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.
1
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.
2
(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.
3
(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:
4
(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.
5
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.
6
(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, mortgage, deed of trust or other
agreement, instrument or contract to which DMECA is now a party or by
which it or any of its assets or properties are bound or its
Certificate of Incorporation or the bylaws of DMECA as amended, or any
law, order, rule or regulation, writ, injunction, judgment or decree of
any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over DMECA or any of its businesses or
properties.
(g) DMECA is, and on the Effective Date will be duly
authorized, qualified, and licensed under any and all applicable laws,
regulations, ordinances, or orders of public authorities to carry on
its business in the places and in the manner as presently conducted or
as contemplated in this Agreement. The business of DMECA does not
require it to be registered as an investment company or investment
adviser as such terms are defined under the Investment Company Act and
the Investment Advisers Act of 1940, each as amended.
(h) DMECA has, and on the Effective Date will have no
subsidiaries.
(i) Except for (i) the incurring of expenses of its
organization, (ii) the issuance of the DMECA Shares to Diamond, (iii)
the incurring of expenses relating to this Agreement and the
consummation of the transactions contemplated by this Agreement, and
(iv) the consummation of the Merger, DMECA has had, and on the
Effective Date will have had no business and no financial or other
transactions of any nature whatsoever.
(j) DMECA has, and on the Effective Date will have no
liabilities (including, but not limited to, tax liabilities) nor are
there, or on the Effective Date will there be, any claims against DMECA
(whether such liabilities or claims are contingent or absolute, direct
or indirect, and matured or unmatured) except for liabilities for its
organization expenses or expenses incurred in connection with the
Merger.
7
(k) DMECA has, and on the Effective Date will have no
fixtures, furniture, equipment, inventory or accounts receivable.
(l) DMECA has, and on the Effective Date will have no
contracts and commitments to which it is, or on the Effective Date will
be a party, except for this Agreement and other documents and
instruments contemplated hereby in connection with the Merger.
(m) 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 against DMECA, or
challenging the validity or propriety of the transactions contemplated
by this Agreement and, to DMECA's best knowledge, there is no
reasonable basis for any other proceeding, claim, action or
governmental investigation against DMECA. DMECA 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 DMECA.
(n) Since the inception of DMECA there have been, and to the
Effective Date there will be (i) no salaried or otherwise compensated
employees and no bonuses paid to any officer or director of DMECA; (ii)
no loans made to or any transactions with any officer or director of
DMECA; (iii) no dividends or other distributions declared or paid by
DMECA; and (iv) no purchase by DMECA of any DMECA Shares.
(o) Since its inception, DMECA has not issued or committed
itself to issue, and to the Effective Date will not issue or commit
itself 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.
(p) DMECA has no patents, patent applications, trademarks,
trademark registrations, tradenames, copyrights, copyright
registrations or applications therefore.
(q) Since its inception, DMECA has, and on the Effective Date
will have in all material respects conducted its affairs in compliance
with all applicable laws, rules and regulations.
(r) During the past five year period, no officer or director
of DMECA has been the subject of any Bad Event.
(s) DMECA has no pension plan, profit sharing or similar
employee benefit plan.
(t) DMECA 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.
(u) DMECA has no employees.
8
4. REPRESENTATIONS AND WARRANTIES OF DIAMOND. Diamond represents,
warrants and covenants, except to the extent set forth on the Diamond Schedule
of Exceptions or except as set forth in the reports required to be filed by
Diamond under the Securities Act and the Exchange Act of 1934, as amended,
including pursuant to Section 13(a) or 15(d) thereof ("SEC REPORTS"), as
follows:
(a) Diamond is a duly organized and validly existing
corporation in good standing under the laws of the State of New Jersey,
authorized to issue an aggregate of 800,000,000 shares of Diamond
Common Stock. On the Effective Date, there will be issued and
outstanding no more than 20,696,882 shares of Diamond Common Stock, all
of which such issued and outstanding shares will be validly issued,
fully paid and nonassessable. The fully diluted number of shares will
be not more than 29,796,971 shares of common stock. Except as
contemplated by this Agreement, on the Effective Date there will be no
issued or outstanding options, warrants or other rights, or commitments
or agreements of any kind, contingent or otherwise, to purchase or
otherwise acquire shares of Diamond Common Stock or any issued or
outstanding securities of any nature convertible into shares of Diamond
Common Stock (see Exhibit A). There is no proxy or any other agreement,
arrangement or understanding of any kind authorized or outstanding
which restricts, limits or otherwise affects the right to vote any
shares of Diamond Common Stock.
(b) Diamond is, and on the Effective Date will be, duly
authorized, qualified and licensed under any and all applicable laws,
regulations, ordinances or orders of public authorities to carry on its
business in the places and in the manner as presently conducted. The
business of Diamond does not require it to be registered as an
investment company or investment advisor, as such terms are defined
under the Investment Company Act and the Investment Advisors Act of
1940.
(c) Diamond has, and on the Effective Date the following
subsidiaries:
1. Diamond Acquisition, Delaware
2. Diamond Acquisition, New Jersey (to be terminated)
3. E-DMEC Corporation, California - Incorporated 1985
(All California Business runs through this Company)
4. Jewel Products International Inc. - California, Incorporated
1991.(Dormant - sold toys. Has a patient, no value)
5. Salesdirect123.com - California, Incorporated 1996.
(Dormant - was to be used for internet sales)
2. The financial statements of Diamond, consisting of its
Balance Sheets as at March 31, 2006 and 2005, and its Statement of
Operations for the fiscal years ended March 31, 2006 and 2005, its
Statement of Stockholders' Equity as of March 31, 2006 and 2005, and
its Statement of Cash Flows for the fiscal years ended March 31, 2006
and 2005, all together with accompanying notes, have been audited by
independent public accountants, are complete and correct in all
material respects, present fairly the financial position of Diamond and
the results of operations and changes in financial position for the
respective periods ended on such dates, and were prepared in accordance
with generally accepted accounting principles consistently applied
9
during the periods. The interim financial statements of Diamond,
consisting of its Balance Sheet as of December 31, 2006 and its
Statement of Operations, Statement of Stockholders' Equity and
Statement of Cash Flows for the nine-month period ending December 31,
2006 have been prepared in accordance with generally accepted
accounting principles and have been adjusted for all normal and
recurring accruals and present fairly the financial position of Diamond
and the results of operations and changes in financial position for the
respective periods ended on such dates, and were prepared in accordance
with generally accepted accounting principles consistently applied
during the periods. All the financial statements referenced herein
regarding Diamond are collectively referred to as the "DIAMOND
FINANCIAL STATEMENTS", all of which are set forth in the SEC Reports
publicly filed with the Commission.
3. There has not been, and on the Effective Date there will
not have been, any material change in the financial condition of
Diamond from that set forth in the Diamond Financial Statements except
for (i) transactions in the ordinary course of business, (ii)
transactions relating to this Agreement, and (iii) the incurring of
expenses and liabilities relating to this Agreement.
4. There are, and on the Effective Date will be, no
liabilities (including, but not limited to, tax liabilities) or claims
against Diamond (whether such liabilities or claims are contingent or
absolute, direct or indirect, accrued or unaccrued and matured or
unmatured) not appearing on the Diamond Financial Statements, except
for (i) liabilities for expenses incurred relating to this Agreement
and the consummation of the transactions contemplated hereby and (ii)
liabilities and commitments incurred or made in the ordinary course of
Diamond's business or taxes incurred on earnings since December 31,
2006.
5. All federal, state, county and local income, excise,
property or other tax returns required to be filed by Diamond have been
filed and all required taxes, fees or assessments have been paid or an
adequate reserve therefore has been set up in the Diamond Financial
Statements.
6. Diamond has, and on the Effective Date will have, no
fixtures, furniture, equipment, inventory or accounts receivable.
7. Diamond has, and on the Effective Date will have, no
material contracts to which it is, or on the Effective Date will be, a
party.
8. 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 Diamond's
knowledge threatened in writing, against Diamond, including, but not
limited to any shareholder claims or derivative actions, or challenging
the validity or propriety of the transactions contemplated by this
Agreement, and, to Diamond's best knowledge, there is no reasonable
10
basis for any proceeding, claim, action or governmental investigation
against Diamond. Diamond 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 Diamond.
9. There will be salaried or otherwise compensated employees
until the DVD /Video business is shut down or such employees are
terminated.
10. Diamond has not issued or committed itself to issue, and
to the Effective Date will not issue or commit itself to issue, any
additional common shares or any options, rights, warrants, or other
securities convertible into common shares, except as contemplated by
this Agreement.
11. Diamond has one patent (Jewel), no patent applications,
trademarks, trademark registrations, trade names, copyrights, copyright
registrations or applications therefor. Diamond has no knowledge of any
infringements by it of any third party's intellectual property.
12. Diamond 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.
13. On the Effective Date there will be no loans, leases,
commitments, arrangements or other contracts of any kind or nature
outstanding between (i) Diamond and (ii) any officer or director of
Diamond or any person related to or affiliated with any officer or
director of Diamond.
14. During the past five year period, no officer or director
of Diamond has been the subject of any undisclosed Bad Event.
15. Diamond has no pension plan, profit sharing or similar
employee benefit plan.
16. Except for the consent and approval of the Boards of
Directors of DMECA and Diamond and RXFA the filing of a Certificate of
Merger, and the filing of a Form 8-K within 15 days of the Effective
Date, 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 Diamond of this
Agreement and (ii) the consummation of the Merger and the other
transactions contemplated hereby. Diamond 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, or will be prior to
the Effective Date, duly approved by the Board of Directors of Diamond.
This Agreement has been duly executed and delivered by Diamond and
constitutes the legal, valid and binding obligation of Diamond
11
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).
17. Diamond 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.
18. Diamond has no employees.
19. None of the information supplied or to be supplied by or
about Diamond to RXFA 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.
20. The execution and delivery by Diamond of this Agreement,
the consummation and performance of the transactions herein
contemplated, and compliance with the terms of this Agreement by
Diamond will not conflict with, result in a breach of or constitute a
default under (i) any indenture, mortgage, deed of trust or other
agreement, instrument or contract to which Diamond is now a party or by
which it or any of its assets or properties is bound; (ii) the
Certificate of Incorporation, as amended, or the bylaws of Diamond, in
each case as amended; or (iii) any law, order, rule or regulation,
writ, injunction, judgment or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over
Diamond or any of its business or properties.
21. To the best of its knowledge, Diamond is not in violation
of any federal, state or local environmental law or regulation.
5. REPRESENTATIONS TO SURVIVE CLOSING. All of the representations,
covenants and warranties contained in this Agreement (including all statements
contained in any certificate or other instrument delivered by or on behalf of
Diamond, DMECA or RXFA pursuant hereto or in connection with the transactions
contemplated hereby) shall survive the Closing for a period of three (3) years
from the Effective Date.
6. SURVIVING CORPORATION. The surviving entity shall be RXFA. Its name,
identities, articles of organization, operating agreement, existence, purposes,
powers, objects, franchises, rights and immunities shall be unaffected and
unimpaired by the Merger, except as described in the Certificate of Merger.
12
7. TREATMENT OF SHARES OF CONSTITUENT CORPORATIONS. The terms and
conditions of the Merger, the mode of carrying the same into effect, and the
manner and basis of converting the securities of each of the Constituent
Corporations are as follows:
(a) All of the Outstanding RXFA shares shall be exchanged by
virtue of the Merger at the Effective Date into approximately 85% of
Diamond's outstanding shares as of the Effective Date or approximately
168,849,504 post split shares (see Exhibit A) of Diamond Common Stock.
(b) DMECA shall acquire 100% of RXFA outstanding shares as of
the effective date.
(c) The separate existence and corporate organization of
DMECA, except insofar as it may be continued by statute, shall cease on
Effective Date and RXFA shall become a wholly owned subsidiary of
Diamond.
Series A convertible preferred: 50 share authorized and issued, only 40
remain outstanding.
8. RIGHTS AND LIABILITIES OF SURVIVING CORPORATION. (a) On and after
the Effective Date, RXFA, as the surviving entity of the Merger, shall succeed
to and possess, without further act or deed, all of the estate, rights,
privileges, powers and franchises, both public and private and all of the
property, real, personal and mixed, of DMECA; all debts due to DMECA on whatever
account shall be vested in RXFA; all claims, demands, property, rights,
privileges, powers, franchises and every other interest of DMECA shall be as
effectively the property of RXFA as they were of DMECA; the title to any real
estate by deed or otherwise in DMECA shall not revert or be in any way impaired
by reason of the Merger, but shall be vested in RXFA; all rights of creditors
and all liens upon any property of DMECA shall be preserved unimpaired, limited
in lien to the property affected by such lien at the Effective Date; all debts,
liabilities and duties of DMECA shall thenceforth attach to RXFA and may be
enforced against it to the same extent as if such debts, liabilities and duties
had been incurred or contracted by it; and RXFA shall indemnify and hold
harmless Diamond and the officers and directors of DMECA against all such debts,
liabilities and duties and against all claims and demands arising out of the
Merger.
9. FURTHER ASSURANCES OF TITLE. As and when requested by RXFA, or by
any of its successors or assigns, DMECA shall execute and deliver, or cause to
be executed and delivered, all such deeds and instruments and will take or cause
to be taken all such further action as RXFA may deem necessary or desirable in
order to vest in and confirm to RXFA title to and possession of the property
acquired by RXFA by reason or as a result of the Merger and otherwise to carry
out the intent and purposes hereof, and the officers and directors of RXFA and
Diamond are fully authorized in the name of RXFA or Diamond or otherwise to take
any and all such action.
10. CONDITIONS OF OBLIGATIONS OF DMECA AND DIAMOND. The obligation of
DMECA and Diamond to consummate the Merger is subject to the following
conditions prior to the Effective Date:
(a) RXFA has not suffered an uninsured loss on account of
fire, flood, accident, or other calamity of such a character as to
interfere materially with the continuous operation of its business or
materially affect adversely its condition, financial or otherwise,
regardless of whether or not such loss shall have been insured.
(b) That no material transactions shall have been entered into
by RXFA other than transactions in the ordinary course of business
between December 31, 2006 and the Effective Date, other than as
referred to in this Agreement or in the schedules annexed, except with
the prior written consent of Diamond.
13
(c) Except as disclosed in this Agreement or in the schedules
annexed hereto, that no material adverse change in the aggregate shall
have occurred in the financial condition of RXFA since December 31,
2006.
(d) That none of the properties or assets of RXFA shall have
been sold or otherwise disposed of other than in the ordinary course of
business during such period, except with the prior written consent of
Diamond.
(e) That RXFA shall have performed and complied with the
provisions and conditions of this Agreement on its part to be performed
and complied with, and that the representations and warranties made by
RXFA in this Agreement are true and correct, both when made and as of
the Effective Date.
(f) That all applicable filings and regulatory approvals
required to be made or obtained by RXFA have been made or obtained.
(g) That this Agreement and the transactions contemplated
hereby shall have been approved by appropriate action of RXFA, the
Managing Member and the Members.
(h) That there shall have been full compliance with the
applicable securities or "blue sky" laws and regulations of any state
or other governmental body having jurisdiction over the Merger.
(i) That Diamond shall have received from RXFA the following
documents:
(i) original signature page of this Agreement
duly executed by ROXA;
(ii) Good Standing Certificate of ROXA;
(iii) Good Standing Certificate of ROXA;
(iv) Certificate of Incorporation of ROXA;
(v) Organizational minutes of ROXA and any other
documents required by Section 16;
(vi) By-Laws of ROXA;
(vii) Written consent of shareholders of ROXA
authorizing the Merger;
(viii) Written consent of the Board of Directors of
ROXA authorizing the Merger; and
(ix) Officer's Certificate of ROXA evidencing
compliance with the provisions of this
Section 11.
12. CONDITIONS OF OBLIGATIONS OF RXFA. The obligations of RXFA to
consummate the Merger are subject to the following conditions prior to the
Effective Date:
(a) That DMECA and Diamond are in compliance with their
respective representations, warranties and covenants contained herein,
and that RXFA shall receive from each of DMECA and Diamond a
certificate to such effect from the President of DMECA and Diamond as
of the Effective Date.
14
(b) That DMECA and Diamond shall not have suffered any loss on
account of fire, flood, accident or other calamity of such a character
as to interfere materially with the continuous operation of its
business or materially affect adversely its condition, financial or
otherwise, regardless of whether or not such loss shall have been
insured.
(c) That no material transactions shall have been entered into
by DMECA or Diamond other than transactions in the ordinary course of
business since December 31, 2006, other than as referred to in this
Agreement, except with the prior written consent of RXFA.
(d) That no material adverse change shall have occurred in the
financial condition of DMECA or Diamond since December 31, 2006 other
than as referred to in this Agreement.
(e) That none of the properties or assets of DMECA or Diamond
shall have been sold or otherwise disposed of other than in the
ordinary course of business September 30, 2002, except with the written
consent of RXFA.
(f) That DMECA and Diamond shall each have performed and
complied with the provisions and conditions of this Agreement on its
part to be performed and complied with, and that the representations
and warranties made by Diamond herein are true and correct.
(g) That all applicable filings and regulatory approvals
required to be made or obtained by Diamond have been made or obtained.
(h) That Diamond shall have held a meeting of its Board of
Directors at which meeting all of its directors shall have resigned
seriatim with the exception of James Lu and the persons designated by
RXFA shall have been appointed as directors of Diamond, all subject to
the consummation of the Merger.
(i) That RXFA shall have received from Diamond and DMECA the
following documents:
(i) Original signature page of this Agreement
duly executed by Diamond and DMECA;
(ii) Good Standing Certificate of Diamond;
(iii) Good Standing Certificate of DMECA;
(iv) Certificate of Incorporation of Diamond;
(v) Certificate of Incorporation of DMECA;
(vi) Organizational minutes of Diamond and any
other documents required by Section 15;
(vii) Organizational minutes of DMECA and any
other documents required by Section 15;
(viii) By-Laws of Diamond;
(ix) By-Laws of DMECA;
(x) Written consent of shareholders of DMECA
authorizing the Merger;
(xi) Written consent of the Board of Directors of
Diamond authorizing the Merger;
(xii) Officer's Certificate of Diamond evidencing
compliance with the provisions of this
Section 12; and
(xiii) Officer's Certificate of DMECA evidencing
compliance with the provisions of this
Section 12.
15
13. ABANDONMENT. This Agreement and the Merger may be abandoned (a) by
any of the Companies, acting by its Board of Directors, at any time prior to its
adoption by the shareholders of such Company, as provided by law, (b) by any of
the Companies, acting by its Board of Directors by written notice to the other
parties hereto, at any time in the event of the failure of any condition in
favor of such entity as to which the consummation of the Merger is subject, or
(c) by the consent of all the Companies, acting each by its Board of Directors,
at any time after such adoption by such shareholders and prior to the Effective
Date. In the event of abandonment of this Agreement, the same shall become
wholly void and of no effect, and there shall be no further liability or
obligation hereunder on the part of any of the Companies, their respective
Boards of Directors or any other party to this Agreement.
14. CLOSING OR TERMINATION. In the event the Closing of this Agreement
shall not take place by May 30, 2007, due to failure of any condition of closing
required herein, any party shall have the right to terminate this Agreement, in
which event no party shall have any further right or obligation as against any
other.
15. DELIVERY OF CORPORATE PROCEEDINGS OF DIAMOND AND DMECA. At the
Closing, Diamond and DMECA shall deliver to counsel for RXFA the originals of
all of the corporate proceedings of Diamond and DMECA, duly certified by their
respective Secretaries, relating to this Agreement.
16. DELIVERY OF CORPORATE PROCEEDINGS OF RXFA. At the Closing, RXFA
shall deliver to counsel for Diamond and DMECA the originals of all of the
corporate proceedings of RXFA, duly certified by its Secretary, relating to this
Agreement and a draft of the language proposed to be included the Form 8-K to be
filed within 15 days of the Effective Day, which draft shall be substantially in
compliance with the requirements of Form 8-K.
17. LIMITATION OF LIABILITY. The representations and warranties made by
any party to this Agreement are intended to be relied upon only by the other
parties to this Agreement and by no other person. Nothing contained in this
Agreement shall be deemed to confer upon any person not a party to this
Agreement any third party beneficiary rights or any other rights of any nature
whatsoever.
18. FURTHER INSTRUMENTS AND ACTIONS. Each party shall deliver such
further instruments and take such further action as may be reasonably requested
by any other in order to carry out the intent and purposes of this Agreement.
19. GOVERNING LAW. This Agreement is being delivered and is intended to
be performed in the State of New Jersey and shall be construed and enforced in
accordance with the laws of such State without regard to conflicts of laws
thereof.
20. NOTICES. All notices or other communications to be sent by any
party to this Agreement to any other party to this Agreement shall be sent by
certified mail, nationwide overnight delivery service or by personal delivery or
nationwide overnight courier to the addresses hereinbefore designated, or such
other addresses as may hereafter be designated in writing by a party.
21. BINDING AGREEMENT. This Agreement represents the entire agreement
among the parties hereto with respect to the matters described herein and is
binding upon and shall inure to the benefit of the parties hereto and their
legal representatives, successors and permitted assigns. This Agreement may not
be assigned and, except as stated herein, may not be altered or amended except
in writing executed by the party to be charged.
16
22. COUNTERPARTS. This Agreement may be executed in counterparts, all
of which, when taken together, shall constitute the entire Agreement.
23. SEVERABILITY. The provisions of this Agreement shall be severable,
so that the unenforceability, validity or legality of any one provision shall
not affect the enforceability, validity or legality of the remaining provisions
hereof.
24. JOINT DRAFTING. This Agreement shall be deemed to have been drafted
jointly by the parties hereto, and no inference or interpretation against any
party shall be made solely by virtue of such party allegedly having been the
draftsperson of this Agreement.
25. RELIANCE ON CERTIFICATES. In rendering any opinion referred to
herein, counsel for the parties hereto may rely, as to any factual matters
involved in their respective opinions, on certificates of public officials and
of corporate and company officers, and on such other evidence as such counsel
may reasonably deem appropriate and, as to the matters governed by the laws of
jurisdictions other than the United States or the States of New Jersey and
California, an opinion of local counsel in such other jurisdiction(s), which
counsel shall be satisfactory to the other parties in the exercise of their
reasonable discretion.
26. PUBLIC ANNOUNCEMENTS. All parties hereto agree that any public
announcement, press release or other public disclosure of the signing of this
Agreement shall be made jointly and only after all parties hereto have reviewed
and approved the language and timing of such disclosure, except as such
disclosure may be required pursuant to any legal obligation or order of any
court having proper jurisdiction over any of the parties hereto.
27. DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated in this Section 27:
"BAD EVENTS" shall mean, collectively, the events described in clauses
(i) through (vi) of Section 2(t).
"CERTIFICATE OF MERGER" shall have the meaning set forth in Section 1.
"CFTC" shall have the meaning set forth in Section 2(t)(iii)(A).
"CLOSING" shall have the meaning set forth in Section 1.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMISSION" shall mean the Securities and Exchange Commission.
"COMMISSION REPORTS" shall have the meaning set forth in the opening
paragraph of Section 4
"COMPANIES" shall mean, collectively, Diamond, DMECA and RXFA.
"CONTRACTS" shall have the meaning set forth in Section 2(m).
"CONSTITUENT CORPORATIONS" shall mean, collectively, RXFA and DMECA.
17
"EFFECTIVE DATE" shall mean the date the Certificate of Merger is filed
with the appropriate State.
"DIAMOND" shall mean Diamond Inc., a New Jersey corporation.
"DIAMOND COMMON STOCK" shall have the meaning set forth in the second
recital to this Agreement.
"DIAMOND FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 4(d).
"DIAMOND SCHEDULE OF EXCEPTIONS" shall mean the schedule of exceptions
to the representations, warranties and covenants of Diamond annexed
hereto and made a part hereof.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section
2(e).
"DMECA" shall mean Diamond Acquisition, Inc., a New Jersey corporation
and wholly owned subsidiary of Diamond.
"DMECA SHARES" shall have the meaning set forth in the third recital to
this Agreement.
"IRS" shall mean the Internal Revenue Service.
"MERGER" shall have the meaning set forth in the fourth recital to this
Agreement.
"OUTSTANDING DIAMOND COMMON STOCK" shall have the meaning set forth in
the second recital to this Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
the rules and regulation promulgated thereunder.
"RXFA" shall mean Rx for Africa, Inc., a Delaware Corporation
"RXFA SCHEDULE OF EXCEPTIONS" shall mean the schedule of exceptions to
the representations, warranties and covenants of RXFA annexed hereto
and made a part hereof.
[SIGNATURE PAGE FOLLOWS]
18
IN WITNESS WHEREOF, the parties hereto have made and executed this
Agreement as of the day and year first above written.
DIAMOND ENTERTAINMENT CORPORATION
By: /s/ James Lu
------------------------------
Name: James Lu
Title: CO-CEO
By: /s/ Jeff Schillen
------------------------------
Name: Jeff Schillen
Titls: Co-CEO
RX FOR AFRICA, INC.
By: /s/ David Blech
------------------------------
Name: David Blech
Title: Authorized Agent
DIAMOND ACQUISITION, INC.
By: /S/ James Lu
------------------------------
Name: James Lu
Title: President and Director
19