Exhibit 10.5
ACQUISITION AGREEMENT
This Acquisition Agreement (this "Agreement"), dated as of August 15, 2000, is
entered into by and between New Medium Enterprises, Inc, a Nevada corporation
("NME"), and Stratagram Technology Group Inc, a Nevada Corporation ("STGI").
Whereas, STGI owns all of the assets and rights of Broadeo Wireless
Communications Assets hereinafter referred to as ("BWC Assets").
Whereas, the Boards of Directors of NME and STGI each have, in light of and
subject to the terms and conditions set forth herein, (i) determined that the
Acquisition of Broadeo Wireless Assets, "BWC ASSETS" by NME (as defined below)
is fair to their respective stockholders and in the best interests of such
stockholders and (ii) approved the Acquisition in accordance with this
Agreement;
Whereas, NME and STGI desire to make certain representations, warranties,
covenants and agreements in connection with the Acquisition by NME of "BWC
ASSETS" and also to prescribe various conditions to the Acquisition.
Now, therefore, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, NME and STGI hereby agree as follows:
ARTICLE I The Acquisition
Section 1.1. The Acquisition. At the Closing Time (as defined below) and upon
the terms and subject to the conditions of this Agreement NME shall acquire 100%
of the Assets of "BWC ASSETS" (as defined below) (the "Acquisition").
Section 1.2. Closing of the Acquisition. The closing of the Acquisition (the
"Closing") will take place at a time and on a date to be specified by the
parties, which shall be no later than the second business day after satisfaction
of the latest occurrence of the conditions set forth in Article 5 (the "Closing
Date"), at the offices of NME unless another time, date or place is agreed to in
writing by the parties hereto.
Section 1.3. Terms of the Transaction:
A. Acquisition of "BWC ASSETS":
STGI Shall deliver to NME 100% of the intellectual property and business plan
assets, sketches, drawings, prototypes, designs, system specifications,
conceptual drawings, etc. of "BWC ASSETS" and its broadband multimedia concept
("The BWC System").
B. Issuance of Warrants to STGI for purchase shares of NME:
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(a) NME shall deliver to STGI warrants of NME to purchase 500,000 common
shares of NME exercisable at $1.00 per share and warrants of NME to
purchase 500,000 common shares of NME exercisable at $1.50 per share.
The exercise of warrants shall be subject to a lockup period as
follows: 25% of warrants shall be exercisable anytime after 60 days
following the . effectiveness of the Registration Statement, 25% of
warrants shall be exercisable anytime after 90 days following the
effectiveness of the Registration Statement 25% of warrants shall be
exercisable anytime after 120 days following the . effectiveness of
the Registration Statement 25% of warrants shall be exercisable
anytime after 150 days following the . effectiveness of the
Registration Statement. Notwithstanding the aforementioned, at no time
shall STGI permitted to exercise such number of warrants that would
result in a number of shares issued to STGI that would exceed 15% of
the dollar amount traded in the five trading days prior to the date of
such exercise. NME may waive part or all of the lockup provisions
stated herein.
(b) Warrants shall be valid for a period of three years from the date of
the effectiveness of the Registration Statement.
(c) NME will register with the SEC 1,000,000 common shares underlying the
warrants.
C. STGI Equity in Broadeo.
(a) NME shall cause the organization of Broadeo Wireless Communications,
Inc. (BWCI) as a separate corporation, under the Laws of Nevada, to
develop The BWC System.
(b) NME shall name three officers and directors. STGI shall name one
officer and no directors.
(c) Broadeo Wireless Communications Inc. (BWCI) shall authorize
100,000,000 shares. Out of the authorized shares BWCI shall issue a
total of 10,000,000 shares of which NME shall own 9,500,000 and STGI
shall own 500,000 shares.
ARTICLE 2
Representations and Warranties of NME.
NME hereby represents and warrants to
STGI as follows:
Section 2.1. Organization and Qualification. NME is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has all requisite power and authority to own,
lease and operate its properties and to carry on its businesses as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not have a Material Adverse
Effect (as defined below) on NME.
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Section 2.2 Authority Relative to this Agreement. NME has all necessary
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of NME (the "NME
Board") and no other corporate proceedings on the part of NME are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by NME and
constitutes a valid, legal and binding agreement of NME, enforceable against NME
in accordance with its terms.
Neither the execution, delivery and/or performance of this Agreement by NME nor
the consummation by NME of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
Certificate of Incorporation or Bylaws.
Section 2.3. No Default. NME is not in breach, default or violation (and no
event has occurred which with notice or the lapse of time or both would
constitute a breach default or violation) of any term, condition or provision of
(i) its Certificate of Incorporation or Bylaws (or similar governing documents).
Section 2.4. Litigation. NME has no suit, claim, action, proceeding or
investigation pending or, to the knowledge of NME, threatened against NME or any
of its subsidiaries or any of their respective properties or assets before any
Governmental Entity. Except as disclosed herein, NME is not subject to any
outstanding order, writ, injunction or decree.
Section 2. 5 Disclosure. No representation or warranty of NME in this Agreement
or any certificate, schedule, document or other instrument furnished or to be
furnished to STGI pursuant hereto or in connection herewith contains, as of the
date of such representation, warranty or instrument, or will contain any untrue
statement of a material fact or, at the date thereof, omits or will omit to
state a material fact necessary to make any statement herein or therein, in
light of the circumstances under which such statement is or will be made, not
misleading.
ARTICLE 3
Representations and Warranties of STGI
Except as set forth on the Disclosure Schedule delivered by STGI to NME (the
"STGI Disclosure Schedule"), STGI hereby represents and warrants to NME as
follows:
Section 3.1. Authority Relative to this Agreement;
(a) STGI has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by The Board of Directors of STGI (the "STGI
Board"), and no other corporate proceedings on the part of STGI are
necessary to authorize this Agreement or to consummate the
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transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by STGI and constitutes a valid, legal
and binding agreement of STGI, enforceable against STGI in accordance
with its terms.
(b) The STGI Board has resolved to approve and adopt this Agreement.
Neither the execution, delivery and performance of this Agreement by
STGI nor the consummation by STGI of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision
of the respective Certificate of Incorporation or Bylaws (ii) result
in a violation or breach or constitute a default under, any instrument
or obligation to which STGI or any of STGI subsidiaries is a party or
by which any of them or any of their respective properties or assets
may be bound or including the "BWC ASSETS".
Section 3.2 No Default. None of STGI or any of its subsidiaries is in breach,
default or violation (and no event has occurred which with notice or the lapse
of time or both would constitute a breach, default or violation) of any term,
condition or provision of (i) its Certificate of Incorporation or Bylaws (or
similar governing documents), (ii) any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which STGI or
any of its subsidiaries, including the "BWC ASSETS" assets, is now a party or by
which any of them or any of their respective properties or assets may be bound
or (iii) any order, writ, injunction, decree, law, statute, rule or regulation
applicable to STGI, its subsidiaries or any of their respective properties or
assets. Each note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which STGI or any of its
subsidiaries is now a party or by which any of them or any of their respective
properties or assets including the assets of "BWC ASSETS" may be bound .and that
has not expired is in full force and effect and is not subject to any default
thereunder of which STGI is aware by any party obligated to STGI or any
subsidiary thereunder.
Section 3.3 Litigation. . There is no suit, claim, action, proceeding or
investigation pending, or, ., threatened against STGI or any of its subsidiaries
or any of their respective properties or assets further, none of STGI or its
subsidiaries is subject to any outstanding order, writ, injunction or decree.
Section 3.4 Title to Property. STGI has defensible title to all of "BWC ASSETS"
assets, free and clear of all liens, charges and encumbrances except liens for
taxes not yet due and payable and such liens or other imperfections of title, if
any, as do not materially detract from the value of or interfere with the
present use of the property affected thereby.
Section 3.5 Intellectual Property.
(a) STGI possesses adequate licenses or other valid rights to use, all existing
United States and foreign patents, trademarks, trade names, services marks,
copyrights, trade secrets, and applications therefore that are material to
the assets of "BWC ASSETS" as currently conducted.
(b) The validity of the "BWC ASSETS" Property Rights and the title thereto by
STGI or any subsidiary, as the case may be, is not being questioned in any
litigation to which STGI or any subsidiary is a party.
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(c) Each of STGI and its subsidiaries has taken steps it believes appropriate
to protect and maintain its trade secrets as such, except in cases where
STGI has elected to rely on patent or copyright protection in lieu of trade
secret protection. STGI hereby provides full descriptions of all of its
patents as filed with the PTO.
Section 3.6 Vote Required. The affirmative vote of the holders of the
outstanding STGI Shares is the only vote of the holders of any class or series
of STGI capital stock necessary to approve and adopt this Agreement and the
Acquisition.
Section 3.7 Insider Interests. No officer or director of STGI has any interest
in any material property, real or personal, tangible or intangible, including
without limitation, any computer software or STGI Intellectual Property Rights,
used in or pertaining to the "BWC ASSETS", other than
Section 3.8. Opinion of Financial Adviser. STGI management has determined,
without the advise of an outside Financial Adviser, to the effect that, as of
such date the exchange ratio contemplated by the Acquisition is fair to the
holders of STGI Shares.
Section 3.9 Disclosure. No representation or warranty of STGI in this Agreement
or any certificate, schedule, document or other instrument furnished or to be
furnished to NME pursuant hereto or in connection herewith contains, as of the
date of such representation, warranty or instrument, or will contain any untrue
statement of a material fact or, at the date thereof, omits or will omit to
state a material fact necessary to make any statement herein or therein, in
light of the circumstances under which such statement is or will be made, not
misleading.
Section 3.10 No Existing Discussions. As of the date hereof, STGI is not
engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to any Third Party Acquisition.
Section 3.11. Material Assets:
STGI has delivered or otherwise made available to NME true, correct and complete
copies of all, product design and development plans as described in Appendix A.
Section 3.12 Non-Compete STGI hereby agrees not to compete directly or
indirectly in any venture or endeavor in the wireless communication sector, and
not to disclose any of its trade secrets, intellectual properties, business
plans, concepts, sketches etc. to any outside parties.
ARTICLE 4
Section 4.1. Other Potential Acquirers. STGI, its affiliates and their
respective officers, directors, employees, representatives and agents shall
immediately cease any existing discussions or negotiations, if any, with any
parties conducted heretofore with respect to any Third Party Acquisition.
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Section 4.2. Meetings of Stockholders. Each of STGI and NME shall take all
action necessary, in accordance with the respective General Corporation Law of
its respective state, and its respective certificate of incorporation and
bylaws, to duly call, give notice of, convene and hold a meeting of its
stockholders as promptly as practicable, to consider and vote upon the adoption
and approval of this Agreement and the transactions contemplated hereby. The
stockholder votes required for the adoption and approval of the transactions
contemplated by this Agreement shall be the vote required by their respective
charters and bylaws and STGI will, through its respective Board of Directors,
recommend to its respective stockholders approval of such matters.
Section 4.3. Registration. NME shall use all reasonable efforts to cause the
shares issued in the Acquisition which underlie the warrants, to be to be
registered pursuant to the Securities Act of 1933.
Section 4.4. Confidentiality:
NME will hold and will cause its consultants and advisers to hold in confidence
all documents and information furnished to it in connection with the
transactions contemplated by this Agreement.
ARTICLE 5
Conditions to Consummation of the Acquisition
Section 5.1. Conditions to Each Party's Obligations to Effect the Acquisition.
The respective obligations of each party hereto to effect the Acquisition are
subject to the satisfaction at or prior to the Closing Time of the following
conditions:
(a) This Agreement shall have been approved and adopted by the requisite vote
of the stockholders of STGI
(b) This Agreement shall have been approved and adopted by the Board of
Directors of NME and STGI;
Section 5.2. Conditions to the Obligations of NME. The obligation of NME to
effect the Acquisition is subject to the satisfaction at or prior to the Closing
Time of the following conditions:
(a) All representations of STGI contained in this Agreement or in any other
document delivered pursuant hereto shall be true and correct.
(b) Each of the covenants and obligations of STGI to be performed at or before
the Closing Time pursuant to the terms of this Agreement shall have been
duly performed in all material respects at or before the Closing Time. STGI
shall have delivered to NME a certificate to that effect.
(c) STGI shall have obtained the consent or approval of each person whose
consent or approval shall be required in order to permit the succession by
NME pursuant to the Acquisition to any obligation, right or interest of
"BWC ASSETS" under any loan or credit agreement, note, mortgage, indenture,
lease or other agreement or instrument,
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(d) There shall have been no events, changes or effects with respect to "BWC
ASSETS".
Section 5.3. Conditions to the Obligations of STGI. The respective obligations
of STGI to effect the Acquisition are subject to the satisfaction at or prior to
the Closing Time of the following conditions:
(a) Each of the covenants and obligations of NME to be performed at or
before the Closing Time pursuant to the terms of this Agreement shall
have been duly performed in all material respects at or before the
Closing Time and at the Closing NME shall have delivered to STGI a
certificate to that effect
ARTICLE 6
Termination; Amendment; Waiver
Section 6.1. Termination. This Agreement may be terminated and the Acquisition
may be abandoned at any time prior to the Closing Time, whether before or after
approval and adoption of this Agreement by STGI's stockholders:
(a) By mutual written consent of NME and STGI;
(b) By NME if (i) there shall have been a breach of any representation or
warranty on the part of STGI set forth in this Agreement, or if any
representation or warranty of STGI shall have become untrue, in either
case such that the conditions set forth in Section 5.2(a) would be
incapable of being satisfied by August 31, 2000..(or as otherwise
extended), (ii) there shall have been a breach by STGI of any of their
respective covenants or agreements hereunder having an Adverse Effect
on STGI and or "BWC ASSETS" or adversely affecting (or materially
delaying) the consummation of the Acquisition, and STGI, as the case
may be, has not cured such breach within 20 business days after notice
by NME thereof, provided that NME has not breached any of its
obligations hereunder;
(c) By STGI if (i) there shall have been a breach of any representation or
warranty on the part of NME set forth in this Agreement, or if any
representation or warranty of NME shall have become untrue, in either
case such that the conditions set forth in Section 5.3(a) would be
incapable of being satisfied by August 31, 2000.(or as otherwise
extended), (ii) there shall have been a breach by NME of its covenants
or agreements hereunder having a Material Adverse Effect on NME.
Section 6.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party hereto or its affiliates, directors, officers or stockholders, other
than the provisions of this Section 6.2 hereof. Nothing contained in this
Section 6.2 shall relieve any party from liability for any breach of this
Agreement.
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Section 6.3. Fees and Expenses. Each party shall bear its own expenses in
connection with this Agreement and the transactions contemplated hereby.
Section 6.4. Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of the parties hereto.
ARTICLE 7
Miscellaneous
Section 7.1 Entire Agreement; Assignment. This Agreement (a) constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements and understandings both written
and oral, between the parties with respect to the subject matter hereof.
Section 7.2 Validity. If any provision of this Agreement, or the application
thereof to any person or circumstance, is held invalid or unenforceable, the
remainder of this Agreement, and the application of such provision to other
persons or circumstances, shall not be affected thereby, and to such end, the
provisions of this Agreement are agreed to be severable.
Section 73. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by facsimile
or by registered or certified mail (postage prepaid, return receipt requested),
to each other party as follows:
If to STGI: Xxxxx Xxxxxxx
EVP
Stratagram Technology Group Inc.
0000 Xxxxxx X
Xxxxxxxx XX 00000-0000
If to NME: Xxxxx Xxxxxxxx
President
New Medium Enterprises Inc.
0000 00xx Xxxxxx
Xxxxxxxx XX 00000
Or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 7.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
principles of conflicts of law thereof.
Section 7.5 Descriptive Headings. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
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Section 7.6 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and its successors and permitted
assigns, nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.
Section 7.8 Specific Performance. The parties hereby acknowledge and agree that
the failure of any party to perform its agreements and covenants hereunder,
including its failure to take all actions as are necessary on its part to the
consummation of the Acquisition, will cause irreparable injury to the other
parties for which damages, even if available, will not be an adequate remedy.
Accordingly, each party hereby consents to the issuance of injunctive relief by
any court of competent jurisdiction to compel performance of such party's
obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder
Section 7.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
In Witness Whereof, each of the parties has caused this Agreement to be duly
executed on its behalf as of the day and year first above written.
New Medium Enterprises, Inc.
_________________________________ Dated: August 15, 2000
Xxxxx Xxxxxxxx, CEO
Stratagram Technology Group, Inc.
_________________________________ Dated: August 15, 2000
Xxxxx Xxxxxxx, Executive V.P.
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Appendix A
Attached material Assets: Confidential technology and business plans
CONFIDENTIAL
Appendix A - Broadeo Wireless Communications Assets
Section 3.11 MATERIAL ASSETS
Confidential Business and Technology plans
The following plans constitute the Broadeo Wireless Communications Assets (BWCA)
pursuant to the Acquisition Agreement to which this document is appended:
1. Technology
a. The Multipoint to multipoint network design which offers the following
benefits for a fixed wireless network:
i. Conforms to the "line of sight" requirement of high frequency
transmissions.
ii. Reduces the size, power and cost of the CPE (consumer premise
equipment).
iii. Reduces microwave radiation levels for residential equipment.
iv. Reduces the required number of powerful base station.
v. Increases the number of cells and multiplies the total data
throughput per area.
b. The application of the following technology concepts to potentially
increase the total bandwidth available within each cell and to improve
system and cost efficiencies. These technologies were researched by
STGI as a solution for cost and bandwidth improvements but are not
proprietary to STGI or Broadeo. Future specific hardware or software
designs for these systems may be patentable.
i. Spread Spectrum - allows borrowing of unused spectrum to support
crowded channels.
ii. High modulation schemes (64-256QAM vs. QPSK or 16QAM) - increase
data rate and capacity but may increase SNR Signal Noise Ratio
and Signal to Interference C/I Ratio.
iii. Sectorized Transceivers - transmit a directionally focused signal
dividing their cell circumference into multiple channels, which
can each reuse the entire frequency range. An antenna with
20-degree sectors can multiply its total capacity by providing
the maximum signal bandwidth to each of the 18 sectors.
iv. Vertical and Horizontal Polarization - separate signals occupying
the full frequency range can be polarized and transmitted over
perpendicular plates.
v. Array Broadcasting - Using a close array of antennas to channel a
signal into directional beams, which can each carry the full
bandwidth. Results are similar to using sectorized antennas but
this technology offers greater control of directional channeling.
(Array Com)
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vi. Multiplexing - W-OFDM (Wideband Orthogonal Frequency Division
Multiplexing) (Wi-Lan)
vii. MC-DSSS (Multi-Code Direct Sequence Spread Spectrum) (wi-lan)
c. The following infrastructure hardware
i. The Broadband Multimedia Gateway - a line of intelligent "active
network" servers, switches and gateways utilizing IPv6 and other
protocol enhancements to enable delivery of integrated multimedia
(data, voice, video) content and services. This line will consist
of multimedia IP "jukeboxes" for internal deployment (in Hotels,
Universities, Cruise ships etc.), carrier-class broadband
multimedia gateways to enable delivery across multiple broadband
channels and multimedia IP storage server, which are designed to
out perform conventional storage servers.
d. The following consumer premises equipment (CPE) and end-user interface
concepts
i. The "Home Server" - a server designed to allow multiple users to
simultaneously control and retrieve various broadband media
resources.
ii. "Virtual Appliances" - media control units designed to simulate
the convenient user interfaces already on the market. These
include remote control units, "virtual" sound systems, "virtual"
VCRs, telephone units etc.
iii. Integration of the following third party interfaces: Singularis,
OpenTv and ACTV
e. Guidance on the specification requirements of MTU (multi tenant units)
and client interface network switches, routers and other equipment
(i.e. BlueTooth).
f. Guidance on defining protocols for security, billing and multimedia
control.
g. Guidance on specification requirement and system design for user
interface hardware and software and for I/O and control mechanisms.
2. Business
a. The trade name Broadeo
b. The Broadband Multimedia Service (BMS) business model which STGI
designed as the evolutionary successor of today's telecom services.
The BMS system is structured as a convergence of Cable TV, Telephone
and Internet access services. The BMS system is a service designed to
generate revenues from monthly subscription fees based on bandwidth
allocation and fees for Video On Demand.
c. Guidance on further developing the business model of The Venture and
in seeking strategic alliances with Media, software, hardware and
telecom companies.
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d. Xxxxxxx.xxx, the domain name and the website.
Components of Broadeo's Broadband Media Service platform
[CHART]
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