ePals Enters Into Memorandum of Understanding for Launch of ePals China
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HERNDON, VA, Oct 03 (MARKET WIRE) -- ePals Corporation (TSX-V: SLN) ("ePals"), an education technology company and leading safe social learning network ("SLN"), and Kaleido Co. Ltd. ("Kaleido") today announced the signing of a Memorandum of Understanding (the "MOU") regarding the objective to create and launch a Chinese language version of the ePals Global Social Learning Network in China in 2012. Kaleido is an investment group based in China building extensive education business assets and networks in China. Pursuant to the MOU, the parties will work together to create a partnership ("ePals China") in which ePals will hold a 49% interest that will develop and sell educational products and services to the Pre-K to grade 12 market in China using the ePals digital learning platform. The transaction is subject to the negotiation and execution of definitive agreements setting out the detailed terms of the relationship on or before March 31, 2012. During this time, the parties have agreed to negotiate exclusively with each other regarding the establishment and delivery of cloud-based products and services for the Pre-K to grade 12 market in China. "Kaleido is a perfect choice to help us establish ePals China and further the ePals mission of transforming K-12 education globally through online, collaborative learning experiences," said Miles Gilburne, Chairman and CEO of ePals. "We welcome Dr. Jiren Liu and the group of leading Chinese executives and entrepreneurs behind Kaleido to our existing group of like-minded investors including Ted Leonsis, Mitch Kapor, Steve and Jean Case, Yossi Vardi, Microsoft, Dell and National Geographic." The MOU sets out a framework with respect to the proposed structure and governance of ePals China, as well as with respect to cross equity ownership, the initial contribution of assets to ePals China, capital contributions and distributions and other operational matters. Upon the closing of this transaction and as to be stipulated in definitive agreements, Kaleido will be issued five-year term performance warrants exercisable to purchase up to an aggregate of 21,983,512 voting common shares of ePals, with each warrant being exercisable to purchase one voting common share at a price of C$0.64 (subject to standard adjustments). An aggregate of 4,993,502 warrants will be exercisable immediately and the balance will vest over a period of five years subject to the achievement by ePals China of pre-established performance targets. In connection with the execution of the MOU and receipt of required approvals for outbound transactions within forty five days of the Effective Date, Kaleido has also agreed to purchase 1,000,000 voting common shares of ePals on a private placement basis, at a price of C$0.50 per share, for total gross proceeds to ePals of C$500,000. These securities will be subject to a hold period under applicable Canadian securities laws expiring 4 months and 1 day from the date of issuance. Completion of the transactions described in this press release are subject to a number of conditions, including, but not limited to, the negotiation and execution of definitive agreements creating and governing ePals China, the receipt of all requisite regulatory approvals in Canada, the United States and China, including the approval of the TSX Venture Exchange, and the receipt of all requisite approvals of ePals, Kaleido and other entities as may be formed in connection with the corporate transaction described in the MOU. About ePals Corporation ePals Corporation (TSX-V: SLN) is an education technology company and the leading provider of safe social learning networks (SLN). Focused on the K-12 market, ePals offers elementary and secondary school administrators, teachers, students and parents worldwide a safe and secure platform for building educational communities, providing quality digital content and facilitating collaboration for effective 21st century learning. ePals' award-winning products include: the ePals Global Community(TM); SchoolMail(R)365; LearningSpace(R); and In2Books(R), a common core eMentoring program that builds reading, writing and critical thinking skills. ePals customers and partners include International Baccalaureate, Microsoft Corporation, Dell Inc., IBM Corp., National Geographic and leading school districts across the United States and globally. ePals serves approximately 700,000 educators and reaches millions of teachers, students and parents in approximately 200 countries and territories. For the ePals Global Community, visit www.epals.com. Corporate information is available at www.corp.epals.com. Conference Call Please join us on our company update conference call: ePals Update Conference call: October 4th, 2011 - 8:00 am EDT ------------------------------------------------------------------------- Conference Dial in: 1.866.551.3680 or 1.212.401.6760 Participant Passcode: 92904281# At the prompt, please record your full name and company name You will be placed on hold until the Event begins ------------------------------------------------------------------------- For Audio Playback: 1.866.551.4520 or 1.212.401.6750 Participant Passcode: 276674# ------------------------------------------------------------------------- Neither the TSX Venture Exchange, nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) has in any way passed upon the merits of the transactions described herein and neither of the foregoing entities has in any way approved or disapproved of the contents of this press release. Cautionary Statement Regarding Forward-Looking Information: Certain statements contained in this press release constitute forward-looking information within the meaning of applicable securities laws, including statements with respect to a proposed partnership arrangement and proposed private placement. These statements relate to future events or future performance. Forward-looking information is necessarily based upon a number of assumptions and factors that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information. Those assumptions and factors are based on information currently available to the Corporation. Such material factors and assumptions include, but are not limited to: the Corporation's ability to execute on its business plan; the ability of the Corporation to negotiate definitive agreements relating to the partnership arrangement and private placement; the receipt of all requisite regulatory approvals in Canada, the United States and China, including the approval of the TSX Venture Exchange, and the receipt of all requisite corporate approvals of ePals, Kaleido and other entities as may be formed in connection with the partnership arrangement or the private placement; the completion of satisfactory due diligence investigations by the Corporation; the availability of additional financing, if and when required; and market conditions generally. Although the Corporation has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. The forward-looking information contained in this press release is made as of the date hereof and the Corporation is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein. For further information, please contact: Aric Holsinger Chief Financial Officer ePals Corporation Tel: 703.885.3400 Jacqueline Van Meter Senior Marketing Manager ePals Corporation Tel: 703.885.3400 Copyright 2011, Market Wire, All rights reserved. -0-