SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 17th of June , 2004
AMONG:
KS E-MEDIA HOLDINGS INC., a corporation formed pursuant to the laws of
the State of Delaware and having an office for business located at
0000 Xxxx 0xx Xxxxxx, Xxxxxxxxx, XX XXX0X0
("KS E-Media")
AND:
TIANJIN ZHONGJIN BIOLOGY DEVELOPMENT CO., LTD., a company formed
pursuant to the laws of the People's Republic of China and having an
office for business located at 1801 Guangyiun Building, Youyibeilu,
Hexi Dstrict, Tianjin, China
("Zhongjin")
AND:
The shareholders of Zhongjin, each of whom are set forth on the
signature page of this Agreement
WHEREAS:
A. The Zhongjin Shareholders own 1,500 Zhongjin Shares, being 100% of the
presently issued and outstanding Zhongjin Shares;
B. KS E-Media is a reporting company whose common stock is quoted on the NASD
"Bulletin Board"; and
C. The respective Boards of Directors of KS E-Media, and Xxxxxxxx xxxx it
advisable and in the best interests of KS E-Media and Zhongjin that Zhongjin
become a wholly-owned subsidiary of KS E-Media (the "Acquisition") pursuant to
this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
Definitions
1.1 In this Agreement the following terms will have the following meanings:
(a) "Acquisition" means the Acquisition, at the Closing, of Zhongjin by KS
E-Media pursuant to this Agreement;
(b) "Acquisition Shares" means the 3,658,375 KS E-Media Common Shares to
be issued to the Zhongjin Shareholders at Closing pursuant to the
terms of the Acquisition;
(c) "Agreement" means this share purchase agreement among KS E-Media,
Zhongjin, and the Zhongjin Shareholders;
(d) "Closing" means the completion, on the Closing Date, of the
transactions contemplated hereby in accordance with Article 9 hereof;
(e) "Closing Date" means the day on which all conditions precedent to the
completion of the transaction as contemplated hereby have been
satisfied or waived;
(f) "KS E-Media Accounts Payable and Liabilities" means all accounts
payable and liabilities of KS E-Media, on a consolidated basis, due
and owing or otherwise constituting a binding obligation of KS E-Media
and its subsidiaries (other than a KS E-Media Material Contract) as of
March 31, 2004 as a set forth in Schedule "B" hereto;
(g) "KS E-Media Accounts Receivable" means all accounts receivable and
other debts owing to the KS E-Media, on a consolidated basis, as of
March 31, 2004 as set forth in Schedule "C" hereto;
(h) "KS E-Media Assets" means the undertaking and all the property and
assets of the KS E-Media Bussiness of every kind and description
wheresoever situated including, without limitation, KS E-Media
Equipment, KS E-Media Inventory, KS E-Media Material Contracts, KS
E-Media Accounts Receivable, KS E-Media Cash, KS E-Media Intangible
Assets and KS E-Media Goodwill, and all credit cards, charge cards and
banking cards issued to KS E-Media;
(i) "KS E-Media Bank Accounts" means all of the bank accounts, lock boxes
and safety deposit boxed of KS E-Media and its subsidiaries or
relating to the KS E-Media as set forth in Schedule "D" hereto;
(j) "KS E-Media Business" means all aspects of any business conducted by
KS E-Media and its subsidiaries;
(k) "KS E-Media Cash" means all cash on hand or on deposit to the credit
of KS E-Media and its subsidiaries on the Closing Date;
(l) "KS E-Media Common Shares" means the shares of common stock in the
capital of KS E-Media;
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(m) "KS E-Media Debt to Related Parties" means the debts owned by KS
E-Media to any affiliate, director or officer of KS E-Media as
describe in Schedule "E" hereto;
(n) "KS E-Media Equipment" means all machinery, equipment, furniture, and
furnishings used in the KS E-Media Business, including, without
limitation, the items more particularly described in Schedule "F"
hereto;
(o) "KS E-Media Financial Statements" means, collectively, the audited
consolidated financial statements of KS E-Media for the fiscal year
ended September 30, 2003, together with the unqualified auditors'
report thereon, and the unaudited consolidated financial statements of
KS E-Media for the six month period ended March 31, 2004, true copies
of which are attached as Schedule "A" hereto;
(p) "KS E-Media Goodwill" means the goodwill of the KS E-Media Business
including the right to all corporate, operating and trade names
associated with the KS E-Media Business, all books and records and
other information relating to the KS E-Media Business, all necessary
licenses and authorizations and any other rights used in connection
with the KS E-Media Business;
(q) "KS E-Media Insurance Policies" means the public liability insurance
and insurance against loss or damage to the KS E-Media Assests and the
KS E-Media Business as described in Schedule "G" hereto;
(r) "KS E-Media Intangible Assets" means all of the intangible assets of
KS E-Media and its subsidiaries, including, without limitation, KS
E-Media Goodwill, all trademarks, logos, copyrights, designs, and
other intellectual and industrial property of KS E-Media and its
subsidiaries;
(s) "KS E-Media Inventory" means all inventory and supplies of the KS
E-Media Business as of March 31, 2004, as set forth in Schedule "H"
hereto;
(t) "KS E-Media Material Contracts" means the burden and benefit of and
the right, title and interest of KS E-Media and the subsidiaries in,
to and under all trade and non-trade contracts, engagements or
commitments, whether written or oral, to which KS E-Media or its
subsidiaries are entitled to receive the sum of $10,000 or more
including, without limitation, any pension plans, profit sharing
plans, bonus plans, loan agreements, security agreements, indemnities
and guarantees, any agreements with employees, lessees, licensees,
managers, accountants, suppliers, agents, distributors, officers,
directors, attorneys and others which cannot be terminated without
liability on not more than one month's notice, and those contracts
listed in Schedule "I" hereto;
(u) "Place of Closing" means the offices of Sichenzia Xxxx Xxxxxxxx
Xxxxxxx LLP, or such other place as KS E-Media and Zhongjin may
mutually agree upon;
(v) "Zhongjin Accounts Payable and Liabilities" means all accounts payable
and liabilities of Zhongjin, due and owning or otherwise constituting
a binding obligation of Zhongjin (other than a Zhongjin Material
Contact) as of March 31, 2004 as set forth in Schedule "K" hereto;
(w) "Zhongjin Accounts Receivable" means all accounts receivable and other
debts owing to Zhongjin, as of March 31, 2004 as set forth in Schedule
"L" hereto;
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(x) "Zhongjin Assets" means the undertaking and all the property and
assets of the Zhongjin Business of every kind and description
wheresoever situated including, without limitatio, Zhongjin Equipment,
Zhongjin Inventory, Zhongjin Material Contracts, Zhongjin Accounts
Receivbale, Zhongjin Cash, Zhongjin Intangible Assets and Zhongjin
Goodwill, and all credit cards, charge cards and banking cards issued
to Zhongjin;
(y) "Zhongjin Bank Accounts" means all of the bank accounts, lock boxes
safety deposit boxes of Zhongjin or relating to the Zhongjin Business
as set forth in Schedule "M" hereto;
(z) "Zhongjin Business" means all aspects of the business conducted by
Zhongjin;
(aa) "Zhongjin Cash" means all cash on hand or on deposit to the credit of
Zhongjin on the Closing Date;
(bb) "Zhongjin Debt to Related Parties" means the debts owed by Zhongjin
and subsidiaries to the Zhongjin Shareholders or to any family member
thereof, or to any affiliate, director or officer of Zhongjin or the
Zhongjin as described in Schedule "N";
(cc) "Zhongjin Equipment" means all machinery, equipment, furniture, and
furnishings used in the Zhongjin Business, including, without
limitation, the items more particularly described in Schedule "O"
hereto;
(dd) "Zhongjin Financial Statements" means collectively, the audited
consolidated financial statements of Zhongjin for the period from
inception to December 31, 2003, together with the reviewed financial
statements for the three month period ended March 31, 2004, true
copies of which are attached as Schedule "J" hereto;
(ee) "Zhongjin Goodwill" means the goodwill of the Zhongjin Business
together with the exclusive right of KS E-Media to represent itself as
carrying on the Zhongjin Business in succession of Zhongjin subject to
the terms hereof, and the right to use any words indicating that the
Zhongjin Business is so carried on including the right to use the name
"Zhongjin" or "Zhongjin International" or any variation thereof as
part of the name of or in connection with the Zhongjin Business or any
part thereof carried on or to be carried on by the Zhongjin, the right
to all corporate, operating and trade names associated with the
Zhongjin Business, or any variations of such names as part of or in
connection with the Zhongjin Business, all necessary licenses and
authorizations and any other rights used in connection with the
Zhongjin Business;
(ff) "Zhongjin Insurance Policies" means the public liability insurance and
insurance against loss or damage to Zhongjin Assets and the Zhongjin
Business as described in Schedule "P" hereto;
(gg) "Zhongjin Intangible Assets" means all of the intangible assets of
Zhongjin, including, without limitation, Zhongjin Goodwill, all
trademarks, logos, copyrights, designs, and other intellectual and
industrial property of Zhongjin and its subsidiaries;
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(hh) "Zhongjin Inventory" means all inventory and supplies of the Zhongjin
Business as of March 31, 2004 as set forth in Schedule "Q" hereto;
(ii) "Zhongjin Material Contracts" means the burden and benefit of and the
right, title and interest of Zhongjin in, to and under all trade and
non-trade contracts, engagements or commitments, whether written or
oral, to which Zhongjin is entitled in connection with the Zhongjin
Business whereunder Zhongjin is obligated to pay or entitled to
receive the sum of $10,000 or more including, without limitation, any
pension plans, profit sharing plans, bonus plans, loan agreements,
security agreements, indemitites and guarantees, any agreements with
employees, lessees, licensees, managers, accountants, suppliers,
agents, distributors, officers, directors, attorneys or others which
cannot be terminated without liability on not more than one month's
notice, wand those contracts listed in Schedule "R" hereto;
(jj) "Zhongjin Related Party Debts" means the debts owed by the Zhongjin
Shareholders or by any family member thereof, or by any affiliate,
director or officer of Zhongjin or the Zhongjin Shareholders, to
Zhongjin as described in Schedule "S"; and
(kk) "Zhongjin Shares" means all of the issued and outstanding shares of
Zhongjin's equity stock.
Any other terms defined within the text of this Agreement will have the meanings
so ascribe to them.
Captions and Section Numbers
1.2 The headings and section references in this Agreement are for convenience of
reference only and do not form a part of this Agreement and are not intended to
interpret, define or limit the scope, extent or intent of this Agreement or any
provision thereof.
Section Reference and Schedules
1.3 Any reference to a particular "Article", "section". "paragraph", "clause",
or other subdivision is to the particular Article, section clause or other
subdivision of this Agreement and any reference to a Schedule by letter will
mean the appropriate Schedule attached to this Agreement and by such reference
the appropriate Schedule is incorporated into and mate part of this Agreement.
The Schedules to this Agreement are as follows:
Information concerning KS E-Media
Schedule "A" KS E-Media Financial Statements
Schedule "B" KS E-Media Accounts Payable and Liabilities
Schedule "C" KS E-Media Accounts Receivable
Schedule "D" KS E-Media Bank Accounts
Schedule "E" KS E-Media Debts to Related Parties
Schedule "F" KS E-Media Equipment
Schedule "G" KS E-Media Insurance Policies
Schedule "H" KS E-Media Inventory
Schedule "I" KS E-Media Material Contracts
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Information concerning Zhongjin
Schedule "J" Zhongjin Financial Statements
Schedule "K" Zhongjin Accounts Payable and Liabilities
Schedule "L" Zhongjin Accounts Receivable
Schedule "M" Zhongjin Bank Accounts
Schedule "N" Zhongjin Bedts to Related Parties
Schedule "O" Zhongjin Equipment
Schedule "P" Zhongjin Insurance Policies
Schedule "Q" Zhongjin Inventory
Schedule "R Zhongjin Material Contracts
Schedule "S" Zhongjin Related Party Debts
Severablility of Clauses
1.4 If any part of this Agreement is declared or held to be invalid for any
reason, such invalidity will not affect the validity of the remainder which will
continue in full force and effect and be construed as if this Agreement had been
executed without the invalid portion, and it is hereby declared the intention of
the parties that this Agreement would have been executed without reference to
any portion which may, for any reason, be hereafter declared or held to be
invalid.
ARTICLE 2
THE ACQUISITION
Sale of Shares
2.1 The Zhongjin Shareholders hereby agree to sell to KS E-Media the Zhongjin
Shares in exchange for the Acquisition Shares on the Closing Date and to
transfer to KS E-Media on the Closing Date 100% undivided interest in and to the
Zhongjin Shares free from all liens, mortgages, charges, pledges, encumbrances
or other burdens with all rights now or thereafter attached thereto.
Allocation of Consideration
2.2 The Acquisition Shares shall be allocated to the Zhongjin Shareholders on
the basis of 2,438.9166 Acquisition Shares for each one Zhongjin Share held by a
Zhongjin Shareholder.
Adherence with Applicable Securities Laws
2.3 The Zhongjin Shareholders agree that they are acquiring the Acquisition
Shares for investment purposes and will nto offer, sell or otherwise transfer,
pledge or hypothecate any of the Acquisition Shares issued to them (other than
pursuant to an effective Registration Statement under the Securities Act of
1933, as amended) directly or indirectly unless:
(a) the sale is to KS E-Media;
(b) the sale is made pursuant to the exemption from registration under the
Securities Act of 1933, as amended, provided by Rule 144 thereunder;
or
(c) the Acquisition Shares are sold in a transaction that does not require
registration under the Securities Act of 1933, as amended, or any
applicable United States state laws and regulations governing the
offer and sale of securities, and the vendor has furnished to KS
E-Media an opinion of counsel to that effect or such other written
opinion as may be reasonably required by KS E-Media.
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The Zhongjin Shareholders acknowledge that the certificates
representing the Acquisition Shares shall bear the following legend:
NO SALE, OFFIER TO SELL, OR TRANSFER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE SHALL BE MADE UNLESS A REGISTRATION STATEMENT UNDER THE
FEDERAL SECURITIES ACT OF 1933, AS AMENDED, IN RESPECT OF SUCH SHARES
IS THEN IN EFFECT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
SAID ACT IS THEN IN FACT APPLICABLE TO SAID SHARES.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF KS E-MEDIA
Representations and Warranties
3.1 KS E-Media hereby represents and warranties in all material respects to
Zhongjin and the Zhongjin Shareholders, with the intent that Zhongjin and the
Zhongjin Shareholders will rely thereon in entering into this Agreement and in
approving and completing the transactions contemplated hereby, that:
KS E-Media - Corporate Status and Capacity
(a) Incorporation. KS E-Media is a corporation duly incorporated an
validly subsisting under the laws of the State of Delaware, and is in
good standing with the office of the Secretary of State for the State
of Delaware;
(b) Carrying on a Business. KS E-Media conducts the business describe in
its filings with the Securities and Exchange Commission and does not
conduct any other business. KS E-Media is a duly authorized to carry
on such business in Xxxxxxxxx, XX, Xxxxxx. The nature of the KS
E-Media Business does not require KS E-Media to register or otherwise
be qualified to carry on business in any other jurisdictions;
(c) Corporate Capacity. KS E-Media has the corporate power, capacity and
authority to own the KS E-Media Assets and to enter into and complete
this Agreement.
(d) Reporting Status; Listing. KS E-Media is required to file current
reports with the Securities and Exchange Commission pursuant to
section 15(d) of the Securities Exchange Act of 1934, the KS E-Media
Common Shares are quoted on the NASD "Bulletin Board", and all the
reports required to be filed by KS E-Media with the Securities and
Exchange Commission or NASD have been timely filed;
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KS E-Media - Capitalization
(e) Authorized Capital. The authorized capital of KS E-Media consists of
30,000,000 KS E-Media Common Shares, $0.0001 par value and 5,000,000
shares of preferred stock. $0.0001 par value, of which 3,015,558 KS
E-Media Common Shares, and no shares of preferred stock are presently
issued and outstanding.
(f) No Option, Warrant or Other Right. No person, firm or corporation has
any agreement, option, warrant, preemptive right or any other right
capable of becoming an agreement, option, warrant or right for any
acquisition of KS E-Media Common Shares or for the purchase,
subscription or issuance of any of the unissued shares in the capital
of KS E-Media;
KS E-Media Records and Financial Statements
(g) Charter Documents. The charter documents of KS E-Media and its
subsidiaries have not been altered since the incorporation of each,
respectively, except as filed in the record books of KS E-Media or its
subsidiaries, as the case may be;
(h) Corporate Minute Books. The corporate minute books of KS E-Media and
its subsidiaries are complete and each of the minutes contained there
in accurately reflect the actions that were taken at a duly called and
held meeting or by consent without a meeting. All actions by KS
E-Media and its subsidiaries which required director or shareholder
approval are reflected on the corporate minute books of KS E-Media and
its subsidiaries. KS E-Media and its subsidiaries are not in violation
or breach of, or in default with respect to, any term of their
respective Certificates of Incorporation (or other charter documents)
or by-laws.
(i) KS E-Media Financial Statements. The KS E-Media Financial Statements
present fairly, in all material respects, the assets and liabilities
(whether accrued, absolute, contingent or other wise) of KS E-Media,
on a consolidated basis, as of the respective dates thereof, and the
sales and earning of the KS E-Media Business during the periods
covered thereby, in all material respects and have been prepared in
substantial accordance with generally accepted accounting principles
consistently applied;
(j) KS E-Media Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of KS E-Media or its
subsidiaries which are not disclosed in Schedule "B" hereto or
reflected in the KS E-Media Financial Statements except those incurred
in the ordinary course of business since the date of the said schedule
and the KS E-Media Financial Statements, and neither KS E-Media nor
its subsidiaries have guaranteed or agreed to guarantee any debt,
liability or other obligation of any person, firm or corporation.
Without limiting the generality of the foregoing, all accounts payable
and liabilities of KS E-Media as of March 31, 2004, are described in
Schedule "B" hereto;
(k) KS E-Media Accounts Receivable. All the KS E-Media Accounts Receivable
result from bona fide business transactions and services actually
rendered without, to the knowledge and belief of KS E-Media, any claim
by the obligor for set-off or counterclaim. Without limiting the
generality of the foregoing, all accounts receivable of KS E-Media as
of March 31, 2004, are described in Schedule "C" hereto:
(l) KS E-Media Bank Accounts. All of the KS E-Media Bank Accounts, their
location, numbers and the authorized signatories thereto are set forth
in Schedule "D" hereto;
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(m) No Debt to Related Parties. Except as disclosed in Schedule "E"
hereto, neither KS E-Media nor any of its subsidiaries is, and on
Closing will not be, indebted to any affiliate, director or office of
KS E-Media except accounts payable on account of bona fide business
transactions of KS E-Media incurred in normal course of the KS E-Media
Business, including employment agreements, none of which are more than
30 days in arrears;
(n) No Related Party Debt to KS E-Media. No director or officer or
affiliate of KS E-Media nor any of its subsidiaries is, and on Closing
will not be, indebted to any affiliate, director or officer of KS
E-Media or any subsidiary on any account whatsoever, except for
advances on account of travel and other expenses not exceed $1,000 in
total;
(o) No Dividends. No dividends or other distributions on any shares in the
capital of KS E-Media have been made, declared or authorized since the
date of KS E-Media Financial Statements;
(p) No Payments. No payments of any kind have been made or authorized
since the date of the KS E-Media Financial Statements to or on behalf
of officers, directors, shareholders or employees of KS E-Media or its
subsidiaries or under any management agreements with KS E-Media or its
subsidiaries, except payments made in the ordinary course of business
and at the regular rates of salary or other remuneration payable to
them;
(q) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting KS E-Media;
(r) No Adverse Events. Since the date of the KS E-Media Financial
Statement
(i) there has not been any material adverse change in the consolidate
financial position or condition of KS E-Media, its subsidiaries,
its liabilities or the KS E-Media Assets or any damage, loss or
other change in circumstances materially affecting KS E-Media,
the KS E-Media Business or the KS E-Media Assets or KS E-Media'
right to carry on the KS E-Media Business, other than changes in
the ordinary course of business,
(ii) there has not been any damage, destruction, loss or other event
(whether or not covered by insurance) materially and adversely
affecting KS E-Media, its subsidiaries, the KS E-Media Business
or the KS E-Media Assets,
(iii) there has not been any material increase in the compensation
payable or to become payable by KS E-Media to any of KS E-Media'
officers, employees or agents or any bonus, payment or
arrangement made to or with any of them,
(iv) the KS E-Media Business has been and continues to be carried on
in the ordinary course, (v) KS E-Media has not waived or
surrendered any right of material value, (vi) neither KS E-Media
nor its subsidiaries have discharged or satisfied or pain any
lien or encumbrance or obligation or liability other than current
liabilities in the ordinary course of business, and
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(vii) no capital expenditures in excess of $10,000 individually or
$30,000 in total have been authorized or made.
KS E-Media - Income Tax Matters
(s) Tax Returns. All tax returns and reports of KS E-Media and its
subsidiaries required by law to be filed have been filed and are true,
complete and correct, and any taxes payable in accordance with any
return filed by KS E-Media and its subsidiaries or in accordance with
any notice of assessment or reassessment issued by any taxing
authority have been so paid;
(t) Current Taxes. Adequate provisions have been made for taxes payable
for the current period for which tax returns are not yet required to
be filed and there are not agreements, waivers, or other arrangements
providing for an extension of time with respect to the filing of any
tax return by, or payment of, any tax, governmental charge or
deficiency by KS E-Media or its subsidiaries. KS E-Media is not aware
of any contingent tax liabilities or any grounds which would prompt a
reassessment including aggressive treatment of income and expenses in
filing earlier tax returns;
KS E-Media - Applicable Laws and Legal Matters
(u) Licenses. KS E-Media and its subsidiaries hold all licenses and
permits as may be requisite for carrying on the KS E-Media Business in
the manner in which it has heretofore been carried on, which licenses
and permits have been maintained and continue to be in good standing
except where the failure to obtain or maintain such licenses or
permits would not have a material adverse effect on the KS E-Media
Business;
(v) Applicable Laws. Neither KS E-Media nor its subsidiaries have been
charged with or received notice of breach of any laws, ordinances,
statutes, regulations, by-laws, orders or decrees to which they are
subject or which apply to them the violation of which would have am
material adverse effect on the KS E-Media Business, and to KS E-Media'
knowledge, neither KS E-Media nor its subsididaires are in breach of
any laws, ordinances, statutes, regulations, bylaws, orders or decrees
in the contravention of which would result in a material adverse
impact on the KS E-Media Business;
(w) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding pending or threatened
against or relating to KS E-Media,, its subsidiaries, the KS E-Media
Business, or any of the KS E-Media Assets nor does KS E-Media have nay
knowledge of any deliberate act or omission of KS E-Media or its
subsidiaries that would form any material basis for any such action or
proceeding;
(x) No Bankruptcy. Netierh KS E-Media nor its subsidiaries have made any
voluntary assignment or proposal under applicable laws relating to
insolvency and bankruptcy and no bankruptcy petition has been filed or
presented against KS E-Media or its subsidiaries and no order has been
made or a resolution passed for the winding-up, dissolution or
liquidation of KS E-Media or its subsidiaries;
(y) Labor Maters. Neither KS E-Media nor its subsidiaries are party to any
collective agreement relating to the KS E-Media Business with any
labor union or other association of employees and no part of the KS
E-Media Business has been certified as a unit appropriate for
collective bargaining or, to the knowledge of KS E-Media, has made any
attempt in that regard;
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(z) Finder's Fees. Neither KS E-Media, nor its subsidiaries are party to
any agreement which provides for the payment of finder's fees,
brokerage fees, commission or other fees or amounts which are or may
become payable to any third party in connection with the execution and
delivery of this Agreement and the transactions contemplated herein.
Execution and Performance of Agreement
(aa) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated hereby,
have been duly and validly authorized by all necessary corporate
action on the part of KS E-Media;
(bb) No Violation or Breach. The execution and performance of this
Agreement will not: (i) violate the charter documents of KS E-Media or
result in any breach of, or default under, any loan agreement,
mortgage, deed of trust, or any other agreement to which KS E-Media or
its subsidiaries are party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, the KS E-Media Material Contracts,
or any right or rights enjoyed by KS E-Media or its subsidiaries,
(iii) result in any alteration of KS E-Media' or its subsidiaries'
obligations under any agreement to which KS E-Media or its
subsidiaries are party including, without limitation, the KS
E-Media Material Contracts,
(iv) result in the creation or imposition of any lien, encumbrance or
restriction of any nature whatsoever in favor of a third party
upon or against the KS E-Media Assets,
(v) result in the imposition of any tax liability to KS E-Media or
its subsidiaries relating to the KS E-Media Assets, or
(vi) violate any court order or decree to which either KS E-Media or
its subsidiaries are subject;
The KS E-Media Assets - Ownership and Condition
(cc) Business Assets. The KS E-Media comprise all of the property and
assets of the KS E-Media Business, and no other person, firm or
corporation owns any assets used by KS E-Media or its subsidiaries in
operating the KS E-Media Business, whether under a lease, rental
agreement or other arrangement, other than as disclosed in Schedules
"F" or "I" hereto;
(dd) Title. KS E-Media or its subsidiaries are the legal and beneficial
owner of the KS E-Media Business, free and clear of all mortgages,
liens, charges, pledges, security interests, encumbrances or other
claims whatsoever, save and except as disclosed in Schedules "F" or
"I" hereto;
(ee) No Option. No person, firm or corporation has any agreements or
options or a right capable of becoming an agreement for the purchase
of any of the KS E-Media Assets;
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(ff) KS E-Media Insurance Policies. KS E-Media and its subsidiaries
maintain the public liability insurance and insurance against loss or
damage to the KS E-Media Assets and the KS E-Media Business as
describe in Schedule "G" hereto;
(gg) KS E-Media Material Contracts. The KS E-Media Material Contracts
listed in Schedule "I" constitute all of the material contracts of KS
E-Media and its subsidiaries;
(hh) No Default. There has not been any default in any material obligation
of KS E-Media or any other party to be performed under any of the KS
E-Media Material Contracts, each of which is in good standing and in
full force and effect and unamended (except as disclosed in Schedule
"I" hereto), and KS E-Media is not aware of any default in the
obligations of any other party to any of the KS E-Media Material
Contracts;
(ii) No Compensation on Termination. There are no agreements, commitments
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of KS E-Media or its
subsidiaries. Neither KS E-Media nor its subsidiaries are obliged to
pay benefits or share profits with any employee after termination of
employment except as required by law;
KS E-Media Assets - KS E-Media Equipment
(jj) KS E-Media Equipment. The KS E-Media Equipment has been maintained in
a good manner consistent with that of a reasonably prudent owner and
such equipment is in good working condition;
KS E-Media Assets - KS E-Media Goodwill and Other Assets
(kk) KS E-Media Goodwill. KS E-Media and its subsidiaries does not carry on
the KS E-Media Business under any other business or trade names. KS
E-Media does not have any knowledge of any infringement by KS E-Media
or its subsidiaries of any patent, trademarks, copyright or trade
secret;
The KS E-Media Business
(ll) Maintaenance of Business. Since the date of the KS E-Media Financial
Statements, KS E-Media and its subsidiaries have not entered into any
material agreements or commitment except in the ordinary course and
except as disclosed herein;
(mm) Subsidiaries. Except for the Kama Sutra Media Ltd., KS E-Media does
not own any subsidiaries and does not otherwise own, directly or
indirectly, any shares or interest in any other corporation,
partnership, joint venture or firm; and
KS E-Media - Acquisition Shares
(nn) Acquition Shares. The Acquisition Shares when delivered to the
Zhongjin Shareholders pursuant to the Acquisition shall be validly
issued and outstanding as fully pain and non-assessable shares and the
Acquisition Shares shall be transferable upon the books of KS E-Media,
in all cases subject to the provisions and restrictions of all
applicable securities laws.
12
Non-Merger and Survival
3.2 The representations and warranties of KS E-Media contained herein will be
true at and as of Closing in all material respects as though such
representations and warranties were made as of such time. Notwithstanding the
completion of the transactions contemplated hereby, the waiver of any condition
contained herein (unless such waiver expressly releases a party from any such
representation or warranty) or any investigation made by Zhongjin or the
Zhongjin Shareholders, the representations or warranties of KS E-Media shall
survive the Closing.
Indemnity
3.3 KS E-Media agrees to indemnify and save harmless Zhongjin and the Zhongjin
Shareholders from and against any and all claims, demands, actions, suits,
proceedings, assessments, judgments, damages, costs, losses and expenses,
including any payment made in good faith in settlement of any claim (subject to
the right of KS E-Media to defend any such claim), resulting from the breach by
it of any representation or warranty made under this Agreement or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished by KS E-Media to Zhongjin or the Zhongjin
Shareholders hereunder.
ARTICLE 4
COVENANTS OF KS E-MEDIA
4.1 KS E-Media covenants and agrees with Zhongjin and the Zhongjin Shareholdes
that it will:
(a) Conduct of Business. Until the Closing, conduct the KS E-Media
Business diligently and in the ordinary course consistent with the
manner in which the KS E-Media Business generally has been operated up
to the date of the execution of this Agreement;
(b) Preservation of Business. Until the Closing, use its best efforts to
preserve the KS E-Media Business and the KS E-Media Assets and,
without limitation, preserve for Zhongjin KS E-Media's and its
subsidiaries' relationships with any third party having business
relations with them;
(c) Access. Until the Closing, give Zhongjin, the Zhongjin Shareholders,
and their representatives full access to all of the properties, books,
contracts, commitments and records of KS E-Media, and furnish to
Zhongjin, the Zhongjin Shareholders and their representatives all such
information as they may reasonably request;
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to the Closing, any and all third party
consents required to permit the Acquisition and to preserve and
maintain the KS E-Media Assets notwithstanding the change in control
of Zhongjin arising from the Acquisition;
(e) Stock Dividend. Within ten (10) days from the Closing Date, KS E-Media
shall effectuate a four-for-one forward split of the KS E-Media Common
Shares by way of stock dividend;
13
(f) Name Change. Forthwith after the Closing, take such steps are required
to change the name of KS E-Media to "Genex Pharmacuetical, Inc." or
such similar name as may be acceptable to the board of directors of
Zhongjin; and
(g) Sale of Business. Within thirty (30) days from the Closing Date, KS
E-Media shall sell its business operations, as they exist immediately
prior to the Closing, to Xxxxx Xxxxxx. In consideration of the sale,
Xx. Xxxxxx shall return 2,212,500 KS E-Media Common Shares to KS
E-Media to Xx. Xxxxxx. Other than indebtedness of Zhonjin, KS E-Media
shall have noo indebtedness or other liability of any kind or nature
after the salee of the business to Xx. Xxxxxx, save and except
liabilities incurred in connection with the Acquisition.
Authorization
4.2 KS E-Media hereby agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting KS E-Media and its subsidiaries to release any
and all information in their possession respecting KS E-Media and its
subsidiaries to the Zhongjin Shareholders. KS E-Media shall promptly execute and
deliver to the Zhongjin Shareholders any and all consents to the release of
information and specific authorizations which the Zhongjin Shareholders
reasonably requires to gain access to any and all such information.
Survival
4.3 The covenants set forth in this Article shall survive the Closing for the
benefit of Zhongjin and the Zhongjin Shareholders.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
THE ZHONGJN SHAREHOLDERS
Representations and Warranties
5.1 The Zhongjin Shareholders hereby jointly and severaly represent and warrant
in all material respect to KS E-Media, with the intent that it will rely thereon
in entering into this Agreement and in approving and completing the transactions
contemplated hereby, that:
Zhongjin - Company Status and Capacity
(a) Formation. Zhongjin is a company duly formed and validly subsisting
under the laws of the People's Republic of China;
(b) Carrying on Business. Zhongjin carries on the Zhongjin Business
primarily in the People's Republic of Chnina and does not carry on any
material business activity in any other jurisdiction. Zhongjin is duly
authorized to carry on the Zhongjin Business does not require that
Zhongjin to register or otherwise be quialified to carry on the
business in any other jurisdiction;
(c)Legal Capacity. Zhongjin has the legal power, capacity and authority to
own Zhongjin Assets, to carry on the Business of Zhongjin and to enter
into and complete this Agreement;
14
Zhongjin - Capitalization
(d) Authorized Capital. The authorized capital of Zhongjin consists of
1,500 shares of capital stock;
(e) Ownership of Zhongjin Shares. The issued and outstanding share capital
of Zhongjin will on Closing consist of 1,500 capital shares (being the
Zhongjin Shares), which shares on Closing shall be validly issued and
outstanding as fully paid and non-assessable shares. The Zhongjin
Shareholders will be at Closing the registered and beneficial owners
of the 1,500 Zhongjin Shares. The Zhongjin Shares owned by the
Zhongjin Shareholders will on Closing be free and clear of any and all
liens, charges, pledges, encumbrances, restrictions on transfer and
adverse claims whatsoever;
(f) No Option, Warrant or Other Right. No person, firm or corporation has
any agreement, option, warrant, preemptive right or any other right
capable of becoming an agreement, option, warrant or right for the
acquisition of Zhongjin Shares held by the Zhongjin Shareholders or
for the purchase, subscription or issuance of any of the unissued
shares in the capital of Zhongjin;
(g) No Restrictions. There are no restrictions on the transfer, sale or
other disposition of Zhongjin Shares contained in the charter
documents of Zhongjin or under any agreement;
Zhongjin - Records and Financial Statements
(h) Charter Documents. The charter documents of Zhongjin have not been
altered since its formation date, except as filed in the record books
of Zhongjin;
(i) Minute Books. The minute books of Zhongjin are complete and each of
the minutes contained therein accurately reflect the actions that were
taken at a duly called and held meeting or by consent without a
meeting. All actions by Zhongjin which required director or
shareholder approval are reflected on the corporate minute books of
Zhongjin. Zhongjin is not in violation or breach of, or in default
with respect to, any term of its Certificate of Incorporation (or
other charter documents) or by-laws.
(j) Zhongiin Financial Statements. The Zhongjin Financial Statements
present fairly, in all material respects, the assets and liabilities
(whether accrued, absolute, contingent or otherwise) of Zhongjin as of
the date thereof, and the sales and earnings of the Zhongjin Business
during the periods covered thereby, in all material respects, and have
been prepared in substantial accordance with generally accepted
accounting principles consistently applied;
(k) Zhongiin Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of Zhongjin which are not
disclosed in Schedule "K" hereto or reflected in the Zhongjin
Financial Statements except those incurred in the ordinary course of
business since the date of the said schedule and the Zhongjin
Financial Statements, and Zhongjin has not guaranteed or agreed to
guarantee any debt, liability or other obligation of any person, firm
or corporation. Without limiting the generality of the foregoing, all
accounts payable and liabilities of Zhongjin as of March 31, 2004 are
described in Schedule "K" hereto;
(l) Zhongjin Accounts REceivable. All the Zhongjin Accounts Receivable
result from bona fide business transactions and services actually
rendered without, to the knowledge and belief of the Zhongjoin
Shareholders, any claim by the obligor for set-off or counterclaim.
Without limiting the generality of the foregoing, all accounts
receivable of Zhongjin as of MArch 31, 2004, are described in Schedule
"L" hereto;
15
(m) Zhongjin Bank Accounts. All of the Zhongjin Bank Accounts, their
location, numbers and the authorized signatories thereto are as set
forth in Schedule "M" hereto;
(n) No Debt to Related Parties. Except as disclosed in Schedule "N"
hereto, Zhongjin is not and on Closing will not be, indebted to the
Zhongjin Shareholders nor to any family member thereof, nor to any
affiliate, director or officer of Zhongjin or the Zhongjin
Shareholders except accounts payable on account of bona fide business
transactions of Zhongjin incurred in normal course of Zhongjin
Business, including employment agreements with the Zhongjin
Shareholders, none of which are more than 30 days in arrears;
(o) No Related Party Debt to Zhongjin. Except as set forth on Schedule "S"
hereto, no Zhongjin Shareholder nor any director, officer or affiliate
of Zhongjin is now indebted to or under any financial obligation to
Zhongjin on any account whatsoever, except for advances on account of
travel and other expenses not exceeding $5,000 in total;
(p) No Dividends. No dividends or other distributions on any shares in
the capital of Zhongjin have been made, declared or authorized since
the date of the Zhongjin Financial Statements;
(q) No Payments. No payments of any kind have been made or authorized
since the date of the Zhongjin Financial Statements to or on behalf of
the Zhongjin Shareholders or to or on behalf of officers, directors,
shareholders or employees of Zhongjin or under any management
agreements with Zhongjin, except payments made in the ordinary course
of business and at the regular rates of salary or other remuneration
payable to them;
(r) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting Zhongjin, except as set forth in the Zhongjin Financial
Statements;
(s) No Adverse Events. Since the date of the Zhongjin Financial
Statements:
(i) there has not been any material adverse change in the
consolidated financial position or condition of Zhongjin, its
liabilities or the Zhongjin Assets or any damage, loss or other
change in circumstances materially affecting Zhongjin, the
Zhongjin Business or the Zhongjin Assets or Zhongjin's right to
carry on the Zhongjin Business, other than changes in the
ordinary course of business,
(ii) there has not been any damage, destruction, loss or other event
(whether or not covered by insurance) materially and adversely
affecting Zhongjin, the Zhongjin Business or the Zhongjin Assets,
(iii) there has not been any material increase in the compensation
payable or to become payable by Zhongjin to the Zhongjin
Shareholders or to any of Zhongjin's officers, employees or
agents or any bonus, payment or arrangement made to or with any
of them,
15
(iv) the Zhongjin Business has been and continues to be carried on in
the ordinary course,
(v) Zhongjin has not waived or surrendered any right of material
value,
(vi) Zhongjin has not discharged or satisfied or paid any lien or
encumbrance or obligation or liability other than current
liabilities in the ordinary course of business, and
(vii) no capital expenditures in excess of $10,000 individually or
$30,000 in total have been authorized or made;
Zhongjin - Income Tax Matters
(t) Tax Returns. All tax returns and reports of Zhongjin required by law
to be filed have been filed and are true, complete and correct, and
any taxes payable in accordance with any return filed by Zhongjin or
in accordance with any notice of assessment or reassessment issued by
any taxing authority have been so paid;
(u) Current Taxes. Adequate provisions have been made for taxes payable
for the current period for which tax returns are not yet required to
be filed and there are no agreements, waivers, or other arrangements
providing for an extension of time with respect to the filing of any
tax return by, or payment of, any tax, governmental charge or
deficiency by Zhongjin. Zhongjin is not aware of any contingent tax
liabilities or any grounds which would prompt a reassessment including
aggressive treatment of income and expenses in filing earlier tax
returns;
Zhongjin - Applicable Laws and Legal Matters
(v) Licenses. Zhongjin holds all licenses and permits as may be requisite
for carrying on the Zhongjin Business in the manner in which it has
heretofore been carried on, which licenses and permits have been
maintained and continue to be in good standing except where the
failure to obtain or maintain such licenses or permits would not have
a material adverse effect on the Zhongjin Business;
(w) Applicable Laws. Zhongjin has not been charged with or received notice
of breach of any laws, ordinances, statutes, regulations, by-laws,
orders or decrees to which they are subject or which applies to them
the violation of which would have a material adverse effect on the
Zhongjin Business, and, to the knowledge of the Zhongjin Shareholders,
Zhongjin is not in breach of any laws, ordinances, statutes,
regulations, by-laws, orders or decrees the contravention of which
would result in a material adverse impact on the Zhongjin Business;
(x) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding pending or threatened
against or relating to Zhongjin, the Zhongjin Business, or any of the
Zhongjin Assets, nor do the Zhongjin Shareholders have any knowledge
of any deliberate act or omission of Zhongjin that would form any
material basis for any such action or proceeding;
(y) No Bankruptcy. Zhongjin has not made any voluntary assignment or
proposal under applicable laws relating to insolvency and bankruptcy
and no bankruptcy petition has been filed or presented against
Zhongjin and no order has been made or a resolution passed for the
winding-up, dissolution or liquidation of Zhongjin;
16
(z) Labor Matters. Zhongjin is not party to any collective agreement
relating to the Zhongjin Business with any labor union or other
association of employees and no part of the Zhongjin Business has been
certified as a unit appropriate for collective bargaining or, to the
knowledge of the Zhongjin Shareholders, has made any attempt in that
regard;
(aa) Finder's Fees. Zhongjin is not a party to any agreement which provides
for the payment of finder's fees, brokerage fees, commissions or other
fees or amounts which are or may become payable to any third party in
connection with the execution and delivery of this Agreement and the
transactions contemplated herein;
Execution and Performance of Agreement
(bb) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated hereby,
have been duly and validly authorized by all necessary corporate
action on the part of Zhongjin;
(cc) No Violation or Breach. The execution and performance of this
Agreement will not
(i) violate the charter documents of Zhongjin or result in any breach
of, or default under, any loan agreement, mortgage, deed of
trust, or any other agreement to which Zhongj in is a party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, Zhongjin Material Contracts, or
any right or rights enjoyed by Zhongjin,
(iii) result in any alteration of Zhongjin's obligations under any
agreement to which Zhongjin is a party including, without
limitation, the Zhongjin Material Contracts,
(iv) result in the creation or imposition of any lien, encumbrance or
restriction of any nature whatsoever in favor of a third party
upon or against the Zhongjin Assets,
(v) result in the imposition of any tax liability to Zhongjin
relating to Zhongjin Assets or the Zhongjin Shares, or
(vi) violate any court order or decree to which either Zhongjin is
subject;
Zhongjin Assets - Ownership and Condition
(dd) Business Assets. The Zhongjin Assets, comprise all of the property and
assets of the Zhongjin Business, and neither the Zhongjin Shareholders
nor any other person, firm or corporation owns any assets used by
Zhongjin in operating the Zhongjin Business, whether under a lease,
rental agreement or other arrangement, other than as disclosed in
Schedules "0" or "R" hereto;
(ee) Title. Zhongjin is the legal and beneficial owner of the Zhongjin
Assets, free and clear of all mortgages, liens, charges, pledges,
security interests, encumbrances or other claims whatsoever, save and
except as disclosed in Schedules "0" or "R" hereto;
17
(ff)No Option. No person, firm or corporation has any agreement or option
or a right capable of becoming an agreement for the purchase of any of
the Zhongjin Assets;
(gg)Zhongiin Insurance Policies. Zhongjin maintains the public liability
insurance and insurance against loss or damage to the Zhongjin Assets
and the Zhongjin Business as described in Schedule "P" hereto;
(hh) Zhongiin Material Contracts. The Zhongjin Material Contracts listed in
Schedule "R" constitute all of the material contracts of Zhongjin;
(ii) No Default. There has not been any default in any material obligation
of Zhongjin or any other party to be performed under any of Zhongjin
Material Contracts, each of which is in good standing and in full
force and effect and unamended (except as disclosed in Schedule "R"),
and Zhongjin is not aware of any default in the obligations of any
other party to any of the Zhongjin Material Contracts;
(jj) No Compensation on Termination. There are no agreements, commitments
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of Zhongjin. Zhongjin is
not obliged to pay benefits or share profits with any employee after
termination of employment except as required by law;
Zhongjin Assets - Zhongjin Equipment
(kk) Zhongiin Equipment. The Zhongjin Equipment has been maintained in a
manner consistent with that of a reasonably prudent owner and such
equipment is in good working condition;
Zhongjin Assets - Zhongjin Goodwill and Other Assets
(11) Zhongjin Goodwill. Zhongjin carries on the Zhongjin Business only
under the name " Tianjin Zhongjin Biology Development Co., Ltd." and
variations thereof and under no other business or trade names. The
Zhongjin Shareholders do not have any knowledge of any infringement by
Zhongjin of any patent, trademark, copyright or trade secret;
The Business of Zhongjin
(mm) Maintenance of Business. Since the date of the Zhongjin Financial
Statements, the Zhongjin Business has been carried on in the ordinary
course and Zhongjin has not entered into any material agreement or
commitment except in the ordinary course; and
(nn) Subsidiaries. Zhongjin does not own any subsidiaries and does not
otherwise own, directly or indirectly, any shares or interest in any
other corporation, partnership, joint venture or firm and Zhongjin
does not own any subsidiary and does not otherwise own, directly or
indirectly, any shares or interest in any other corporation,
partnership, joint venture or firm.
Non-Merger and Survival
5.2 The representations and warranties of Zhongjin contained herein will be true
at and as of Closing in all material respects as though such representations and
warranties were made as of
18
such time. Notwithstanding the completion of the transactions contemplated
hereby, the waiver of any condition contained herein (unless such waiver
expressly releases a party from any such representation or warranty) or any
investigation made by KS E-Media, the representations and warranties of Zhongjin
shall survive the Closing.
Indemnity
5.3 The Zhongjin Shareholders agree to indemnify and save harmless KS E-Media
from and against any and all claims, demands, actions, suits, proceedings,
assessments, judgments, damages, costs, losses and expenses, including any
payment made in good faith in settlement of any claim (subject to the right of
the Zhongjin Shareholders to defend any such claim), resulting from the breach
by any of them of any representation or warranty of such party made under this
Agreement or from any misrepresentation in or omission from any certificate or
other instrument furnished or to be furnished by Zhongjin or the Zhongjin
Shareholders to KS E-Media hereunder.
ARTICLE 6
COVENANTS OF ZHONGJIN AND
THE ZHONGJIN SHAREHOLDERS
Covenants
6.1 Zhongjin and the Zhongjin Shareholders covenant and agree with KS E-Media
that they will:
(a) Conduct of Business. Until the Closing, conduct the Zhongjin Business
diligently and in the ordinary course consistent with the manner in
which the Zhongjin Business generally has been operated up to the date
of execution of this Agreement;
(b) Preservation of Business. Until the Closing, use their best efforts to
preserve the Zhongjin Business and the Zhongjin Assets and, without
limitation, preserve for KS E-Media Zhongjin's relationships with
their suppliers, customers and others having business relations with
them;
(c) Access. Until the Closing, give KS E-Media and its representatives
full access to all of the properties, books, contracts, commitments
and records of Zhongjin relating to Zhongjin, the Zhongjin Business
and the Zhongjin Assets, and furnish to KS E-Media and its
representatives all such information as they may reasonably request;
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party consents
required to permit the Acquisition and to preserve and maintain the
Zhongjin Assets, including the Zhongjin Material Contracts,
notwithstanding the change in control of Zhongjin arising from the
Acquisition;
(e) Reporting and Internal Controls. From and after the Closing, the
Zhongjin Shareholders shall forthwith take all required actions to
implement internal controls on the business of Zhongjin to ensure that
Zhongjin and KS E-Media comply with Section 13(b)(2) of the Securities
and Exchange Act of 1934;
19
(f) Stock Dividend. Within ten (10) days from the Closing Date, Zhongjin
and the Zhongjin Shareholders shall cause KS E-Media to effectuate a
four-for-one forward split of the KS E-Media Common Shares by way of
stock dividend;
(g) Name Change. Forthwith after the Closing, Zhongjin and the Zhongjin
Shareholders shall take such steps are required to change the name of
KS EMedia to "Genex Pharmaceutical, Inc." or such similar name as may
be acceptable to the board of directors of KS E-Media;
(h) Sale of Business. Within thirty (30) days from the Closing Date, KS
E-Media shall sell its business operations, as they exist immediately
prior to the Closing, to Xxxxx Xxxxxx. In consideration of the sale,
Xx. Xxxxxx shall return 2,212,500 KS E-Media Common Shares to KS
E-Media for cancellation. In addition, Xx. Xxxxxx shall forgive all
indebtedness owed by KS E-Media to Xx. Xxxxxx;
(i) No Reverse Stock Splits. For a period of twelve (12) months following
the Closing, take any action to cause or result in any way in a
reverse stock split of the capital stock of KS E-Media; and
(j) 1934 Act Reports. >From and after the Closing Date, take all such
steps as are necessary to discharge all reporting obligations imposed
upon them by the Securities Exchange Act of 1934.
Authorization
6.2 Zhongjin hereby agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting Zhongjin to release any and all information in
their possession respecting Zhongjin to KS EMedia. Zhongjin shall promptly
execute and deliver to KS E-Media any and all consents to the release of
information and specific authorizations which KS E-Media reasonably require to
gain access to any and all such information.
Survival
6.3 The covenants set forth in this Article shall survive the Closing for the
benefit of KS EMedia.
ARTICLE 7
CONDITIONS PRECEDENT
Conditions Precedent in favor of KS E-Media
7.1 KS E-Media's obligations to carry out the transactions contemplated hereby
are subject to the fulfillment of each of the following conditions precedent on
or before the Closing:
(a) all documents or copies of documents required to be executed and
delivered to KS E-Media hereunder will have been so executed and
delivered;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by Zhongjin or the Zhongjin Shareholders at
or prior to the Closing will have been complied with or performed;
(c) title to the Zhongjin Shares held by the Zhongjin Shareholders and to
the Zhongjin Assets will be free and clear of all mortgages, liens,
charges, pledges,
20
security interests, encumbrances or other claims whatsoever, save and
except as disclosed herein, and the Zhongjin Shares shall be duly
transferred to KS EMedia;
(d) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of Zhongjin, its liabilities or the Zhongjin Assets or
any damage, loss or other change in circumstances materially and
adversely affecting Zhongjin, the Zhongjin Business or the
Zhongjin Assets or Zhongjin's right to carry on the Zhongjin
Business, other than changes in the ordinary course of business,
none of which has been materially adverse, or
(ii) any damage, destruction, loss or other event, including changes
to any laws or statutes applicable to Zhongjin or the Zhongjin
Business (whether or not covered by insurance) materially and
adversely affecting Zhongjin, the Zhongjin Business or the
Zhongjin Assets; and
(e) the transactions contemplated hereby shall have been approved by all
other regulatory authorities having jurisdiction over the subject
matter hereof, if any.
Waiver by KS E-Media
7.2 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of KS E-Media and any such condition may be waived in
whole or in part by KS EMedia at or prior to the Closing by delivering to
Zhongjin a written waiver to that effect signed by KS E-Media. In the event that
the conditions precedent set out in the preceding section are not satisfied on
or before the Closing, KS E-Media shall be released from all obligations under
this Agreement.
Conditions Precedent in Favor of Zhongjin and the Zhongjin Shareholders
7.3 The obligations of Zhongjin and the Zhongjin Shareholders to carry out the
transactions contemplated hereby are subject to the fulfillment of each of the
following conditions precedent on or before the Closing:
(a) all documents or copies of documents required to be executed and
delivered to Zhongjin hereunder will have been so executed and
delivered;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by KS E-Media at or prior to the Closing
will have been complied with or performed;
(c) KS E-Media will have delivered the Acquisition Shares to be issued
pursuant to the terms of the Acquisition to Zhongjin at the Closing
and the Acquisition Shares will be registered on the books of KS
E-Media in the name of the holder of Zhongjin Shares at the time of
Closing;
(d) title to the Acquisition Shares will be free and clear of all
mortgages, liens, charges, pledges, security interests, encumbrances
or other claims whatsoever;
(e) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of KS X-
00
Media, its subsidiaries, their liabilities or the KS E-Media
Assets or any damage, loss or other change in circumstances
materially and adversely affecting KS E-Media, the KS E-Media
Business or the KS E-Media Assets or KS E-Media' right to carry
on the KS E-Media Business, other than changes in the ordinary
course of business, none of which has been materially adverse, or
(ii) any damage, destruction, loss or other event, including changes
to any laws or statutes applicable to KS E-Media or the KS
E-Media Business (whether or not covered by insurance) materially
and adversely affecting KS E-Media, its subsidiaries, the KS
E-Media Business or the KS EMedia Assets;
(f) the transactions contemplated hereby shall have been approved by all
other regulatory authorities having jurisdiction over the subject
matter hereof, if any; and
(g) the satisfaction of all liabilities of KS E-Media on or prior to the
Closing Date, other than those liabilities to be transferred to Xx.
Xxxxxx, save and except for liabilities incurred in connection with
the Acquisition.
Waiver by Zhongjin and the Zhongjin Shareholders
7.4 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of Zhongjin and the Zhongjin Shareholders and any such
condition may be waived in whole or in part by Zhongjin or the Zhongjin
Shareholders at or prior to the Closing by delivering to KS E-Media a written
waiver to that effect signed by Zhongjin and the Zhongjin Shareholders. In the
event that the conditions precedent set out in the preceding section are not
satisfied on or before the Closing, Zhongjin and the Zhongjin Shareholders shall
be released from all obligations under this Agreement.
Nature of Conditions Precedent
7.5 The conditions precedent set forth in this Article are conditions of
completion of the transactions contemplated by this Agreement and are not
conditions precedent to the existence of a binding agreement. Each party
acknowledges receipt of the sum of $1.00 and other good and valuable
consideration as separate and distinct consideration for agreeing to the
conditions of precedent in favor of the other party or parties set forth in this
Article.
Termination
7.6 Notwithstanding any provision herein to the contrary, if the Closing does
not occur on or before June 30, 2004, this Agreement will be at an end and will
have no further force or effect, unless otherwise agreed upon by the parties in
writing.
Confidentiality
7.7 Notwithstanding any provision herein to the contrary, the parties hereto
agree that the existence and terms of this Agreement are confidential and that
if this Agreement is terminated pursuant to the preceding section the parties
agree to return to one another any and all financial, technical and business
documents delivered to the other party or parties in connection with the
negotiation and execution of this Agreement and shall keep the terms of this
Agreement and all information and documents received from Zhongjin and KS
E-Media and the contents thereof confidential and not utilize nor reveal or
release same, provided, however, that KS E-Media will be required to issue a
news release regarding the execution and consummation of this Agreement
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and file a Current Report on Form 8-K with the Securities and Exchange
Commission respecting the proposed Acquisition contemplated hereby together with
such other documents as are required to maintain the currency of KS E-Media's
filings with the Securities and Exchange Commission.
ARTICLE 8
RISK
Material Change in the Business of Zhongjin
8.1 If any material loss or damage to the Zhongjin Business occurs prior to
Closing and such loss or damage, in KS E-Media' reasonable opinion, cannot be
substantially repaired or replaced within sixty (60) days, KS E-Media shall,
within two (2) days following any such loss or damage, by notice in writing to
Zhongjin, at its option, either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Acquisition and the other transactions
contemplated hereby, in which case the proceeds and the rights to
receive the proceeds of all insurance covering such loss or damage
will, as a condition precedent to KS E-Media' obligations to carry out
the transactions contemplated hereby, be vested in Zhongjin or
otherwise adequately secured to the satisfaction of KS E-Media on or
before the Closing Date.
Material Change in the KS E-Media Business
8.2 If any material loss or damage to the KS E-Media Business occurs prior to
Closing and such loss or damage, in Zhongjin's reasonable opinion, cannot be
substantially repaired or replaced within sixty (60) days, Zhongjin shall,
within two (2) days following any such loss or damage, by notice in writing to
KS E-Media, at its option, either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Acquisition and the other transactions
contemplated hereby, in which case the proceeds and the rights to
receive the proceeds of all insurance covering such loss or damage
will, as a condition precedent to Zhongjin's obligations to carry out
the transactions contemplated hereby, be vested in KS EMedia or
otherwise adequately secured to the satisfaction of Zhongjin on or
before the Closing Date.
ARTICLE 9
CLOSING
Closing
9.1 The Acquisition and the other transactions contemplated by this Agreement
will be closed at the Place of Closing in accordance with the closing procedure
set out in this Article.
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Documents to be Delivered by Zhongjin
9.2 On or before the Closing, Zhongjin and the Zhongjin Shareholders will
deliver or cause to be delivered to KS E-Media:
(a) the original or certified copies of the charter documents of Zhongjin
and all corporate records documents and instruments of Zhongjin, the
corporate seal of Zhongjin and all books and accounts of Zhongjin;
(b) all reasonable consents or approvals required to be obtained by
Zhongjin for the purposes of completing the Acquisition and preserving
and maintaining the interests of Zhongjin under any and all Zhongjin
Material Contracts and in relation to Zhongjin Assets;
(c) certified copies of such resolutions of the shareholders and directors
of Zhongjin as are required to be passed to authorize the execution,
delivery and implementation of this Agreement;
(d) an acknowledgement from Zhongjin and the Zhongjin Shareholders of the
satisfaction of the conditions precedent set forth in section 7.3
hereof;
(e) the certificates or other evidence of ownership of the Zhongjin
Shares, together with such other documents or instruments required to
effect transfer of ownership of the Zhongjin Shares to KS-Media; and
Documents to be Delivered by KS E-Media
(f) such other documents as KS E-MEdia may reasonably require to give
effect to the terms and intention of this Agreement.
Documents to be Delivered by KS E-Media
9.3 On or before the Closing, KS E-Media shall deliver or cause to be delivered
to Zhongjin and the Zhongjin Shareholders:
(a) share certificates representing the Acquisition Shares duly registered
in the names of the holders of shares of Zhongjin Common Stock;
(b) certified copies of such resolutions of the directors of KS E-Media as
are required to be passed to authorize the execution, delivery and
implementation of this Agreement;
(c) a certified copy of a resolution of the directors of KS E-Media dated
as of the Closing Date appointing the nominees of Zhongjin as officers
of Zhongjin and appointing the nominee of the Zhongjin Shareholders to
the board of directors of KS E-Media;
(d) undated resignation of Xxxxx Xxxxxx as a director of KS E-Media;
(e) an acknowledgement from KS E-Media of the satisfaction of the
conditions precedent set forth in section 7.1 hereof;
(f) such other documents as Zhongjin may reasonably require to give effect
to the terms and intention of this Agreement.
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ARTICLE 10
POST-CLOSING MATTERS
Forthwith after the Closing, KS E-Media, Zhongjin and the Zhongjin
Shareholders, as the case may be, agree to use all their best efforts to:
(a) issue a news release reporting the Closing;
(b) file with the Securities and Exchange Commission a report on Form 14f1
disclosing the change in control of KS E-Media and, 10 days after such
filing, forthwith date and accept the resignation of Xxxxx Xxxxxx as a
director of KS EMedia;
(c) file a Form 8-K with the Securities and Exchange Commission disclosing
the terms of this Agreement within 15 days of the Closing and, not
more than 60 days following the filing of the Form 8-K, file and
amended Form 8-K which includes the audited financial statements of
Zhongjin as well as pro forma financial information of Zhongjin and KS
E-Media as required by Item 310 of Regulation SB as promulgated by the
Securities and Exchange Commission;
(d) file reports on Forms 13D and 3 with the Securities and Exchange
Commission disclosing the acquisition of the Acquisition Shares by the
Zhongjin Shareholders;
(e) within 10 days of the Closing, take such steps are required to change
the name of KS E-Media to "Genex Pharmaceutical, Inc." or such similar
name as may be acceptable to the board of directors of KS E-Media; and
(f) within 10 days of the Closing, take such steps are required to
effectuate a fourfor-one forward split of the KS E-Media Common Shares
by way of stock dividend.
ARTICLE 11
GENERAL PROVISIONS
Arbitration
11.1 The parties hereto shall attempt to resolve any dispute, controversy,
difference or claim arising out of or relating to this Agreement by negotiation
in good faith. If such good negotiation fails to resolve such dispute,
controversy, difference or claim within fifteen (15) days after any party
delivers to any other party a notice of its intent to submit such matter to
arbitration, then any party to such dispute, controversy, difference or claim
may submit such matter to arbitration in the City of New York, New York.
Notice
11.2 Any notice required or permitted to be given by any party will be deemed to
be given when in writing and delivered to the address for notice of the intended
recipient by personal delivery, prepaid single certified or registered mail, or
telecopier. Any notice delivered by mail shall be deemed to have been received
on the fourth business day after and excluding the date of mailing, except in
the event of a disruption in regular postal service in which event such notice
shall be deemed to be delivered on the actual date of receipt. Any notice
delivered personally or by telecopier shall be deemed to have been received on
the actual date of delivery.
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Addresses for Service
11.3The address for service of notice of each of the parties hereto is as
follows:
(a) KS E-Media:
KS E-Media Holdings, Inc.
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Attn: Xxxxx Xxxxxx, President
Phone: (000) 000-0000
Telecopier: (000) 000-0000
(b) Zhongjin or the Zhongjin Shareholders:
Tianjin Zhongjin Biology Development Co., Ltd.
1801 Guangyiun Building
Youyibeilu, Hexi Dstrict
Tianjin, China
With a copy to:
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxx, Esq.
Phone: (000) 000-0000
Telecopier: (000) 000-0000
Change of Address
11.4 Any party may, by notice to the other parties change its address for notice
to some other address in North America and will so change its address for notice
whenever the existing address or notice ceases to be adequate for delivery by
hand. A post office box may not be used as an address for service.
Further Assurances
11.5 Each of the parties will execute and deliver such further and other
documents and do and perform such further and other acts as any other party may
reasonably require to carry out and give effect to the terms and intention of
this Agreement.
Time of the Essence
11.6 Time is expressly declared to be the essence of this Agreement. Entire
Agreement
11.7 The provisions contained herein constitute the entire agreement among
Zhongjin, the Zhongjin Shareholders and KS E-Media respecting the subject matter
hereof and supersede all previous communications, representations and
agreements, whether verbal or written, among Zhongjin, the Zhongjin Shareholders
and KS E-Media with respect to the subject matter hereof.
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Enurement
11.8 This Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
Assignment
11.9 This Agreement is not assignable without the prior written consent of the
parties hereto.
Counterparts
11.10 This Agreement may be executed in counterparts, each of which when
executed by any party will be deemed to be an original and all of which
counterparts will together constitute one and the same Agreement. Delivery of
executed copies of this Agreement by telecopier will constitute proper delivery,
provided that originally executed counterparts are delivered to the parties
within a reasonable time thereafter.
Applicable Law
11.11 This Agreement is subject to the laws of the State of New York.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF the parties have executed this Agreement effective
as of the day and year first above written.
KS E-MEDIA HOLDINGS, INC.
By: /S/ Xxxxx Xxxxxx
------------------------
Xxxxx Xxxxxx, President
TIANJIN ZHONGJIN BIOLOGY
DEVELOPMENT CO., LTD.
By:/S/ Fuzhi Song
---------------------
Fuzhi Song, Chairman
SHAREHOLDERS
/S/ Fuzhi Song
---------------
Fuzhi Song
/S/ Xxxxxx Song
---------------
Xxxxxx Song
