any proposed deficiency or
assessment, and has properly withheld all amounts required by law to be
withheld for income taxes and unemployment taxes, including without limitation
social security and unemployment compensation, relating to its employees, and
remitted such withheld amounts to the appropriate taxing authority as required
by law. Advantage Life does not have a permanent establishment located in any
tax jurisdiction other than in the United States and is not liable for the
payment of any taxes levied by any foreign tax jurisdiction.
6.9 Litigation; Compliance with Laws. Except as set forth in
Schedule 6.9 attached hereto, there is no suit, action, claim, arbitration,
administrative or legal or other proceeding, or governmental investigation
pending or, to the knowledge of Advantage Life threatened against or related to
Advantage Life. Except as set forth in Schedule 6.9 attached hereto, there has
been no failure to comply with, nor any default under, any law, ordinance,
requirement, regulation, or order applicable to Advantage Life or its business
operations, nor any violation of or default with respect to any order, writ,
injunction, judgment, or decree of any court or federal, state or local
department, official, commission, authority, board, bureau, agency, or other
instrumentality issued or pending against Advantage Life which might have a
material adverse effect on the financial condition, its business, results of
operations, properties or assets of
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<PAGE> 16
Advantage Life. Except as set forth in Schedule 6.9 attached hereto, Advantage
Life has obtained all permits, licenses, zoning variances, approvals, and other
authorization necessary for the operation of its business. All such permits,
licenses, approvals and authorizations are currently valid and in full force
and no revocation, cancellation or withdrawal thereof has been effected or
threatened. The execution of this Agreement and the performance of the
transactions contemplated hereby have not and will not change in any respect,
or result in the termination of, any such material permits, licenses,
certificates, zoning variances and authorizations. There have been no illegal
kickbacks, bribes or political contributions made by Advantage Life.
6.10 No Changes. Since July 31, 1996 there has not been:
a. Any change in the financial or other condition,
assets, liabilities or business of Advantage Life, except changes
described in Schedule 6.10 hereto, none of which individually or in
the aggregate has been materially adverse to Advantage Life;
b. Any damage, destruction or loss (whether or not
covered by insurance) or any condemnation by governmental authorities
which has or may adversely affect the business or assets of Advantage
Life to a material degree;
c. Any strike, lockout, labor trouble or any similar
event or condition of any character adversely affecting the business
of Advantage Life;
d. Except as disclosed in writing to the Shareholder
from time to time, any declaration, setting aside or payment of any
dividend or other distribution in respect of any of Advantage Life's
shares or any direct or indirect redemption, purchase or other
acquisition of Advantage Life's shares or any direct or indirect
payment or incurring of management fees or other transactions between
the shareholders of Advantage Life and Advantage Life; or
e. Any increase in the compensation payable or to become
payable by Advantage Life to any of its officers, employees or agents,
or any known payment or arrangement made to or with any thereof,
except in the ordinary course of business as disclosed to the
Shareholder.
6.11 Veracity of Statements. No representation or warranty by
Advantage Life or Advantage Life Acquisition contained in this Agreement and no
statement contained in any certificate, schedule or other instrument furnished
to the Shareholder pursuant hereto or in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits
to state a material fact necessary to make it not misleading.
6.12 Copies of Articles of Incorporation, Bylaws and Stock Records.
A copy of Advantage Life's Certificate of Incorporation, Bylaws and stock
records (certified by the Secretary of Advantage Life) has been delivered to
the Shareholder and each is correct and in
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effect as at the date of this Agreement. A copy of Advantage Life
Acquisition's Certificate of Incorporation, Bylaws and stock records (certified
by the Secretary of Advantage Life Acquisition) has been delivered to Universal
Mica and the Shareholder and each is correct and in effect as at the date of
this Agreement. Such books and records have been regularly and properly kept
and are complete, accurate and legally sufficient under applicable law.
6.13 Directors and Officers. Schedule 6.13 attached hereto is a
true and complete list as of the date of this Agreement showing the names of
Advantage Life's and Advantage Life Acquisition's directors and officers, each
of whom has been duly elected.
6.14 ERISA Matters. Advantage Life has no Benefit Plans (as
defined in Section 3 of the Employee Retirement Income Security Act of 1974, as
amended).
ARTICLE 7
ACTIVITIES PRIOR TO THE CLOSING DATE BY UNIVERSAL MICA
7.1 Operation of Business. Universal Mica hereby agrees that from
and after the date hereof to the Effective Date, except as otherwise
contemplated by this Agreement or with Advantage Life's express written
consent, Universal Mica shall conduct its business solely in the ordinary
course and Universal Mica shall:
a. Not amend Universal Mica's Certificate of
Incorporation or Bylaws except as may be necessary to carry out this
Agreement or as required by law;
b. Not change Universal Mica's corporate name or consent
to the use thereof by any other corporation;
c. Not pay or agree to pay to any employee, officer, or
director of Universal Mica, without the consent of Advantage Life,
compensation that is in excess of the current compensation level of
such employee, officer, or director except in the ordinary course of
business as disclosed from time to time to Advantage Life;
d. Not make any changes in Universal Mica's management
without the consent of Advantage Life;
e. Not merge or consolidate Universal Mica with any
other corporation or allow it to acquire or agree to acquire or be
acquired by any corporation, association, partnership, joint venture,
or other entity;
f. Not sell, transfer, or otherwise dispose of any
material assets without the prior written consent of Advantage Life,
except in the ordinary course of business;
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g. Not create, incur, assume, or guarantee any
indebtedness for money borrowed except in the ordinary course of
business; create or suffer to exist any mortgage, lien, or other
encumbrance on any of its properties or assets, real or personal,
except those in existence on the date hereof or permitted by Section
5.7; or increase the amount of any indebtedness outstanding under any
loan agreement, mortgage, or other borrowing arrangement in existence
on the date hereof;
h. Cause Universal Mica to pay when due in accordance
with historical practice all accounts payable and trade obligations of
Universal Mica;
i. Maintain all material tangible portions of the assets
of Universal Mica in good operating repair, order, and condition,
reasonable wear and tear excepted, and notify Advantage Life
immediately upon any loss of, damage to, or destruction of any
material tangible portion of the assets;
j. Use their best efforts to maintain in full force and
effect insurance coverage of the types and in the amounts set forth in
Schedule 5.13 attached hereto and apply the proceeds received under
any insurance policy or as a result of any loss or destruction of or
damage to any assets to the repair or replacement of such assets;
k. Maintain in full force and effect all material
agreements, contracts, leases, licenses, permits, authorizations, and
approvals necessary for or related to the operation of the business of
Universal Mica in all respects and in all places as the business is
now conducted;
l. Use its best efforts to preserve Universal Mica's
business organization intact, to keep available the services of its
present employees and to preserve the good will of its customers and
others having business relations with it;
m. Timely pay in accordance with the terms of each
Benefit Plan all bona fide claims for Benefits thereunder; and
n. Promptly advise Advantage Life in writing of the
commencement of, and of any known threat to commence any, suit, claim,
action, arbitration, legal or administrative proceeding, governmental
investigation, or tax audit against Universal Mica.
7.2 Access to Information. Universal Mica shall provide Advantage
Life and its accountants, counsel and other representatives, during normal
business hours and upon reasonable notice, access to the properties of
Universal Mica, including books, records, equipment, real estate, contracts,
and other assets, and upon reasonable notice shall provide an opportunity to
discuss the business and assets with its officers, employees, and independent
accountants, customers, suppliers and sales representatives and furnish to
Advantage Life and its representatives copies of such documents, records, and
information with respect to the affairs
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<PAGE> 19
of Universal Mica as Advantage Life or its representatives may reasonably
request and Advantage Life shall afford such information confidential
treatment.
7.3 Labor Disputes. Between the date hereof and the Effective
Date, Universal Mica shall promptly advise Advantage Life of any actual or
threatened union organization campaign, strike, slowdown, work stoppage, or
other labor disturbance ("Labor Dispute") by any labor union or group of
employees against Universal Mica, and Universal Mica shall use its best efforts
to resolve any and all Labor Disputes to the mutual satisfaction of Advantage
Life and Universal Mica.
7.4 Best Efforts. Subject to the other provisions of this
Agreement, Universal Mica shall use its best efforts to cause the conditions
listed in Article 9.1 hereof to be satisfied on the Effective Date.
ARTICLE 8
ACTIVITIES PRIOR TO CLOSING DATE OF ADVANTAGE LIFE
8.1 Operation of Business. Advantage Life hereby agrees that from
and after the date hereof to the Effective Date, except as otherwise
contemplated by this Agreement or with Universal Mica's express written
consent, Advantage Life shall conduct its business solely in the ordinary
course and Advantage Life shall:
a. Not amend Advantage Life's Certificate of
Incorporation or Bylaws except as may be necessary to carry out this
Agreement or as required by law;
b. Not merge or consolidate Advantage Life, or any
subsidiary, with another entity, acquire another entity or agree to be
acquired by any other entity;
c. Not sell, transfer, or otherwise dispose of any
material assets without the prior written consent of Universal Mica,
except in the ordinary course of business; and
d. Maintain in full force and effect all material
agreements, contracts, leases, licenses, permits, authorizations, and
approvals necessary for or related to the operation of the business of
Advantage Life in all respects and in all places as the business is
now conducted.
8.2 Best Efforts. Subject to the other conditions of this
Agreement, Advantage Life shall use its best efforts to cause the conditions
listed in Article 9.2 hereof to be satisfied on the Closing Date.
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ARTICLE 9
CONDITIONS PRECEDENT TO THE CLOSING
9.1 Obligation of Advantage Life to Close. The obligation of
Advantage Life to consummate the merger on the Effective Date shall be subject
to the satisfaction or the waiver by Advantage Life of the following conditions
on or prior to the Closing Date:
a. Representations and Warranties; Compliance with
Agreement. The representations and warranties of Universal Mica and
the Shareholder set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as of
the Effective Date as though made on and as of the Effective Date, and
Universal Mica and the Shareholder shall have performed all covenants
and agreements to be performed by either of them under this Agreement
on or prior to the Effective Date, and Universal Mica and the
Shareholder shall have delivered to Advantage Life certificates to
such effect dated the Effective Date signed by the Shareholder and by
Universal Mica, which certificates shall be in the form attached
hereto as Schedule 9.1(a);
b. Litigation Affecting Closing. On the Effective Date,
no proceeding shall be pending or threatened before any court or
governmental agency in which it is sought to restrain or prohibit or
to obtain damages or other relief in connection with this Agreement or
the consummation of the transactions contemplated hereby, and no
investigation that might eventuate in any such suit, action or
proceeding shall be pending or threatened;
c. Required Consents. The holders of any single debt
obligation of Universal Mica exceeding $25,000, the lessors of any
material real or property or assets leased by Universal Mica, the
parties (other than Universal Mica) to any other material contract,
commitment or agreement to which Universal Mica is a party, any
governmental agency or body or any other individual or entity which
owns or has authority to grant any franchise, license, permit,
easement, right or other authorization necessary for the business of
Universal Mica and any governmental body or regulatory agency having
jurisdiction over Universal Mica, to the extent that their consent or
approval is required under the pertinent debt, lease, contract,
commitment or agreement or other document or instrument or under
applicable laws, rules or regulations for the consummation of the
merger contemplated hereby in the manner herein provided, shall have
granted such consent or approval;
d. No Material Damage to Business. The assets shall not
have been and shall not be threatened to be materially adversely
affected in any way as a result of fire, explosion, earthquake,
disaster, accident, labor dispute, any action by any governmental
authority, flood, drought, embargo, riot, civil disturbance, uprising,
activity of armed forces or act of God or public enemy.
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<PAGE> 21
9.2 Obligation of Universal Mica and the Shareholder to Close.
The obligation of Universal Mica and the Shareholder to consummate the merger
on the Effective Date shall be subject to the satisfaction of the following
conditions on or prior to the Effective Date:
a. Representations and Warranties; Compliance with
Agreement. The representations and warranties of Advantage Life and
Advantage Life Acquisition set forth in this Agreement shall be true
and correct in all material respects as of the date of this Agreement
and as of the Effective Date as though made on and as of the Effective
Date, and Advantage Life and Advantage Life Acquisition shall have
performed all covenants and agreements to be performed by either of
them under this Agreement on or prior to the Effective Date, and
Advantage Life and Advantage Life Acquisition shall have delivered to
Universal Mica certificates to such effect dated the Effective Date
and signed by Advantage Life and Advantage Life Acquisition, which
certificates shall be in the form attached hereto as Schedule 9.2(a);
or
b. Litigation Affecting Closing. On the Effective Date,
no proceeding shall be pending or threatened before any court or
governmental agency in which it is sought to restrain or prohibit or
to obtain damages or other relief in connection with this Agreement or
the consummation of the transaction contemplated hereby, and no
investigation that might eventuate in any such suit, action or
proceeding shall be pending or threatened.
c. No Material Damage to Business. The assets of
Advantage Life shall not have been and shall not be threatened to be
materially adversely affected in any way as a result of fire,
explosion, earthquake, disaster, accident, labor dispute, any action
by any governmental authority, flood, drought, embargo, riot, civil
disturbance, uprising, activity of armed forces or act of God or
public enemy.
ARTICLE 10
INDEMNIFICATION
10.1 By Universal Mica and the Shareholder. From and after the
Effective Date, Universal Mica and the Shareholder, jointly and severally,
shall indemnify and hold harmless Advantage Life and Advantage Life Acquisition
from and against (i) any and all damages, losses, obligations, deficiencies,
liabilities, claims, encumbrances, penalties, costs, and expenses, including
reasonable attorneys' fees (together, a "Loss"), and which Advantage Life or
Advantage Life Acquisition may suffer or incur, resulting from, related to, or
arising out of any misrepresentation, breach of warranty, or nonfulfillment of
any of the covenants or agreements of Universal Mica or the Shareholder in this
Agreement or from any misrepresentation in or omission from any schedule to
this Agreement, and (ii) any and all actions, suits, investigations,
proceedings, demands, assessments, audits, judgments and claims (including
employment-related claims) arising out of any of the foregoing; provided,
however, that before Advantage Life or Advantage Life Acquisition may assert a
claim for indemnity under this Article, Advantage Life
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must give or cause to be given written notice of such claim to the Shareholder
and Universal Mica as provided in Section 10.4.
10.2 By Advantage Life and Advantage Life Acquisition. From and
after the Effective Date, Advantage Life and Advantage Life Acquisition,
jointly and severally, shall indemnify and hold harmless the Shareholder from
and against (i) any and all Loss which the Shareholder may suffer or incur,
resulting from, related to, or arising out of any misrepresentation, breach of
warranty, or nonfulfillment of any of the covenants or agreements of Advantage
Life or Advantage Life Acquisition in this Agreement or from any
misrepresentation in or omission from any certificate or document furnished or
to be furnished to the Shareholder hereunder and (ii) any and all actions,
suits, investigations, proceedings, demands, assessments, audits, judgments,
and claims (including employment-related claims) arising out of any of the
foregoing; provided, however, that before the Shareholder may assert a claim
for indemnity under this Section, the Shareholder must give or cause to be
given written notice of such claim to Advantage Life and Advantage Life
Acquisition as provided in Article 10.4.
10.3 Limitation of Indemnity. Notwithstanding any provisions
herein to the contrary:
a. Neither party shall be liable to the other party for
any misrepresentation, the breach of any warranty or the failure to
fulfill any covenant or agreement herein if such other party shall
have had "actual knowledge" of the facts upon which such
misrepresentation, breach or failure to fulfill is based at or prior
to the Effective Date. For purposes of this Section 10.3(a) "actual
knowledge" on the part of Advantage Life, Advantage Life Acquisition
or Universal Mica, respectively, shall mean the actual knowledge of
one or more of its executive employees; and
b. The liability of either party computed otherwise in
accordance with this Article 10 shall be limited to the after-tax
consequence to the indemnified party (or the affiliated group of which
such indemnified party is a member) of any such damage, loss,
liability, deficiency cost or expense suffered or incurred by such
indemnified party and shall be computed after giving effect to the
recovery, if any, by the indemnified party of any applicable insurance
proceeds, the pursuit of which shall be mandatory by the indemnified
party.
10.4 Notice. Promptly after acquiring knowledge of any Loss or
action, suit, investigation, proceeding, demand, assessment, audit, judgment,
or claim against which the Shareholder have indemnified Advantage Life and
Advantage Life Acquisition or against which Advantage Life and Advantage Life
Acquisition have indemnified the Shareholder, or as to which any party may be
liable, the Shareholder, Universal Mica Advantage Life Acquisition or Advantage
Life, as the case may be, shall give to the other party written notice thereof.
Each indemnifying party shall, at its own expense, promptly defend, contest or
otherwise protect against any Loss or action, suit, investigation, proceeding,
demand, assessment, audit, judgment, or claim against which it or he has
indemnified an indemnified party, and each indemnified party shall receive from
the other party all necessary and reasonable cooperation in said defense
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including, but not limited to, the services of employees of the other party who
are familiar with the transactions out of which any such Loss or action, suit,
investigation, proceeding, demand, assessment, audit, judgment, or claim may
have arisen. The indemnifying party shall have the right to control the
defense of any such proceeding unless relieved of its or his liability
hereunder with respect to such defense by the indemnified party. The
indemnifying party shall have the right, at its or his option, and, unless so
relieved, to compromise or defend, at its or his own expense by its or his own
counsel, any such matter involving the asserted liability of the indemnified
party. In the event that the indemnifying party shall undertake to compromise
or defend any such asserted liability, it or he shall promptly notify the
indemnified party of its or his intention to do so. In the event that an
indemnifying party, after written notice from an indemnified party, fails to
take timely action to defend the same, the indemnified party shall have the
right to defend the same by counsel of its or his own choosing, but at the cost
and expense of the indemnifying party.
10.5 Money Damages. If the Losses indemnified against pursuant to
the provisions of Articles 10.1 and 10.2 hereof can be compensated by the
payment of money to the other party, the indemnifying party shall, within 21
days after receipt of a written notice of a claim pursuant to Article 10.4
deliver to the other party either: (i) the amount of such claim by check or by
wire transfer to the bank account of that party's choosing, or (ii) a written
notice stating that it or he objects to the validity of such claim and setting
forth in reasonable detail the grounds on which it or he is contesting the
validity of the claim.
ARTICLE 11
SURVIVAL OF REPRESENTATIONS,
WARRANTIES, GUARANTEES, AND COVENANTS
11.1 Date Certain For Survival. All representations and warranties
made by the Shareholder, Advantage Life, Advantage Life Acquisition or
Universal Mica in this Agreement or pursuant hereto shall survive the closing
hereunder for a period ending on the first anniversary of the Effective Date.
ARTICLE 12
CONDUCT OF UNIVERSAL MICA, THE SHAREHOLDER, ADVANTAGE
LIFE AND ADVANTAGE LIFE ACQUISITION AFTER THE MERGER
12.1 Additional Actions and Cooperation. After the Effective Date,
at the request of either party and at the requesting party's expense, but
without additional consideration, the other party shall execute and deliver
from time to time such further instruments of assignment, conveyance and
transfer, shall cooperate in the conduct of litigation and the processing and
collection of insurance claims, and shall take such other actions as may
reasonably be required to convey and deliver more effectively to Advantage Life
Acquisition the assets of Universal Mica Shares or to confirm and perfect the
Shareholder interest in the common stock of
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Advantage Life, and otherwise to accomplish the orderly transfer to Advantage
Life of the assets and business of Universal Mica as contemplated by this
Agreement.
12.2 Audit Access. Advantage Life Acquisition will preserve the
books, records, reports, documents and lists obtained by it pursuant to this
Agreement for a period of at least seven years from the Effective Date, will
not thereafter destroy or otherwise dispose of such records without giving the
Shareholder notice and the opportunity to take possession thereof, and, while
in possession of such records, will permit representatives of the Shareholder
to have access at reasonable times to such books, records, reports, documents
and files, to make such copies therefrom as such representatives reasonably
request. Advantage Life Acquisition shall, subject to applicable law and
regulation, and the terms of any confidentiality agreement, hold in confidence
any nonpublic information concerning Universal Mica obtained hereunder.
12.3 Insurance. On and after the Effective Date Advantage Life
shall cause Universal Mica to maintain liability insurance coverage customary
for the business engaged in by Universal Mica and Advantage Life Acquisition
shall use its best efforts for a period of three years from the Effective Date
to cause the Shareholder to be named as an additional insured thereon. On the
Effective Date, Advantage Life Acquisition shall inform Universal Mica as to
the name of the insurer and terms of the policy providing such coverage,
including the amount of any deductible, and shall inform the Shareholder
promptly upon any change in the insurer or the terms of such policy.
ARTICLE 13
BROKERAGE; EXPENSES
None of the parties has employed or will employ any broker, agent,
finder, or consultant (collectively, "Broker") or has incurred or will incur
any liability for any brokerage fees, commissions, finders' fees, or other
fees, in connection with the negotiation or consummation of the transactions
contemplated by this Agreement, except as herein set forth. The Shareholder
are responsible for and hereby indemnify and hold Advantage Life and Advantage
Life Acquisition harmless against and in respect of any claim for brokerage
fees, commissions, or other finders' fees or commissions of any such Broker
employed by the Shareholder or Universal Mica and any additional such claims
incurred by the Shareholder or Universal Mica relative to this Agreement and
the transactions contemplated hereby and any attorney fees incurred by any of
these parties in relation to any such claim by a Broker. Similarly, Advantage
Life and Advantage Life Acquisition are responsible for and hereby indemnify
and hold the Shareholder harmless against and in respect of any claim for
brokerage fees, commissions, or other finders' fees or commissions of any such
Broker employed by Advantage Life or Advantage Life Acquisition and any
additional such claims incurred by Advantage Life or Advantage Life Acquisition
relative to this Agreement and the transactions contemplated hereby and any
attorney fees incurred by Advantage Life in relation to any such claim by a
Broker. Except as otherwise expressly provided in this Agreement, Universal
Mica shall bear the expenses of Universal Mica
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and the Shareholder in connection with this Agreement or the transactions
contemplated hereby, including without limitation, any brokerage commission
paid to The Argentum Group. Advantage Life and Advantage Life Acquisition
shall bear their respective expenses incurred in connection with this Agreement
or the transactions contemplated hereby.
ARTICLE 14
TERMINATION
14.1 Events of Termination. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated by written notice of
termination at any time before the Effective Date only as follows:
a. By mutual consent of Universal Mica and Advantage
Life within 60 days of the date of this Agreement;
b. Provided that neither Advantage Life nor Advantage
Life Acquisition are not in material default hereunder, by Advantage
Life upon three days' written notice to Universal Mica and the
Shareholder, if all of the conditions precedent set forth in Article
9.1 hereof have not been met; or
c. Provided that Universal Mica and the Shareholder are
not in material default hereunder, by Universal Mica or the
Shareholder upon three days' written notice to Advantage Life if all
of the conditions precedent set forth in Article 9.2 hereof have not
been met.
ARTICLE 15
CORPORATE NAMES
Advantage Life Acquisition shall have the exclusive right to use the
corporate name "Universal Mica" after the Effective Date and the Shareholder
shall retain no rights therein.
ARTICLE 16
GENERAL
16.1 Entire Agreement; Amendments. This Agreement constitutes the
entire understanding among the parties with respect to the subject matter
contained herein and supersedes any prior understandings and agreements among
them respecting such subject matter. This Agreement may be amended,
supplemented, and terminated only by a written instrument duly executed by all
of the parties.
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16.2 Headings. The headings in this Agreement are for convenience
of reference only and shall not affect its interpretation.
16.3 Gender; Number. Words of gender may be read as masculine,
feminine, or neuter, as required by context. Words of number may be read as
singular or plural, as required by context.
16.4 Exhibits and Schedules. Each Exhibit and Schedule referred to
herein is incorporated into this Agreement by such reference.
16.5 Severability. If any provision of this Agreement is held
illegal, invalid, or unenforceable, such illegality, invalidity, or
unenforceability will not affect any other provision hereof. This Agreement
shall, in such circumstances, be deemed modified to the extent necessary to
render enforceable the provisions hereof.
16.6 Notices. All notices and other communications hereunder shall
be in writing and shall be given to the person by sending a copy thereof by
certified mail or by telecopy. Notice shall be deemed to have been given to
the person entitled thereto when deposited in the United States mail or when
transmitted.
If to Advantage Life or Advantage Life Acquisition, to:
Mr. Alan Lipstein
Advantage Life, Inc.
4332 Carrollwood Village Drive
Tampa, Florida 33629
With a copy to:
John N. Giordano, Esq.
Bush Ross Gardner Warren Rudy, P.A.
220 S. Franklin St.
Tampa, Florida 33602
If to Universal Mica or the Shareholder:
Mr. George Lafauci
Universal Mica Products, Inc.
1815 Route 110
Farmingdale, New York 11735
With a copy to:
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Notice of any change in any such address shall also be given in the manner set
forth above. Whenever the giving of notice is required, the giving of such
notice may be waived by the party entitled to receive such notice.
16.7 Waiver. The failure of any party to insist upon strict
performance of any of the terms or conditions of this Agreement will not
constitute a waiver of any of its rights hereunder.
16.8 Assignment. No party may assign any of its rights or delegate
any of its obligations hereunder without the prior written consent of the other
parties.
16.9 Successors and Assigns. This Agreement binds, inures to the
benefit of, and is enforceable by the successors and assigns of the parties,
and does not confer any rights on any other persons or entities.
16.10 Governing Law; Jurisdiction. The parties agree that,
irrespective of any wording that might be construed to be in conflict with this
paragraph, this Agreement is one for performance in Florida. The parties to
this Agreement agree that they waive any objection, constitutional, statutory
or otherwise, to a Florida court's taking jurisdiction of any dispute between
them. By entering into this agreement, the parties, and each of them
understand that they might be called upon to answer a claim asserted in a
Florida court. This Agreement shall be construed and enforced in accordance
with law of the State of Florida. Venue for any such action shall be deemed
proper in Hillsborough County, Florida.
16.11 No Benefit to Others. The representations, warranties,
covenants and agreements contained in this Agreement are for the sole benefit
of the parties hereto and their successors and assigns, and they shall not be
construed as conferring and are not intended to confer any rights on any other
persons.
16.12 Publicity. Prior to the Effective Date, all notices to third
parties and all other publicity relating to the transactions contemplated by
this Agreement shall be jointly planned, coordinated and agreed to by the
Shareholder and Advantage Life. Except as may be required by law, prior to the
Effective Date none of the parties hereto shall act unilaterally in this regard
without the prior approval of the Shareholder and Advantage Life; provided,
however, that such approval shall not be unreasonably withheld.
16.13 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. The execution of this Agreement by any party hereto will not become
effective until counterparts hereof have been executed by all the parties
hereto. It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other counterparts.
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<PAGE> 28
16.14 Limitations Upon Consent: Whenever, under the terms of this
Agreement, the parties hereto are called upon to give their written consent,
such written consent will not be unreasonably withheld.
16.15 Form of Consent: All consents of any kind required under this
Agreement shall be in writing. Whenever, under the terms of this Agreement,
Advantage Life, and/or Universal Mica are authorized to give consent, such
consent may be given and shall be conclusively evidenced by the Chairman of the
Board of Directors or the president of each respective corporation giving such
consent. Whenever, under the terms of this Agreement, any of the Shareholder
is authorized to give his consent, such consent may be given and shall be
conclusively evidenced in writing as certified by each of these persons
individually or by their duly appointed legal representative.
16.16 Attorneys' Fees and Court Actions: If a legal action is
initiated by any party to this Agreement against another, arising out of or
relating to the alleged performance or non-performance of any right or
obligation established hereunder, or any dispute concerning the same, any and
all fees, costs and expenses reasonably incurred by each successful party or
his or its legal counsel in investigating, preparing for, prosecuting,
defending against, or providing evidence, producing documents or taking any
other action in respect of, such action shall be the joint and several
obligation of and shall be paid or reimbursed by the unsuccessful party.
16.17 Binding Effect: This Agreement shall inure to the benefit of
and be binding upon Advantage Life and Universal Mica, and their successors or
assigns, including but not limited to any corporation or other business entity
which may acquire all or substantially all of Advantage Life's and/or Universal
Mica's assets and business, or with, or into which Universal Mica and/or any
Universal Mica subsidiary may be consolidated or merged, and upon the
executors, administrators and legal representatives thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
ADVANTAGE LIFE PRODUCTS, INC.
By: /s/ Alan S. Lipstein, President
---------------------------------
Alan S. Lipstein, President
ADVANTAGE LIFE ACQUISITION, INC.
By: /s/ Alan S. Lipstein
---------------------------------
Alan S. Lipstein, President
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<PAGE> 29
UNIVERSAL MICA PRODUCTS, INC.
By:
-----------------------------
George Lafauci, President
THE SHAREHOLDER
--------------------------------
George Lafauci
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<PAGE> 30
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
ADVANTAGE LIFE PRODUCTS, INC.
By:
-------------------------------------
Alan S. Lipstein, President
ADVANTAGE LIFE ACQUISITION, INC.
By:
------------------------------------
Alan S. Lipstein, President
UNIVERSAL MICA, INC.
By: /s/ George Lafauci
-------------------------------------
George Lafauci, President
THE SHAREHOLDER
/s/ George Lafauci
----------------------------------------
George Lafauci
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