United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1933
Date of Report: April 29, 2003
Commission File Number: 000-29183
eKnowledge Group, Inc.
Nevada 76-04030898
(Jurisdiction of Incorporation) (I.R.S. Employer Identification No.)
400 S. Ramona, Suite 203 Corona, CA 92879
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (909) 372-2800
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock
On April 1, 2003, January 31, 2003, the Board of Directors of eKnowledge
Group, Inc., approved a Revised Merger Term Sheet with American Affinity
Partners, Inc. which arranges for pre-closing financing, a spin off of
certain non-core assets, related liabilities and personnel, and a management
advisory services agreement with The Amara Group, Inc. The Revised Merger
Term Sheet was executed on April 1, 2003. On April 9, 2003 the management
advisory services agreement with The Amara Group, Inc. was executed. Under
the terms of the agreement Amara shall oversee and advise on the
restructuring and recapitalization of the company including integration of
the merger with American Affinity Partners, Inc. Amara shall have full
operating control of eKnowledge during the term of the agreement.
Exhibit 100 - April 1, 2003, Revised Merger Term Sheet between American Affinity
Partners, Inc. and eKnowledge Group, Inc.
Exhibit 101 - April 9, 2003, Management Services Agreement between The Amara
Group, Inc. and eKnowledge Group, Inc.
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Exhibit 102 - April 23, 2003 Press release regarding Revised Merger Term Sheet
between American Affinity Partners, Inc. and eKnowledge Group, Inc
and Management Services Agreement between The Amara Group, Inc.
and eKnowledge Group, Inc.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
eKnowledge Group, Inc.
/s/Gary Saunders
Gary Saunders
President & Secretary
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Exhibit 100
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Exhibit 100
American Affinity Partners, Inc. ("AAP")
Revised Merger Term Sheet
Eknowledge Group, Inc. ("EKWL")
This term sheet describes certain revised terms to the existing term sheet
understanding between the parties. A final agreement shall exist when properly
executed merger agreements, reorganization agreements and conditions to closing
are met. Certain terms as described herein shall be binding on the parties.
Summary: AAP and EKWL have agreed to enter into a merger or reorganization as
appropriate. As part of the transaction a pre-closing financing shall be
consummated. Certain EKWL assets, related liabilities and personnel shall be
spun-off as part of the transaction.
Ownership: The equity in the public company shall be revised as
follows:
* AAP shareholders shall receive 90% of the fully diluted shares
* EKWL shareholders shall receive 10%of the fully diluted shares this represents
the entire ownership including this contemplated financing, restructuring of
debt and any related equity issuances prior to closing
Financing: EKWL shall complete a financing with European investors and
ESOP share sales. This financing shall raise a maximum of $1,000,000.
Financing may be raised from any additional sources as the parties deem
appropriate. The $1,000,000 refers to a net maximum raise after paying
related financing expenses
As part of this transaction 50% of the first $100,000 raised shall be set aside
for working capital for a spin-off transaction of certain EKWL assets as
discussed in spin-off below. Thereafter 25% of the additional proceeds of the
financing shall be set aside and distributed up to a maximum of $250,000 in
total set asides. All proceeds of the financing shall be held by Rutan & Tucker
with the understanding that as money is wired to its escrow account funds shall
be set aside according to the formula up to the maximum
Distributions shall occur as funds are raised subject to the formula and
commitments and wired to Newco each Friday if any funds have been wired into the
Rutan & Tucker escrow account during that respective week. It is anticipated
that fund distribution will begin within 2 weeks of this agreement and terminate
upon reaching the maximum net $250,000 distribution.
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Spin-off: Saunders and Hildebrandt and EKWL commit to enter into an agreement
whereby Saunders and Hildebrandt purchase assets and liabilities from EKWL and
fund a Newco containing certain EKWL assets and related liabilities, namely the
accounts receivable, available funds outside of Rutan & Tucker escrow account,
the existing Public Sector e-Learning Coalition, We The People, Mazda project
work, Pavilion, and Test Prep business and or other project work
Certain assets includes contracts, intellectual property, equipment that are
free and clear of any liens (proof shall be submitted and a lien search
performed) and leases. Certain liabilities shall be assumed as well.
EKWL shall enter into an asset sale agreement with Newco as soon as is
practical, no later than 4/30/03, and shall enter into a financing agreement
with EKWL to access capital as raised pro-rata per the AAP-EKWL financing
arrangement above.
Restructuring of EKWL: EKWL shall begin the restructuring immediately with
the execution this agreement and the execution of a management agreement
with the Amara Group within 5 days of executing this term sheet
Board: AAP shall have 4 of 5 seats on the EKWL board
Executives: Mr. Saunders shall have an executive position within the Holding
company and be President/CEO of a restarted Eknowledge business after and
through the restructuring. Mr. Saunders shall receive a monthly fee of $10,000
beginning immediately with this financing. The monthly payment shall continue
through the end of June 2003 and at such time a new compensation plan shall be
agreed to consistent with title and responsibilities of the executive going
forward after the close of the Merger/Reorganization
The Amara Group shall receive a management agreement paying it $10,000 per month
immediately with the beginning of the financing. Amara shall have full authority
and veto over all capital transactions, negotiations with creditors, execution
of contracts and other corporate matters as appropriate. Upon execution of the
management agreement EKWL shall submit all corporate actions, board resolutions,
share issuances, notes issuances to Rutan for review and approval prior to
executing any agreements with any parties including but not limited to any
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revised compensation agreements, the execution of contracts, incurrence of any
liabilities, etc. Any single violation of any of the conditions in the preceding
sentence shall result in the immediate dismissal of all EKWL executives and
board members. Additionally, EKWL executives and board members shall forfeit any
equity shares owned, stock options, warrants, notes or any form of equity
interest in EKWL. There shall be no exceptions and no cures. The Amara Group &
Rutan shall not unreasonably withhold review and approval.
Transaction Costs: All transaction costs shall be borne by EKWL. This
includes legal, accounting, advisory fees any third party costs related to
completion of any aspect of this and the related agreements
Insider Loans: All insider loans shall be forgiven as part of this
agreement immediately with execution of this agreement including those owed
to Saunders and Hildebrandt.
EKWL Debts: To the extent practical, EKWL shall restructure all debts with a
goal of full payment of those obligations subject to a workable payment plan,
swap of debt for common equity and/or cash or in some combination of all three
for all valid debts of EKWL to non-affiliated, non-officers and non-insider
shareholders as appropriate exclusive or any indebtedness owed to The Amara
Group or AAP, if any
Conditions to Closing: The closing conditions for this transaction shall be
as follows:
* Properly executed merger agreements'
* Completion of the financing with a capital raise of at least
$ 200,000.
* Shut down of all remaining EKWL businesses after completion of the financing
* Restructuring of remaining liabilities to third party non-employees,
non-former employees, former consultants to EKWL acceptable to AAP
* Forgiveness of all indebtedness held by any current or former executive of
EKWL with specific loans of Saunders/Hildebrandt forgiven
* Settlement with tax authorities acceptable to AAP
* Restrictions from entering into any new agreements that bind or create and
new liabilities for EKWL
* Good standing in all previous agreements and no defaults of existing
agreements between AAP and EKWL
* Good standing with the SEC
* EKWL shall retain new SEC and corporate counsel subject to the approval of
AAP and Amara
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Agreed to by:
________________________________ Date: ________________
Eknowledge Group, Inc
Gary Saunders, Chairman and CEO
________________________________ Date: _________________
American Affinity Partners, Inc.
David Hirschhorn, Chairman and CEO
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Exhibit 101
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Exhibit 101
MANAGEMENT SERVICES AGREEMENT
AMARA GROUP, INC.
THIS MANAGEMENT SERVICES AGREEMENT, (herein the "Agreement"), is
made this 9th day of April, 2003, by and between Amara Group, Inc. , a
California Corporation, ("Amara ") and Eknowledge Group, Inc. (herein
referred to as "Company"), and is stated as follows:
- -Recitals-
A. Whereas, Company is duly organized and existing as a [state of Nevada]
corporation with its principal place of business located in [California]
and is engaged in [providing business services] and doing business in the
markets described herein; and
A. Whereas, Company is desirous of engaging Amara to serve as a development,
operations, internet business troubleshooting, and regulatory
manager/administrator to implement and oversee execution of the business
plan described herein; and
A. Whereas, Company's board of directors is authorized to retain a
professional business management services organization and to delegate to
such organization all directorial and management powers of the Company as
are needed by Amara to undertake its responsibilities and obligations
contained herein; and
A. Whereas, Amara is a professional business management services organization
which specializes in the development, implementation and administration of
business plans tailored to maximize, expand, restructure, and/or reorganize
companies to assure financial stability, achieve all operational goals and
maximize profits on operations needed to secure a healthy future for
sale/reorganization and immunize against unfavorable take over.
A. Whereas, The Board of Directors (the "Board") of the Company has, by
resolution, authorized it's president to engage Amara to manage and
administrate the business and operations of Company and Amara desires to
accept such engagement, all on the terms and conditions set forth below.
(See attachment)
Now Therefore, for valuable consideration, and in exchange for the covenants
and promises set forth herein, it is hereby agreed by and between Amara and
Company as follows:
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TERMS AND CONDITIONS
1. ENGAGEMENT OF AMARA
Company hereby engages Amara as the exclusive managing and servicing agent of
the Company and it's business operations, and Amara hereby accepts said
appointment and undertakes to perform all of the services and responsibilities
set forth herein in such capacity and to comply with all provisions of this
Agreement.
2. DEFINITIONS
2.1 Administrative Services: Those services more fully described in 4 of this
Agreement, including without limitation financial, legal, personnel, and
public relations services.
2.2 Management Support Services: Those services more fully described in 3 of
this Agreement, including without limitation the marketing support and
commercial development services to be supplied by the personnel referred to
in 3.2.
2.3 Subsidiary: Any corporate entity, other than the Company, of which at least
fifty percent (50%) of the voting stock is owned or controlled, directly or
indirectly, by the Company.
2.5 Technical Services: Those services more fully described in 5 of this
Agreement.
2.6 Term of this Agreement: The period set forth in 7 of this Agreement.
3. MANAGEMENT SUPPORT AND COMMERCIAL DEVELOPMENT SERVICES
3.1 Types of Services: For the term of this Agreement, Amara shall make
available to the Company the following services in connection with the
Company's business as may be required to accomplish the business plan and
objective(s) described herein:
(a) General management support in connection with the day-to-day operation of
the Company's business, including operating and sales services; and
(b) Commercial development and marketing research services concerning the
Company's business arena, including without limitation advice about and
collection and analysis of information relating to the market for the
products and/or services to be sold by the Company.
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3.2 Personnel: Amara shall make available to the Company appropriate personnel
to perform the services described in 3.1. Amara shall assign to the Company
various personnel or consultants retained by Amara to provide such services
as may be required to accomplish the business plan and objective(s)
described herein, and whom shall carry out their reasonable and lawful
orders in connection with the furnishing of such services as described in
3.1. The personnel or consultants shall be compensated by, and shall remain
as employees or consultants of, Amara .
4. ADMINISTRATIVE SERVICES
4.1 Financial Services: Amara shall make available to the Company the services
of its treasury, control and planning departments, or the equivalent
thereof, to assist the Company with respect to accounting, control, and
other financial matters as required to accomplish the objectives of the
Agreement. This assistance shall include assistance and advice with respect
to external financings, bank relations, cash management, investments,
public reporting, accounting, credit and collection, and such other matters
as these departments generally handle for Amara .
4.2 Tax and Audit: Amara shall make available to the Company the services of
its internal audit and tax departments, or the equivalent thereof, for
consultation and advice with respect to the establishment, execution, and
control of accounting policies, financial budgets, administrative
procedures, and systems as required to accomplish the objectives of the
Agreement. Amara 's tax consultants shall also assist the Company in the
timely preparation and filing of all required tax returns and other tax
related reports and advise the Company with respect to tax matters
generally, and provide tax opinions as may be required to accomplish the
objectives of the Agreement.
4.3 Legal: Amara shall make available to the Company the services of its legal
department and advisors to provide those services to the Company as are
normally provided to Amara as required to accomplish the objectives of the
Agreement. These services shall include counsel, advice, and assistance
with respect to negotiation and drafting as well as enforcement of
Company's contracts, management and oversight of litigation, government
regulatory compliance matters, products liability, distribution practices,
corporate record keeping, patent and trademark applications and
prosecutions, selection, and general supervision of outside legal counsel
engaged by or on behalf of the Company and such other matters as Amara 's
legal department generally handles for Amara .
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4.4 Personnel: Amara shall make available to the Company the services of its
personnel which shall provide to the Company those services as generally
provided to Amara as required to accomplish the objectives of the
Agreement. These services shall include advice and information concerning
the recruitment, hiring, training, and retention of personnel as well as
the setting of standards for performance and efficiency for the personnel;
assistance in the accomplishment of wage and salary programs and the
compliance of these programs with all applicable regulations; assistance in
the development and establishment of pension and other employee benefit
programs; and the conduct of negotiations for and assistance with respect
to all general labor matters.
4.5 Public Relations: Amara shall make available to the Company the services of
its corporate communications department, or the equivalent thereof, for
handling internal and external business communications and other matters
normally handled by that department for Amara as required to accomplish the
objectives of the Agreement. These services shall include assistance in the
preparation of internal and external news releases, relations with local
and national trade and general press organizations, the organization of
news conferences, the preparation of product literature for distribution to
the general public and the trade, the organization and implementation of
advertising and promotion campaigns, and such other similar matters as
Amara and the Company may mutually agree.
4.6 Miscellaneous Services: Amara shall make available to the Company the
services of its product/service marketing and advertising consultants and
advisors, purchasing department, corporate physical distribution
department, insurance advisors, real estate advisors, and other
miscellaneous administrative staff groups, advisors and consultants or the
equivalents thereof, to advise and assist with respect to matters falling
within the areas of expertise of these various departments as required to
accomplish the objectives of the Agreement.
4.7 Requests and Timing of Services: The Administrative Services under this 4
shall be made available as required to accomplish the objectives of the
Agreement and shall be performed by Amara 's internal staff groups that
generally perform these services for Amara . These Administrative Services
shall be provided by Amara in a reasonably prompt manner subject to the
availability of personnel and the level of tasks generally demanded of the
Amara staff groups involved.
5. TECHNICAL SERVICES
5.1 Manufacturing and Engineering Services: Amara shall make available the
services of its manufacturing and engineering agents and advisors, or the
equivalent thereof, to provide, such services and assistance as required to
accomplish the objectives of the Agreement. These services may include,
without limitation, manufacturing services, engineering, design
engineering, and other technical services, assistance, and advice.
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5.2 Electronic Data Processing: Amara shall make available to the Company the
services of its electronic data processing department, or the equivalent
thereof, services and assistance as required to accomplish the objectives
of the Agreement.
5.3 Amara 's Employees. Amara may, from time to time, temporarily assign to the
Company certain of Amara 's employees to perform work for and on behalf of
the Company with respect to Amara . These persons shall remain employees of
Amara during the term of the service to the Company; provided, however,
that these employees of Amara shall execute and deliver to the Company an
Employee Proprietary Information Agreement substantially in the form of
Exhibit "A" attached to this Agreement.
5.4 Requests and Timing of Services: The Technical Services described in 5.1,
5.2, and 5.3 above shall be made available as required to accomplish the
objectives of the Agreement and shall be performed by Amara 's staff group
normally responsible for such services in a reasonably prompt manner
subject to the availability of personnel and the level of tasks generally
demanded of them. Additional services and personnel may be provided to the
Company as an accommodation to the Company by Amara , and at its request
subject to all terms and conditions of the Agreement.
6. CHARGES FOR SERVICES
6.1 Services for Internal Development: Services supplied to the Company by
Amara under Paragraphs 3, 4, and 5 of this Agreement for the purpose of the
internal development of the Company as a business, which is deemed to
include the training of Amara technical personnel but to exclude the
development of Amara 's new in house technology, shall be charged on a
fully-loaded cost basis plus a fifteen percent (15 %) administrative
surcharge.
6.2 Fully Loaded Costs: For purposes of 6.1, the term "fully-loaded cost" shall
be computed at the same rates and in the same manner as Amara charges or
would charge, in accordance with its normal practices and policies as in
effect from time to time, its internal divisions and Subsidiaries for like
or similar services rendered contemporaneously with services to be rendered
to the Company under 3, 4 and 5, together with all out-of-pocket expenses
incurred by Amara , including, without limitation, all travel, housing,
relocation, and subsistence expenses of Amara 's personnel directly related
to the rendering of services to the Company under 3, 4 and 5.
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6.3 Services for Client-Billable Work: Services supplied to the Company by
Amara , under 3, 4 and 5 of this Agreement for work that is billable by the
Company to a client or clients shall be charged on an arms'-length basis
or, in the alternative, at the option of the Company, with the concurrence
of Amara , on the basis of a pro rata share of the revenues of the
respective project, with the pro rata basis calculated by the relative
independent contribution of Amara 's employees to the project vis-a-vis
employees of the Company, while taking into account fully-loaded costs.
Determination of the relative independent contribution of employees of
Amara and the Company to a particular project shall be made by the Board of
Directors of the Company after consultation with the Chief Executive
Officer and Chief Technical Officer of the Company.
6.4 Reimbursement and Record Keeping: For all services supplied to the Company
by Amara under 3, 4 and 5 under this Agreement, the Company shall make
reimbursement to Amara quarterly within 10 calendar days of receipt of
Amara 's invoice. Amara shall keep reasonable records as evidence of the
above costs for periods of not less than three (3) years and shall allow
the Company to examine such records at any reasonable times.
6.5 Services Rendered by the Company: Any services rendered by the Company to
Amara shall be invoiced at to be agreed on consulting rates.
7. TERM
7.1 Initial Term and Renewal: Unless terminated earlier pursuant to 7.2 below,
the Initial Term and Renewals for this Agreement shall be as follows:
(a) Initial Term. The initial term of this Agreement shall be for a period of
one year and 6 months or 18 months commencing on April 7, 2003.
(b) Renewal. In the event that at the conclusion of this contract, the parties
are satisfied with the respective performance of the other during the
initial contract period, then this Agreement shall be renewed for an
addition one (1) year term thereafter unless either party which is not then
in material default hereunder shall have given the other party written
notice of non-renewal at least ninety (90) days prior to the expiration of
the then current term.
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7.2 Termination: This Agreement may be terminated prior to the natural
expiration of the term:
(a) For Cause: Either by the Company's Board or by Amara , at any time for
cause, provided that, if the cause constitutes a breach or default of this
Agreement which is capable of being cured, such breach or default shall not
have been cured within thirty (30) days following written notice of such
breach or default; or
(b) Without Cause: Upon thirty (30) days prior written Notice to Company
authorized by vote of a Majority of Shareholders exclusive of Company's
insiders as defined by federal securities laws.
(c) Without Cause: Upon thirty (30) days prior written Notice to Amara only
under the condition that Company and AAP do not complete anticipated merger
due to factors outside Company control. For example if Company chooses not
to follow through with merger this termination Section 7.2 ( c ) may not be
used by Company.
In the event that either party shall dispute a termination by the other pursuant
to the provisions of this subparagraph 7.2, the dispute shall be submitted to
arbitration in accordance with the commercial arbitration rules of the American
Arbitration Association. The fee payable to the American arbitration Association
to initiate the arbitration shall be remitted by the party initiating the
arbitration; the cost of arbitration, including such fee, shall ultimately be
borne as determined by the arbitrator under the aforesaid rules.
7.3 Resignation: Amara may resign upon compliance with the following
conditions, assuming such compliance has not been hindered or made
impossible due to Company or any third party's actions or omissions or
other misfeasance:
(a) On or before the resignation Effective Date, or upon such later date that
the Company may successfully obtain the services of a substitute managing
agent not to exceed one hundred eight (180) days following Effective Date,
Amara shall turn over all books and records relating to the management and
operation of the Project to the successor managing agent or to such other
person or entity as the Board may direct;
(b) In the event that Amara 's resignation shall be authorized as provided
hereinabove, the Company shall use its best efforts to obtain the services
of a responsible management services company to provide Company with
services consistent with industry-recognized standards so that Manager may
accomplish the resignation in a timely manner;
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(c) Such conditions as may be subsequently negotiated and established by and
between Company and Amara pursuant to a properly executed written document
intended to govern an event of resignation without cause by Amara .
8. DUTIES OF COMPANY
The Company shall furnish Amara with copies of any and all documents connected
with the business which may assist Amara in carrying out its duties hereunder,
including, without limitation, all current and historical books and records,
product/service marketing and advertising data, operational documents, personnel
records, documents generated in litigation, regulatory compliance documents,
insurance policies, employment contracts, vendor purchasing agreements, real
property leases, personal property leases, invoices, product inventories, the
Articles of Incorporation and Bylaws of Company, all corporate resolutions,
proxies, any formal notices of defaults, claims, or suits, received by the
Company, and any and all written instruments executed by or on behalf of the
Company. The Company shall timely disclose and provide Amara with any and all
information not known to Amara which may be relevant to Amara 's performance
under this Agreement. The Company shall fully cooperate with Amara in connection
with Amara 's performance hereunder.
9. DUTIES AND OBLIGATIONS OF AMARA
9.1 In General: Amara shall provide or cause to be provided all services and
personnel required to administer the affairs of the Company and to manage
and operate the business of the Company as contemplated by the Bylaws and
all other governing documents, corporate resolutions, and agreements
affecting operations, as well as all applicable law, at all times in the
manner consistent with the provisions of the Bylaws of the Company and
subject to the terms and conditions set forth herein. Amara shall manage
and operate the Company in accordance with good practices and character,
consistent with the best interests of the Company. Amara shall have all the
powers which the Company has, pursuant to the Declaration, to the extent
necessary to perform its duties and obligations hereunder. Subject to the
provisions of 5.5 and 12 below, Amara may delegate its authority and
responsibilities to one or more sub-agents for such periods and upon such
terms and Amara deems proper.
9.2 Administrative Services: Not in limitation of the provisions of 8., Amara
shall provide the following services of an administrative nature:
(a) Board Of Directors' Meetings. Amara shall provide assistance to the Board,
as the Board may from time to time request or direct, with the organizing
and coordinating of the meetings of the Board and of the Company, which
assistance shall include the preparation and delivery of notices of
meetings consistent with the requirements of the Project's Bylaws. Amara
shall coordinate the preparation and approval of agendas with the Board and
shall be available, as the Board may direct, to assist in the conduct of
meetings and/or to oversee the election of Board members. Amara shall
circulate minutes of any such meeting, as approved by the Secretary of the
Company, within thirty (30) days following such meetings.
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(b) Corporate/Operations Books and Records. Amara shall hold or cause to be
held, all records of the affairs of the Company, including, but not limited
to, minutes of the meetings, correspondence, modification of Bylaws and
Rules and Regulations.
(c) Communications: Amara shall initiate, develop, and establish effective
communication with Board of Directors, shareholders, creditors, vendors,
advisors and other appropriate interested persons or entities by use of
newsletters, meetings, telephonic or other forms of effectual
communication.
(d) Company Documents: Amara shall, from time to time as necessary or
desirable, recommend to the Board that it amend, modify or supplement the
Bylaws of Company or other required documents, public filings, governing
documents and all contracts to comply with relevant federal, state and
local statutes and laws, case precedents, or as needed for implementing
operational requirements.
(e) Roster of Shareholders/Warrant holders. Amara shall cause a complete and
accurate list of Roster of Shareholders/Warrant holders to be maintained
(the "Roster") setting forth the name and the mailing address of each.
Amara shall, upon lawfully and duly delivered written request from any
Shareholder/Warrant holder, furnish a copy of the Roster to the requesting
Shareholder/Warrant holder, provided that Amara may charge a reasonable fee
to such Shareholder/Warrant holder for the cost of preparation of the
Roster and that such Shareholder/Warrant holder agrees in writing to
neither make commercial use of the Roster nor to provide, in whole or in
part, the Roster, or copy thereof, to any third party.
(f) Legal Issues: Amara will work, communicate, and assist in any activities of
a legal nature that the Company is or may from time to time become
involved, and as set forth above obtain and engage all appropriate legal
counsel as may be required for the Company. Additionally, Amara will
endeavor to remain up to date on emerging or changing legal issues in the
business/industry in which the Company operates.
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9.3 Fiscal Services: Not in limitation of the provisions of Paragraph 5.1
above, Amara shall, subject to the supervision of the Company and at the
sole expense of the Company cause the following services of a fiscal nature
to be provided:
(a) Budgets: Amara shall prepare and submit to the Board for approval, which
approval shall not be unreasonably withheld, not less than sixty (60) days
prior to the end of succeeding Fiscal Year, a budget and management
overview meeting the requirements of the operational business plan. Each
budget approved by the Board is called the "Budget." Amara shall cause a
copy of the Budget to be distributed to all members of the Company's Board
of Directors or it's duly constituted financial sub committee, not more
than sixty (60) days nor less than forty-five (45) days before the
beginning of each Fiscal Year.
(b) Revenue Reserve Program: Amara shall establish and oversee an appropriate
revenue reserve program. This would include identification of all
foreseeable operational requirements and other related present and future
costs and such a program will conform to all relevant state and federal
requirements for retention of capital.
(c) Bank Accounts: Amara shall establish all necessary bank and brokerage
accounts for the Company consistent with the Bylaws and resolutions of the
Company's Board of Directors, and shall marshal collection of all of
Company's receivables and revenues, and shall deposit or invest said funds
and all other amounts collected by Amara in connection with the performance
of its duties hereunder in the accounts designated for such purpose. Amara
shall keep accurate books and records reflecting the amount of such
accounts, which duty may be delegated to it's retained CPA/Financial
advisors.
(d) Disbursements: Amara shall cause disbursement from the operating bank
account of the Company any and all accounts required for the payment of all
Company's expenses incurred consistent with the applicable Budget and as
otherwise permitted by the bylaws, resolutions of the Board of Directors,
as required to effectuate the purpose of this agreement, and/or as required
or permitted by law. Amara shall also have the right and entitlement to
disburse to itself all monies due from Company under this Agreement should
the Company fail or refuse to pay such to Amara on a timely basis as
defined herein.
(e) Financial Statements and Audits. Amara shall cause any and all audits to be
conducted as required by law, or by board of directors resolution(s) or
under the terms of this agreement. Amara shall cause all financial
statements required by law, private agreement, or otherwise to be prepared
and copies thereof distributed to all required or requested interested
parties in the manner and at the time provided for by law, private
agreement, or otherwise, which duty may be delegated to it's retained
CPA/Financial advisors.
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(f) Books and Records. Amara shall cause to be kept and maintained full and
adequate books and records reflecting the results of operation of the
Company in accordance with generally accepted accounting principles. The
books and accounts and other records relating to the operation of the
Company shall be available to the directors, and shareholders and
investors/lenders as required by law or private agreement and its
representatives at all reasonable times for examination, inspection and
transcription, or , at the Company's expense , distribution to all members
as may be directed by the Board.
(g) Expense Control. Amara shall, in it's own discretion, implement and oversee
an operating expense control system to reduce unnecessary expenses and
initiate cost cutting measures to maximize the Company's fiscal efficiency,
and increase it's inherent equity value.
9.4 Physical Services. Not in limitation of the provisions of Paragraph 9.1
above, Amara shall provide the following services of a physical nature at
the sole expense of the Company unless otherwise noted:
(a) Emergency Procedures. Amara shall oversee establishment and implementation
of emergency and disaster procedures to enhance operational safety and
reduce potential Company liability.
(b) Inspections. Amara shall make timely inspections of the Company's real
property holdings, leased real property, product inventory, and other
personal property and render reports and make recommendations concerning
the afore-described Property to the Board for its repair, restoration, and
maintenance.
(c) Insurance. Amara shall, on behalf of Company, and at Company's expense,
obtain and keep in force all insurance required by the provisions of the
Declaration. Amara shall administer all such insurance and claims under
such insurance policies or bonds.
(d) Personnel Services. Amara is authorized to hire, pay, supervise and
discharge, or cause to be hired, paid, supervised and discharged, all
employees and independent contractors that may be required for the proper
maintenance and operation of the Project and the Company. Such services may
be performed by in-house personnel, rather than on a contracted basis.
Compensation, payroll taxes and employees' benefits of such employees shall
be the responsibility of the Company. Amara shall also conduct ongoing
staff training, conduct reviews and evaluation of management level
personnel, maintaining moral and consistency throughout the Project.
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10. COMPENSATION:
10.1 Monthly Retainer Fee: As consideration for Amara 's services, the Company
shall pay Amara a non-refundable monthly retainer of $10,000.00 for each of
the first 3 months of the engagement, $15,000 per month for months 4, 5 and
6 of the engagement and $10,000 per month for months 7-18 of the
engagement, commencing upon signing of this agreement and thereafter on the
first day of each successive month, to be credited against any future
transaction fee, as defined below. In addition, as an incentive to enter
into the relationship, Amara shall receive Company common stock equal to
00% of the Company.
10.2 Financing Fee: Upon the completion of any Financing Amara introduces,
finds, or facilitates to the Company, the Company agrees to pay Amara a
cash fee totaling ten per cent (10%) of the gross proceeds of the
Financing, subject to a minimum of $200,000 (the "Financing Fee"). Amara
shall have the option of receiving up to 25% of the total Financing Fee in
warrants to acquire Company stock to be issued in the Financing, such that
the "in-the-money" value of each warrant (defined as the difference between
the strike price and the price per share of the Financing) times the number
of warrants totals the value equal to the percent of the Financing Fee
Amara opts to receive as warrants. The strike price for warrants received
in lieu of cash Financing Fee shall equal one cent ($0.01) per share. The
warrants shall include mutually acceptable provisions customary in private
equity transactions and shall expire on the fifth anniversary of their
issuance. Additionally, Amara shall receive warrants to purchase 10% of the
number of shares sold by the Company in the financing (for example if
2,000,000 shares of common stock are sold by the Company in the Financing,
Amara shall receive warrants to purchase 200,000 shares of common stock).
10.3 Merger/Sale: During the course of Amara 's service there may also be
potential merger or sale transactions to be evaluated that involve the
Company or any of its subsidiaries or business units (each of the foregoing
being hereinafter referred to as a "Sale Transaction"). The Company and
Amara agree that, in the event the Company determines to proceed with a
Sale Transaction of this sort during the term of this engagement, then
Amara shall serve as the Company's financial advisor in connection with the
Sale Transaction. As consideration for Amara 's services, upon the
completion of the Sale Transaction, the Company shall pay Amara a fee (the
"Sale Transaction Fee") of 5.0% of total Transaction Value (defined below),
subject to a minimum of $500,000.
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10.4 Restructure/Reorganization: A fee of 20% of the incremental cash flow
created through Amara's initiatives and/or 10% of value create-[e.g. % of
profits pre-tax for x number of years or cash out our option for market
value of cash flow model determined by the following formula, (i.e. 5 x
annual pre tax profit), and payable in cash]
10.5 Acquisitions: During the course of Amara 's service there may also be
potential acquisitions to be evaluated (each, an Acquisition) . If the
Company determines to proceed with an Acquisition, then Amara shall serve
as the Company's financial advisor in connection with the Acquisition. As
consideration for Amara 's services, upon completion of the Acquisition,
the Company shall pay Amara a fee (the "Acquisition Fee") of 5% of the
Transaction Value of the Acquisition. Transaction Value shall have the same
definition as in 10.7, but for the purposes of evaluating Acquisition
Transaction Value any reference to the Company shall refer instead to the
acquired company or assets.
10.6 Revenue Contracts, Strategic Marketing/Partnering Agreements and Business
Development Alliances: During the course of the Amara 's service there may
also be potential strategic partnerships, key revenue contracts ("Strategic
Revenue Relationships") that Amara may introduce and evaluate. If the
Company determines to proceed with a Strategic Revenue Relationship, then
Amara shall receive 10% of the revenue from these agreements payable in
cash on a quarterly basis, 30 days after the end of each quarter.
10.7 Transaction Value Defined: For purposes of this agreement, the term
"Transaction Value" means (i) the total amount of cash paid, directly or
indirectly, for the assets, business or capital stock of the Company; (ii)
the fair market value of any assets, securities or other property or rights
transferred, directly or indirectly, in payment for the assets, business or
stock of the Company (including, without limitation, payments to be made
under non-competition or similar arrangements - other than payments to be
made under bona fide employment or consulting arrangements- and any
deferred or contingent payments, when, as and if such payments are received
by the Company or its stockholders), except that debt instruments will be
valued at the face amount thereof as of such date; (iii) the principal
amount of any indebtedness for borrowed money appearing on the most recent
balance sheet of the Company prior to the consummation of the Transaction
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assumed directly or indirectly by any acquiring entity or remaining
outstanding immediately after closing; and (iv) the aggregate amount of any
dividends or other distributions declared by the Company with respect to
its stock after the date hereof, other than normal recurring cash dividends
in amounts not materially greater than currently paid or distributions of
amounts included in Transaction Value pursuant to clauses (i), (ii) or
(iii). If any shareholder directly or indirectly retains an ownership
interest in Company or directly or indirectly acquires an ownership
interest in the corporation or other entity surviving or resulting from the
Transaction, the Transaction Value shall be calculated by assuming that
such shareholder had sold its entire ownership interest in the Company and
received in exchange therefore an amount per share equal to that received
by the Company or the other shareholders of the Company, as of the date of
the closing of the Sale Transaction. The fair market value of any assets,
securities, property or rights (other than as provided above) will be
mutually agreed by Amara and the Company. If the parties cannot agree upon
the fair market value of such assets, securities, property or rights, they
will choose a qualified appraiser of national standing to conclusively
determine, at the Company's expense, such fair market value. Upon request,
the Company will make available to Amara any information available to it
for purposes of calculating the amount of any component of the Transaction
Value.
10.8 Payment Of Sale Transaction Fee: The Sale Transaction Fee will become
payable by the Company upon consummation of (a) any merger, consolidation,
reorganization, recapitalization or other transaction or series of related
transactions pursuant to which the Company is acquired by or combined with
another person or entity in which more than fifty percent (50%) of the
shares of the Company after such merger or consolidation are owned by
persons other than the persons who were the stockholders of the Company
prior to such a merger or consolidation or (b) the acquisition, directly or
indirectly, by another person or entity, in a single transaction or series
of related transactions, of (i) all or a substantial portion of the assets
or business of Company or (ii) securities representing 50% or more of the
total voting power of the Company in the election of directors, each a Sale
Transaction.
10.9 Costs: The Company agrees to reimburse Amara for all reasonable
out-of-pocket costs and expenses including but not limited to costs
referred to herein below at 10.10- 10.12, inclusive, incurred in connection
with the performance of its duties under this agreement upon presentation
of supporting documentation, including but not limited to, reasonable fees
and expenses of legal counsel retained by it. Amara will submit
out-of-pocket expenses to Company for prompt reimbursement on a monthly
basis.
10.10 Discounts:. Due to Amara 's substantial purchasing power, it may enter
into master agreements with vendors of goods and services. These
arrangements may provide for preferred or discounted pricing and financial
incentives paid to Amara for contract revenues generated to such vendors of
goods and services. Such incentives do not increase the charges
traditionally billed for such services by said vendors. All such discounts,
rebates or commissions shall inure to the benefit of the Company. Company
agrees that it will not seek to circumvent such arrangements by attempting
to deal directly with such vendors without Amara 's written consent
obtained in advance, but should Company violate this provision, then Amara
shall be entitled, in addition to all other damages and remedies, to obtain
all such consideration from Company as a reimbursable cost of Amara .
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10.11 Employees: Each and every person performing services in connection with
the Agreement (the "Management Employee") shall be the employee of Amara
and not of the Company. Except as otherwise stated herein, the salary and
other related expenses, including, without limitation, payroll taxes and
the cost of employee benefits, or other compensation for any Management
Employee allocable to the Company, shall be a cost to the Company.
10.12 Advisors/Consultants: Except as otherwise stated herein, the fees and
other related billed expenses, or other compensation for any Amara retained
independent contractor allocable to the Company, shall be a cost to the
Company.
10.13 Fee Payment Rights:
11. EVENTS OF DEFAULT
The Company shall be in default for:
* Failure to pay fees as agreed upon
* Failure to reimburse expenses
* A voluntary or involuntary bankruptcy filing
* Commission of illegal acts
* Failure to follow direction or any terms of
this agreement
12. REMEDIES ON DEFAULT
Remedies shall include but not be limited to:
* Pursuit of all appropriate legal remedies
* Payment of all back fees plus interest at the rate of 10%
per annum until repaid
* Paying for all legal and third party expenses that Amara may
incur as a result of protecting its rights and seeking compensation
as permitted under this agreement and by law
* Removal of Company personnel as required
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13 NOTICES
Any notice, request, demand, instruction or other document to be given hereunder
to any party shall be in writing and shall either be personally delivered to the
person at the appropriate address set forth below (in which event such notice
shall be deemed effective only upon such delivery) or delivered by mail, sent by
registered or certified mail, return receipt requested, as follows:
If to the Company:
If to Amara : The Amara Group, Inc.
________________________
________________________
________________________
Notices so mailed shall be deemed to have been given 48 hours after the deposit
of same in any United States mail post office box in the state to which the
notice is addressed or 72 hours after deposit in any such post office box other
than in the state to which the notice is addressed, postage prepaid, addressed
as set forth above. The addresses and addressees for the purpose of this
paragraph may be changed by giving written notice of such change in the manner
herein provided for giving notice. Unless and until such written notice is
received, the last address and addressee stated by written notice, or as
provided herein if no written notice of change has been set or received, shall
be deemed to continue in effect for all purposes hereunder.
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14. WAIVER
The waiver or failure to enforce any provision of this Agreement shall not
operate as a waiver of any future breach of such provision or any other
provisions hereof.
15. MERGER
All understandings and agreements heretofore had between the parties respecting
the employment contemplated by this Agreement are merged by this Agreement which
fully and completely expresses the agreement of the parties. There are no
agreements except as specifically set forth in this Agreement and Attachments or
to be set forth in the instruments or other documents delivered or to be
delivered hereunder.
16. AMENDMENTS
No change in or addition to, or waiver or termination of this Agreement or any
part thereof shall be valid unless in writing and signed by or on behalf of each
of the parties hereto.
17. PARAGRAPH HEADINGS
The paragraph headings herein contained are for the purposes of identification
only and shall not be considered in construing this Agreement.
18. SUCCESSORS AND ASSIGNS
All of the terms and provisions of this Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties and each of their
respective successors and assigns. In no event shall the obligations or duties
of Amara be assigned without the prior written consent of the Company.
19. ATTORNEYS' FEES
In the event of any controversy, claim or dispute between the parties hereto
arising out of or relating to this Agreement or the breach thereof results in
arbitration or litigation, the prevailing party in such proceedings shall be
entitled to recover from the losing party reasonable expenses, attorneys' fees
and costs.
20. SEVERABILITY
Every provision of this Agreement is intended to be several. If any term or
provision hereof is illegal or invalid for any reason whatsoever, such
illegality shall not affect the validity of the remainder of the within
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
Company : Amara :
Amara Group , Inc., a California Corporation
By: By:
Gary Saunders David Walters
Its: Its:
________________________
By:
David
Hirschhorn
Its:
________________________
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- --------------------------------------------------------------------------------
Exhibit 102
- --------------------------------------------------------------------------------
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Exhibit 102
Headline: eKnowledge Group, Inc. Enters into Management Services
Agreement with The Amara Group, Inc.
Corona, CA: April 29, 2003. eKnowledge Group ("EKWL") has entered into
an extensive management advisory services agreement with The Amara Group,
Inc. Under the terms of the agreement Amara shall oversee and advise on the
restructuring and recapitalization of the company including integration of
the merger with American Affinity Partners, Inc. (AAP). Amara shall have
full operating control of eKnowledge during the term of the agreement.
As part of Amara's engagement, Amara is expected to secure a new auditor for
eKnowledge and complete all necessary SEC filings as appropriate, subject to
the cooperation of existing eKnowledge executives, accounting advisors and
exiting auditing firm.
Additionally, eKnowledge and American Affinity Partners, Inc. have modified
the terms of their proposed merger. Under the revised terms, Eknowledge
shall sell-off in a management led buyout certain non-core assets of
eKnowledge and assume certain related liabilities.
Gary Saunders, CEO of eKnowledge commented "In an effort to increase the
pace of integration of the businesses, focus on the new business model and
move the restructuring of our balance sheet forward in an expeditious
manner, we believe retaining Amara shall greatly enhance our internal
efforts. Additionally, Amara is familiar with American Affinity Partners'
businesses and thus can positively impact their integration with our
Prevention Point relationship". Mr. Saunders added, "Amara and its partners
have extensive experience in creating value for micro cap companies and we
hope and believe their expertise shall be very helpful in this transition.
As our senior secured debt holder, their continual attention to this
transaction is much appreciated."
"We are happy that eKnowledge has chosen to work with us on an expedited
basis to facilitate the closing of the merger, clean-up of the capital
structure, and integration of the combining businesses" added David Walters,
Managing Director of The Amara Group.
About eKnowledge:
eKnowledge recently announced an impending merger with American Affinity
Partners, Inc. and a related working capital line with The Amara Group, Inc.
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eKnowledge is an e-Learning Company utilizing interactive video and active
learning to meet knowledge objectives. Through its products, eKnowledge
provides training to over 500 local government cities, counties, agencies,
districts, and risk pools via a Public Sector e-Learning Coalition. Through
its services, eKnowledge customizes other organizations' training,
education, marketing, and other programs for delivery over the Internet or
upon CD-ROM.
Contact person: Gary Saunders (909) 372-2800
About AAP:
AAP is a provider of software solutions and services to human resource
departments in various vertical markets servicing such industries as auto,
diesel repair, aircraft repair and maintenance and related industries. AAP
has a suite of solutions and proprietary delivery mechanisms for its benefit
programs including products specifically tailored for the PEO industry. For
more information please visit us at www.americanaffinitypartners.com
http://www.americanaffinitypartners.com/ .
Contact person: Carrie Style (949) 588-8120
About Amara:
The Amara Group, Inc. is a Southern California based merchant banking firm.
As a "transition investor", Amara focuses on companies and investors that
are experiencing challenges in the micro and small cap market space,
generally companies with under a $500 million market capitalization. Amara
can deliver capital and advice to help companies create and execute
appropriate "capital market strategies" to enhance and create stakeholder
value and liquidity. Additionally, Amara is a sponsor of the "Value Under
the Radar" series of conferences focused on "Orphan Public Companies" with
market capitalization's under $500 million.
More information about Amara can be found at www.amaragroup.com
http://www.amaragroup.com. Amara can be contacted at: (949) 206-0017 David
Walters, Managing Director and David Hirschhorn, Managing Director. Fax: (949)
206-0315.
Safe Harbour:
The Private Securities Reform Act of 1995 provides a "safe harbor" for
forward-looking statements. Certain information included in this Press Release
(as well as information included in oral statements or other written statements
made or to be made) contains statements that are forward-looking, such as those
relating to consummation of transactions, anticipated future revenues and/or
success of current product offerings. Such forward-looking information involves
important risks and uncertainties that could significantly affect anticipated
results in the future and, accordingly, such results may differ materially from
those expressed in any forward-looking statements.
SOURCE eKnowledge Group, Inc.
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