SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
EduLink Inc.
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(Exact name of the registrant as specified in its charter)
Nevada 95-4562316
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(State or other jurisdiction of (I.R.S. employer
Incorporation or Organization) Identification no.)
450 North Beverly Drive
Suite 602
Beverly Hills, California 90210
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(Address of principal executive offices) (Zip code)
Registrant's Telephone number, including area code (310) 247-7800
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Names of each exchange on which
to be so registered Each class is to be registered
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None N/A
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Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 Par Value
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(Title of Class)
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ITEM 1: BUSINESS
(a) General Development of Business.
The registrant was originally incorporated in January 1994 in Nevada
under the name URREA Enterprises, Inc. ("URREA") and was engaged in the business
of extracting minerals. In October, 1999, URREA agreed to acquire 100% of the
issued and outstanding common stock shares of EduLink Inc., a California
corporation, in exchange for 7,776,000 shares of URREA's common stock.
Prior to the acquisition of EduLink URREA effected a forward stock split
of its issued and outstanding shares on a 50:1 basis, which increased its
outstanding shares of common stock from 5,180,450 to 259,022,500, as well as the
number of shares of common stock to be issued and delivered in exchange for the
shares of EduLink. At the closing on October 27, 1999, EduLink merged with and
into URREA in exchange for 388,800,000 shares of URREA common stock and URREA
changed its name to EduLink Inc.
EduLink Inc. is engaged in the design, development and marketing of an
Internet educational service program, called the "EduLink Global Smart
Schoolhouse(sm)", which will offer to schools and homes: (i) a comprehensive
school information management and communications system; and (ii) an
individualized standards based and nationally recognized 4th through 12th grade
curriculum with the appropriate instructional strategies and student assessment
(the "Schoolhouse System"). It is intended that this service will be utilized by
four separate categories of end users: students, parents, teachers, and school
administrators. The service will be provided, without charge, over the Internet.
From July, 1996, through approximately April, 1998, EduLink developed
an initial business plan for the Schoolhouse System, built a prototype Website,
produced a limited number of educational content lesson plans and developed an
initial template to construct educational content. From April 1998 to date,
EduLink re-defined the business plan for the Schoolhouse System, redeveloped the
structure and methodology for building interdisciplinary and interactive lessons
as well as "Virtual Labs" utilizing inquiry based instruction and re-developed
the architectural concepts for the Schoolhouse System. To date, EduLink has not
produced material aspects of the Schoolhouse System, nor does EduLink currently
have the financial resources or personnel to undertake such production. EduLink
intends to initially develop, produce, beta test and launch the Schoolhouse
System for the 7th and 8th grades and estimates that approximately $9.5 Million
will be required to complete such activities and to pay sums currently owed by
EduLink to third parties.
EduLink's corporate offices are located at:
450 North Beverly Drive 5743 Corsa Avenue
Suite 602 and Suite 207
Beverly Hills, California 90210 Westlake Village, California 91362
Telephone (310) 247 7800 Telephone (818) 874-1273
(b) Financial Information about Segments.
EduLink operates in one business segment, the design, development and
sale of educational products.
(c) Narrative Description of Business.
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GENERAL
Generally it is expected that the Schoolhouse System will provide:
* a comprehensive information management and communication
service with programs uniquely tailored to school, student and
parent needs, such as an electronic filtered 24 hour daily
news feed, an EDU-chat room, free EDU-mail, tutorial services,
school stores, and student schedules;
* interdisciplinary curriculum content, such as developing
units, lessons, and activities by drawing from two or more
forms of content disciplines (for example, combining language
arts, math and science within the context of history) and
cross age curriculum content, that is combining the curriculum
content to fit the needs of the two grades, such as 7th grade
13 years old students with 8th grade 14 years old students;
* the integration of quality multi-media educational content,
educational assessment, and teacher instructional strategies
in a web based environment;
* educational curriculum content and student skill proficiencies
based upon national standards;
* a 4th through 12th U.S.A. public and private school
curriculum, including units, lesson and activities;
* a Global Smart Schoolhouse that can be adapted to a worldwide
educational audience and made specific to a country's national
education agenda;
* two minute video teasers and/or simulated games as
introductions to the curriculum units;
* a means to fully use the Internet so as to enhance student
collaboration;
* a 3D Virtual World Smart Lab with emphasis on inquiry and
design based learning;
* an electronic essay grader and a student essay tutorial
program;
* teacher, student, and parent tools to enhance learning, such
as thesaurus, dictionary, encyclopedia, atlas, word processor,
calculator, cognitive mapping, inquiry steps and intelligent
student coaching;
* archived audio, video, still pictures and data from nationally
recognized content organizations housed inside the EduLink
teacher curriculum center; and
* a teacher authoring tool kit to publish teacher created
lessons inside the Global Smart Schoolhouse.
EduLink expects to rollout its service in stages. The Schoolhouse
System for the 7th and 8th grades is expected to be beta tested in January,
2001, and launched in September, 2001. In each succeeding twelve months, EduLink
expects to beta test and launch the service for two additional grades (e.g.
9th-10th, 5th-6th and 3rd-4th) until the total service and products are in the
market by January, 2005.
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EduLink plans to market the Schoolhouse System to public and private
schools throughout the United States, to homes of school aged children
(inclusive of homeschoolers) and to homes of grandparents and relatives of
school aged children.
Schools will receive the service at no charge. Homes will receive the
System's basic service at no charge and will have access to the System's premium
services for a nominal monthly access fee. EduLink intends to reach schools and
homes by taking a multiple front approach, inclusive of direct sales and
telemarketing, through alliances with companies that have substantial regional
and national presence in school and/or home markets, such as local telephone
companies, cable companies, computer companies, internet service providers,
cross promotion with companies attempting to reach demographics similar to those
of Company and public relations activities which illustrate the academic value
of Company's content. EduLink believes it will generate revenue from the
following sources:
* home subscriptions for premium services;
* transactional revenue from the school store and links to
other websites;
* corporate sponsorship in the 3D Virtual World Smart lab
design based problems;
* traditional corporate advertising and sponsorships within the
commercial zones;
* corporate underwriting in various forms;
* international franchises; and
* federal grants.
The Schoolhouse System concept was developed by Dr. Ronald R. Rescigno,
a co-founder, co-Chairman and President of EduLink. Dr. Rescigno was formerly
the Superintendent of a California public school district and was responsible
for that district's award winning interactive and computer-oriented learning
programs.
CURRENT STATUS
From July, 1996, through approximately April, 1998, EduLink developed
an initial business plan for the Schoolhouse System, built a prototype Website,
produced a limited number of educational content lesson plans and developed an
initial template to construct educational content. From April 1998 to date,
EduLink re-defined the business plan for the Schoolhouse System, redeveloped the
structure and methodology for building interdisciplinary and interactive lessons
as well as "Virtual Labs" utilizing inquiry based instruction and re-developed
the architectural concepts for the Schoolhouse System. To date, EduLink has not
produced material aspects of the Schoolhouse System, nor does EduLink currently
have the financial resources or personnel to undertake such production. EduLink
intends to initially develop, produce, beta test and launch the Schoolhouse
System for the 7th and 8th grades and estimates that approximately $9.5 Million
will be required to complete such activities and to pay sums currently owed by
EduLink to third parties.
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THE SAATCHI AGREEMENT
From approximately February 1997 through April 1998, Saatchi provided
production and consulting services in connection with the Schoolhouse System. In
January 1998, Saatchi and EduLink Inc. executed an agreement, effective as of
July 1997, pursuant to which Saatchi agreed to provide various services,
including but not limited to designing and establishing a website for the
Schoolhouse System (the "Saatchi Agreement"). Pursuant to the terms of the
Saatchi Agreement, EduLink executed and delivered an $850,000 note to Saatchi
relating to fees owed for past services through December 1997. In addition,
pursuant to the Saatchi Agreement, Saatchi claimed additional fees of $548,000
as of June 10, 1998, which charges were disputed by EduLink.
Pursuant to the provisions of the Saatchi Agreement, EduLink's
ownership of the intellectual property Saatchi developed pursuant to the Saatchi
Agreement was subject to it making all required payments to Saatchi under the
Saatchi Agreement and Saatchi Note. The rights at issue are the GUI, or
graphical user interface, developed for the three existing prototype websites
and for the six prototype web based lesson plan Internet prototypes.
From April 1998, the date Saatchi discontinued services, the
Schoolhouse System concept went through substantial modifications, rendering the
intellectual property developed by Saatchi with respect to educational lesson
plans and templates antiquated for EduLink's purposes.
On January 5, 2000, Saatchi and EduLink entered into an agreement to
settle their differences under the following terms:
* EduLink's total obligation to Saatchi, inclusive of sums due
under the Saatchi Note, was reduced to $1,000,000 payable out
of 15% of the net proceeds, obtained by EduLink from its
financing activities;
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* interest at prime plus one percent (1%) will accrue on the
$1,000,000 debt, commencing as of January 1, 2000, if, but
only if the debt is not paid by December 31, 2000;
* in lieu of 31,000,000 shares and 14,000,000 warrants that were
to be issued to Saatchi under the Saatchi Agreement, Saatchi
will receive 11,435,000 shares of EduLink's common stock;
* EduLink agreed that it would pay Saatchi by January 15, 2000,
the difference between $100,000 and the sums theretofore paid
to Saatchi under the settlement agreement; by April 30, 2000,
the difference between $400,000 and the sums theretofore paid
to Saatchi under the settlement agreement; and by December 31,
2000, the difference between $600,000 and the sums theretofore
paid to Saatchi under the settlement agreement. EduLink paid
Saatchi $100,000 on January 5, 2000.
* the Company will assign the Schoolhouse program's intellectual
property rights to Saatchi if the $1,000,000 obligation is not
paid by December 31, 2001.
SCHOOLS, TEACHERS, STUDENTS AND PARENTS
EduLink intends that the Schoolhouse System will be developed for and
used by the four essential categories of end users in the educational process;
school administrators, teachers, students and parents.
SCHOOL ADMINISTRATORS. The portion of the Schoolhouse System designed
for school administrators will serve as the administrative arm of the
Schoolhouse System in a particular school and is intended to, among other
things, detail school district resources and Internet technology capabilities.
Other special features will include information templates on class reunions and
school activities as well as a general school wide information guide.
TEACHERS. It is planned that teachers will have access to all
Schoolhouse System curriculum units, lessons, news feeds, video teasers, the
virtual lab and the inquiry and designed base problems and tools. Teachers will
be able to use the Schoolhouse System to enhance their existing programs and to
allow them more time to individualize instruction. By using the time saving
tools, such as the electronic essay grader and the inquiry based tool kit,
teachers will become facilitators of the student's learning experiences rather
than dispensers of knowledge. Teachers will be able to guide students into
inquiry and design based learning while coaching them to interact and
collaborate with students in other geographical areas of the world. Teachers
will be able to use the system to assess student performance, to collaborate
with students on writing exercises to solve academic and real time problems, to
create lessons from the news feeds and from the banks of archived resources
using the EduLink electronic authoring tools, to exchange information
instantaneously with other educators, and to communicate quickly and directly to
parents.
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STUDENTS. Students will be able to access the Schoolhouse System at
home allowing them to supplement and enhance their learning. Students will be
able to review their course work, obtain materials and interactive resources
related to their course work and, if necessary, receive direct tutorial aid. The
portion of the Schoolhouse System designed for students is intended to have,
among other things, the applicable educational information for the grade of the
particular student courses, daily lessons and related materials, as well as a
school information guide to help organize a student's schedule, events, sports
activities and clubs. Students will be able to access, with the touch of a
finger tip, student-run web pages, current news events, updated bus schedules
and a daily read out on their teachers, classes and activities. Students will
also have their assignment lists and personal "lockers" with their own private
passwords to record their outside activities, appointments and errands.
PARENTS. Through the use of the Schoolhouse System, parents will have
the ability to interact directly with a variety of persons involved in their
child's education including teachers, guidance counselors and career counselors.
For college-bound students, all of the pertinent information relating to
prospective colleges, scholarships, financial aid and sample SAT and ACT tests
will be available to parents. Parents will be able to maintain direct contact
with teachers, school administrators, coaches and other parents through a
special PTA menu. They will be able to schedule"chat" sessions on a regular
basis and at their own convenience. "Chat" sessions and bulletin board postings
will allow parents to participate by sharing experiences with parents of same
age students around the city, state, nation, and world. Parents will be able to
enter the virtual school storefront and shop for educational merchandise at
discounted rates. The majority of the virtual school storefront merchandise will
be rated and endorsed by EduLink.
DELIVERY OF AND ACCESS TO THE SCHOOLHOUSE SYSTEM
EduLink has developed a demonstrable prototype Internet Website for the
Schoolhouse System. It is intended that school administrators, teachers,
students and parents, free of charge, will access the Website through desktop
computers. The Website currently is in its' embryonic stage and only has
minimal, basic available information regarding the Schoolhouse System. Within
each end user group, a member of a particular group will only have access to
certain information and services. For example, students will receive access
codes allowing them access to the curriculum services, but not to the grades or
records of other students. Only a student's teacher and school administrator
will have such access. Each end user will have a personal identification code,
which will allow them access to their private information.
EduLink believes that parents will want access to the Schoolhouse
system not only to provide their children with access to the Schoolhouse system
at home, but also to allow the parents to become more involved in their child's
educational experiences. The parents of homeschoolers will be able to access all
the course requirements in the form of units, lessons, and activities, which
will satisfy the legal requirements of home schooling. EduLink anticipates a
significant penetration into the homeschooler market. Parents using their own
personal access code will be able to interact with their child's school program
from any computer with access to the Internet.
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POTENTIAL SOURCES OF REVENUE
As indicated elsewhere herein, since the Schoolhouse System is in the
embryonic development stage, as of the date hereof EduLink has not generated any
revenues and none can be expected to be generated until the Schoolhouse System
is fully developed and marketed to, among others, the school districts and the
homes of the school age children.
EduLink if it is able to fully develop and market the Schoolhouse
System, expects to derive revenue primarily from the following sources:
* home subscriptions for premium services;
* transactional revenue from the school store and links to
other websites;
* corporate investment in the 3D Virtual World Smart lab
design based problems;
* traditional corporate advertising and sponsorships within
the commercial zones;
* corporate underwriting in various forms;
* international franchises; and
* federal grants.
COMPETITION
Although, to EduLink's knowledge, there are no other companies engaged
in the identical type of business to be conducted by EduLink the market for
companies with similar ideas and educational related materials is highly and
intensely competitive. EduLink will be in direct competition with companies with
significantly longer operating histories, significantly greater financial,
technical, product development and marketing resources, greater name recognition
and larger customer bases than that of EduLink. Competitors of EduLink include
education curriculum software companies such as Edscape Corporation, Lightspan
Networks, Inc., Softkey International, Inc., National Education Corporation,
Davidson and Associates, Inc., Scholastic Corporation, Broderbund Software,
Inc., Knowledge Adventure, Inc., Jostens LLC, CNN Newsroom, PBS Mathline, CTB
McGraw Hill, Net School/ACTV Inc., e School and CCC Inc. a subsidiary of Simon
and Schuster now owned by Peason Pic. Moreover, other entities not currently in
this industry may in the future attempt to launch a business identical to
EduLink. EduLink's competitors may develop products comparable or superior to
those developed by EduLink adapt more quickly than EduLink to new technologies,
evolving industry trends or customer requirements, or devote greater resources
to the development, promotion and license of their products than EduLink.
Accordingly, there can be no assurance that competition will not intensify or
that EduLink will be able to compete effectively in its proposed market.
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MANUFACTURING, DISTRIBUTION
EduLink will not manufacture or distribute the software, but intends to
contract with third parties for the manufacturing, packaging, marketing and
distribution functions with regards to any Software which it develops.
EMPLOYEES-ALLIANCES:
EduLink currently has three employees, namely, Michael Rosenfeld, Dr.
Ronald Rescigno and Ian Rescigno. In addition, EduLink has entered into
agreements with the following individuals and entities:
* For content development, research grants, and online educational
tutorial experts -McGuire and Associates, headed by Kathleen McGuire,
Ph.D., director of UCLA Extension's Distance Learning Programs; Los
Angeles, California;
* For content oversight, including units, lessons, activities and the
design and inquiry based problems within the 3D virtual world and
endorsement - Professor Gary B. Nash, Ph.D., Project Co-Director for
the National Standards for History, National Center for History in the
Schools, University of California, Los Angeles, UCLA;
* For data base engineering, front end graphic design services, 3D
Virtual World Design, and the Graphic User Interface (GUI) for design
and inquiry based problems - Science Applications International
Corporation (SAIC), Center for Advanced Information Technology,
Annapolis, Maryland;
* For teacher, parent and student filtering and curriculum development
tool and the teacher curriculum center - SAIC, Center for Advanced
Information Technology, Annapolis, Maryland;
* For the inquiry based software and tool kit - SAIC, Center for Advanced
Information Technology, Annapolis, Maryland;
* For research and educational marketing - McGuire and Associates, headed
by Kathleen McGuire, Ph.D., director of UCLA Extension's Distance
Learning Programs; Los Angeles, California.
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TRADEMARKS AND COPYRIGHTS
EduLink has obtained a trademark for its corporate logo including the
design plus words and letters. Additionally, EduLink is in the process of
researching and applying for a servicemark for the EduLink Global Smart
Schoolhouse and the History Hopper. EduLink believes that any software it is
able to develop in the future will be proprietary and it will attempt to protect
such software under copyright, trademark and trade secret laws as well as
through contractual restrictions on disclosure, copying and distribution.
Software products are susceptible to unauthorized copying. It may be possible
for unauthorized third parties to copy or to reverse engineer EduLink's
products. As the number of interactive software products in the market increases
and the functionality of these products further overlaps, EduLink believes that
interactive software will increasingly become the subject of claims that such
software infringes on the property of others.
As disclosed above, EduLink may lose those intellectual property rights
derived from services performed by Saatchi under the Saatchi Agreement if
EduLink fails to pay sums due Saatchi by December 31, 2001.
LITIGATION
EduLink is not a party to any legal proceedings and is not aware of any
pending or threatened legal proceedings.
AVAILABLE INFORMATION
EduLink has filed with the Securities and Exchange Commission this
Registration Statement on Form 10 under the Securities Exchange Act of 1934. For
further information with respect to EduLink reference is made to the documents
filed as exhibits to the Form 10. Statements contained in this Form 10 regarding
the contents of any contract or any other document to which reference is made
are not necessarily complete, and, in each instance where a copy of such
contract or other document has been filed as an exhibit to the Form 10
Registration Statement, reference is made to the copy so filed, each such
statement being qualified in all respects by such reference. A copy of the
Registration Statement and the exhibits thereto may be inspected without charge
at the offices of the Commission at Judiciary Plaza, 450 Fifth Street,
Washington, D.C. 20549, and copies of all or any part of the Registration
Statement may be obtained from the Public Reference Section of the Commission,
Washington, D.C. 20549 upon the payment of the fees prescribed by the
Commission. The Commission maintains a Web site (http://www.sec.gov) that
contains reports, proxy and information statements and other information
regarding registrants, such as EduLink that file electronically with the
Commission.
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ITEM 2: FINANCIAL INFORMATION.
The following information has been derived from the financial
statements of the Company. Such information should be read in conjunction with
the audited financial statements of the Company for the years ended December 31,
1998 and 1999 appearing elsewhere in this Registration Statement.
SELECTED FINANCIAL DATA
(Dollars in thousands, except per share data)
AS OF AND FOR THE YEARS ENDED DECEMBER 31
Income statement: 1999 1998 1997 1996
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(Unaudited) (Unaudited)
Revenue $ -- $ -- $ -- $ --
Software development expenses $ (121) $ 897 $1,840 $ 305
Operating expenses $ 145 $ 143 $ 246 $ 128
Net loss $ 24 $1,040 $2,086 $ 433
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion is provided to afford the reader an
understanding of the major elements of the Company's financial condition,
results of operation, capital resources and liquidity. It should be read in
conjunction with the financial statements and notes thereto and other
information appearing elsewhere in this Registration Statement.
Overview
EduLink, Inc. is engaged in the design, development and marketing of
an internet educational web based software service program to schools and homes.
It is intended that this service will be utilized by students, parents,
teachers and school administrators. The service will be delivered over the
internet to personal computer users.
Results of Operations
Year Ended December 31, 1999 as Compared to Year Ended December 31, 1998
Revenue
The Company is a development stage enterprise and has spent most of its
efforts during the past three years in developing the School House System web
based software initially for the 7th & 8th grades, which is intended to be beta
tested in January 2001 and launched in September 2001. Accordingly, the Company
has not generated any revenue to date.
Software Development Costs
In January 1997, the Company contracted with an outside software
development vendor to provide production and consulting services in connection
with the web based Schoolhouse System.
Software development expenses decreased by 98% to $(121,000) in 1999
from $897,000 in 1998. The credit to software development cost in 1999 arose
from the adjustment of a disputed liability relating to work done in 1997 and
1998 which was recorded in the books in those years. The adjustment was
accounted for as a change in accounting estimate and accordingly resulted in a
net credit to software development cost during 1999. In addition, during 1999,
the Company was conceptualizing its business plan and focusing on how to utilize
the development work completed during 1998.
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Software development costs include amounts paid to the software
development vendor, school teachers and other consultants.
General and Administrative Expenses
General and administrative expenses in 1999 in the aggregate were in
line with 1998. These expenses consisting primarily of rent, salaries and legal
and professional fees amounted to $125,000 in 1999 as compared with $123,000 in
1998.
Year Ended December 31,1998 as Compared with Year Ended December 31, 1997
Software Development Costs
Software development costs decreased by $944,000 or 51% from $897,000
in 1998 as compared with $1,840,000 in 1997. These comprised of expenditures on
School House Software development paid to the vendor amounting to $604,000 in
1998 as compared with $920,000 in 1997 and fees paid to consultants and other
contractors of $161,000 in 1998 as compared with $799,000 in 1997. In general,
software development costs decreased in 1998 as the Company stopped further
production and development of the web based software and focused on developing
its business plan, which included strategic planning and reengineering.
General and Administrative Expenses
General and administrative expenses decreased by $16,000 or 49% to
$123,000 in 1998 as compared with $240,000 in 1997. The decrease was
attributable to decrease in travel, legal and professional and office expenses.
YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996
Software development costs increased by $1,535,000 from $306,000 in
1996 to $1,840,000 in 1997. This was primarily due to $920,000 paid to Saatchi &
Saatchi for the development and production of the School house System and
$798,000 paid to consultants, contractors and teachers in connection with the
development of the School House System.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased by $107,000 or 80% to
$240,000 in 1997 as compared to $133,000 in 1996. The increase was primarily due
to increase in legal and accounting fee of $80,000 incurred in connection with
general business matters and raising capital, increase in office expenses of
$17,000 and insurance expenses of $21,000.
Liquidity and Capital Resources
Since 1996, we have financed our working capital needs through capital
contributions by owners, private placements and bridge loans. As of December 31,
1999, we had cash in hand of approximately $74,000. Cash used in operations was
$25,000, $203,000 and $1,455,000 in 1999, 1998 and since inception,
respectively. Cash used in operations was primarily for consulting fees
related to the design and development of computer software and general and
administrative expenses. Since 1996 through November 1999, we have raised
$1,375,000 through private placements and seed capital from one of our
executives and approximately $376,000 in bridge loans. $50,000 of the bridge
notes were repaid, and $125,000 worth of the bridge notes were converted into
common stock in 1997.
We estimate that we need approximately $8,500,000 for our ongoing
software content development, content oversight, data base engineering, graphic
design services, graphic user interface, curriculum development tool,
information technology center, inquiry based software and for research and
educational marketing among other things.
In December 1999, we have offered through a private placement
memorandum to sell approximately 190,000,000 shares at an offering price of
$0.05 per share. The proceeds from this offering net of placement agent's fees
and expenses is expected to be not less than $8,550,000. As of March 8, 2000, we
have received subscriptions amounting to $1,187,500, including $100,000 received
in December 1999 on which no fees or commission were due or payable.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable to the Registrant.
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ITEM 3: PROPERTIES.
FACILITIES
EduLink is utilizing a portion of the offices used by Michael Rosenfeld
at 450 North Roxbury Drive, Suite 602, Beverly Hills, California 90210 as its
administrative offices. EduLink also has its production offices located at 5743
Corsa Avenue, Suite 207, Westlake Village, California 91362.
ITEM 4: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of EduLink's outstanding common stock by:
* each person who is known by it to be the beneficial owner of
5% or more of its outstanding common stock;
* each director and executive officer individually;
* and all executive officers and directors as a group, as of
the date of this Registration Statement.
EduLink believes that each of the beneficial owners of the common stock
listed in the table, based on information furnished by such owner, has sole
investment and voting power with respect to such shares.
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BENEFICIAL OWNERSHIP
NAME & ADDRESS OF BENEFICIAL OWNER NUMBER PERCENTAGE (1)
Michael Rosenfeld (2) 172,101,170 (3) 23.68%
Ronald Rescigno (2) 173,816,469 (3) 23.92%
Ian Rescigno (2) 34,305,000(4) .05%
Kathleen McGuire(2) 5,717,647 (5) .01%
Dorothy Tucker (2) 5,717,647 (5) .01%
All executive officers and directors as a
group ( five persons) 391,642,933 47.20%
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(1) Calculated on the basis of 669,572,500 shares of common stock issued
and outstanding. For purposes of this table, a person or group of
persons is deemed to have "beneficial ownership" of any shares which
such person has the right to acquire within 60 days after the date of
this registration statement. For purposes of computing the percentage
of outstanding shares held by each person or group of persons named
above on the date of this registration statement, any security which
such person or group of persons has the right to acquire within 60 days
after such date is deemed to be outstanding for the purpose of
computing the percentage ownership for such person or persons, but is
not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person.
(2) Address is c/o EduLink, Inc., 450 North Roxbury Drive, Beverly Hills,
CA 90210.
(3) Includes 57,176,470 shares issuable upon exercise of warrants, at an
exercise price of $.0022 per share, which expire on August 14, 2004.
(4) Consists of 34,305,000 shares issuable upon exercise of warrants, at an
exercise price of $.0022 per share, which expire on January 31, 2007.
(5) Consists of 5,717,647 shares issuable upon exercise of warrants, at an
exercise price of $.0022 per share, which expire on September 14, 2003.
ITEM 5: DIRECTORS AND EXECUTIVE OFFICERS.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
EduLink's directors and executive officers are comprised of the
following individuals:
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NAME AGE POSITION
Michael Rosenfeld 57 Co-Chairman of the Board of Directors and
Chief Executive Officer
Ronald Rescigno 63 Co-Chairman of the Board of Directors and
President
Ian Rescigno 34 Senior Vice President - Operations
Kathleen McGuire 45 Director
Dorothy Tucker 50 Director
MICHAEL ROSENFELD is Co Chairman and Chief Executive Officer of
EduLink. Mr. Rosenfeld has spent approximately the last thirty years
specializing in entertainment law with an emphasis on the music recording and
publishing industry. Mr. Rosenfeld received his Bachelors of Arts degree from
UCLA in 1964, and his L.L.B. from UCLA 1967, where he was also of the "Order of
the Coif' and a member of the UCLA Law Review.
RONALD R. RESCIGNO, Ed.D., D.H.L., Co-Chairman and President, EduLink
Inc. Effective, January 1997, Dr. Rescigno retired as a public school
superintendent in California. He served in the public schools of the United
States for 39 years, 17 as a school superintendent. Dr. Rescigno holds two
doctorates; the degree of Doctor of Humane Letters (honoris causa) awarded by
Wilkes University, Wilkes-Barre, Pennsylvania, in 1989 for his international
work in student learning and the integration of computer networked technology
and a Doctor of Education degree awarded by the University of North Colorado,
Greeley, Colorado in 1978. Dr. Rescigno received his Bachelor of Science degree
from Wilkes College, Wilkes-Barre, Pennsylvania in 1958 and a Master of Arts
degree from Columbia University, New York, New York, in 1967. He is the author
of the book Smarter Classrooms - Smarter World and produced a video on the same
subject. He is currently working on a sequel to the above book describing his
vision of the cyberspace school-i.e., the Global Smart Schoolhouse.
Dr. Rescigno has been a consultant on educational technology for the
United Nations Industrial Organization (UNIDO) and a keynote speaker at numerous
conferences, including the first United State/USSR Joint Conference on
Computers, Education and Children, the State of Israel's Ministry of Industrial
Seminar "Computerized Integrated Learning System Development and
Implementation," the Digital World Conference in 1993 and the 1996 Harvard
Business School International Conference. In 1990 Dr. Rescigno was appointed by
the Governor of the State of California and served as Vice-Chair of the State
Educational Technology Committee until 1995. He has been frequently asked to
assist the U.S. Department of Education and the Department of Defense in
educational technology issues and projects. Dr. Rescigno has also been a
consultant and advisor to AT &T, GTE, IBM, SAIC, and other companies on the
creation and management of virtual environments and how personnel would function
in a virtual environment.
15
<PAGE>
Dr. Rescigno's leadership and accomplishments have been singled out by
international, national and state reports for the development and implementation
of public/private partnerships, for the seamless integration of multi-media
computer assisted technology in teaching and learning, for outstanding and
significant achievement in test results in low socio-economic neighborhood
schools, for the development of "futuristic" and "state of the art" internet and
intranet web based net working systems, and for his management skills in the use
of scarce public funds to create innovative and engaging student learning and
teaching environments.
IAN RESCIGNO, Vice President - Operations, has responsibilities which
include video production, content licensing and acquisition, strategic content
partnerships, project management. In 1989, after Mr. Resicigno graduated from
the University of California at Los Angeles with a degree in History, he founded
ECO International, Inc. ECO's primary business goal revolved around the
development of multimedia products. As an infant industry there was no
established standard or models that could be followed. For electronic content
development, ECO developed a synergistic model among content developers, design
specialists, audio/video experts, and computer technologists. ECO became
familiar with "brand indentification" and the creative process that must take
place for a product to represent the look and feel of a quality multimedia
product. ECO was personally involved in the development of a cost effective
business model for multimedia by managing all phases of the production,
marketing, and selling cycles.
Mr. Rescigno was part of the design team that developed SOTA's Multi
Media Curriculum System (MMCS) and implemented two (MMCS) research and
development sites; one with World Ort in London, England and one with the
Bulgarian Academy of Sciences in Sofia, Bulgaria. Mr. Rescigno brokered a
distribution agreement with the Israel Center for Education Technology (CET)
through Dynamind (an Israeli company) for the rights to sell the "Search and
Solve" science software package in the U.S. and Canada. The product was
integrated into SOTA's Multi Media Curriculum System. Prior to the Balkan unrest
Mr. Rescigno worked with the United Nations Industrial Development Organization
(UNIDO) to procure a grant to establish a training site in Belgrade, Yugoslavia
and Sofia, Bulgaria in advanced manufacturing processes for developing nations.
KATHLEEN MCGUIRE, Ph.D., is a Director of the Company. She currently is
Project Director, Distance Learning Program, UCLA Extension, having received her
B.A. and Masters from Cal Poly and her Ph.D. from UCLA Graduate School of
Education and Information Studies.
DOROTHY TUCKER, Ph.D., is a Director of the Company. Dr. Tucker
received her Ph.D. in Psychology from California School of Professional
Psychology and her Ph.D. in Counselor Education from Ohio State University. She
currently serves as a member of the California State Bar Board of Governors and
the President's Task Force on Urban Initiatives, among other things.
16
<PAGE>
ITEM 6: EXECUTIVE COMPENSATION.
Through 1999, the Chief Executive Officer has not received any
compensation. Through 1999 no other executive officer has received compensation
in excess of $100,000.
On September 4, 1999, employment agreements were entered into between
EduLink and each of Dr. Rescigno, Ian Rescigno and Michael Rosenfeld. The terms
of these employment agreements include: an employment term through December 31,
2004; annual base compensation, commencing January 2000 of $150,000 for each of
Dr. Rescigno and Mr. Rosenfeld, and $90,000 for Ian Rescigno, with bonuses based
upon formulae relating to EduLink's revenue. In addition, each of Mr. Rosenfeld,
Dr. Rescigno and Ian Rescigno have the right to receive warrants to purchase
shares of EduLink's common stock as each of four separate deliverables are
completed within specific time limits. Pursuant to the terms of Mr. Rosenfeld's
agreement, he shall receive the sum of $10,000 per month in lieu of $10,000 in
monthly compensation otherwise payable to him until his receipt of sums advanced
to EduLink by Mr. Rosenfeld on an interest free basis during 1999 to lower
overhead. Moreover, pursuant to the terms of Mr. Rosenfeld's agreement, it is
anticipated that EduLink shall replace him as CEO with another individual and in
such event, Mr. Rosenfeld shall remain with EduLink as Executive Vice President
- - Business Development. Mr. Rosenfeld and Dr. Rescigno also had each previously
been granted warrants to purchase 57,176,470 shares of common stock of EduLink.
STOCK OPTION PLAN
EduLink intends to establish a stock option plan to attract and retain
key employees and directors of EduLink.
ITEM 7: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Mr. Rosenfeld advanced funds to or on behalf of EduLink during 1999
equal to $112,902.42, and EduLink has agreed to repay these funds to Mr.
Rosenfeld on a periodic basis, such payments to be made in lieu of, and shall
serve to reduce, the monthly compensation otherwise payable to him under the
terms of his EduLink employment agreement. In addition, Mr. Rosenfeld has waived
his right to receive reimbursement for $140,403.25 in sums advanced by him to or
on behalf of EduLink during the years 1996, 1997 and 1998. Dr. Rescigno was
reimbursed $22,500 by EduLink for expenses incurred in 1998 and 1999.
ITEM 8: LEGAL PROCEEDINGS.
None.
17
<PAGE>
ITEM 9: MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
EduLink's common stock is publicly traded on Nasdaq's over-the-counter
Bulletin Board Market under the symbol "MYIQ".
The following table sets forth the range of high and low bid prices for
the EduLink's Common Stock for each quarterly period since its Common Stock
began trading, as reported by brokers and dealers making a market in the capital
stock. Such quotations reflect inter-dealer prices without retail markup,
markdown or commission, and may not necessarily represent actual transactions:
HIGH LOW
Year ended December 31, 2000
January 1 - March 6...................... 1/2 2/11
HIGH LOW
Year ended December 31, 1999 1/4 1/11
Fourth Quarter...........................
HOLDERS
As of the date of this registration statement, there were approximately
110 record holders of EduLink's common stock.
DIVIDENDS
EduLink has not paid any cash or other dividends on its common stock
since its inception and does not anticipate paying any such dividends in the
foreseeable future. EduLink intends to retain any earnings for use in the
Company's operations and to finance the expansion of its business.
ITEM 10: RECENT SALES OF UNREGISTERED SECURITIES.
In October, 1999, URREA Enterprises, Inc. acquired of the issued and
outstanding shares of the common stock of EduLink Inc., a California
corporation, through a merger and stock-for- stock exchange exempt from
registration pursuant to Section 3(a)(10) of the Securities Act of 1993. At the
closing, the California corporation merged with and into URREA in exchange for
388,800,000 shares of URREA common stock and URREA changed its name to EduLink
Inc.
18
<PAGE>
From January through March 8, 2000, EduLink sold 21,750,000 shares of
its common stock, in units of 500,000 shares each, to 11 accredited investors at
a price per unit of $25,000 pursuant to exemption under Regulation D of the
Securities Act of 1933. EduLink paid no placement agent fees in connection with
such financing transactions.
ITEM 11: DESCRIPTION OF REGISTRANT'S SECURITIES TO BE
REGISTERED.
EduLink is authorized to issue 1.5 billion shares of common stock,
$.001 par value, per share. As of the date of this Form 10 Registration
Statement, 669, 572,500 shares of common stock were issued and outstanding.
Each share of common stock is entitled to one vote per outstanding
share held on each matter submitted to a vote at a meeting of shareholders. Each
shareholder may exercise such vote either in person or by proxy. Shareholders
are not entitled to cumulate their votes for the election of Directors. There
are no preemptive or other preferential rights to purchase additional shares of
common stock. Upon liquidation, dissolution or winding-up of EduLink the holders
of common stock are entitled to receive, pro rata, the assets of EduLink which
are legally available for distribution to shareholders subject to the prior
rights on liquidation of creditors. All of the issued and outstanding shares of
common stock are validly authorized, fully paid and non-assessable.
Dividends
EduLink has not paid any cash dividends on its common stock. The
present policy of the Board of Directors is to retain earnings to finance the
operations and development of EduLink's business. Accordingly, it is anticipated
that no cash dividends will be paid in the foreseeable future.
Transfer Agent
The transfer agent for the common stock is Standard Registrar and
Transfer Company, 12528 South 1840 East, Draper, Utah 84020.
Reports to Stockholders
EduLink by filing this Registration Statement, is registering its
common stock under the provisions of Section 12(g) of the Securities Exchange
Act of 1934, as amended. Such registration requires EduLink to comply with
periodic reporting, proxy solicitation and certain other requirements of the
Securities Exchange Act of 1934, as amended.
19
<PAGE>
ITEM 12: INDEMNIFICATION OF DIRECTORS AND OFFICERS.
EduLink's By-laws provide for indemnification of officers and directors
to the fullest extent permitted by Nevada law. In addition, under EduLink's
By-laws, no director shall be liable personally to EduLink or its stockholders
for monetary damages for breach of fiduciary duty as a director; provided that
the Certificate of Incorporation does not eliminate the liability of directors
for (i) any breach of the director's duty of loyalty to EduLink or its
stockholders; (ii) acts of omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) acts or omissions in
respect of certain unlawful dividend payments or stock redemptions or
repurchases; or (iv) any transaction from which such director derives improper
personal benefit.
ITEM 13: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
EduLink's financial statements are included in a separate Section of
this Report following Item 15.
ITEM 14: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 15: FINANCIAL STATEMENTS AND EXHIBITS.
Index to Financial Statement and Exhibits Page
Report of Independent Certified Public Accountants........... F-1
Financial Statements
Balance Sheets............................................. F-2
Statements of Operations................................... F-3
Statements of Stockholders' Deficit........................ F-4
Statements of Cash Flows................................... F-5
Notes to the Financial Statements.......................... F-7
20
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
EduLink, Inc.
We have audited the accompanying balance sheets of EduLink, Inc. (a development
stage company) as of December 31, 1999 and 1998, and the related statements of
operations, stockholders' deficit, and cash flows for each of the three years in
the period ended December 31, 1999. 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 audits in accordance with generally accepted auditing
standards. Those 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 audits 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 EduLink, Inc. as of December
31, 1999 and 1998, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1999 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. During the years ended December 31,
1999, 1998, and 1997, the Company incurred net losses of $23,956, $1,040,237,
and $2,086,226, respectively. In addition, the Company's net cash used in
operating activities was $25,837, $203,875, and $885,562 for the years ended
December 31, 1999, 1998, and 1997, respectively, and the Company's accumulated
deficit was $3,589,686 and $3,565,730 as of December 31, 1999 and 1998,
respectively. In addition, successful completion of the Company's transition,
ultimately, to the attainment of profitable operations is dependent upon
obtaining adequate financing to fulfill its development activities and achieving
a level of sales adequate to support the Company's cost structure. These
factors, among others, as discussed in Note 2 to the financial statements, raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
March 8, 2000
F-1
<PAGE>
EDULINK, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
December 31,
- --------------------------------------------------------------------------------
ASSETS
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Current assets
Cash ................................................... $ 74,103 $ --
----------- -----------
Total current assets ...................... $ 74,103 $ --
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Book overdraft ......................................... $ -- $ 60
Bridge notes payable ................................... 200,000 200,000
Accounts payable ....................................... 1,284,357 1,970,774
Due to related party ................................... 112,902 140,519
----------- -----------
Total current liabilities .......................... 1,597,259 2,311,353
----------- -----------
Commitments and contingencies
Stockholders' deficit
Common stock, $0.001 par value
1,500,000,000 shares authorized
647,822,500 and 388,800,000 shares issued and
outstanding ........................................ 647,823 388,800
Shares committed to be issued .......................... 671,750 --
Additional paid-in capital ............................. 746,957 865,577
Deficit accumulated during the development stage ....... (3,589,686) (3,565,730)
----------- -----------
Total stockholders' deficit ................... (1,523,156) (2,311,353)
----------- -----------
Total liabilities and stockholders' deficit $ 74,103 $ --
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
EDULINK, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1999, 1998, and 1997 and
for the Period from January 25, 1996 (Inception) to December 31, 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the
Period from
January 25,
For the Year Ended 1996
December 31, (Inception) to
---------------------------------------------- December 31,
1999 1998 1997 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C>
Income
Interest .......................... $ -- $ -- $ 2,052 $ 6,818
------------- ------------- ------------ -------------
Expenses
Software development costs ........ (121,070) 896,836 1,840,421 2,921,814
General and administrative ........ 145,026 143,401 247,857 674,690
------------- ------------- ------------ -------------
Total expenses .................. 23,956 1,040,237 2,088,278 3,596,504
------------- ------------- ------------ -------------
Net loss ............................. $ (23,956) $ (1,040,237) $ (2,086,226) $ (3,589,686)
============= ============= ============ =============
Basic and diluted loss per share ..... $ 0.000055 $ 0.0027 $ 0.0056 $ 0.0092
============= ============= ============ =============
Weighted-average shares outstanding .. 433,630,817 388,800,000 372,557,966 390,281,195
============= ============= ============ =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
EDULINK, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' DEFICIT
For the Period from January 25, 1996 (Inception) to December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Deficit
Shares Accumulated
Common Stock Committed Additional During the
--------------------------- to be Paid-In Development
Shares Amount Issued Capital Stage Total
----------- ----------- --------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 25,
1996 (Inception).. -- $ -- $ -- $ -- $ -- $ --
Sale of common stock. 28,302,353 28,302 594,575 622,877
Shares issued to
founders and
professionals .... 276,754,118 276,754 (276,754) --
Shares issued for
investment banking
services ......... 58,300,000 58,300 (33,300) 25,000
Net loss ............ (439,267) (439,267)
----------- ----------- --------- ---------- ---------- -----------
Balance, December
31, 1996 ......... 363,356,471 363,356 -- 284,521 (439,267) 208,610
Sale of common stock. 20,531,471 20,532 410,968 431,500
Conversion of bridge
notes ............ 2,625,000 2,625 172,375 175,000
Shares issued to
founders and
professionals .... 2,287,058 2,287 (2,287) --
Net loss ............ (2,086,226) (2,086,226)
----------- ----------- --------- ---------- ----------- -----------
Balance, December
31, 1997 ......... 388,800,000 388,800 -- 865,577 (2,525,493) (1,271,116)
Net loss ............ (1,040,237) (1,040,237)
----------- ----------- --------- ---------- ----------- -----------
Balance, December
31, 1998 ......... 388,800,000 388,800 -- 865,577 (3,565,730) (2,311,353)
Changes due to
recapitalization.. 259,022,500 259,023 (259,023) --
Loan from
stockholder
contributed to
capital .......... 140,403 140,403
Common stock
subscription
received ......... 100,000 100,000
Common stock to be
issued ........... 571,750 571,750
Net loss ............ (23,956) (23,956)
----------- ----------- --------- ---------- ----------- -----------
Balance, December
31, 1999 ......... 647,822,500 $ 647,823 $ 671,750 $ 746,957 $(3,589,686) $(1,523,156)
=========== =========== ========= ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
EDULINK, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1999, 1998 and 1997 and
for the Period from January 25, 1996 (Inception) to December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the
Period from
January 25,
For the Year Ended 1996
December 31, (Inception) to
-------------------------------------- December 31,
1999 1998 1997 1999
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net loss ........................................ $ (23,956) $(1,040,237) $(2,086,226) $(3,589,686)
Adjustments to reconcile net loss to net cash
used in operating activities
Common stock to be issued for software
development costs ......................... 571,750 -- -- 571,750
Common stock issued for professional services -- -- -- 25,000
Common stock issued for related party payable 140,403 -- -- 140,403
Increase (decrease) in
Accounts payable .............................. (686,417) 717,845 1,230,662 1,284,357
Due to related party .......................... (27,617) 118,517 (29,998) 112,902
--------- ----------- ----------- -----------
Net cash used in operating activities ..... (25,837) (203,875) (885,562) (1,455,274)
--------- ----------- ----------- -----------
Cash flows from financing activities
Common stock subscription received .............. 100,000 -- -- 100,000
Proceeds from issuance of bridge notes .......... -- 200,000 -- 375,000
Repayment of bridge notes ....................... -- -- -- (50,000)
Proceeds from issuance of common stock .......... -- -- 500,000 1,375,000
Cost of issuance of common stock ................ -- -- (68,500) (270,623)
--------- ----------- ----------- -----------
Net cash provided by financing activities.. 100,000 200,000 431,500 1,529,377
--------- ----------- ----------- -----------
Net increase (decrease) in cash ......... 74,163 (3,875) (454,062) 74,103
Cash (book overdraft), beginning of period ......... (60) 3,815 457,877 --
--------- ----------- ----------- -----------
Cash (book overdraft), end of period ............... $ 74,103 $ (60) $ 3,815 $ 74,103
========= =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
EDULINK, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1999, 1998 and 1997 and
for the Period from January 25, 1996 (Inception) to December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the
Period from
January 25,
For the Year Ended 1996
December 31, (Inception) to
-------------------------------------- December 31,
1999 1998 1997 1999
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Supplemental disclosures of cash flow information
Interest paid ................................ $ -- $ -- $ -- $ 11,521
========= =========== =========== ===========
Income taxes paid ............................ $ -- $ -- $ 1,600 $ 1,600
========= =========== =========== ===========
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
During the year ended December 31, 1999, a stockholder contributed $140,403 due
this stockholder as additional paid-in capital.
During the year ended December 31, 1999, the Company recorded $571,750 of
software development costs as additional paid-in capital, which represents the
Company's commitment to issue 11,435,000 shares of common stock to a vendor (see
Note 3).
During the year ended December 31, 1997, the Company converted $175,000 of
bridge notes into 2,625,000 shares of common stock.
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
EDULINK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
- --------------------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF BUSINESS
URREA Enterprises, Inc. ("URREA"), a Nevada corporation, acquired
EduLink, Inc. ("OLD EduLink"), a California corporation engaged in the
development of educational software, on October 28, 1999. After the
acquisition, URREA changed its name to EduLink, Inc.
URREA issued 388,800,000 shares of common stock to acquire 100% of the
common stock of OLD EduLink. The acquisition was accounted for as a
reverse acquisition of URREA by OLD EduLink as the stockholders of OLD
EduLink owned 60% of the common stock of URREA after the acquisition,
resulting in a recapitalization of URREA. URREA had no significant
assets or liabilities at the date of acquisition and did not have
significant operations prior to the acquisition. Therefore, no pro
forma information is presented.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going Concern
The accompanying financial statements have been prepared on a going
concern basis which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As shown
in the financial statements, during the years ended December 31, 1999,
1998, and 1997, the Company incurred losses of $23,956, $1,040,237, and
$2,086,226, respectively. As of December 31, 1999, the Company is in
the development stage and is primarily engaged in research and
development activities. Accordingly, the accompanying statements of
operations should not be regarded as typical for normal periods of
operation. The Company's development stage status, recurring net
losses, and capital deficit raise substantial doubt about its
ability to continue as a going concern. Additional financing will be
required in order for the Company to complete its development stage
activities. Management believes that it will be able to obtain such
financing from new investors.
To meet these objectives, the Company expects to complete an additional
$9,500,000 private placement of preferred equity in early 2000, which
management expects will provide sufficient funding to continue the
Company's present operations and support future marketing and
development activities. The company has received subscription amounting
to $1,187,500 on which no fees or commission was due or payable through
March 8, 2000, in connection with the offering, $100,000 of which was
received prior to December 31, 1999.
F-7
<PAGE>
EDULINK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
- --------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Going Concern (Continued)
The financial statements do not include any adjustments relating to the
recoverability and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern.
Development Stage Enterprise
The Company is a development stage company as defined in Statement of
Financial Accounting Standards ("SFAS") No. 7, "Accounting and
Reporting by Development Stage Enterprises." The Company is devoting
substantially all of its present efforts to establish a new business,
and its planned principal operations have not yet commenced. All losses
accumulated since inception have been considered as part of the
Company's development stage activities.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements, as well as the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Software Development Costs
Development costs incurred in the research and development of new
software products are expensed as incurred until technological
feasibility in the form of a working model has been established. To
date, the Company has not completed its software development to the
point of technological feasibility, and accordingly, no costs have been
capitalized.
Stock Split
In October 1999, the Company's Board of Directors declared a 50-for-1
stock split. All applicable share and per share data have been
retroactively restated for the stock split.
Income Taxes
The Company uses the asset and liability method of accounting for
income taxes. The asset and liability method accounts for deferred
income taxes by applying enacted statutory rates in effect for periods
in which the difference between the book value and the tax bases of
assets and liabilities are scheduled to reverse. The resulting deferred
tax asset or liability is adjusted to reflect changes in tax laws or
rates. Because the Company has incurred losses from operations, no
benefit is realized for the tax effect of the net operating loss
carryforward due to the uncertainty of its realization.
F-8
<PAGE>
EDULINK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
- --------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of Long-Lived Assets
The Company reviews long-lived assets to be held and used for
impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. If the sum of
the expected future cash flows (undiscounted and without interest
charges) is less than the carrying amount of the asset, the Company
would recognize an impairment loss based on the estimated fair value of
the asset.
Loss per Share
Basic loss per share is computed by dividing loss available to common
stockholders by the weighted-average number of common shares
outstanding. Diluted loss per share is computed similar to basic loss
per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if
the potential common shares had been issued and if the additional
common shares were dilutive. Because the Company has incurred net
losses, basic and diluted loss per share are the same.
Comprehensive Income
The Company utilizes SFAS No. 130, "Reporting Comprehensive Income."
This statement establishes standards for reporting comprehensive income
and its components in a financial statement. Comprehensive income as
defined includes all changes in equity (net assets) during a period
from non-owner sources. Examples of items to be included in
comprehensive income, which are excluded from net income, include
foreign currency translation adjustments and unrealized gains and
losses on available-for-sale securities. Comprehensive income is not
presented in the Company's financials statements since the Company did
not have any of the items of comprehensive income in any period
presented.
NOTE 3 - ACCOUNTS PAYABLE
On January 5, 2000, the Company entered into an agreement with its
major vendor and the vendor's affiliates to settle a disputed amount of
a contractual obligation arising from a software development contract.
The Company owed $1,708,000 at December 31, 1999 to this vendor and its
affiliates. The agreement calls for a settlement of the entire
outstanding balance for $1,000,000 within the period specified by the
agreement. The Company has agreed to pay the vendor at specified dates
15% of the net financing proceeds it receives pursuant to its financing
activities. In the event the Company is unable to pay this agreed
amount by December 31, 2000, commencing January 1, 2000, interest shall
accrue on the unpaid balance at the prime rate as determined at the end
of each quarter, plus 1%.
F-9
<PAGE>
EDULINK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
- --------------------------------------------------------------------------------
NOTE 3 - ACCOUNTS PAYABLE (Continued)
In addition, the agreement states that the Company will assign to the
vendor intellectual property rights of the software developed if the
$1,000,000 obligation is not paid by December 31, 2001.
Further, the Company has agreed to issue approximately 11,435,000
shares of its common stock as part of the settlement agreement within
60 days of the date of this agreement in lieu of shares and warrants
that were agreed upon previously. This commitment to issue common stock
has been recorded as common stock to be issued at $571,750, which
represents the value of the Company's common stock based on a recent
subscription of shares through a private placement memorandum dated
December 19, 1999.
The settlement has been recorded as a change in accounting estimate.
Accordingly, software development costs have been credited for a net
amount of $136,000. The effect of this change in accounting estimate is
to decrease net loss for the year ended December 31, 1999 by $136,000
and to decrease net loss per share by $0.00031.
NOTE 4 - BRIDGE NOTES PAYABLE
Bridge notes represent notes payable at 10% per annum and are currently
due for payment. The Company issued 20,869,412 and 11,435,294 warrants
to purchase shares of common stock to the 1998 and 1996 lenders,
respectively, at an average exercise price of $0.034 per share.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Lease
The Company co-leases its facility under an operating lease agreement
with an unrelated third party. Future minimum lease payments at
December 31, 1999 were as follows:
Year Ending Gross Company's
December 31, Commitment Portion
------------ ---------- ---------
2000................................. 103,254 $ 36,139
2001................................. 106,673 37,335
2002................................. 106,673 37,335
-------- --------
Total............................. $316,600 $110,809
======== ========
F-10
<PAGE>
EDULINK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
- --------------------------------------------------------------------------------
NOTE 5 - COMMITMENTS AND CONTINGENCIES (Continued)
Lease (Continued)
Rent expense was $31,711 and $28,648, and $5,124 for the years ended
December 31, 1999, 1998, and 1997, respectively.
Employment Agreement
In September 1999, the Company entered into five-year employment
contracts with its President, Chief Executive Officer, and Senior Vice
President that provide for a minimum annual salary, incentives, and
bonuses, which are based on the Company's attainment of specified
levels of sales and earnings. The annual salaries for the three
officers are $150,000, $150,000, and $90,000, respectively. During the
year ended December 31, 1999, all three officers were not compensated,
and unpaid compensation in the amounts of $50,000, $50,000, and
$30,000, respectively, was waived by the officers.
NOTE 6 - RELATED PARTY TRANSACTIONS
During the year ended December 31, 1999, one of the principal
stockholders of the Company paid $112,902 of the Company's expenses,
which are recorded on the accompanying balance sheet as due to related
party. In addition, this principal stockholder contributed $140,403 due
to this stockholder as additional capital.
NOTE 7 - COMMON STOCK AND COMMON STOCK WARRANTS
During the period from January 25, 1996 (inception) to December 31,
1996, the Company issued 28,302,353 shares of common stock in
connection with a private placement for $622,877, net of expenses of
$202,213. In addition, the Company issued 276,754,118 shares of common
stock to its founders and professionals and 58,300,000 shares to the
investment bankers in exchange for services valued at $25,000.
During the year ended December 31, 1997, the Company issued 20,531,471
shares of common stock in connection with a private placement for
$431,500, net of expenses of $68,500. In addition, the Company issued
2,287,058 shares of common stock to its founders and professionals.
The Company issued warrants to purchase 51,458,824 common shares in
connection with a private placement at an average exercise price of
$0.035. In addition, the Company also issued 125,788,235 warrants to
its principal stockholders and directors and 2,287,059 warrants to a
consultant.
F-11
<PAGE>
EDULINK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
- --------------------------------------------------------------------------------
NOTE 7 - COMMON STOCK AND COMMONS STOCK WARRANTS (Continued)
A summary of the Company's warrant activity is listed below:
<TABLE>
<CAPTION>
Weighted- Weighted-
Weighted- Average Average
Average Exercise Exercise
Stock Stock Remaining Price of Price of
Exercise Warrants Warrants Contractual Warrants Warrants
Price Outstanding Exercisable Life Outstanding Exercisable
----------- ------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 0.035 84,907,059 84,907,059 2.74 years $ 0.035 $ 0.035
$ 0.0022 125,788,235 125,788,235 4.51 years 0.0022 $ 0.0022
$ 0.000087 1,143,529 1,143,529 4 years 0.000087 $0.000087
----------- -----------
211,838,824 211,838,824
=========== ===========
</TABLE>
The Company obtained a valuation for its warrants from an independent
firm that used the Black-Scholes option valuation model with the
following weighted-average assumptions for the years ended December 31,
1999 and 1998: dividend yields of 0% and 0%, respectively; risk free
interest rates of 7% and 6%, respectively; expected volatility of 0%
and 0%, respectively; and expected lives of four and four years,
respectively.
The weighted-average fair value of the warrants issued during the years
ended December 31, 1999 and 1998 was $0.022 and $0, respectively.
NOTE 8 - INCOME TAXES
The Company has incurred no income tax expenses since inception. The
actual tax benefit differs from the expected tax benefit computed by
applying the United States federal corporate tax rate of 34% to loss
before income taxes as follows:
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Expected tax benefit ..................... $ (8,000) $(354,000) $(709,000)
State income taxes, net of federal benefit -- (10,000) (20,000)
Changes in valuation allowance ........... 8,000 364,000 729,000
--------- --------- ---------
Total ................................ $ -- $ -- $ --
========= ========= =========
</TABLE>
F-12
<PAGE>
EDULINK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
- --------------------------------------------------------------------------------
NOTE 8 - INCOME TAXES (Continued)
The tax effects of temporary differences that give rise to deferred tax
assets were as follows
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net operating loss carryforwards ............. $ 317,000 $ 308,000 $ 76,000
Software development costs capitalized for tax
purposes ................................. 1,210,000 1,033,000 2,582,000
----------- ----------- -----------
1,527,000 1,341,000 2,658,000
Less valuation allowance ..................... (1,527,000) (1,341,000) (2,658,000)
----------- ----------- -----------
Total ............................... $ -- $ -- $ --
=========== =========== ===========
</TABLE>
At December 31, 1999, the Company had federal and state net operating
loss carryforwards of approximately $794,000 and $396,000,
respectively, which begin to expire in 2011 and 2001, respectively.
NOTE 9 - YEAR 2000 ISSUE
The Company has completed a comprehensive review of its computer
systems to identify the systems that could be affected by ongoing Year
2000 problems. Upgrades to systems judged critical to business
operations have been successfully installed. To date, no significant
costs have been incurred in the Company's systems related to the Year
2000.
Based on the review of the computer systems, management believes all
action necessary to prevent significant additional problems has been
taken. While the Company has taken steps to communicate with outside
suppliers, it cannot guarantee that they have all taken the necessary
steps to prevent any service interruption that may affect the Company.
NOTE 10 - SUBSEQUENT EVENTS
On February 1, 2000, the Company entered into an agreement with an
officer to issue warrants to purchase 34,305,000 shares of common stock
at an exercise price of $0.0022 per share.
F-13
<PAGE>
EDULINK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
- --------------------------------------------------------------------------------
NOTE 10 - SUBSEQUENT EVENTS (Continued)
As of March 8, 2000, the Company has received subscriptions amounting
to $1,187,500, including $100,000 received in December 1999, on which
no fees or commission was due or payable in connection with the
December 1999's private placement memorandum offering.
F-14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
EduLink, Inc.
------------------
Registrant
Date: March 9, 2000 By: /s/ Michael Rosenfeld
----------------------
Title: Chief Executive Officer
22
<PAGE>
Exhibits
2.1 Agreement and Plan of Merger between URREA Enterprises and EduLink Inc.
3.1 Articles of Incorporation of URREA Enterprises, Inc.
3.2 Articles of Merger for URREA Enterprises, Inc.
3.3 By-laws of EduLink Inc.
4.1 Form of Warrant Agreement with Michael Rosenfeld (Rosenfeld Warrant
Agreement)
4.2 Amendment to Rosenfeld Warrant Agreement, dated September 15, 1999
4.3 Form of Warrant Agreement with Ronald C. Rescigno (Rescigno Warrant
Agreement)
4.4 Amendment to Rescigno Warrant Agreement, dated September 15, 1999
4.5 Warrant Agreement with Dorothy Tucker, dated September 15, 1999.
4.6 Warrant Agreement with Kathleen McGuire, dated September 15, 1999
4.7 Warrant Agreement with Ian Rescigno, dated February 1, 2000
4.8 Specimen of common stock certificate
10.1 Agreement with Saatchi & Saatchi North America, Inc. dated January 5,
2000.
10.2 Employment Agreement between Michael Rosenfeld and EduLink Inc., dated
September 4, 1999 ("Rosenfeld Employment Agreement")
10.3 Amendment to Rosenfeld Employment Agreement, dated February 1, 2000
10.4 Employment Agreement between Ronald Rescigno and EduLink Inc., dated
September 4, 1999 ("Dr. Rescigno Employment Agreement")
10.5 Amendment to Dr. Rescigno Employment Agreement dated February 1, 2000
10.6 Employment Agreement between Ian Rescigno and EduLink Inc., dated
September 4, 1999 ("Ian Rescigno Employment Agreement")
23
<PAGE>
10.7 Amendment to Ian Rescigno Employment Agreement, dated February 1, 2000
10.8 Agreement with Science Applications International Corporation.
10.9 Agreement with Professor Gary B. Nash, Ph.D.
10.10 Agreement with McGuire and Associates.
11.1 Statement of Computation of Per Share Earnings
21.1 Subsidiaries of the Registrant
27.1 Financial Data Schedule
24
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Document
- ------- ------------------------------------
2.1 Agreement and Plan of Merger between URREA Enterprises and
EduLink Inc.
3.1 Articles of Incorporation of URREA Enterprises, Inc.
3.2 Articles of Merger for URREA Enterprises, Inc.
3.3 By-laws of EduLink Inc.
4.1 Form of Warrant Agreement with Michael Rosenfeld (Rosenfeld
Warrant Agreement)
4.2 Amendment to Rosenfeld Warrant Agreement, dated September 15,
1999
4.3 Form of Warrant Agreement with Ronald C. Rescigno (Rescigno
Warrant Agreement)
4.4 Amendment to Rescigno Warrant Agreement, dated September 15,
1999
4.5 Warrant Agreement with Dorothy Tucker, dated September 15,
1999.
4.6 Warrant Agreement with Kathleen McGuire, dated September 15,
1999
4.7 Warrant Agreement with Ian Rescigno, dated February 1, 2000
4.8 Specimen of common stock certificate
10.1 Agreement with Saatchi & Saatchi North America, Inc. dated
January 5, 2000.
10.2 Employment Agreement between Michael Rosenfeld and EduLink
Inc., dated September 4, 1999 ("Rosenfeld Employment
Agreement")
10.3 Amendment to Rosenfeld Employment Agreement, dated February 1,
2000
10.4 Employment Agreement between Ronald Rescigno and EduLink Inc.,
dated September 4, 1999 ("Dr. Rescigno Employment Agreement")
10.5 Amendment to Dr. Rescigno Employment Agreement dated February
1, 2000
25
<PAGE>
10.6 Employment Agreement between Ian Rescigno and EduLink Inc.,
dated September 4, 1999 ("Ian Rescigno Employment Agreement")
10.7 Amendment to Ian Rescigno Employment Agreement, dated February
1, 2000
10.8 Agreement with Science Applications International Corporation.
10.9 Agreement with Professor Gary B. Nash, Ph.D.
10.10 Agreement with McGuire and Associates.
11.1 Statement of Computation of Per Share Earnings
21.1 Subsidiaries of the Registrant
27.1 Financial Data Schedule
26
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Plan") is made this 28th day of October,
1999, among URREA Enterprises, Inc., a Nevada corporation ("URREA"); EduLink,
Inc., a California corporation, ("EduLink") and its shareholders
("Shareholders").
URREA wishes to acquire one hundred percent (100%) of the issued and
outstanding stock of EduLink for and in exchange for stock of URREA, in a stock
for stock transaction intending to qualify as a tax-free exchange pursuant to
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended. The
parties intend for this Plan to represent the terms and conditions of such
tax-free reorganization, which Plan the parties hereby adopt.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, IT IS AGREED:
Section 1
Terms of Exchange
1.1 Number of Shares. Upon the execution hereof, the holders of all the
issued and outstanding stock of EduLink agree to assign, transfer, and deliver
to URREA, free and clear of all liens, pledges, encumbrances, charges,
restrictions or known claims of any kind, nature or description, all of their
shares of EduLink stock, and URREA agrees to acquire such shares on the date
thereof, or as soon as practicable thereafter, by issuing and delivering in
exchange therefore solely common shares of URREA's stock, par value $.001, in
the aggregate of 7,776,000 common shares, the amount of these shares shall be
adjusted to 388,800,000 common shares to take into account the forward stock
split provided for in Section 2.2 (c). Pursuant to Section 2.2 (c) prior to the
issuance of the 7,776,000 shares URREA will effect a forward stock split of its
issued and outstanding shares on a 50 for 1 basis, which will increase URREA's
issued and outstanding stock from 5,180,450 common shares to 259,022,500 common
shares. Therefore, 388,800,000 common shares shall be issued to EduLink which
shall represent approximately sixty percent (60%) of the then issued and
outstanding stock of URREA. Subsequent to the date hereof, the Shareholders
shall, upon the surrender to URREA of the EduLink certificates representing
their respective beneficial and record ownership of one hundred percent (100%)
of the issued and outstanding shares of EduLink or as soon as practicable
thereafter, and further provided an exemption from the registration provisions
of Section 5 of the Securities Act of 1933 is available for the issuance
thereof, the Shareholders shall be entitled to receive a certificate(s)
evidencing shares of the exchanged URREA stock as provided for herein. Upon the
consummation of the transaction contemplated herein, URREA shall merge with
EduLink and become the surviving corporation.
1.2 Anti-Dilution. For all relevant purposes of this Plan, the number of
URREA shares to be issued and delivered pursuant to this Plan shall be
appropriately adjusted to take into account any stock split, stock dividend,
reverse stock split, recapitalization, or similar change in URREA common stock,
which may occur between the date of the execution of this Plan and the date of
the delivery of such shares.
<PAGE>
1.3 Delivery of Certificates. The Shareholders shall transfer to URREA at
the closing provided for in Section 2 (the "Closing") the shares of common stock
of EduLink listed opposite their respective names on Exhibit A hereto (the
"EduLink shares") in exchange for shares of the common stock of URREA as
outlined above in Section 1.1 hereof (the "URREA Stock"). All of such shares of
URREA stock shall be issued at the closing to the Shareholders, in the numbers
shown opposite their respective names in Exhibit "A." The transfer of EduLink
shares by the Shareholders shall be effected by the delivery to URREA at the
Closing of certificates representing the transferred shares endorsed in blank or
accompanied by stock powers executed in blank, with all signatures guaranteed by
a national bank and with all necessary transfer taxes and other revenue stamps
affixed and acquired at the Shareholders' expense.
1.4 Further Assurances. Subsequent to the execution hereof, and from time to
time thereafter, the Shareholders shall execute such additional instruments and
take such other action as URREA may request in order to more effectively sell,
transfer and assign clear title and ownership in the EduLink shares to URREA.
Section 2
Closing
2.1 Closing. The Closing contemplated by Section 1.3 shall be held on or
before October 3 1, 1 999 or at such other time or place as may be mutually
agreed upon in writing by the parties. The Closing may also be accomplished by
wire, express mail or other courier service, conference telephone communications
or as otherwise agreed by the respective parties or their duly authorized
representatives. In any event, the closing of the transactions contemplated by
this Plan shall be effected as soon as practicable after all of the conditions
contained herein have been satisfied.
2.2 Closing Events. At the Closing, each of the respective parties hereto
shall execute, acknowledge and deliver (or shall cause to be executed,
acknowledged, and delivered) any agreements, resolutions, rulings, or other
instruments required by this Plan to be so delivered at or prior to Closing,
together with such other items as may be reasonably requested by the parties
hereto and their respective legal counsel in order to effectuate or evidence the
transaction contemplated hereby. At the Closing, the following events will take
place:
(a) The Board of Directors and the owners of a majority of the issued and
outstanding stock of URREA will adopt a resolution to change the name of URREA
to EduLink, Inc.
(b) The Board of Directors and the owners of a majority of the issued and
outstanding stock of URREA will adopt a resolution to increase the authorized
capital of URREA to 1.5 billion common shares.
(c) The Board of Directors and the owners of a majority of the issued and
outstanding stock of URREA will adopt a resolution to forward split issued and
outstanding common stock of
-2-
<PAGE>
URREA on a 50 for 1 basis which will increase the issued and outstanding stock
of URREA from 5,180,450 common shares to 259,022,500.
(d) The current officers and directors of URREA shall submit their
resignations and appoint the following officers and directors:
Michael Rosenfeld CEO and Director
Dr. Ronald C. Recigno President, Treasurer and Director
Ian Recigno Senior Vice President - Operations
Stephanie Eichhom Secretary
Dorothy M. Tucker Director
Kathleen McGuire Director
Section 3
Representations, Warranties and Covenants of URREA
URREA represents and warrants to, and covenants with, the Shareholders and
EduLink as follows:
3.1 Corporate Status. URREA is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada. URREA has
full corporate power and is duly authorized, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry on its business
on all material respects as it is now being conducted, and there is no
jurisdiction in which the character and location of the assets owned by it, or
the nature of the business transacted by it, requires qualification. Included in
the URREA schedules (defined below) are complete and correct copies of its
Articles of Incorporation and Bylaws as in effect on the date hereof. The
execution and delivery of this Plan does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of URREA's
Articles of Incorporation or Bylaws. URREA has taken all action required by law,
its Articles of Incorporation, its Bylaws, or otherwise, to authorize the
execution and delivery of this Plan.
3.2 Capitalization. The authorized capital stock of URREA as of the date
hereof consists of 50,000,000 common shares, par value $.001. Pursuant to
Section 2.2 (b), at the losing the Board of Directors will adopt an amendment to
increase the authorized capital of URREA from 50,000,000 common shares to 1.5
billion common shares. As of the date hereof there are 5,180,450 common shares
of URREA issued and outstanding. Upon completion of the forward stock split
provided for in Section 2.2 (c) URREA will have 259,022,500 common shares issued
and outstanding. The common shares of URREA issued and outstanding are fully
paid, non-assessable shares. There are no outstanding options, warrants,
obligations convertible into shares of stock, or calls or any understanding,
agreements, commitments, contracts or promises with respect to the issuance of
URREA's common stock or with regard to any options, warrants or other
contractual rights to acquire any of URREA's authorized but unissued common
shares.
-3-
<PAGE>
3.3 Financial Statements.
(a) URREA hereby warrants and covenants to EduLink that the financial
statements fairly and accurately represent the financial condition of URREA and
that no material change has occurred in the financial condition of URREA.
(b) URREA hereby warrants and represents that the financial statements
for the periods set forth in subparagraph (a), supra, fairly and accurately
represent the financial condition of URREA as submitted heretofore to EduLink
for examination and review.
3.4 Conduct of Business. URREA is a development stage company and has not
been engaged in any operational activities prior to the date hereof.
3.5 Options, Warrants and Rights. URREA has no options, warrants or stock
appreciation rights related to the authorized but unissued URREA common stock.
There are no existing options, warrants, calls, or commitments of any character
relating to the authorized and unissued URREA common stock, except options,
warrants, calls, or commitments, if any, to which URREA is not a party and by
which it is not bound.
3.6 Title to Property. URREA has good and marketable title to all of its
properties and assets, real and personal, proprietary or otherwise, as will be
reflected in the balance sheets of URREA, and the properties and assets of URREA
are subject to no mortgage, pledge, lien or encumbrance, unless as otherwise
disclosed in its financial statements.
3.7 Litigation. There are no material actions, suits, or proceedings,
pending, or, to the best knowledge of URREA, threatened by or against or
effecting URREA at law or in equity, or before any governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind;
URREA does not have any knowledge of any default on its part with respect to any
judgment, order, writ, injunction, decree, warrant, rule, or regulation of any
court, arbitrator, or governmental agency or instrumentality.
3.8 Books and Records. From the date hereof, and for any reasonable period
subsequent thereto, URREA and its present management will (i) give to the
Shareholders and EduLink, or their duly authorized representatives, full access,
during normal business hours, to all of its books, records, contracts and other
corporate documents and properties so that the Shareholders and EduLink, or
their duly authorized representatives, may inspect them; and (ii) furnish such
information concerning the properties and affairs of URREA as the Shareholders
and EduLink, or their duly authorized representatives, may reasonably request.
Any such request to inspect URREA's books shall be directed to URREA's counsel,
Daniel W. Jackson, at the address set forth herein under Section 10.4 Notices.
3.9 Confidentiality. Until the Closing (and thereafter if there is no
Closing), URREA and its representatives will keep confidential any information
which they obtain from the Shareholders or from EduLink concerning its
properties, assets and the proposed business operations
-4-
<PAGE>
of EduLink. If the terms and conditions of this Plan imposed on the parties
hereto are not consummated on or before 5:00 p.m. MST on December 31, 1999 or
otherwise waived or extended in writing to a date mutually agreeable to the
parties hereto, URREA will return to EduLink all written matter with regard to
EduLink obtained in connection with the negotiations or consummation of this
Plan.
3.10 Conflict with Other Instruments. The transactions contemplated by this
Plan will not result in the breach of any term or provision of, or constitute a
default under any indenture, mortgage, deed of trust, or other material
agreements or instrument to which UREA was or is a party, or to which any of its
assets or operations are subject, and will not conflict with any provision of
the Articles of Incorporation or Bylaws of URREA.
3.11 Corporate Authority. URREA has full corporate power and authority to
enter into this Plan and to carry out its obligations hereunder and will deliver
to the Shareholders and EduLink, or their respective representatives, at the
Closing, a certified copy of resolutions of its Board of Directors authorizing
execution of this Plan by its officers and performance thereunder.
3.12 Consent of Shareholders. URREA hereby warrants and represents that the
shareholders of URREA, being the owners of a majority of the issued and
outstanding stock of the Corporation consented in writing to the authorization
to execute this Agreement and Plan of Merger as between URREA and EduLink
pursuant to a stock-for-stock transaction in which URREA would acquire one
hundred percent of the issued and outstanding shares of EduLink in exchange for
the issuance of a total of 388,800,000 common shares of URREA and thereby
EduLink shall merge with and into URREA.
3.13 Special Covenants and Representations Regarding the Exchanged URREA
Stock. The consummation of this Plan and the transactions herein contemplated
include the issuance of the exchanged URREA shares to the Shareholders, which
constitutes an offer and sale of securities under the Securities Act of 1933, as
amended, and applicable states' securities laws. Such transaction shall be
consummated in reliance on exemptions from the registration and prospectus
requirements of such statutes which depend interlace on the circumstances under
which the Shareholders acquire such securities. In connection with the reliance
upon exemptions from the registration and prospectus delivery requirements for
such transactions, at the Closing, Shareholders shall cause to be delivered to
URREA a Letter(s) of Investment Intent in the form attached hereto as Exhibit B
and incorporated herein by reference.
3.14 Undisclosed or Contingent Liabilities. URREA hereby represents and warrants
that it has no undisclosed or contingent liabilities which have not been
disclosed to EduLink in writing or in this Agreement or in any exhibit attached
hereto.
3.15 Information. The information concerning URREA set forth in this Plan, and
the URREA schedules attached hereto, are complete and accurate in all material
respects and do not contain, or will not contain, when delivered, any untrue
statement or a material fact or omit to state a material fact the omission of
which would be misleading to EduLink in connection with this Plan.
-5-
<PAGE>
3.16 Title and Related Matters. URREA has good and marketable title to all
of its properties, interests in properties, and assets, real and personal, which
are reflected, or will be reflected, in the URREA balance sheets, free and clear
of any and all liens and encumbrances.
3.17 Contracts or Agreements. URREA is not bound by any material contracts,
agreements or obligations which it has not already disclosed to EduLink in
writing or in this Agreement or in any Exhibit attached hereto.
3.18 Governmental Authorizations. URREA has all licenses, franchises,
permits and other government authorizations that are legally required to enable
it to conduct its business in all material respects as conducted on the date
hereof.
3.19 Compliance with Laws and Regulations. URREA has complied with all
applicable statutes and regulations of any federal, state, or other applicable
jurisdiction or agency thereof, except to the extent that noncompliance would
not materially and adversely effect the business, operations, properties,
assets, or condition of URREA or except to the extent that noncompliance would
not result in the occurrence of any material liability, not otherwise disclosed
to EduLink.
3.20 Approval of Plan. The Board of Directors of URREA has authorized the
execution and delivery of this Plan by URREA and have approved the Plan and the
transactions contemplated hereby. URREA has full power, authority, and legal
right to enter into this Plan and to consummate the transactions contemplated
hereby.
3.21 Investment Intent. URREA is acquiring the EduLink shares to be
transferred to it under this Plan for the purpose of merging with EduLink and
not with a view to the sale or distribution thereof, and URREA shall cancel the
EduLink shares upon the completion of the merger.
3.22 Unregistered Shares and Access to Information. URREA understands that
the offer and sale of the EduLink shares have not been registered with or
reviewed by the Securities and Exchange Commission under the Securities Act of
1933, as amended, or with or by any state securities law administrator, and no
federal, state securities law administrator has reviewed or approved any
disclosure or other material concerning EduLink or the EduLink shares. URREA has
been provided with and reviewed all information concerning EduLink, the EduLink
shares as it has considered necessary or appropriate as a prudent and
knowledgeable investor to enable it to make an informed investment decision
concerning the EduLink shares. URREA has made an investigation as to the merits
and risks of its acquisition of the EduLink Shares and has had the opportunity
to ask questions of, and has received satisfactory answers from, the officers
and directors of EduLink concerning EduLink, the EduLink shares and related
matters, and has had an opportunity to obtain additional information necessary
to verify the accuracy of such information and to evaluate the merits and risks
of the proposed acquisition of the EduLink shares.
3.23 Obligations. URREA has no outstanding obligations to any of its
employees or consultants.
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3.24 URREA Schedules. URREA has delivered to EduLink the following items
listed below, hereafter referred to as the "URREA Schedules", which are hereby
incorporated by reference and made a part hereof. A certification executed by a
duly authorized officer of URREA on or about the date of the Plan will be
executed to certify that the URREA Schedules are true and correct.
(a) Copy of Articles of Incorporation, as amended, and Bylaws;
(b) Financial statements;
(c) Shareholder list;
(d) Resolutions of Directors approving Plan;
(e) Consent of Shareholders approving Plan;
(f) Officers' Certificate as required under Section 6.2 of the Plan;
(g) Opinion of counsel as required under Section 6.4 of the Plan;
(h) Certificate of Good Standing;
Section 4
Representations, Warranties and Covenants of EduLink
EduLink represents and warrants to, and covenants with, the Shareholders and
URREA as follows:
4.1 Corporate Status. EduLink is a corporation duly organized, validly
existing and in under the laws of California, incorporated on January 25, 1996.
On September 30, 1990, EduLink filed its Statement By Domestic Stock Corporation
in order to receive its Certificate of Good Standing from the State of
California. EduLink has also filed tax returns for the years ended 1997 and 1996
in order to receive its Certificate of Tax Clearance from the Tax Clearance
Unit. The Statement By Domestic Stock Corporation and the tax returns for 1997
and 1996 are attached hereto as Schedule (k) of the EduLink Schedules. EduLink
has full corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on its
business on all material respects as it is now being conducted, and there is no
jurisdiction in which the character and location of the assets owned by it, or
the nature of the business transacted by it, requires qualification. included in
the EduLink schedules (defined below) are complete and correct copies of its
Articles of Incorporation and Bylaws as in effect on the date hereof. The
execution and delivery of this Plan does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of EduLink's
Articles of Incorporation or Bylaws. EduLink has taken all action required
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by law, its Articles of Incorporation, its Bylaws, or otherwise, to authorize
the execution and delivery of this Plan.
4.2 Capitalization. The authorized capital stock of EduLink as of the date
hereof consists of 20,000,000 common shares, par value $.001 and 51 preferred
shares, par value $001. As of the date hereof there are 3,400,000 common shares
of EduLink issued and outstanding. There are no preferred shares issued and
outstanding. The foregoing shares are fully paid, non-assessable shares. As of
the date hereof there are 1,870,000 warrants outstanding. A Warrant Description
is attached hereto as Exhibit C.
4.3 Conduct of Business. EduLink will use its best efforts to maintain and
preserve its business organization, employee relationships and goodwill intact,
and will not, without the prior written consent of URREA, enter into any
material commitments from the date of execution of the Plan and through the
closing of the Plan.
EduLink agrees that EduLink will conduct itself in the following manner
pending the Closing:
(a) Certificate of Incorporation and Bylaws. No change will be made in
the Certificate of Incorporation or Bylaws of EduLink.
(b) Capitalization, etc. EduLink will not make any change in its
authorized or issued shares of any class, declare or pay any dividend or other
distribution, or issue, encumber, purchase or otherwise acquire any of its
shares of any class.
4.4 Title to Property. EduLink has good and marketable title to all of its
properties and assets, real and personal, proprietary or otherwise, as will be
reflected in the balance sheets of EduLink, and the properties and assets of
EduLink are subject to no mortgage, pledge, lien or encumbrance, unless as
otherwise disclosed in its financial statements and subject to the Agreement by
and Between EduLink and Saatchi & Saatchi North America Inc. ("Saatchi
Agreement") attached hereto in Schedule (f) of EduLink, Inc.'s Schedules.
4.5 Litigation. There are no material actions, suits, or proceedings,
pending, or, to the best knowledge of EduLink, threatened by or against or
effecting EduLink at law or in equity, or before any governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind;
EduLink does not have any knowledge of any default on its part with respect to
any judgment, order, writ, injunction, decree, warrant, rule, or regulation of
any court, arbitrator, or governmental agency or instrumentality.
4.6 Books and Records. From the date hereof, and for any reasonable period
subsequent thereto, EduLink and its present management will (i) give to URREA,
or their duly authorized representatives, full access, during normal business
hours, to all of its books, records, contracts and other corporate documents and
properties so that URREA, or their duly authorized representatives, may inspect
them; and (ii) furnish such information concerning the properties and affairs
of EduLink as the Shareholders and EduLink, or their duly authorized
representatives, may
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reasonably request. Any such request to inspect EduLink's books shall be
directed to EduLink's representative, at the address set forth herein under
Section 10.4 Notices.
4.7 Confidentiality. Until the Closing (and thereafter if there is no
Closing), EduLink and its representatives will keep confidential any information
which they obtain from the Shareholders or from EduLink concerning its
properties, assets and the proposed business operations of EduLink. If the terms
and conditions of this Plan imposed on the parties hereto are not consummated on
or before 5:00 p.m. MST on December 31, 1999, or otherwise waived or extended in
writing to a date mutually agreeable to the parties hereto, EduLink will return
to URREA all written matter with regard to URREA obtained in connection with the
negotiations or consummation of this Plan.
4.8 Investment Intent. The Shareholders represent and covenant that they are
acquiring the unregistered and restricted common shares of URREA to be delivered
to them under this Plan for investment purposes and not with a view to the
subsequent sale or distribution thereof, and as agreed, supra, the Shareholders,
their successors and assigns agree to execute and deliver to URREA on the date
of Closing or no later than the date on which the restricted shares are issued
and delivered to the Shareholders, their assigns, or designees, an Investment
Letter similar in form to that attached hereto as Exhibit B.
4.9 Unregistered Shares and Access to Information. EduLink and the
Shareholders understand that the offer and sale of URREA shares to be exchanged
for the EduLink shares have not been registered with or reviewed by the
securities and Exchange Commission under the Securities Act of 1933, as amended,
or with or by any state securities law administrator, and no federal or state
securities law administrator has reviewed or approved any disclosure or other
material facts concerning URREA or URREA stock. EduLink and the Shareholders
have been provided with and reviewed all information concerning URREA and URREA
shares, to be exchanged for the EduLink shares as they have considered necessary
or appropriate as prudent and .knowledgeable investors to enable them to make
informed investment decisions concerning the URREA shares, to be exchanged for
the EduLink shares. EduLink and the Shareholders have made an investigation as
to the merits and risks of their acquisition of the URREA shares, to be
exchanged for the EduLink shares and have had the opportunity to ask questions
of, and have received satisfactory answers from, the officers and directors of
URREA concerning URREA shares to be exchanged for the EduLink shares and related
matters, and have had an opportunity to obtain additional information necessary
to verify the accuracy of such information and to evaluate the merits and risks
of the proposed acquisition of the URREA shares to be exchanged for the EduLink
shares.
4.10 Title to Shares. The Shareholders are the beneficial and record owners,
free and clear of any liens and encumbrances, of whatever kind or nature, of all
of the shares of EduLink of whatever class or series, which the Shareholders
have contracted to exchange.
4.11 Contracts. All claims in this section are subject to the terms and
conditions in the Saatchi Agreement, attached hereto in Schedule (f) of EduLink,
Inc.'s Schedules. It is further understood that on or before the Closing Date of
this Agreement Ian Rescigno, Michael Rosenfeld
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and Ronald Rescigno will execute their respective employment agreements with
EduLink attached hereto as Schedule G.
(a) Except for the Saatchi Agreement, attached hereto in Schedule (f) of
EduLink, Inc.'s Schedules, and the employment agreements EduLink is not a party
to any contracts, written or oral, or any other commitments to which EduLink is
a party or by which EduLink or its properties are bound.
(b) Except for the Saatchi Agreement attached hereto in Schedule (f) of
EduLink, Inc.'s Schedules and the employment agreements EduLink is not a party
to any contract, agreement, corporate restriction, or subject to any judgment,
order, writ, injunction, decree, or award, which materially and adversely effect
the business, operations, properties, assets, or conditions of EduLink.
(c) Except for the employment agreements EduLink is not a party to any
material oral or written (i) contract for employment of any officer which is
not terminable on 30 days (or less) notice; (ii) profit sharing, bonus, deferred
compensation, severance, or any other retirement plan of arrangement covered by
Title IV of the Employee Retirement Income Security Act, as amended, or
otherwise covered; (iii) agreement providing for the sale, assignment or
transfer of any of its rights, assets or properties, whether tangible or
intangible, except sales of its property in the ordinary course of business with
a value of less than $2,000; or (iv) waiver of any right of any value which in
the aggregate is extraordinary or material concerning the assets or properties
scheduled by EduLink, except for adequate value and pursuant to contract.
EduLink has not entered into any material transaction which is not listed in the
EduLink Schedules or reflected in the EduLink financial statements.
4.12 Material Contract Defaults. EduLink is not in default in any material
respect under the terms of any contract, agreement, lease or other commitment
which is material to the business, operations, properties or assets, or
condition of EduLink, and there is no event of default or event which, with
notice of lapse of time or both, would constitute a default in any material
respect under any such contract, agreement, lease, or other commitment in
respect of which EduLink has not taken adequate steps to prevent such default
from occurring, or otherwise compromised, reached a satisfaction of, or provided
for extensions of time in which to perform under any one or more contract
obligations, among others with the exception of the Saatchi Agreement, attached
hereto in Schedule (f) of EduLink, Inc.'s Schedules.
4.13 Conflict with Other Instruments. The consummation of the within
transactions will not result in the breach of any term or provision of, or
constitute a default under any indenture, mortgage, deed of trust, or other
material agreement or instrument to which EduLink was or is a party, or to which
any of its assets or operations are subject, and will not conflict with any
provision of the Articles of Incorporation or Bylaws of EduLink.
4.14 Governmental Authorizations. EduLink is in good standing in the State
of California. Except for compliance with federal and state securities laws, no
authorization, approval, consent or order of, or registration, declaration, or
filing with, any court or other governmental body
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is required in connection with the execution and delivery by EduLink of this
Plan and the consummation by EduLink of the transactions contemplated hereby.
4.15 Compliance with Laws and Regulations. EduLink has complied with all
applicable statutes and regulations of any federal, state, or other applicable
jurisdiction or agency thereof, except to the extent that noncompliance would
not materially and adversely effect the business, operations, properties,
assets, or condition of EduLink or except to the extent that noncompliance would
not result in the occurrence of any material liability, not otherwise disclosed
to URREA.
4.16 Approval of Plan. The Board of Directors of EduLink have authorized the
execution and delivery of this Plan by EduLink and have approved the Plan and
the transactions contemplated hereby. EduLink has full power, authority, and
legal right to enter into this Plan and to consummate the transactions
contemplated hereby.
4.17 Information. The information concerning EduLink set forth in this Plan,
and the EduLink Schedules attached hereto, are complete and accurate in all
material respects and do not contain, or will not contain, when delivered, any
untrue statement or a material fact or omit to state a material fact the
omission of which would be misleading to URREA in connection with this Plan.
4.18 EduLink Schedules. EduLink has delivered to URREA the following items
listed below, hereafter referred to as the "EduLink Schedules", which is hereby
incorporated by reference and made a part hereof. A certification executed by a
duly authorized officer of EduLink on or about the date within the Plan is
executed to certify that the EduLink Schedules are true and correct.
(a) Copy of Articles of Incorporation and Bylaws;
(b) Financial Statements;
(c) Resolutions of Board of Directors approving Plan;
(d) Consent of Shareholders approving Plan;
(e) Schedule of all debts, mortgages, security interests, pledges, liens,
encumbrances, claims and the like;
(f) Schedule of all material contracts;
(g) A list of key employees, including current compensation, with notation
as to job description and whether or not such employee is subject to written
contract, and if subject to a contract or employment agreement, a copy of the
same;
(h) A schedule showing the name and location of each bank or other
institution with which EduLink has an account;
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(i) A schedule setting forth the shareholders, together with the number of
shares owned beneficially or of record by each (also attached as Exhibit A);
(j) Officers' Certificate as required by Section 7.2 of the Plan;
(k) Copy of state and federal tax returns for the years ended 1997 and 1996
and Statement By Domestic Stock Corporation.
(l) Certificate of Good Standing
Section 5
Special Covenants
5.1 Resignation of Directors. At the Closing, all of URREA's current
officers and directors will resign from their respective positions, in seriatim.
5.2 Name of the Corporation. At the Closing, the Board of Directors of URREA
will adopt a resolution to change the name of URREA to EduLink, Inc.
5.3 EduLink Information Incorporated in URREA's Reports. EduLink represents
and warrants to URREA that all the information furnished under this Plan shall
be true and correct in all material respects and that there is no omission of
any material fact required to make the information stated not misleading.
EduLink agrees to indemnify and hold URREA harmless, including each of its
Directors and Officers, and each person, if any, who controls such party, under
any applicable law from and against any and all losses, claims, damages,
expenses or liabilities to which any of them may become subject under applicable
law, or reimburse them for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such actions, whether or
not resulting in liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based on any untrue statement, or
omission of a material fact contained in such information delivered hereunder.
5.4 URREA Information Incorporated in EduLink's Reports. URREA represents
and warrants to EduLink that all the information furnished under this Plan shall
be true and correct in all material respects and that there is no omission of
any material fact required to make the information stated not misleading. URREA
and the current officers and directors of URREA agree to indemnify and hold
EduLink Harmless, including each of its Directors and Officer, and each person,
if any, who controls such party, under any applicable law from and against any
and all losses claims, damages, expenses or liabilities to which any of them any
become subject under applicable law, or reimburse them for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such actions, whether or not resulting in liability, insofar as
such losses, claims, damages, expenses, liabilities or actions arise out of or
are based on any untrue statement, or omission of a material fact contained in
such information delivered hereunder.
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5.5 Special Covenants and Representations Regarding the Exchanged URREA
Stock. The consummation of this Plan and the transactions herein contemplated,
including the issuance of the URREA shares in exchange for one hundred percent
(100%) of the issued and outstanding shares of EduLink to the Shareholders
constitutes of offer and sale of securities under the Securities Act and the
applicable state statutes, which depend, inter alia, on the circumstances under
which the Shareholders acquired such securities. URREA intends to rely on the
exemption of the registration provision of Section 5 of the Securities Act as
provided for under Section 4.2 of the Securities Act of 1933, which states
"transactions not involving a public offering", among others. Each Shareholder
upon submission of his EduLink shares and the receipt of the URREA shares
exchanged therefor, shall execute and deliver to URREA a litter of investment
intent to indicate, among other representations, that the Shareholder is
exchanging the EduLink shares for URREA shares for investment purposes and not
with a view to the subsequent distribution thereof. A proposed Investment Letter
is attached hereto as Exhibit B and incorporated herein by reference for the
general use by the Shareholders, as they may determine.
5.6 Action Prior to Closing. Upon the execution hereof until the Closing
date,
(a) EduLink and URREA will (i) perform all of their obligations under
material contracts, leases, insurance policies and/or documents relating to
their assets and business; (ii) use their best efforts to maintain and preserve
their business organization intact, to retain their key employees, and to
maintain its relationship with existing potential customers and client; and
(iii) fully comply with the perform in all material respects all duties and
obligations imposed on them by all federal and state laws and all rules,
regulations, and orders imposed by all federal or state governmental
authorities.
(b) Neither EduLink nor URREA will (i) make any change in their Articles of
Incorporation or Bylaws except and unless as contemplated pursuant to Section 3
and Section 5 of this Plan; (ii) enter into or amend any contract, agreement, or
other instrument of the types described in the parties' schedules, except that a
party may enter into or amend any contract or other instrument in the ordinary
course of business involving the sale of goods or services, provided that such
contract does not involve obligations in except of $10,000.
Section 6
Conditions Precedent to Obligations of
EduLink and the Shareholders
All obligations of EduLink and the Shareholders under this Plan are subject
to the satisfaction, on or before the Closing date, except as otherwise provided
for herein, or waived or extended in writing by the parties hereto, of the
following conditions:
6.1 Accuracy of Representations. The representations and warranties made by
URREA in this Plan were true when made and shall be true as of the Closing date
(except for exchanges therein permitted by this Plan) with the same force and
effect as if such representations and warranties were made at and as of the
Closing date; and, URREA shall have performed and complied
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with all aspects of this Agreement, unless waived or extended in writing by the
parties hereto. EduLink shall have been furnished with a certificate, signed by
a duly authorized executive officer of URREA and dated the Closing date, to the
foregoing effect.
6.2 Officers' Certificate. EduLink and the Shareholders shall have been
furnished with a certificate dated the Closing date and signed by a duly
authorized executive officer of URREA, to the effect that no litigation,
proceeding, investigation, claim, demand or inquiry is pending, or to the best
knowledge of URREA, threatened, which might result in an action to enjoin or
prevent the consummation of the transactions contemplated by this Plan, or which
might result in any material adverse change in the assets, properties, business,
or operations of URREA, and that this Agreement has been complied with in all
material respects.
6.3 No Material Adverse Change. Prior to the Closing date, there shall have
not occurred any material adverse change in the financial condition, business or
operations of URREA, nor shall any event have occurred which, with lapse of time
or the giving of notice or both, may cause or create any material adverse change
in the financial condition, business or operations of URREA, except as otherwise
disclosed to EduLink.
6.4 Opinion of Counsel of URREA. URREA shall furnished to EduLink and the
Shareholders an opinion dated as of the Closing date and in form and substance
satisfactory to EduLink and the Shareholders to the effect that:
(a) URREA is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Nevada, and with all requisite corporate
power to perform its obligations under this Plan.
(b) The business of URREA, as presently conducted, including, upon the
consummation hereof, the ownership of all of the issued and outstanding shares
of EduLink, does not require it to register it to do business as a foreign
corporation on any jurisdiction other than under the jurisdiction of its
Articles of Incorporation or Bylaws and URREA has complied to the best of its
knowledge in all material respects with all the laws, regulations, licensing
requirements and orders applicable to its business activities and has filed with
the proper authorities, including the Department of Commerce, Division of
Corporations, and Secretary of State for the State of Nevada, all statements and
reports required to be filed.
(c) The authorized and outstanding capital stock of URREA as set forth in
Section 3.2 above, and all issued and outstanding shares have been duly and
validly authorized and issued and are fully paid and non-assessable.
(d) There are no material claims, suits or other legal proceedings pending
or threatened against URREA or any court or before or by any governmental body
which might materially effect the business of URREA or the financial condition
of URREA as a whole and no such claims, suits or legal proceedings are
contemplated by governmental authorities against URREA.
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(e) To the best knowledge of such counsel, the consummation of the
transactions contemplated by this Plan will not violate or contravene the
provisions of the Certificate of Incorporation or Bylaws of URREA, or any
contract, agreement, indenture, mortgage, or other by which URREA is bound.
(f) This Plan constitutes a legal, valid and binding obligation of URREA
enforceable in accordance with its terms, subject to the effect of any
bankruptcy, insolvency, reorganization, moratorium, or similar law effecting
creditors' rights generally and general principles of equity (regardless of
whether such principles or considered in a proceeding in equity of law).
(g) The execution and delivery of this Plan and the consummation of the
transactions contemplated hereby have been ratified by a majority of the
Shareholders of URREA and have been duly authorized by its Board of Directors.
(h) URREA has not, nor will it undertake any action, the result of which
would endanger the tax-free mature of the Plan.
6.5 Good Standing. EduLink shall have received a Certificate of Good
Standing for the State of Nevada, dated within ninety (90) days prior to
Closing, but in no event later than ten days subsequent to the execution hereof
certifying that URREA is in good standing as a corporation in the State of
Nevada.
6.6 Other Items. EduLink and the Shareholders shall have received such
further documents, certifications or instruments relating to the transactions
contemplated hereby as EduLink and the Shareholders may reasonably request.
Section 7
Conditions Precedent to Obligations of URREA
All obligations of URREA under this Plan are subject, at its option, to the
fulfillment, before the Closing, of each of the following conditions:
7.1 Accuracy of Representations. The representations and warranties made by
EduLink and the Shareholders under this Plan were true when made and shall be
true as of the Closing date (except for changes therein permitted by this Plan)
with the same force and effect as if such representations and warranties were
made at and as of the Closing date; and, URREA shall have performed and
complied with all aspects of this Agreement, unless waived or extended in
writing by the parties hereto. URREA shall have been furnished with a
certificate, signed by a duly authorized executive officer of EduLink and dated
the Closing date, to the foregoing effect.
7.2 Officers' Certificate. URREA shall have been furnished with a
certificate dated the Closing date and signed by a duly authorized executive
officer of EduLink, to the effect that no litigation, proceeding, investigation,
claim, deed, or inquiry is pending, or to the best knowledge of EduLink,
threatened, which might result in an action to enjoin or prevent the
consummation of the
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transactions contemplated by this Plan, or which might result in any material
adverse change in the assets, properties, business, or operations of EduLink,
and that this Agreement has been complied with in all material respects. All of
the representations made in this paragraph 7.2 would be subject to the Saatchi
Agreement, attached hereto in Schedule (f) of EduLink, Inc.'s Schedules.
7.3 No Material Adverse Change. Prior to the Closing date, there shall have
not occurred any material adverse change in the financial condition, business or
operations of URREA, nor shall any event have occurred which, with lapse of time
or the giving of notice or both, may cause or create any material adverse change
in the financial condition, business or operations of EduLink, except as
otherwise disclosed to URREA.
7.4 Dissenter's Rights Waived. Shareholders representing one hundred percent
(100%) of the issued and outstanding shares of EduLink, and each of them, have
agreed and hereby waive any dissenters' rights, if any, under the laws of the
State of Nevada in regards to any objection to this Plan as outlined herein and
otherwise consent to and agree and authorize the execution and consummation of
the within Plan in accordance to the terms and conditions to this Plan by
EduLink.
7.5 Other Items. URREA shall have received such further documents,
certifications or instruments relating to the transactions contemplated hereby
as URREA may reasonably request.
7.6 Execution of Investment Letter. The Shareholders shall have executed and
delivered copies of Exhibit B to URREA.
Section 8
Termination
8.1 Termination by EduLink or the Shareholders. This Plan may be terminated
any time prior to the Closing date by action of EduLink or the Shareholders, if
URREA shall fail to comply in any material respect with any of the covenants or
agreements contained in this Plan, or if any of its representations and
warranties contained herein shall be inaccurate in any material respect.
8.2 Termination by URREA. This Plan may be terminated at any time prior to
the Closing date by action of URREA if EduLink shall fail to comply in any
material respect with any of the covenants or agreements contained in this Plan,
or if any of its representations or warranties contained herein shall be
inaccurate in any material respect.
8.3 Termination by Mutual Consent
(a) This Plan may be terminated at any time prior to the Closing date by
mutual consent of URREA, expressed by action of its Board of Directors, EduLink
or the Shareholders.
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(b) If this Plan is terminated pursuant to Section 8, this Plan shall be of
no further force and effect and no obligation, right or liability shall arise
hereunder. Each party shall are its own costs in connection herewith.
Section 9
Shareholders' Representative
The Shareholders hereby irrevocably designate and appoint Michael Rosenfeld,
as their agent and attorney in fact (the "Shareholders' Representative") with
full power and authority until the Closing to executive, deliver and receive on
their behalf all notices, requests and other communications hereunder; to fix
and alter on their behalf the date, time and place of the Closing; to waive,
amend or modify any provisions of this Plan and to take such other action on
their behalf in connection with this Plan, the Closing and the transactions
contemplated hereby as such agent deems appropriate; provided, however, that no
such waiver, amendment or modification may be made if it would decrease the
number of shares to be issued to the Shareholders under Section 1 hereof or
increase the extent of their obligation to URREA hereunder, unless agreed in
writing by the Shareholders.
Section 10
General Provisions
10.1 Further Assurances. At any time, and from time to time, after the
Closing date, each party will execute such additional instruments and take such
action as may be reasonably requested by the other party to confirm or perfect
title to any property transferred hereunder or otherwise to carry out the intent
and purposes of the Plan.
10.2 Consolidated Financial Statements. As soon as practicable after the
closing EduLink and the Shareholders shall cause to have consolidated financial
statements prepared.
10.3 Payments of Costs and Fees. URREA and EduLink shall each bear their own
costs and expenses, including any legal and accounting fees in connection with
the negotiation, execution and consummation of the Plan.
10.4 Press Release and Shareholders' Communications. On the date of Closing,
or as soon thereafter as practicable, EduLink and the Shareholders shall cause
to have promptly prepared and disseminated a news release concerning the
execution and consummation of the Plan, such press release and communication to
be released promptly and within the time required by the laws, rules and
regulations as promulgated by the United States Securities and Exchange
Commission, and concomitant therewith to cause to be prepared a full and
complete letter to URREA's shareholders which shall contain information required
by Regulation 240.14f-a as promulgated under Section 14(f) as mandated under
the Securities and Exchange Act of !934, as amended.
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10.5 Notices. All notices and other communications required or permitted
hereunder shall be sufficiently given if personally delivered, sent by
registered mail, or certified mail, return receipt requested, postage prepaid,
or by facsimile transmission addressed to the following parties hereto or as
such other addresses as follows:
If to URREA: URREA Enterprises, Inc.
417 Agate
Rock Springs, Wyoming 82901
With a copy to: Daniel W. Jackson, Esq.
525 South 300 East
Salt Lake City, Utah 84111
If to EduLink: EduLink, Inc.
450 North Roxbury Drive, Suite 602
Beverly Hills, California 90210
If to the Shareholders: Michael Rosenfeld
450 North Roxbury Drive, Suite 602
Beverly Hills, California 90210
or at such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice of communication shall
be deemed to have been given as of the date so delivered, mailed, sent by
facsimile transmission, or telegraphed.
10.6 Entire Agreement. This Plan represents the entire agreement between the
parties relating to the subject matter hereof, including any previous letters of
intent, understandings, or agreements between URREA, EduLink and the
Shareholders with respect to the subject matter hereof, all of which are hereby
merged into this Plan, which alone fully and completely expresses the agreement
of the parties relating to the subject matter hereof. Excepting the foregoing
agreement, there are no other courses of dealing, understandings, agreements,
representations, or warranties, written or oral, except as set forth herein.
10.7 Governing Law. This Plan shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada, except to the
extent preempted by federal law, in which even (and to that extent only) federal
law shall govern.
10.8 Tax Treatment. The transaction contemplated by this Plan is intended to
qualify as a "tax-free" reorganization under the provisions of Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended. EduLink and URREA
acknowledge, however, that each are being represented by their own tax advisors
in connection with this transaction, and neither has made any representations or
warranties to the other with respect to treatment of such transaction or nay
part of effect thereof under applicable tax laws, regulations or
interpretations; and no attorney's opinion or tax revenue ruling has been
obtained with respect to the tax consequences of the transactions contemplated
by the within Plan.
-18-
<PAGE>
10.10 Amendment of Waiver. Every right and remedy provided herein shall be
cumulative with every other right and remedy, whether conferred herein, at law
or in equity, and may be enforced concurrently or separately, and no waiver by
any party of the performance of any obligation by the other shall be encurred
ass a waiver of the same or any other default than, therefore, or thereafter
occurring or existing. Any time prior to the expiration of thirty (30) days from
the date hereof, this Plan may be amended by a writing signed by all parties
hereto, with respect to any of the terms contained herein, and any term or
condition of this Plan may be waived or time for performance thereof may be
extended by a writing signed by the party or parties for whose benefit the
provision is intended.
10.11 Counterparts. This Plan may be executed in any number of counterparts,
each of which when executed and delivered shall be deemed to be an original, and
all of which together shall constitute one and the same instruments.
10.12 Headings. The section and subsection headings in this Plan are
inserted for convenience only and shall not effect in any way the meaning or
interpretation of the Plan.
10.13 Parties in Interest. Except as may be otherwise expressly provided
herein, all terms and provisions of this Plan shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, beneficiaries,
personal and legal representatives, and assigns.
IN WITNESS WHEREOF, the parties have executed this Plan and Agreement of
Merger effective the day and year first set forth above.
Attest: URREA ENTERPRISES, INC.
/s/ Anita Patten By /s/ Martin Giocoechea
- ---------------- ------------------------
Its President
Attest: EDULINK, INC.
/s/ By /s/ Ronald C. Rescigno
- ---------------- ------------------------
It President
Attest: SHAREHOLDERS
/s/ By /s/ Michael Rosenfeld
- ---------------- ------------------------
-19-
<PAGE>
Attest:
/s/ /s/ Ronald C. Rescigno
- ---------------- ------------------------
Ronald C. Rescigno
Attest: AM-TWO, LLC
/s/ By: /s/ Alan Miller
- ---------------- ------------------------
Alan Miler
Its: Manager
Attest: AM-THREE, LLC
/s/ By: /s/ Alan Miller
- ---------------- ------------------------
Alan Miler
Its: Manager
Attest: AM-FOUR, LLC
/s/ By: /s/ Eric Ellenhorn
- ---------------- ------------------------
Eric Ellenhorn
Its: Manager
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
URREA ENTERPRISES, INC.
We, the undersigned natural persons of the age of eighteen years or more,
acting as incorporators of a corporation under the General Corporation Law of
the State of Nevada, adopt the following Articles of Incorporation for such
corporation.
ARTICLE I
Name
The name of this corporation is URREA Enterprises, Inc.
ARTICLE II
Duration
The duration of this corporation is perpetual.
ARTICLE III
Purpose
The purpose or purposes for which this corporation is organized are:
(a) To engage in any lawful act or activity for which the corporation may
be organized under the general corporation law of Nevada.
(b) To engage in mining and mining development and to do all acts necessary
in connection with said business purpose.
(c) To do each and every thing necessary suitable or proper for the
accomplishment of any of the purposes or the attainment of any one or more of
the subjects herein enumerated or which at any time may appear conductive to or
expedient for the protection
<PAGE>
or benefit of this corporation and to do said acts as fully and to the same
extent as natural persons might or could do in any part of the world; as
principals, agents, partners, trustees or otherwise, either alone or in
conjunction with any other person, association or corporation.
ARTICLE IV
Stock
The Corporation shall have the authority to issue fifty million
(50,000,000) shares of common stock with a par value of $0.001 per share, all
stock of the corporation shall be of the same class common and shall have the
same rights and preferences, fully paid stock of this corporation shall not be
liable to any further call or assessment.
ARTICLE V
Amendment
These Articles of incorporation may be amended by the affirmative vote of a
majority of the shares entitled to vote on each such amendment.
ARTICLE VI
Shareholder Rights
The authorized and treasury stock of this corporation may be issued at such
time, upon such terms and conditions and for such consideration as the Board of
Directors shall determine. Shareholders shall not have pre-emptive rights to
acquire unissued shares of the stock of this corporation and cumulative voting
is denied.
2
<PAGE>
ARTICLE VII
Initial Office and Agent
The address of the initial registered office of the corporation is and the
name of the corporation's initial registered agent at such address is Laughlin
Associates, 2533 North Carson Street, Carson City, Nevada 89706.
ARTICLE VIII
Directors
The number of Directors constituting the initial Board of Directors of this
corporation is three. The name and address of the persons who are to serve as
director until the first annual meeting of stockholders, or until their
successors are elected and qualified are:
Deryl J. Sweat
P.O. Box 1568
Rock Springs, Wyoming 82902
Martin Goicoechea
P.O. Box 6201
Rock Springs, Wyoming 82901
Albert A. Etcheverry
904 Potter Street
Rock Springs, Wyoming 82901
ARTICLE IX
Incorporators
The name and address of each incorporator is:
Deryl J. Sweat
P.O. Box 1568
Rock Springs, Wyoming 82902
Martin Goicoechea
P.O. Box 6201
Rock Springs, Wyoming 82901
3
<PAGE>
Albert A. Etcheverry
904 Potter Street
Rock Springs, Wyoming 82901
ARTICLE X
Common Directors - Transactions Between Corporations
No contract or other transaction between this corporation and one or more
of its directors or any other corporation, firm, association or entity in which
one or more of its directors or officers are financially interested, shall be
either void or voidable because of such relation or interest, or because such
director or directors are present at the meeting of the Board of Directors, or a
committee thereof which authorizes, approves or ratifies such contract or
transaction, or because his or their votes are counted for such purpose if: (a)
the fact of such relationship or interest is disclosed or known to the Board of
Directors or committee which authorizes, approves, or ratifies this contract or
transaction by vote or consent sufficient for the purpose without counting the
votes or consents of such interested directors; or (b) the fact of such
relationship or interest is disclosed or known to the shareholders entitled to
vote and they authorize, approve, or ratify such contract or transaction by vote
or written consent; or (c) the contract or transaction is fair and reasonable to
the corporation.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board or Directors or committee thereof which
authorizes, approves or ratifies such contract or transaction.
4
<PAGE>
ARTICLE XI
LIMITED LIABILITY AND INDEMNIFICATION
OF DIRECTORS AND OFFICERS
No Director of Officer of the corporation shall be personally liable to the
corporation or any of its stockholders for damages for a breach of a fiduciary
duty as a Director or Officer involving any action or omission of any such
Director or Officer; provided, however, that the foregoing provision shall not
eliminate or limit the liability of a Director and Officer of the corporation
for: (a) acts or omission which involve intentional misconduct, fraud or knowing
violation of law or (b) a payment of a dividend in violation of Nevada Revised
Statues Section 78.300.
DATED this ________ day of ________________________, 1993.
/s/ Martin Goicoechea
------------------------------------
/s/ Deryl J. Sweat
------------------------------------
/s/ Albert A. Etcheverry
------------------------------------
STATE OF WYOMING )
) ss
COUNTY OF )
I hereby certify that on the ___________ day of _______________________,
1992, Deryl J. Sweat, Martin Goicoechea, and Albert A. Etcheverry, personally
appeared before me who, being by me first duly sworn, severally declared that
they are the incorporators and that the statements therein contained are true.
DATED this __________ day of ____________________, 1993.
/s/
------------------------------------
NOTARY PUBLIC
5
<PAGE>
EXHIBIT 3.2
ARTICLES OF MERGER FOR
URREA ENTERPRISES, INC.,
A NEVADA CORPORATION
Pursuant to the provisions of Section 92A.200 of the Nevada Revised
Statutes, URREA Enterprises, Inc., a Nevada corporation (the "Corporation"),
hereby adopts and files the following Articles of Merger as the surviving
corporation to the merger of Edulink, Inc., a California corporation
("EduLink"), with and into the Corporation:
FIRST: The name and place of incorporation of each corporation which is a
party to this merger is as follows:
Name: Place of Incorporation
----- ----------------------
URREA Enterprises, Inc. Nevada
EduLink, Inc. California
SECOND: The Agreement and Plan of Merger (the "Plan") governing the merger
between the Corporation and EduLink, Inc., has been adopted by the Board of
Directors of the Corporation and EduLink.
THIRD: The approval of the shareholders of the Corporation and EduLink was
required to effectuate the merger. The number of shares of stock outstanding in
each of the corporations (and the number of votes entitled to be cast) as of
the date of the adoption of the Plan was as follows:
Entity Type of Shares Number of Shares Outstanding
- ------ -------------- ----------------------------
URREA Enterprises, Inc. Common 5,180,450
EduLink, Inc. Common 3,400,000
The number of shares of stock of each corporation which voted for and
against the Plan was as follows:
Entity Type of Shares For Against
- ------ -------------- --- -------
URREA Enterprises, Inc. Common 4,010,000 0
EduLink, Inc. Common 2,912,500 0
FOURTH: The number of votes cast for the Plan by each voting group
entitled to vote was sufficient for approval of the merger by each such voting
group.
FIFTH: Following the merger Article I and Article IV to the Articles of
Incorporation of the surviving corporation shall be amended as follows:
A. Delete Article I in its entirety and substitute in its place
the following:
<PAGE>
ARTICLE I
The name of the Corporation is EduLink, Inc.
B. Delete Article IV in its entirety and substitute in its place
the following:
ARTICLE IV
The amount of the total authorized capital stock of the Corporation
is 1,500,000,000 shares of common stock, par value $.001 per share. Each
share of common stock shall have one (1) vote. Such stock may be issued
from time to time without any action by the stockholders for such
consideration as may be fixed from time to time by the Board of
Directors, and shares so issued, the full consideration for which has
been paid or delivered, shall be deemed the full paid up stock, and the
holder of such shares shall not be liable for any further payment
thereof. Said stock shall not be subject to assessment to pay the debts
of the Corporation, and no paid-up stock and no stock issued as fully
paid, shall ever be assessed or assessable by the Corporation.
The Corporation is authorized to issue 1,500,000,000 shares of common
stock, par value $.001 per share.
SIXTH: The complete executed Plan is on file at the registered office or
other place of business of the Corporation.
SEVENTH: A copy of the Plan will be furnished by the Corporation, on
request and without cost, to any shareholder of either corporation which is a
party to the merger.
EIGHTH: The merger will be effective upon the filing of the Articles of
Merger.
DATED this 27th day of October, 1999.
URREA ENTERPRISES, INC., a Nevada corporation
By /s/ Martin Goicoechea
----------------------------
Martin Goicoechea, President
By /s/ John W. Peters
-----------------------------------
John W. Peters, Secretary/Treasurer
<PAGE>
EXHIBIT 3.3
BY-LAWS
OF
EDULINK, INC.
OFFICES
Section 1. The principal office of the Corporation shall be located at 450
N. Roxbury Drive, Beverly Hills, CA 90210. The corporation may have such other
offices, either within or without the State of Nevada as the Board of Directors
may designate or as the business of the Corporation may require from time to
time.
The registered office of the Corporation required by the Nevada Business
Corporation Act to be maintained in the State of Nevada may be, but need not be,
identical with the principal offices, if any, State of Nevada, and the address
of the registered office may be changed, from time to time, by the Board of
Directors.
ARTICLE II
STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of stockholders shall be held
at the principal office of the Corporation or at such other places on the third
Friday of June or at such other times as the Board of Directors may, from time
to time, determine. If the day so designated falls upon a legal holiday then the
meeting shall be held upon the first day thereafter. The Secretary shall serve
personally or by mail a written notice thereof, not less than ten (10) nor more
than fifty (50) days previous to such meeting,
1
<PAGE>
addressed to each stockholder at his address as it appears on the stock book;
but at any meeting at which all stockholders not present have waived notice in
writing, the giving of notice as above required may be dispensed with.
Section 2. Special Meetings. Special meeting of stockholders other than
those regulated by statute, may be called at any time by a majority of the
Directors. Notice of such meeting stating the place, day and hour and the
purpose for which it is called, shall be served personally or by mail, not less
than ten (10) days before the date set for such meeting. If mailed, it shall be
directed to a stockholder at his address as it appears on the stock book; but at
any meeting at which all stockholders not present have waived notice in writing,
the giving of notice as above described may be dispensed with. The Board of
Directors shall also, in like manner, call a special meeting of stockholders
representing not less than ten percent (10) of the capital stock of the
Corporation entitled to vote at the meeting. The President may in his direction
call a special meeting of stockholders upon ten (10) days notice.
Section 3. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining stockholders entitled to receive notice of or to vote at
any meeting of stockholders or any adjournment thereof, or stockholders entitled
to receive payment of any dividend; or in order to make a determination of
stockholders for nay other proper purpose, the Board of Directors of the
corporation may provide that the stock transfer books shall be closed for at
least ten (10) days immediately preceding such
2
<PAGE>
meeting. In lieu of closing the stock transfer books, the board of Directors may
fix in advance a date as the record date for any such determination of
stockholders, such date in any case to be not more than thirty (30) days, and in
case of a meeting of stockholders, not less than ten (10) days prior to the date
on which the particular action, requiring such determination of stockholders, is
to be taken. If the stock transfer books are not closed, and no record date is
fixed for the determination of stockholders entitled to receive notice of or to
vote at a meeting of stockholders, or stockholders entitled to receive payment
of a dividend, the date on which notice of the meeting is mailed or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination as
to stockholders. When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
Section 4. Voting. At all meetings of the stockholder of record having the
right to vote, subject to the provisions of Section 3, each stockholder of the
Corporation is entitled to one (1) vote for each share of stock having voting
power standing in the name of such stockholder on the books of the Corporation.
Votes may be cast in person or by written authorized proxy.
Section 5. Proxy. Each proxy must be executed in writing by the stockholder
of the Corporation or his duly authorized attorney. Such proxy shall be filed
with the Secretary of the Corporation
3
<PAGE>
before or at the time of the meeting. No proxy shall be valid after the
expiration of eleven (11) months from the date of its execution unless it shall
have specified therein its duration.
Every proxy shall be revocable at the discretion of the person executing it
or of his personal representatives or assigns.
Section 6. Voting of Shares by Certain Holders. Shares standing in the name
of another corporation may be voted by such officer, agent or proxy as the
by-laws of such corporation may prescribe, or, in the absence of such provision,
as the Board of Directors of such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may be
voted by him either in person or by proxy without a transfer of such shares into
his name. Shares tending in the name of a trustee may be voted by him either in
person or by proxy, but no trustee shall be entitled to vote shares held by him
without a transfer of such shares into his name.
Shares standing in the name of a receiver may be bored by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority so to do be
contained in an appropriate order of the Court by which such receiver was
appointed.
A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledge shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the Corporation or held
4
<PAGE>
by it in a fiduciary capacity shall not be voted, directly or indirectly, at any
meeting, and shall not be counted in determining the total number of outstanding
shares at any given time.
Section 7. Election of Directors. At each election for Directors, every
stockholder entitled to vote at such election shall have the right to vote, in
person or by proxy, the number of shares owned by him.
Section 8. Quorum. A majority of the outstanding shares of the Corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of the stockholders.
If a quorum shall not be present or represented, the stockholders entitled
to vote thereat, present in person or by proxy, shall have the power to adjourn
the meeting, from time to time, until the quorum shall be present or
represented. At such rescheduled meeting at which a quorum specified item of
business may be transacted which might have been transacted at the meeting as
originally notified.
The number of votes or consents of the holders of any class of stock having
voting power which shall be necessary for the transaction of any business or any
specified item of business at any meeting of stockholders, or the giving of any
consent, shall be a majority of the outstanding shares of the Corporation
entitled to vote, represented in person or by proxy.
Section 9. Informal Action by Stockholders. Any action required to be taken
at a meeting of the stockholders, or any other action which may be taken at a
meeting of the stockholders, may be
5
<PAGE>
taken at a meeting if a consent in writing setting forth the action so taken
shall be signed by all of the stockholders entitled to vote with respect to the
subject matter thereof.
ARTICLE III
DIRECTORS
Section 1. Number. The affairs and business of this Corporation shall be
managed by a Board of Directors. The first Board of Directors shall consist of
three (3) members. Thereafter the number of directors may be increased to not
more than nine (9) by resolution of the Board of Directors. Directors need not
be residents of the State of Utah and need not be stockholders of the
Corporation.
Section 2. Election. The Directors shall be elected at each annual meeting
of the stockholders, but if any such annual meeting is not held, or the
Directors are not elected thereat, the Directors may be elected at any special
meeting of the Stockholders held for that purpose.
Section 3. Term of Office. The term of office of each of the Directors
shall be one (1) year, which shall continue until his successor has been elected
and qualified.
Section 4. Duties. The Board of Directors shall have the control and
general management of the affairs and business of the Corporation. Such
Directors shall in all cases act as a Board, except as herein provided in
Section 1, regularly convened, by a majority, and may adopt such rules and
regulations for the conduct of meetings and the management of the Corporation,
as may be deemed
6
<PAGE>
proper, so long as it is not inconsistent with these Bylaws and the Laws of the
State of Utah.
Section 5. Directors' Meetings. Regular meetings of the Board of Directors
shall be held immediately following the annual meeting of the stockholders, and
at such other time and places as the Board of Directors may determine. Special
meetings of the Board of Directors may be called by the President or the
Secretary upon the written request of two 2) Directors.
Section 6. Notice of Meetings. Notice of meetings other than the regular
annual meeting shall be given by service upon each Director in person, or by
mailing to him at his last known address, at least three (3) days before the
date therein designated for such meeting, including the day of mailing, of a
written or printed notice thereof specifying the time and place of such meeting,
and the business to be brought before the meeting, and no business other than
that specified in such notice shall be transacted at any special meeting. At any
Directors' meeting at which a quorum of the Board of Directors shall be present
(although held without notice), any and all business may be transacted which
might have been transacted if the meeting had been duly called if a quorum of
the Directors waive or are willing to waive the notice requirements of such
meeting.
Any Directors may waive notice of any meeting under the provisions of
Article XII. The attendance of a Director at a meeting shall constitute a waiver
of notice of such meeting except where a Director attends a meeting for the
express purpose of
7
<PAGE>
objecting to the transaction of any business because the meeting is not lawfully
convened or called.
Section 7. Voting. At all meetings of the Board of Directors, each Director
is to have one (1) vote. The act of a majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors.
Section 8. Vacancies. Vacancies in the board occurring between annual
meetings shall be filled for the unexpired portion of the term by a majority of
the remaining Directors.
Section 9. Removal of Directors. Any one or more of the Directors may be
removed, with or without cause, at any time, by a vote of the stockholders
holding a majority of the stock, at any special meeting called for that purpose.
Section 10. Quorum. The number of Directors who shall be present at any
meeting of the board of directors in order to constitute a quorum for the
transaction of any business or any specified item of business shall be a
majority.
The number or votes of directors that shall be necessary for the
transaction of any business of any specified item of business at any meeting of
the Board of Directors shall be a majority.
If a quorum shall not be present at any meeting of the board of directors,
those present may adjourn the meeting, from time to time, until a quorum shall
be present.
Section 11. Executive Committee. By resolution of the Board of Directors
and at their option, the Directors may designate an Executive Committee which
includes at least three (3) Directors, to
8
<PAGE>
manage and direct the daily affairs of the Corporation. Said Executive Committee
shall have and may exercise all of the authority that is vested in the Board of
Directors as if the Board of Directors were regularly convened, except that the
Executive Committee shall not have authority to amend these By-Laws.
At all meetings of the Executive Committee, each member of said committee
shall have one (1) vote and the act of a majority of the members present at a
meeting at which a quorum is present shall be the act of the Executive
Committee.
The number of Executive Committee members who shall be present at any
meeting of the Executive Committee in order to constitute a quorum for the
transaction of business or any specified item of business shall be a majority.
The number of votes of Executive Committee members that shall be necessary
for the transaction of any business or any specified item of business at any
meeting of the Executive Committee shall be a majority.
Section 12. Compensation. By resolution of the Board of Directors, the
Directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors or each may be paid a stated salary as Director. No such
payment shall preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 13. Presumption of Assent. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed
9
<PAGE>
to have assented to the action taken unless his dissent is entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
Secretary of the Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a Director who voted in favor of such
action.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be: President,
Vice-President, Secretary, and Treasurer, and such assistant Secretaries as the
President shall determine. An officer may hold more than one (1) office.
Section 2. Election. All officers of the Corporation shall be elected
annually by the Board of Directors at its meeting held immediately following the
meeting of the stockholders, and shall hold office for the term of one (1) year
or until their successors are duly elected. Officers need not be members of the
Board of Directors.
The Board may appoint such other officers, agents and employees as it shall
deem necessary who shall have such authority and shall perform such duties as,
from time to time, shall be prescribed by the Board.
Section 3. Duties of Officers. The duties and powers of the officers of the
Corporation shall be as follows:
10
<PAGE>
PRESIDENT
The President shall, when present, preside at all meetings of the
stockholders and Directors. He shall present at each annual meeting of the
stockholders and Directors, a report of the condition of the business of the
Corporation. He shall cause to be called regular and special meetings of the
stockholders and Directors in accordance with these Bylaws. He shall appoint and
remove, employ and discharge, and fix the compensation of all agents, employees,
and clerks of the corporation other than the duly appointed officers, subject to
the approval of the Board of Directors. He shall sign and make all contracts and
agreements in the name of the Corporation, subject to the approval of the Board
of Directors. He shall see that the books, reports, statements and certificates
required by the statutes are properly kept, made and filed according to law. He
shall sign all certificates of stock, notes, drafts, or bills of exchange,
warrants or other orders for the payment of money duly drawn by the Treasurer;
and he shall enforce these By-laws and perform all the duties incident to the
position and office, and which are required by law.
VICE PRESIDENT
During the absence or inability of the President to render and perform his
duties or exercise his powers, as set forth in these Bylaws or in the acts under
which the Corporation is organized, the same shall be performed and exercised by
the Vice-President; and when so acting, he shall have all the powers and be
subject to all the responsibilities hereby given to or imposed upon such
President.
11
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SECRETARY
The Secretary shall keep the minutes of the meetings of the Board of
Directors and of the stockholders in appropriate books, provided for that
purpose. He shall give and serve all notices of the Corporation. He shall be
custodian of the records and of the corporate seal and affix the latter when
required. He shall keep the stock and transfer books in the manner prescribed
By-laws, so as to show at all times the amount of capital stock issued and
outstanding; the manner and the time compensation for the same was paid; the
names of the owners thereof, alphabetically arranged; the number of shares owned
by each; the time at which each person became such owner; and the amount paid
thereon; and keep such stock and transfer books open daily during the business
hours of the office of the corporation, subject to the inspection of any
stockholder of the corporation, and permit such stockholder to make extracts
from said books to the extent prescribed by law. He shall sign all certificates
of stock. He shall present to the Board of Directors their stated meetings all
communications addressed to him officially by the President or any officer or
stockholder of the Corporation; and he shall attend to all correspondence and
perform all the duties incident to the office of Secretary.
TREASURER
The Treasurer shall have the care and custody of and be responsible for all
the funds and securities of the Corporation, and deposit all such funds in the
name of the Corporation in such
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<PAGE>
bank or banks, trust company or trust companies or safe deposit vaults as the
Board of Directors may designate. He shall exhibit at all reasonable times his
books and accounts to any Director or stockholder of the Corporation upon
application at the office of the Corporation during business hours. He shall
render a statement of the conditions of the finances of the Corporation at each
regular meeting of the Board of Directors, and at such other times as shall be
required of him, and a full financial report at the annual meeting of the
Stockholders. He shall keep, at the office of the Corporation, correct books of
account of all its business and transactions and such other books of account as
the Board of Directors may require. He shall do and perform all duties
appertaining to the office of Treasurer. The Treasurer shall, if required by the
Board of Directors, give to the Corporation such security or bond for the
Faithful discharge of his duties as the Board may direct. He shall perform such
other duties as from time to time may be assigned to him by the President or by
the Directors.
Section 4. Bond. The Treasurer shall, if required by the Board of
Directors, give to the Corporation such security for the faithful discharge of
his duties as the board may direct.
Section 5. Vacancies. How Filled. All vacancies in any office shall be
filled by the Board of Directors without undue delay, either at its regular
meeting or at a meeting specifically called for that purpose. In the case of the
absence of any officer of the Corporation or for any reason that the Board of
Directors
13
<PAGE>
may deem sufficient, the Board may, except as specifically otherwise provided in
these By-laws, delegate the power or duties of such officers to any other
officer or Director for the time being; provided, a majority of the entire Board
concur therein.
Section 6. Compensation of Officers. The officers shall receive such salary
or compensation as may be determined by the Board of Directors.
Section 7. Removal of Officers. The Board of Directors may remove any
officer, by a majority vote, at any time with or without cause.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Description of Stock Certificates. The certificates of stock
representing shares shall be in such form as shall be determined by the
Directors and shall be numbered and registered in the order in which they are
issued. They shall be bound in a book and shall be issued in consecutive order
therefrom, and in the margin thereof shall be entered the name of the person
owing the shares therein represented, with the number of shares and the date
thereof. Such certificates shall exhibit the holder's name, number of shares and
date of issue. They shall be signed by the President or Vice-President, and
countersigned by the Secretary or Treasurer and sealed with the Seal of the
Corporation.
Section 2. Transfer of Stock. The stock of the Corporation shall be
assignable and transferable on the books of the Corporation only by the person
in whose name it appears on said
14
<PAGE>
books, his legal representatives or by his duly authorized agent. In case of
transfer by attorney, the power of attorney, duly executed and acknowledged,
shall be deposited with the secretary. In all cases of transfer, the former
certificate must be surrendered up and canceled before a new certificate may be
issued. No transfer shall be made upon the books of the corporation within ten
(10) days next preceding the annual meeting of the stockholders.
Section 3. Lost Certificates. If a stockholder shall claim to have lost or
destroyed a certificate or certificates of stock issued by the Corporation, the
Board of Directors may, at its discretion, direct a new certificate or
certificates to be issued, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost or destroyed, and upon the
deposit of a bond or other indemnity in such form and with such securities if
any that the Board may require.
ARTICLE VI
SEAL
Section 1. Seal. The seal of the Corporation shall be as follows:
ARTICLE VII
DIVIDENDS
Section 1. When Declared. The Board of Directors shall by vote declare
dividends from the surplus profits of the Corporation whenever, in their
opinion, the condition of the Corporation's
15
<PAGE>
affairs will render it expedient for such dividends to be declared.
Section 2. Reserve. The Board of Directors may set aside, out of the net
profits of the Corporation available for dividends, such sum or sums (before
payment of dividends) as the Board, in their absolute discretion, think proper
as a reserve fund, to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the Directors shall think conducive to the interest of the
Corporation, and they may abolish or modify any such reserve in the manner which
it was created.
ARTICLE VIII
INDEMNIFICATION
Section 1. Any person made a party to or involved in any civil, criminal or
administrative action, suit or proceeding by reason of the fact that he or his
testator or intestate is or was a Director, officer, or employee of the
Corporation, or of any corporation which he, the testator, or intestate served
as such at the request of the Corporation, shall be indemnified by the
Corporation against expenses reasonably incurred by him or imposed on him in
connection with or resulting from the defense of such action, suit, or
proceeding and in connection with or resulting from any appeal thereon, except
with respect to matters as to which it iS adjudged in such action, suit or
proceeding that such officer, Director, or employee was liable to the
Corporation, or tO such other corporation, for negligence of misconduct in the
performance of his duty. As used herein the term "expense" shall
16
<PAGE>
include all obligations incurred by such person for the payment of money,
including without limitation, attorney's fees, judgments, awards, fines,
penalties, and amounts paid in satisfaction of judgment or in settlement of any
such action, suit, or proceedings, except amounts paid to the Corporation or
such other corporation by him.
A judgment or conviction whether based on plea of guilty or nolo contendere
or its equivalent, or after trial, shall not of itself be deemed an adjudication
that such Director, officer or employee is liable to the Corporation, or such
other corporation, for negligence of misconduct in the performance of his
duties. Determination of the rights of such indemnification and the amount
thereof may be made at the option of the person to be indemnified pursuant to
procedure set forth, from time to time, in the By-laws or by any of the
following procedures:
a) order of the Court or administrative body or agency having jurisdiction
on the action, suit, or proceeding
b) resolution adopted by a majority of the quorum of the Board of Directors
of the Corporation without counting in such majority any Directors who
have incurred expenses in connection with such action, suit or
proceeding
c) if there is no quorum of Directors who have not incurred expense in
connection with such action, suit, or proceeding, then by resolution
adopted by a majority of the committee of stockholders and Directors who
have not incurred such expenses appointed by the Board of Directors
d) resolution adopted by a majority of the quorum of the Directors entitled
to vote at any meeting; or
e) order of any Court having jurisdiction over the Corporation.
Any such determination that a payment by way of
17
<PAGE>
indemnification should be made will be binding upon the Corporation. Such right
of indemnification shall not be exclusive of any other right which such
Directors, officers and employees of the Corporation and other person above
mentioned may have or hereafter acquire, and without limiting the generality of
such statement, they shall be entitled to their respective rights of
indemnification under any By-law, Agreement, vote of stockholders, provision of
law, or otherwise in addition to their rights under this Article. The provisions
of this Article shall apply to any member of any committee appointed by the
Board of Directors as fully as though each person had been Director, officer or
employee of the Corporation.
ARTICLE X
AMENDMENTS
Section 1. How Amended. These By-laws may be altered, amended, repealed or
added to by the vote of the Board of Directors of the Corporation at any regular
meeting of said Board, or at a special meeting of Directors called for that
purpose, provided a quorum of the Directors as provided by law and by the
Articles of Incorporation, are present at such regular meeting or special
meeting. These By-laws and amendments thereto and new By-laws added by the
Directors may be amended, altered or replaced by the stockholders at any annual
or special meeting of the stockholders.
ARTICLE XI
FISCAL YEAR
Section 1. Fiscal Year. The fiscal year shall begin January 1 and end
December 31.
18
<PAGE>
ARTICLE XII
WAIVER OF NOTICE
Section 1. Whenever any notice is required to be given to any shareholders
or Directors of the Corporation under the provisions of these By-laws or under
the Articles of Incorporation under the provisions of the Nevada Business
Corporation Act, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.
19
EXHIBIT 4.1
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE. THIS WARRANT MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED AND SUCH REGISTRATION OR QUALIFICATION
AS MAY BE NECESSARY UNDER THE SECURITIES LAWS OF ANY STATE, OR AN OPTION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR QUALIFICATION IS
NOT REQUIRED.
Warrant No. ______ _______ Shares
FORM OF COMMON STOCK PURCHASE WARRANT
EDULINK, INC.
[DATE]
EduLink, Inc., a California corporation (the "Company"), for value
received hereby grants to Michael Rosenfeld, an individual, or his registered
assigns ("Holder") under the terms herein, the right to purchase _______ shares
of the Company's common stock (the "Common Stock") for $____ per share (the
"Exercise Price"). (The Common Stock acquirable upon exercise hereof is
referred to herein as the "Warrant Shares.")
1. Term of Warrant. This Common Stock Purchase Warrant ("Warrant") may be
exercised at any time commencing on the date hereof until the seventh
anniversary of the date hereof.
2. Reservation of Common Stock. The Company agrees that the number of
Warrant Shares sufficient to provide for the exercise of this Warrant upon the
basis set forth herein shall at all times during the term of this Warrant be
reserved for the exercise thereof.
3. Manner of Exercise. This Warrant may be exercised in whole or in part
by surrendering this certificate, with the exercise form attached, duly
executed by the Warrant Holder or by the Warrant Holder's duly authorized
attorney, accompanied by payment of the Exercise Price for the Warrant shares
to be acquired, which payment shall be made in cash or bank cashier's or
certified check at the principal office of the Company or its designated
assign. The date on which this Warrant is thus surrendered accompanied by
tender of payment of the Exercise Price, is referred to as the "Exercise Date."
<PAGE>
4. Issuance of Common Stock Upon Exercise. The Company shall cause to be
issued, within ten (10) days after the Exercise Date, a certificate or
certificates in the name requested by the Warrant Holder of the number of
Warrant Shares to which the Warrant Holder is entitled upon such exercise. All
Warrant Shares delivered upon the exercise of this Warrant shall be validly
issued, fully paid and non-assessable. Irrespective of the date of issuance and
delivery of any Warrant Shares upon the exercise of this Warrant, each person
in whose name any such certificate evidencing Warrant Shares is to be issued
shall be deemed to have become the holder of record of such Warrant Shares on
the Exercise date.
5. Sale of Warrant or Shares. Neither this Warrant nor the Warrant Shares
issuable upon exercise of this Warrant, have been registered under the
Securities Act of 1933 as amended (the "Act"), or under the securities laws of
any state. Neither this Warrant nor any warrant Shares when issued may be sold,
transferred, pledged, or hypothecated in the absence of (i) an effective
registration statement for this Warrant or the Warrant Shares, as the case may
be, under the Act and such registration or qualification as may be necessary
under the securities laws of any state, or (ii) an opinion of counsel
reasonably satisfactory to the Company that such registration or qualification
is not required. The Company shall cause each certificate evidencing Warrant
Shares issued upon exercise of this Warrant prior to said registration and
qualification to bear the following legend: "THE SHARES EVIDENCED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED OR UNDER THE SECURITIES LAWS OF ANY STATE. THE SHARES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND SUCH REGISTRATION OR QUALIFICATION AS
MAY BE NECESSARY UNDER THE SECURITIES LAWS OF ANY STATE, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR QUALIFICATION IS
NOT REQUIRED."
6. Transfer. This Warrant shall be registered on the books of the Company
which shall be kept at its principal office for that purpose, and shall be
transferable only on such books by the Warrant Holder in person or by duly
authorized attorney with written notice, and only in compliance with the
preceding paragraph. The Company may issue appropriate stop orders to its
tranfer agent to prevent a transfer in violation of the preceding section.
7. Piggyback Registration. If the Company conducts an initial public
offering of its Common Stock registered under the Act, the Company shall give
thirty (30) days prior written notice thereof to the Warrant Holder and shall,
upon written request of the Warrant Holder, include in the registration
statement such number of Warrant Shares as Holder may request, subject to
reasonable limitations imposed by the underwriter of the offering who may
determine to exclude some or all of the Warrant Shares on the same basis as
securities owned by other holders of stock, warrants or options of the Company
who request registration of their securities under registration rights granted
prior to the date of this Warrant. Such inclusion, in any event, shall be at
2.
<PAGE>
no cost to the Warrant Holder (other than payment of any underwriting fees,
discounts or commissions with respect to the Warrant Shares included in such
registration which shall be paid by the Warrant Holder) and shall be at the
sole cost and expense of the Company. In connection with any notification or
registration statement, the Company shall take any reasonable steps to make the
securities covered thereby eligible for public offering and sale by the
effective date of such registration statement. In connection with any such
registration, the Company shall bear all the expenses and professional fees
(excluding underwriting discounts and commission with respect to the Warrant
Shares) which arise in connection with such filing and keeping the registration
statement effective and correct and shall provide the Company with a reasonable
number of printed copies of the prospectus in final and preliminary form.
8. Adjustment. The number of Warrant Shares issuable upon the exercise of
this Warrant is subject to adjustment if the Company shall, prior to any
exercise of this Warrant, effect one or more stock splits, stock dividends, or
other increases or reductions in the number of shares of common Stock
outstanding.
(a) The Exercise Price and the number of Warrant Shares to be issued
upon exercise of this Warrant shall be adjusted as follows.
(i) If at any time after the date hereof the number of shares of
Common Stock outstanding is increased by a stock dividend payable in shares of
Common Stock or by a subdivision or split-up of shares of Common Stock, then,
on the record date of such stock dividend, subdivision or split-up, the
Exercise Price shall be appropriately decreased and the number of shares of
Common Stock issuable on exercise of this Warrant shall be appropriately
increased in proportion to such increase of outstanding shares;
(ii) If at any time after the date hereof the number of shares of
Common Stock outstanding is decreased by a combination of the outstanding
shares of Common Stock, then, on the effective date of such combination, the
Exercise Price shall be appropriately increased and the number of shares of
Common Stock issuable on exercise of this Warrant shall be appropriately
decreased in proportion to such decrease in outstanding shares.
(b) All calculations under this Section 10 shall be made to the nearest
cent or to the nearest one hundredth (1/100) of a share, as the case may be. No
fractional shares of Common Stock shall be issued upon exercise of this
Warrant. Any fractional shares of Common Stock which might otherwise be issued
upon exercise of this Warrant shall be rounded to the nearest whole share (with
one-half rounded up).
(c) If the Exercise Price shall be adjusted, the Company shall prepare
and mail to the holder hereof a certificate setting forth the event requiring
the adjustment, the amount of the adjustment, the method by which the
adjustment was calculated, and (after giving effect to the adjustment) the
Exercise Price.
3.
<PAGE>
9. No Rights as Stockholder. The Warrant Holder is not, by virtue of its
ownership of this Warrant, entitled to any rights whatsoever as a stockholder
of the Company.
10. Governing Laws. This Warrant shall be construed according to the laws
of the State of California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on
its behalf.
EDULINK, INC.
By:
----------------------
MICHAEL ROSENFELD, CEO
4.
<PAGE>
AMENDMENT TO COMMON STOCK PURCHASE
WARRANT - EDULINK, INC.
Reference is made to the Common Stock Purchase Warrant issued to Michael
Rosenfeld ("Holder") by Company (the "Warrant"). Notwithstanding the provisions
of the Warrant to the contrary, the Exercise Price and the number of securities
purchasable upon the exercise of the Warrants shall be adjusted in the
following manner upon the happening of the following event in lieu of any other
adjustment described in the Warrant to which this Amendment relates:
If the Company shall consummate a merger within one hundred twenty (120)
days following the date hereof (the "Merger") into URREA, Inc. (the "Surviving
Corporation") whereby the Surviving Corporation issues its shares of common
stock ("common stock") to Company's shareholders in exchange for the shares of
Company's common stock held by such shareholders, then:
(i) The Warrant shall, immediately upon the effective date of such
Merger, entitle the Holder to purchase shares of the common stock
of the Surviving Corporation from the Surviving Corporation; and
(ii) The Exercise Price in effect on the date hereof shall be adjusted so
that it shall equal the price determined by multiplying the Exercise
Price in effect on the date hereof by a fraction, the denominator of
which shall be the number of shares of the Surviving Corporation's
common stock issued to the shareholders of Company pursuant to the
Merger, and the numerator of which shall be the number of shares of
Company's Common Stock outstanding immediately prior to the
effective date of the Merger;
(iii) Whenever the Exercise Price payable upon exercise of each Warrant is
adjusted pursuant to (ii) above, the number of shares of the
Surviving Corporation's common stock purchasable upon exercise of
the Warrants shall simultaneously be adjusted by multiplying the
number of shares of Company's Common Stock initially issuable upon
exercise of the Warrants by the Exercise Price in effect on the date
hereof and dividing the product so obtained by the Exercise Price,
as adjusted.
(iv) Notwithstanding any above-described adjustments, certificates for
Warrants issued prior to such adjustment may continue to express
<PAGE>
the same price and number and kind of shares of Company's Common
Stock as are initially issuable pursuant to this Warrant;
(v) The Surviving Corporation shall not be required to issue fractional
shares upon the exercise of this Warrant.
Following the effective date of the Merger, the Exercise Price and the
number of shares purchasable upon exercise of the Warrants, as adjusted
pursuant to the provisions hereof, shall be subject to those subsequent
adjustments required by the provisions of the Warrant as a result of an
applicable corporate action which occurs following the effective date of the
Merger.
IN WITNESS WHEREOF, EduLink, Inc. has caused this Amendment to the
Warrants to be signed by its duly authorized officer and is dated as of
September 15, 1999.
EDULINK, INC.
By: /s/ Michael Rosenfeld
------------------------
MICHAEL ROSENFELD, CEO
2.
<PAGE>
EXHIBIT 4.2
AMENDMENT
Reference is made to the following Common Stock Purchase Warrants
(hereinafter collectively referred to as "Warrants") issued by EduLink, Inc. to
Michael Rosenfeld ("Holder") as of August 15, 1997:
(1) One Common Stock Purchase Warrants, each of which grants to the Holder
the right to purchase 100,000 Warrant Shares (as such term is defined
in such Warrants) at a per share Exercise Price (as such term is
defined in such Warrants) of $3.50;
(2) One Common Stock Purchase Warrants, each of which grants to the Holder
the right to purchase 200,000 Warrant Shares at a per share Exercise
Price of $5.00;
(3) One Common Stock Purchase Warrants, each of which grants to the Holder
the right to purchase 200,000 Warrant Shares at a per share Exercise
Price of $7.00.
Notwithstanding the provisions of the Warrants to the contrary, Company
agrees that the Exercise Price of each Warrant described herein shall be
reduced to Twenty Five Cents ($.25) per share, effective as of the date hereof.
IN WITNESS WHEREOF, EduLink, Inc. has caused this Amendment to the
Warrants to be signed by its duly authorized officer and is dated as of
September 15, 1999.
EDULINK, INC.
By: /s/ Michael Rosenfeld
-----------------------
MICHAEL ROSENFELD, CEO
<PAGE>
EXHIBIT 4.3
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE. THIS WARRANT MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED AND SUCH REGISTRATION OR QUALIFICATION
AS MAY BE NECESSARY UNDER THE SECURITIES LAWS OF ANY STATE, OR AN OPTION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR QUALIFICATION IS
NOT REQUIRED.
Warrant No. ______ _______ Shares
FORM OF COMMON STOCK PURCHASE WARRANT
EDULINK, INC.
[DATE]
EduLink, Inc., a California corporation (the "Company"), for value
received hereby grants to Ronald C. Rescigno, an individual, or his registered
assigns ("Holder") under the terms herein, the right to purchase _______ shares
of the Company's common stock (the "Common Stock") for $____ per share (the
"Exercise Price"). (The Common Stock acquirable upon exercise hereof is
referred to herein as the "Warrant Shares.")
1. Term of Warrant. This Common Stock Purchase Warrant ("Warrant") may be
exercised at any time commencing on the date hereof until the seventh
anniversary of the date hereof.
2. Reservation of Common Stock. The Company agrees that the number of
Warrant Shares sufficient to provide for the exercise of this Warrant upon the
basis set forth herein shall at all times during the term of this Warrant be
reserved for the exercise thereof.
3. Manner of Exercise. This Warrant may be exercised in whole or in part
by surrendering this certificate, with the exercise form attached, duly
executed by the Warrant Holder or by the Warrant Holder's duly authorized
attorney, accompanied by payment of the Exercise Price for the Warrant shares
to be acquired, which payment shall be made in cash or bank cashier's or
certified check at the principal office of the Company or its designated
assign. The date on which this Warrant is thus surrendered accompanied by
tender of payment of the Exercise Price, is referred to as the "Exercise Date."
<PAGE>
4. Issuance of Common Stock Upon Exercise. The Company shall cause to be
issued, within ten (10) days after the Exercise Date, a certificate or
certificates in the name requested by the Warrant Holder of the number of
Warrant Shares to which the Warrant Holder is entitled upon such exercise. All
Warrant Shares delivered upon the exercise of this Warrant shall be validly
issued, fully paid and non-assessable. Irrespective of the date of issuance and
delivery of any Warrant Shares upon the exercise of this Warrant, each person
in whose name any such certificate evidencing Warrant Shares is to be issued
shall be deemed to have become the holder of record of such Warrant Shares on
the Exercise date.
5. Sale of Warrant or Shares. Neither this Warrant nor the Warrant Shares
issuable upon exercise of this Warrant, have been registered under the
Securities Act of 1933 as amended (the "Act"), or under the securities laws of
any state. Neither this Warrant nor any warrant Shares when issued may be sold,
transferred, pledged, or hypothecated in the absence of (i) an effective
registration statement for this Warrant or the Warrant Shares, as the case may
be, under the Act and such registration or qualification as may be necessary
under the securities laws of any state, or (ii) an opinion of counsel
reasonably satisfactory to the Company that such registration or qualification
is not required. The Company shall cause each certificate evidencing Warrant
Shares issued upon exercise of this Warrant prior to said registration and
qualification to bear the following legend: "THE SHARES EVIDENCED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED OR UNDER THE SECURITIES LAWS OF ANY STATE. THE SHARES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND SUCH REGISTRATION OR QUALIFICATION AS
MAY BE NECESSARY UNDER THE SECURITIES LAWS OF ANY STATE, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR QUALIFICATION IS
NOT REQUIRED."
6. Transfer. This Warrant shall be registered on the books of the Company
which shall be kept at its principal office for that purpose, and shall be
transferable only on such books by the Warrant Holder in person or by duly
authorized attorney with written notice, and only in compliance with the
preceding paragraph. The Company may issue appropriate stop orders to its
tranfer agent to prevent a transfer in violation of the preceding section.
7. Piggyback Registration. If the Company conducts an initial public
offering of its Common Stock registered under the Act, the Company shall give
thirty (30) days prior written notice thereof to the Warrant Holder and shall,
upon written request of the Warrant Holder, include in the registration
statement such number of Warrant Shares as Holder may request, subject to
reasonable limitations imposed by the underwriter of the offering who may
determine to exclude some or all of the Warrant Shares on the same basis as
securities owned by other holders of stock, warrants or options of the Company
who request registration of their securities under registration rights granted
prior to the date of this Warrant. Such inclusion, in any event, shall be at
2.
<PAGE>
no cost to the Warrant Holder (other than payment of any underwriting fees,
discounts or commissions with respect to the Warrant Shares included in such
registration which shall be paid by the Warrant Holder) and shall be at the
sole cost and expense of the Company. In connection with any notification or
registration statement, the Company shall take any reasonable steps to make the
securities covered thereby eligible for public offering and sale by the
effective date of such registration statement. In connection with any such
registration, the Company shall bear all the expenses and professional fees
(excluding underwriting discounts and commission with respect to the Warrant
Shares) which arise in connection with such filing and keeping the registration
statement effective and correct and shall provide the Company with a reasonable
number of printed copies of the prospectus in final and preliminary form.
8. Adjustment. The number of Warrant Shares issuable upon the exercise of
this Warrant is subject to adjustment if the Company shall, prior to any
exercise of this Warrant, effect one or more stock splits, stock dividends, or
other increases or reductions in the number of shares of common Stock
outstanding.
(a) The Exercise Price and the number of Warrant Shares to be issued
upon exercise of this Warrant shall be adjusted as follows.
(i) If at any time after the date hereof the number of shares of
Common Stock outstanding is increased by a stock dividend payable in shares of
Common Stock or by a subdivision or split-up of shares of Common Stock, then,
on the record date of such stock dividend, subdivision or split-up, the
Exercise Price shall be appropriately decreased and the number of shares of
Common Stock issuable on exercise of this Warrant shall be appropriately
increased in proportion to such increase of outstanding shares;
(ii) If at any time after the date hereof the number of shares of
Common Stock outstanding is decreased by a combination of the outstanding
shares of Common Stock, then, on the effective date of such combination, the
Exercise Price shall be appropriately increased and the number of shares of
Common Stock issuable on exercise of this Warrant shall be appropriately
decreased in proportion to such decrease in outstanding shares.
(b) All calculations under this Section 10 shall be made to the nearest
cent or to the nearest one hundredth (1/100) of a share, as the case may be. No
fractional shares of Common Stock shall be issued upon exercise of this
Warrant. Any fractional shares of Common Stock which might otherwise be issued
upon exercise of this Warrant shall be rounded to the nearest whole share (with
one-half rounded up).
(c) If the Exercise Price shall be adjusted, the Company shall prepare
and mail to the holder hereof a certificate setting forth the event requiring
the adjustment, the amount of the adjustment, the method by which the
adjustment was calculated, and (after giving effect to the adjustment) the
Exercise Price.
3.
<PAGE>
9. No Rights as Stockholder. The Warrant Holder is not, by virtue of its
ownership of this Warrant, entitled to any rights whatsoever as a stockholder
of the Company.
10. Governing Laws. This Warrant shall be construed according to the laws
of the State of California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on
its behalf.
EDULINK, INC.
By:
----------------------
MICHAEL ROSENFELD, CEO
4.
<PAGE>
AMENDMENT TO COMMON STOCK PURCHASE
WARRANT - EDULINK, INC.
Reference is made to the Common Stock Purchase Warrant issued to Ronald C.
Rescigno ("Holder") by Company (the "Warrant"). Notwithstanding the provisions
of the Warrant to the contrary, the Exercise Price and the number of securities
purchasable upon the exercise of the Warrants shall be adjusted in the
following manner upon the happening of the following event in lieu of any other
adjustment described in the Warrant to which this Amendment relates:
If the Company shall consummate a merger within one hundred twenty (120)
days following the date hereof (the "Merger") into URREA, Inc. (the "Surviving
Corporation") whereby the Surviving Corporation issues its shares of common
stock ("common stock") to Company's shareholders in exchange for the shares of
Company's common stock held by such shareholders, then:
(i) The Warrant shall, immediately upon the effective date of such
Merger, entitle the Holder to purchase shares of the common stock
of the Surviving Corporation from the Surviving Corporation; and
(ii) The Exercise Price in effect on the date hereof shall be adjusted so
that it shall equal the price determined by multiplying the Exercise
Price in effect on the date hereof by a fraction, the denominator of
which shall be the number of shares of the Surviving Corporation's
common stock issued to the shareholders of Company pursuant to the
Merger, and the numerator of which shall be the number of shares of
Company's Common Stock outstanding immediately prior to the
effective date of the Merger;
(iii) Whenever the Exercise Price payable upon exercise of each Warrant is
adjusted pursuant to (ii) above, the number of shares of the
Surviving Corporation's common stock purchasable upon exercise of
the Warrants shall simultaneously be adjusted by multiplying the
number of shares of Company's Common Stock initially issuable upon
exercise of the Warrants by the Exercise Price in effect on the date
hereof and dividing the product so obtained by the Exercise Price,
as adjusted.
(iv) Notwithstanding any above-described adjustments, certificates for
Warrants issued prior to such adjustment may continue to express
<PAGE>
the same price and number and kind of shares of Company's Common
Stock as are initially issuable pursuant to this Warrant;
(v) The Surviving Corporation shall not be required to issue fractional
shares upon the exercise of this Warrant.
Following the effective date of the Merger, the Exercise Price and the
number of shares purchasable upon exercise of the Warrants, as adjusted
pursuant to the provisions hereof, shall be subject to those subsequent
adjustments required by the provisions of the Warrant as a result of an
applicable corporate action which occurs following the effective date of the
Merger.
IN WITNESS WHEREOF, EduLink, Inc. has caused this Amendment to the
Warrants to be signed by its duly authorized officer and is dated as of
September 15, 1999.
EDULINK, INC.
By: ________________________
MICHAEL ROSENFELD, CEO
2.
<PAGE>
EXHIBIT 4.4
AMENDMENT
Reference is made to the following Common Stock Purchase Warrants
(hereinafter collectively referred to as "Warrants") issued by EduLink, Inc. to
Ronald C. Rescigno ("Holder") as of August 15, 1997:
(1) One Common Stock Purchase Warrants, each of which grants to the Holder
the right to purchase 100,000 Warrant Shares (as such term is defined
in such Warrants) at a per share Exercise Price (as such term is
defined in such Warrants) of $3.50;
(2) One Common Stock Purchase Warrants, each of which grants to the Holder
the right to purchase 200,000 Warrant Shares at a per share Exercise
Price of $5.00;
(3) One Common Stock Purchase Warrants, each of which grants to the Holder
the right to purchase 200,000 Warrant Shares at a per share Exercise
Price of $7.00.
Notwithstanding the provisions of the Warrants to the contrary, Company
agrees that the Exercise Price of each Warrant described herein shall be
reduced to Twenty Five Cents ($.25) per share, effective as of the date hereof.
IN WITNESS WHEREOF, EduLink, Inc. has caused this Amendment to the
Warrants to be signed by its duly authorized officer and is dated as of
September 15, 1999.
EDULINK, INC.
By: /s/ Michael Rosenfeld
-------------------------
MICHAEL ROSENFELD, CEO
<PAGE>
EXHIBIT 4.5
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE. THIS WARRANT MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED AND SUCH REGISTRATION OR QUALIFICATION
AS MAY BE NECESSARY UNDER THE SECURITIES LAWS OF ANY STATE, OR AN OPTION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR QUALIFICATION IS
NOT REQUIRED.
Warrant No. DT 50,000 Shares
COMMON STOCK PURCHASE WARRANT
EDULINK, INC.
September 15, 1999
EduLink, Inc., a California corporation (the "Company"), for value
received hereby grants to Dorothy Tucker, an individual, or his registered
assigns ("Holder") under the terms herein, the right to purchase 50,000 shares
of the Company's common stock (the "Common Stock") for $0.25 per share (the
"Exercise Price"). (The Common Stock acquirable upon exercise hereof is
referred to herein as the "Warrant Shares.")
1. Term of Warrant. This Common Stock Purchase Warrant ("Warrant") may be
exercised at any time commencing on the date hereof until the fourth
anniversary of the date hereof.
2. Reservation of Common Stock. The Company agrees that the number of
Warrant Shares sufficient to provide for the exercise of this Warrant upon the
basis set forth herein shall at all times during the term of this Warrant be
reserved for the exercise thereof.
3. Manner of Exercise. This Warrant may be exercised in whole or in part
by surrendering this certificate, with the exercise form attached, duly
executed by the Warrant Holder or by the Warrant Holder's duly authorized
attorney, accompanied by payment of the Exercise Price for the Warrant shares
to be acquired, which payment shall be made in cash or bank cashier's or
certified check at the principal office of the Company or its designated
assign. The date on which this Warrant is thus surrendered accompanied by
tender of payment of the Exercise Price, is referred to as the "Exercise Date."
<PAGE>
4. Issuance of Common Stock Upon Exercise. The Company shall cause to be
issued, within ten (10) days after the Exercise Date, a certificate or
certificates in the name requested by the Warrant Holder of the number of
Warrant Shares to which the Warrant Holder is entitled upon such exercise. All
Warrant Shares delivered upon the exercise of this Warrant shall be validly
issued, fully paid and non-assessable. Irrespective of the date of issuance and
delivery of any Warrant Shares upon the exercise of this Warrant, each person
in whose name any such certificate evidencing Warrant Shares is to be issued
shall be deemed to have become the holder of record of such Warrant Shares on
the Exercise date.
5. Sale of Warrant or Shares. Neither this Warrant nor the Warrant Shares
issuable upon exercise of this Warrant, have been registered under the
Securities Act of 1933 as amended (the "Act"), or under the securities laws of
any state. Neither this Warrant nor any warrant Shares when issued may be sold,
transferred, pledged, or hypothecated in the absence of (i) an effective
registration statement for this Warrant or the Warrant Shares, as the case may
be, under the Act and such registration or qualification as may be necessary
under the securities laws of any state, or (ii) an opinion of counsel
reasonably satisfactory to the Company that such registration or qualification
is not required. The Company shall cause each certificate evidencing Warrant
Shares issued upon exercise of this Warrant prior to said registration and
qualification to bear the following legend: "THE SHARES EVIDENCED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED OR UNDER THE SECURITIES LAWS OF ANY STATE. THE SHARES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND SUCH REGISTRATION OR QUALIFICATION AS
MAY BE NECESSARY UNDER THE SECURITIES LAWS OF ANY STATE, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR QUALIFICATION IS
NOT REQUIRED."
6. Transfer. This Warrant shall be registered on the books of the Company
which shall be kept at its principal office for that purpose, and shall be
transferable only on such books by the Warrant Holder in person or by duly
authorized attorney with written notice, and only in compliance with the
preceding paragraph. The Company may issue appropriate stop orders to its
tranfer agent to prevent a transfer in violation of the preceding section.
7. Piggyback Registration. If the Company conducts an initial public
offering of its Common Stock registered under the Act, the Company shall give
thirty (30) days prior written notice thereof to the Warrant Holder and shall,
upon written request of the Warrant Holder, include in the registration
statement such number of Warrant Shares as Holder may request, subject to
reasonable limitations imposed by the underwriter of the offering who may
determine to exclude some or all of the Warrant Shares on the same basis as
securities owned by other holders of stock, warrants or options of the Company
who request registration of their securities under registration rights granted
prior to the date of this Warrant. Such inclusion, in any event, shall be at
2.
<PAGE>
no cost to the Warrant Holder (other than payment of any underwriting fees,
discounts or commissions with respect to the Warrant Shares included in such
registration which shall be paid by the Warrant Holder) and shall be at the
sole cost and expense of the Company. In connection with any notification or
registration statement, the Company shall take any reasonable steps to make the
securities covered thereby eligible for public offering and sale by the
effective date of such registration statement. In connection with any such
registration, the Company shall bear all the expenses and professional fees
(excluding underwriting discounts and commission with respect to the Warrant
Shares) which arise in connection with such filing and keeping the registration
statement effective and correct and shall provide the Company with a reasonable
number of printed copies of the prospectus in final and preliminary form.
8. Adjustment. The number of Warrant Shares issuable upon the exercise of
this Warrant is subject to adjustment if the Company shall, prior to any
exercise of this Warrant, effect one or more stock splits, stock dividends, or
other increases or reductions in the number of shares of common Stock
outstanding.
(a) The Exercise Price and the number of Warrant Shares to be issued
upon exercise of this Warrant shall be adjusted as follows.
(i) If at any time after the date hereof the number of shares of
Common Stock outstanding is increased by a stock dividend payable in shares of
Common Stock or by a subdivision or split-up of shares of Common Stock, then,
on the record date of such stock dividend, subdivision or split-up, the
Exercise Price shall be appropriately decreased and the number of shares of
Common Stock issuable on exercise of this Warrant shall be appropriately
increased in proportion to such increase of outstanding shares;
(ii) If at any time after the date hereof the number of shares of
Common Stock outstanding is decreased by a combination of the outstanding
shares of Common Stock, then, on the effective date of such combination, the
Exercise Price shall be appropriately increased and the number of shares of
Common Stock issuable on exercise of this Warrant shall be appropriately
decreased in proportion to such decrease in outstanding shares.
(b) All calculations under this Section 10 shall be made to the nearest
cent or to the nearest one hundredth (1/100) of a share, as the case may be. No
fractional shares of Common Stock shall be issued upon exercise of this
Warrant. Any fractional shares of Common Stock which might otherwise be issued
upon exercise of this Warrant shall be rounded to the nearest whole share (with
one-half rounded up).
(c) If the Exercise Price shall be adjusted, the Company shall prepare
and mail to the holder hereof a certificate setting forth the event requiring
the adjustment, the amount of the adjustment, the method by which the
adjustment was calculated, and (after giving effect to the adjustment) the
Exercise Price.
3.
<PAGE>
9. No Rights as Stockholder. The Warrant Holder is not, by virtue of its
ownership of this Warrant, entitled to any rights whatsoever as a stockholder
of the Company.
10. Governing Laws. This Warrant shall be construed according to the laws
of the State of California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on
its behalf.
EDULINK, INC.
By: /s/ Michael Rosenfeld
----------------------
MICHAEL ROSENFELD, CEO
4.
<PAGE>
AMENDMENT TO COMMON STOCK PURCHASE
WARRANT - EDULINK, INC.
Reference is made to the Common Stock Purchase Warrant issued to Dorothy
Tucker ("Holder") by Company (the "Warrant"). Notwithstanding the provisions
of the Warrant to the contrary, the Exercise Price and the number of securities
purchasable upon the exercise of the Warrants shall be adjusted in the
following manner upon the happening of the following event in lieu of any other
adjustment described in the Warrant to which this Amendment relates:
If the Company shall consummate a merger within one hundred twenty (120)
days following the date hereof (the "Merger") into URREA, Inc. (the "Surviving
Corporation") whereby the Surviving Corporation issues its shares of common
stock ("common stock") to Company's shareholders in exchange for the shares of
Company's common stock held by such shareholders, then:
(i) The Warrant shall, immediately upon the effective date of such
Merger, entitle the Holder to purchase shares of the common stock
of the Surviving Corporation from the Surviving Corporation; and
(ii) The Exercise Price in effect on the date hereof shall be adjusted so
that it shall equal the price determined by multiplying the Exercise
Price in effect on the date hereof by a fraction, the denominator of
which shall be the number of shares of the Surviving Corporation's
common stock issued to the shareholders of Company pursuant to the
Merger, and the numerator of which shall be the number of shares of
Company's Common Stock outstanding immediately prior to the
effective date of the Merger;
(iii) Whenever the Exercise Price payable upon exercise of each Warrant is
adjusted pursuant to (ii) above, the number of shares of the
Surviving Corporation's common stock purchasable upon exercise of
the Warrants shall simultaneously be adjusted by multiplying the
number of shares of Company's Common Stock initially issuable upon
exercise of the Warrants by the Exercise Price in effect on the date
hereof and dividing the product so obtained by the Exercise Price,
as adjusted.
(iv) Notwithstanding any above-described adjustments, certificates for
Warrants issued prior to such adjustment may continue to express
<PAGE>
the same price and number and kind of shares of Company's Common
Stock as are initially issuable pursuant to this Warrant;
(v) The Surviving Corporation shall not be required to issue fractional
shares upon the exercise of this Warrant.
Following the effective date of the Merger, the Exercise Price and the
number of shares purchasable upon exercise of the Warrants, as adjusted
pursuant to the provisions hereof, shall be subject to those subsequent
adjustments required by the provisions of the Warrant as a result of an
applicable corporate action which occurs following the effective date of the
Merger.
IN WITNESS WHEREOF, EduLink, Inc. has caused this Amendment to the
Warrants to be signed by its duly authorized officer and is dated as of
September 15, 1999.
EDULINK, INC.
By: /s/ Michael Rosenfeld
-----------------------
MICHAEL ROSENFELD, CEO
2.
<PAGE>
EXHIBIT 4.6
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE. THIS WARRANT MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED AND SUCH REGISTRATION OR QUALIFICATION
AS MAY BE NECESSARY UNDER THE SECURITIES LAWS OF ANY STATE, OR AN OPTION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR QUALIFICATION IS
NOT REQUIRED.
Warrant No. KM 50,000 Shares
COMMON STOCK PURCHASE WARRANT
EDULINK, INC.
September 15, 1999
EduLink, Inc., a California corporation (the "Company"), for value
received hereby grants to Kathleen McGuire, an individual, or his registered
assigns ("Holder") under the terms herein, the right to purchase 50,000 shares
of the Company's common stock (the "Common Stock") for $0.25 per share (the
"Exercise Price"). (The Common Stock acquirable upon exercise hereof is
referred to herein as the "Warrant Shares.")
1. Term of Warrant. This Common Stock Purchase Warrant ("Warrant") may be
exercised at any time commencing on the date hereof until the fourth
anniversary of the date hereof.
2. Reservation of Common Stock. The Company agrees that the number of
Warrant Shares sufficient to provide for the exercise of this Warrant upon the
basis set forth herein shall at all times during the term of this Warrant be
reserved for the exercise thereof.
3. Manner of Exercise. This Warrant may be exercised in whole or in part
by surrendering this certificate, with the exercise form attached, duly
executed by the Warrant Holder or by the Warrant Holder's duly authorized
attorney, accompanied by payment of the Exercise Price for the Warrant shares
to be acquired, which payment shall be made in cash or bank cashier's or
certified check at the principal office of the Company or its designated
assign. The date on which this Warrant is thus surrendered accompanied by
tender of payment of the Exercise Price, is referred to as the "Exercise Date."
<PAGE>
4. Issuance of Common Stock Upon Exercise. The Company shall cause to be
issued, within ten (10) days after the Exercise Date, a certificate or
certificates in the name requested by the Warrant Holder of the number of
Warrant Shares to which the Warrant Holder is entitled upon such exercise. All
Warrant Shares delivered upon the exercise of this Warrant shall be validly
issued, fully paid and non-assessable. Irrespective of the date of issuance and
delivery of any Warrant Shares upon the exercise of this Warrant, each person
in whose name any such certificate evidencing Warrant Shares is to be issued
shall be deemed to have become the holder of record of such Warrant Shares on
the Exercise date.
5. Sale of Warrant or Shares. Neither this Warrant nor the Warrant Shares
issuable upon exercise of this Warrant, have been registered under the
Securities Act of 1933 as amended (the "Act"), or under the securities laws of
any state. Neither this Warrant nor any warrant Shares when issued may be sold,
transferred, pledged, or hypothecated in the absence of (i) an effective
registration statement for this Warrant or the Warrant Shares, as the case may
be, under the Act and such registration or qualification as may be necessary
under the securities laws of any state, or (ii) an opinion of counsel
reasonably satisfactory to the Company that such registration or qualification
is not required. The Company shall cause each certificate evidencing Warrant
Shares issued upon exercise of this Warrant prior to said registration and
qualification to bear the following legend: "THE SHARES EVIDENCED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED OR UNDER THE SECURITIES LAWS OF ANY STATE. THE SHARES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND SUCH REGISTRATION OR QUALIFICATION AS
MAY BE NECESSARY UNDER THE SECURITIES LAWS OF ANY STATE, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR QUALIFICATION IS
NOT REQUIRED."
6. Transfer. This Warrant shall be registered on the books of the Company
which shall be kept at its principal office for that purpose, and shall be
transferable only on such books by the Warrant Holder in person or by duly
authorized attorney with written notice, and only in compliance with the
preceding paragraph. The Company may issue appropriate stop orders to its
tranfer agent to prevent a transfer in violation of the preceding section.
7. Piggyback Registration. If the Company conducts an initial public
offering of its Common Stock registered under the Act, the Company shall give
thirty (30) days prior written notice thereof to the Warrant Holder and shall,
upon written request of the Warrant Holder, include in the registration
statement such number of Warrant Shares as Holder may request, subject to
reasonable limitations imposed by the underwriter of the offering who may
determine to exclude some or all of the Warrant Shares on the same basis as
securities owned by other holders of stock, warrants or options of the Company
who request registration of their securities under registration rights granted
prior to the date of this Warrant. Such inclusion, in any event, shall be at
2.
<PAGE>
no cost to the Warrant Holder (other than payment of any underwriting fees,
discounts or commissions with respect to the Warrant Shares included in such
registration which shall be paid by the Warrant Holder) and shall be at the
sole cost and expense of the Company. In connection with any notification or
registration statement, the Company shall take any reasonable steps to make the
securities covered thereby eligible for public offering and sale by the
effective date of such registration statement. In connection with any such
registration, the Company shall bear all the expenses and professional fees
(excluding underwriting discounts and commission with respect to the Warrant
Shares) which arise in connection with such filing and keeping the registration
statement effective and correct and shall provide the Company with a reasonable
number of printed copies of the prospectus in final and preliminary form.
8. Adjustment. The number of Warrant Shares issuable upon the exercise of
this Warrant is subject to adjustment if the Company shall, prior to any
exercise of this Warrant, effect one or more stock splits, stock dividends, or
other increases or reductions in the number of shares of common Stock
outstanding.
(a) The Exercise Price and the number of Warrant Shares to be issued
upon exercise of this Warrant shall be adjusted as follows.
(i) If at any time after the date hereof the number of shares of
Common Stock outstanding is increased by a stock dividend payable in shares of
Common Stock or by a subdivision or split-up of shares of Common Stock, then,
on the record date of such stock dividend, subdivision or split-up, the
Exercise Price shall be appropriately decreased and the number of shares of
Common Stock issuable on exercise of this Warrant shall be appropriately
increased in proportion to such increase of outstanding shares;
(ii) If at any time after the date hereof the number of shares of
Common Stock outstanding is decreased by a combination of the outstanding
shares of Common Stock, then, on the effective date of such combination, the
Exercise Price shall be appropriately increased and the number of shares of
Common Stock issuable on exercise of this Warrant shall be appropriately
decreased in proportion to such decrease in outstanding shares.
(b) All calculations under this Section 10 shall be made to the nearest
cent or to the nearest one hundredth (1/100) of a share, as the case may be. No
fractional shares of Common Stock shall be issued upon exercise of this
Warrant. Any fractional shares of Common Stock which might otherwise be issued
upon exercise of this Warrant shall be rounded to the nearest whole share (with
one-half rounded up).
(c) If the Exercise Price shall be adjusted, the Company shall prepare
and mail to the holder hereof a certificate setting forth the event requiring
the adjustment, the amount of the adjustment, the method by which the
adjustment was calculated, and (after giving effect to the adjustment) the
Exercise Price.
3.
<PAGE>
9. No Rights as Stockholder. The Warrant Holder is not, by virtue of its
ownership of this Warrant, entitled to any rights whatsoever as a stockholder
of the Company.
10. Governing Laws. This Warrant shall be construed according to the laws
of the State of California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on
its behalf.
EDULINK, INC.
By: /s/ Michael Rosenfeld
----------------------
MICHAEL ROSENFELD, CEO
4.
<PAGE>
AMENDMENT TO COMMON STOCK PURCHASE
WARRANT - EDULINK, INC.
Reference is made to the Common Stock Purchase Warrant issued to Kathleen
McGuire ("Holder") by Company (the "Warrant"). Notwithstanding the provisions
of the Warrant to the contrary, the Exercise Price and the number of securities
purchasable upon the exercise of the Warrants shall be adjusted in the
following manner upon the happening of the following event in lieu of any other
adjustment described in the Warrant to which this Amendment relates:
If the Company shall consummate a merger within one hundred twenty (120)
days following the date hereof (the "Merger") into URREA, Inc. (the "Surviving
Corporation") whereby the Surviving Corporation issues its shares of common
stock ("common stock") to Company's shareholders in exchange for the shares of
Company's common stock held by such shareholders, then:
(i) The Warrant shall, immediately upon the effective date of such
Merger, entitle the Holder to purchase shares of the common stock
of the Surviving Corporation from the Surviving Corporation; and
(ii) The Exercise Price in effect on the date hereof shall be adjusted so
that it shall equal the price determined by multiplying the Exercise
Price in effect on the date hereof by a fraction, the denominator of
which shall be the number of shares of the Surviving Corporation's
common stock issued to the shareholders of Company pursuant to the
Merger, and the numerator of which shall be the number of shares of
Company's Common Stock outstanding immediately prior to the
effective date of the Merger;
(iii) Whenever the Exercise Price payable upon exercise of each Warrant is
adjusted pursuant to (ii) above, the number of shares of the
Surviving Corporation's common stock purchasable upon exercise of
the Warrants shall simultaneously be adjusted by multiplying the
number of shares of Company's Common Stock initially issuable upon
exercise of the Warrants by the Exercise Price in effect on the date
hereof and dividing the product so obtained by the Exercise Price,
as adjusted.
(iv) Notwithstanding any above-described adjustments, certificates for
Warrants issued prior to such adjustment may continue to express
<PAGE>
the same price and number and kind of shares of Company's Common
Stock as are initially issuable pursuant to this Warrant;
(v) The Surviving Corporation shall not be required to issue fractional
shares upon the exercise of this Warrant.
Following the effective date of the Merger, the Exercise Price and the
number of shares purchasable upon exercise of the Warrants, as adjusted
pursuant to the provisions hereof, shall be subject to those subsequent
adjustments required by the provisions of the Warrant as a result of an
applicable corporate action which occurs following the effective date of the
Merger.
IN WITNESS WHEREOF, EduLink, Inc. has caused this Amendment to the
Warrants to be signed by its duly authorized officer and is dated as of
September 15, 1999.
EDULINK, INC.
By: /s/ Michael Rosenfeld
----------------------
MICHAEL ROSENFELD, CEO
2.
<PAGE>
EXHIBIT 4.7
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE. THIS WARRANT MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED AND SUCH REGISTRATION OR QUALIFICATION
AS MAY BE NECESSARY UNDER THE SECURITIES LAWS OF ANY STATE, OR AN OPTION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR QUALIFICATION IS
NOT REQUIRED.
Warrant No. IR 34,305,000 Shares
COMMON STOCK PURCHASE WARRANT
EDULINK, INC.
February 1, 2000
EduLink, Inc., a California corporation (the "Company"), for value
received hereby grants to Ian Rescigno, an individual, or his registered
assigns ("Holder") under the terms herein, the right to purchase 34,305,000
shares of the Company's common stock (the "Common Stock") for $.0022 per share
(the "Exercise Price"). (The Common Stock acquirable upon exercise hereof is
referred to herein as the "Warrant Shares.")
1. Term of Warrant. This Common Stock Purchase Warrant ("Warrant") may be
exercised at any time commencing on the date hereof until the seventh
anniversary of the date hereof.
2. Reservation of Common Stock. The Company agrees that the number of
Warrant Shares sufficient to provide for the exercise of this Warrant upon the
basis set forth herein shall at all times during the term of this Warrant be
reserved for the exercise thereof.
3. Manner of Exercise. This Warrant may be exercised in whole or in part
by surrendering this certificate, with the exercise form attached, duly
executed by the Warrant Holder or by the Warrant Holder's duly authorized
attorney, accompanied by payment of the Exercise Price for the Warrant shares
to be acquired, which payment shall be made in cash or bank cashier's or
certified check at the principal office of the Company or its designated
assign. The date on which this Warrant is thus surrendered accompanied by
tender of payment of the Exercise Price, is referred to as the "Exercise Date."
<PAGE>
4. Issuance of Common Stock Upon Exercise. The Company shall cause to be
issued, within ten (10) days after the Exercise Date, a certificate or
certificates in the name requested by the Warrant Holder of the number of
Warrant Shares to which the Warrant Holder is entitled upon such exercise. All
Warrant Shares delivered upon the exercise of this Warrant shall be validly
issued, fully paid and non-assessable. Irrespective of the date of issuance and
delivery of any Warrant Shares upon the exercise of this Warrant, each person
in whose name any such certificate evidencing Warrant Shares is to be issued
shall be deemed to have become the holder of record of such Warrant Shares on
the Exercise date.
5. Sale of Warrant or Shares. Neither this Warrant nor the Warrant Shares
issuable upon exercise of this Warrant, have been registered under the
Securities Act of 1933 as amended (the "Act"), or under the securities laws of
any state. Neither this Warrant nor any warrant Shares when issued may be sold,
transferred, pledged, or hypothecated in the absence of (i) an effective
registration statement for this Warrant or the Warrant Shares, as the case may
be, under the Act and such registration or qualification as may be necessary
under the securities laws of any state, or (ii) an opinion of counsel
reasonably satisfactory to the Company that such registration or qualification
is not required. The Company shall cause each certificate evidencing Warrant
Shares issued upon exercise of this Warrant prior to said registration and
qualification to bear the following legend: "THE SHARES EVIDENCED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED OR UNDER THE SECURITIES LAWS OF ANY STATE. THE SHARES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND SUCH REGISTRATION OR QUALIFICATION AS
MAY BE NECESSARY UNDER THE SECURITIES LAWS OF ANY STATE, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR QUALIFICATION IS
NOT REQUIRED."
6. Transfer. This Warrant shall be registered on the books of the Company
which shall be kept at its principal office for that purpose, and shall be
transferable only on such books by the Warrant Holder in person or by duly
authorized attorney with written notice, and only in compliance with the
preceding paragraph. The Company may issue appropriate stop orders to its
tranfer agent to prevent a transfer in violation of the preceding section.
7. Piggyback Registration. If the Company conducts an initial public
offering of its Common Stock registered under the Act, the Company shall give
thirty (30) days prior written notice thereof to the Warrant Holder and shall,
upon written request of the Warrant Holder, include in the registration
statement such number of Warrant Shares as Holder may request, subject to
reasonable limitations imposed by the underwriter of the offering who may
determine to exclude some or all of the Warrant Shares on the same basis as
securities owned by other holders of stock, warrants or options of the Company
who request registration of their securities under registration rights granted
prior to the date of this Warrant. Such inclusion, in any event, shall be at
2.
<PAGE>
no cost to the Warrant Holder (other than payment of any underwriting fees,
discounts or commissions with respect to the Warrant Shares included in such
registration which shall be paid by the Warrant Holder) and shall be at the
sole cost and expense of the Company. In connection with any notification or
registration statement, the Company shall take any reasonable steps to make the
securities covered thereby eligible for public offering and sale by the
effective date of such registration statement. In connection with any such
registration, the Company shall bear all the expenses and professional fees
(excluding underwriting discounts and commission with respect to the Warrant
Shares) which arise in connection with such filing and keeping the registration
statement effective and correct and shall provide the Company with a reasonable
number of printed copies of the prospectus in final and preliminary form.
8. Adjustment. The number of Warrant Shares issuable upon the exercise of
this Warrant is subject to adjustment if the Company shall, prior to any
exercise of this Warrant, effect one or more stock splits, stock dividends, or
other increases or reductions in the number of shares of common Stock
outstanding.
(a) The Exercise Price and the number of Warrant Shares to be issued
upon exercise of this Warrant shall be adjusted as follows.
(i) If at any time after the date hereof the number of shares of
Common Stock outstanding is increased by a stock dividend payable in shares of
Common Stock or by a subdivision or split-up of shares of Common Stock, then,
on the record date of such stock dividend, subdivision or split-up, the
Exercise Price shall be appropriately decreased and the number of shares of
Common Stock issuable on exercise of this Warrant shall be appropriately
increased in proportion to such increase of outstanding shares;
(ii) If at any time after the date hereof the number of shares of
Common Stock outstanding is decreased by a combination of the outstanding
shares of Common Stock, then, on the effective date of such combination, the
Exercise Price shall be appropriately increased and the number of shares of
Common Stock issuable on exercise of this Warrant shall be appropriately
decreased in proportion to such decrease in outstanding shares.
(b) All calculations under this Section 10 shall be made to the nearest
cent or to the nearest one hundredth (1/100) of a share, as the case may be. No
fractional shares of Common Stock shall be issued upon exercise of this
Warrant. Any fractional shares of Common Stock which might otherwise be issued
upon exercise of this Warrant shall be rounded to the nearest whole share (with
one-half rounded up).
(c) If the Exercise Price shall be adjusted, the Company shall prepare
and mail to the holder hereof a certificate setting forth the event requiring
the adjustment, the amount of the adjustment, the method by which the
adjustment was calculated, and (after giving effect to the adjustment) the
Exercise Price.
3.
<PAGE>
9. No Rights as Stockholder. The Warrant Holder is not, by virtue of its
ownership of this Warrant, entitled to any rights whatsoever as a stockholder
of the Company.
10. Governing Laws. This Warrant shall be construed according to the laws
of the State of California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on
its behalf.
EDULINK, INC.
By: /s/ Michael Rosenfeld
----------------------
MICHAEL ROSENFELD, CEO
4.
<PAGE>
EXHIBIT 4.8
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT
INCORPORATED UNDER THE LAWS OF THE STATE OF
Nevada
NUMBER EduLink, Inc. SHARES
AUTHORIZED COMMON STOCK: 1,500,000,000 SHARES
PAR VALUE: $.001 CUSIP NO. 28164R 10 3
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
Shares of EDULINK, INC. Common Stock
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid until countersigned by the Transfer Agent and registered by the
Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
/s/ Stephanie Eichhorn /s/ Ronald C. Rescigno
---------------------- ----------------------
SECRETARY PRESIDENT
[SEAL]
EXHIBIT 10.1
January 5, 2000
EduLink, Inc.
450 North Roxbury Drive
Suite 602
Beverly Hills, California 90210
Attention: Michael Rosenfeld, Chief Executive Officer
Re: Agreement by and between EduLink, Inc. and
Saatchi & Saatchi North America, Inc.
Dated as of July 1,1997 (the "Agreement")
This letter agreement will serve to memorialize the agreement between you
and us in connection with the above-referenced Agreement. Capitalized items not
otherwise defined herein shall have the meaning given them in the Agreement.
Based on the foregoing, the parties agree as follows:
1. Background.
1.1 EduLink, Inc. ("EduLink") engaged Saatchi & Saatchi North America,
Inc. ("SSNA"), the Saatchi Entertainment Group, a division of SSNA,
Darwin Digital, a division of SSNA, and certain other affiliates of
SSNA (collectively "Saatchi") to render certain Services under
the Agreement.
1.2 Saatchi claims that as of the date hereof, Phase I of the Agreement
has been completed and that Saatchi has fully performed the Services
in accordance with the terms of the Agreement. EduLink disputes such
claims.
1.3 Saatchi claims that EduLink owes Saatchi in excess of $1,500,000,
inclusive of a debt owed to Saatchi by EduLink evidenced by a
Promissory Note dated December 31,1997 (the "December Note"). EduLink
disputes such claims.
<PAGE>
January 5, 2000
Page 2.
1.4 EduLink is diligently seeking financing of $9,500,000 pursuant to
various private placements (herein called "Financing Activities") and
intends to complete such financing within one year of this letter
agreement.
2. The parties desire to resolve each and all of their disputes and claims
against the other and accordingly agree that:
2.1 The Agreement shall be terminated, effective on the date hereof, and
Saatchi shall have no further obligations to render Services
thereunder;
2.2 Subject to the full and prompt performance by EduLink of all of its
obligations set forth in this letter agreement, the parties mutually
agree that the amount owed to Saatchi for the Services performed
pursuant to the Agreement as of the date hereof is $1,000,000 (the
"Agreed Sum"), inclusive of a debt owed to Saatchi by EduLink
evidenced by the December Note, which December Note shall be cancelled
upon prompt payment in full by EduLink of the Agreed Sum in accordance
with the terms of this letter agreement. In the event that EduLink
fails to promptly perform any of its obligations hereunder (as to
which, time shall be of the essence), then the December Note shall
remain in effect, not be cancelled and shall survive and not be
affected by the general release set forth in Sections 5.1 and 5.2
hereof; but EduLink shall receive as a credit toward the payment of
such December Note all payments actually made hereunder.
2.3 EduLink agrees to pay Saatchi by check made payable to "Saatchi &
Saatchi North America, Inc." fifteen percent (15%) of any Net
Financing Proceeds received by EduLink, pursuant to its Financing
Activities until Saatchi has been paid the Agreed Sum in Full. "Net
Financing Proceeds" shall mean the gross sums received by EduLink from
its Financing Activities, less aggregate commissions of up to five
percent (5%) of such gross sums paid or retained by brokers,
investment bankers and other third parties. Such percentage of Net
Financing Proceeds payable to Saatchi hereunder shall be remitted to
Saatchi within fifteen (15) business days following the end of each
calendar month in which such Net Financing Proceeds are received by
EduLink, together with appropriate accountings.
2.4 To the extent Saatchi has received less than $100,000 pursuant to
Section 2.3 above by January 10, 2000, EduLink shall pay Saatchi the
difference
<PAGE>
January 5, 2000
Page 3.
between $100,000 and the sums actually paid to Saatchi by EduLink
pursuant to Section 2.3 above as of January 10, 2000.
2.5 To the extent Saatchi has received less than 400,000 in the aggregate
pursuant to Sections 2.3 and 2.4 above by April 30, 2000, EduLink
shall pay Saatchi the difference between $400,000 and the sums
actually paid to Saatchi by EduLink pursuant to Sections 2.3 and 2.4
above as of April 30, 2000.
2.6 To the extent Saatchi has received less than $600,000 in the aggregate
pursuant to sections 2.3, 2.4 and 2.5 above by December 31, 2000,
EduLink shall pay Saatchi the difference between $600,000 and the sums
actually paid to Saatchi by EduLink pursuant to Sections 2.3, 2.4 and
2.5 above as of December 31, 2000.
2.7 To the extent Saatchi has received less than $1,000,000 (plus any
accrued interest pursuant to Section 2.8 below) in the aggregate
pursuant to Sections 2.3, 2.4, 2.5 and 2.6 above by December 31, 2001,
EduLink shall pay Saatchi the difference between $1,000,000 (plus any
such accrued interest) and the sums actually paid to Saatchi by
EduLink pursuant to Sections 2.3, 2.4, 2.5 and 2.6 above as of
December 31, 2001.
2.8 Notwithstanding the foregoing to the contrary, if but only if Saatchi
has not been paid the Agreed Sum by December 31, 2000, then commencing
as of January 1, 2000, interest shall accrue on the unpaid balance of
the Agreed Sum, computed at the end of each calendar quarter, at an
interest rate of prime plus one percent (1%), as such prime rate is
established by Chase Manhattan Bank at the commencement of each
applicable calendar quarter.
2.9 The parties mutually agree that in lieu of the shares of EduLink's
Common Stock and the Warrants granting the Holder the right to
purchase EduLink's Common Stock issuable to Saatchi pursuant to the
terms of Section 8 of the Agreement, EduLink shall issue and Saatchi
shall accept, 100,000 shares of EduLink's Common Stock. Within sixty
(60) days of the date of this letter agreement, EduLink shall deliver
to Saatchi stock certificate(s) representing such 100,000 shares of
EduLink's Common Stock.
<PAGE>
January 5, 2000
Page 4.
3. Content.
3.1 All materials delivered to Saatchi on EduLink's behalf by teachers
from the Redondo Beach and Berryessa School Districts, other than the
materials described in Sections 3.2.1, 3.2.2 and 3.2.3 below, shall be
delivered to EduLink by Saatchi within ten (10) days following the
date of this letter agreement, including without limitation:
3.1.1 Seventeen mathematics lesson plans (Redondo Beach);
3.1.2 Twenty-three history lesson plans for Unit 8 (Berryessa);
3.1.3 Seven science lesson plans;
3.1.4 Information on a conceptual library (Berryessa).
3.2 Work Product: All work product resulting from services rendered by
Saatchi under the Agreement shall be delivered to EduLink by Saatchi
within ten (10) days following the date of this letter agreement. Such
work product shall include, without limitation:
3.2.1 One mathematics lesson plan based upon material provided by
Redondo Beach School District teachers, as refined by Saatchi,
inclusive of graphic user interfaces;
3.2.2 Seven history lesson plans based upon material provided by
Berryessa School District teachers, as refined by Saatchi,
inclusive of graphic user interfaces;
3.2.3 One science lesson plan based upon material provided by Redondo
Beach School District teachers, as refined by Saatchi;
3.2.4 All completed and/or rough screens developed for the teacher,
parent, student and school desktops within the so-called
schoolhouse shell;
3.2.5 The files for the following three sites, each to be transferred
via CD-ROM: www.darwindigital.com/elink375:
www.darwindigital.com/studiesberryessa/unit8;
www.coby.com/edulink.
<PAGE>
January 5, 2000
Page 5.
3.2.6 Any and all data relating to market research conducted on
EduLink's behalf;
3.2.7 Any licenses or rights obtained by Saatchi to utilize and
exploit material included in the items set forth in Sections
3.2.1 through 3.2.6 above.
4. Rights.
4.1 Saatchi hereby assigns to EduLink all of its right, title and interest
in and to the content described in Section 3.1 above.
4.2 Saatchi hereby grants to EduLink an exclusive license to use and
exploit, in any and all media, all of Saatchi's right, title and
interest, if any, in and to the content described in Section 3.2
above. The term of such license shall expire on December 31, 2001.
4.3 Upon the expiration of the license described in Section 4.2 above, if
Saatchi has then received the Agreed Sum from EduLink, all of
Saatchi's right, title and interest, if any, in and to the content
described in Section 3.2 above shall be the sole and exclusive
property of EduLink and Saatchi shall have no claims to such property
whatsoever; if, however, upon the expiration of the license described
in Section 4.2 above, Saatchi has not received the Agreed Sum from
EduLink, then EduLink shall: return all of such content to Saatchi;
refrain from utilizing or exploiting in any manner any of such
content; forfeit any claim to ownership of such content; and execute
and deliver to Saatchi such investments and provide such other
information which may be necessary or helpful in Saatchi's opinion in
obtaining, maintaining and enforcing copyrights and other intellectual
property rights relating to such content and/or effectuating the
ownership and enjoyment by Saatchi thereof.
5. Release.
5.1 General Release. Except with respect to breaches of or obligations
created by this letter agreement, which obligations shall survive this
Release to the extent contemplated by this letter agreement, EduLink,
on the one hand,
<PAGE>
January 5, 2000
Page 6.
and Saatchi, on the other hand, each hereby forever fully and finally
release, acquit and discharge the other from any and all claims,
demands, costs, losses, damages, liabilities, obligations, actions,
causes of action, lawsuits and expenses (including, without
limitation, all attorneys' fees and costs) of every type, kind and
character whatsoever, whether known or unknown, suspected or
unsuspected, however arising, including without limitation, by reason
of the Agreement.
5.2 Section 1542 Waiver. This Release is not to be construed as an
admission by either party of the validity of any unlawful or wrongful
conduct or of any liability, or lack thereof, to the other party, all
of which is expressly denied. The parties intend that this Release
shall be effective as a full and final accord and satisfaction and
release of each and every released matter. In furtherance of this
intention, they acknowledge that they are familiar with Section 1512
of the Civil Code of the state of California, which provides as
follows:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have
materially affected his settlement with the debtor.
The parties waive and relinquish to the fullest possible extent every
right or benefit which they have or may have under Section 1542 and
under any similar or analogous law of any other applicable
jurisdiction with regard to the subject matter of this Release. The
parties acknowledge that they are aware they may hereafter discover
facts in addition to or different from those which they now know or
believe to be true with respect to the subject matter of this Release.
Nevertheless, they intend fully, finally and forever, to settle and
release all released matters, known or unknown, suspected or
unsuspected, which now exist, heretofore existed, or may arise
hereafter based on existing facts and circumstances. In furtherance of
this intention, the releases given in this Release shall be in, and
shall remain in, effect as full and complete releases, notwithstanding
the discovery or existence of any additional or different facts.
5.3 No Assignments. Each party warrants and represents that it has not
previously assigned or transferred or purported to assign or transfer
to any third party any claims or other rights released hereunder.
<PAGE>
January 5, 2000
Page 7.
Please confirm your acceptance and agreement to the foregoing by signing in
the indicated space below.
Very truly yours,
SAATCHI & SAATCHI NORTH AMERICA, INC.
By: ________________________________
Name: ______________________________
Title: _____________________________
ACCEPTED AND AGREED:
EDULINK, INC.
By: _________________________________
Name: _______________________________
Title: ______________________________
<PAGE>
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of this 4th day of September, 1999, by and
between Michael Rosenfeld, an individual residing at 30 Wavecrest Avenue,
Venice, California 90291 ("Executive") and EDULINK, INC., a California
corporation with its principal offices at 450 North Roxbury Drive, Beverly
Hills, California 90210 (the "Company").
WITNESSETH:
WHEREAS the Company is engaged in the design, development, production and
marketing of an internet-based interactive educational system designed for
institutional and individual and users; and
WHEREAS Executive has, since the inception of the Company in 1996, served as
its Chief Executive Officer and the Company recognizes the value of his services
which are of a specific, unique and extraordinary character and therefor
requires the continued services of Executive as its Chief Executive Officer for
a specified period of time; and
WHEREAS the Company believes that the establishment and maintenance of sound
and vital management of the Company is essential to the protection and
enhancement of the interests of the Company and its stockholders and, in order
to secure such protection, desires to obtain the contractual commitment of
certain of its executive officers, including the Executive, to render their
services to the Company for a specific period of time; and
WHEREAS for the foregoing reasons, the Company desires to employ the
Executive as its Chief Executive Officer, and Executive is desirous of being so
employed, all on and subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
unconditionally acknowledged, the parties hereto do hereby agree as follows:
1. Employment. During the Term (as hereinafter defined) of this Agreement,
the Company hereby employs Executive as its Chief Executive Officer, upon and
subject to the terms and conditions set forth in this Agreement. Executive
hereby agrees to accept such employment, upon and subject to the terms and
conditions set forth in this Agreement, provided that Executive agrees that
Company intends to replace Executive with others to serve as its CEO and
Executive hereby consents to such action, provided that in such event Executive
shall be engaged by Company as its Senior Vice President - Business Development
and shall have the rights to the compensation and benefits set forth
hereinbelow. In addition, the Company shall, subject to Executive's consent,
cause Executive to be re-elected to the Company's Board of Directors during the
Term of this Agreement.
2. Executive's Duties and Responsibilities.
2.1 Executive will perform all of the services customarily associated with
the position of Chief Executive Officer during the Term of this Agreement,
subject to the policies established by and under the direction of the Board of
Directors of the Company, and subject to Executive's
1.
<PAGE>
engagement as Senior Vice President, as set forth in Paragraph 1 above.
Executive also agrees to perform such other duties and responsibilities,
consistent with such position, as the Board of Directors may assign to him from
time to time during the Term hereof.
2.2 Executive agrees to devote that portion of his business time, attention
and energy which is reasonably required for him to perform his duties under this
Agreement during the Term hereof and Executive shall perform such duties
diligently, in good faith and in a manner consistent with the best interests of
the Company. Executive further agrees to use his best efforts at all times
during the Term hereof to preserve, protect, enhance, and maintain the trade,
business and goodwill of the Company.
2.3 Executive shall perform his services wherever his services are
reasonably required but principally at 450 North Roxbury Drive, Beverly Hills,
California 90210. Under no circumstances shall Executive, without his prior
written consent, be required to change the location of his current residence in
order to perform the services required of him under this Agreement (nor to
travel any distance which is significantly greater than the distance currently
traveled by the Executive to the Company's offices). The Company shall furnish
Executive with a private office, stenographic help and such other facilities,
services and staff as are suitable to his position and necessary and adequate
for the performance of his services under this Agreement.
3. Term.
3.1 The term of this Agreement shall commence as of September ____, 1999 and
shall expire on December 31, 2004, subject to earlier termination as hereinafter
provided in paragraph 3.2 hereof (the "Term").
3.2 Pursuant to the provisions of Paragraph 3.1 above, the Term of this
Agreement shall terminate on the earlier to occur of any of the following
events:
(a) The death of Executive;
(b) The Permanent Disability (hereinafter defined) of Executive as
provided in Paragraph 7 hereof;
(c) Any repeated breach of trust or other repeated action by which
Executive obtains material personal gain at the expense or to the detriment of
the Company;
(d) The failure of Executive to perform the customary duties of his
position, provided that Executive is furnished with notice of such breach from
the Company (with Executive not participating or voting with respect to any such
notice if Executive is a director of the Company) and Executive fails to cure
any such breach within thirty (30) days of such notice;
(e) A conviction of the Executive for any felony or of any other crime
involving moral turpitude;
(f) The delivery of notice to the Company by the Executive, or to the
Executive to the Company, as the case may be, of the termination of this
Agreement for any breach or default by the Company or the Executive, as the case
may be, of any of their respective representations, warranties, obligations or
covenants under this Agreement, provided that any such breach or default is not
cured within thirty (30) days after such notice from Executive or the Company,
as the case may be.
2.
<PAGE>
(g) The entry by a court of competent jurisdiction of a decree or order
for relief in respect of the Company in a voluntary case under any applicable
bankruptcy, insolvency, or similar law then in effect or the appointment of a
receiver, liquidator, assignee, custodian, trustee, or sequestrator of the
Company or for any substantial part of its property or an order by any such
court for the wind-up or liquidation of the Company's affairs; or a petition
initiating an involuntary case under any such bankruptcy, insolvency, or similar
law is filed against the Company and remains pending for sixty (60) days without
a stay or dismissal; or the Company commences a voluntary case under any such
bankruptcy, insolvency, or similar law then in effect, or makes any general
assignment for the benefit of its creditors or takes action in furtherance of
any of the foregoing; or
4. Compensation. In consideration of the performance by Executive of his
services under this Agreement during the Term hereof, the Company shall pay
Executive the following compensation:
(a) During the first year of the Term hereof, a salary of Fourteen
Thousand Four Hundred Dollars ($14,400) plus reimbursement of expenses
previously advanced by Executive on Company's behalf equal to One Hundred Thirty
Five Thousand Six Hundred Dollars ($135,600) ("Prior Expenses"); and during each
additional year of the Term hereof, a salary of One Hundred Fifty Thousand
Dollars ($150,000). Such salary (plus such Prior Expenses with respect to the
first year of the Term) is herein called the "Base Salary" and shall be paid to
Executive in equal monthly installments, in arrears, on the first day of each
month during the Term hereof.
(b) The Company shall also pay Executive, in addition to the Base Salary,
the following incentive compensation in each calendar year during the Term
hereof (except for the calendar year ended December 31, 1999): The greater of
ten percent (10%) of the Net Pre-Tax Profits (hereinafter defined) of the
Company or ten percent (10%) of the Net Cash Flow (hereinafter defined) of the
Company (the "Bonus"). Notwithstanding the foregoing or any other provision of
this Agreement to the contrary, the maximum bonus payable to Executive in any
specific calendar year shall not exceed an amount equal to twice Executive's
Base Salary during the calendar years ending December 31, 2000 and 2001 and
three times such base salary during the calendar years, 2002, 2003 and 2004.
For purposes hereof, "Net Pre-Tax Profits" shall mean the net pre-tax income
of the Company and "Net Cash Flow" shall mean the net pre-tax cash flow of the
Company, in each calendar year during the Term hereof, as determined by the
Company's certified public accountants, at the Company's expense, applying
generally accepted accounting principles consistently applied during each
period. In determining Net Pre-Tax Profits and Net Cash Flow, the Company's
accountants shall not consider losses incurred in any prior calendar year and
shall add to the net calculations of each of such items, any compensation or
similar expense incurred or recognized by the Company in connection with the
issuance of securities of the Company for purchase prices which are less than,
or warrants, options or other convertible securities which are exercisable at
prices below, fair market value.
(c) The Bonus shall be payable to Executive within thirty (30) days
following the completion of the audited or unaudited financial statements of the
Company for each such calendar year during the Term of this Agreement, but in
any event, not later than April 1 of each such year (or within ten (10) days
after the final resolution of any disagreement with respect to the calculation
of Net Pre-Tax Profits or Net Cash Flow pursuant to the terms of subparagraph
(d) below). In the event of any termination of this Agreement prior to the
expiration of the Term hereof, the Company shall pay Executive (or his estate in
the case of any earlier termination due to Executive's death) the Bonus in a
pro-rated amount based upon Net Pre-Tax Profits and Net Cash Flow for the number
of days in any such calendar year in which any such termination occurs, such
payment to be made sixty (60) days after any such termination (unless such
termination results from an occurrence under Paragraphs 3.2(c), 3.2(d), 3.2(e),
3.2(f), but only in the event of a termination by the Company thereunder, or
3.2(g), in which case,
3.
<PAGE>
notwithstanding any provision of this Agreement to the contrary, the Company
shall have no obligation to make any Bonus payment to Executive).
Notwithstanding the foregoing, the minimum, Bonus shall be paid semi-annually on
June 1 and December 31 of each such calendar year.
(d) The Company shall deliver to Executive with each Bonus payment during
the Term hereof (other than all minimum Bonus payments), a report setting forth
the calculation of Net Pre-Tax Profits and Net Cash Flow. Unless Executive
notifies the Company within fifteen (15) business days after receipt of said
calculations of his disagreement therewith (which notice shall state with
reasonable specificity the reasons for any such disagreement and the amounts in
dispute), said calculations will be final, binding and conclusive on Executive.
If there is a disagreement, and the disagreement cannot be resolved by the
Company and the Executive within sixty (60) days following the delivery of such
calculations, the items in dispute may be submitted by either the Company or the
Executive to the Company's then independent auditors (with a copy being
furnished to the other party). After affording each of the Company and the
Executive the opportunity to present their respective positions (which
opportunity shall not extend for more than ten (10) business days following the
submission of such disputed items to such auditors), the independent auditors
shall determine what, if any, changes are required in the calculations, and such
determination shall be final, binding and conclusive on the Company and the
Executive. The fees, costs and expenses of such independent auditing firm shall
be allocated between the Company and the Executive as follows:
(1) If the Company or Executive submits such calculations to such
independent auditors and the auditors confirm that calculations of Net Pre-Tax
Profits and Net Cash Flow (within 5% thereof, plus or minus), the party which
submitted such calculations to such auditors will pay all of the costs therefor;
or
(2) If the Company or Executive submits such calculations to such
independent auditors and the auditors determine that the calculation of Net
Pre-Tax Profits was understated by more than 5%, then the Company will pay all
of the costs therefor; or
(3) If the Company or Executive submits such calculations to such
independent auditors and the auditors determine that the calculation of Net
Pre-Tax Profits and Net Cash Flow was overstated by more than 5%, the Executive
will pay all of the costs therefor.
(e) Executive shall have the right, at Executive's sole expense, upon
reasonable advance notice and during normal business hours at the Company's
offices, to examine and copy the books and records of the Company relating to
Net Pre-Tax Profits and Net Cash Flow. Executive hereby acknowledges and agrees
that any non-published documentation or other information obtained by him in the
course of any such examination shall be subject to the provisions of Paragraph 8
hereof.
(f) The Company shall, in addition to the Base Salary and the Bonus,
reimburse Executive for all ordinary and necessary out-of-pocket expenses
incurred by him in the performance of his services under this Agreement, subject
to and upon receipt by the Company of invoices or other documentation in support
thereof. Such expenses for which Executive shall be entitled to reimbursement
shall include, but not be limited to, travel and entertainment expenses and
expenses incurred in connection with promoting the Company's business.
5. Executive Benefits. In addition to the Base Salary and the Bonus,
Executive shall receive the following benefits:
4.
<PAGE>
5.1 Executive shall be entitled to four (4) weeks paid vacation and fifteen
(15) paid sick days during each year of the Term hereof. Executive shall take
such vacation at such times as will not unreasonably interfere with significant
activities of the Company and upon reasonable advance notice to the Company. Any
unused vacation shall be paid to Executive by the Company at the end of each
year of the Term hereof.
5.2 The Company shall pay for and maintain for Executive during the term
second and each subsequent year of the Term of this Agreement, disability
insurance providing for the payment to Executive of a minimum of sixty percent
(60%) of his Base Salary for any "disability" as defined in such disability
insurance policy. The Company shall also pay and maintain for Executive during
the Term hereof, major medical, hospitalization, dental and vision insurance
(which insurance will cover Executive and members of his immediate family). The
Company shall maintain such disability, medical, dental, and vision insurance in
effect, at the Company's cost, for a period of eighteen (18) months after the
expiration of this Agreement or the termination of this Agreement pursuant to
Paragraphs 3.2(b), 3.2(f) or 3.2(h) hereof. During the Term of this Agreement,
the Company may, at its election at any time during the Term hereof, obtain and
maintain at its cost, a key man life insurance policy on the Executive's life
with the Company as the beneficiary thereof and Executive will cooperate with
the Company and its insurer with respect thereto.
5.3 The Company grants to Executive the following number of options to
purchase one share of Company's Common Stock per option at an exercise price of
$.25 per share, provided that Executive shall not have the right to exercise
those options corresponding to the specific deliverables described below unless
and until such deliverables are completed on or before the corresponding
"outside completion date":
Number of Options Deliverable Outside Completion Date
- ----------------- ----------- -----------------------
50,000 Design Phase Elements
Described in Schedule A.
50,000 Build-Out Elements
Described in Schedule A.
50,000 Completion of Beta Test
described in Schedule A.
50,000 National Launch of 7th
and 8th Grade Service
Described in Schedule A.
The remaining terms and conditions applicable to such options, are described in
Schedule A-1, attached hereto.
5.4 The Company agrees that the exercise price of each of the 500,000
Options to purchase one (1) share of Company's Common Stock heretofore granted
to Executive shall be equal to $.25 per share (rather than $3.50 with respect to
the first 100,000 Options, $5.00 with respect to the next 200,000 Options, and
$7.00 with respect to the next 200,000 Options). The provision of this Paragraph
5.4 constitutes a material inducement for Executive to continue rendering
services to Company.
5.
<PAGE>
5.5 The Company agrees that nothing contained in this Agreement is intended
to, or shall be deemed to be granted to the Executive in lieu of, or as a
limitation upon, any rights and privileges which the Executive may otherwise be
entitled to as an executive employee of the Company under any retirement,
pension, profit sharing, insurance, hospitalization or other employee benefit
plan of any type (including, without limitation, any incentive, profit sharing,
bonus or stock option plan), which may now be in effect or which may hereafter
be adopted by the Company, or any subsidiary of the Company, it being understood
that the Executive shall have the same rights and privileges to participate in
such Company (including its subsidiaries) benefit plans as any other officer or
executive employee of the Company or any of its subsidiaries.
6. Severance; Change of Control.
6.1 In the event that, upon the expiration of the Term hereof on December
31, 2004, this Agreement has not been renewed or Executive and the Company have
not entered into a successor employment agreement, the Company shall pay to
Executive on such date, in cash, a lump sum amount equal to Executive's then
Base Salary plus the bonus compensation payable to Executive for the calendar
year 2003, then multiplied by a factor of 1.5.
6.2 Omitted.
6.3 If, at any time after a Change in Control has occurred, the Company (or
any successor thereto) terminates this Agreement prior to the expiration of the
Term of this Agreement, Executive shall receive (1) his Base Salary, Bonus and
all fringe benefits provided for under Paragraph 5 hereof, including, without
limitation, all benefits and awards under the Company's stock option, stock
appreciation, restricted stock, stock bonus and similar plans and the Company's
pension and retirement plans and programs which are then in effect, accrued
through the date of any such termination; provided, however, that all of
Executive's vested stock options, stock appreciation rights, restricted stock
grants and stock bonuses and similar benefits shall be deemed to vest in full on
any such termination date, notwithstanding any provision to the contrary in any
applicable agreement or plan and (ii) a lump sum payment, in cash, on the date
of any such termination, in an amount equal to the then Base Salary of Executive
multiplied by a factor of 5.
6.4 For purposes hereof, a "Change in Control" shall mean and be deemed to
have occurred if: (I) any "person" or "group" (as such terms are used in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Act"), except for an employee stock ownership trust (or any of the
trustees hereof), becomes a "beneficial owner" (as such term is used in Rule
13d-3 promulgated under the Act), after the date hereof, directly or indirectly,
of securities of the Company representing thirty percent (30%) or more of the
combined voting power of the Company's then outstanding securities; or (ii) the
majority of the Board of Directors, as such entire Board of Directors is
comprised as of the date hereof, no longer serve as directors of the Company,
except that there shall not be counted toward such majority who no longer serve
as directors any director who ceased to serve either prior to the date of a
Change in Control, for any reason, or at any other time due to voluntary
resignation, death, disability or termination for cause or any director who is
elected to the Board of Directors after the date hereof and who is approved by
Executive; or (iii) the shareholders of the Company approve a plan of
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets; or (iv) the
shareholders of the Company approve a merger of consolidation of the Company
with any other entity, other than a merger or consolidation which would result
in the combined voting power of the Company's voting securities outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or
6.
<PAGE>
consolidation; or (v) any other event shall have occurred which constitutes
a change in ownership or effective control of the Company or in the ownership of
its assets; provided, however, that no Change in Control shall be deemed to have
occurred if any aforementioned plan of liquidation, sale of assets, merger or
consolidation is not consummated. Notwithstanding the foregoing, any transaction
involving a leveraged buyout or other acquisition of the Company which would
otherwise constitute a Change in Control, in which Executive participates in the
surviving or successor entity (other than solely as an employee or consultant),
shall not constitute a Change in Control.
7. Disability.
7.1 Subject to the terms of Paragraph 7.2 below, in the event Executive
suffers any illness, injury or other incapacity which causes him to become
temporarily disabled during the Term of this Agreement, he shall continue to
receive one hundred percent (100%) of the Base Salary, Bonus and all other
benefits to which he was entitled at the time he became so disabled for any
period of disability not in excess of six (6) consecutive calendar months, the
term "Permanent Disability" as used in this Agreement shall mean any disability
of Executive for a period in excess of six (6) consecutive calendar months. For
the purpose of this Paragraph, the terms "disabled" and "disability" shall mean
any physical or mental illness, injury or other incapacity which, in the opinion
of a doctor reasonably satisfactory to the Company and Executive, renders the
Executive unable to perform his duties hereunder. The date that any such
disability shall be deemed to have commenced shall be the date Executive first
absents himself from work during a continuous period of disability as so
determined by the doctor hereinabove set forth.
7.2 Upon any Permanent Disability, the Company may at any time thereafter
either reduce the Base Salary to be received by Executive to seventy-five
percent (75%) of the Base Salary at the time of any such Permanent Disability
(including all payments Executive may receive under any disability policy
maintained by the Company) or terminate this Agreement upon ninety (90) days
prior written notice to Executive. In the event of any such termination,
Executive shall be entitled to receive from the Company or from the Company's
disability carrier, disability compensation in an amount which shall, when added
to all social security benefits received by Executive as a result of the
Permanent Disability, equal Seventy Thousand Dollars ($70,000) per annum.
8. Confidentiality and Non-Disclosure Covenant.
8.1 During the Term of this Agreement, Executive hereby acknowledges that he
may obtain and be entrusted with unpublished material confidential and
proprietary information relating to the Company's present and proposed business
and operations, including, without limitation, financial information relating to
the Company's present and proposed business and proposed business and
operations, the cost and pricing of the Company's services, the sales and
marketing plans and strategies of the Company, proposed Company's accounts and
the terms of all material agreements to which the Company is a party. All of
such information that may be obtained by Executive shall, for purposes hereof,
be referred to as "Confidential Information." Executive hereby agrees that,
unless the Confidential Information becomes publicly known through legitimate
origin not involving any improper act or omission of Executive, neither he, nor
any entity or person owned or controlled directly or indirectly by him, shall,
during the Term of this Agreement or thereafter, use for his own benefit or for
the benefit of others for any purpose and in any manner whatsoever, divulge to
any person, firm, corporation or other entity or otherwise publish or disclose
any Confidential Information (except as necessary in connection with the
performance of Executive's services under this Agreement). This provision shall
survive the expiration or termination of this Agreement. Notwithstanding the
foregoing, Executive shall not be in breach of this covenant with respect to any
use or disclosure of any Confidential Information by him which does not cause
any material damage to the Company or is required as a result of any legal
process served upon him in any judicial or administrative proceeding (provided
that the Company shall be
7.
<PAGE>
give notice in time to enable it to object to such disclosure) or was obtained
by Executive from a third party without such third party's breach of agreement
or obligation of trust.
8.2 Executive hereby acknowledges and agrees that any actual or threatened
breach of the provisions of this Paragraph 8 may cause irreparable harm to the
Company and may not be remediable by an action at law for damages and,
therefore, the Company shall be entitled to seek, as a non-exclusive remedy, in
any court of competent jurisdiction, all equitable remedies therefor, including,
without limitation, a temporary or permanent injunction or specific performance
of the provisions hereof, without the necessity of showing any actual damage or
that monetary damages would not provide an adequate remedy at law or posting a
bond therefor. The provisions of this Paragraph 8 shall survive the termination
or expiration of the Term of this Agreement.
9. Representations and Warranties of Executive. The Executive represents and
warrants to the Company as follows:
9.1 All action on the part of the Executive necessary for the authorization,
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, has been taken and this Agreement
constitutes a valid and legally binding obligation of Executive, enforceable in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other laws affecting generally the
enforcement of creditors' rights and by general principles of equity.
9. Representations and Warranties of Executive. The Executive represents and
warrants to the Company as follows:
9.1 All action of the part of the Executive necessary for the authorization,
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, has been taken and this Agreement
constitutes a valid and legally binding obligation of Executive, enforceable in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other laws affecting generally the
enforcement of creditors' rights and by general principles of equity.
9.2 The authorization, execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, will
not result in any violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, a default under any provision
of any instrument, judgment, order, writ, decree or agreement to which Executive
is a party or by which he is bound.
9.3 There is no action, suit, proceeding, or investigation pending, or to
the knowledge of Executive, currently threatened against Executive, in any way
relating to the validity of this Agreement or the right of Executive to enter
into or to consummate this Agreement and the transactions contemplated hereby.
10. Representations and Warranties of the Company. The Company represents
and warrants to the Executive as follows:
10.1 All action on the part of the Company necessary for the authorization,
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, has been taken and this Agreement
constitutes a valid and legally binding obligation of the Company, enforceable
in accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other laws affecting generally the
enforcement of creditors' rights and by general principles of equity.
10.2 The authorization, execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, will
not result in any violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, a default under any provision
of the Company's Certificate of Incorporation by By-Laws or any instrument,
judgment, order, writ, decree or agreement to which the Company is a party or by
which he is bound.
10.3 There is no action, suit, proceeding, or investigation pending, or to
the knowledge of the Company, currently threatened against the Company, in any
way relating to the validity
8.
<PAGE>
of this Agreement of the right of the Company to enter into or to consummate
this Agreement and the transactions contemplated hereby.
11. Arbitration. Except for any action under this Agreement for injunctive
or other equitable relief, all disputes, controversies and differences between
the parties hereto arising under this Agreement which the parties hereto are
unable to settle amicably shall be resolved in Los Angeles, California, by
binding arbitration in accordance with the Rules then in force of the American
Arbitration Association. The arbitration shall be held before three arbitrators
one of which shall be selected by the other two arbitrators, and the decision of
such arbitrators shall be deemed to be final, and judgment upon any award or
decision rendered thereby may be entered in any court, domestic or foreign,
having jurisdiction thereof.
12. Miscellaneous.
12.1 This Agreement constitutes the sole and entire agreement between the
parties hereto with respect to the subject matter hereof. This Agreement may not
be changed or modified except by an instrument in writing signed by the party to
be bound thereby.
12.2 All notices, consents, requests, demands and other communications
required or permitted to be given under this Agreement shall be in writing and
delivered personally, receipt prepaid, return receipt requested, addressed to
the parties hereto as follows (or to such other address and/or to such other
persons as either of the parties hereto shall specify by notice given in
accordance with this provision):
(a) If to the Company:
EduLink, Inc. 450
North Roxbury Drive
Suite 602
Beverly Hills, California 90210
Attn: Chief Executive Officer
(b) If to Executive:
Michael Rosenfeld
30 Wavecrest Avenue
Venice, California 90291
All such notices, consents, requests, demands and other communications shall be
deemed given when personally delivered as aforesaid, or, if mailed as aforesaid,
on the third business day after the mailing thereof or on the day actually
received, if earlier, except for a notice of a change of address which shall be
effective only upon receipt.
12.3 Neither party hereto may assign this Agreement of their respective
rights, benefits or obligations hereunder without the written consent of the
other party hereto. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors, heirs, personal
representatives, administrators, executors and permitted assigns. Nothing
contained in this Agreement is intended to confer upon any person or entity,
other than the parties hereto, and their respective successors, heirs, personal
representatives, administrators, executors or permitted assigns, any rights,
benefits, obligations, remedies or liabilities under or by reason of this
Agreement. Notwithstanding the foregoing,
9.
<PAGE>
in the event of a sale of securities or assets of the Company constituting a
Change of Control, the Company shall have the right to assign this Agreement to
the person or entity acquiring the stock or assets of the Company provided that
any such person or entity agrees in writing to assume and be bound by all of the
terms and provisions of this Agreement.
12.4 No waiver of this Agreement shall be effective unless in writing and
signed by the party to be bound thereby. The waiver by either party hereto of a
breach of any provision of this Agreement, or of any representation, warranty,
covenant or obligation in this Agreement to the other party hereto shall not be
construed as a waiver of any subsequent breach or of any other provision,
representation, warranty, covenant or obligation of such other party, unless the
instrument of waiver expressly so provides.
12.5 This Agreement shall be governed by and construed in accordance with
the laws of the State of California with respect to contracts made and to be
fully performed therein, without regard to the conflicts of laws principles
thereof. By his execution hereof, Executive hereby consents and irrevocably
submits to the in personam jurisdiction of the American Arbitration Association
tribunal located in the City and County of Los Angeles, State of California and
agrees that any process in any action commenced in such tribunal under this
Agreement may be served upon him personally, by certified or registered mail,
return receipt requested, or by Federal Express or other courier service, with
the same full force and effect as if personally served upon him in Los Angeles
City. Each of the parties hereto hereby waives any claim that the jurisdiction
of any such tribunal is not a convenient forum for any such action and any
defense of lack of in personam jurisdiction with respect thereto. In the event
of any such action or proceeding the party prevailing therein shall be entitled
to payment from the other party hereto of its reasonable counsel fees and
disbursements in an amount determined therein.
12.6 The parties hereto hereby agree that, at any time and from time to time
during the Term hereof, upon the reasonable request of the other party hereto,
they shall do, execute, acknowledge and deliver, or cause to be done, executed,
acknowledge and delivered, such further acts, deeds, assignments, transfers,
conveyances and assurances as may be reasonably required to more effectively
consummate this Agreement and the transactions contemplated thereby or to
confirm or otherwise effectuate the provisions of this Agreement.
12.7 If any term or provision of this Agreement, or the application thereof
to any person or circumstance, if finally determined by a court or arbitration
tribunal to any extent to be illegal, invalid or unenforceable, the remainder of
this Agreement, or the application of such term or provision to persons or
circumstances other than those as to which it is held illegal, invalid or
unenforceable, shall not be affected thereby and each term and provision of this
Agreement shall be valid and shall be enforced to the fullest extent permitted
hereunder and by law.
12.8 Except as required by applicable law or in connection with the
preparation of the Company's financial statements or documents, the Company will
not publish or disclose the compensation or other provisions of this Agreement.
12.9 During and after the Term of this Agreement, the Company shall defend,
indemnify and hold Executive harmless from any claims, causes of action,
liabilities, damages, costs or expenses incurred by Executive based upon or in
connection with the performance of his services under this Agreement to the
fullest extent permitted by the laws of the State of California and the Articles
of
10.
<PAGE>
Incorporation and By-Laws of the Company. This provision will survive the
expiration or termination of the Term of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executive this Agreement this ____
day of August, 1999.
EDULINK, INC.
By: /s/ Ronald Rescigno
---------------------------
Ronald Rescigno - President
/s/ Michael Rosenfeld
---------------------------
Michael Rosenfeld
11.
<PAGE>
EXHIBIT 10.3
AMENDMENT TO EMPLOYMENT AGREEMENT
Notwithstanding the provisions of the employment agreement dated as of
September 1, 1999 ("Agreement"), between Michael Rosenfeld ("Executive") and
EduLink, Inc. ("Company") to the contrary, the parties agree as follows:
(1) Payment to Executive of the annual compensation described in
paragraph 4(a) of the Agreement shall commence on January 1, 2000,
rather than September, 1999; accordingly, Executive waives any claims
to compensation during the period September 1, 1999 through December
31, 1999.
(2) Paragraph 5.3 of the Agreement shall be amended to provide that:
(3) The words "Warrant" shall be substituted for the word "Option"
wherever it appears.
Dated: As of February 1, 2000.
EDULINK, INC.
By: /s/ Michael Rosenfeld
----------------------
MICHAEL ROSENFELD, CEO
/s/ Ronald Rescigno
----------------------
RONALD RESCIGNO
<PAGE>
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of this ____ day of September, 1999, by and
between Ronald Rescigno, an individual residing at 4063 Bridgewood Lane,
Westlake Village, California 91362 ("Executive") and EDULINK, INC., a California
corporation with its principal offices at 450 North Roxbury Drive, Beverly
Hills, California 90210 (the "Company").
WITNESSETH:
WHEREAS, the Company is engaged in the design, development, production and
marketing of an internet-based interactive educational system designed for
institutional and individual and users; and
WHEREAS, Executive has, since the inception of the Company in 1996, served
as its President and the Company recognizes the value of his services which are
of a specific, unique and extraordinary character and therefor requires the
continued services of Executive as its President for a specified period of time;
and
WHEREAS, the Company believes that the establishment and maintenance of
sound and vital management of the Company is essential to the protection and
enhancement of the interests of the Company and its stockholders and, in order
to secure such protection, desires to obtain the contractual commitment of
certain of its executive officers, including the Executive, to render their
services to the Company for a specific period of time; and
WHEREAS, for the foregoing reasons, the Company desires to employ the
Executive as its President, and Executive is desirous of being so employed, all
on and subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
unconditionally acknowledged, the parties hereto do hereby agree as follows:
1. Employment. During the Term (as hereinafter defined) of this Agreement,
the Company hereby employs Executive as its President, upon and subject to the
terms and conditions set forth in this Agreement. Executive hereby agrees to
accept such employment, upon and subject to the terms and conditions set forth
in this Agreement. In addition, the Company shall, subject to Executive's
consent, cause Executive to be re-elected to the Company's Board of Directors
during the Term of this Agreement.
2. Executive's Duties and Responsibilities.
2.1 Executive will perform all of the services customarily associated with
position of President during the Term of this Agreement, subject to the policies
established by and under the direction of the Board of Directors of the Company.
Executive also agrees to perform such other duties and responsibilities,
consistent with such position, as the Board of Directors may assign to him from
time to time during the Term hereof.
1.
<PAGE>
2.2 Executive agrees to devote substantially all of his business time,
attention and energy to the performance of his duties under this Agreement
during the Term hereof and shall perform such duties diligently, in good faith
and in a manner consistent with the best interests of the Company. Executive
further agrees to use his best efforts at all times during the Term hereof to
preserve, protect, enhance, and maintain the trade, business and goodwill of the
Company.
2.3 Executive shall perform his services wherever his services are
reasonably required but principally at one of the principal offices of the
Company which are presently located at 4063 Bridgewood Lane, Westlake Village,
California 91362, and 450 North Roxbury Drive, Beverly Hills, California 90210.
Under no circumstances shall Executive, without his prior written consent, be
required to change the location of his current residence in order to perform the
services required of him under this Agreement (nor to travel any distance which
is significantly greater than the distance currently traveled by the Executive
to the Company's offices). The Company shall furnish Executive with a private
office, stenographic help and such other facilities, services and staff as are
suitable to his position and necessary and adequate for the performance of his
services under this Agreement.
3. Term.
3.1 The term of this Agreement shall commence as of September ___, 1999 and
shall expire on December 31, 2004, subject to earlier termination as hereinafter
provided in paragraph 3.2 hereof (the "Term").
3.2 Pursuant to the provisions of Paragraph 3.1 above, the Term of this
Agreement shall terminate on the earlier to occur of any of the following
events:
(a) The death of Executive;
(b) The Permanent Disability (hereinafter defined) of Executive as
provided in Paragraph 7 hereof;
(c) Any repeated breach of trust or other repeated action by which
Executive obtains material personal gain at the expense or to the detriment of
the Company;
(d) The failure of Executive to perform the customary duties of his
position, provided that Executive is furnished with notice of such breach from
the Company (with Executive not participating or voting with respect to any such
notice if Executive is a director of the Company) and Executive fails to cure
any such breach within thirty (30) days of such notice;
(e) A conviction of the Executive for any felony or of any other crime
involving moral turpitude;
(f) The delivery of notice of the Company by the Executive, or to the
Executive to the Company, as the case may be, of the termination of this
Agreement for any breach or default by the Company or the Executive, as the case
may be, of any of their respective representations, warranties, obligations or
covenants under this Agreement, provided that any such breach or default is not
occured within thirty (30) days after such notice from Executive or the Company,
as the case may be.
(g) The entry by a court of competent jurisdiction of a decree or order
for relief in respect of the Company in a voluntary case under any applicable
bankruptcy, insolvency, or similar law then in effect or the appointment of a
receiver, liquidator, assignee, custodian, trustee, or sequestrator of the
Company or for any substantial part of its property or an order by any such
court for
2.
<PAGE>
the wind-up or liquidation of the Company's affairs; or a petition initiating an
involuntary case under any such bankruptcy, insolvency, or similar law is filed
against the Company and remains pending for sixty (60) days without a stay or
dismissal; or the Company commences a voluntary case under any such bankruptcy,
insolvency, or similar law then in effect, or makes any general assignment for
the benefit of its creditors or takes action in furtherance of any of the
foregoing; or
4. Compensation. In consideration of the performance by Executive of his
services under this Agreement during the Term hereof, the Company shall pay
Executive the following compensation:
(a) A base salary of One Hundred Fifty Thousand Dollars ($150,000)
during each year of the Term hereof (the "Base Salary"), such salary to be paid
to Executive in equal monthly installments (after the deduction of all
applicable withholding and other required payroll deductions) (the "Monthly Base
Salary Payments"), in arrears, on the first day of each month during the Term of
this Agreement.
(b) The Company shall also pay Executive, in addition to the Base
Salary, the following incentive compensation in each calendar year during the
Term hereof (except for the calendar year ended December 31, 1999): The greater
of ten percent (10%) of the Net Pre-Tax Profits (hereinafter defined) of the
Company or ten percent (10%) of the Net Cash Flow (hereinafter defined) of the
Company (the "Bonus"). Notwithstanding the foregoing or any other provision of
this Agreement to the contrary, the maximum bonus payable to Executive in any
specific calendar year shall not exceed an amount equal to twice Executive's
Base Salary during the calendar years ending December 31, 2000 and 2001 and
three times such base salary during the calendar years, 2002, 2003 and 2004.
For purposes hereof, "Net Pre-Tax Profits" shall mean the net pre-tax income
of the Company and "Net Cash Flow" shall mean the net pre-tax cash flow of the
Company, in each calendar year during the Term hereof, as determined by the
Company's certified public accountants, at the Company's expenses, applying
generally accepted accounting principles consistently applied during each
period. In determining Net Pre-Tax Profits and Net Cash Flow, the Company's
accountants shall not consider losses incurred in any prior calendar year and
shall add to the net calculations of each of such items, any compensation or
similar expense incurred or recognized by the Company in connection with the
issuance of securities of the Company for purchase prices which are less than,
or warrants, options or other convertible securities which are exercisable at
prices below, fair market value.
(c) The Bonus shall be payable to Executive within thirty (30) days
following the completion of the audited or unaudited financial statements of the
Company for each such calendar year during the Term of this Agreement, but in
any event, not later than April 1 of each such year (or within ten (10) days
after the final resolution of any disagreement with respect to the calculation
of Net Pre-Tax Profits or Net Cash Flow pursuant to the terms of subparagraph
(d) below). In the event of any termination of this Agreement prior to the
expiration of the Term hereof, the Company shall pay Executive (or his estate in
the case of any earlier termination due to Executive's death) the Bonus in a
prorated amount based upon Net Pre-Tax Profits and Net Cash Flow for the number
of days in any such calendar year in which any such termination occurs, such
payment to be made sixth (60) days after any such termination (unless such
termination results from an occurrence under Paragraphs 3.2(c), 3.2(d), 3.2(e),
3.2(f), but only in the event of a termination by the Company thereunder, or
3.2(g), in which case, notwithstanding any provision of this Agreement to the
contrary, the Company shall have no obligation to make any Bonus payment to
Executive). Notwithstanding the foregoing, the minimum, Bonus shall be paid
semi-annually on June 1 and December 31 of each such calendar year.
3.
<PAGE>
(d) The Company shall deliver to Executive with each Bonus payment
during the Term hereof (other than all minimum Bonus payments), a report setting
forth the calculation of Net Pre-Tax Profits and Net Cash Flow. Unless Executive
notifies the Company within fifteen (15) business days after receipt of said
calculations of his disagreement therewith (which notice shall state with
reasonable specificity the reasons for any such disagreement and the amounts in
dispute), said calculations will be final, binding and conclusive on Executive.
If there is a disagreement, and the disagreement cannot be resolved by the
Company and the Executive within sixty (60) days following the delivery of such
calculations, the items in dispute may be submitted by either the Company or the
Executive to the Company's then independent auditors (with a copy being
furnished to the other party). After affording each of the Company and the
Executive the opportunity to present their respective positions (which
opportunity shall not extend for more than ten (10) business days following the
submission of such disputed items to such auditors), the independent auditors
shall determine what, if any, changes and required in the calculations, and such
determination shall be final, binding and conclusive on the Company and the
Executive. The fees, costs and expenses of such independent auditing firm shall
be allocated between the Company and the Executive as follows:
(1) If the Company or Executive submits such calculations to such
independent auditors and the auditors confirm that calculations of Net Pre-Tax
Profits and Net Cash Flow (within 5% thereof, plus or minus), the party which
submitted such calculations to such auditors will pay all of the costs therefor;
or
(2) If the Company or Executive submits such calculations to such
independent auditors and the auditors determine that the calculation of Net
Pre-Tax Profits was understated by more than 5%, then the Company will pay all
of the costs therefor; or
(3) If the Company or Executive submits such calculations to such
independent auditors and the auditors determine that the calculation of the Net
Pre-Tax Profits and Net Cash Flow was overstated by more than 5%, the Executive
will pay all of the costs therefor.
(e) Executive shall have the right, at Executive's sole expense, upon
reasonable advance notice and during normal business house at the Company's
offices, to examine and copy the books and records of the Company relating to
Net Pre-Tax Profits and Net Cost Flow. Executive hereby acknowledges and agrees
that any non-published documentation or other information obtained by him in the
course of any such examination shall be subject to the provisions of Paragraph 8
hereof.
(f) The Company shall, in addition to the Base Salary and the Bonus
reimburse Executive for all ordinary and necessary out-of-pocket expenses
incurred by him in performance of his services under this Agreement, subject to
and upon receipt by the Company of invoices or other documentation in support
thereof. Such expenses for which Executive shall be entitled to reimbursement
shall include, but not be limited to, travel and entertainment expenses and
expenses incurred in connection with promoting the Company's business.
5. Executive Benefits. In addition to the Base Salary and the Bonus,
Executive shall receive the following benefits:
5.1 Executive shall be entitled to four (4) weeks paid vacation and fifteen
(15) paid sick days during each year of the Term hereof. Executive shall take
such vacation at such times as will not unreasonably interfere with significant
activities of the Company and upon reasonable advance notice to the Company. Any
unused vacation shall be paid to Executive by the Company at the end of each
year of the Term hereof.
4.
<PAGE>
5.2 The Company shall pay for the maintain for Executive during the term
second and each subsequent year of the Term of this Agreement, disability
insurance providing for the payment to Executive of a minimum of sixty percent
(60%) of his Base Salary for any "disability" as defined in such disability
insurance policy. The Company shall also pay and maintain for Executive during
the Term hereof, major medical, hospitalization, dental and vision insurance
(which insurance will cover Executive and members of his immediate family). The
Company shall maintain such disability, medical, dental, and vision insurance in
effect, at the Company's cost, for a period of eighteen (18) months after the
expiration of this Agreement or the termination of this Agreement pursuant to
Paragraphs 3.2(b), 3.2(f) or 3.2(h) hereof. During the Term of this Agreement.
The Company may, at its election at any time during the Term hereof, obtain and
maintain at its cost, a key man life insurance policy on the Executive's life
with the Company as the beneficiary thereof and Executive will cooperate with
the Company and its insurer with respect thereto.
5.3 The Company grants to Executive the following number of options to
purchase one share of Company's Common Stock per option at an exercise price of
$.25 per share, provided that Executive shall not have the right to exercise
those options corresponding to the specific deliverables described below unless
and until such deliverables are completed on or before the corresponding
"outside completion date":
Number of Option Deliverable Outside Completion Date
- ---------------- ----------- -----------------------
50,000 Design Phase Elements
Described in Schedule A.
50,000 Build-Out Elements Described in
Schedule A.
50,000 Completion of Beta Test
described in Schedule A.
50,000 National Launch 7th and 8th
Grade Service Described in
Schedule A.
The remaining terms and conditions applicable to such options, are described in
Schedule A-1, attached hereto.
5.4 The Company agrees that the exercise price of each of the 500,000
Options to purchase one (1) share of Company's Common Stock heretofore granted
to Executive shall be equal to $.25 per share (rather than $3.50 with respect to
the first 100,000 Options, $5.00 with respect to the next 200,000 Options, and
$7.00 with respect to the next 200,000 Options). The provision of this Paragraph
5.4 constitutes a material inducement for Executive to continue rendering
services to Company.
5.5 The Company agrees that nothing contained in this Agreement is intended
to, or shall be deemed to be granted to the Executive in lieu of, or as a
limitation upon, any rights and privileges which the Executive may otherwise be
entitled to as an executive employee of the Company under any retirement,
pension, profit sharing, insurance, hospitalization or other employee benefit
plan of any type (including, without limitation, any incentive, profit sharing,
bonus or stock option plan), which may now
5.
<PAGE>
be in effect or which may hereafter be adopted by the Company, or any subsidiary
of the Company, it being understood that the Executive shall have the same
rights and privileges to participate in such Company (including its
subsidiaries) benefit plans as any other officer or executive employee of the
Company or any of its subsidiaries.
6. Severance; Change of Control.
6.1 In the event that, upon the expiration of the Term hereof on December
31, 2004, this Agreement has not been renewed or Executive and the Company have
not entered into a successor employment agreement, the Company shall pay to
Executive on such date, in cash, a lump sum amount equal to Executive's then
Base Salary plus the bonus compensation payable to the Executive for the
calendar year 2003, then multiplied by a factor of 1.5.
6.2 Omitted
6.3 If, at any time after a Change in Control has occurred, the Company (or
any successor thereto) terminates this Agreement prior to the expiration of the
Term of this Agreement, Executive shall receive (1) has Base Salary, Bonus and
all fringe benefits provided for under Paragraph 5 hereof, including, without
limitation, all benefits and awards under the Company's stock option, stock
appreciation, restricted stock, stock bonus and similar plans and the Company's
pension and retirement plans and programs which are then in effect, accrued
through the date of any such termination; provided, however, that all of
Executive's vested stock options, stock appreciation rights, restricted stock
grants and stock bonuses and similar benefits shall be deemed to vest in full on
any such termination date, notwithstanding any provision to the contrary in any
applicable agreement or plan and (ii) a lump sum payment, in cash, on the date
of any such termination, in an amount equal to the then Base Salary of Executive
multiplied by a factor of 5.
6.4 For purposes hereof, a "Change in Control" shall mean and be deemed to
have occurred if: (I) any "person" or "group" (as such terms are used in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Act"), except for an employee stock ownership trust (or any of the
trustees thereof), becomes a "beneficial owner" (as such term is used in Rule
13d-3 promulgated under the Act), after the date hereof, directly or indirectly,
of securities of the Company representing thirty percent (30%) or more of the
combined voting power of the Company's then outstanding securities; or (ii) the
majority of the Board of Directors, as such entire Board of Directors is
comprised as of the date hereof, no longer serve as directors of the Company,
except that there shall not be counted toward such majority who no longer serve
as directors any director who ceased to serve either prior to the date of a
Change in Control, for any reason, or at any other time due to voluntary
resignation, death, disability or termination for cause or any director who is
elected to the Board of Directors after the date hereof and who is approved by
Executive; or (iii) the shareholders of the Company approve a plan of
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets; or (iv) the
shareholders of the Company approve a merger of consolidation of the Company
with any other entity, other than a merger or consolidation which would result
in the combined voting power of the Company's voting securities outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; or (v) any other event shall have occurred which
constitutes a change in ownership or effective control of the Company or in the
ownership of its assets; provided, however, that no Change in Control shall be
deemed to have occurred if any aforementioned plan of liquidation, sale of
assets, merger on consolidation is not consummated. Notwithstanding the
foregoing, any transaction involving a leveraged buyout or other acquisition of
the Company which would otherwise constitute a Change in
6.
<PAGE>
Control, in which Executive participates in the surviving or successor entity
(other than solely as an employee or consultant), shall not constitute a Change
in Control.
7. Disability.
7.1 Subject to the terms of Paragraph 7.2 below, in the event Executive
suffers any illness, injury or other incapacity which causes him to become
temporarily disabled during the Term of this Agreement, he shall continue to
receive one hundred percent (100%) of the Base Salary, Bonus and all other
benefits to which he was entitled at the time he became so disabled for any
period of disability not in excess of six (6) consecutive calendar months. The
term "Permanent Disability" as used in this Agreement shall mean any disability
of Executive for a period in excess of six (6) consecutive calendar months. For
the purpose of this Paragraph, the terms "disabled" and "disability" shall mean
any physical or mental illness, injury or other incapacity which, in the opinion
of the doctor reasonably satisfactory to the Company and executive, renders the
Executive unable to perform his duties hereunder. The date that any such
disability shall be deemed to have commenced shall be the date Executive first
absents himself from working during a continuous period of disability as
determined by the doctor hereinabove set forth.
7.2 Upon any Permanent Disability, the Company may at any time thereafter
either reduce the Base Salary to be received by Executive to seventy-five
percent (75%) of the Base Salary at the time of any such Permanent Disability
(including all payments Executive may receive under any disability policy
maintained by the Company) or terminate this Agreement upon ninety (90) days
prior written notice to Executive. In the event of any such termination,
Executive shall be entitled to receive from the Company or from the Company's
disability carrier, disability compensation in an amount which shall, when added
to all social security benefits received by Executive as a result of the
Permanent Disability, equal Seventy Thousand Dollars ($70,000) per annum.
8. Confidentiality and Non-Disclosure Covenant.
8.1 During the Term of this Agreement, Executive hereby acknowledges that he
may obtain and be entrusted with unpublished material confidential and
proprietary information relating to the Company's present and proposed
business and operations, including, without limitation, financial information
relating to the Company's present and proposed business and proposed business
and operations, the cost and pricing of the Company's services, the sales and
marketing plans and strategies of the Company, proposed Company's accounts and
the terms of all material agreements to which the Company is a party. All of
such information that may be obtained by Executive shall, for purposes hereof,
be referred to as "Confidential Information." Executive hereby agrees that,
unless the Confidential Information becomes publicly known through legitimate
origin not involving any improper act or omission of Executive, neither he, nor
any entity or person owned or controlled directly or indirectly by him, shall,
during Term of this Agreement or thereafter, use for his own benefit or for the
benefit of others for any purpose and in any manner whatsoever, divulge to any
person, firm, corporation or other entity or otherwise publish or disclose any
Confidential Information (except as necessary in connection with the performance
of Executive's services under this Agreement). This provision shall survive the
expiration or termination of this Agreement. Notwithstanding the foregoing,
Executive shall not be in breach of this covenant with respect to any use or
disclosure of any Confidential Information by him which does not cause any
material damage to the Company or is required as a result of any legal process
served upon him in any judicial or administrative proceeding (provided that the
Company shall be given notice in time to enable it to object to such disclosure)
or was obtained by Executive from a third party without such third party's
breach of agreement or obligation of trust.
7.
<PAGE>
8.2 Executive hereby acknowledges and agrees that any actual or threatened
breach of the provisions of this Paragraph 8 may cause irreparable harm to the
Company and may not be remediable by an action at law for damages and,
therefore, the Company shall be entitled to seek, as a non-exclusive remedy, in
any court of competent jurisdiction, all equitable remedies therefor,
including, without limitation, a temporary or permanent injunction or specific
performance of the provisions hereof, without the necessity of showing any
actual damage or that monetary damages would not provide an adequate remedy at
law or posting a bond therefor. The provisions of this Paragraph 8 shall survive
the termination or expiration of the Term of this Agreement.
9. Representations and Warranties of Executive. The Executive represents and
warrants to the Company as follows:
9.1 All action of the part of the Executive necessary for the authorization,
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, has been taken and this Agreement
constitutes a valid and legally binding obligation of Executive, enforceable in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other laws affecting generally the
enforcement of creditor's rights and by general principles of equity.
9.2 The authorization, execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, will
not result in any violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, a default under any provision
of any instrument, judgment, order, writ, decree or agreement to which Executive
is a part or by which he is bound.
9.3 There is no action, suit, proceeding, or investigation pending, or to
the knowledge of Executive, currently threatened against Executive, in any way
relating to the validity of this Agreement or the right of Executive to enter
into or to consummate this Agreement and the transactions contemplated hereby.
10. Representations and Warranties of the Company. The Company represents
and warrants to the Executive as follows:
10.1 All action on the part of the Company necessary for the authorization,
execution delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, has been taken and this Agreement constitutes
a valid and legally binding obligation of the Company, enforceable in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other laws affecting generally the
enforcement of creditors' rights and by general principles of equity.
10.2 The authorization, execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, will
not result in any violation or by in conflict with or constitute, with or
without the passage of time and giving of notice, a default under any provision
of the Company's Certificate of Incorporation by By-Laws or any instrument,
judgment, order, writ, decree or agreement to which the Company is a party or by
which he is bound.
10.3 There is no action, suit, proceeding, or investigation pending, or to
the knowledge of the Company, currently threatened against the Company, in any
way relating to the validity of this Agreement or the right of the Company to
enter into or to consummate this Agreement and the transactions contemplated
hereby.
8.
<PAGE>
11. Arbitration. Except for any action under this Agreement for injunctive
or other equitable relief, all disputes, controversies and differences between
the parties hereto arising under this Agreement which the parties hereto are
unable to settle amicably shall be resolved in Los Angeles, California, by
binding arbitration in accordance with the Rules then in force of the American
Arbitration Association. The arbitration shall be held before three arbitrators
one of which shall be selected by the other two arbitrators, and the decision
of such arbitrators shall be deemed to be final, and judgment upon any award or
decision rendered thereby may be entered in any court, domestic or foreign,
having jurisdiction thereof.
12. Miscellaneous.
12.1 This Agreement constitutes of sole and entire agreement between the
parties hereto with respect to the subject matter hereof. This Agreement may not
be changed or modified except by an instrument in writing signed by the party to
be bound thereby.
12.2 All notices, consents, requests, demands and other communications
required or permitted to be given under this Agreement shall be in writing and
delivered personally, receipt prepaid, return receipt requested, addressed to
the parties hereto as follows (or to such other address and/or such other
persons as either of the parties hereto shall specify by notice given in
accordance with this provision):
(a) If to the Company:
EduLink, Inc.
450 North Roxbury Drive
Suite 602
Beverly Hills, California 90210
Attn: Chief Executive Officer
(b) If to Executive:
Ronald Rescigno
4063 Bridgewood Lane
Westlake Village, California 91362
All such notices, consents, requests, demands and other communications shall be
deemed given when personally delivered as aforesaid, or, if mailed as aforesaid,
on the third business day after the mailing thereof or on the day actually
received, if earlier, except for a notice of a change of address which shall be
effective only upon receipt.
12.3 Neither party hereto may assign this Agreement or their respective
rights, benefits or obligations hereunder without the written consent of the
other party hereto. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors, heirs, personal
representatives, administrators, executors and permitted assigns. Nothing
contained in this Agreement is intended to confer upon any person or entity,
other than the parties hereto, and their respective successors, heirs, personal
representatives, administrators, executors or permitted assigns, any rights,
benefits, obligations, remedies or liabilities under or by reason of this
Agreement. Notwithstanding the foregoing, in the event of a sale of securities
or assets of the Company constituting a Change of Control, the Company shall
have the right to assign this Agreement to the person or entity acquiring the
stock or assets
9.
<PAGE>
of the Company provided that any such person or entity agrees in writing to
assume and be bound by all of the terms and provisions of this Agreement.
12.4 No waiver of this Agreement shall be effective unless in writing and
signed by the party to be bound thereby. The waiver by either party hereto of a
breach of any provision of this Agreement, or of any representation, warranty,
covenant or obligation in this Agreement by the other party hereto shall not be
construed as a waiver of any subsequent breach or of any other provision,
representation, warranty, covenant or obligation of such other party, unless the
instrument of waiver expressly so provides.
12.5 This Agreement shall be governed by and construed in accordance with
the laws of the State of California with respect to contracts made and to be
fully performed therein, without regard to the conflicts of laws principles
thereof. By his execution hereof, Executive hereby consents and irrevocably
submits to the in personam jurisdiction of the American Arbitration Association
tribunal located in the City and County of Los Angeles, State of California and
agrees that any process in any action commenced in such tribunal under this
Agreement may be served upon him personally, by certified or registered mail,
return receipt requested, or by Federal Express or other courier service, with
the same full force and effect as if personally served upon him in Los Angeles
City. Each of the parties hereto hereby waives any claim that the jurisdiction
of any such tribunal is not a convenient forum for any such action and any
defense of lack of in personam jurisdiction with respect thereto. In the event
of any such action or proceeding the party prevailing therein shall be entitled
to payment from the other party hereto of its reasonable counsel fees and
disbursements in an amount determined therein.
12.6 The parties hereto hereby agree that, at any time and from time to time
during the Term hereof, upon the reasonable request of the other party thereto,
they shall do, execute, acknowledge and deliver, or cause to be done, executed,
acknowledge and delivered, such further acts, deeds, assignments, transfers,
conveyances and assurances as may be reasonably required to more effectively
consummate this Agreement and the transactions contemplated thereby or to
confirm or otherwise effectuate the provisions of this Agreement.
12.7 If any term or provision of this Agreement, or the application thereof
to any person or circumstance, is finally determined by a court or arbitration
tribunal to any extent to be illegal, invalid or unenforceable, the remainder of
this Agreement, or the application of such term or provision to persons or
circumstances other than those as to which it is held illegal, invalid or
unenforceable, shall not be affected thereby and each term and provision of this
Agreement shall be valid and shall be enforced to the fullest extent permitted
hereunder and by law.
12.8 Except as required by applicable law or in connection with the
preparation of the Company's financial statements or documents, the Company will
not publish or disclose the compensation or other provisions of this Agreement.
12.9 During and after the Term of this Agreement, the Company shall defend,
indemnify and hold Executive harmless from any claims, cause of action,
liabilities, damages, costs or expenses incurred by Executive based upon or in
connection with the performance of his services under this Agreement to the
fullest extent permitted by the laws of the State of California and the Articles
of
10.
<PAGE>
Incorporation and By-Laws of the Company. This provision will survive the
expiration or termination of the Term of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this ____
day of September, 1999.
EDULINK, INC.
By: /s/ Michael Rosenfeld
-----------------------
Michael Rosenfeld - CEO
/s/ Ronald Rescigno
------------------------
Ronald Rescigno
11.
<PAGE>
EXHIBIT 10.5
AMENDMENT TO EMPLOYMENT AGREEMENT
Notwithstanding the provisions of the employment agreement dated as of
September 1, 1999 ("Agreement"), between Ronald Rescigno ("Executive") and
EduLink, Inc. ("Company") to the contrary, the parties agree as follows:
(1) Payment to Executive of the annual compensation described in
paragraph 4(a) of the Agreement shall commence on January 1, 2000,
rather than September, 1999; accordingly, Executive waives any claims
to compensation during the period September 1, 1999 through December
31, 1999.
(2) Paragraph 5.3 of the Agreement shall be amended to provide that:
(3) The words "Warrant" shall be substituted for the word "Option"
wherever it appears.
Dated: As of February 1, 2000.
EDULINK, INC.
By: /s/ Michael Rosenfeld
----------------------
MICHAEL ROSENFELD, CEO
/s/ Ronald Rescigno
----------------------
RONALD RESCIGNO
<PAGE>
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of this 4th day of September, 1999, by and
between Ian Rescigno, an individual residing at 4063 Bridgewood Lane,
Westlake Village, California 91362 ("Executive") and EDULINK, INC., a California
corporation with its principal offices at 450 North Roxbury Drive, Beverly
Hills, California 90210 (the "Company").
WITNESSETH:
WHEREAS, the Company is engaged in the design, development, production and
marketing of an internet-based interactive educational system designed for
institutional and individual and users; and
WHEREAS, the Company believes that the establishment and maintenance of
sound and vital management of the Company is essential to the protection and
enhancement of the interests of the Company and its stockholders and, in order
to secure such protection, desires to obtain the contractual commitment of
certain of its executive officers, including the Executive, to render their
services to the Company for a specific period of time; and
WHEREAS, for the foregoing reasons, the Company desires to employ the
Executive as its Senior Vice President - Operations, and Executive is desirous
of being so employed, all on and subject to the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein and other
good and valuable consideration, the receipt and sufficiency of which are
hereby unconditionally acknowledged, the parties hereto do hereby agree as
follows:
1. Employment. During the Term (as hereinafter defined) of this Agreement,
the Company hereby employs Executive as its Senior Vice President - Operations,
upon and subject to the terms and conditions set forth in this Agreement.
Executive hereby agrees to accept such employment, upon and subject to the
terms and conditions set forth in this Agreement.
2. Executive's Duties and Responsibilities.
2.1 Executive will perform all of the services customarily associated
with the position of Senior Vice President - Operations during the Term of this
Agreement, subject to the policies established by and under the direction of
the Board of Directors of the Company. Executive also agrees to perform such
other duties and responsibilities, consistent with such position, as the Board
of Directors may assign to him from time to time during the Term hereof.
2.2 Executive agrees to devote substantially all of his business time,
attention and energy to the performance of his duties under this Agreement
during the Term hereof and shall perform such duties diligently, in good faith
and in a manner consistent with the best interests of the Company. Executive
further agrees to use his best efforts at all times during the Term hereof to
preserve, protect, enhance, and maintain the trade, business and goodwill of
the Company.
1.
<PAGE>
2.3 Executive shall perform his services wherever his services are
reasonably required but principally at one of the principal offices of the
Company which are presently located at 4063 Bridgewood Lane, Westlake Village,
California 91362, and 450 North Roxbury Drive, Beverly Hills, California 90210.
Under no circumstances shall Executive, without his prior written consent, be
required to change the location of his current residence in order to perform
the services required of him under this Agreement (nor to travel any distance
which is significantly greater than the distance currently traveled by the
Executive to the Company's offices). The Company shall furnish Executive with a
private office, stenographic help and such other facilities, services and staff
as are suitable to his position and necessary and adequate for the performance
of his services under this Agreement.
3. Term.
3.1 The term of this Agreement shall commence as of September ____,
1999 and shall expire on December 31, 2004, subject to earlier termination as
hereinafter provided in paragraph 3.2 hereof (the "Term").
3.2 Pursuant to the provisions of Paragraph 3.1 above, the Term of this
Agreement shall terminate on the earlier to occur of any of the following
events:
(a) The death of Executive;
(b) The Permanent Disability (hereinafter defined) of Executive as
provided in Paragraph 7 hereof;
(c) Any repeated breach of trust or other repeated action by which
Executive obtains material personal gain at the expense or to the detriment of
the Company;
(d) The failure of Executive to perform the customary duties of his
position, provided that Executive is furnished with notice of such breach from
the Company (with Executive not participating or voting with respect to any
such notice if Executive is a director of the Company) and Executive fails to
cure any such breach within thirty (30) days of such notice;
(e) A conviction of the Executive for any felony or of any other
crime involving moral turpitude;
(f) The delivery of notice to the Company by the Executive, or to
the Executive to the Company, as the case may be, of the termination of this
Agreement for any breach or default by the Company or the Executive, as the
case may be, of any of their respective representations, warranties,
obligations or covenants under this Agreement, provided that any such breach or
default is not cured within thirty (30) days after such notice from Executive
or the Company, as the case may be.
(g) The entry by a court of competent jurisdiction of a decree or
order for relief in respect of the Company in a voluntary case under any
applicable bankruptcy, insolvency, or similar law then in effect or the
appointment of a receiver, liquidator, assignee, custodian, trustee, or
sequestrator of the Company or for any substantial part of its property or an
order by any such court for the wind-up or liquidation of the Company's
affairs; or a petition initiating an involuntary case under any such
bankruptcy, insolvency, or similar law is filed against the Company and remains
pending for sixty (60) days without a stay or dismissal or the Company
commences a voluntary case under any such bankruptcy, insolvency, or similar
law then in effect, or makes any general assignment for the benefit of its
creditors or takes action in furtherance of any of the foregoing; or
2.
<PAGE>
4. Compensation. In consideration of the performance by Executive of his
services under this Agreement during the Term hereof, the Company shall pay
Executive the following compensation:
(a) A base salary of Ninety Thousand Dollars ($90,000) during each
year of the Term hereof (the "Base Salary"), such salary to be paid to
Executive in equal monthly installments (after the deduction of all applicable
withholding and other required payroll deductions) (the "Monthly Base Salary
Payments"), in arrears, on the first day of each month during the Term of this
Agreement.
(b) The Company shall also pay Executive, in addition to the Base
Salary, the following incentive compensation in each calendar year during the
Term hereof (except for the calendar year ended December 31, 1999): The greater
of ten percent (10%) of the Net Pre-Tax Profits (hereinafter defined) of the
Company or ten percent (10%) of the Net Cash Flow (hereinafter defined) of the
Company (the "Bonus"). Notwithstanding the foregoing or any other provision of
this Agreement to the contrary, the maximum bonus payable to Executive in any
specific calendar year shall not exceed an amount equal to twice Executive's
Base Salary during the calendar years ending December 31, 2000 and 2001 and
three times such base salary during the calendar years, 2002, 2003 and 2004.
For purposes hereof, "Net Pre-Tax Profits" shall mean the net
pre-tax income of the Company and "Net Cash Flow" shall mean the net pre-tax
cash flow of the Company, in each calendar year during the Term hereof, as
determined by the Company's certified public accountants, at the Company's
expense, applying generally accepted accounting principles consistently applied
during each period. In determining Net Pre-Tax Profits and Net Cash Flow, the
Company's accountants shall not consider losses incurred in any prior calendar
year and shall add to the net calculations of each of such items, any
compensation or similar expense incurred or recognized by the Company in
connection with the issuance of securities of the Company for purchase prices
which are less than, or warrants, options or other convertible securities which
are exercisable at prices below, fair market value.
(c) The Bonus shall be payable to Executive within thirty (30) days
following the completion of the audited or unaudited financial statements of
the Company for each such calendar year during the Term of this Agreement, but
in any event, not later than April 1 of each such year (or within ten (10) days
after the final resolution of any disagreement with respect to the calculation
of Net Pre-Tax Profits or Net Cash Flow pursuant to the terms of subparagraph
(d) below). In the event of any termination of this Agreement prior to the
expiration of the Term hereof, the Company shall pay Executive (or his estate
in the case of any earlier termination due to Executive's death) the Bonus in a
pro-rated amount based upon Net Pre-Tax Profits and Net Cash Flow for the
number of days in any such calendar year in which any such termination occurs,
such payment to be made sixty (60) days after any such termination (unless such
termination results from an occurrence under Paragraphs 3.2(c), 3.2(d), 3.2(e),
3.2(f), but only in the event of a termination by the Company thereunder, or
3.2(g), in which case, notwithstanding any provision of this Agreement to the
contrary, the Company shall have no obligation to make any Bonus payment to
Executive). Notwithstanding the foregoing, the minimum, Bonus shall be paid
semi-annually on June 1 and December 31 of each such calendar year.
(d) The Company shall deliver to Executive with each Bonus payment
during the Term hereof (other than all minimum Bonus payments), a report
setting forth the calculation of Net Pre-Tax Profits and Net Cash Flow. Unless
Executive notifies the Company within fifteen (15) business days after receipt
of said calculations of his disagreement therewith (which notice shall state
with reasonable specificity the reasons for any such disagreement and the
amounts in dispute), said calculations will be final, binding and conclusive on
Executive. If there is a disagreement, and the disagreement cannot be resolved
by the Company and the Executive within sixty (60) days following the delivery
of such calculations, the items in dispute may be submitted by either the
Company or the Executive to the Company's then independent auditors (with a
copy being furnished to the other party).
3.
<PAGE>
After affording each of the Company and the Executive the opportunity to
present their respective positions (which opportunity shall not extend for more
than ten (10) business days following the submission of such disputed items to
such auditors), the independent auditors shall determine what, if any, changes
are required in the calculations, and such determination shall be final,
binding and conclusive on the Company and the Executive. The fees, costs and
expenses of such independent auditing firm shall be allocated between the
Company and the Executive as follows:
(1) If the Company or Executive submits such calculations to
such independent auditors and the auditors confirm that calculations of Net
Pre-Tax Profits and Net Cash Flow (within 5% thereof, plus or minus), the party
which submitted such calculations to such auditors will pay all of the costs
therefor; or
(2) If the Company or Executive submits such calculations to
such independent auditors and the auditors determine that the calculation of
Net Pre-Tax Profits was understated by more than 5%, then the Company will pay
all of the costs therefor; or
(3) If the Company or Executive submits such calculations to
such independent auditors and the auditors determine that the calculation of
Net Pre-Tax Profits and Net Cash Flow was overstated by more than 5%, the
Executive will pay all of the costs therfor.
(e) Executive shall have the right, at Executive's sole expense,
upon reasonable advance notice and during normal business hours at the
Company's offices, to examine and copy the books and records of the Company
relating to Net Pre-Tax Profits and Net Cash Flow. Executive hereby
acknowledges and agrees that any non-published documentation or other
information obtained by him in the course of any such examination shall be
subject to the provisions of Paragraph 8 hereof.
(f) The Company shall, in addition to the Base Salary and the
Bonus, reimburse Executive for all ordinary and necessary out-of-pocket
expenses incurred by him in the performance of his services under this
Agreement, subject to and upon receipt by the Company of invoices or other
documentation in support thereof. Such expenses for which Executive shall be
entitled to reimbursement shall include, but not be limited to, travel and
entertainment expenses and expenses incurred in connection with promoting the
Company's business.
5. Executive Benefits. In addition to the Base Salary and the Bonus,
Executive shall receive the following benefits:
5.1 Executive shall be entitled to four (4) weeks paid vacation and
fifteen (15) paid sick days during each year of the Term hereof. Executive
shall take such vacation at such times as will not unreasonably interfere with
significant activities of the Company and upon reasonable advance notice to the
Company. Any unused vacation shall be paid to Executive by the Company at the
end of each year of the Term hereof.
5.2 The Company shall pay for and maintain for Executive during the
term second and each subsequent year of the Term of this Agreement, disability
insurance providing for the payment to Executive of a minimum of sixty percent
(60%) of his Base Salary for any "disability" as defined in such disability
insurance policy. The Company shall also pay and maintain for Executive during
the Term hereof, major medical, hospitalization, dental and vision insurance
(which insurance will cover Executive and members of his immediate family). The
Company shall maintain such disability, medical, dental, and vision insurance
in effect, at the Company's cost, for a period of eighteen (18) months after
the expiration of this Agreement or the termination of this Agreement pursuant
to Paragraphs 3.2(b), 3.2(f) or
4.
<PAGE>
3.2(h) hereof. During the Term of this Agreement, the Company may, at its
election at any time during the Term hereof, obtain and maintain at its cost, a
key man life insurance policy on the Executive's life with the Company as the
beneficiary thereof and Executive will cooperate with the Company and its
insurer with respect thereto.
5.3 The Company grants to Executive the following number of options to
purchase one share of Company's Common Stock per option at an exercise price of
$.25 per share, provided that Executive shall not have the right to exercise
those options corresponding to the specific deliverables described below unless
and until such deliverables are completed on or before the corresponding
"outside completion date":
Number of Options Deliverable Outside Completion Date
- ----------------- ----------- -----------------------
50,000 Design Phase Elements
Described in Schedule A.
50,000 Build-Out Elements
Described in Schedule A.
50,000 Completion of Beta Test
described in Schedule A.
50,000 National Launch of
7th and 8th Grade Service
Described in Schedule A.
The remaining terms and conditions applicable to such options, are described in
Schedule A-1, attached hereto.
5.4 The Company agrees that nothing contained in this Agreement is
intended to, or shall be deemed to be granted to the Executive in lieu of, or
as a limitation upon, any rights and privileges which the Executive may
otherwise be entitled to as an executive employee of the Company under any
retirement, pension, profit sharing, insurance, hospitalization or other
employee benefit plan of any type (including, without limitation, any
incentive, profit sharing, bonus or stock option plan), which may now be in
effect or which may hereafter be adopted by the Company, or any subsidiary of
the Company, it being understood that the Executive shall have the same rights
and privileges to participate in such Company (including its subsidiaries)
benefit plans as any other officer or executive employee of the Company or any
of its subsidiaries.
6. Severance: Change of Control.
6.1 In the event that, upon the expiration of the Term hereof on
December 31, 2004, this Agreement has not been renewed or Executive and the
Company have not entered into a successor employment agreement, the Company
shall pay to Executive on such date, in cash, a lump sum amount equal to
Executive's then Base Salary plus the bonus compensation payable to Executive
for the calendar year 2003, then multiplied by a factor of 1.5.
6.2 Omitted.
5.
<PAGE>
6.3 If, at any time after a Change in Control has occured, the Company
(or any successor thereto) terminates this Agreement prior to the expiration of
the Term of this Agreement, Executive shall receive (1) his Base Salary, Bonus
and all fringe benefits provided for under Paragraph 5 hereof, including,
without limitation, all benefits and awards under the Company's stock option,
stock appreciation, restricted stock, stock bonus and similar plans and the
Company's pension and retirement plans and programs which are then in effect,
accrued through the date of any such termination; provided, however, that all
of Executive's vested stock options, stock appreciation rights, restricted
stock grants and stock bonuses and similar benefits shall be deemed to vest in
full on any such termination date, notwithstanding any provision to the
contrary in any applicable agreement or plan and (ii) a lump sum payment, in
cash, on the date of any such termination, in an amount equal to the then Base
Salary of Executive multiplied by a factor of 5.
6.4 For purposes hereof, a "Change in Control" shall mean and be deemed
to have occurred if: (I) any "person" or "group" (as such terms are used in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Act"), except for an employee stock ownership trust (or any of
the trustees thereof), becomes a "beneficial owner" (as such term is used in
Rule 13d-3 promulgated under the Act), after the date hereof, directly or
indirectly, of securities of the Company representing thirty percent (30%) or
more of the combined voting power of the Company's then outstanding securities;
or (ii) the majority of the Board of Directors, as such entire Board of
Directors is comprised as of the date hereof, no longer serve as directors of
the Company, except that there shall not be counted toward such majority who no
longer serve as directors any director who ceased to serve either prior to the
date of a Change in Control, for any reason, or at any other time due to
voluntary resignation, death, disability or termination for cause or any
director who is elected to the Board of Directors after the date hereof and who
is approved by Executive; or (iii) the shareholders of the Company approve a
plan of liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or (iv) the
shareholders of the Company approve a merger of consolidation of the Company
with any other entity, other than a merger or consolidation which would result
in the combined voting power of the Company's voting securities outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation; or (v) any other event shall have occurred
which constitues a change in ownership or effective control of the Company or
in the ownership of its assets; provided, however, that no Change in Control
shall be deemed to have occurred if any aforementioned plan of liquidation,
sale of assets, merger or consolidation is not consummated. Notwithstanding the
foregoing, any transaction involving a leveraged buyout or other acquisition of
the Company which would otherwise constitute a Change in Control, in which
Executive participates in the surviving or successor entity (other than solely
as an employee or consultant), shall not constitute a Change in Control.
7. Disability.
7.1 Subject to the terms of Paragraph 7.2 below, in the event Executive
suffers any illness, injury or other incapacity which causes him to become
temporarily disabled during the Term of this Agreement, he shall continue to
receive one hundred percent (100%) of the Base Salary, Bonus and all other
benefits to which he was entitled at the time he became so disabled for any
period of disability not in excess of six (6) consecutive calendar months. The
term "Permanent Disability" as used in this Agreement shall mean any disability
of Executive for a period in excess of six (6) consecutive calendar months. For
the purpose of this Paragraph, the terms "disabled" and "disability" shall mean
any physical or mental illness, injury or other incapacity which, in the
opinion of a doctor reasonably satisfactory to the Company and Executive,
renders the Executive unable to perform his duties hereunder. The date that any
6.
<PAGE>
such disability shall be deemed to have commenced shall be the date Executive
first absents himself from work during a continuous period of disability as so
determined by the doctor hereinabove set forth.
7.2 Upon any Permanent Disability, the Company may at any time
thereafter either reduce the Base Salary to be received by Executive to
seventy-five percent (75%) of the Base Salary at the time of any such Permanent
Disability (including all payments Executive may receive under any disability
policy maintained by the Company) or terminate this Agreement upon ninety (90)
days prior written notice to Executive. In the event of any such termination,
Executive shall be entitled to receive from the Company or from the Company's
disability carrier, disability compensation in an amount which shall, when
added to all social security benefits received by Executive as a result of the
Permanent Disability, equal Seventy Thousand Dollars ($70,000) per annum.
8. Confidentiality and Non-Disclosure Covenant.
8.1 During the Term of this Agreement, Executive hereby acknowledges
that he may obtain and be entrusted with unpublished material confidential and
proprietary information relating to the Company's present and proposed business
and operations, including, without limitation, financial information relating
to the Company's present and proposed business and proposed business and
operations, the cost and pricing of the Company's services, the sales and
marketing plans and strategies of the Company, proposed Company's accounts and
the terms of all material agreements to which the Company is a party. All of
such information that may be obtained by Executive shall, for purposes hereof,
be referred to as "Confidential Information." Executive hereby agrees that,
unless the Confidential Information becomes publicly known through legitimate
origin not involving any improper act or omission of Executive, neither he, nor
any entity or person owned or controlled directly or indirectly by him, shall,
during the Term of this Agreement or thereafter, use for his own benefit or for
the benefit of others for any purpose and in any manner whatsoever, divulge to
any person, firm, corporation or other entity or otherwise publish or disclose
any Confidential Information (except as necessary in connection with the
performance of Executive's services under this Agreement). This provision shall
survive the expiration or termination of this Agreement. Notwithstanding the
foregoing, Executive shall not be in breach of this covenant with respect to
any use or disclosure of any Confidential Information by him which does not
cause any material damage to the Company or is required as a result of any
legal process served upon him in any judicial or administrative proceeding
(provided that the Company shall be given notice in time to enable it to object
to such disclosure) or was obtained by Executive from a third party without
such third party's breach of agreement or obligation of trust.
8.2 Executive hereby acknowledges and agrees that any actual or
threatened breach of the provisions of this Paragraph 8 may cause irreparable
harm to the Company and may not be remediable by an action at law for damages
and, therefore, the Company shall be entitled to seek, as a non-exclusive
remedy, in any court of competent jurisdiction, all equitable remedies
therefor, including, without limitation, a temporary or permanent injunction or
specific performance of the provisions hereof, without the necessity of showing
any actual damage or that monetary damages would not provide an adequate remedy
at law or posting a bond therefor. The provisions of this Paragraph 8 shall
survive the termination or expiration of the Term of this Agreement.
9. Representations and Warranties of Executive. The Executive represents
and warrants to the Company as follows:
9.1 All action on the part of the Executive necessary for the
authorization, execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, has been taken and this
Agreement constitutes a valid and legally binding obligation of Executive,
enforceable in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency,
7.
<PAGE>
reorganization, moratorium, or other laws affecting generally the enforcement
of creditors' rights and by general principles of equity.
9.2 The authorization, execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, will
not result in any violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, a default under any provision
of any instrument, judgment, order, writ, decree or agreement to which Executive
is a party or by which he is bound.
9.3 There is no action, suit, proceeding, or investigation pending, or
to the knowledge of Executive, currently threatened against Executive, in any
way relating to the validity of this Agreement or the right of Executive to
enter into or to consummate this Agreement and the transactions contemplated
hereby.
10. Representations and Warranties of the Company. The Company represents
and warrants to the Executive as follows:
10.1 All action on the part of the Company necessary for the
authorization, execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, has been taken and this
Agreement constitutes a valid and legally binding obligation of the Company,
enforceable in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other laws affecting
generally the enforcement of creditors' rights and by general principles of
equity.
10.2 The authorization, execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, will
not result in any violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, a default under any
provision of the Company's Certificate of Incorporation or By-Laws or any
instrument, judgment, order, writ, decree or agreement to which the Company is
a party or by which he is bound.
10.3 There is no action, suit, proceeding, or investigation pending,
or to the knowledge of the Company, currently threatened against the Company,
in any way relating to the validity of this Agreement or the right of the
Company to enter into or to consummate this Agreement and the transactions
contemplated hereby.
11. Arbitration. Except for any action under this Agreement for injunctive
or other equitable relief, all disputes, controversies and differences between
the parties hereto arising under this Agreement which the parties hereto are
unable to settle amicably shall be resolved in Los Angeles, California, by
binding arbitration in accordance with the Rules then in force of the American
Arbitration Association. The arbitration shall be held before three arbitrators
one of which shall be elected by the other two arbitrators, and the decision of
such arbitrators shall be deemed to be final, and judgment upon any award or
decision rendered thereby may be entered in any court, domestic or foreign,
having jurisdiction thereof.
12. Miscellaneous.
12.1 This Agreement constitutes the sole and entire agreement between
the parties hereto with respect to the subject matter hereof. This Agreement
may not be changed or modified except by an instrument in writing signed by the
party to be bound thereby.
12.2 All notices, consents, requests, demands and other communications
required or permitted to be given under this Agreement shall be in writing and
delivered personally, receipt prepaid,
8.
<PAGE>
return receipt requested, addressed to the parties hereto as follows (or to
such other address and/or to such other persons as either of the parties hereto
shall specify by notice given in accordance with this provision):
(a) If to the Company:
EduLink, Inc.
450 North Roxbury Drive
Suite 602
Beverly Hills, California 90210
Attn: Chief Executive Officer
(b) If to Executive:
Ian Rescigno
_____________________________
_____________________________
All such notices, consents, requests, demands and other communications shall be
deemed given when personally delivered as aforesaid, or, if mailed as
aforesaid, on the third business day after the mailing thereof or on the day
actually received, if earlier, except for a notice of a change of address which
shall be effective only upon receipt.
12.3 Neither party hereto may assign this Agreement or their
respective rights, benefits or obligations hereunder without the written
consent of the other party hereto. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors, heirs,
personal representatives, administrators, executors and permitted assigns.
Nothing contained in this Agreement is intended to confer upon any person or
entity, other than the parties hereto, and their respective successors, heirs,
personal representatives, administrators, executors or permitted assigns, any
rights, benefits, obligations, remedies or liabilities under or by reason of
this Agreement. Notwithstanding the foregoing, in the event of a sale of
securities or assets of the Company constituting a Change of Control, the
Company shall have the right to assign this Agreement to the person or entity
acquiring the stock or assets of the Company provided that any such person or
entity agrees in writing to assume and be bound by all of the terms and
provisions of this Agreement.
12.4 No waiver of this Agreement shall be effective unless in writing
and signed by the party to be bound thereby. The waiver by either party herto
of a breach of any provision of this Agreement, or of any representation,
warranty, covenant or obligation in this Agreement by the other party hereto
shall not be construed as a waiver of any subsequent breach or of any other
provision, representation, warranty, covenant or obligation of such other
party, unless the instrument of waiver expressly so provides.
12.5 This Agreement shall be governed by and construed in accordance
with the laws of the State of California with respect to contracts made and to
be fully performed therein, without regard to the conflicts of laws principles
thereof. By his execution hereof, Executive hereby consents and irrevocably
submits to the in personam jurisdiction of the American Arbitration Association
tribunal located in the City and County of Los Angeles, State of California and
agrees that any process in any action commenced in such tribunal under this
Agreement may be served upon him personally, by certified or registered mail,
return receipt requested, or by Federal Express or other courier service, with
the same
9.
<PAGE>
full force and effect as if personally served upon him in Los Angeles City.
Each of the parties hereto hereby waives any claim that the jurisdiction of any
such tribunal is not a convenient forum for any such action and any defense of
lack of in personam jurisdiction with respect thereto. In the event of any such
action or proceeding, the party prevailing therein shall be entitled to payment
from the other party hereto of its reasonable counsel fees and disbursements in
an amount determined therein.
12.6 The parties hereto hereby agree that, at any time and from time
to time during the Term hereof, upon the reasonable request of the other party
hereto, they shall do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered, such further acts, deeds, assignments,
transfers, conveyances and assurances as may be reasonably required to more
effectively consummate this Agreement and the transactions contemplated thereby
or to confirm or otherwise effectuate the provisions of this Agreement.
12.7 If any term or provision of this Agreement, or the application
thereof to any person or circumstance, is finally determined by a court or
arbitration tribunal to any extent to be illegal, invalid or unenforceable, the
remainder of this Agreement, or the application of such term or provision to
persons or circumstances other than those as to which it is held illegal,
invalid or unenforceable, shall not be affected thereby and each term and
provision of this Agreement shall be valid and shall be enforced to the fullest
extent permitted hereunder and by law.
12.8 Except as required by applicable law or in connection with the
preparation of the Company's financial statements or documents, the Company
will not publish or disclose the compensation or other provisions of this
Agreement.
12.9 During and after the Term of this Agreement, the Company shall
defend, indemnify and hold Executive harmless from any claims, causes of
action, liabilities, damages, costs or expenses incurred by Executive based
upon or in connection with the performance of his services under this Agreement
to the fullest extent permitted by the laws of the State of California and the
Articles of Incorporation and By-Laws of the Company. This provision will
survive the expiration or termination of the Term of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
4th day of September, 1999.
EDULINK, INC.
By: /s/ Michael Rosenfeld
-----------------------
Michael Rosenfeld - CEO
/s/ Ian Rescigno
----------------
Ian Rescigno
<PAGE>
EXHIBIT 10.7
AMENDMENT TO EMPLOYMENT AGREEMENT
Notwithstanding the provisions of the employment agreement dated as of
September 1, 1999 ("Agreement"), between Ian Rescigno ("Executive") and EduLink,
Inc. ("Company") to the contrary, the parties agree as follows:
(1) Payment to Executive of the annual compensation described in
paragraph 4(a) of the Agreement shall commence on January 1,
2000, rather than September, 1999; accordingly, Executive waives
any claims to compensation during the period September 1, 1999
through December 31, 1999.
(2) Paragraph 5.3 of the Agreement shall be amended to provide that:
a. The words "Warrant" shall be substituted for the word
"Option" wherever it appears.
b. The number of Warrants applicable to the Deliverable
described as "Design Phase Elements" shall be reduced from
"200,000" to "50,000, " and the number of Warrants
applicable to the Deliverable described as "Build-Out
Elements" shall be reduced from "200,000" to "50,000."
(3) A new paragraph 5.5 shall be deemed added to the Agreement as
follows:
"5.5 In consideration of Executive's execution of this Agreement,
Company grants to Executive 300,000 Warrants to purchase one
share of Company's Stock per Warrant at an exercise price of
$.25 per share."
Dated: As of February 1, 2000.
EDULINK, INC.
By: /s/ Michael Rosenfeld
----------------------
MICHAEL ROSENFELD, CEO
/s/ Ian Rescigno
----------------------
IAN RESCIGNO
<PAGE>
EXHIBIT 10.8
CONTRACT AGREEMENT
EDULINK/SAIC-2000-001
INTRODUCTION
This Contract Agreement, effective October 1, 1999 is made between EduLink, Inc.
(hereinafter referred to as "Buyer"), a corporation with principal offices in
Westlake Village, California, and Science Applications International Corporation
(hereinafter referred to as "Seller"), a Delaware Corporation with principal
offices in San Diego, California. The work, defined by Individual Task Order
Statement of Work and Schedule will be performed on a Time and Material basis,
in accordance with Schedule A (Specific Terms and Conditions), and any
referenced documents listed in Section 14.0 of this agreement.
SCHEDULE A
SPECIFIC TERMS AND CONDITIONS
1.0 TERM AND PERIOD OF PERFORMANCE
The term of this Agreement is October 1, 1999 to September 30, 2000, unless
amended in writing by mutual agreement of the parties. The period of performance
for Task Orders issued under this Agreement will be as defined in the Task
Order. Seller is not obligated to continue work or provide services and Buyer is
not obligated to compensate Seller for expenses incurred or commitments made
before or after these dates.
1.1 LABOR RATES
A Not-to-Exceed price will be negotiated for each Task Order issued under this
Agreement in accordance with the following Time and Material (T&M) rates:
Labor Category Labor Rate
-------------- ----------
Program Manager $200.00/hour
Senior Technical Manager $150.00/hour
Mid-level Technical Staff $120.00/hour
Junior Technical Staff $90.00/hour
Project Control/Administrative $68.00/hour
Task Orders issued hereunder may include one or more labor categories. The
hourly rates shall remain fixed for the term of the Agreement.
1.2 FUNDING
Funding will be established by individual Task Orders. Unless this Agreement is
amended in writing by mutual agreement of the parties. Seller is not obligated
to incur expenses or make commitments in excess of the amount stated in each
Task Order and Buyer is not obligated to compensate Seller beyond the amount
stated.
2.0 ORDERING
(a) Any supplies or services to be furnished under this agreement shall be
ordered by issuance of a Task Order by the individual designated in
Section 2.2
(b) There is no limit on the number of Task Orders that may be issued. The
Buyer may issue Task Orders requiring delivery to multiple destinations
or performance at multiple locations.
(c) Any Task Order issued during the effective period of this Agreement and
not completed within that period shall be completed by the Seller
within the time specified in the Task Order. The Agreement shall govern
the Seller's and the Buyer's rights and obligations with respect to that
Task Order to the same extent as if the Task Order were completed during
the Agreement's effective term.
<PAGE>
2.1 TASK ORDERS
(a) Only the Buyer's designated Representatives, as set forth in paragraph
2.2 hereto, are authorized to place orders hereunder.
(b) All delivery orders issued hereunder are subject to the terms and
conditions of this Agreement. The Agreement shall control in the event
of conflict with any task order. When mailed, a Task Order shall be
"issued" for purposes of this Agreement at the time Buyer deposits the
order in the mail, or, if transmitted by other means, when physically
delivered to Seller.
(c) In addition to any other data that may be called for in the agreement,
the following information shall be specified in each Task Order, as
applicable:
Date of Order Period of Performance Buyer Furnished
Material Value
Contract and Order Number Place of Performance Estimated
Categories/Hours
Not-to-Exceed Price
(d) The information contained in each Task Order respecting to labor
categories/hours, period of performance, and the Not-to-Exceed price
shall be the result of either Buyer's estimate or the negotiated
agreement reached by the parties in advance of Task Order issuance.
(e) Orders may be modified by written agreement between Buyer's Contract
Representative and the Seller. Modifications to task orders shall
include the information set forth in paragraph c above, as applicable.
Orders may be modified orally by Buyer's Contract Representative in
emergency circumstances. Oral modifications shall be confirmed by
issuance of a written modification within seven (7) working days from
the time of the oral communication modifying the order.
2.2 AUTHORIZED ORDERING AGENTS
In addition to the Seller Representative listed in Section 3.0, the following
Edulink, Inc. employees are hereby designated Authorized Ordering Agents for
the supplies and/or services listed in this Agreement, subject to the dollar
limits indicated below:
Name: Ian Rescigno Dollar Limit Per Order: TBD
Name: Ronald Rescigno Dollar Limit Per Order: TBD
Name: ______________ Dollar Limit Per Order: ________
Authority of the above named individuals to act as Ordering Agents for Buyer
is limited to this Agreement. In the event that the Seller performs work under
instructions from individuals other than those listed above, Seller is hereby
notified that payment for such work may not be made.
2.3 INSPECTION
All materials furnished and services performed pursuant hereto shall be subject
to inspection and test by Buyer and its agents during the period of
performance. In the event that material furnished or services supplied are not
performed in accordance with the specifications and instructions of Buyer,
Buyer may require Seller to replace or correct services or materials. The cost
of replacement or corrections shall be determined under the Payment clause of
this contract, but the "hourly rate" for labor hours incurred in the
replacement or correction shall be reduced to exclude that portion of the rate
attributable to profit. If the
<PAGE>
Seller fails to proceed with the reasonable promptness within the Not-to-Exceed
price, the Buyer may terminate the contract for default.
2.4 INVOICES
Invoices shall be prepared in duplicate and contain the following information:
contract number, task order number, labor categories, hourly rate, labor hours,
extended totals by category, material and other direct costs detail shall be
separated from labor costs. Invoices will be mailed to:
Edulink, Inc.
4063 Bridgewood Lane
Westlake Village, CA 91362
Invoices shall clearly reference a unique invoice number on each invoice, period
of incurred costs, and the date of the invoice. Invoices shall include the
"Amount Previously Billed," the "Amount of this Invoice," and the "Total Amount
Billed to Date" for each labor category.
Invoices not paid within 45 days shall be subject to 1.5% interest charge.
2.5 PAYMENT
The Buyer shall pay the Seller upon the submission of invoices approved by the
Buyer as follows:
(a) Hourly Rate. The amounts shall be computed by multiplying the appropriate
hourly rates in Section 1.1 by the number of direct labor hours
performed. Invoices may be submitted once each month to the Buyer. The
Buyer shall pay the invoice within 30 days after the approval by Buyer.
Overtime rates are not authorized unless negotiated and approved by
Buyer.
(b) Materials and Other Direct Costs. Materials and other direct costs, such
as travel, will be reimbursed on actual cost basis with reasonable and
allocable materials handling costs and profit included in the charge to
the extent that they are clearly excluded from hourly rates.
(c) Total Cost. It is estimated that the total cost to the Buyer for the
performance of this contract shall not exceed the ceiling price. The
Seller agrees to use its best efforts to perform the work within the
ceiling price of each task order. If at any time the Seller has reason to
believe that the total price to the Buyer will be substantially greater
or less than the ceiling price, the Seller shall notify the Buyer and
provide a revised estimate for performing the work.
(d) If acceptable by Buyer, Seller prefers invoice payment via Electronic
Funds Transfer (EFT) through the Treasury Financial Communications
System. The following information is provided:
Science Applications International Corporation
10260 Campus Point Drive, San Diego, CA 92121
Contact Person: John P. Bowen
Phone Number: (619) 552-4841
Name of Financial Institution: Bank of America, NT&SA
Address: 450 "B" Street, Suite 100, San Diego, CA 92101
ABA Identifier: 121000358
Telegraphic Abbrv: BNKAMER
Account Number: 14520-00006
Please also reference:
Project Number: (to be furnished with first invoice)
"Advice San Diego Corporate Banking Number 1450"
Should EFT payment not be available, please remit payments to the
following address:
<PAGE>
Science Applications International Corporation
Drawer CS
Atlanta, GA 20284-8347
2.6 YEAR 2000 WARRANTY
(a) SAIC's standard Year 2000 warranty specifically disclaims the following:
(i) System wide warranty responsibility,
(ii) Warranty responsibility for any items (i.e. COTS software) not
developed by SAIC or our vendors and subcontractors,
(iii) Warranty responsibility for corrupted inputs that are not Year 2000
compliant.
The following clauses are incorporated by reference into each task
order.
(a) Year 2000 Warranty
Seller warrants that the services performed under this Contract shall be
performed with that degree of skill and judgment normally exercised by
recognized professional firms performing services of a similar nature.
Buyer's exclusive remedy for breach of this warranty is to have Seller
re-perform any services whose non-compliance with this warranty is made
known by the Buyer to Seller in writing within ninety (90) days after
Buyer's acceptance of the non-compliant services.
Except as provided in the immediate paragraph above, Seller disclaims any
warranty, responsibility, or liability for the Year 2000 compliance or
functionality of Buyer's hardware, software, firmware or computer
systems, and disclaims any warranty that any services provided will
achieve Year 2000 compliance or functionality with Buyer's systems. The
provisions of this Year 2000 Warranty shall take precedence over any
inconsistent provisions elsewhere in this Contract including its exhibits
and attachments.
(b) Disclaimer of Impiled Warranties
THE EXPRESS WARRANTIES, IF ANY, CONTAINED IN THE CONTRACT ARE THE SOLE
AND EXCLUSIVE WARRANTIES PROVIDED BY SELLER, SELLER SPECIFICALLY
DISCLAIMS, AND CUSTOMER, WAIVES ANY OTHER WARRANTIES, INCLUDING BUT NOT
LIMITED TO WARRANTIES OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, AS WELL AS ANY WARRANTIES ALLEGED TO HAVE ARISEN FROM CUSTOM
USAGE, OR PAST DEALINGS BETWEEN THE PARTIES.
(c) Limitation of Liability
Buyer agrees that, Seller's total liability to Buyer and all liabilities
arising out of or related to this contract, from any cause or causes, and
regardless of the legal theory, including breach of contract, warranty,
negligence, strict liability, or statutory liability, shall not, in the
aggregate, exceed the amounts paid to Seller under the Contract, or under
the specific task order at issue, whichever is less.
In no event shall either Seller or Buyer be liable to the other for any
special, indirect, incidental, consequential, or economic (including, but
not limited to lost profits and lost business opportunity) damages,
regardless of the legal theory under which such damages are sought, and
even if the parties have been advised of the possibility of such damages.
<PAGE>
Any claim by Buyer against Seller relating to this contract, other than
in warranty, must be made in writing and presented to Seller within one
(1) year after the earlier of: (1) the date on which Buyer accepts the
deliverable at issue; or (2) the date on which Seller completes
performance of the services specified in the contract. Any claim under
warranty must be made within the time specified in the applicable
warranty clause.
(d) Limitation on Dissemination of SAIC Commercial Work Product
Seller and Buyer expressly exclude any and all third parties form the
benefits of this Agreement. In the event that Buyer furnishes any Seller
work product to a person who is not a party to this Agreement, Buyer
agrees to defend, indemnity, and hold harmless Seller from and against
all claims, damages, losses, costs and expenses (including reasonable
attorney's fees) of actions brought by third parties, and arising out of
or relating to such third party's use or distribution of, or reliance
upon, Seller's work product.
3.0 TECHNICAL AND CONTRACTUAL REPRESENTATIVES
The following authorized representatives are hereby designated for this
Contract:
Seller: Science Applications Buyer: Edulink, Inc.
International Corporation
Technical: Steve Rizzi Technical: /s/ Ian Rescigno
----------------------
Contractual: Joanne Gladden Contractual: /s/ Ronald Rescigno
--------------------
3.1 CONTACTS
Contacts with Buyer which affect the contract prices, schedule, statement of
work, and contract terms and conditions shall be made with the authorized
contractual representative. No changes to this Contract shall be binding upon
Buyer unless incorporated in a written modification to the Contract and signed
by Buyer's contractual representative.
3.2 CHANGES
Buyer may, by written notice to Seller at any time before completion of this
contract, make changes within the general scope of this contract in any one of
the following: (a) drawings, designs, or specifications; (b) quantity, (c)
delivery; (d) method of shipment or routing and (e) make changes in the amount
of Buyer furnished property. If any such change causes a material increase or
decrease in any hourly rate or the Not-to-Exceed price, or the time required for
the performance of any part of the work under this contract, the Buyer shall
make an equitable adjustment in the hourly rates of delivery schedule, or both,
and shall modify the contract Not-to-Exceed price. As a condition precedent to
any equitable adjustment, the Seller must notify Buyer in writing of any request
for adjustment within thirty (30) days from the date Seller receives notice from
Buyer of a change, or from the date of any act of Buyer which Seller considers
to constitute a change. Failure to are to any adjustment shall be a dispute and
shall be settle through arbitration. Seller shall proceed with the work ad
changed without interruption and without awaiting settlement of any such claim.
3.3 DISCLOSURE
Seller shall not disclose information concerning work under this Contract to any
third party; unless such disclosure is necessary for the performance of the
contract effort. No news, releases, public announcements, denial or confirmation
of any part of the subject matter of this Contact or any phase of any program
hereunder shall be made without prior written consent of Buyer. The restrictions
of this paragraph shall continue in effect upon completion or termination of
this Contract for such period of time
<PAGE>
as may be mutually agreed upon in writing by the parties. In the absence of a
written established period, no disclosure is authorized. Failure to comply with
the provisions of this Clause may be cause for termination of this Contract.
4.0 ASSIGNMENT OF CONTRACTS
This Contract is not assignable and shall not be assigned by Seller without the
prior written consent of Buyer. Further, Seller agrees to obtain Buyer's
approval before subcontracting this order or any substantial portion thereof;
provided, however, that this limitation shall not apply to the purchase of
standard commercial supplies or raw materials.
5.0 INFRINGEMENT INDEMNITY
In lieu of warranty by Buyer or Seller against infringement, statutory or
otherwise, it is agreed that Seller shall defend at its expense, any suit
against Buyer or its customers based on a claim that any item furnished under
the order or the normal use of sale thereof infringes any U.S. Letters patent or
copyright, and shall pay costs and damages finally awarded in any such suit,
provided that Seller is notified in writing of the suit and give authority,
information, and assistance at Seller's expense for the defense of the same. If
the use or sale of said item is enjoined as a result of such suit, Seller, at no
Expense to Buyer, shall obtain for Buyer and its customers the right use and
sell said item or shall substitute an equivalent item acceptance to the Buyer
and extend this patent indemnity thereto.
6.0 PROPRIETARY INFORMATION, TOOLS, MATERIALS, ETC.
(a) Seller agrees it will keep confidential and not use any material,
jigs, dies, fixtures, molds, patterns, tape, gauges, other equipment,
designs, sketches, specifications, drawings, computer programs and
software, or other data or information furnished by Buyer for any purpose
whatsoever other than as herein specified, including but not limited to
the manufacturer of large quantities, without prior written consent of
Buyer. All materials, jigs, dies, fixtures, molds, patterns, tapes,
gauges, other equipment, design, sketches, specifications, drawings,
computer programs and software, or other data or information furnished by
Buyer, whether loaned to Seller or fabricated, manufactured, purchased,
or otherwise acquired by Seller for the performance of this Contract and
specifically charged to Buyer are property of the Buyer. They are to be
marked for identification as Buyer may designate an upon completion of
termination of this Contract shall be returned to Buyer in good
condition, reasonable wear only excepted, together with all spoiled and
surplus material, unless otherwise directed in writing by Buyer. Seller
agrees to replace, at its expense, all such items not so returned. Seller
shall make no charge for any storage, maintenance or retention of such
property of Buyer. Seller shall bear all risk of loss for the Buyer's
property in Seller's possession.
(b) If Buyer furnishes any material for fabrication hereunder, Seller agrees:
(i) not to substitute any other material in such fabrication without
Buyer's prior written consent, (ii) that title to such material shall not
be affected by incorporation in or attachment to any other property; and
(iii) to state and warrant on its packing sheet and invoice for final
parts: "All materials furnished by Buyer on the order (except that which
becomes normal industrial waste or was replaced at Seller's expense) has
been returned in the form of parts or held as unused material for Buyer's
disposition".
7.0 DISPUTES
Any dispute or disposed of shall be determined in the following manner.
(a) Buyer and Seller agree to enter into negotiations to resolve any dispute.
Both parties agree to negotiate in good faith to reach a mutually
agreeable settlement within a reasonable amount of time.
<PAGE>
(b) If negotiation is unsuccessful, Buyer and Seller agree to enter into
binding Arbitration. The American Arbitration Associations (AAA)
Commercial Arbitration Rules (most recent edition) are to govern this
Arbitration. The Arbitration shall take place in the Commonwealth of
Virginia. The Arbitrator shall be bound to follow the applicable contract
provisions and Virginia law in adjudicating the dispute. It is agreed by
both parties that the Arbitrator's decision is final, and that no party
may take any action, judicial or administrative, to overturn this
decision. The judgment rendered by the Arbitrator may be entered in any
court having jurisdiction thereof.
Pending any decision, appeal or judgment referred to in this provision or the
settlement of any dispute arising under this Contract, Seller shall proceed
diligently with the performance of this Contract.
8.0 DEFAULT
(a) The Buyer may, by written notice of default to the Seller, terminate the
whole or any part of this Contract in any one of the following
circumstances; (i) if Seller fails to make progress in the work so as to
endanger performance delivery of the suppliers or to perform the services
within the time specified herein or any extension thereof; or (ii) if
Seller fails to perform any of the other provisions of this Contract in
accordance with its terms, and in either of these two circumstances does
not cure such failure within a period of 10 days (or such longer period
as) Buyer may authorize in writing) after receipt of notice from the
Buyer specifying such failure; or (iii) Seller becomes insolvent or the
subject of proceedings under any law relating to bankruptcy or the relief
of debtors or admits in writing its inability to pay its debts as they
become due.
(b) If this Contract is so terminated, Seller shall submit a final
termiation settlement proposal to the Buyer. The Seller shall submit the
proposal promptly but no later than six (6) months from the effective
date of the termination. If Seller fails to submit the proposal within
the time allowed, the Buyer may determine the amount, if any, due the
Seller because of termination. The amount will be determined as follows
(i) An amount for direct labor hours determined by multiplying the number
of direct labor hours expended before the effective date of termination
by the hourly rates, less profit, in the schedule, less any hourly rate
payments already made to the Seller, (ii) An amount for material expenses
incurred before the effective date of termination, not previously paid to
the Seller. Buyer may procure or otherwise obtain upon such terms and in
such manner as Buyer may deem appropriate, supplies or services similar
to those terminated, Seller, subject to the exceptions set forth below;
shall be liable to Buyer for any excess costs of such similar supplies or
services.
(c) Seller shall transfer title and deliver to Buyer, in the manner and to
the extent requested in writing by Buyer at or after terminations such
complete articles, partially completed articles and materials, parts,
tools, dies, patterns, jigs, fixtures, plans, drawings, information and
contract rights as Seller has produced or acquired for the performance of
the terminated part of this Contract, and Buyer will pay Seller the
contract price for compete articles delivered to and accepted by Buyer
and the fair value of the other property of Seller so requested and
delivered.
(d) Seller shall continue performance of this Contract to the extent not
terminated. Buyer shall have no obligations to Seller with respect to the
terminated part of the Contract except as herein provided. In case of
Seller's default, Buyer's rights as set forth herein shall be in addition
to Buyer's other rights although not set forth in this Contract.
(e) Seller shall not be liable for damages resulting from default due to
causes beyond the Seller's control and without Seller's fault or
negligence, provided, however, that if Seller's default is caused by the
default of a contractor or supplier, and without the fault or negligence
of either of them and, provided further, the supplies or services to be
furnished by the contractor or supplier were not obtainable from other
sources.
<PAGE>
9.0 GENERAL RELATIONSHIP
Seller agrees that in all matters relating to this Contract it shall be
acting as independent contractor and shall assume and pay all liabilities and
perform all obligations imposed with respect to the performance of this
Contract. Seller shall have no right, power or authority to create any
obligation, expressed or implied, on behalf of Buyer and shall have no authority
to represent Buyer as an agent.
10.0 NON-WAIVER OF RIGHTS
The failure of Buyer to insist upon strict performance of any of the terms and
conditions in the Contract, or to exercise any rights or remedies, shall not be
construed as a waiver of its rights to assert any of the same or to rely on any
such terms or conditions at any time thereafter. The invalidity in whole or in
part of any term or condition of this contract shall not affect the validity of
other parts hereof.
11.0 APPLICABLE STATE LAW AND COMPLIANCE
This Contract shall be governed by and construed in accordance with the law of
the Commonwealth of Virginia. Seller agrees to comply with the applicable
provisions of any Federal, state or local law or ordinance and all others, rules
and regulations issued thereunder.
12.0 ORDER OF PRECEDENCE
The document identified below is hereby incorporated by reference. In the vent
of an inconsistency or conflict between or among the provisions of the Contract,
the inconsistency shall be resolved by giving precedence to this Contract.
13.0 CONDUCT OF OPERATIONS
Buyer represents and warrants to Seller that Buyer conducts its business and
operations in compliance with all applicable Federal, state and local laws
relating to or governing gambling, lotteries, games of chance and the gaming
industry generally.
14.0 ENTIRE AGREEMENT
Upon acceptance of this Contract, Seller agrees that the provisions under this
Contract, including all documents incorporated herein by references, shall
constitute the entire Agreement between the parties hereto and supersede all
prior agreements relating to the subject matter hereof. No prior or
contemporaneous statement or representation, whether oral or written, has been
relied upon by the parties, except as expressly stated herein. This contract may
not be modified or terminated orally, and no modification or any claimed waiver
of any of the provisions hereof shall be binding unless in writing and signed by
the party against whom such modification or waiver is sought to be enforced.
<PAGE>
In witness whereof, the duly authorized representatives of Buyer and the Seller
have executed this Contract on the Dates shown.
BUYER: SELLER:
Edulink, Inc. Science Applications
International Corporation
By: /s/ By:
------------------------------ --------------------------
Name: /s/ Ronald Rescigno Name: Joanne Gladden
---------------------------- ------------------------
Title: President & Chief Operating Title: Senior Contracts
Officer Representative
--------------------------- ----------------------
Date: 9/23/99 Date:
---------------------------- ------------------------
<PAGE>
SAMPLE TASK ORDER FORMAT
TASK ORDER NUMBER 001
UNDER CONTRACT AGREEMENT EDULINK/SALC-2000-001
Date:
-------------
Period of Performance:
---------------
Buyer Furnished Material:
---------------
Description of Work to be Performed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
Labor Category Rate Estimated Hours Total Not-to-Exceed Price
- -------------- ---- --------------- -------------------------
<S> <C> <C> <C>
Program Manager $200.00/hour
Senior Technical Manager $150.00/hour
Mid-level Technical Staff $120.00/hour
Junior Technical Staff $90.00/hour
Project Control/Admin. $68.00/hour
</TABLE>
Materials and Other Direct Costs. Materials and other directs costs, such as
travel, will be reimbursed on actual cost basis with reasonable and allocable
materials handling costs and profit included in the charge to the extent that
they are clearly excluded from hourly rates.
In witness whereof, the duly authorized representatives of Buyer and the Seller
have executed this Task Order on the dates shown.
BUYER: SELLER:
Edulink, Inc. Science Applications
International Corporation
By: By:
------------------------------ ----------------------------------
Name: Name: Joanne Gladden
---------------------------- --------------------------------
Title: Title: Senior Contracts Representative
--------------------------- ------------------------------
Date: Date:
---------------------------- --------------------------------
<PAGE>
[SAIC LOGO]
Science Applications International Corporation
An Employee-Owned Company
February 8, 2000 CLF10753
Edulink, Inc.
4063 Bridgewood Lane
Westlake Village, California 91362
Attention: Dr. Ronald Resigno
Reference: Contract No. Edulink/SAIC-2000-001, Task Order 1
Subject: Modification 1
Dear Dr. Resigno:
Science Applications International Corporation (SAIC) respectfully requests a
modification to the subject task order. Currently the task order specifies
requirements for Program Manager, Mid-level Technical Staff, and Project
Control/Admin hours and trips from Baltimore and Orlando to Los Angeles. SAIC
requests authorization to utilize all of the labor categories defined in the
contract as well as additional travel. The hours would be reallocated within the
original task order funding ceiling for direct labor, and travel would be
reimbursed at actual cost plus reasonable handling costs.
This modification would allow the flexibility that is necessary to address the
dynamic nature of the requirements and design effort.
If you authorize the modification, please indicate your concurrence by signing
the acknowledgement block at the end of this letter. If you have any questions
or concerns regarding the above, I may be contacted at (703) 676-6437, by
facsimile at (703) 676-4161, or by e-mail at [email protected].
Sincerely, AUTHORIZATION
SCIENCE APPLICATIONS /s/ Ronald C. Rescigno
INTERNATIONAL CORPORATION ----------------------------
Signature
/s/ Joanne B, Gladden /s/ Rinaco C. Rescigno
- -------------------------------- ----------------------------
Joanne B. Gladden Print/Type Name
Senior Contracts Representative
President
----------------------------
cc: J. Roberts, S. Rizzi/SAIC Title
ltr. log/file
2/8/00
----------------------------
Date
1710 Goodridge Drive, P.O. Box 1303, McLean, Virginia 22102 * (703) 821-4300
<PAGE>
EXHIBIT 10.9
As of February 1, 2000
Gary Nash
University of California, Los Angeles
National Center for History in the Schools
Department of History
5262 Bunche Hall
405 Hilgard Avenue
Los Angeles, California 90005
Dear Mr. Nash:
This letter shall serve to memorialize the agreement between you and us,
as follows:
0 We hereby engage you to render your services as an independent
contractor, and you hereby accept such engagement, to assist us in
supervising and guiding those individuals (the "Design Team") engaged
by us to design the content of an interdisciplinary, cross age,
inquiry based 7th and 8th grade curriculum which satisfies core
curriculum standards. In this connection, you agree to supervise the
Design Team so as to ensure that the content to be delivered to us by
the Design Team, consisting of ten units ("Units") with approximately
70 lessons and 560 activities, plus approximately 40 inquiry and
design based investigative questions for a contemplated 3-D virtual
world (herein collectively called the "Content"), shall conform to the
National Standards for United States History (in an international
context) and that the various activities shall be consistent with the
types of activities set forth in the two volumes of "Bring History
Alive: Sourcebooks for Teaching World and United States History." In
addition, you agree to supervise the Design Team so as to ensure that
any interdisciplinary content (i.e. content relating to subjects other
than History, such as Mathematics and Science) included within any of
the above-described approximate number of 560 activities or 40
investigative questions shall not dilute or adversely effect the
delivered content's acceptability in terms of conforming to the
National Standards for United States and World History. It is
specifically understood that you shall not be responsible for guiding
the Design Team in terms of ensuring whether any of the incorporated
interdisciplinary content conforms with the National Standards for
subjects other than History, such as Mathematics and Science.
<PAGE>
1 In consideration of the rendition of your services, we shall pay you
the sum of $3,000 per month, commencing as of February 1, 2000, for a
period of twelve consecutive months or until such time as the Content
is delivered to and approved by us, whichever first occurs. Such
$3,000 monthly payment shall be deemed an advance against a fee equal
to $100 per hour for each hour of services rendered by you hereunder.
You agree to log the time expended by you on our behalf and send us a
bill reflecting the time so expended within 10 days after the end of
each calendar month and within 15 days following the end of each
three-month period, we shall pay you the difference between the total
fees due you and the total sums theretofore paid to you by us;
provided, however, you agree that at such time as you estimate that
the time you must expend on a monthly basis will exceed 40 hours, you
shall notify us so that we may have the opportunity to review with you
the work situation in depth.
2 In addition, we shall pay you bonuses equal to seven and one-half
percent (7.5%) of the gross royalties actually earned by the U.C.
Regents ("UCLA") pursuant to any license between UCLA and EduLink
relating to the intellectual property so licensed to us by UCLA
relating specifically to history curriculum for the 7th and 8th
grades. This 7.5% will not apply to "advances" paid to UCLA but will
apply to UCLA's gross earnings under the license. The bonus will be
paid as and when payments/accountings are to be rendered to UCLA under
the license, if any.
3 We agree that we shall take reasonable steps to ensure that the
individual members of the Design Team are willing and able to comply
with your guidance so that you are able to satisfy your obligations to
us.
4 In addition to the foregoing, we hereby grant to you Warrants to
purchase 1,000,000 shares of our Common Stock at an exercise price of
ten cents ($.10) per share, such Warrants to vest at the rate of
100,000 Warrants for each Unit of Content delivered to and approved by
us hereunder. The documentation reflecting the issuance of such
Warrants shall be issued to you within the next 60 days and such
documentation (as well as documentation relating to any warrants
described in paragraphs 6 and 7 below) shall contain all of those
provisions customarily included in such documents, including without
limitation, provisions relating to the term by which such Warrants may
be exercised (i.e. four years from issuance) and the restrictions on
sale of the Warrants or the underlying securities.
5 You agree to serve on EduLink's "Curriculum Committee" and will
receive additional Warrants to purchase 500,000 shares of EduLink's
Common Stock at an Exercise Price of $.20 per share. In addition, you
agree to assist us in securing the services of at least three
pre-approved individuals to serve on the Curriculum Committee, one to
represent Science, one to represent Mathematics, and one to represent
English Literature; for your assistance, you shall receive an
additional 1,000,000 Warrants, one-third of which shall vest as each
of such
<PAGE>
individuals agrees to serve on such Curriculum Committee, provided the
agreements for such services are obtained on or before April 30, 2000.
The exercise price applicable to each of such Warrants will equal
$.20.
6 You shall also have the right to render services similar to those
described in paragraph 1 above for and in connection with our creation
of curriculum for three additional grade groupings: 9th/10th;
11th/12th; 4th/5th/6th. The terms of agreement with respect to fees
payable to you would be the same as those set forth in paragraph 2
above (plus the 7.5% bonus described in paragraph 3 above if material
is licensed from UCLA relating to history curriculum for each
applicable grade grouping), such fees to be subject to increases as
determined and agreed upon after good faith negotiations between you
and us; and you shall also be entitled to additional Warrants to
purchase 1,000,000 shares of EduLink's Common Stock per each grade
grouping, such Warrants to vest at the rate of 100,000 Warrants per
Unit delivered, up to 10 Units per grade grouping. The exercise prices
will equal 75% of the average market price of EduLink's Common Stock
on the close of business during the five business days immediately
preceding the date the applicable Warrants vest.
7 You agree that as between you and us, all of the results and proceeds
of your services shall be our sole and exclusive property, from
inception, inclusive of any copyrights therein, and for this purpose
any such results and proceeds shall be considered a "work for hire."
8 You agree that we shall hve the right to use your name, likeness and
biographical data in our various publicity material concerning our
business activities so as to reflect your engagement hereunder.
9 Entire Agreement. This Agreement contains the entire Agreement between
you and us, and there are no other promises or conditions either oral
or written. This Agreement supersedes any prior written or oral
agreements or communications between the parties.
10 This Agreement may be modified or amended only if made in writing and
signed by both parties.
If the foregoing confirms your understanding of our Agreement, please sign this
letter in the space provided below.
Very truly yours,
EduLink, Inc.
By: ________________________
Michael Rosenfeld
AGREED TO AND ACCEPTED
______________________
Gary Nash
<PAGE>
EXHIBIT 10.10
As of February 1, 2000
Kathleen McGuire
d/b/a McGuire and Associates
2300 California Avenue
Santa Monica, California 90403
Dear Ms. McGuire:
This letter shall serve to memorialize the agreement between you and us,
as follows:
1. You and individuals furnished by you are in the business of rendering
consulting services to educational institutions and businesses,
specializing in matters related to learning and curriculum, including:
course design; curriculum design; instructor development; distance
learning implementation; educational assignment; structuring and
coordination of educational programs; recruitment of instructors and
implementation of training; and development of tutorial and counseling
programs.
2. Commencing on February 1, 2000, you, together with those content
development specialists designated by you from time to time and
approved by us from time to time ("Specialists"), shall provide us
with the content development of an interdisciplinary, cross-age,
inquiry-based 7th/8th grade curriculum. "Content development," for
purposes herein, includes: responsibility to core curriculum
standards; collation of our previous course content; integration of
educational software applications required by our current and future
agreements with our content providers; presentation and final editing
of content for fulfillment of deliverable agreement schedule;
recruitment and training of online tutors as needed. You and we shall
mutually determine a
<PAGE>
product delivery schedule for the above-described content to be so
developed by you and such Specialists and shall memorialize such
schedule in writing signed by you and us (the "Deliverable Schedule").
3. In consideration of the services to be provided pursuant to the
provisions of paragraph 2 above, we shall pay you the total sum of
$148,400, which sum shall be disbursed in installments based upon the
satisfactory delivery to us of the content so developed hereunder
pursuant to the Deliverable Schedule and payment schedule to be
mutually agreed upon by you and us. In this connection, you agree that
payments to you pursuant to this paragraph 3 shall release us of any
obligation to make any payments to the Specialists and that you shall
be responsible for making all required payments to such Specialists.
In addition, you agree that the results and proceeds of services
rendered hereunder by you and the Specialists shall be deemed our sole
and exclusive property, from inception, inclusive of all copyrights
therein, and for this purpose shall be considered a "work for hire."
4. In addition to the foregoing, you shall render the following services
for us:
(a) Schedule and manage the Specialists;
(b) Liaison and interface between the Specialists and us and our
multiple content providers;
(c) Assist us in exploring federal and private funding sources for our
continued research and development;
(d) Aggregate and analyze student assessments of the curriculum
developed by you and the Specialists;
(e) Provide qualitative and quantitative assessments of student, parent
and teacher responses to our content, services and products, as
developed;
(f) Identify possible schools to participate in our Beta Test and
service launch;
(g) Identify possible corporate alliances;
(h) Assist in planning for and scheduling additional rollouts of
content for other grade levels (i.e. 4th through 6th; 9th through
12th).
<PAGE>
5. In consideration of the services to be provided by you pursuant to
paragraph 4 above, we shall pay you the sum of $3,000 per month,
commencing on the first day of February, 2000 (receipt of such
February monthly payment you hereby acknowledge) and continuing for a
period of twelve consecutive months, or until this Agreement is
terminated pursuant to the provisions below.
6. This Agreement may be terminated by us prior to January 31, 2001 if
you have defaulted in any of your material obligations hereunder,
including without limitation, your failure or the failure of the
Specialists to satisfy the delivery requirements set forth in the
Deliverable Schedule to be mutually agreed upon, as set forth above.
7. Upon termination of this Agreement, payments shall cease, provided,
however, that you shall be entitled to payments for periods and
partial periods that occurred prior to the date of termination and for
which you have not yet been paid. Any extraordinary expenses shall be
submitted to us for pre-approval (in writing) and shall be paid if so
approved. This Agreement shall terminate automatically upon your
completion of the services required by this Agreement.
8. Confidentiality. You recognize that you have and will have the
following information relating to us and our business:
* Products
* Future plans
* Business affairs
* Trade secrets
* Customer lists
* Copyrights
You also recognize that the foregoing information and other proprietary
information (collectively "Information") are valuable, special, and unique
assets. You agree that neither you nor any Specialist will at any time or in
any manner, either directly or indirectly, use any Information for your or such
Specialist's own benefit, or divulge, disclose or communicate any Information
in any manner to any third party without our prior written consent. You shall
protect the Information and treat it as strictly confidential.
<PAGE>
9. You agree that we shall have the right to use your, and each
Specialist's, name, likeness and biographical data in our various
publicity material concerning our business activities so as to reflect
your engagement hereunder.
10. You shall cause each specialist to execute such documentation which
ensures our rights to the results and proceeds of their services as we
may reasonably from time to time require.
11. Entire Agreement. This Agreement contains the entire Agreement between
you and us, and there are no other promises or conditions either oral
or written. This Agreement supersedes any prior written or oral
agreements or communications between the parties.
12. This Agreement may be modified or amended only if made in writing and
signed by both parties.
If the foregoing confirms your understanding of our Agreement, please sign
this letter in the space provided below.
Very truly yours,
EduLink, Inc.
By: /s/ Michael Rosenfeld
---------------------
Michael Rosenfeld
AGREED TO AND ACCEPTED
/s/ Kathleen McGuire
- ----------------------------
Kathleen McGuire
d/b/a McGuire and Associates
EXHIBIT 11.1
Edulink, Inc.
Weighted Average Shares Outstanding
For The Year Ended December 31, 1999
Earnings Per Share
Increase Days
Date (Decrease) Outstanding Outstanding Share-days
388,800,000
01/01/99 388,800,000 (300) (116,640,000,000)
10/28/99 259,022,500 647,822,500 (65) (42,108,462,500)
12/31/99 647,822,500 0 0
-------------------------------
(365) (158,748,462,500)
===============================
Weighted Shares OS 434,927,295
=============
Net Loss ($23,956)
=============
Basic loss per common share (0.000055)
=============
Diluted loss per common share (0.000055)
=============
<PAGE>
Edulink, Inc.
Weighted Average Shares Outstanding
For The Year Ended December 31, 1998
Earnings Per Share
Earnings Per Share
Increase Days
Date (Decrease) Outstanding Outstanding Share-days
388,800,000
01/01/98 388,800,000 0
12/31/98 388,800,000 (365) (141,912,000,000)
-------------------------------
(365) (141,912,000,000)
===============================
Weighted Shares OS 388,800,000
=============
Net Loss ($1,040,237)
=============
Basic loss per common share (0.0027)
=============
Diluted loss per common share (0.0027)
=============
<PAGE>
Edulink, Inc.
Weighted Average Shares Outstanding
For The Year Ended December 31, 1997
Earnings Per Share
Earnings Per Share
Increase Days
Date (Decrease) Outstanding Outstanding Share-days
363,356,471
01/01/97 363,356,471 232 84,298,701,272
08/21/97 25,443,529 388,800,000 133 51,710,400,000
12/31/97 388,800,000 0 0
-------------------------------
(365) 136,009,101,272
===============================
Weighted Shares OS 372,627,675
=============
Net Loss $2,086,226
=============
Basic loss per common share 0.0056
=============
Diluted loss per common share 0.0056
=============
<PAGE>
Edulink, Inc.
Weighted Average Shares Outstanding
For The Period From 01/25/96 (inception) to December 31, 1999
Earnings Per Share
Earnings Per Share
Increase Days
Date (Decrease) Outstanding Outstanding Share-days
363,356,471
01/25/96 363,356,471 568 206,386,475,528
08/21/97 25,443,529 388,800,000 803 312,206,400,000
10/28/99 259,022,500 647,822,500 64 41,460,640,000
-------------------------------
1,435 560,053,515,528
===============================
Weighted Shares OS 390,281,195
=============
Net Loss ($3,589,686)
=============
Basic loss per common share (0.00920)
=============
Diluted loss per common share (0.00920)
=============
EXHIBIT 21.1
The Registrant does not have any subsidiaries.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Edulink Inc.'s Financial Statements for the years ended December 31, 1999, 1998
and 1997
</LEGEND>
<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR OTHER
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998 DEC-31-1997 JAN-25-1996
<PERIOD-END> DEC-31-1999 DEC-31-1998 DEC-31-1997 DEC-31-1999
<CASH> 74103 0 0 0
<SECURITIES> 0 0 0 0
<RECEIVABLES> 0 0 0 0
<ALLOWANCES> 0 0 0 0
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 74103 0 0 0
<PP&E> 0 0 0 0
<DEPRECIATION> 0 0 0 0
<TOTAL-ASSETS> 74103 0 0 0
<CURRENT-LIABILITIES> 1597258 2311353 0 0
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 647823 233800 0 0
<OTHER-SE> (2170979) (2700153) 0 0
<TOTAL-LIABILITY-AND-EQUITY> 74103 0 0 0
<SALES> 0 0 0 0
<TOTAL-REVENUES> 0 0 0 0
<CGS> 0 0 0 0
<TOTAL-COSTS> 0 0 0 0
<OTHER-EXPENSES> 23956 1040237 2088278 3596504
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 0 0 (2052)<F1> (6818)<F2>
<INCOME-PRETAX> (23956)<F3> (1040237)<F3> (2086226)<F3> (3589686)<F3>
<INCOME-TAX> 0 0 0 0
<INCOME-CONTINUING> 0 0 0 0
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> (23956) (1040237) (2086226) (3589686)
<EPS-BASIC> (0.000) (0.003) (0.006) (0.009)
<EPS-DILUTED> (0.000) (0.003) (0.006) (0.009)
<FN>
<F1>Denotes interest income
<F2>Denotes interest income
<F3>Represents pre tax loss
</FN>
</TABLE>
