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Exhibit 10.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of December 30, 2005, by and among China Media Networks International, Inc., a Nevada corporation (“CMNW”), CMNW Acquisition Corporation, a Nevada corporation and a wholly-owned subsidiary of CMNW (“Acquisition Corp.”), OrthoSupply Management, Inc., a Delaware corporation (“OrthoSupply”), Thunderbird Global Corporation, a Panamanian corporation (“Thunderbird”), for the sole purpose of the transactions contemplated under Section 7 hereof, the representations and warranties set forth in Sections 8 and 14 hereof, and the indemnification obligations set forth in Section 13(a) hereof, and Mark L. Baum (“Baum”), for the sole purpose of the representations and warranties set forth in Sections 10 and 14 hereof and the indemnification obligations set forth in Section 13(b) hereof.
WITNESSETH:
WHEREAS, CMNW is a public company with 509,709 shares of its common stock, $0.0001 par value per share (the “CMNW Common Stock”), issued and outstanding as of the date hereof;
WHEREAS, Thunderbird is the holder of record of 465,241 shares (the “Thunderbird Shares”) of the 509,709 issued and outstanding shares of CMNW Common Stock;
WHEREAS, OrthoSupply is a private company with (a) 17,736,619 shares of its common stock, $0.001 par value per share (“OrthoSupply Common Stock”), (b) 1,700,000 shares of its Series A Convertible Preferred Stock, $0.001 par value per share (“OrthoSupply Series A Preferred Stock”), (c) warrants to purchase an aggregate of 5,177,335 shares of OrthoSupply Common Stock (“OrthoSupply Warrants”), and (d) options to purchase 600,000 shares of OrthoSupply Common Stock (“OrthoSupply Options”), issued and outstanding as of the date hereof;
WHEREAS, the Board of Directors of CMNW has designated 1,700,000 shares of its authorized but unissued preferred stock as a new series of preferred stock, $0.0001 par value per share, designated “Series A Convertible Preferred Stock” (the “CMNW Series A Preferred Stock”), having virtually identical rights, preferences and privileges as the OrthoSupply Series A Preferred Stock, which CMNW Series A Preferred Stock has been created by the filing of a Statement of Designations (the “Statement of Designations”) with the Secretary of State of the State of Nevada;
WHEREAS, the respective Boards of Directors of each of CMNW, Acquisition Corp. and OrthoSupply, and the shareholders of Acquisition Corp. and OrthoSupply, have approved and authorized the execution and delivery of this Agreement so as to implement the Merger (as defined in Section 1 hereof) in compliance with the provisions of the Delaware General Corporation Law of the State of Delaware (the “DGCL”), and the Nevada Revised Statues of the State of Nevada (the “NRS”), with the result that OrthoSupply shall continue as the surviving corporation and the separate existence of Acquisition Corp. (except as it may be continued by operation of law) shall cease;
WHEREAS, CMNW, Acquisition Corp., and OrthoSupply intend that the Merger will qualify as a tax-free reorganization pursuant to Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”);
WHEREAS, immediately after the consummation and effectiveness of the Merger, OrthoSupply, which shall then be a wholly-owned subsidiary of CMNW, shall distribute $500,000 in cash to CMNW to be used in part to redeem from Thunderbird the Thunderbird Shares (such redemption being referred to herein as the “Thunderbird Redemption”); and
WHEREAS, the parties desire to make certain representations, warranties and agreements in connection with the Merger on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements herein contained, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. The Merger. Subject to the terms and conditions hereinbelow set forth, on the Effective Date (as defined in Section 6(a) hereof), in accordance with the DGCL and the NRS, Acquisition Corp. shall be merged with and into OrthoSupply with OrthoSupply being the surviving entity (the “Merger”) and, in connection therewith:
(a) except to the extent provided or permitted by the DGCL and the NRS, the separate existence of Acquisition Corp. shall cease and terminate and OrthoSupply shall continue as the surviving corporation and as a wholly-owned subsidiary of CMNW (OrthoSupply as the surviving corporation after the Merger is hereinafter sometimes referred to as the “Surviving Corporation”);
(b) all of the rights, privileges, immunities, powers, franchises and authority (both public and private) of OrthoSupply and Acquisition Corp. shall vest in the Surviving Corporation;
(c) all of the assets and property of OrthoSupply and Acquisition Corp. of every kind, nature and description (real, personal and mixed and both tangible and intangible) and every interest therein, wheresoever located, including, without limitation, all debts or other obligations belonging or due to OrthoSupply or Acquisition Corp., all claims and all causes of action, shall be, and be deemed to be, vested, absolutely and unconditionally, in the Surviving Corporation; and
(d) all debts and obligations of OrthoSupply or Acquisition Corp., all rights of creditors of OrthoSupply or Acquisition Corp., and all liens or security interests encumbering any of the property of OrthoSupply or Acquisition Corp., shall be vested in the Surviving Corporation and shall remain in full force and effect without modification or impairment and shall be, and be deemed to be, enforceable against the Surviving Corporation and its assets and properties with the same full force and effect as if such debts, obligations, liens or security interests had been originally incurred or created by the Surviving Corporation in its own name and for its own behalf. Without limiting the generality of the foregoing, Surviving Corporation specifically assumes all continuing obligations which OrthoSupply or Acquisition Corp. would otherwise have to indemnify its officers and directors, to the fullest extent currently provided in the Surviving Corporation’s Amended and Restated Certificate of Incorporation, By-Laws and pursuant to the DGCL, with respect to any and all claims arising out of actions taken or omitted by such officers and directors prior to the Effective Date.
2. Instruments of Conveyance. Without limiting the generality of the provisions of Section 1 hereof and/or the succession provisions of applicable law, the officers and directors of Acquisition Corp. last in office shall (to the extent they, or any of them, possess and/or may exercise the power to do so) execute, deliver and/or record such deeds and/or other instruments of transfer and/or conveyance, and take or cause to be taken, such other and further actions, as the case may be, as shall be reasonably requested by OrthoSupply or its legal counsel, to vest, perfect, confirm, implement the transfer of, or establish in the name, on behalf or for the account or the benefit of OrthoSupply, title to, and/or possession of, any or all of the assets, property, property interests, rights, privileges, immunities, powers and franchises owned and/or exercisable by Acquisition Corp. (or in which Acquisition Corp. had an interest and/or the power to exercise immediately prior to the Effective Date) and which was vested, or intended to be vested, in OrthoSupply pursuant to the provisions of this Agreement and the Merger.
3. Constitutional Documents, Directors, and Officers. On and as of the Effective Date:
(a) the Amended and Restated Certificate of Incorporation of OrthoSupply, as further amended on such date in full force and effect, shall be the Certificate of Incorporation of the Surviving Corporation, until the same shall be altered, amended, modified, terminated or rescinded in the manner provided by the DGCL, which rights of alteration, amendment, modification, termination and/or rescission are hereby expressly reserved by OrthoSupply.
(b) the By-Laws of OrthoSupply on such date in full force and effect shall be the By-Laws of the Surviving Corporation, until the same shall be altered, amended, modified, terminated or rescinded in the manner provided in the Amended and Restated Certificate of Incorporation of OrthoSupply and/or the DGCL, which rights of alteration, amendment, modification, termination and/or rescission are hereby expressly reserved by OrthoSupply; and
(c) the members of the Board of Directors of the Surviving Corporation shall be the directors of OrthoSupply immediately prior to the Effective Date, who shall hold such office as provided in the By-Laws of OrthoSupply and/or the DGCL. The officers of the Surviving Corporation shall be the former officers of OrthoSupply, who shall hold office as provided in the By-Laws of OrthoSupply.
4. Conversion. On and as of the Effective Date, by virtue of the Merger and without any action on the part of the holder of any shares of capital stock of OrthoSupply or capital stock of Acquisition Corp.:
(a) subject to the provisions of Section 5 hereof, all of the outstanding shares of OrthoSupply Common Stock shall be converted and exchanged into shares of CMNW Common Stock in the following manner: each issued and outstanding share of OrthoSupply Common Stock shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted and exchanged into one (1) duly authorized, validly issued, fully paid and non-assessable share of CMNW Common Stock.
(b) subject to the provisions of Section 5 hereof, all of the outstanding shares of OrthoSupply Series A Preferred Stock shall be converted and exchanged into shares of CMNW Series A Preferred Stock in the following manner: each issued and outstanding share of OrthoSupply Series A Convertible Preferred Stock shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted and exchanged into one (1) duly authorized, validly issued, fully paid and nonassessable share of CMNW Series A Preferred Stock.
(c) subject to the provisions of Section 11 hereof, the OrthoSupply Options and OrthoSupply Warrants shall be converted and exchanged into new options for shares of CMNW Common Stock (“CMNW Options”) and new warrants for shares of CMNW Common Stock (“CMNW Warrants”), as the case may be, in the following manner: each issued and outstanding OrthoSupply Option and OrthoSupply Warrant shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted and exchanged into a CMNW Option and a CMNW Warrant, as the case may be, exercisable for the same number of shares of CMNW Common Stock as equals the number of shares of OrthoSupply Common Stock which were issuable upon the exercise of the OrthoSupply Option and OrthoSupply Warrant, as the case may be, for which it is being exchanged, and containing substantially similar other terms and conditions.
(d) Each issued and outstanding share of the capital stock of Acquisition Corp. shall be converted into and become one (1) fully paid and nonassessable share of common stock of the Surviving Corporation.
(e) The shares of CMNW Common Stock and CMNW Series A Preferred Stock to be issued to the holders of OrthoSupply Common Stock and OrthoSupply Series A Preferred Stock, the CMNW Warrants to be issued to the holders of OrthoSupply Warrants, and the shares of CMNW Common Stock to be issued to the holders of the OrthoSupply Options and OrthoSupply Warrants upon the exercise thereof, shall be deemed to be “restricted securities” as defined by Rule 144(a)(3) under the Securities Act of 1933, as amended (the “Securities Act”). The certificates evidencing such shares shall bear substantially the following restrictive legend:
“THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE SECURITIES ACT OR THERE IS AN OPINION FROM COUNSEL TO THE COMPANY THAT SUCH SALE OR OTHER TRANSFER MAY BE MADE PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENT OF THE SECURITIES ACT.”
5. Certificate Exchange. Subsequent to the Effective Date, the issuance and distribution of New Certificates (as defined in Section 5(a) hereof) in exchange for Old Certificates (as defined in Section 5(a) hereof) shall be implemented as follows:
(a) As promptly after the Effective Date as shall be reasonably possible, CMNW shall deposit with a bank, trust company or attorney designated by CMNW and OrthoSupply (the “Representative”), for the benefit of the former holders of shares of OrthoSupply Common Stock and OrthoSupply Series A Preferred Stock, for exchange through the Representative in accordance with this Section 5, stock certificates representing the shares of the CMNW Common Stock and CMNW Series A Preferred Stock (the “New Certificates”) issuable pursuant to Section 4 hereof in exchange for such holders’ stock certificates representing the OrthoSupply Common Stock and OrthoSupply Series A Preferred Stock (the “Old Certificates”).
(b) As promptly after the Effective Date as shall be reasonably possible, the Representative shall be directed to, and shall, send written notification (each, a “Stock Notification”) to each holder of the OrthoSupply Common Stock and OrthoSupply Series A Preferred Stock of the consummation of the Merger, the availability of the New Certificates and provide (i) a description of the procedure to be followed in connection with the surrender of the Old Certificates and the issuance of the New Certificates, and (ii) a letter of transmittal (which shall be in customary form and have such provisions as CMNW and OrthoSupply may reasonably specify). Upon compliance by a holder thereof with the requirements for the certificate surrender and issuance specified in the Stock Notification, the Representative shall be directed to, and shall, issue and transmit to such holder New Certificates representing that number of shares of the CMNW Common Stock and/or CMNW Series A Preferred Stock, as the case may be, to which such holder shall be entitled as herein provided.
(c) Upon delivery of the New Certificates, the Old Certificates shall be deemed surrendered and cancelled. Notwithstanding anything to the contrary set forth herein, the representations, warranties, indemnities, agreements and other statements of OrthoSupply or its officers, directors, employees and agents, and of each purchaser of OrthoSupply Series A Preferred Stock or its officers, directors, employees, and agents, made in connection with the original issuance and purchase of the OrthoSupply Series A Preferred Stock, shall remain operative and in full force and effect regardless of the exchange under this Section 5 and Section 11 hereof.
(d) On the Effective Date, CMNW shall take all corporate action necessary to reserve for issuance a sufficient number of shares of CMNW Common Stock for delivery upon conversion of the CMNW Series A Preferred Stock exchanged in accordance with this Section 5.
6. The Effective Date.
(a) Subject to the provisions of this Agreement, (i) articles of merger (“Articles of Merger”) in such form as is required by the NRS, and (ii) a certificate of merger (“Certificate of Merger”) in such form as is required by the DGCL, shall be duly prepared, executed and acknowledged by OrthoSupply and Acquisition Corp. and thereafter delivered to the Secretary of State of the State of Nevada and the Secretary of State of the State of Delaware, as applicable, for filing, as provided in the NRS and the DGCL, as applicable, as early as practicable on the date of the execution and delivery of this Agreement. The Merger shall become effective as at the close of business on the date of filing the Articles of Merger and the Certificate of Merger (the “Effective Date”).
(b) The closing of the Merger (the “Closing”) shall take place as of the Effective Date.
(c) On the Effective Date, CMNW shall fix the number of members of the Board of Directors at not less then one (1) and not more than thirteen (13), effective with the Effective Date. The Board of Directors of CMNW shall consist of the following individuals:
Mark L. Baum
Brian Lesperance
(d) On the Effective Date, the officers of CMNW shall be as follows, each to serve until the first meeting of the Board of Directors immediately following the next Annual Meeting of Stockholders of CMNW or until the Board otherwise directs.:
Name Position
Brian Lesperance President, Chief Executive Officer, Treasurer and Secretary
7. Thunderbird Redemption. Immediately following the consummation of the Merger on the Effective Date, OrthoSupply shall distribute $500,000 in cash to CMNW (the “Cash Distribution”). Immediately following its receipt of the Cash Distribution, CMNW shall effect the Thunderbird Redemption by redeeming from Thunderbird the Thunderbird Shares for a redemption price equal to the aggregate of (a) the amount of the Cash Distribution (the “Cash Portion”), (b) 600,000 shares of CMNW Common Stock, and (c) a warrant to purchase an additional 600,000 shares of CMNW Common Stock in form and substance mutually agreeable to CMNW and Thunderbird. The Cash Portion shall be wire transferred by CMNW to Thunderbird in accordance with the following wire transfer instructions:
Bank: Wells Fargo Bank N.A.
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Pacific Palisades, California 90272
(310) 550-2800
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Account Name: The Baum Law Firm PC
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The Baum Law Firm
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Encinitas, California 92024
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