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EXHIBIT 10.64
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT")made as of this 4th
day
of May, 2007, by and among Diamond Entertainment Corporation, a New
Jersey
corporation having its principal place of business at 800 Tucker
Lane, Walnut,
California 91789 ("Diamond"), DMEC Acquisition Inc., a Delaware
corporation
("DMECA"), and RX for Africa, Inc., a Delaware Corporation having
its principal
place of business at 465 W 23 Street #12J, New York, NY 10011
("RXFA").
Capitalized terms used in this Agreement and not otherwise
defined
shall have the meanings ascribed to such terms in Section 27.
WHEREAS, RXFA shall acquire 100% of the issued and outstanding
common
stock of DMECA, a wholly owned subsidiary of Diamond, upon the
merger of DMECA
with and into RXFA in exchange for a combination of convertible
debentures plus
eighty-five percent (85%) of the issued and authorized Diamond
Common Stock; and
WHEREAS, Diamond is authorized to issue RXFA 168,849,504 (85% of
the
total outstanding) post split shares of its common stock, no par
value ($0) per
share (the "DIAMOND COMMON STOCK") of which 29,796,971 represents
post split
fully diluted shares ("OUTSTANDING DIAMOND COMMON STOCK") as of
March 31, 2007
(see Exhibit A); and
WHEREAS, DMECA is a wholly owned subsidiary of Diamond and is
authorized to issue 50 shares of common stock, par value $.001
(referred to as
the "DMECA SHARES"), of which 25 such DMECA Shares are issued and
outstanding
and owned by Diamond; and
WHEREAS, the respective Boards of Directors of Diamond and DMECA
and
the Boards of Directors of RXFA deem it advisable and generally to
the advantage
and welfare of the Companies, and their respective shareholders,
that (i) DMECA
be merged with and into RXFA under the terms and conditions
hereinafter set
forth (the "MERGER") and to be a tax free reorganization under
Section
368(a)(1)(A) of the Code; and
NOW, THEREFORE, in consideration of the premises, covenants and
conditions hereof, the parties hereto do mutually agree as
follows:
1. VOTE ON MERGER AND RELATED MATTERS. The Constituent
Corporations
shall each, as soon as practicable but prior to closing, and in no
event later
than 10 days after the execution and delivery hereof, (i) cause a
special
meeting of its shareholders to be called to consider and vote upon
the Merger on
the terms and conditions hereinafter set forth, or (ii) obtain
written consent
of such shareholders as is necessary to approve the Merger. Subject
to the
further conditions and provisions of this Agreement, a closing of
the Merger
shall be held (the "CLOSING"), and a certificate of merger and all
other
documents or instruments deemed necessary or appropriate by the
parties hereto
to effect the Merger shall be executed and filed with the Secretary
of State of
Delaware as promptly as possible thereafter. The certificate of
merger for the
Merger (the "CERTIFICATE OF MERGER") so filed shall be
substantially in the
forms of EXHIBITS A1 AND A2 annexed hereto, with such changes
therein as the
Boards of Directors of the Constituent Corporations shall mutually
approve.
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2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF RXFA. RXFA and the
RXFA
Managing Member(s), jointly and severally, represent, warrant and
covenant as
follows, except to the extent set forth on the RXFA Schedule of
Exceptions:
(a) RXFA is, and on the Effective Date will be, a duly
organized and a validly existing Corporation in good standing under
the
laws of the State of Delaware and in such other jurisdictions as it
is
qualified to do business. All Outstanding RXFA shares, on the
Effective
Date, will be duly authorized, validly issued, fully paid and
nonassessable. There are no, and on the Effective Date there will
be
no, issued or outstanding rights, options or warrants to purchase
any
equity interest in RXFA, including but not limited to any other
issued
or outstanding securities of any nature convertible into or
exercisable
or exchangeable for equity interests of RXFA, as applicable.
The
Outstanding RXFA Equity Interests have all been issued pursuant to
an
appropriate exemption from the registration requirements of the
Securities Act and from any applicable registration requirements of
the
various states.
(b) RXFA does not have, and on the Effective Date will not
have, any subsidiaries, nor does it own any direct or indirect
interest
in any other business entity.
(c) RXFA has, and on the Effective Date will have, full power
and authority to enter into this Agreement and, subject to any
required
shareholder or other third party approval in accordance with the
laws
of the State of Delaware, to consummate the transactions
contemplated
hereby. This Agreement and the transactions contemplated hereby
have
been duly approved prior to the Closing, by RXFA shareholders.
(d) RXFA is qualified or licensed as a foreign limited
liability company in all jurisdictions where its business or
ownership
of assets so requires, except where the failure to be qualified
or
licensed would not have a material adverse effect on the business
of
RXFA. The business of RXFA does not require it to be registered as
an
investment company or investment adviser; as such terms are
defined
under the Investment Company Act of 1940 and the Investment
Advisers
Act of 1940, each as amended.
(e) The financial statements of RXFA, consisting of its
Balance Sheets as of RXFA's fiscal year-end June 30, 2006 and 2005,
its
Statement of Income (Loss) for the fiscal years ended June 30, 2006
and
2005, its Statement of Member's Equity for the two years ended June
30,
2006 and 2005, and its Statements of Cash Flows for the fiscal
years
ended June 2006 and 2005, have been audited by independent
public
accountants and fairly present the financial position, results
of
operations and other information purported to be shown therein, at
the
date and for the respective periods to which they apply. The
interim
financial statements of RXFA, consisting of its Balance Sheet as
of
December 31, 2006 and its Statements of Income (Loss) for the
six
months ended December 31, 2006, fairly present the financial
position,
results of operations and other information purported to be
shown
therein of RXFA, at the date and for the respective periods to
which
they apply. All such financial statements have been prepared in
conformity with generally accepted accounting principles
consistently
applied throughout the periods involved, and have been adjusted for
all
normal and recurring accruals. All such financial statements
(together,
the "FINANCIAL STATEMENTS") have been delivered to Diamond and
are
incorporated herein and made a part hereof.
(f) There has not been, and on the Effective Date there will
not have been in the aggregate, any material adverse change in
the
condition, financial or otherwise, of RXFA from that set forth in
the
Financial Statements.
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(g) Except for transactions occurring in the ordinary course
of business, there has not been, and on the Effective Date there
will
not have been, any transactions involving RXFA since December 31,
2002
in an amount in excess of $25,000.
(h) There are, and on the Effective Date will be, no
liabilities (including, but not limited to, tax liabilities) or
claims
against RXFA (whether such liabilities or claims are contingent
or
absolute, direct or indirect, matured or unmatured) not appearing
on
the Financial Statements, other than liabilities incurred in
the
ordinary course of business or taxes incurred on earnings since
December 31, 2006.
(i) All federal, state, county and local income, excise,
property and other tax or information returns required to be filed
by
RXFA have been filed, and all required taxes, fees or assessments
have
been paid or an adequate reserve therefore has been established in
the
Financial Statements. The federal income tax returns and state
and
foreign income tax returns of RXFA have not been audited by the IRS
or
any other taxing authority within the past five (5) years. Neither
the
IRS nor any state, local or other taxing authority has proposed
any
additional taxes, interest or penalties with respect to RXFA or any
of
their operations or businesses. There are no pending, or to the
knowledge of RXFA, threatened, tax claims or assessments, and there
are
no pending, or to the knowledge of RXFA, threatened, tax
examinations
by any taxing authorities. RXFA has not given any waivers of
rights
(which are currently in effect) under applicable statutes of
limitations with respect to the federal income tax returns of RXFA,
for
any year.
(j) Except as provided for in the Financial Statements, RXFA,
has, and on the Effective Date will have, good and marketable title
to
all of its furniture, fixtures, equipment and other assets as set
forth
in the Financial Statements, and such assets are owned free and
clear
of all security interests, pledges, liens, restrictions and
encumbrances of every kind and nature, except as set forth in
the
Financial Statements.
(k) RXFA is the owner of its inventory as set forth in the
Financial Statements and has good and marketable title thereto.
(l) The
accounts receivable as set forth in the Financial
Statements represent amounts due for goods sold or services
rendered by
RXFA in the ordinary course of business and, except as reserved for
in
the Financial Statements, are collectable in the ordinary course
of
business.
(m) A copy of all agreements, contracts, arrangements,
understandings and commitments, whether written or oral, to which
RXFA
is or on the Effective Date will be, a party, or from which RXFA
will
receive substantial benefits and which are material to RXFA
(collectively, "CONTRACTS"), have been delivered to Diamond and
DMECA.
A list of such Contracts is set forth on the RXFA Schedule of
Exceptions, which such schedule shall be amended at the Effective
Date
to reflect any Contracts entered into between the date hereof and
the
Effective Date. RXFA is not now, nor will be on the Effective Date,
in
material default under any Contract. The validity and
enforceability
of, and rights of RXFA contained in, each such Contract shall not
be
adversely effected by the Merger or the transactions
contemplated
hereby or any actions taken in furtherance hereof.
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(n) There are, and on the Effective Date there will be, no
legal, administrative, arbitral or other proceedings, claims,
actions
or governmental investigations of any nature pending, or to
RXFA's
knowledge, as applicable, threatened, involving RXFA, individually
or
in the aggregate in which an unfavorable determination could result
in
suspension or termination of RXFA's business or authority to
conduct
such business in any jurisdiction or could result in the payment
by
RXFA of more than $25,000 individually or $100,000 in the
aggregate, or
challenging the validity or propriety of the transactions
contemplated
by this Agreement and, to RXFA's best knowledge, there is no
reasonable
basis for any such proceeding, claim, action or governmental
investigation. RXFA is not a party to any order, judgment or
decree
which will, or might reasonably be expected to, materially
adversely
affect the business, operations, properties, assets or
financial
condition of RXFA.
(o) Since December 31, 2006 there have been, and through the
Effective Date there will be (i) no bonuses or extraordinary
compensation to any of the officers, Managing Member or Members,
(ii)
no loans made to or any other transactions with any of the
officers,
Managing Member or Members or their families, and (iii) no
dividends or
other distributions declared or paid by RXFA.
(p) RXFA has, and on the Effective Date will have, maintained
casualty and liability policies and other insurance policies
with
respect to its
business which are appropriate and customary for
businesses similar in size, industry and risk profile. Copies of
all of
the policies of insurance and bonds presently in force with respect
to
RXFA, including without limitation those covering properties,
buildings, machinery, equipment, worker's compensation, officers
and
directors and public liability, have been delivered to Diamond
and
DMECA. All such insurance is outstanding and in full force and
effect,
with all premiums thereon duly paid, and RXFA has not received
any
notice of cancellation of any such policies.
(q) RXFA has, and on the Effective Date will have, no patents,
patent applications, trademarks, trademark registrations or
applications, trade names, copyrights, copyright registrations
or
applications, or other intellectual property. RXFA does not
have
knowledge of any infringements by it of any third party's
intellectual
property.
(r) Since its inception, RXFA has, and on the Effective Date
will have, in all material respects operated its business and
conducted
its affairs in compliance with all applicable laws, rules and
regulations, except where the failure to so comply did not have
and
would not be expected to have a material adverse effect on its
business
or property.
(s) There are, and on the Effective Date there will be, no
loans, leases or other Contracts outstanding between RXFA and any
of
its officers, Managing Member or any other Member or any person
related
to or affiliated with any such officers or Managing Member or any
other
Member.
(t) During the past five year period neither RXFA, nor any of
its officers or Managing Member, nor any person intended upon
consummation of the Merger to become an officer or director of
either
RXFA or Diamond or any successor entity or subsidiary, has been
the
subject of:
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(i) a petition under the Federal bankruptcy laws or
any other insolvency or moratorium law or has a receiver, fiscal
agent
or similar officer been appointed by a court for the business
or
property of RXFA or such person, or any partnership in which RXFA
or
any such person was a general partner at or within two years before
the
time of such filing, or any corporation or business association
of
which RXFA or any such person was an executive officer at or within
two
years before the time of such filing;
(ii) a conviction in a criminal proceeding or a named
subject of a pending criminal proceeding (excluding traffic
violations
which do not relate to driving while intoxicated or driving under
the
influence);
(iii) any order,
judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction,
permanently or temporarily enjoining RXFA or any such person from,
or
otherwise limiting, the following activities:
(A) acting as a futures commission merchant,
introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by
the United States Commodity Futures Trading
Commission ("CFTC") or an associated person of any
of the foregoing, or as an investment adviser,
underwriter, broker or dealer in securities, or as
an affiliated person, director or employee of any
investment company, bank, savings and loan
association or insurance company, or engaging in or
continuing any conduct or practice in connection
with such activity;
(B) engaging in any type of business
practice; or
(C) engaging in any activity in connection
with the purchase or sale of any security or
commodity or in connection with any violation of
Federal, state or other securities laws or
commodities laws;
(iv) any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any Federal, state or local
authority barring, suspending or otherwise limiting for more than
60
days the right of RXFA or any such person to engage in any
activity
described in the preceding sub-paragraph, or to be associated
with
persons engaged in any such activity;
(v) a finding by a court of competent jurisdiction in
a civil action or by the Commission to have violated any
securities
law, regulation or decree and the judgment in such civil action
or
finding by the Commission has not been subsequently reversed,
suspended
or vacated; or
(vi) a finding by a court of competent jurisdiction
in a civil action or by the CFTC to have violated any federal
commodities law, and the judgment in such civil action or finding
by
the CFTC has not been subsequently reversed, suspended or
vacated.
(u) RXFA does not have any pension plan, profit sharing or
similar employee benefit plan.
(v) Except for the consent and approval of the Members and the
filing of the Certificate of Merger, no consents or approvals of,
or
filings or registrations with, any third party or any public body
or
authority are necessary in connection with (i) the execution
and
delivery by RXFA of this Agreement and (ii) the consummation by
RXFA of
the Merger and by RXFA of all other transactions contemplated
hereby.
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This Agreement has been duly executed and delivered by RXFA and
constitutes the legal, valid and binding obligation of RXFA,
enforceable against it in accordance with the terms hereof, except
as
may be limited by bankruptcy, insolvency, reorganization,
moratorium or
similar laws of general application relating to or affecting
the
enforcement of rights hereunder or general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(w) RXFA knows of no person who rendered any service in
connection with the introduction of Diamond, DMECA or RXFA to any
of
the other companies, and they know of no claim by anyone for a
"finder's fee" or similar type of fee in connection with the Merger
and
the other transactions contemplated hereby.
(x)
No employees of RXFA are on strike or to the best of their
knowledge threatening any strike or work stoppage. RXFA does not
have
any obligations under any collective bargaining or labor union
agreements nor is RXFA involved in any material controversy with
any of
its employees or any organization representing any of its
employees.
(y) None of the information supplied or to be supplied by or
about RXFA for inclusion or incorporation by reference in any
information supplied to holders of Diamond Common Stock concerning
the
Merger, contains any untrue statement of a material fact or omits
to
state any material fact required to be stated therein or necessary
in
order to make the statements therein, in light of the
circumstances
under which they are made, not misleading.
(z) The execution and delivery by RXFA of this Agreement, the
consummation and performance of the transactions herein
contemplated,
and compliance with the terms of this Agreement by RXFA will
not
conflict with, result in a breach of or constitute or give rise to
a
default under (i) any indenture, mortgage, deed of trust or
other
agreement, instrument or Contract to which RXFA is now a party or
by
which it or any of its assets or properties are bound; (ii) the
Articles of Organization or the Operating Agreement of RXFA, in
each
case as amended; or (iii) any law, order, rule, regulation,
writ,
injunction, judgment or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction
over
RXFA or any of its business or properties wherein such breach
could
have a material adverse effect on RXFA or any of its business
or
properties.
(aa) To the best of its knowledge, RXFA is not in violation of
any federal, state or local environmental law or regulation.
3. REPRESENTATIONS AND WARRANTIES OF DMECA. DMECA represents
and
warrants as follows:
(a) DMECA is, and on the Effective Date will be, a duly
organized and validly existing corporation in good standing under
the
laws of the State of Delaware, authorized to issue only the
DMECA
Shares. On the Effective Date there will be issued and outstanding
all
of the DMECA Shares, which shall be fully paid and nonassessable
and
all of which shall be
owned by Diamond. There are no, and on the
Effective Date there will be no issued or outstanding options
or
warrants to purchase DMECA Shares or any issued or outstanding
securities of any nature convertible into DMECA Shares, or any
agreements or understandings to issue any DMECA Shares, options
or
warrants.
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(b) DMECA has been organized solely for the purpose of
consummating the Merger and, since its inception, has had no
business
activity of any nature other than those related to its organization
or
as contemplated by this Agreement.
(c) DMECA has, and on the Effective Date will have, full power
and authority to enter into this Agreement and to consummate
the
transactions contemplated hereby. This Agreement and the
transactions
contemplated hereby have been duly approved by the Board of
Directors
of
DMECA.
(d) Since its inception, DMECA has not issued or committed
itself to issue, and to the Effective Date will not issue or commit
to
issue, any DMECA Shares or any options, rights, warrants, or
other
securities
convertible into DMECA Shares, except for the issuance of
the DMECA Shares to Diamond.
(e) Except for the consent and approval of the shareholders of
DMECA, and the filing of the Certificate of Merger, no consents
or
approvals of, or filings or registrations with, any third party or
any
public body or authority are necessary in connection with (i)
the
execution and delivery by DMECA of this Agreement and (ii) the
consummation by DMECA of the Merger and the other transactions
contemplated hereby.
(f) The execution and delivery by DMECA of this Agreement, the
consummation and performance of the transactions herein
contemplated,
and compliance with
the terms of this Agreement by DMECA will not
conflict with, result in a breach of or constitute or give rise to
a
default under any indenture, mortga
