UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported): July 21, 2008
LEGEND
MEDIA, INC.
(Exact
name of Registrant as specified in its charter)
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Nevada
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333-138479
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87-0602435
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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9663
Santa Monica Blvd. #952
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Beverly
Hills, CA
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90210
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(310)
933-6050
(Registrant's
telephone number, including area code)
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(Former
Name or Former Address, if Changed Since Last
Report)
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General
Instruction A.2. below):
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
2.01 Completion
of Acquisition or Disposition of Assets.
On
July
21, 2008, Legend Media, Inc. (the "Company") closed a transaction pursuant
to
which Well Chance Investments Limited, its wholly-owned subsidiary and a British
Virgin Islands company (the "Purchaser"), purchased (the "Purchase") 100% of
the
common stock of News Radio Limited, a British Virgin Islands company (the
"Target"). The transaction occurred pursuant to the terms of a Share Purchase
Agreement (the "Purchase Agreement") that the Company entered into on June
4,
2008 with the Purchaser and all of the shareholders of the Target (the
"Sellers") as previously disclosed in the Company's Current Report on Form
8-K
filed on June 6, 2008.
At
the
closing of the Purchase, the Purchaser delivered to the Sellers shares of the
Company's common stock, par value $0.001 per share (the "Common Stock"), with
an
aggregate value of 2,000,000 Chinese Renminbi ("RMB") (approximately $287,728
based on the currency exchange rate on June 5, 2008) based on the weighted
average trading price of the Common Stock for the 30 trading days immediately
before June 4, 2008 (67,388 shares). In addition, (i) within 28 days after
closing of the Purchase, the Purchaser is obligated to deliver RMB 5,250,000
(approximately $755,287 based on the currency exchange rate on June 5, 2008)
to
an account of the Sellers' designation and (ii) within 90 days after closing
of
the Purchase, the Purchaser is obligated to deliver RMB 1,600,000 (approximately
$230,182 based on the currency exchange rate on June 5, 2008) to an account
of
the Sellers' designation.
In
addition, the Sellers will receive additional, performance-based consideration
within 30 days of year-end 2008, 2009 and 2010 based on the net revenues and
net
income for such periods of Beijing Maihesi Advertising International Co., Ltd.,
a company limited by shares, organized in the People’s Republic of China and
wholly-owned by the Sellers (the "Advertising Entity"), as follows: (a) if
for
the seven-month period ending December 31, 2008, net revenues equal or exceed
90% of RMB 12,000,000 and net income equals or exceeds RMB 0, the Sellers will
receive shares of the Company’s common stock with an aggregate value of RMB
2,500,000 (approximately $359,660 based on the currency exchange rate on June
5,
2008) with a price per share equal to the weighted average trading price for
the
30 trading days immediately prior to the date such amount becomes payable;
(b)
if for the 12-month period ending December 31, 2009, net revenues equal or
exceed 80% of RMB 30,000,000 and net income equals or exceeds RMB 6,000,000,
the
Sellers will receive RMB 4,000,000 (approximately $575,457 based on the currency
exchange rate on June 5, 2008) in the form of cash, the number of shares of
the
Company’s common stock as determined by a price per share equal to the weighted
average trading price for the 30 trading days immediately prior to the date
such
amount becomes payable, or a combination of the two, at the election of the
Sellers; and (c) if for the 12-month period ending December 31, 2010, net
revenues equal or exceed 80% of RMB 34,000,000 and net income equals or exceeds
RMB 8,000,000, the Sellers will receive RMB 8,000,000 (approximately $1,150,914
based on the currency exchange rate on June 5, 2008) in the form of cash, the
number of shares of the Company’s common stock as determined by a price per
share equal to the weighted average trading price for the 30 trading days
immediately prior to the date such amount becomes payable, or a combination
of
the two, at the election of the Sellers. Pursuant to the terms of the Purchase
Agreement, the Purchaser and the Sellers will mutually select an impartial
auditor to audit and determine, according to U.S. generally accepted accounting
principles, the Advertising Entity's net revenues and net income for the
relevant time-periods.
After
the
closing of the Purchase, the Company became the indirect beneficiary of several
agreements entered into by the Company's affiliates.
In
connection with the closing of the Purchase, CRI News Radio Limited, a Hong
Kong
company wholly owned by the Target, through its subsidiary, a company organized
in the People's Republic of China, Legend Media (Beijing) Information and
Technology Co., Ltd. (the "Consulting Entity"), entered into an Exclusive
Technical, Operational, Business Consulting and Services Agreement (the "Service
Agreement") with the Advertising Entity and the Sellers pursuant to which the
Consulting Entity became the exclusive provider of technical, operational,
business consulting and other services to the Advertising Entity in exchange
for
a service fee and bonus as described in more detail in the Service Agreement.
The term of the Service Agreement is 10 years with an automatic renewal for
another 10-year term unless a party provides written notice that it does not
wish to renew the Service Agreement. The Advertising Entity agreed to several
important covenants in the Service Agreement, including (but not limited to),
agreeing not to appoint any member of the Advertising Entity's senior management
without the Consulting Entity's consent and to grant the Consulting Entity
certain informational rights. In addition, in the Service Agreement, each of
the
Sellers: (a) pledged his 100% equity interest in the Advertising Entity to
the
Consulting Entity as a guarantee of the Advertising Entity's fulfillment of
its
obligations under the Service Agreement; (b) granted to the Consulting Entity
or
its designee an option to purchase any or all of his equity interest in the
Advertising Entity at nominal value; and (c) agreed not to dispose of or
encumber any of his equity interest in the Advertising Entity without the
Consulting Entity's prior written consent.
The
Consulting Entity also entered into an Operating Agreement (the "Operating
Agreement") with the Advertising Entity and the Sellers to secure the
performance of the parties' obligations under the Service Agreement. Pursuant
to
the terms of the Operating Agreement: (a) the Advertising Entity and the Sellers
agreed not to cause the Advertising Entity to, conduct any transactions which
may have a material adverse effect on the Advertising Entity's assets,
obligations, rights or operations without the Consulting Entity's prior written
consent; (b) the Advertising Entity and the Sellers granted the Consulting
Entity certain informational rights; (c) the Advertising Entity and the Sellers
agreed to submit the Advertising Entity's annual budget and monthly cash
requirement plans to the Consulting Entity for approval, obtain the Consulting
Entity's approval for withdrawals from the Advertising Entity's bank accounts,
and accept corporate policies and guidance from the Consulting Entity with
respect to the appointment and dismissal of senior management, daily operations
and management and financial administrative systems; (d) the Advertising Entity
and the Sellers agreed to appoint or cause to be appointed the individuals
nominated by the Consulting Entity to become directors, general manager, chief
financial officer or other senior management of the Advertising Entity; and
(e)
the Sellers unilaterally entered into Authorization Agreements (the
"Authorization Agreements") pursuant to which each of the Sellers authorized
Jeffrey Dash, the Company's Chief Executive Officer, to exercise such Sellers'
voting rights with respect to shares of the Advertising Entity at the Adverting
Entity's shareholders' meeting. The term of the Operating Agreement is 10 years
with an automatic renewal for another 10-year term unless a party provides
written notice that it does not wish to renew the Service Agreement. The term
of
each of the Authorization Agreements is 10 years but it terminates automatically
upon the earlier termination of the Service Agreement.
The
foregoing descriptions of the Purchase Agreement, the Service Agreement, and
the
Operating Agreement, copies of which are filed as Exhibits 10.1, 10.2, and
10.3
hereto, respectively, and the Authorization Agreements, copies of which are
filed hereto as Exhibits 10.4 and 10.5, are qualified in their entirety by
reference to the complete documents and are incorporated herein by
reference.
Item
8.01 Other
Events.
On
July
21, 2008, the Company issued a press release announcing the closing of the
Purchase and the related transactions. A copy of the press release is furnished
as Exhibit 99.1 to this Current Report on Form 8-K.
The
information contained in this Item 8.01 shall not be deemed "filed" for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), nor shall it be deemed incorporated by reference in any filing under
the
Exchange Act, except as shall be expressly set forth by specific reference
in
such filing.
Item
9.01 Financial
Statements and Exhibits.
(d)
Exhibits.
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Exhibit
#
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Description
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10.1*
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Share
Purchase Agreement, dated as of June 4, 2008, among Legend Media,
Inc.,
Well Chance Investments Limited, Ju Baochun and Xue Wei
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10.2
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Exclusive
Technical, Operational, Business Consulting and Services Agreement,
dated
as of July 3, 2008, by and among Legend Media (Beijing) Information
and
Technology Co., Ltd., Beijing Maihesi Advertising International Co.,
Ltd.,
Ju Baochun and Xue Wei
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10.3
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Operating
Agreement, dated as of July 3, 2008, by and among Legend Media (Beijing)
Information and Technology Co., Ltd., Beijing Maihesi Advertising
International Co., Ltd., Ju Baochun and Xue Wei
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10.4
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Authorization
Agreement, dated as of July 3, 2008, between Xue Wei and Jeffrey
Dash
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10.5
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Authorization
Agreement, dated as of July 3, 2008, between Ju Baochun and Jeffrey
Dash
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99.1
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Press
Release dated July 21, 2008
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*
Incorporated herein by reference to the Company's Current Report on Form 8-K
filed with the SEC on June 6, 2008.
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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LEGEND
MEDIA, INC.
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Date:
July 25, 2008
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By:
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/s/
Jeffrey Dash
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Jeffrey
Dash
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Chief
Executive Officer
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