American Educational Products, Inc. Board of Directors Agrees to Merger Proposal and Declares Special Cash Dividend.

Business Editors

BOULDER, Colo.--(BUSINESS WIRE)--July 11, 2000

American Educational Products, Inc. (Nasdaq:AMEP) (PSE:EP) announced today that it has agreed to a merger proposal from G.C. Associates Holdings Corp. ("GC"), its largest shareholder.

Under the proposal, all minority holders of AMEP common stock would receive $10.00 per share in cash. Consummation of the merger is subject to, among other conditions: (i) satisfactory completion of a due diligence review by GC of AMEP's business, assets, and liabilities; (ii) execution and delivery of a definitive merger agreement and such other documentation (including regulatory filings) as may be requisite or appropriate; and (iii) receipt by AMEP of an independent fairness opinion. The merger is expected to become effective by the early part of the fourth quarter.

In a separate action, AMEP's Board of Directors declared today that a special cash dividend in the aggregate amount of $780,750 would be paid to holders of the Company's common stock of record on August 18, 2000. The exact per-share cash distribution cannot be determined due to the possible conversion of the Company's 1,067,000 outstanding warrants between now and the record date. If none of the outstanding warrants are converted prior to the record date, the number of shares outstanding will remain at 1,084,270 and the special cash dividend will equal $0.72 per share. If all of the warrants are converted prior to the record date, the number of shares outstanding will increase to 2,151,270 and the cash dividend will therefore equal $0.36 per share. GC has informed the Company that it has not determined whether it will exercise all or any portion of its 279,840 warrants prior to the record date. Further, AMEP does not know whether any other outstanding warrants will be exercised prior to the record date. Payment of the cash dividend, which will be made on October 30, 2000, is not contingent on the consummation of the proposed merger.

American Educational Products, Inc. develops and produces hands-on educational materials for schools and parents. The Company's broad base of proprietary products, primarily in math and science, gives it a strong presence in the preschool through high school instructional market.

Along with historical information, this statement contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and is thus prospective. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements.