Zycom, Inc.
000 Xxxxxx Xxxxx
Xxxxx 0000
Xx. Lauderdale, FL 33301
March 21, 2000
Xxxxxxxx.xxx, Inc.
00000 Xxxxx Xxxxxx Xxxxxx Xxxxx
Reston, VA 20190
Re: Business Combination between Zycom, Inc. ("Zycom") and Tutornet. com,
Inc. ("Tutornet")
Ladies and Gentlemen:
We submit for your consideration a proposal relating to the transfer of all of
the shares of capital stock of Tutornet to Zycom in exchange for shares of
Zycom. This proposal is made upon the terms and subject to the conditions set
forth below.
1. Authorized and Outstanding Securities of Zycom. Zycom has 256,215 shares
of common stock, par value $.0001 per share, outstanding, and is
authorized to issue a total of 100,000,000 shares of common stock. Zycom
is also authorized to issue a total of 10,000,000 shares of preferred
stock, of $1.00 par value per share, of, which no preferred stock has
been issued and none will be issued prior to the closing contemplated
herein. Zycom has no other securities, or rights, options, or warrants to
purchase securities, outstanding. At the time of closing, Zycom will have
1,281,075 shares of common stock, par value $.0001 per share,
outstanding.
2. Authorized and Outstanding Securities of Tutornet. Tutornet currently has
outstanding approximately 25,000,000 shares of common, stock, par value
$.001. The actual number of shares of common stock outstanding of
Tutornet is _______________ in the names and amounts of such stockholders
set forth in Exhibit A attached hereto. Such outstanding common shares
(not including the Exchange Stock discussed in 2.11 below), as well as
any other shares issued prior to the closing hereunder are referred to as
the "Tutornet Shares."
2.1 Approximately 24,200,000 shares of the common stock of Tutornet Shares
are held by management, affiliates and other principal stockholders of
Tutornet representing 96.80% of the
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Tutornet Shares (the "Exchange Stock"). The names and amounts of the
holders of the Exchange Stock are referred to as Exhibit B attached
hereto.
2.2 Tutornet also has outstanding or will have outstanding as of the closing,
options, warrants or other rights to purchase approximately 6,000,000
share of the common stock Tutornet. The series and amount of outstanding
warrants, options, or rights to purchase shares of the common stock, all
of which afford the holders thereof the right, under certain conditions,
to acquire shares of common stock together with the names and amounts of
such holders are referred to as (the "additional shares") set forth in
Exhibit C attached hereto. The shares to be issued or reserved for
issuance by Zycom at closing shall be in exchange for all of the Tutornet
Shares, the Exchange Stock and the additional shares.
3. Issuance and Delivery of Zycom Stock in Exchange for Tutornet Stock.
(a) Exchange of Common Stock. At the time of closing:
(i) Zycom would issue or reserve for issuance at an appropriate
date, to those persons and entities referred to in Paragraph 2
and Exhibits A, B, and C hereof (hereinafter referred to as the
"Stockholders" or "Tutornet Stockholders") a total of
30,000,000 common shares of Zycom. It is the intention of the
parties hereto that after the exchange of stock to the Tutornet
Stockholders, the present Zycom shareholders will own 4.1% of
the outstanding stock of Zycom.
(ii) Zycom. would issue 24,200,000 share of its common stock in
exchange for the 24,200,000 shares of Exchange Stock
(hereinafter the "Exchange").
(b) Restricted Nature of Shares to be Issued. None of the Zycom shares
that would be issued in the Exchange or otherwise would be registered,
but rather would constitute "restricted securities" within the meaning of
Rule 144, promulgated under the Securities Act of 1933, as amended (the
"Act").
Immediately following the closing, Tutornet would se its best effort to
register under the Act with the United States Securities and Exchange
Commission: (i) the Exchange Stock; (ii) the Tutornet Shares; (iii) the
additional shares; and (iv) the stock held by the former officer,
director and affiliate stockholders of Zycom.
(c) Possible Adjustment in Number of Shares to be Issued. If, prior to
consummation of the Exchange, Zycom or Tutornet should:
(i) declare any dividend payable in share of its common stock,
(ii) split or combine its shares of common stock, or
(iii) issue any additional shares of common stock
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(iv) (except as provided for the 5:1 forward split the results for
which are set forth in Paragraph 1 hereunder), an appropriate
adjustment would be made in the number of shares of common
stock issuable to the Tutornet Stockholders, or reserved for
exercise by option holders and warrant holders.
(d) Deliveries at the time of closing.
(i) Tutornet and the holders of the Exchange Stock would deliver to
Zycom at the time of closing, certificates representing 24,200
shares of the Tutornet Stock.
(ii) Zycom would deliver at time of closing certificates,
representing in the names of the holders of the Exchange Stock
as set forth in the Agreement and Plan of Reorganization, each
in the appropriate denomination as set forth therein.
(iii) It is expected that the Agreement and Plan of Reorganization
would cause, as of the time of closing, all of Tutornet's
operations to be conducted immediately thereafter as the
operations of Zycom, or in the event of a change of name, the
new name of Zycom.
4. Closing. The closing of transactions between Business Development
Corporation, Zycom, and Tutornet would take place no later than April 12, 2000.
5. Conditions to Closing. Conditions to the Closing to be contained in the
Agreement and Plan of Reorganization between Zycom and Tutornet are the
following:
(a) Prior to the time of closing, Tutornet and Zycom will deliver
certified consolidated financial statements stated as of December 31,
1999 and December 31, 1998 that in all material respects, present fairly,
the financial position of Tutornet and Zycom, and the results of its
operations, and its cash flows in conformity with generally accepted
accounting principles.
(b) Zycom, Xxxxxxxx and the Stockholders, acting through their own
management personnel, counsel, accountants or other representatives,
designated by them, would have full opportunity to examine the books and
records of the other to determine the acceptability of their respective
businesses and to investigate all aspects of the business of the other
party, and all of its assets and liabilities, and each party would be
satisfied to proceed with the Closing upon completion of such examination
and investigation.
(c) Xxxxxxxx, no later than 10 days before the time of closing, would
have provided fully completed and executed (i) "Directors and Officers
Questionnaire's" with respect to every proposed director, officer,
significant employee and affiliate of Tutornet and (ii) furnished a fully
completed "Private Company Checklist" information to Zycom's counsel.
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(d) 95% of the Exchange Stock of Tutornet would be tendered at Closing
for exchange into Zycom shares of common stock.
(e) Prior to the closing, Tutornet and Zycom will have provided for the
tax-free acquisition of 100% of the common stock of a suitable SEC
reporting corporation whereby, after the acquisition, the combined entity
would have complied with OTCBB Eligibility Rule (NASD Rules 6530 and 6540
of the National Association of Securities Dealers). The cost of the
acquisition of the SEC reporting corporation, excluding legal fees, shall
be paid by Business Development Corporation. Should Zycom issue
securities in connection with such an acquisition, a like amount of
securities issued for such acquisition would be surrendered to Zycom from
the holdings of Business Development Corporation.
(f) Each party shall have received favorable opinions on such legal
matters in connection with the Exchange as are reasonable.
(g) Zycom and Xxxxxxxx would have satisfied themselves that the business
of the other has been conducted in the ordinary course and in compliance
with federal and state securities laws.
(h) Neither Zycom and Xxxxxxxx will authorize the dissemination of the
release of any information to the general public or disseminate any press
release regarding the proposed transaction without the written consent of
the other party. At the time of closing the parties will disseminate a
press release satisfactory to Tutornet, Zycom and their respective legal
counsels.
(i) Pursuant to the effectuation of the undertakings contemplated by this
memorandum, Zycom and Tutornet shall be responsible for the payment of
their own expenses.
(j) Zycom, at Closing, shall have virtually no liabilities nor assets set
forth on its unaudited balance sheet as of April 8, 2000.
(k) Business Development Corporation, at the time of closing, would have
received a fee in connection with the facilitation of the proposed
transactions discussed in this Memorandum in the amount of $250,000.
6. Standstill Agreement. From the date hereof neither Business Development
Corporation, Tutornet or their principal stockholders may discuss or negotiate
with any other corporation, firm or person, or entertain or consider any
inquiries or proposals relating to the possible disposition or exchange of their
shares of capital stock of Zycom or Tutornet. Notwithstanding the foregoing, the
parties would be free to engage in activities mentioned in the preceding
sentence which are designed to complete the transactions contemplated by this
Memorandum. At any time either party provides written notice to the other of the
intention not to pursue the transactions discussed in this
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Memorandum, notice of such intention shall terminate both parties obligations
with respect to this Paragraph 6.
7. Board of Directors. At the Closing, all of Xxxxx's current board of
directors, and every person serving as an officer of Xxxxx would resign his
respective positions and/or offices by tendering written resignations. Zycom's
board members, before tendering their resignations, would appoint as members of
Zycom's new board such persons designated by Xxxxxxxx to fill such director
positions, with such appointments to be effective as of the time of closing.
8. Confidentiality. Zycom and Tutornet would furnish such information as
requested by the other as to its business and operations. In compliance with
this paragraph, the parties specifically authorize the contact with customers,
employees, and partners of the other. It is agreed that such disclosures and
information obtained are proprietary and confidential to the extent such
information does not exist in the public domain. The parties agree to hold such
information in confidence and not to reveal any of such information to any
person who is not a party to this transaction, or an officer, director or key
employee thereof, and not to use the information obtained for any purpose other
than assisting in its due diligence inquiry precedent to the time of closing.
Upon request by Zycom or Tutornet a confidentiality agreement would be executed
by any person selected to receive confidential information, prior to receipt of
such information.
Policy of Zycom Regarding Representations and Warranties Contained in an
Eventual Agreement and Plan of Reorganization.
The warranties of Zycom that become a part of an eventual Agreement and Plan of
Reorganization would be made exclusively by Zycom.
If the foregoing proposed points are agreeable to please so indicate on the copy
of this document enclosed herewith in the space provide and return the same to
the undersigned on or before 5 pm, eastern time, Thursday, March 23, 2000.
Very truly yours, Accepted:
/s/ Xxx X. Xxxxxxx
-----------------------------
Xxx X. Xxxxxxx
Zycom, Inc. /s/ Euburn Xxxxx
Van X. Xxxxxxx, President ---------------------------------
March 21, 2000 Xxxxxx Xxxxx
Date:_________
Xxxxxx Xxxxx, President,
Xxxxxxxx.xxx Inc.
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