Thursday, December 15, 2005
ACQUISITION AGREEMENT
THIS IS A FORMAL APPROVAL BY ALL PARTIES OF THE ACQUISITION AGREEMENT (this
"Agreement") made and agreed into as of the 31st of October , 2005 and
supersedes any other agreement, term sheet made previously by and among
- NEW MEDIUM ENTERPRISES INC., a corporation organized under the laws of the
State of Nevada (the "NME"),
- BEIJING E-WORLD DIGITAL TECHNOLOGIES XX.XXX , a corporation organized
under the laws of the People's Republic of China and also referred to as Beijing
E-World and hereinafter referred to as ("E-World"),
- SEMILLA CAPITAL BVI, a corporation formed under the laws of the British
Virgin Islands ("Semilla") and
- THOSE INDIVIDUALS and entities IDENTIFIED AS VENDORS and listed on the
signature pages of this Agreement (individually a "Vendor" and collectively, the
"Vendors").
BACKGROUND
A. NME specializes in the next generation optical storage technologies.
B. E-World has a legal power and authority to conduct business in the fields
of optical storage and electronics in the People's Republic of China
(Establishing of Company Agreement - EXHIBIT A)
C. Semilla has the right to acquire E-World Shareholding, which shall be
69.09% of the total registered capital of E-World (refer to the "E-World
Shareholding"). By investing USD $8,500,000 in E-World. To avoid any doubt the
acquisition of E-World Shareholding means the ownership and the rights of
ownership of 69.09% of E-World and all the assets, technological, financial, and
operational and per the Agreements that exist or will exist between E-World and
other parties and all other assets and rights tangible and intangible.
D. Vendors, collectively, own 100% of the issued and outstanding capital
stock of Semilla (refer to "Semilla Stock").
E. NME desires to acquire from Vendors, and Vendors desire to sell to NME,
all of Vendors' rights, titles and interests in the Semilla Stock on the terms
and subject to the conditions set forth in this Agreement.
F. E-World explicitly agrees and wishes that NME acquire 100% of Semilla on
terms and conditions set up in this Agreement.
G. Following its acquisition of Semilla, NME has agreed, to exercise the
right of Semilla to acquire E-World Shareholding, with all the rights due to
this ownership of Shareholding in E-World in the accordance with the Laws Of
People Republic of China and the International Law, by the investment of US$8.5
million as per Clause C above, in connection with its acquisition of Semilla, to
provide an investment commitment to E-World of US$8.5 million through Semilla,
described in Sections 2 of this Agreement, whereupon E-World Shareholding will
be owned by Semilla without any doubt or encumbrance with all the rights due to
this ownership in accordance with the Laws of Republic of China and
International Law.
H. Independent consultants appointed by NME have completed their review of
the business of E-World and NME is satisfied with their findings.
AGREEMENT
In consideration of the foregoing and of the mutual promises, commitments
and respective representations and warranties, covenants, agreements and
conditions contained herein, and intending to be legally bound, the parties
agree as follows:
ARTICLE 1
DEFINITIONS
For the purposes of this Agreement, except as otherwise expressly
provided, or unless the context otherwise requires, the following terms, when
used in this Agreement and the Exhibits, Schedules, and other documents
delivered in connection herewith, have the meanings assigned to them in this
Article 1.
ACTION means any action, complaint, investigation, petition, suit, or
other proceeding, whether civil or criminal, in law or in equity, or before any
arbitrator or Governmental Entity.
AFFILIATE means a Person that directly or indirectly, through one or
more intermediaries, controls, or is under common control with, a specified
Person.
AGREEMENT means this Agreement, as amended or supplemented, together
with all Exhibits and Schedules attached or incorporated by reference.
APPROVAL means any approval, authorization, consent, qualification, or
registration, or any waiver of any of the foregoing, required to be obtained
from, or any notice, statement, or other communication required to be filed with
or delivered to, any Governmental Entity or any other Person.
APPROVAL DATE means the date when the board and majority shareholder
consent is obtained by all parties. In this agreement, approval date means 16th
December 2005
BITE SHARES means 30,123,240.00 common shares of NME's issued by NME
to Bite Investments, a current holder of NME Common Shares.
CLOSING means the date of satisfying Clause 8.1 of Article 8 and
completion of the Escrow arrangement by all parties to this agreement.
CLOSING DATE means the opening of business on the first business day
on which all of the conditions to Closing hereunder have been met
ENCUMBRANCE means any claim, charge, lease, covenant, easement,
security interest, license, lien, option, pledge, right of others, or
restriction (whether on voting, sale, transfer, disposition, or otherwise),
whether imposed by agreement, understanding, law, equity, or otherwise, except
for any restrictions on transfer generally arising under any applicable federal
or state securities law.
ESCROW AGREEMENT means the Escrow Agreement attached as EXHIBIT B
attached hereto and incorporated herein by this reference pursuant to which the
Escrow Holder shall hold the Semilla stock, an undertaking by E-World for giving
of E-World Shareholding, with all the rights due to this ownership of 69.09% of
E-World in accordance with the Laws Of People Republic of China and the
International Law, to Semilla as per Joint Venture Agreement as per EXHIBIT B,
the NME Stock, the Bite shares and the May shares until satisfaction of all
conditions set forth therein for delivery thereof to the parties entitled
thereto. The Escrow Agreement shall obligate the Escrow Holder to deliver the
Semilla Stock and E-World undertaking to NME, - the NME Stock and to the
Vendors, and the May shares to May Ltd and Bite shares to Bite upon the last
to occur of (i) the satisfaction of the covenants set forth in Articles 7, 8 and
11 of this Agreement and (ii) the actual funding of the permanent financing
described in Section 11.3 herein and (iii) such other terms and conditions as
are set forth in the Escrow Agreement.
ESCROW HOLDER means the entity defined as the Escrow Holder pursuant
to the Escrow Agreement.
E-WORLD SHAREHOLDING means the ownership and the rights of
ownership of 69.09% of E-World together with all the assets, technological,
financial, operational and per the Agreements that exist or will exist between
E-World and other parties and all other assets and rights tangible and
intangible (refer also to Articles 5.5 and 5.6 below). It also means 69.09% of
the increased registered capital of E-World represented by the investment of USD
$8,500,000. It also covers the issue by NME of 98,098,284.70 Common shares to
acquire all the share capital of Semilla. This number may be slightly more or
less according to the exchange rate between RMB (China official currency) and
USD at the Closing Date.
GOVERNMENTAL ENTITY means any government or any agency, bureau, board,
commission, court, department, official, political subdivision, tribunal, or
other instrumentality of any government, whether federal, state or local,
domestic or foreign.
JOINT VENTURE AGREEMENT means the agreement between Semilla and
E-World (on behalf of its current shareholders) to invest US$8,500,000 in
E-World in consideration of the acquisition the E-World Shareholding. Joint
Venture Agreement is EXHIBIT C of this Agreement.
LOSS means any action, cause of action, assessments, cost, damage,
disbursement, expense, liability (direct and consequential), loss, deficiency,
diminution in value, obligation, penalty or settlement of any kind or nature,
whether foreseeable or unforeseeable, including but not limited to interest or
other carrying costs, penalties, reasonable legal, accounting, and other
professional fees and expenses incurred in the investigation, collection,
prosecution and defense of claims, and amounts paid in settlement, that may be
imposed on or otherwise incurred or suffered by the specified person.
MAY SHARES mean, shares of 46,037,960 common shares of NME's issued
by NME to May, Ltd., a current holder of NME Common Shares
NME COMMON SHARES has the meaning set forth in Article 2 of this
Agreement.
ORDER means any decree, injunction, judgment, order, ruling,
assessment or writ.
PERSON means an association, a corporation, an individual, a
partnership, a trust or any other entity or organization, including a
Governmental Entity.
SEMILLA STOCK means all of the capital stock of Semilla issued and
outstanding.
SIGNING DATE means 31st, October, 2005
TAXES means all taxes (whether federal, state, local or foreign) based
upon or measured by income, and any other tax whatsoever, including gross
receipts, profits, sales, use, occupancy, value added, ad valorem, transfer,
withholding, payroll, excise or property taxes, together with any interest,
penalties or additions to tax attributable thereto.
ARTICLE 2
PURCHASE AND SALE
On the Closing Date and upon the terms and subject to the conditions
of this Agreement:
(i) each Vendor agrees to sell, transfer and assign to NME the
Semilla Stock free and clear of Encumbrances and deliver the certificates
evidencing the Semilla Stock to the Escrow Holder, to be held pursuant to the
provisions of the Escrow Agreement;
(ii) E-Word will sell, transfer and issue the E-World
Shareholding clear of Encrumbrances to Semilla in consideration of NME
satisfying Articles 7, 8 and 11 of this agreement and which will be in full
compliance and in accordance with the Joint Venture Agreement.
(iii) NME will issue to the Vendors free and clear of all
Encumbrances 98,098,285 Common Shares (the "NME Common Shares") which shall be
40.86% of total issued shares of NME at the time and date of this Agreement and
NME wishes that 40 million of these shares be awarded to E-World Senior
Executives and Management. The parties hereby acknowledge that the issuance of
such NME Common Shares shall not be made on a pro-rata basis to the Vendors.
Neither NME nor any other party to this Agreement shall be responsible in any
manner whatsoever for the allocation of the NME Common Shares as set forth
herein. E-World and the Vendors shall, jointly and severally, indemnify NME and
such other parties in respect of any matters relating to such allocation of NME
Common Shares pursuant to the provisions of Article 10 hereof.
(iv) NME will issue Bite Investments 30,123,240 fully paid Common Shares
(the "Bite Shares")
NME will issue to May Ltd the May Warrants and shall deliver certificates
evidencing the NME Common Shares, the Bite Shares and the May Warrants to the
Escrow Holder, to be held pursuant to the provisions of the Escrow Agreement.
The NME Common Shares shall be allocated among and registered in the names of
the Vendors in accordance with the ratios set forth on the signature pages
hereto, adjacent to the name of each Vendor.
ARTICLE 3
CLOSING
Upon the terms and subject to the conditions set forth in this
Agreement, the CLOSING of the transactions contemplated by this Agreement shall
take place on or before 150th day following Signing Date of this Agreement by
all parties hereto. Notwithstanding the forgoing, in the event that all of the
conditions to Closing hereunder as set forth in Article 7 hereof shall not have
been satisfied by such date (i.e., 150th day following Signing Date hereof),
then any party may upon written notice to the other parties to the effect
thereof extend such Closing Date to a date which shall be no later than 180 days
following the signing date of this Agreement by all parties hereto. The Closing
shall take place at the offices of Beijing E-World located in Beijing, China or
any other mutually convenient place to be decided by all parties to this
Agreement. At the Closing the parties shall deliver to each other all of the
documents and instruments provided for in Article 7 of this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SEMILLA OR VENDORS
Semilla and Vendors, severally, and not jointly, represent, warrant and
agree as follows:
4.1 ORGANIZATION AND RELATED MATTERS.
-----------------------------------
Semilla is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation and has
the corporate power and authority to own and operate its properties and assets,
and to carry on its business as currently conducted. No proceedings for the
liquidation or dissolution of Semilla have been commenced or have been
authorized. Semilla has furnished NME copies of all of Semilla's organizational
documents and documents proving the rights of Semilla to acquire. Such copies
are true, correct and complete and contain all amendments through the Closing
Date.
4.2 NO ENCUMBRANCES.
-----------------
The authorized capital stock of Semilla immediately prior to the
Closing consists of 1 share of Common Stock, of which 1 share will be issued and
outstanding and all of which are held by Vendors. There are no securities of
Semilla issued or outstanding other than the Semillas Stock. All issued and
outstanding shares of Semilla's capital stock have been duly authorized and
validly issued, and are fully paid and non-assessable. There are no options or
warrants or other conversion privileges or rights currently outstanding to
purchase any of the authorized but un-issued capital stock of Semilla. Semilla
has no subsidiaries. Vendors have good and marketable title to the Stock free
and clear of any Encumbrances.
4.3 AUTHORIZATION; NO CONFLICTS.
-----------------------------
Semilla and Vendors have all necessary power and authority to execute,
deliver, and perform this Agreement. This Agreement has been duly authorized
executed and delivered by Semilla and by each Vendor and constitutes the legally
valid and binding obligations of Semilla and the Vendors, enforceable against
them in accordance with its terms except as such enforceability may be limited
by (i) the effect of bankruptcy, insolvency, receivership, conservatorship,
fraudulent transfer, moratorium, and other similar laws and equitable
principles affecting or relating to or limiting creditors' rights generally, and
(ii) the rules governing the availability of specific performance, injunctive
relief or other equitable remedies and general principles of equity, regardless
of whether considered in a proceeding in equity or at law. The execution,
delivery, and performance of this Agreement by Semilla and each Vendor will not
violate or constitute a breach or default (whether upon lapse of time or the
occurrence of any act or event or otherwise) under (a) any material law to which
any of them is subject, or (b) any material contract or agreement to which any
of them is a party; and will not result in any material violation of, or
constitute a material default under, or result in the creation of any
Encumbrance upon any of the assets of Semilla under, any agreement or instrument
by which Semilla or any of its assets is bound. Following the Closing,
Semilla's title to its properties and assets will not be subject to any
Encumbrance under any material agreement or instrument by which Semilla or any
of its assets is bound.
4.4 BROKERS OR FINDERS.
--------------------
Semilla has engaged the services of Bite Investments as a M&A
Consultant on its behalf and its Affiliates in connection with the negotiation,
execution and performance of this Agreement and the transactions contemplated by
this Agreement, and will be entitled to a brokerage fee of 30,123,240.00 NME
common share defined Bite Shares.
4.5 NO MATERIAL ADVERSE CHANGES.
------------------------------
Since MANAGEMENT ACCOUNTS DATED 30TH SEPTEMBER 2005, and submitted to
NME's due diligence consultants there has been no material adverse change in the
business, prospects, financial condition or assets of Semilla.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF E-WORLD
E-World represents, warrants and agrees as follows:
5.1 ORGANIZATION AND RELATED MATTERS.
-----------------------------------
E-World is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation and has the
corporate power and authority to own and operate its properties and assets, and
to carry on its business as currently conducted. No proceedings for the
liquidation or dissolution of E-World have been commenced or have been
authorized. E-World has furnished NME copies of all of E-World's organizational
documents. Such copies are true, correct and complete and contain all
amendments through the Closing Date.
5.2 NO ENCUMBRANCES.
-----------------
The authorized total registered capital of E-World immediately after
the NME's investment will be RMB 30,770,000 plus USD $8, 500,000. Current
E-World registered capital of E-World is RMB 30,770,000. There are no other
conversion privileges or rights currently outstanding to increase the registered
capital of E-World except the Joint Venture Agreement. A true, correct and
complete copy of the Joint Venture Agreement has been furnished to NME and
contains all amendments through the Closing Date. The USD $8, 500,000
investment will be duly authorized, validly issued, fully paid and
non-assessable and will constitute 69.09% (refer to E-World Shareholding) of the
registered capital of E-World in accordance with the Joint Venture Agreement.
E-World has two subsidiaries as per EXHIBIT E. E-World has good and marketable
title to all of its properties and assets free and clear of any encumbrances.
5.3 AUTHORIZATION; NO CONFLICTS.
-----------------------------
E-World has all necessary power and authority to execute, deliver, and
perform this Agreement. This Agreement and each of the documents and
instruments to be executed and delivered by E-World pursuant to this Agreement
have been duly authorized executed and delivered by E-World and constitutes the
legally valid and binding obligations of E-World, enforceable against it in
accordance with their respective terms except as such enforceability may be
limited by (i) the effect of bankruptcy, insolvency, receivership,
conservatorship, fraudulent transfer, moratorium, and other similar laws and
equitable principles affecting or relating to or limiting creditors' rights
generally, and (ii) the rules governing the availability of specific
performance, injunctive relief or other equitable remedies and general
principles of equity, regardless of whether considered in a proceeding in equity
or at law. The execution, delivery, and performance of this Agreement and each
of the documents and instruments to be executed and delivered by E-World
pursuant to this Agreement by E-World do not and will not violate or constitute
a breach or default (whether upon lapse of time or the occurrence of any act or
event or otherwise) under (a) any material law to which it is subject, or (b)
any material contract or agreement to which it is a party; and will not result
in any material violation of, or constitute a material default under, or result
in the creation of any Encumbrance upon any of the assets of E-World under, any
agreement or instrument by which E-World or any of its assets is bound.
Following the Closing, E-World's title to its properties and assets will not be
subject to any Encumbrance under any material agreement or instrument by which
E-World or any of its assets is bound.
5.4 NO BROKERS OR FINDERS.
------------------------
No agent, broker, finder, or investment or commercial banker, or other
Person or firm engaged by or acting on behalf of E-World or any of its
Affiliates in connection with the negotiation, execution, or performance of this
Agreement or the transactions contemplated by this Agreement, is or will be
entitled to any brokerage or finder's or similar fee or other commission as a
result of any of the transactions contemplated by this Agreement.
5.5 FINANCIAL STATEMENTS.
---------------------
E-World has delivered to NME true, correct and complete copies of its
certified financial statements for each of its two most recently completed
fiscal years prior to the date of this Agreement (collectively, the "Financial
Statements"). The Financial Statements are attached to this Agreement in
EXHIBIT F. The Financial Statements have been prepared in accordance with
generally accepted accounting principles in People Republic of China
consistently applied and present fairly the financial condition and results of
operations of NME and other information presented therein and, with respect to
such of the information presented in the Financial Statements for quarterly
periods, subject to normal year end adjustments and except that no footnotes
need to be included with such quarterly Financial Statements.
5.6 OTHER ASSETS.
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EXHIBIT G hereto contains a true, correct and complete list of all:
(i) licenses, permits, franchises and authorizations held or used
by E-World in connection with the operation of its business;
(ii) contracts and agreements to which E-World is a party or by
which any of its properties or assets is bound;
(iii) all intangible properties held, used or usable by E-World in
connection with the conduct of its business, including but not limited to all
patents and patent applications, copyrights, trademarks, trade names, service
marks, trade secrets, know how, processes and specifications and all goodwill
associated with any of them; and
(iv) all franchises, permits, licenses, registrations, orders and
approvals held or used by E-World in connection with the conduct of its
business.
5.7 COMPLIANCE WITH LAW.
---------------------
No franchise, license, permit, registration, order or approval of any
governmental entity is necessary for the conduct of the business of E-World as
presently conducted or as proposed to be conducted on and after the Closing
which has not been obtained by E-World. Each such franchise, license, permit,
registration, order and approval is in full force and effect and E-World is in
full compliance with all of the terms and conditions of each of them and no
proceeding is pending or threatened to revoke, amend or limit any of them.
5.8 NO MATERIAL ADVERSE CHANGES.
------------------------------
There have been no material adverse changes in the business prospects
of E-World since the review carried out by independent consultants and there
have been no material adverse changes in the financial condition and assets of
E-World since the latest certified financial statements for the year ended 31
December 2004.
5.9 FULL DISCLOSURE.
----------------
All documents, instruments and materials delivered to NME by E-World
in connection with this Agreement and the transactions contemplated herein are
accurate, complete and authentic. The information furnished to NME by or on
behalf of E-World in connection with this Agreement and the transactions
contemplated herein does not contain any untrue statement of material fact and
does not omit to state any material fact necessary to make the statements made,
in the context in which they are made, not false or misleading. There is no
fact or circumstance known to E-World which has not been disclosed to NME in
writing which could reasonably be expected to have a material adverse effect on
the business, properties, assets, financial condition or prospects of E-World.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF NME
NME represents and warrants as follows:
6.1 AUTHORIZATION\NO CONFLICTS.
---------------------------
NME has all necessary corporate power and authority to execute,
deliver, and perform this Agreement. This Agreement constitutes the legally
valid and binding obligations of NME, enforceable against NME in accordance with
its terms except as such enforceability may be limited by (i) the effect of
bankruptcy, insolvency, receivership, conservatorship, fraudulent transfer,
moratorium, and other similar laws and equitable principles affecting or
relating to or limiting creditors' rights generally, and (ii) the rules
governing the availability of specific performance, injunctive relief or other
equitable remedies and general principles of equity, regardless of whether
considered in a proceeding in equity or at law. The execution, delivery, and
performance of this Agreement by NME will not violate or constitute a breach or
default (whether upon lapse of time or the occurrence of any act or event or
otherwise) under (a) any law to which NME is subject, or (b) any material
contract to which NME is a party.
6.2 NO ENCUMBRANCES.
----------------
The authorized capital stock of NME immediately prior to the Closing
consists of 500,000,000 shares of Common Stock and 200,000,000 shares of
Preferred Stock, of which 155,586,227.68 shares of Common Stock will be issued
and outstanding immediately prior to the Closing [Confirm]. All issued and
outstanding shares of NME's capital stock have been, and all shares of NME Stock
when issued in accordance with the provisions of this Agreement will be, duly
authorized and validly issued, fully paid and nonassessable.
6.3 BROKERS OR FINDERS.
--------------------
NME has engaged the services of May Ltd as a M&A Consultant on its
behalf and its Affiliates in connection with the negotiation, execution and
performance of this Agreement and the transactions contemplated by this
Agreement, and will be entitled to a brokerage fee aggregating to 46,037,960
shares.
6.4 NO MATERIAL ADVERSE CHANGES.
------------------------------
Since THE SEPTEMBER 30TH 2005 10K FILING AND AS OF THIS AGREEMENT
there has been no material adverse change in the business, prospects, financial
condition or assets of NME.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 GENERAL CONDITIONS.
-------------------
The obligations of the parties to effect the Closing shall be subject
to the satisfaction of the following condition unless waived in writing by all
parties hereto:
(A) NO INJUNCTIONS; ORDERS. No preliminary or permanent
injunction or other Order shall have been issued and not removed by any court of
competent jurisdiction or by any Governmental Entity, nor shall any statute,
rule, regulation, or executive order be promulgated or enacted by any
Governmental Entity, that substantially interferes with the practical
realization by the parties hereto of the benefits of the consummation of the
transactions contemplated hereby.
(B) BOARD AND SHAREHOLDER APPROVAL. The Boards of Directors and
shareholders of each of NME, E-World, Semilla and such of the Vendors as are not
natural persons, shall have approved the consummation of the transactions
contemplated by this Agreement, as each may be required to do under the laws and
regulations to it or them.
(C) MUTUAL OBLIGATIONS. The obligations of each party hereto to
consummate the transactions contemplated by this Agreement are expressly
conditioned upon the satisfaction by each of the other parties hereto of their
respective obligations pursuant to this Article 7.
(D) ESCROW AGREEMENT. Each party shall have delivered to each of
the other parties the Escrow Agreement and each shall have delivered to the
Escrow Holder the documents and instruments required to be delivered by such
party to the Escrow Holder pursuant to Article 2 hereof.
(E) SEC APPROVAL. NME shall have obtained approval from the SEC
staff in respect of the definitive Information Statement on Schedule 14C to be
distributed to shareholders regarding certain corporate actions to be taken by
NME in connection with the transactions contemplated by this Agreement. The
Closing Date shall occur not less than 20 days following the distribution of
such definitive Information Statement to the shareholders of NME in form
approved by the SEC staff.
7.2 CONDITIONS TO OBLIGATIONS OF NME.
------------------------------------
In addition to the satisfaction of each condition set forth in Section
7.1 hereof, the obligations of NME to effect the Closing shall be subject to the
satisfaction of the following conditions except to the extent waived in writing
by NME on or prior to the Closing Date:
(A) REPRESENTATIONS AND WARRANTIES AND COVENANTS OF E-WORLD,
SEMILLA AND VENDORS. The representations and warranties of E-World, Semilla and
the Vendors herein contained shall be true in all material respects at the
Closing Date with the same effect as though made at such time. E-World, Semilla
and the Vendors shall have performed all obligations and complied with all
covenants and conditions required to be performed or complied with at or prior
to the Closing Date by this Agreement.
(B) DELIVERABLES OF E-WORLD, SEMILLA AND THE VENDORS. On or prior
to the Closing Date, E-World, Semilla and the Vendors shall deliver or cause to
be delivered the following to NME:
(i) the original minute book, stock ledger and corporate seal
of Semilla and all other original records, books, documents, instruments,
agreements and the like which pertain exclusively to Semilla or its business or
assets;
(ii) executed resignations of those current officers and
directors of Semilla, such resignations to be effective upon Closing;
(iii) executed copies of a Share Purchase Agreement
containing representations and warranties of each Vendor concerning the Vendors'
respective investment intent and qualifications to hold the NME Common Shares,
in the form of EXHIBIT H attached hereto; and
(iv) a certificate executed by officers of each of E-World
and Semilla and each of the Vendors certifying that all conditions on their
respective parts required to be met or satisfied hereunder have been met.
7.3 CONDITIONS TO OBLIGATIONS OF SEMILLA AND VENDORS.
------------------------------------------------------
In addition to the satisfaction of each condition set forth in Section
7.1 hereof, the obligations of the Vendors to effect the Closing shall be
subject to the satisfaction of the following conditions, except to the extent
waived in writing by Semilla and the Vendors on or prior to the Closing Date:
(A) REPRESENTATIONS AND WARRANTIES AND COVENANTS OF NME. The
representations and warranties of NME herein contained shall be true in all
material respects at the Closing Date with the same effect as though made at
such time. NME shall have in all material respects performed all obligations
and complied with all covenants and conditions required to be performed or
complied at or prior to the Closing Date by this Agreement.
(B) DELIVERABLES BY NME. On or prior to the Closing Date, NME
shall deliver or cause to be delivered the following:
(i) a certificate executed by officers of NME certifying that
all conditions on the part of NME required to be met or satisfied hereunder have
been met.
7.4 CONDITIONS TO OBLIGATIONS OF E-WORLD.
----------------------------------------
In addition to the satisfaction of each condition set forth in Section
7.1 hereof, the obligations of E-World to effect the Closing shall be subject to
the satisfaction of the following conditions except to the extent waived in
writing by E-World on or prior to the Closing Date:
(A) REPRESENTATIONS AND WARRANTIES AND COVENANTS OF NME. The
representations and warranties of NME herein contained shall be true in all
material respects at the Closing Date with the same effect as though made at
such time. NME shall have performed all obligations and complied with all
covenants and conditions required to be performed or complied at or prior to the
Closing Date by this Agreement.
(B) DELIVERABLES OF NME. On or prior to the Closing Date, NME
shall deliver or cause to be delivered the following to E-World:
(i) a certificate executed by officers of NME certifying that
all conditions on the part of NME required to be met or satisfied hereunder have
been met;
ARTICLE 8
ADDITIONAL AGREEMENTS OF THE PARTIES
8.1 INTERIM FINANCING.
------------------------
On or before 16th, December 2005, NME shall facilitate through its
financier Tribal SARL an interim financing or bridge financing for a sum of US $
1.1 million by way of a bank guarantee or any other bank instrument as may be
solely designated by NME. E-World may draw upon this interim credit facility
for a period not exceeding 150 days following the availability thereof under the
conditions set forth on Schedule annexed hereto. This interim credit
facility will form part of the total investment condition of this Agreement
[E-World agrees to pay fees related to the trade finance arranged by NME as per
Article 12 , clause 12.11.]
8.2 INVESTMENT TO E-WORLD.
----------------------------
NME shall invest into E-World a total amount of USD $8,500,000 in cash
through Semilla in order to acquire the E-World Shareholding pursuant to the
terms of this Agreement and the Joint Venture Agreement. This investment shall
be advanced as follows: (i) on or before 16th, December 2005, NME shall advance
or cause to be advanced the interim credit facility in the amount of US $ 1.1
million pursuant to Section 8.1 above, which interim credit facility will be
converted as an investment within 150 days following the Signing Date; (ii) on
or before the 28th of Feburary 2006 NME shall pay the sum of $ 2.5 million in
cash to E-World through Semilla, for the exclusive purpose to repay shareholder
loans (iii) on or before the earlier to occur of the listing of the NME Common
Shares on NASDAQ SmallCap Market or on any other recognized exchange pursuant to
Section 11.3 hereof or 150 days following the signing Date, NME shall pay the
balance ($5,000,000.00) through Semilla to E-world for completing increased
register capital certification...
8.3 CHANGE OF NAME AND ADD BOARD OF DIRECTOR MEMBER OF NME.
Effective as of the Closing, each of NME and E-World shall change its
corporate name as follows: (i) NME shall change its name to NME-World; and (ii)
E-World shall change its English name to NME-World (China). NME agrees to
provide 3 board seats to be nominated by Vendors, the number of seats Vendors
take in NME shall in accordance with the ratio of shares the Vendors have in
NME.
NME will have the right to appoint a Co Chairman to the board of Beijing E-world
--------------------------------------------------------------------------------
and also a joint CFO. Both parties from signing date will cooperate to develop
---------------------
a joint VMD/EVD product/products and will pursue a joint technical collaboration
vigorously.
ARTICLE 9
TERMINATION OF OBLIGATIONS; SURVIVAL
9.1 TERMINATION OF AGREEMENT.
--------------------------
Anything herein to the contrary notwithstanding, this Agreement and
the transactions contemplated by this Agreement shall terminate at the close of
business on 200 days from the signing date of this Agreement unless the Closing
has been consummated or unless this Agreement is extended by unanimous consent
in writing of all parties hereto and may otherwise be terminated at any time
before the Closing as follows and in no other manner.
(A) MUTUAL CONSENT. By unanimous written consent of all the
parties hereto.
(B) ILLEGALITY. By any party hereto if there shall be a final,
non-appealable order of a Governmental Entity of competent jurisdiction which
would have the effect of preventing the Closing.
9.2 EFFECT OF TERMINATION.
-----------------------
If this Agreement shall be terminated pursuant to Section 9.1, all
further obligations of the parties under this Agreement shall terminate without
further liability of any party to another; provided, that the obligations of the
parties contained in Section 12.8 shall survive any such termination. A
termination under Section 9.1 shall not relieve any party of any liability for a
breach of, or for any misrepresentation under, this Agreement or be deemed to
constitute a waiver of any available remedy (including specific performance if
available) for any such breach or misrepresentation.
9.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
----------------------------------------------
The representations and warranties contained in or made pursuant to
this Agreement shall survive the Closing Date.
ARTICLE 10
INDEMNIFICATION
10.1 OBLIGATIONS OF THE PARTIES.
-----------------------------
Each party hereto agrees to indemnify and hold harmless each other
party and their respective directors, officers, employees, Affiliates and agents
from and against any and all Losses, asserted against, resulting in, imposed
upon or incurred or suffered by, any of them, directly or indirectly, as a
result of, or based upon or arising from, any inaccuracy in or breach or
non-fulfillment of any of the representations, warranties or covenants or
agreements made by such party in or pursuant to this Agreement.
10.2 PROCEDURE.
---------
(A) NOTICE. Losses for or against which any party is entitled to
indemnification pursuant to this Article 10 resulting from the assertion of
liability by third parties are "Third Party Claims." Any party seeking
indemnification (an "Indemnified Party") with respect to Third Party Claims
shall give notice to the party required to provide indemnification (the
"Indemnifying Party") within 30 days of becoming aware of any such Third Party
Claim. The Indemnifying Party will promptly assume the defense thereof with
experienced counsel satisfactory to the Indemnified Party. Notwithstanding the
foregoing, the rights of any Indemnified Party to be indemnified in respect of
Third Party Claims shall not be adversely affected by the Indemnified Party's
failure to give notice unless (and then only to the extent that) the
Indemnifying Party is materially prejudiced thereby.
(B) DEFENSE. If the Indemnifying Party, within 20 days after
receipt of a notice of a Third Party Claim, fails to assume the defense of such
Indemnified Party against such Third Party Claim, the Indemnified Party shall
have the right to undertake the defense, compromise or settlement of the Third
Party Claim on behalf of and for the account and risk of the Indemnifying Party;
provided, however that no such settlement of a Third Party Claim shall be
effective unless the Indemnified Party shall give the Indemnifying Party 14 days
prior written notice of the terms and conditions of such settlement, and the
Indemnifying Party shall not have given notice to the Indemnified Party of its
objection in writing to the terms of such settlement within seven days of its
receipt of such notice.
(C) SETTLEMENT. Notwithstanding anything in this Section 10.2 to
the contrary, (i) if the Indemnified Party reasonably believes that a Third
Party Claim may materially and adversely affect the business or operations of
the Indemnified Party, other than as a result of money damages or other money
payments, such person shall have the right to defend, compromise or settle such
Third Party Claim, and (ii) the Indemnifying Party shall not, without the
written consent of the Indemnified Party, settle or compromise any Third Party
Claim or consent to entry of any judgment in respect thereof unless such
settlement, compromise or consent includes as an unconditional term thereof the
giving by the claimant or the plaintiff to the Indemnified Party a release from
all liability in respect of such Third Party Claim; provided, however that no
such settlement of a Third Party Claim shall be effective unless the Indemnified
Party shall give the Indemnifying Party 14 days prior written notice of the
terms and conditions of such settlement, and the Indemnifying Party shall not
have given notice to the Indemnified Party of its objection in writing to the
terms of such settlement within seven days of its receipt of such notice.
.. (D) LIMITATION. Notwithstanding anything to the contrary in this
Article 10, this Section relates only to the procedure for indemnifiable claims
that are Third Party Claims. Nothing herein shall be deemed to limit any
indemnifiable claim that is not a Third Party Claim.
10.3 SURVIVAL.
--------
This Article shall survive any termination of this Agreement. Any
matter as to which a claim has been asserted by notice to the other party that
is pending or unresolved at the end of any limitation period shall continue to
be covered by this Article until such matter is finally terminated or otherwise
resolved (subject to applicable statutes of limitations) by the parties and
settled under this Agreement and any amounts payable hereunder are finally
determined and paid.
ARTICLE 11
COVENANTS
11.1 COVENANTS OF VENDORS.
----------------------
Each Vendor covenants and agrees as follows:
(i) such Vendor shall hold, for its own account, the NME
Stock acquired by it hereunder for at least one year after it receives the NME
Stock from the Escrow Holder, or such longer period of time as may be required
by applicable law;
(ii) until the 1st (First) anniversary of the Closing Date,
such Vendor will not sell or otherwise transfer, assign or dispose of (A) more
than one-third of the shares of NME Stock acquired by such Vendor hereunder in
any consecutive 12-month period; (B) more than 15% of the shares of NME Stock
acquired by such Vendor hereunder during any calendar month; or (C) any shares
of NME Stock to any competitor of NME;
(iii) such Vendor will not enter into any agreement with any other
Vendor or holder of the capital stock of NME which provides that the Vendor
would vote in concert with such other holder on matters affecting NME or
E-World.
(iv) such Vendor will comply with all securities laws and
regulations applicable to it, including without limitation the securities laws
of the United States and the Rules and Regulations of the U.S. Securities and
Exchange Commission.
11.2 COVENANTS OF E-WORLD AND SEMILLA.
------------------------------------
Each of E-World and Semilla, severally and not jointly, covenants and
agrees as follows:
(i) it will maintain its corporate existence in good standing
under the laws of its jurisdiction of incorporation;
(ii) it will keep proper books of record and account in which
full and correct entries shall be made of all of its financial transactions in
accordance with generally accepted accounting principles;
(iii) it will pay or cause to be paid all Taxes, assessments
or other governmental charges levied upon any of its properties or assets, or in
respect of its income, before the same should become delinquent, unless the same
are contested in good faith and such contest does not require the payment of
such Taxes;
(iv) other than the Interim financing in Clause 8.1 in
Article 8, it will not enter into any agreement providing for the borrowing of
any money, or for the issuance of any note, debenture or other instrument
evidencing indebtedness, or any guaranty, indemnity or other surety of or for
the obligations of any other Person before the Closing Date;
(v) it will not sell, lease, assign, transfer, license or
otherwise dispose of any of its assets or properties whether now owned or
hereafter acquired, other than the sale of inventory in the ordinary course of
its business before the Closing Date;
(vi) it will not enter into any agreement to sell or
otherwise issue any of its capital stock, or any other of its securities,
including but not limited to any options to acquire the same, or seek to
increase its authorized capital stock before the Closing Date;
(vii) it will not consolidate with or merge into any other Person
or permit any other Person to merge into it, or acquire all or substantially all
of the assets or capital stock of any other Person before the Closing Date; and
(viii) it will operate its business only in the ordinary course consistent
with its past practices before the Closing Date.
11.3 COVENANTS OF NME.
-------------------
NME covenants and agrees as follows:
(i) it will promptly apply for listing of its common stock on
the NASDAQ SmallCap Market or any other recognized exchange and shall use its
commercially reasonable efforts to obtain approval of such application within
150 days following the Signing Date, or as soon thereafter as is reasonably
practicable; and subject to, and conditioned upon, the satisfaction of all
applicable initial listing requirements of such NASDAQ SmallCap Market or other
exchange, includingall financial and corporate governance requirements.
(ii) it shall invest E-World the sum of USD $8,500,000
through SEMILLA as per clause 8.2 in Article 8.
(iii) NME will file a resale registration statement on
appropriate form with the SEC in respect of the NME Common Shares within a
reasonable period following the Closing Date. NME will thereafter use
commercially reasonable efforts to have such registration statement declared
effective by the SEC.
ARTICLE 12
GENERAL
12.1 AMENDMENTS; WAIVERS.
--------------------
This Agreement and any schedule or exhibit attached hereto may be
amended only by agreement in writing of all parties. No waiver of any provision
or consent to any exception to the terms of this Agreement or any agreement
contemplated hereby shall be effective unless in writing and signed by the party
to be bound and then only to the specific purpose, extent, and instance so
provided.
12.2 EXHIBITS; SCHEDULES; INTEGRATION.
----------------------------------
Each exhibit and schedule delivered pursuant to the terms of this
Agreement shall be in writing and shall constitute a part of this Agreement,
although schedules need not be attached to each copy of this Agreement. All
references in this Agreement to schedules refer to schedules set forth in the
Disclosure Schedule as supplemented or amended from time to time. This
Agreement, together with such exhibits and schedules, constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements and understandings of the parties in connection
therewith.
12.3 COMMERCIALLY REASONABLE EFFORTS.
---------------------------------
Unless otherwise expressly required elsewhere in this Agreement, each party
shall use commercially reasonable efforts to cause all conditions to its
obligations hereunder to be timely satisfied and to perform and fulfill all of
its covenants and obligations under this Agreement. The parties shall cooperate
with each other in such actions and in securing all requisite Approvals required
to consummate and implement the transactions contemplated herein. Each party
shall execute and deliver both before and after the Closing such further
certificates, agreements and other documents and take such other actions as the
other parties may reasonably request to consummate and implement the
transactions contemplated hereby or to evidence such events or matters.
12.4 GOVERNING LAW; ARBITRATION.
----------------------------
(a) GOVERNING LAW. This Agreement and the legal relations between
the parties shall be governed by and construed in accordance with the laws of
the State of New York applicable to contracts made and performed in such State
and without regard to conflicts of law doctrines, except to the extent that
certain matters are preempted by federal law or are governed by the law of the
jurisdiction of organization or incorporation of the respective parties.
(b) ARBITRATION. Any claim or controversy arising out of or
relating to this Agreement shall be settled by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association in NYC
, New York and shall be brought in New York City , New York as the exclusive
jurisdiction for the hearing of such claim or controversy. Any judgment on the
award rendered by the arbitrators may be entered in any court having
jurisdiction. All parties shall use reasonable efforts to proceed with and
conclude as expeditiously as possible any arbitration proceedings pursuant
hereto.
12.5 ASSIGNMENT.
----------
Neither this Agreement nor any rights or obligations hereunder shall
be assignable by any party.
12.6 HEADINGS.
--------
The descriptive headings of the articles, sections, and subsections of
this Agreement are for convenience only and do not constitute a part of this
Agreement.
12.7 COUNTERPARTS.
------------
This Agreement and any amendment hereto or any other agreement (or
document) delivered pursuant hereto may be executed in one or more counterparts
and by different parties in separate counterparts. All of such counterparts
shall constitute one and the same agreement (or other document) and shall become
effective (unless otherwise therein provided) when one or more counterparts have
been signed by each party and delivered to the other party.
12.8 CONFIDENTIALITY.
---------------
All information disclosed by any party (or its (or their)
representatives) whether before or after the date hereof, in connection with the
transactions contemplated by, or the discussions and negotiations preceding,
this Agreement to any other party (or its (or their) representatives) shall be
kept confidential by such other party and its representatives and shall not be
used by any Persons other than as contemplated by this Agreement for a period of
three years following the Closing Date, except to the extent that such
information (i) may otherwise be required by law or (ii) to the extent such duty
as to confidentiality is waived in writing by the other party. If this
Agreement is terminated in accordance with its terms, each party shall use all
reasonable efforts to return upon written request from the other party all
documents (and reproductions thereof) received by it or its representatives from
such other party (and, in the case of reproductions, all such reproductions made
by the receiving party) that include information not within the exceptions
contained in the first sentence of this Section 12.8.
12.9 PARTIES IN INTEREST.
---------------------
This Agreement shall be binding upon and inure to the benefit of each
party, and nothing in this Agreement, express or implied, is intended to confer
upon any other person any rights or remedies of any nature whatsoever under or
by reason of this Agreement. Nothing in this Agreement is intended to relieve
or discharge the obligation of any third person to any party to this Agreement.
12.10 NOTICES.
--------
Any notice or other communication hereunder must be given in writing
and either (a) delivered in person, (b) transmitted by telex, facsimile
transmission, or telecommunications mechanism, or (c) deposited in the mail,
postage prepaid, as follows:
IF TO NME, ADDRESSED TO:
New Medium Enterprise Inc.
000 Xxx Xxxx
Xxxxx
Xxxxxx X0 0XX
Xxxxxx Xxxxxxx
Telephone: 000 0000 0000
Facsimile: 020 8749 8025
IF TO E-WORLD, ADDRESSED TO:
Beijing E-World Technology Co Ltd
Xxxxxxx Xxxxx X-X0
000X Xxxxxxxxxxx Xxxxxx
Xxxxxxx 000000
Xxxxx
Telephone: 00 00 00 00000000-0000
Facsimile: 00 86 10 88016791
IF TO SEMILLA, ADDRESSED TO:
Xxxx 000
0/X
Xxxxxxxx Industrial Xxxxxxxxxx Xxxxxxxx
00-00 Xxxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Telephone:
Facsimile:
IF TO THE VENDORS, ADDRESSED TO:
The addresses listed with their respective names on the signature pages hereto
or to such other address or to such other person as any party shall have last
designated by such notice to the other parties. Each such notice or their
communication shall be effective (i) if given by telecommunication, 12 hours
after transmission to the applicable number so specified in (or pursuant to)
this Section 12.10; (ii) if given by e-mail 72 HOURS AND BY TRADITIONAL POST 10
WORKING DAYS after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (iii) if given by any other means,
when actually delivered to such address.
12.11 EXPENSES.
--------
Each party hereto shall pay its own expenses incident to the
negotiation, preparation and performance of this Agreement and the transactions
contemplated hereby, including but not limited to the fees, expenses, and
disbursements of its investment bankers, accountants, and counsel and of
securing third party consents and approvals required to be obtained by it.
E-World will pay expenses related the Trade finance which specifically
will be as per the Term sheet which forms part of this agreement.
12.12 REMEDIES; WAIVER.
-----------------
To the extent permitted by law, all rights and remedies existing under
this Agreement and any related agreements or documents are cumulative to, and
not exclusive of, any rights or remedies otherwise available under applicable
law. No failure on the part of any party to exercise, or delay in exercising,
any right hereunder shall be deemed a waiver thereof, nor shall any single or
partial exercise preclude any further or other exercise of such or any other
right.
12.13 ATTORNEYS' FEES.
-----------------
In the event of any Action for the breach of this Agreement or
misrepresentation by any party, the prevailing party shall be entitled to
recover from the opposing party reasonable attorneys' fees, costs, and expenses
incurred in such Action.
12.14 REPRESENTATION BY COUNSEL; INTERPRETATION.
--------------------------------------------
The parties hereto each acknowledge that it has been represented by
counsel in connection with this Agreement and the transactions contemplated by
this Agreement. Accordingly, any rule of law, or any legal decision that would
require interpretation of any claimed ambiguities in this Agreement against the
party that drafted it, has no application and is expressly waived. The
provisions of this Agreement shall be interpreted in a reasonable manner to
effect the intent of the parties hereto.
12.15 SPECIFIC PERFORMANCE.
---------------------
The parties hereto each acknowledge that, in view of the uniqueness
of the Stock and the transactions contemplated by this Agreement, the other
party would not have an adequate remedy at law for money damages in the event
that this Agreement has not been performed in accordance with its terms. Each
party therefore agrees that the other parties shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which it may
be entitled, at law or in equity.
12.16 SEVERABILITY.
------------
If any provision of this Agreement is determined to be invalid,
illegal, or unenforceable, the remaining provisions of this Agreement shall
remain in full force and effect provided that the economic and legal substance
of the transactions contemplated is not affected in any manner materially
adverse to any party. In the event of any such determination, the parties agree
to negotiate in good faith to modify this Agreement to
fulfill as closely as possible the original intent and purpose hereof. To the
extent permitted by law, the parties hereby to the same extent waive any
provision of law that renders any provision hereof prohibited or unenforceable
in any respect.
12.17 FURTHER DUE DILIGENCE INVESTIGATIONS .
---------------------------------------
All due diligence investigations and examinations will be undertaken by NME and
its attorneys, accountants, agents and representatives in respect of the
proposed listing of the joint companies pursuant to this transaction.
12.18 FURTHER APPROVED ACTIONS.
---------------------------
All actions, proceedings, instruments and documents in connection with the
contemplated and proposed listing shall have been approved in form and substance
by counsel of NME.
12.19 OFFICIAL VERSION.
-----------------
In the event that one or more parties translates this Agreement, the
exhibits hereto, or any other documents, certificates, agreements or other
writings contemplated hereby or thereby into other languages for the sake of
convenience, the English language version of all such writings shall for all
purposes be deemed to be the official version of such writing.
13. EXTENSION
NME will work toward closing in 150 days from signing. However should
the listing be delayed for regulatory reasons or force majeure, such delays will
be regarding by both parties as acceptable as long as evidence of such delay is
communicated to E-World.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Acquisition Agreement to be executed by its duly authorized officers as of the
day and year first above written.
NME
New Medium Enterprises Inc.
By: ____________________________
Title: ____________________________
Chief Executive Office Xxxxxx Xxxxxxxxxxx
E-WORLD
Beijing E-World Technology Co Ltd
By: ____________________________
Title: Chief Executive Officer
SEMILLA
Semilla BVI
By: _____________________________
Title: Director _____________________
[SIGNATURES CONTINUED ON NEXT PAGE]
VENDOR(S):
SEMILLA CAPITAL BVI
Name: ___________________________
Address: __________________________
_________________________________
Telephone ________________________
Facsimile _________________________
Ratio of shares held: ________________
VENDOR(S):
BEIJING E- WORLD DIGITAL TECHNOLOGIES LTD
1. Name: ___________________________
Address: __________________________
_________________________________
Telephone ________________________
Facsimile _________________________
Ratio of shares held: ________________
2Name: ___________________________
Address: __________________________
_________________________________
Telephone ________________________
Facsimile _________________________
Ratio of shares held: ________________
..3. Name: ___________________________
Address: __________________________
_________________________________
Telephone ________________________
Facsimile _________________________
Ratio of shares held: ________________
4. Name: ___________________________
Address: __________________________
_________________________________
Telephone ________________________
Facsimile _________________________
Ratio of shares held: ________________
