AGREEMENT REGARDING SOURCES AND USES OF FUNDS
Exhibit (b)(M)
THIS AGREEMENT REGARDING SOURCES AND USES OF FUNDS is made as of this 24 day of May, 2011
(this “Agreement”), by and among Bireme Limited, a Cayman Islands exempted company with
registered address of c/o Codan Trust Company (Cayman) Limited, Cricket Square, Xxxxxxxx Drive,
P.O. Box 2681 Grand Cayman, KY1-1111 Cayman Islands (the “Company”), Xxxxxxx Xxxxxxx-Xxxxx
with an address of c/o Codan Trust Company (Cayman) Islands, Cricket
Square, Xxxxxxxx Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman
Islands (“Xxxxxxx-Xxxxx”), and Dongie Yang
with an address of Suite 17A, 3Building, Guancai Int’l Apartment, 00 Xxxxxx Xx Xx, Xxxxxxxx
Xxxxxxxx, Xxxxxxx, Xxxxx (“Yang”, and together with Xxxxxxx-Xxxxx, the
“Shareholders”).
W I T N E S S E T H :
WHEREAS, Yang borrowed Three Million Nine Hundred Twenty Thousand and 00/100 Dollars
($3,920,000) from Xxxxxxx-Xxxxx (the “Borrowed Funds”) pursuant to that certain Promissory
Note dated as of May 19, 2011, which is attached as Schedule A hereto;
WHEREAS, Yang combined the Borrowed Funds with One Million and 00/100 Dollars ($1,000,000) of
additional funds (the “Yang Funds”), which he contributed to the Company pursuant to that
certain Contribution Agreement dated as of May 19, 2011, which is attached as Schedule B hereto;
WHEREAS, Yang received One Thousand Two Hundred Thirty (1,230) Company shares in exchange for
his Contribution, representing Twelve and Three Tenths percent (12.3%) of the Company’s shares;
WHEREAS, Xxxxxxx-Xxxxx contributed Thirty Four Million Eighty Thousand and 00/100 Dollars
($34,080,000) (together with the Borrowed Funds and the Yang Funds the “Tender Funds”) to
the Company pursuant to that certain Contribution Agreement dated as of May 19, 2011, which is
attached as Schedule C hereto;
WHEREAS, Xxxxxxx-Xxxxx received Eight Thousand Seven Hundred Seventy (8,770) Company shares in
exchange for her Contribution, representing Eighty Seven and Seven Tenths percent (87.7%) of the
Company’s shares;
WHEREAS, the Company intends to place a tender for shares in Acorn International, Inc., a
company traded on the New York Stock Exchange (the “Transaction”), which if fully
subscribed, would require the Company to use the Tender Funds in their entirety to make payments
for the tendered shares promptly after the close of the Transaction;
WHEREAS, if the Transaction is not fully subscribed, a portion of the Tender Funds will remain
in the Company’s share premium account (“Unused Funds”);
WHEREAS, Xxxxxxx-Xxxxx and Yang desire that the Unused Funds be distributed to them on a
pro-rata basis according to their ownership percentage of the Company as set forth above
(“Xxxxxxx-Xxxxx’x Pro-Rata Distribution” and “Yang’s Pro-Rata Distribution”
respectively); and
WHEREAS, if Yang’s Pro-Rata Distribution is less than or equal to the amount of the
Borrowed Funds, Yang requests that the Company make such distribution directly to Xxxxxxx-Xxxxx on
his behalf as a partial repayment of the Promissory Note.
NOW, THEREFORE, in consideration of the mutual agreements and covenants contained herein, the
parties hereto hereby further agree as follows:
1. Distribution of Unused Funds. Subject to the terms of Paragraph 2, if the
Transaction is not fully subscribed, the Company hereby agrees to distribute the Unused Funds to
Xxxxxxx-Xxxxx and Yang on a pro-rata basis according to their ownership percentage.
2. Directed Payment. The Company hereby agrees to distribute Yang’s Pro-Rata
Distribution within six (6) months of the date of the Transaction according to the following terms:
(a) If Yang’s Pro-Rata Distribution is less than or equal to the amount of the
Borrowed Funds, the Company hereby agrees to distribute one hundred percent (100%) of Yang’s
Pro-Rata Distribution directly to Xxxxxxx-Xxxxx on Xxxx’x behalf as a partial repayment of the
Promissory Note.
(b) If Yang’s Pro-Rata Distribution is greater than the amount of the Borrowed Funds,
the Company hereby agrees to (i) distribute that percentage of Yang’s Pro-Rata Distribution
equal to the Borrowed Funds over Yang’s Pro-Rata Distribution directly to Xxxxxxx-Xxxxx on
Xxxx’x behalf as complete repayment of the principal of the Promissory Note, and (ii) distribute
the remainder of Yang’s Pro-Rate Distribution directly to Yang.
3. Acceptance of Payment. Xxxxxxx-Xxxxx hereby agrees to accept any distribution from
the company of Yang’s Pro-Rata Distribution from the Company as payment or partial payment of the
principal of the Promissory Note (as the case may be).
4. Termination. This Agreement shall terminate upon the occurrence of any of the
following events:
(a) The full subscription of the Transaction; or
(b) The execution of a written instrument by the parties hereto agreeing to the termination of
this Agreement;
5. Severability. If any provisions of this Agreement shall be determined to be
illegal and unenforceable by any court of law, the remaining provisions shall be severable and
enforceable in accordance with their terms.
6. Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the Cayman Islands without regard to the conflicts of laws principles thereof.
7. Benefits of Agreement. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted assigns, Legal
Representatives, and heirs.
8. Communications. All communications provided for herein shall be hand delivered or
sent by an internationally recognized overnight courier, addressed as follows:
| (a) | If to the Company: | ||
| c/o Codan Trust Company (Cayman) Limited Cricket Square, Xxxxxxxx Drive, P.O. Box 2681 Grand Cayman, KY1-1111, Cayman Islands |
|||
| (b) | If to Xxxxxxx-Xxxxx: | ||
| c/o Codan Trust Company (Cayman) Islands Cricket Square, Xxxxxxxx Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands |
|||
| (c) | If to Yang: | ||
| Suite 17A, 3Building, Guancai Int’l Apartment 00 Xxxxxx Xx Xx Xxxxxxxx Xxxxxxxx Xxxxxxx, Xxxxx |
The address of the Company and the Shareholders may be changed at any time upon written notice
to the other parties as provided herein. Any communication provided for herein shall become
effective: if delivered by hand, upon delivery; if mailed by an internationally recognized
overnight courier, upon receipt by the addressee; or if by national recognized overnight courier,
upon receipt of delivery, as evidenced by signed receipt.
9. Changes. The terms and provisions of this Agreement may not be modified or
amended, or any of the provisions hereof waived, temporarily or permanently, except pursuant to the
written consent of all the parties hereto. Any rights applicable to any Shareholder may be waived
by such Shareholder without the consent of the Company or the other Shareholder. Any waiver shall
not operate or be construed as a waiver of any prior or subsequent breach by any of the parties
hereto.
10. Captions. The captions herein are inserted for convenience only and shall not
define, limit, extend, or describe the scope of this Agreement or affect the construction hereof.
11. Nouns and Pronouns. Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine, or neuter forms and the singular form of names
and pronouns shall include the plural and vice-versa.
12. Entire Agreement. This Agreement (as the same may be amended from time to time)
constitutes the entire agreement and understanding among the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements relating to the subject
matter hereof.
13. Counterparts. This Agreement may be executed in one or more counterparts,
including by facsimile or e-mail (i.e., via PDF), each of which shall be deemed to be an original,
but all of which taken together shall constitute one and the same instrument.
[Remainder of Page Intentionally Left Blank — Signature Page Follows]
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set
forth above.
| COMPANY: BIREME LIMITED |
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| By: | /s/ Xxxxxxx Xxxxxxx-Xxxxx | |||
| Name: | Xxxxxxx Xxxxxxx-Xxxxx | |||
| Title: | Director | |||
| SHAREHOLDERS: |
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| /s/ Xxxxxxx Xxxxxxx-Xxxxx | ||||
| XXXXXXX XXXXXXX-XXXXX | ||||
| /s/ Xxxxxxx Xxxx | ||||
| XXXXXXX XXXX | ||||
Schedule A
(Promissory Note)
Schedule B
(Yang’s Contribution Agreement)
Schedule C
(Xxxxxxx-Xxxxx’x Contribution Agreement)
