AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (“ Agreement ”) is made and entered into on this 10th day of June, 2009 by and among Iconic Brands, Inc. (formerly, Paw Spa, Inc.), a Nevada corporation (the “ Parent ”), Paw Spa Acquisition, Inc., a wholly owned subsidiary of Parent and a Nevada Corporation (the “ Merger Sub ”), Harbrew Imports Ltd, Corp., a Florida corporation (“ Harbrew Florida ”), and Harbrew Imports, Ltd, a wholly owned subsidiary of Harbrew Florida and a New York corporation (“ Harbrew New York ”).

WITNESSETH

WHEREAS , the Parent is a corporation formed under the laws of the State of Nevada pursuant to the Articles of Incorporation filed with the Nevada Secretary of State on October 21, 2005 (the “Articles of Incorporation”).

WHEREAS , the Merger Sub is a Nevada Corporation formed under the laws of the State of Nevada on May 8, 2009, as a wholly-owned subsidiary of the Parent.

WHEREAS , Harbrew Florida was formed under the laws of the State of Florida pursuant to the Articles of Incorporation filed with the Florida Secretary of State on January 4, 2007.

WHEREAS , Harbrew New York was formed under the laws of the State of New York on September 8, 1999 and is a wholly owned subsidiary of Harbrew Florida.

WHEREAS , the Board of Directors of the Parent has determined that a merger of Merger Sub with and into Harbrew New York (the “ Merger ”), upon the terms and subject to the conditions set forth in this Agreement, would be fair and in the best interests of its shareholders, and its Board of Directors has approved such Merger.

WHEREAS , the Board of Directors of the Merger Sub and the majority shareholders of the Merger Sub have determined that the Merger, upon the terms and subject to the conditions set forth in this Agreement, would be fair and in the best interests of its shareholders, and its Board of Directors has approved such Merger.  

WHEREAS . the Board of Directors of Harbrew New York as well as the requisite shareholders of Harbrew New York have determined that the Merger, upon the terms and subject to the conditions set forth in this Agreement, would be fair and in the best interests of the shareholders of Harbrew New York, and its Board of Directors has approved the Merger.

WHEREAS , in accordance with Section 78.288 of the Nevada Revised Statutes, the Board of Directors of Harbrew Florida has authorized to distribute its right to receive the Capital Stock of the Parent as set forth in Section 2.04(a) hereof to its existing shareholders (the “ Harbrew Florida Shareholders ”) on a pro-rata basis, as set forth on Exhibit [__] with the number of the Capital Stock of the Parent to be received adjacent such Harbrew Florida Shareholder’s name.

WHEREAS , for federal income tax purposes, the parties intend that the Merger shall qualify as a reorganization under the provisions of Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the “ Code ”) and shall be a tax free exchange.

NOW, THEREFORE , in consideration of the representations, warranties, covenants and agreements contained in this Agreement, the parties agree as follows:

I. DEFINITIONS

When used in this Agreement (and any Exhibits and Schedules in which terms are not otherwise defined), the following terms shall have the following meanings:

Section 1.01  Capital Stock : “Capital Stock” shall mean the outstanding shares of common stock, $0.00001 par value, of the Parent.

Section 1.02 Certificate of Merger : “Certificate of Merger” shall mean a Certificate of Merger in substantially the form attached to this Agreement as Exhibit [___] and to be filed with the State of New York, or an Articles of Merger in substantially the form attached to this Agreement as Exhibit [__]and to be filed with the State of Nevada.

Section 1.03 Closing : “Closing” and “Closing Date” shall mean the closing of the transactions contemplated by this Agreement.

Section 1.04 Effective Time : “Effective Time” shall mean the later date of which the Certificate of Merger is properly filed with the Secretaries of State of New York and Nevada as required under the applicable provisions of the law of such jurisdictions, or such later date as may be agreed by the parties and set forth in the Certificate of Merger.

Section 1.05 Liens : “Lien” shall mean any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and including any lien or charge arising by statute or other law.

Section 1.06 Material Adverse Change : “Material Adverse Change” or “Material Adverse Effect” means, when used in connection with Harbrew New York or the Parent, any change or effect that either individually or in the aggregate with all other such changes or effects is materially adverse to the business, assets, properties, condition (financial or otherwise) or results of operations of such party and its subsidiaries taken as a whole (after giving effect in the case of Parent to the consummation of the Merger).

Section 1.07 Person : “Person” means an individual, corporation, partnership, joint venture, association, trust, unincorporated organization or other entity.

Section 1.08 Subsidiary : A “Subsidiary” of any person means another person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, fifty percent (50%) or more of the equity interests of which) is owned directly or indirectly by such first person.

Section 1.09 Surviving Company : “Surviving Company” shall have the meaning set forth in Section 2.01.

Section 1.10 Tax Return : “Tax Return” shall include all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns (including Form 1099 and partnership returns filed on Form 1065) required to be supplied to a Tax authority relating to Taxes.

II. THE MERGER

Section 2.01 The Merger .  Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with Nevada Revised Statutes and New York Business Corporation Law, Merger Sub shall be merged with and into Harbrew New York at the Effective Time as defined in Section 2.02 hereof.  At the Effective Time, the separate corporate existence of the Merger Sub shall cease and Harbrew New York shall continue as the surviving company (the “ Surviving Company ”) under the laws of the State of New York, and shall succeed as the wholly-owned subsidiary of Iconic Brands, Inc. and assume all the rights and obligations of Merger Sub.

Section 2.02 Effective Time .  The Merger shall become effective on the date and at the time the Certificate of Merger is filed with the Secretary of State of New York in accordance with Section 904-a of the New York Business Corporation Law and the Articles of Merger is filed with the Secretary of State of Nevada pursuant to section 92A.200 of the Nevada Revised Statutes (collectively, the “ Certificates of Merger ”). The Merger shall become effective at the later of such date as the Certificates of Merger are filed with the Secretaries of State of Nevada and New York, or at such other time as is permissible in accordance with the Nevada and New York statutes and as the Parent and  Harbrew New York shall agree. The time at which the Merger shall become effective as aforesaid is referred to hereinafter as the “Effective Time.”

Section 2.03 Closing .  The closing of the Merger (the “ Closing ”) shall occur concurrently with the Effective Time (the “ Closing Date ”).  The Parent shall use reasonable efforts to have the Closing Date and the Effective Time of the Merger to be the same day.  The Closing shall occur at the offices of Anslow & Jaclin, LLP, 195 Route 9 South, Suite 204, Manalapan, New Jersey 07726, unless another date, time or place is agreed to in writing by the parties hereto.  

Section 2.04 Procedure for Closing . At or prior to Closing, the following will occur:

(a)   each Harbrew Florida share (because Harbrew Florida owns 100% of the Harbrew New York shares) that shall be outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive one (1) share of the common stock, par value $0.00001 per share, of the Parent (the “ Capital Stock ”), so that at the Effective Time, the Parent shall be the holder of all of the issued and outstanding shares of Harbrew New York. Immediately upon the conversion, in accordance with Section 78.288 of the Nevada Revised Statutes, Harbrew Florida shall distribute its right to receive the Capital Stock of the Parent to its shareholders, on a pro rata equity ownership basis, with the amount of the Capital Stock to be received by each such Harbrew Florida Shareholder as set forth on Exhibit [__] hereto.

(b)   The Harbrew Florida, as the sole shareholder of Harbrew New York shall surrender the certificates evidencing one hundred percent (100%) of the Harbrew New York shares which shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a certificate representing any such Harbrew New York shares shall cease to have any rights with respect thereto, except the common shares of the Surviving Corporation to be issued in consideration therefore upon surrender of such certificate representing the Harbrew New York shares.

(c)   Promptly after the Effective Time and upon surrender of a certificate or certificates representing the Harbrew New York shares that were outstanding immediately prior to the Effective Time or an affidavit and indemnification in form reasonably acceptable to counsel for the Parent stating that such stockholder has lost their certificate or certificates or that such have been destroyed, the Parent shall issue to each Harbrew Florida Shareholder a certificate or certificates registered in the name of such shareholder representing the number of shares of Capital Stock that such stockholder shall be entitled to receive as set forth in Section 2.04 (a) hereof.  Until the certificate, certificates or affidavit is or are surrendered as contemplated by this Section 2.04 (c) hereof, each certificate or affidavit that immediately prior to the Effective Time represented any outstanding Harbrew New York shares shall be deemed at and after the Effective Time to represent only the right to receive upon surrender as aforesaid the Capital Stock specified in Exhibit [__] hereof for the holder thereof.

(d)   The Parent will issue and deliver twenty seven million one hundred fifty one thousand nine hundred eighty four shares (27,151,984) of its Capital Stock to the Merger Sub representing shares issued in exchange for one hundred percent (100%) ownership of Harbrew New York. The Merger Sub will then issue and deliver the twenty seven million one hundred fifty one thousand nine hundred eighty four shares (27,151,984) of the Parent's Capital Stock, as set forth hereof in accordance with this agreement in exchange for all issued and outstanding shares of Harbrew New York.

Section 2.05 Directors

(a)     Surviving Company . At the Effective Time, the current sole director of the Merger Sub, Edd Cockerill, shall resign and pursuant to Section 78.335 of the Nevada Revised Statutes, the vacancy on the board will be duly replaced with Richard J. DeCicco until the earlier of his resignation or removal or his respective successors are duly elected and qualified, as the case may be.

(b)   Parent . At the Effective Time, the current director of the Parent, Edd Cockerill, shall resign and pursuant to Section 78.335 of the Nevada Revised Statutes, the vacancy on the board will be duly replaced with Richard J. DeCicco until the earlier of his resignation or removal or his respective successors are duly elected and qualified, as the case may be.

Section 2.06 Officers

(a)   Surviving Company .  At the Effective Time, Edd Cockerill shall resign from all officer positions held at the Merger Sub, and Richard DeCicco shall be appointed the Chief Executive Officer and William Blacker shall be appointed the Chief Financial Officer of the Surviving Company, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

(b) Parent . At the Effective Time, Edd Cockerill shall resign from all officer positions he held at the Parent, and Richard DeCicco shall be appointed the Chief Executive Officer and William Blacker shall be appointed the Chief Financial Officer of the Surviving Company, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

Section 2.07 Effects of the Merger . From and after the Effective Time, the Surviving Company shall possess all the rights, assets, powers, privileges, and franchises and be subject to all the obligations, liabilities, restrictions, and disabilities of Harbrew New York and the Merger Sub, all as provided under the applicable provisions of Nevada and New York statutes.

Section 2.08 Articles of Incorporation and Bylaws of the Surviving Company . The Articles of Incorporation of Harbrew New York as in effect immediately prior to the Effective Time shall be the Articles of Incorporation of the Surviving Company until thereafter changed or amended as provided therein or by applicable law. The Bylaws of Harbrew New York immediately in effect at the Effective Time shall be the Bylaws of the Surviving Company until thereafter changed or amended as provided therein or by applicable law.

III. EFFECT OF THE MERGER ON CAPITAL STOCK

Section 3.01 Effect on Capital Stock .  As of the Effective Time, by virtue of the Merger and without any action on the part of the holders of any share of capital stock of Harbrew New York or Merger Sub:

(a) Exchange . At the Closing, each Harbrew Florida (because Harbrew Florida is the 100% parent of Harbrew New York) share issued and outstanding immediately prior to the Effective Time of the Merger shall be converted so that one (1) share of the Parent’s Capital Stock is issued for each one (1) share of Harbrew Florida (the “ Merger Consideration” ).  Said differently, all the 24,593 shares of Harbrew Florida capital stock will be converted into 24,593 shares of the Parent’s Capital Stock. Immediately upon the conversion, Harbrew Florida shall distribute the right to receive the Merger Consideration to its existing shareholders on a pro-rata equity ownership basis, with the amount of the Capital Stock to be received by each such Harbrew Florida Shareholder, as set forth on Schedule 3.01(a).

(b) Management Shares . In connection with this merger and the terms of this Agreement, the Parent shall issue nineteen million five hundred nine thousand one hundred twelve shares (19,509,112) to the management and employees of Harbrew New York as set forth on Schedule 3.01(b).

(c) Capstone Settlement .  In connection with this merger and the terms of this Agreement, Capstone Capital Group I, LLC, a creditor of Harbrew New York, agreed to settle its amount outstanding in the amount of $2,833,205 in such terms as set forth on Schedule 3.01(c).

(d) DeVito Consulting .  In connection with this merger and the terms of this Agreement, as set forth on Schedule 3.01(d), Danny DeVito and certain other consultants shall accept two million eighty six thousand nine hundred seventy three shares of Parent Common Stock in exchange for his consulting services promoting his Danny Devito Premium Limoncello which Harbrew New York has a right to pursuant to a license agreement.

(e) Convertible Noteholders .  As set forth on Schedule 3.01(e), Harbrew New York had issued certain 7% Convertible Promissory Notes.  In connection with this merger and the terms of this Agreement, the Parent, Harbrew New York and certain convertible noteholders have agreed to convert certain convertible notes into common stock of the Parent at a conversion rate of $0.50.  As further set forth on Schedule 3.01(e), the Parent will issue four million four hundred six thousand three hundred seven shares (4,406,307) in satisfaction of outstanding notes in the amount of two million two hundred three thousand one hundred forty seven dollars ($2,203,147).

(f) The present Officers and Directors of Parent will cooperate and sign an undertaking to assist the Surviving Company in all respects disclosing the transactions set forth herein and other information required by the Securities Act of 1933, as amended (the “ Securities Act ”). 

Section 3.02 Exchange of Certificates

(a)   As of the Effective Time, all Harbrew Florida shares shall no longer be outstanding and shall be automatically cancelled and retired and shall cease to exist, and each holder of the certificate representing any shares of Harbrew Florida shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration, without interest. After the Effective Time, there shall be no further transfer on the records of Harbrew Florida of certificates representing the Harbrew New York shares and there shall be no further transfer on the records of the Merger Sub of certificates representing the capital stock of the Merger Sub.  If any certificate for such Parent’s Capital Stock is to be issued in a name other than that in which the certificate for Merger Sub or Harbrew New York shares surrendered for exchange is registered, it shall be a condition of such exchange that the certificate so surrendered shall be properly endorsed, with signature guaranteed, or otherwise in proper form for transfer and that the person requesting such exchange shall pay to the Parent or its transfer agent any transfer or other taxes or other costs required by reason of the issuance of certificates for such Parent’s Capital Stock in a name other than that of the registered holder of the certificate surrendered, or establish to the satisfaction of the  Parent or its transfer agent that all taxes have been paid.

(b)   One hundred percent (100%) of the certificate(s) representing the Harbrew New York shares shall be delivered to the Parent to be issued in the name of the Parent.

(c)   No Further Ownership Rights; Transfer Books. The Merger Consideration issued upon the surrender of the Harbrew Florida shares in accordance with the terms of this Article III shall be deemed to have been issued (and paid) in full satisfaction of all rights pertaining to the shares of Harbrew Florida theretofore represented by such certificates. If, after the Effective Time, certificates representing Harbrew Florida shares are presented to the Parent or Harbrew New York, the presented certificates shall be cancelled and exchanged for shares of the Parent.

IV. REPRESENTATIONS AND WARRANTIES

Section 4.01  Representations and Warranties of Harbrew New York .  As an inducement for Parent and Merger Sub to enter into this Agreement, Harbrew New York makes the following representations and warrants to Parent and Merger Sub:

(a)  Organization, Standing and Corporate Power.  Harbrew New York is a corporation duly incorporated, validly existing and in good standing under the applicable laws of the State of New York and has the requisite organizational power and authority to carry on its business as now being conducted.  Harbrew New York is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed (individually or in the aggregate) has not had or caused and would not reasonably be expected to have a have or cause a Material Adverse Effect.

(b) Subsidiaries.   As of the date hereof, Harbrew New York has no subsidiaries.

(c) Capital Structure.  All the issued and outstanding shares of Harbrew New York are held by Harbrew Florida.  Harbrew Florida has twenty four thousand five hundred ninety three shares (24,593) outstanding.  Except for as disclosed on Schedule 4.01(c), Harbrew New York has no other securities of any nature issued, reserved for issuance or outstanding.  All outstanding Harbrew New York shares are duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights.  There are no outstanding bonds, debentures, notes or other indebtedness or other securities of Harbrew New York having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which the shareholder of Harbrew New York may vote. There are no outstanding securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which Harbrew New York is a party or by which it is bound obligating Harbrew New York to issue, deliver or sell, or cause to be issued, delivered or sold, additional Harbrew New York shares or other equity or voting securities of  Harbrew New York or obligating Harbrew New York to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking.  There are no outstanding contractual obligations, commitments, understandings or arrangements of Harbrew New York to repurchase, redeem or otherwise acquire or make any payment in respect of any shares or securities of Harbrew New York.  There are no agreements or arrangements pursuant to which Harbrew New York is or could be required to register Harbrew New York shares or other securities under the Securities Act of 1933 or other agreements or arrangements with or among any holders of Harbrew New York shares or with respect to any securities of Harbrew New York.

(d) Authority; Non-contravention.  Harbrew New York has the requisite power and authority to enter into this Agreement and to consummate the Merger.  The execution and delivery of this Agreement by Harbrew New York and the consummation by Harbrew New York of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Harbrew New York.  This Agreement has been duly executed and delivered by Harbrew New York and constitutes a valid and binding obligation of Harbrew New York, enforceable against Harbrew New York in accordance with its terms.  The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions hereof will not, conflict with, or result in any breach or violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of or "put" right with respect to any obligation or to loss of a material benefit under, or result in the creation of any material lien upon any of the properties or assets of Harbrew New York, except, with respect to this Agreement, for the filing of the Certificate of Merger with the Secretary of State of Nevada and the Articles of Merger with the Secretary of State of New York.

(e) Absence of Certain Changes or Events.  Since March 31, 2009, Harbrew New York has conducted its business only in the ordinary course consistent with past practice, and there is not and has not been: (i) any Material Adverse Change; (ii) any condition, event or occurrence which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect or give rise to a Material Adverse Change; (iii) any event which, if it had taken place following the execution of this Agreement, would not have been permitted under the terms of this Agreement without prior consent of the Parent; or (iv) any condition, event or occurrence which could reasonably be expected to prevent, hinder or materially delay the ability of Harbrew New York to consummate the transactions contemplated by this Agreement.

(f) Litigation; Labor Matters; Compliance with Laws.

(g) Environmental Matters.  Harbrew New York is in compliance with all applicable Environmental Laws except for such violation thereof would not have a Material Adverse Effect. "Environmental Laws" means all applicable federal, state and local statutes, rules, regulations, ordinances, orders, decrees and common law relating in any manner to contamination, pollution or protection of human health or the environment, and similar state laws.           

(h) Material Contract Defaults.  Harbrew New York is not, or has not, received any notice or has any knowledge that any other party is, in default in any respect under any Material Contract; and there has not occurred any event that with the lapse of time or the giving of notice or both would constitute such a material default.  For purposes of this Agreement, a “Material Contract” means any contract, agreement or commitment that is effective as of the Closing Date to which Harbrew New York is a party (i) with expected receipts or expenditures in excess of $100,000, (ii) requiring Harbrew New York to indemnify any person, (iii) granting exclusive rights to any party, (iv) evidencing indebtedness for borrowed or loaned money in excess of $100,000 or more, including guarantees of such indebtedness, or (v) which, if breached by Harbrew New York in such a manner would (A) permit any other party to cancel or terminate the same (with or without notice of passage of time) or (B) provide a basis for any other party to claim money damages (either individually or in the aggregate with all other such claims under that contract) from Harbrew New York or (C) give rise to a right of acceleration of any material obligation or loss of any material benefit under any such contract, agreement or commitment.

(i) Properties.  Harbrew New York has good, clear and marketable titles to all the tangible properties and tangible assets reflected in the latest balance sheet as being owned by Harbrew New York or acquired after the date thereof which are, individually or in the aggregate, material to the business of Harbrew New York (except properties sold or otherwise disposed of since the date thereof in the ordinary course of business), free and clear of all material liens.

(j) Trademarks and Related Contracts. To the knowledge of Harbrew New York:

(k)  Tax Returns and Tax Payments. Harbrew New York has timely filed all tax returns required to be filed by them, have paid all taxes shown thereon to be due and have provided adequate reserves in their financial statements for any taxes that have not been paid, whether or not shown as being due on any returns.  No material claim for unpaid taxes have been made or become a lien against the property of Harbrew New York or is being asserted against Harbrew New York, no audit of any tax return of Harbrew New York is being conducted by a tax authority, and no extension of the statute of limitations on the assessment of any taxes has been granted by Harbrew New York and is currently in effect.

Section 4.02  Representations and Warranties of the Parent and Merger Sub .  As an inducement for Harbrew New York to enter into this Agreement, the Parent and Merger Sub make the following representations and warrants to Harbrew New York:

(a) Organization, Standing and Corporate Power. The Parent and Merger Sub are duly incorporated, validly existing and in good standing under the laws of the State of Nevada, as is applicable, and has the requisite corporate power and authority to carry on its business as now being conducted.  The Parent and Merger Sub are duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed (individually or in the aggregate) would not have a material adverse effect with respect to Parent.

(b) Subsidiaries. As of the date here