AGREEMENT AND PLAN OF MERGER
Exhibit
2.3
AGREEMENT
AND PLAN OF MERGER
This
Agreement and Plan of Merger is entered into this 18th
day of
September ,2006, by and among Pacific Magtron International Corporation, Inc.,
a
Nevada corporation (“PMIC”); LiveWarehouse, Inc., a California corporation
(“LW”); and Herborium, Inc., a Delaware corporation (“Herborium”).
RECITALS:
WHEREAS,
LW is a
wholly-owned subsidiary of PMIC; and
WHEREAS,
Drs.
Xxxxx X. Xxxxxxxxx (“Xx. Xxxxxxxxx”) and Xxxxx X. Xxxxxxxx (“Xx. Xxxxxxxx”)
(Drs. Xxxxxxxxx and Xxxxxxxx are referred to as the “Original Herborium
Shareholders”) and other individuals, as further identified on Schedule 3.04,
collectively own a 100% interest in Herborium (Xxxxxxxxx, Xxxxxxxx and the
other
individuals identified on Schedule 3.04 are collectively referred to as the
“Herborium Shareholders”); and
WHEREAS,
on or
about May 11, 2005, PMIC and LW, as well as Pacific Magtron, Inc. (“PMI”) and
Pacific Magtron (GA), Inc. (“PMIGA”), filed for protection under the United
States Bankruptcy Code, 11 U.S.C. §§101 et
seq.,
in the
United States Bankruptcy Court for the District of Nevada, (Case
Nos. BK-S-05-14331 LBR, BK-S-05-14335 LBR, and BK-S-05-14339 LBR, jointly
administered under Case No. BK-S-05-14326 LBR)
(the
“Bankruptcy Cases”); and
WHEREAS,
on or
about June 21, 2006, PMIC and LW filed their respective Fourth Amended Plans
of
Reorganization (the “Plans”); and
WHEREAS,
PMI and
PMIGA liquidated in the Bankruptcy Cases pursuant to Plans of Liquidation which
were confirmed by Bankruptcy Court Order entered on January 24, 2006;
and
WHEREAS,
on or
about August 11, 2006, the United States Bankruptcy Court entered an Order
confirming the Plans of PMIC and LW; and
WHEREAS,
the
board of directors of Herborium has approved the Merger (as defined below)
of LW
with and into Herborium in accordance with the provisions of this
Agreement.
NOW,
THEREFORE,
intending to be legally bound hereby, the parties agree as follows:
ARTICLE
I
DEFINITIONS
Unless
otherwise defined in this Agreement, when used herein, the following terms
shall
have the meanings indicated:
"Affiliate"
shall mean with respect to PMIC, LW or Herborium, as the case may be, any person
or entity which directly or indirectly is in control of, is controlled by or
is
under common control with such corporation or entity.
"Certificate
of Merger" means the Certificate of Merger to be filed with the Secretary of
State of each of Delaware and California in the form annexed hereto as Exhibit
“A”.
"Claim"
means any claim, security interest, pledge, mortgage, lien, charge, deed of
trust, right of first refusal, option, conditional sale, bailment, lease,
encumbrance or other interest in property, real or personal, tangible or
intangible.
"Closing"
means the taking and completion of all actions required by this Agreement to
be
taken at Closing or necessary and appropriate to carry out the Merger and other
transactions contemplated hereby to be completed at Closing, all of which,
except as otherwise provided herein, shall be deemed taken at the same time
and
effective only upon the completion of all such actions.
"Closing
Date" means on or before September 11, 2006, or any other date agreed by the
parties.
"Constituent
Corporations" means LW and Herborium.
"Effective
Time" has the meaning set forth in Section 2.01(a) below.
"Herborium
Financials" means the balance sheet of Herborium for the fiscal year ended
November 30, 2004 and 2005, and the six months ending May 31, 2006, together
with the statements of income for the twelve-month and six-month periods then
ended as well as any financial information during the gap period until Closing,
copies of which have previously been delivered by Herborium to
PMIC.
"Knowledge"
means the following: (a) an individual will be deemed to have "Knowledge" of
a
particular fact or matter if: (i) such individual is actually aware of such
fact
or other matter, or (ii) a prudent individual could be expected to discover
or
otherwise become aware of such fact or other matter in the course of conducting
a reasonably comprehensive investigation concerning the existence of such fact
or other matter; and (b) a Person (other than an individual) will be deemed
to
have "Knowledge" of a particular fact or other matter if any individual who
is
serving, or who has at any time served, as a director or officer of such Person
(or in a similar capacity) has, or at any time had, Knowledge of such fact
or
other matter.
"Liabilities"
means, as of any given date as to any given person, any Obligation pursuant
to
which any other person now or with the passage of time or upon the occurrence
of
any event in the future has or will have a right to assert a claim for money
or
equitable relief, including, without limiting the generality of the foregoing,
taxes, fees, assessments or pension, profit sharing or other employee benefit
plan contributions that have or may become due.
"Merger"
means the merger of LW with and into Herborium, as set forth in Section 2.01(a)
below.
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"Obligation"
means any legal obligation, whether matured or unmatured, liquidated or
unliquidated, absolute, fixed or contingent, disputed or
undisputed.
"PMIC
Financials" means the consolidated balance sheet of PMIC for the fiscal year
ending December 31, 2004 and 2005 and statements of income and cash flows of
PMIC for the twelve month periods then ended, and statement of cash on hand
for
exclusive use in paying distributions with respect to Allowed Claims and Equity
Interests of the Creditors of PMIC and LW under the Plans copies of which have
been delivered by PMIC to Herborium.
"Surviving
Corporation" shall mean Herborium.
ARTICLE
II
THE
MERGER
2.01. Merger
of the Constituent Corporations
(a) The
Merger shall be effected as of, and the term "Effective Time" shall mean, the
date and time that the Certificate of Merger is filed with the Secretary of
State of Delaware and the Secretary of State of California, whichever is last
to
occur.
(b) At
the
Effective Time and subject to the terms and conditions of this Agreement, LW
shall be merged with and into Herborium and the separate existence of LW shall
cease. Herborium shall be the Surviving Corporation, and shall continue its
corporate existence and thereupon and thereafter possess all rights, privileges,
powers and franchises of a public as well as a private nature of the Constituent
Corporations, and be subject to all the restrictions, disabilities and duties,
and shall assume full responsibility for all Claims, Obligations and
Liabilities, of each of the Constituent Corporations. At the Effective Time,
all
of the property, personal and mixed, tangible or intangible, and all of the
franchises of each of the Constituent Corporations, and all debts due to any
of
the Constituent Corporations, on whatever account, shall be vested in the
Surviving Corporation.
(c) As
a
result of the Merger, the Certificate of Incorporation of Herborium, as in
effect immediately prior to the Effective Time shall be immediately after the
Effective Time the Certificate of Incorporation of the Surviving Corporation,
except that Article 4 should be amended to provide that the authorized capital
stock of the Surviving Corporation shall consist of one (1) share of Common
Stock, par value $.001.
(d) The
Bylaws of Herborium, as in effect immediately prior to the Effective Time,
shall
be immediately after the Effective Time the Bylaws of the Surviving Corporation
until thereafter amended.
(e) The
directors of the Surviving Corporation and PMIC shall be Xx. Xxxxx X. Xxxxxxxxx,
Xx. Xxxxx X. Xxxxxxxx, Xxx X. Xxxxxxxxx, Xxxxx X. Xxxxxx and an independent
director to be selected by a majority of the vote of the named directors, to
serve until their successors are duly elected by the shareholders of the
Surviving Corporation and PMIC, as the case may be, or until their earlier
death, resignation or removal.
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(f) The
officers of Herborium immediately prior to the Effective Time shall, after
the
Effective Time, be the officers of the Surviving Corporation and PMIC with
such
title as designated in the Plans until their successors are elected and
qualified in accordance with the Certificate of Incorporation and Bylaws of
the
Surviving Corporation or until their earlier death, resignation or
removal.
(g) As
soon
as reasonably practicable following the Effective Time, PMIC shall amend its
Articles of Incorporation and Bylaws, as may be necessary, and take all steps
reasonably necessary, including any filings with the United States Securities
and Exchange Commission, to change its registered corporate name to Herborium
Group, Inc. Concurrently with the Closing, PMIC shall adopt the November 30
fiscal year end for tax and accounting purposes.
(h) For
accounting purposes, Herborium shall be deemed the “acquirer” since it will hold
a majority interest in post-Merger PMIC.
2.02. Status
and Conversion of Securities.
(a) At
the
Effective Time, without the necessity of any action on the part of the
Constituent Corporations or PMIC, 100% of the interests held by the Herborium
Shareholders immediately prior to the Effective Time (the “Herborium Interests”)
shall be exchanged for 92,282,018 shares of post-Merger PMIC authorized and
previously unissued Common Stock (“PMIC Stock”), certificates for which PMIC
Stock shall be delivered to the Herborium Shareholders at Closing in exchange
for the certificates representing the Herborium Interests, and the issued and
outstanding shares of PMIC Stock shall consist of 108,567,080 shares of PMIC
Stock.
(b) Any
and
all shares of LW Capital Stock issued and outstanding immediately prior to
the
Effective Time shall be converted into one share of Common Stock of the
Surviving Corporation and shall be owned by PMIC.
(c) Each
of
PMIC, the Constituent Corporations and the Original Herborium Shareholders
respectively agrees to use its or his best efforts to take all such action
as
may be necessary or appropriate to effectuate the Merger in accordance with
the
terms of this Agreement. If, at any time after the Effective Time, any further
action is necessary or desirable to carry out the purposes of this Agreement
and
to vest in the Surviving Corporation full right, title and possession to all
assets, property, rights, privileges, powers and franchises of any of the
Constituent Corporations, the officers of the Surviving Corporation are fully
authorized in the name of any of the Constituent Corporations to take, and
shall
take, all such lawful and necessary action.
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(d) In
order
to effectuate the securities conversions contemplated by this Section 2.02,
and
as contemplated by the Plans, all issued and outstanding PMIC Series A
Convertible Preferred Shares shall convert into 800,000 shares of PMIC Stock.
The post-Merger PMIC Stock ownership of PMIC shall be divided among the
Herborium Shareholders and other categories of shareholders in accordance with
the Plans and as set forth in Section 2.02(a) above on Schedule 2.02 annexed
hereto.
(e) Each
of
PMIC, the Constituent Corporations, and the Herborium Shareholders shall take
all reasonable steps necessary to complete and satisfy all requirements of
the
United States Securities and Exchange Commission as a result of this Merger
and
the transactions contemplated herein.
ARTICLE
III
HERBORIUM'S
AND ORIGINAL HERBORIUM SHAREHOLDERS’
REPRESENTATIONS
AND WARRANTIES
The
following representations and warranties are being given and made by Herborium
to induce PMIC and LW to enter into this Agreement and to carry out the Merger
and other transactions contemplated by this Agreement, and Herborium
acknowledges that PMIC and LW have relied upon such representations and
warranties.
3.01. Organization
and Qualification.
Herborium is a corporation duly organized, validly existing and in good standing
under the laws of Delaware, has the corporate power and authority to carry
on
its business as such business is now being conducted and to enter into and
perform its obligations hereunder. Herborium has no offices in the United States
outside of the State of New Jersey and is not required to qualify as a foreign
corporation to do business in any other jurisdiction in which the failure to
qualify would have a material adverse effect on Herborium. Herborium will
qualify as a foreign corporation to do business in California for purposes
of
effecting the Merger. Herborium has one wholly-owned subsidiary, Xxxxxxxxx.xxx,
Inc.
3.02. Authorization
of Agreement and Approval of Merger.
The
execution, delivery and performance of this Agreement by Herborium has been
duly
and validly authorized and approved by its Board of Directors and Herborium
Shareholders and no further corporate action or authorization on the part of
Herborium is required to deliver this Agreement and perform the transactions
contemplated hereby, and this Agreement is a legal, valid and binding obligation
of Herborium, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, reorganization, insolvency, moratorium and other
laws
affecting creditors’ rights generally, from time to time, in effect and to
general equitable principles.
3.03. No
Conflict.
To the
best of its Knowledge, neither the execution and delivery of this Agreement
nor
the consummation of the transactions contemplated hereby, nor compliance by
any
of the parties with any of the provisions hereof, will (a) conflict with or
result in any breach of any provision of the Articles of Incorporation or
By-laws of Herborium (b) require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory authority
or any other person except for such as will have been obtained or given on
or
before Closing, except for such that would not have a material adverse effect
on
Herborium and except for certain filings with the United States Securities
and
Exchange Commission and “blue sky” filings with certain state securities
authorities; (c) result in a default (or give rise to any right of
renegotiation, termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any agreement or other instrument to which
Herborium is a party or by which any of the assets of Herborium are bound;
or
(d) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Herborium. Copies of Herborium's Certificate of Incorporation
and
By-laws, as amended through the date hereof, heretofore delivered to PMIC are
complete, accurate, and such Certificate of Incorporation and By-laws are in
full force and effect.
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3.04. Equitable
Interests in Herborium.
Except
as provided in Schedule 3.04, there are no holders of outstanding Herborium
Interests or other Herborium Shareholders. The Herborium Interests have been
duly authorized, are validly issued and outstanding, and are fully-paid and
nonassessable, with no personal liability attaching to the ownership thereof.
Except as set forth in Schedule 3.04, Herborium does not have any capital stock
or other interests outstanding, and Herborium has no outstanding stock
appreciation or similar rights, nor do there exist any convertible securities,
warrants, rights, options, or other contractual rights or commitments pursuant
to which any person may cause or require authorized but unissued shares of
capital stock or any other security of Herborium to be issued to any person.
Neither of the Original Herborium Shareholders is a party to any agreement
by
which any person may have the right to require such Shareholder to transfer
all,
part of or any interest in any of such Shareholder’s Herborium Interests nor is
either of the Original Herborium Shareholders a party to any agreement or
instrument granting any proxy or restricting such Shareholder's voting of such
interest or giving another person the right to vote such interests. To the
best
of its Knowledge, Herborium does not believe that any of the Herborium
Shareholders is a party to any agreement by which any person may have the right
to require such Shareholder to transfer all, part of or any interest in any
of
such Shareholder’s Herborium Interests nor are any of the Herborium Shareholders
a party to any agreement or instrument granting any proxy or restricting such
Shareholder's voting of such interest or giving another person the right to
vote
such interests.
3.05. Financial
Information.
(a) As
of May
31, 2006, except as set forth in the Herborium Financials or as described in
Schedule 3.04 and 3.05, Herborium had no material Liabilities, contingent or
otherwise, and there were no Claims against property of Herborium. The Herborium
Financials fairly present Herborium's financial position as of their respective
dates, and the results of operations for the respective periods then
ended.
(b) Except
as
otherwise disclosed in Schedule 3.05, since May 31, 2006, and until Closing,
Herborium has not incurred and will not incur any Liabilities other than in
the
ordinary course of business, consistent with past practices, except for
professional fees in connection with the transactions described in this
Agreement, which fees shall be paid by Herborium and has not taken and will
not
take any of the actions described in Section 5.02 of this
Agreement.
(c) Except
as
otherwise disclosed in Schedule 3.05, Herborium has filed all tax returns
required by it to be filed by reason of any revenue received or payment made
(including, without limitation, all withholding tax returns) and has paid all
taxes payable by Herborium under such returns. True and complete copies of
all
tax returns filed by Herborium and copies of all elections made at any time
by
Herborium under the Internal Revenue Code have been furnished to
PMIC.
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3.06. Absence
of Certain Changes.
Following the latest date of the Herborium Financials, except as may otherwise
be provided on Schedule 3.06, Herborium has not: (a) had any material, adverse
change in its financial condition, properties, business or operations; (b)
entered into any other transactions material to its business not in the ordinary
course of business; (c) declared, set aside or paid any distribution or dividend
to any of the Herborium Shareholders or repurchased any of its capital stock,
or
paid any compensation to any officer or Herborium Shareholder other than normal
salary in the ordinary course of business at a level not exceeding salary paid
for 2005; (d) repaid any indebtedness to any person or entity outside of the
ordinary course of business. Herborium has received no notice that any
third-party payor material to Herborium's business intends to cease or restrict
its business with Herborium.
3.07. Compliance
with Laws.
Herborium, in the ownership of its property and the conduct of its business,
to
the best of its Knowledge complies in all material respects with all applicable
laws, ordinances, rules, regulations, judgments, orders or covenants, conditions
and restrictions (collectively "Laws"), whether Federal, state, local, or
foreign, and has all permits, licenses and authorizations required by such
governmental agencies, except where the failure to have such permit, license
or
authorization would not have a material adverse effect on Herborium. Herborium
has never received any notices of violation of Laws or been charged with any
violation of any Law or to the best of its Knowledge been subject to any
investigation with respect to violation of any Laws.
3.08. No
Broker's or Finder's Fees.
Other
than fees, if any, payable to Xxxx X. Xxxxxxx, which fees, if any, shall be
paid
by Herborium, Herborium has not dealt with any broker, finder, investment banker
or any other person who may claim entitlement to a broker's or finder's fee,
commission or similar compensation in connection with any of the transactions
contemplated by this Agreement.
3.09. Agreements,
Contracts and Commitments.
Except
as contained on Schedule 3.09, Herborium is not a party to, bound by or
committed to enter into any: (i) employment contract or other agreement of
any kind whatsoever for the compensation of any of its employees; (ii) lease
or
purchase agreement with respect to real property or personal property;
(iii) employee benefit plan within the meaning of Section 3(3) of the
Employment Retirement Income Security Act of 1974, any other bonus, profit
sharing, deferred compensation, hospitalization, health care, disability,
medical or dental, retirement, insurance, sick or vacation pay, pension,
welfare, severance, stock option, stock bonus or stock purchase plan, or any
other plan, agreement or arrangement providing for employee benefits or for
the
remuneration, direct or indirect, of Herborium's employees; (iv) agreements
of
guarantee or indemnification; (v) any loan or credit agreements providing for
the extension of credit to or by Herborium; (vi) joint venture or other
agreement involving the sharing of costs or profits; and (vii) any other
agreement or undertaking involving more than $10,000 in aggregate annual
payments and not terminable by Herborium without penalty, cost or liability
(whether express, implied or by operation of law or otherwise) on notice of
not
more than 30 days. Copies (or, with respect to oral agreements, understandings
or commitments, complete and accurate descriptions thereof) of the contracts,
agreements, leases, understandings, plans, obligations, commitments and other
documents referred to in Schedule 3.09 have been delivered to PMIC, and are
true
and complete.
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3.10. Litigation.
Except
as set forth in Schedule 3.10, to the best of Herborium’s Knowledge there are no
actions, suits or proceedings at law or in equity, or arbitration proceedings,
or claims, demands or investigations, pending or threatened against or involving
Herborium nor has Herborium received notice of any administrative proceedings
pending or threatened against or involving Herborium by or before any
governmental board, department, commission, bureau, instrumentality or agency
(including but not limited to any federal, state, local or foreign governmental
agency. To the best of its Knowledge Herborium is not in violation of any order,
ruling, decree or judgment made or entered with respect to Herborium of any
court or arbitration tribunal or governmental board, department, commission,
bureau, instrumentality or agency.
3.11 Intellectual
Property.
Herborium currently has an exclusive license to distribute
AcnEase® and use all intellectual property relating to AcnEase® expiring in July
2009 and has the right as described in an agreement with the licensor to
purchase all of the intellectual property rights relating to AcnEase®, including
the formulation thereof. Herborium intends to effectuate the acquisition of
such
AcnEase®-related intellectual property rights when and if sufficient financing
is procured following the Merger. Nothing in this Section 3.11 shall be
construed to prevent Herborium’s board of directors at the time financing is
procured, in the exercise of its business judgment, from determining that it
is
not in Herborium’s best interest to effectuate the acquisition of the AcnEase®
intellectual property, provided that such acquisition is not a condition to
any
financing and the financing sources have been apprised of such decision prior
to
providing financing.
3.12. Full
Disclosure.
Herborium has to the best of its Knowledge disclosed to PMIC and to LW all
material facts relating to Herborium's assets, business, condition (financial
and otherwise) and operations. To the best of Herborium’s Knowledge, neither
this Agreement nor any other document, certificate, exhibit, statement or
schedule furnished or to be furnished by or on behalf of Herborium to PMIC
in
connection with the transactions contemplated hereby contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the factual statements contained therein, in
light of the circumstances under which they are made, not
misleading.
3.13 Investment
Representations.
The
following representations and warranties are being given and made by the
Original Herborium Shareholders to induce PMIC and LW to enter into this
Agreement and to carry out the Merger and other transactions contemplated by
this Agreement, and the Original Herborium Shareholders acknowledge that PMIC
and LW have relied upon such representations and warranties.
(a) The
Original Herborium Shareholders have been furnished copies of the PMIC
Financials, the Plans and have had access to PMIC’s filings with the United
States Securities and Exchange Commission, and have had the opportunity to
ask
of the executive officers of PMIC any and all relevant questions in connection
with any aspect of PMIC including, but not limited to, the rights represented
by
the PMIC Stock, and has received answers which they consider to be responsive
to
such questions.
8
(b) The
Original Herborium Shareholders are able to bear the economic risk of the
investment represented by the PMIC Stock.
(c) The
Original Herborium Shareholders are acquiring the PMIC Stock for their own
account for the purpose of investment and not for or with a view to the resale,
distribution, subdivision or fractionalization thereof.
(d) The
Original Herborium Shareholders understand that their right to transfer the
PMIC
Stock will be subject to any applicable restrictions set forth under applicable
state and federal securities laws.
(e) In
approving the Merger, the Original Herborium Shareholders are not relying on
any
representation, warranty or statement made by PMIC or any of its agents,
employees, advisors, attorneys or representatives which is not specifically
made
in this Agreement or in any document attached hereto. The Original Herborium
Shareholders are relying exclusively on the representations and warranties
of
PMIC made herein and the documents attached hereto. Herborium and the Original
Herborium Shareholders had adequate opportunity to conduct independent due
diligence in order to evaluate this investment decision.
3.14 Ownership
of Herborium Interests.
The
Original Herborium Shareholders are the record and beneficial holders of the
exact amount of shares reflected in Schedule 3.04 and have the absolute right,
power and capacity to sell, assign, transfer and deliver such shares free and
clear of any liens, claims or encumbrances.
ARTICLE
IV
PMIC'S
AND LW’S REPRESENTATIONS AND WARRANTIES
In
order
to induce Herborium and the Original Herborium Shareholders to enter into this
Agreement and to approve the Merger and consummate the transactions contemplated
hereby, PMIC and LW each represents and warrants to Herborium and the Herborium
Shareholders as follows:
4.01. Organization
and Qualification.
PMIC is
a corporation duly organized, validly existing and in good standing under the
laws of Nevada, and has the corporate power and authority to carry on its
business as such business is now being conducted and to carry out the
transactions contemplated by this Agreement. LW is a corporation duly organized,
validly existing and in good standing under the laws of California, and has
the
corporate power and authority to carry out the transactions contemplated by
this
Agreement.
4.02. Authorization
of Agreement.
In
accordance with Nevada and California corporate laws, the execution, delivery
and performance of this Agreement by PMIC and LW has been duly and validly
authorized by the Plans, and, therefore, no further Board or shareholder
approvals are necessary. No further action or authorization is required to
deliver this Agreement and perform the transactions contemplated hereby. This
Agreement is a legal, valid and binding obligation of each of PMIC and LW,
enforceable against each of them in accordance with its terms.
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4.03. No
Conflict.
To the
best of LW’s and PMIC’s Knowledge, neither the execution and delivery of this
Agreement by PMIC and LW, nor the consummation of the transactions contemplated
hereby, nor compliance by PMIC and LW with any of the provisions hereof, will
(a) conflict with or result in any breach of any provision of their Articles
of
Incorporation or By-laws, (b) require any consent, approval, authorization
or
permit of, or filing with or notification to, any governmental or regulatory
authority or any other person, except for certain filings with the United States
Securities and Exchange Commission and “blue sky” filings with certain state
securities authorities; (c) result in a default (or give rise to any right
of
renegotiation, termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any material instrument or agreement to
which
either is a party; or (d) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to either.
4.04. Capital
Stock of PMIC and LW.
The
PMIC Stock has been duly authorized, and when issued as contemplated by this
Agreement and the Plans, will be validly issued and outstanding, and fully-paid
and nonassessable, with no personal liability attaching to the ownership. As
of
the Effective Time as a result of the Merger, the PMIC Stock will consist of
108,567,080 shares of common stock, of one class only with a par value of $.001
per share and, except as set forth in Schedule 2.02, PMIC shall not have (i)
any
other capital stock outstanding or (ii) any outstanding stock appreciation
or
similar rights, nor any convertible securities, warrants, rights, options,
or
other contractual rights or commitments pursuant to which any Person may cause
or require authorized but unissued shares of capital stock or any other security
of PMIC to be issued to any Person. As of the Effective Time, the capital stock
of the Surviving Corporation shall consist of one share of common stock with
a
par value $.001 per share owned by PMIC, and the Surviving Corporation shall
not
have (i) any other capital stock outstanding or (ii) any outstanding stock
appreciation or similar rights, nor any convertible securities, warrants,
rights, options, or other contractual rights or commitments pursuant to which
any Person may cause or require authorized but unissued shares of capital stock
or any other security of the Surviving Corporation
to be
issued to any Person.
4.05. Compliance
with Laws.
To the
best of its Knowledge, each of PMIC and LW, in the ownership of its property
and
the conduct of its business, complies with all applicable laws, ordinances,
rules, regulations, judgments, orders or covenants, conditions and restrictions,
whether federal, state, local, foreign or private, and has all permits, licenses
and authorizations required by such governmental agencies.
4.06. No
Broker's or Finder's Fees.
Neither
PMIC nor LW has dealt with any broker, finder, investment banker or any other
person who may claim entitlement to a broker's or finder's fee, commission
or
similar compensation in connection with any of the transactions contemplated
by
this Agreement other than Xxxx X. Xxxxxxx, which compensation, if any, shall
be
satisfied pursuant to a separate agreement.
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4.07. Litigation.
To the
best of PMIC’s and LW’s Knowledge, there are no actions, suits or proceedings at
law or in equity, or arbitration proceedings pending or threatened against
or
involving PMIC or LW; there are no proceedings pending or threatened against
or
involving PMIC or LW by or before any governmental board, department,
commission, bureau, instrumentality or agency and neither PMIC nor LW is in
violation of any order, ruling, decree or judgment of any court or arbitration
tribunal or governmental board, department, commission, bureau, instrumentality
or agency.
4.08
Implementation
of the Plans.
All of
the funding described in Article 7 of the Plans, except for approximately
$30,000 due from the PMI bankruptcy and any subsequent distributions that may
be
received as part of the PMI and PMIGA bankruptcy cases, has been received by
PMIC and LW in accordance with the Plans and all cash distributions required
to
be made with respect to Allowed Claims of the Creditors of PMIC and LW under
the
Plans have been or will be made in accordance with the terms of the Plans or
sufficient cash shall have been segregated in a separate distribution account
within three (3) business days after the Merger to pay such distributions in
accordance with the terms of the Plans. At Closing, PMIC shall instruct its
bank
to transfer any funds remaining after the initial distribution to creditors
under the Plans to the distribution account maintained by ACT as “Disbursing
Agent” under the Plans which funds are designated for any subsequent
distributions as may be required by the Plans. The consummation of the Merger
will in all material respects be in compliance with the Plan and, to the best
of
LW’s and PMIC’s Knowledge, will not give rise to any claim by any creditor of
PMIC or LW. Except as provided on Schedule 4.08 or as otherwise provided in
the
Plans, on the Closing Date, to the best of PMIC’s and LW’s Knowledge, PMIC and
LW shall have no Liabilities as of the Effective Time.
4.09. Full
Disclosure.
To the
best of its Knowledge, PMIC has disclosed to Herborium and the Original
Herborium Shareholders all material facts relating to its assets, business,
condition (financial and otherwise) and operations relevant to the transactions
described in this Agreement. To the best of its Knowledge, neither this
Agreement nor any other document, certificate, exhibit, statement or schedule
furnished or to be furnished by or on behalf of PMIC or LW to Herborium or
the
Original Herborium Shareholders in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the factual
statements contained therein, in light of the circumstances under which they
are
made, not misleading.
ARTICLE
V
INTENTIONALLY
OMITTED
ARTICLE
VI
ACTIONS
AT CLOSING; POST CLOSING COVENANT
As
of the
Closing Date, each of the following has occurred:
6.01. Employment
Agreements.
Concurrently with the Closing, Xx. Xxxxxxxxx has executed an employment
agreement to serve as President and Chief Executive Officer of PMIC and
post-Merger Herborium annexed hereto as Exhibit B and Xx. Xxxxxxxx has executed
an employment and consulting agreement to serve as a consultant to PMIC and
Herborium and thereafter as Co-President and Chief Operating Officer of PMIC
and
post-Merger Herborium annexed hereto as Exhibit C.
11
6.02. Appointment
of Herborium Directors.
In
accordance with the Plans and without any further corporation action by the
Directors of PMIC and LW, the individuals specified in Section 2.01(e) shall
become directors of the Surviving Corporation and PMIC. The existing Directors
of PMIC and LW have provided their resignations from the Board of Directors
of
PMIC and LW, as applicable, which are effective as of the Effective
Time.
6.03.
ACT
Agreement.
Advanced
Communication Technologies, Inc. (“ACT”) shall have entered into an agreement
Annexed hereto as Exhibit D.
6.04. Filing
of Certificates of Merger.
Herborium shall execute the Certificate of Merger and deliver same to PMIC
for
filing and PMIC, on behalf of the Constituent Corporations, shall cause the
Certificate of Merger to be filed with the Secretary of State of Delaware and
California as soon as reasonably practicable following the Closing.
6.05. Further
Assurances.
At any
time, and from time to time, after the date of this Agreement, each party will
execute such additional instruments and take such action as may be reasonably
requested by the other party to confirm or perfect title to any property
transferred hereunder or otherwise to carry out the intent and purposes of
this
Agreement.
ARTICLE
VII
INDEMNIFICATION;
SURVIVAL OF WARRANTIES
7.01. Indemnification
by Herborium.
Herborium shall indemnify PMIC and LW and each of their respective officers,
directors, employees, representatives and agents against any claim made by
any
third party, arising out of or resulting from or in connection with any material
inaccuracy in any of the representations and warranties of Herborium in this
Agreement or in any certificate furnished to PMIC pursuant to this Agreement
or
any failure by Herborium to perform or comply with any agreement or covenant
contained herein or therein and hold harmless PMIC and LW from loss, Liability,
Obligation, damage, expense (including reasonable costs of investigation and
defense) arising out of or resulting from such third party claim.
7.02.
Indemnification
by Original Herborium Shareholders.
The
Original Herborium Shareholders shall indemnify PMIC and LW and each of their
respective officers, directors, employees, representatives and agents against
any claim made by any third party arising out of or resulting from or in
connection with any material inaccuracy in any of the representations and
warranties of the Original Herborium Shareholders in this Agreement or any
failure by the Original Herborium Shareholders to perform or comply with any
agreement or covenant made by he Original Herborium Shareholders in this
Agreement, if any, and hold harmless PMIC and LW from any loss, Liability,
Obligation, damage, expense (including reasonable costs of investigation and
defense) arising out of or resulting from such third party claim.
7.03. Indemnification
by PMIC.
PMIC
and LW shall indemnify Herborium and its respective officers, directors,
employees, representatives and agents and the Original Herborium Shareholders
against any claim made by any third party loss, Liability, Obligation,
damage, expense, arising out of or resulting from or in connection with any
material inaccuracy in any of the representations and warranties of PMIC or
LW
in this Agreement or in any certificate furnished to Herborium or the Original
Herborium Shareholders pursuant to this Agreement or any failure by PMIC or
LW
to perform or comply with any agreement or covenant contained herein or therein
and hold harmless Herborium and the Original Herborium Shareholders from any
loss, Liability, Obligation, damage, expense (including reasonable costs of
investigation and defense) arising out of or resulting from such third party
claim.
12
7.04. Survival
of Warranties and Indemnification Obligations.
Each
representation and warranty in this Agreement shall survive the Closing Date
and
shall expire two years from the Effective Time. Any claim for indemnification
pursuant to Subsection 7.01 or 7.02 must be made on or before the second
anniversary of the Effective Time.
ARTICLE
VIII
MISCELLANEOUS
8.01. Notices.
All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given when mailed by first class, registered or
certified mail, postage prepaid and addressed as follows:
|
PMIC
and LW:
|
Xx.
Xxxxx X. Xxxxxx
|
|
|
President
& CEO
|
||
|
Advanced
Communications Technologies, Inc.
|
||
|
000
Xxxxxxxxx Xxxxxx
|
||
|
Xxxxx
0000
|
||
|
Xxx
Xxxx, XX 00000
|
||
|
With
a required
|
||
|
copy
to:
|
Xxxx
X. Xxxxxx, Esquire
|
|
|
|
Xxxxxx
Xxxxxxx Xxxxxx & Xxxxxxx, LLC
|
|
|
0000
Xxxxxx Xxxxxx, 0xx Xxxxx
|
||
|
Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000
|
||
|
Herborium,
Inc.
|
||
|
or
Xx. Xxxxxxxxx:
|
||
|
Xx.
Xxxxx X. Xxxxxxxxx
|
||
|
0
Xxx Xxxxxx
|
||
|
Xxxxxxx,
Xxx Xxxxxx 00000
|
||
|
|
||
|
Xx.
Xxxxxxxx:
|
Xx.
Xxxxx X. Xxxxxxxx
|
|
|
000
XxxxxxxxXxxxxx
|
||
|
Xxxxx,
XX 00000
|
||
|
With
a required copy to:
|
Xxxxxxxx
X. Xxxx, Esq.
|
|
|
Feder,
Kaszovitz, Isaacson, Weber, Xxxxx, Bass & Rhine LLP
|
||
|
000
Xxxxxxxxx Xxxxxx
|
||
|
Xxx
Xxxx, Xxx Xxxx 00000-0000
|
13
Addresses
may be changed by notice in writing signed by the addressee and given in
accordance with this Section 8.01.
8.02. Entire
Agreement; Amendment.
This
Agreement (including all exhibits and schedules) supersedes any and all other
agreements, oral or written, between the parties hereto with respect to the
subject matter hereof, and contains the entire agreement between such parties
with respect to the transactions contemplated hereunder, except for other
agreements specifically identified in this Agreement. This Agreement may be
amended only by an instrument in writing signed by all of the
parties.
8.03. Binding
Effect; Assignment.
This
Agreement and all of the provisions hereof shall be binding upon and inure
to
the benefit of the parties hereto and their respective successors and permitted
assigns. Neither this Agreement nor any interest herein may directly or
indirectly be transferred or assigned by any party, in whole or in part, without
the written consents of all other parties.
8.04. Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
be deemed to alter or affect any provision of this Agreement.
8.05. Severability.
If any
term or provision of this Agreement or any application thereof shall be invalid
or unenforceable, the remainder of this Agreement and any other application
of
such term or provision shall not be affected thereby.
8.06. No
Third Party Beneficiaries.
This
Agreement is for the benefit of, and may be enforced only by, the parties and
their respective permitted successors and assigns, and is not for the benefit
of, and may not be enforced by, any third party.
8.07. Counterparts.
This
Agreement may be executed and delivered by facsimile and in counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
8.09. Expenses.
Each of
the parties hereto shall bear its own legal and any other expenses with respect
to this transaction; provided, however, that the fees and expenses of PMIC’s
counsel incurred directly in connection with the transactions contemplated
by
this Agreement, and any related filings with the United States Securities and
Exchange Commission, shall be paid by ACT, which payment shall be reimbursed
from any subsequent financing which ACT or any of its affiliates may obtain
within one (1) year of the Closing.
8.10 Governing
Law.
This
Agreement shall be governed by the laws of the State of Delaware.
[REMAINDER
OF PAGE LEFT INTENTIONALLY BLANK]
14
IN
WITNESS WHEREOF,
the
parties hereto have duly executed this Agreement as of the date first above
written.
| |
|
|
| By: | /s/ Xxxxxxx Xxx | |
|
Xxxxxxx Xxx, Chief Financial Officer |
||
|
Livewarehouse,
Inc.
|
||
| |
|
|
| By: | /s/ Xxxxx Xxxxxx | |
|
Xxxxx Xxxxxx, President |
||
|
Herborium,
Inc.:
|
||
| |
|
|
| By: | /s/ Xxxxx X. Xxxxxxxxx | |
|
Xx. Xxxxx X. Xxxxxxxxx, CEO |
||
The
Original Herborium Shareholders sign below for the purpose of agreeing to the
representations and warranties made by them in Sections 3.13 and 3.14 and the
indemnification provisions of Section 7.02 of the above Agreement.
| By: | /s/ Xxxxx X. Xxxxxxxxx | |
|
Xxxxx X. Xxxxxxxxx, Ph.D. |
||
| By: | /s/ Xxxxx X. Xxxxxxxx | |
|
Xxxxx X. Xxxxxxxx, Ph.D. |
||
15
