AGREEMENT AND PLAN OF MERGER
by and among
HOMELIFE, INC.
a Nevada Corporation
HOMELIFE ACQUISITION CORP.
a Delaware Corporation
and
MIT HOLDING, INC.
a Delaware Corporation
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of this 11th day of September, 2006 by and among Homelife, Inc., a
Nevada corporation with its principal place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("HMLF"); MIT Holding, Inc., a
Delaware corporation with its principal place of business at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ("MIT"); Homelife Acquisition Corp., a
Delaware corporation with its principal place of business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Acquisition Sub"); and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, an individual residing at ____________________________
("Cimerman"). MIT and Acquisition Sub may hereafter collectively be referred to
as the "Constituent Corporations."
Premises
WHEREAS, Acquisition Sub is a wholly-owned subsidiary of HMLF; and
WHEREAS, the directors of HMLF, MIT, and Acquisition Sub deem it advisable
and to the advantage and best interests of the respective corporations and their
respective stockholders that Acquisition Sub merge with and into MIT, pursuant
to the provisions of the Delaware General Corporation Law and pursuant to the
terms and conditions provided herein, such that MIT becomes a wholly-owned
subsidiary of HMLF; and
WHEREAS, the parties desire that the exchange qualify as a tax free
reorganization meeting the requirements of Section 368(a) of the Internal
Revenue Code of 1986, as amended (a "368 Reorganization").
NOW THEREFORE, in consideration of the foregoing premises and the
covenants and mutual agreements hereinafter set forth, being duly entered into
by MIT and approved by a resolution adopted by its Board of Directors, being
duly entered into by Acquisition Sub and approved by a resolution adopted by its
Board of Directors, the parties do hereby adopt the plan of reorganization and
merger provided for in this Agreement and do hereby agree that Acquisition Sub
shall merge with and into MIT on the following terms, conditions and other
provisions:
Agreement
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF
HMLF
As an inducement to and to obtain the reliance of MIT, HMLF represents and
warrants that the following are true and correct as of the date hereof and will
continue to be true and correct through the Effective Time (as defined in
Section 3.1, below) as if made on that date
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Section 1.1 Organization. HMLF is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada and has the
corporate power and is duly authorized, qualified, franchised and licensed under
all applicable laws, regulations, ordinances and orders of public authorities to
own all of its properties and assets and to carry on its business in all
material respects as it is now being conducted, including qualification to do
business as a foreign corporation in the jurisdiction in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification. Included in Schedule 1.1 attached hereto are complete
and correct copies of the articles of incorporation, bylaws and amendments
thereto as in effect on the date hereof. The execution and delivery of this
Agreement does not and the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not violate any provision of
HMLF's articles of incorporation or bylaws. HMLF has full power, authority and
legal right and has taken all action required by law, its articles of
incorporation, its bylaws or otherwise to authorize the execution and delivery
of this Agreement and the transactions contemplated hereby.
Section 1.2 Capitalization. The authorized capitalization of HMLF consists
of 500,000,000 common shares, $0.001 par value per share, 100,000 Class A
Preferred Shares, no par value per share and 2,000 Class AA Preferred Shares,
$500 par value. As of the date hereof, HMLF has 12,371,886 common shares issued
and outstanding (of which 9,013,194 common shares are beneficially held by
Cimmerman and 3,358,692 are beneficially held by shareholders other than
Cimmerman), 10,000 Class A Preferred shares issued and outstanding and 50 Class
AA Preferred shares issued and outstanding (collectively, the "Preferred
Stock"). In addition, HMLF presently has 200,000 warrants outstanding at an
exercise price of $1.75 (the "Warrants").
All issued and outstanding shares are legally issued, fully paid and
nonassessable and are not issued in violation of the preemptive or other rights
of any person. All of the Company's securities have been issued in accordance
with Federal and State securities laws. Except as provided in this Section 1.2,
HMLF has no common shares or securities, convertible into, exercisable for or
exchangeable into common shares and has no other securities issued and
outstanding. HMLF has not granted any registration rights with respect to any of
its securities.
Section 1.3 Subsidiaries. Except as set forth on Schedule 1.3, HMLF has no
subsidiaries and does not own any securities in any other entity.
Section 1.4 Tax Matters: Books and Records.
(a) The books and records, financial and others, of HMLF are in all
material respects complete and correct and have been maintained in accordance
with good business accounting practices; and
(b) The audited consolidated financial statements and unaudited
consolidated interim financial statements of HMLF (including any related notes
and schedules), included in the SEC Reports, as defined below, accurately
reflect the consolidated financial position of HMLF as of the dates thereof and
the results of its operations and its cash flows for the periods then ended, in
each case in conformity with GAAP applied on a consistent basis (except as may
be indicated in the notes thereto).
(c) HMLF has no liabilities with respect to the payment of any country,
federal, state, county, or local taxes (including any deficiencies, interest or
penalties).
Section 1.5 Litigation and Proceedings. There are no actions, suits,
proceedings or investigations pending or threatened by or against or affecting
HMLF or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign or before any
arbitrator of any kind. HMLF is not in default with respect to any judgment,
order, writ, injunction, decree, award, rule or regulation of any court,
arbitrator or governmental agency or instrumentality or of any circumstances
which, after reasonable investigation, would result in the discovery of such a
default.
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Section 1.6 Material Contract Defaults. HMLF is not in default under the
terms of any outstanding contract, agreement, lease or other commitment, and
there is no event of default under any such contract, agreement, lease or other
commitment in respect of which HMLF has not taken adequate steps to prevent such
a default from occurring.
Section 1.7 Information. The information concerning HMLF as set forth in
this Agreement and in the attached Schedules is complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made in light
of the circumstances under which they were made, not misleading. HMLF's filings
with the SEC (the "SEC Reports") are complete and accurate and do not contain
any untrue statement of a material fact or omit to state a material fact
required to make the statements made in light of the circumstances under which
they were made, not misleading. HMLF has filed all required reports, forms,
schedules and statements since May 31, 2003 to the date hereof with the SEC. The
SEC Reports were prepared in all material respects with all applicable
requirements of the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). HMLF is not a party to
any contract, agreement or understanding (whether written or oral) that would be
required to be filed as an exhibit to the SEC Reports that has not been filed
prior to the date hereto.
Section 1.8 Title and Related Matters. HMLF has good and marketable title
to and is the sole and exclusive owner of all of its properties, inventory,
interest in properties and assets, real and personal (collectively, the
"Assets") free and clear of all liens, pledges, charges or encumbrances. HMLF
owns free and clear of any liens, claims, encumbrances, royalty interests or
other restrictions or limitations of any nature whatsoever and all procedures,
techniques, marketing plans, business plans, methods of management or other
information utilized in connection with HMLF's business. No third party has any
right to, and HMLF has not received any notice of infringement of or conflict
with asserted rights of others with respect to any product, technology, data,
trade secrets, know-how, proprietary techniques, trademarks, service marks,
trade names or copyrights which, singly or in the aggregate, if the subject of
an unfavorable decision ruling or finding, would have a materially adverse
affect on the business, operations, financial conditions or income of HMLF or
any material portion of its properties, assets or rights.
Section 1.9 Contracts On the Closing Date, except for the payments
referred to in Section 3.3 herein for the payment to be made from the closing
proceeds:
(a) There are no material contracts, agreements franchises, license
agreements, or other commitments to which HMLF is a party or by which it or any
of its properties are bound, including any material oral or written: (I)
contract for the employment of any officer or employee; (ii) profit sharing,
bonus, deferred compensation, stock option, severance pay, pension benefit or
retirement plan, agreement or arrangement covered by Title IV of the Employee
Retirement Income Security Act, as amended; (iii) agreement, contract or
indenture relating to the borrowing of money; (iv) guaranty of any obligation
for the borrowing of money or otherwise, excluding endorsements made for
collection and other guaranties, of obligations, which, in the aggregate exceed
$1,000; (v) consulting or other contract with an unexpired term of more than one
year or providing for payments in excess of $10,000 in the aggregate; (vi)
collective bargaining agreement; (vii) contract, agreement or other commitment
involving payments by it for more than $10,000 in the aggregate; and
(b) HMLF is not a party to any contract, agreement, commitment or
instrument or subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree or award which or in the future may
(as far as HMLF can now foresee) affect the business, operations, properties,
assets or conditions of HMLF.
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Section 1.10 Compliance With Laws and Regulations. Neither HMLF nor any of
its subsidiaries is in violation of, or has violated, any applicable provisions
of any laws, statutes, ordinances, or regulations.
Section 1.11 Authorization. On the Closing Date, (i) there will be no
provision in HMLF's Articles of Incorporation, as amended, or in its By-Laws, as
amended, which prohibits or limits HMLF's ability to consummate the transactions
contemplated hereby, (ii) HMLF shall have the right, power and authority to
enter into this Agreement and to consummate all of the transactions and fulfill
all of the obligations contemplated hereby and (iii) the execution and delivery
of this Agreement and the due consummation by HMLF of the transactions
contemplated hereby will have been duly authorized by all necessary corporate
action of the Board of Directors and stockholders of HMLF. This Agreement
constitutes a legal, valid and binding agreement of HMLF enforceable against
HMLF in accordance with its terms.
Section 1.12 Material Transactions or Affiliations. Other than Cimerman,
there are no material contracts or agreements of arrangement between HMLF and
any person, who was at the time of such contract, agreement or arrangement an
officer, director or person owning of record, or known to beneficially own ten
percent (10%) or more of the issued and outstanding common shares of HMLF and
which is to be performed in whole or in part after the date hereof. HMLF has no
commitment, whether written or oral, to lend any funds to, borrow any money from
or enter into material transactions with any such affiliated person.
Section 1.13 No Conflict or Violation. Subject to the fulfillment of all
of the conditions set forth in Articles V and VI hereof, neither the execution
and delivery of this Agreement, nor the consummation of the transactions
contemplated hereby in accordance herewith, nor compliance by HMLF with any of
the provisions hereof will result in: (i) a violation of or a conflict with any
provision of HMLF's Articles of Incorporation, as amended, or By-Laws, as
amended, (ii) a breach of, or default under any term, condition or provision of
any obligation, agreement or undertaking, whether oral or written to which HMLF
is a party, or an event which, with the giving of notice, lapse of time, or
both, would result in any such breach, (iii) a violation of any applicable law,
rule, regulation, order, decree or other requirement having the force of law, or
order, judgment, writ, injunction, decree or award, or an event which, with the
giving of notice, lapse of time, or both, would result in any such violation, or
(iv) any person having the right to enjoin, rescind or otherwise prevent or
impede the transactions contemplated hereby or to obtain damages from HMLF or to
obtain any other judicial or administrative relief as a result of any
transaction carried out in accordance with the provisions of this Agreement.
Section 1.14 Governmental Authorizations. HMLF has all licenses,
franchises, permits or other governmental authorizations legally required to
enable it to conduct its business as conducted on the date hereof. Except as
provided in Schedule 1.14, no authorization, approval, consent or order of, or
registration, declaration or filing with, any court or other governmental body
is required in connection with the execution and delivery by HMLF of this
Agreement and the consummation of the transactions contemplated hereby.
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Section 1.15 No Material Adverse Events. Since May 31, 2005 HMLF and its
subsidiaries have conducted their business in the ordinary course consistent
with past practice and there has not been:
(a) Any event, occurrence or development of a state of circumstances or
facts which, individually or in the aggregate, has had, or would be reasonably
likely to have, a material adverse affect on HMLF; or
(b) Any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of HMLF, or any
repurchase, redemption or other acquisition by HMLF of any outstanding shares of
capital stock or other equity securities of, or other ownership interests in
HMLF or pursuant to the terms of employee and director stock options; or any
change prior to the date hereof in any method of accounting or accounting
practice by HMLF; or any transaction or commitment made, or any contract,
agreement or settlement entered into, by HMLF relating to its assets or business
(including the acquisition or disposition of any assets) or any relinquishment
by HMLF of any contract or other right, in either case, material to HMLF other
than those contemplated by this Agreement; or any amendment of any material term
of any outstanding security of HMLF; or any tax election made or changed, audit
settled, or amended tax return filed, in each case, that is reasonably likely to
result in a tax liability material to HMLF.
Section 1.16 No Liabilities. As of the Closing Date HMLF does not have any
liabilities or obligations of any kind whatsoever (whether direct, indirect,
accrued, contingent, absolute, secured or unsecured, determined, determinable or
otherwise), including liabilities as guarantor or surety or otherwise for the
obligations of others and tax liabilities due or to become due. There is no
basis for any material claims against HMLF's assets and HMLF does not have
creditors whose prior consent might be required by law for the Merger.
Section 1.17 Due Diligence. HMLF and its representatives have had the
opportunity to perform all due diligence investigations of MIT and its business,
as they have deemed necessary or appropriate and to ask questions of MIT's
officers and directors and have received satisfactory answers to all of their
questions. HMLF and its representatives have had access to all documents and
information about MIT and have reviewed sufficient information to allow them to
evaluate the merits and risks of the Merger
Section 1.18 Books and Records. Except for the minute book and accounting
and corporate records of HMLF furnished to MIT, there are no other books,
records or accounts of HMLF.
Section 1.19 368 Reorganization. Neither HMLF nor any of its affiliates
has taken or agreed to take any action or is aware of any fact or circumstance
that would prevent the Merger from qualifying as a 368 Reorganization.
Section 1.20 No Convertible Securities. Prior to the Closing Date, neither
HMLF nor Acquisition Sub has authorized and does not have in effect any stock
options or stock purchase plans, dividend reinvestment plans or similar plans
pursuant to which any person is entitled to acquire capital stock of either HMLF
or Acquisition Sub or any securities convertible into or exchangeable for its
capital stock. No shares of capital stock of either HMLF or Acquisition Sub will
be awarded or issued without the prior written authorization of MIT.
Section 1.21 Acquisition Sub. Acquisition Sub is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, with all requisite power and authority to carry on any business in
which it is engaged, to own any properties and assets it owns, and is duly
qualified and licensed to do business and is in good standing in all
jurisdictions where the nature of its business makes such qualification
necessary. Acquisition Sub was organized for the sole purpose of consummating
this Merger, and Acquisition Sub has no debts, liabilities, or obligations of
any kind to any person or entity.
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Section 1.22 The OTC-BB
(a) HMLF is listed on the National Association of Securities Dealers, Inc.
OTC Bulletin Board (the "Principal Market"). HMLF shall maintain the common
stock's authorization for quotation on the Principal Market. HMLF shall not take
any action which would be reasonably expected to result in the de-listing or
suspension of the common stock on the Principal Market (excluding suspensions of
not more than one trading day resulting from business announcements by HMLF).
HMLF shall promptly provide to MIT copies of any notices it receives from the
Principal Market regarding the continued eligibility of the common stock for
listing on the Principal Market.
(b) HMLF shall maintain the listing of its common stock on the Principal
Market and shall (i) timely file SEC Reports, at its expense, in accordance with
the Exchange Act; and (ii) comply with the requirements of Rule 14C of the
Exchange Act.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
OF MIT
As an inducement to, and to obtain the reliance of HMLF, MIT represents
and warrants as follows:
Section 2.1 Organization. MIT is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and has the corporate
power and is duly authorized, qualified and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to own all of its
properties and assets and to carry on its business in all material respects as
it is now being conducted, including qualification to do business as a foreign
entity in the country or states in which the character and location of the
assets owned by it or the nature of the business transacted by it requires
qualification. Schedule 2.1 contains complete and correct copies of the articles
of incorporation, bylaws and amendments thereto as in effect on the date hereof.
The execution and delivery of this Agreement does not and the consummation of
the transactions contemplated by this Agreement in accordance with the terms
hereof will not, violate any provision of MIT's certificate of incorporation or
bylaws. MIT has full power, authority and legal right and has taken all action
required by law, its articles of incorporation, bylaws or otherwise to authorize
the execution and delivery of this Agreement.
Section 2.2 Capitalization. The authorized capitalization of MIT consists
of 100,000,000 shares of common stock, $0001 par value per share, and 5,000,000
shares of preferred stock, $.0001 par value per share. As of the date hereof,
there are 21,000,000 common shares issued and outstanding, and the Company has
neither designated any series of, nor issued any preferred stock, provided,
however, that MIT is presently pursuing financing transactions (the "Financing")
that will involve the sale of securities convertible into or exchangeable for
MIT's capital stock, and the capitalization of MIT on the Closing date shall
reflect the issuance of such securities. .
All issued and outstanding common shares have been legally issued, fully
paid, are non-assessable and not issued in violation of the preemptive rights of
any other person. MIT has no other securities, warrants or options authorized or
issued, except for securities to be issued in the Financing.
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Section 2.3 Subsidiaries. Except as set forth on Schedule 2.3, MIT has no
subsidiaries and does not own any securities in any other entity.
Section 2.4 Tax Matters; Books & Records.
(a) The books and records, financial and others, of MIT are in all
material respects complete and correct and have been maintained in accordance
with good business accounting practices; and
(b) The audited consolidated financial statements and unaudited
consolidated interim financial statements of MIT (including any related notes
and schedules), accurately reflect the consolidated financial position of MIT as
of the dates thereof and the results of its operations and its cash flows for
the periods then ended, in each case in conformity with GAAP applied on a
consistent basis (except as may be indicated in the notes thereto).
(c) MIT has no liabilities with respect to the payment of any country,
federal, state, county, or local taxes (including any deficiencies, interest or
penalties).
Section 2.5 Information. The information concerning MIT as set forth in
this Agreement and in the attached Schedules is complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading.
Section 2.6 Title and Related Matters. Except as set forth in Schedule
2.6, MIT has good and marketable title to and is the sole and exclusive owner of
all of its properties, inventory, interests in properties and assets, real and
personal (collectively, the "Assets") free and clear of all liens, pledges,
charges or encumbrances. Except as set forth in Schedule 2.6, MIT owns free and
clear of any liens, claims, encumbrances, royalty interests or other
restrictions or limitations of any nature whatsoever and all procedures,
techniques, marketing plans, business plans, methods of management or other
information utilized in connection with MIT's business. Except as set forth in
Schedule 2.6, no third party has any right to, and MIT has not received any
notice of infringement of or conflict with asserted rights of others with
respect to any product, technology, data, trade secrets, know-how, proprietary
techniques, trademarks, service marks, trade names or copyrights which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a materially adverse affect on the business, operations,
financial conditions or income of MIT or any material portion of its properties,
assets or rights.
Section 2.7 Litigation and Proceedings. There are no actions, suits or
proceedings pending or threatened by or against or affecting MIT, at law or in
equity, before any court or other governmental agency or instrumentality,
domestic or foreign or before any arbitrator of any kind that would have a
material adverse effect on the business, operations, financial condition, income
or business prospects of MIT. MIT does not have any knowledge of any default on
its part with respect to any judgment, order, writ, injunction, decree, award,
rule or regulation of any court, arbitrator or governmental agency or
instrumentality.
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Section 2.8 No Conflict or Violation. Subject to the fulfillment of all of
the conditions set forth in Articles V and VI hereof, neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby in accordance herewith, nor compliance by MIT with any of
the provisions hereof will result in: (i) a violation of or a conflict with any
provision of MIT's Articles of Incorporation, as amended, or By-Laws, as
amended, (ii) a breach of, or default under any term, condition or provision of
any obligation, agreement or undertaking, whether oral or written to which MIT
is a party, or an event which, with the giving of notice, lapse of time, or
both, would result in any such breach, (iii) a violation of any applicable law,
rule, regulation, order, decree or other requirement having the force of law, or
order, judgment, writ, injunction, decree or award, or an event which, with the
giving of notice, lapse of time, or both, would result in any such violation, or
(iv) any person having the right to enjoin, rescind or otherwise prevent or
impede the transactions contemplated hereby or to obtain damages from MIT or to
obtain any other judicial or administrative relief as a result of any
transaction carried out in accordance with the provisions of this Agreement.
Section 2.9 Material Contract Defaults. MIT is not in default under the
terms of any outstanding contract, agreement, lease or other commitment, and
there is no event of default under any such contract, agreement, lease or other
commitment in respect of which MIT has not taken adequate steps to prevent such
a default from occurring.
Section 2.10 Governmental Authorizations. MIT has all licenses, permits
and other governmental authorizations that are legally required to enable it to
conduct its business operations as conducted on the date hereof. No
authorization, approval, consent or order of, or registration, declaration or
filing with, any court or other governmental body is required in connection with
the execution and delivery by MIT of the transactions contemplated hereby.
Section 2.11 Compliance With Laws and Regulations. MIT has complied with
all applicable statutes and regulations of any federal, state or other
governmental entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations, properties,
assets or condition of MIT or would not result in MIT 's incurring any material
liability.
Section 2.12 Approval of Agreement. The directors and shareholders of MIT
have authorized the execution and delivery of the Agreement and have approved
the transactions contemplated hereby.
Section 2.13 Material Transactions or Affiliations. Except as set forth on
Schedule 2.13, as of the Closing Date, there will exist no material contract,
agreement or arrangement between MIT and any person who was at the time of such
contract, agreement or arrangement an officer, director or person owning of
record, or known by MIT to own beneficially, ten percent (10%) or more of the
issued and outstanding common shares of MIT and which is to be performed in
whole or in part after the date hereof. MIT has no commitment, whether written
or oral, to lend any funds to, borrow any money from or enter into any other
material transactions with, any such affiliated person.
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Section 2.14 Liabilities. Except as provided in the financial statements
of MIT for the year ended December 31, 2005 and Schedule 2.14 and liabilities
incurred by MIT in the ordinary course of business since December 31, 2005,. (i)
MIT does not have any liabilities or obligations of any kind whatsoever (whether
direct, indirect, accrued, contingent, absolute, secured or unsecured,
determined, determinable or otherwise), including liabilities as guarantor or
surety or otherwise for the obligations of others and tax liabilities due or to
become due and (ii) there is no basis for any material claims against MIT's
assets and MIT does not have creditors whose prior consent might be required by
law for the Merger.
Section 2.15 Due Diligence. MIT and its representatives have had the
opportunity to perform all due diligence investigations of HMLF and its
business, as they have deemed necessary or appropriate and to ask questions of
HMLF's officers and directors and have received satisfactory answers to all of
their questions. MIT and its representatives have had access to all documents
and information about HMLF and have reviewed sufficient information to allow
them to evaluate the merits and risks of the Merger
ARTICLE III
THE MERGER
Section 3.1 The Merger.
(a) On and subject to the terms and conditions of this Agreement, the
Acquisition Sub will merge with and into MIT (the "Merger"), and MIT shall be
the corporation surviving the Merger (the "Surviving Corporation"). On the
Closing Date: (i) HMLF and the Acquisition Sub will deliver to MIT the various
certificates, instruments, and documents required in this Agreement, (ii) MIT
will file with the Secretary of State of the State of Delaware Articles of
Merger in the form attached hereto as Exhibit B (the "Articles of Merger"), and
(iii) HMLF will deliver to MIT's shareholders the certificates evidencing the
shares of HMLF's common stock issued in the Merger.
(b) The Merger shall become effective at the time (the "Effective Time")
MIT files the Articles of Merger with the Secretary of State of the State of
Delaware. After the Effective Time, MIT shall continue its corporate existence
under the laws of the State of Delaware, and the separate existence and
corporate organization of Acquisition Sub, except insofar as it may be continued
by operation of law, shall be terminated and cease.
Section 3.2 Common Stock of Ambulatory and Acquisition Sub.
(a) On the Effective Time, by virtue of the Merger and without any further
action on the part of the Constituent Corporations or their respective
stockholders, each share of common stock of MIT issued and outstanding
immediately prior thereto shall be combined, changed and converted into one (1)
share of common stock of HMLF, in each case fully paid and nonassessable. On the
Effective Time, by virtue of the Merger and without any further action on the
part of the Constituent Corporations or their respective security holders any
issued or outstanding securities convertible into or exchangeable into shares of
common stock of MIT shall change and convert into securities convertible into
shares of common stock of HMLF, on otherwise identical terms. Such shares shall
be issued to the Shareholders as set forth on Schedule 3.2.
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(b) On the Effective Time, by virtue of the Merger and without any further
action on the part of the Constituent Corporations or their respective
stockholders, each share of Acquisition Sub issued and outstanding immediately
prior thereto shall be combined, changed and converted into one thousandth of
one (.001) share of common stock of MIT, such that HMLF shall own all the issued
and outstanding common stock of MIT.
(c) At the Closing Date, HMLF will not have issued or outstanding any
other shares of stock, nor any options or other rights to purchase the shares of
HMLF, nor any instrument convertible into or exchangeable for shares of MIT,
other than as set forth on Schedule 3.2. No shareholder of HMLF will have any
preemptive right or similar right to purchase the shares of HMLF.
Section 3.3 Stock Certificates.
(a) Certificates of MIT. On and after the Effective Time, all of the
outstanding certificates that, prior to that time, represented shares of common
stock of MIT shall be deemed for all purposes to evidence ownership of and to
represent the proportionate number of shares of HMLF, converted as herein
provided, and shall be so registered on its books and records. The registered
owner of any such outstanding stock certificate shall, until such certificate
shall have been surrendered for conversion or otherwise accounted for to the
Surviving Corporation or its transfer agent, have and be entitled to exercise
any voting and other rights with respect to and to receive any dividend and
other distribution upon the shares of HMLF evidenced by such outstanding
certificate as above provided.
(b) Certificates of Acquisition Sub. On and after the Effective Time, all
of the outstanding certificates that, prior to that time, represented shares of
common stock of Acquisition Sub shall be deemed for all purposes to evidence
ownership of and to represent the proportionate number of shares of MIT,
converted as herein provided, and shall be so registered on its books and
records. The registered owner of any such outstanding stock certificate shall,
until such certificate shall have been surrendered for conversion or otherwise
accounted for to the Surviving Corporation, have and be entitled to exercise any
voting and other rights with respect to and to receive any dividend and other
distribution upon the shares of MIT evidenced by such outstanding certificate as
above provided. All of the capital stock of the Acquisition Sub shall be owned
by HMLF.
Section 3.4 Additional Consideration. In addition to the consideration set
forth in Section 3.2 hereof, the following additional consideration shall be
paid at closing: (1) MIT shall pay HMLF the sum of $250,000 (the "Cash
Consideration") which such amount shall be disbursed by HMLF to pay any and all
liabilities (including any liabilities relating to three tax liens assessed by
the Internal Revenue Service and the State of California against the Company in
1997, 1998 and 2003) of HMLF that exist at Closing in accordance with an updated
schedule of liabilities provided by HMLF to MIT on the Closing Date,. Such
schedule of liabilities shall be substantially in accordance with the estimated
liabilities as set forth on Schedule 3.4 annexed hereto. If all liabilities that
exist at Closing have been paid, excluding loans payable to Cimerman, then HMLF
shall utilize the balance of the Cash Consideration to repay such loans payable
from HMLF to Cimerman; (2) Cimerman, President of HMLF shall retain 240,000
shares of his HMLF Common Stock after HMLF undertakes its agreed upon reverse
stock split (see Section 3.6 below). Based on Cimerman's present beneficial
ownership of 9,013,194 shares of HMLF common stock, Cimerman shall own 240,000
shares after the reverse stock split. As further consideration for Cimerman
retiring his shares of HMLF Common Stock that will allow him to retain 240,000
shares of HMLF Common Stock after the reverse stock split set forth in section
3.6 is undertaken, all the assets and all the liabilities of HMLF shall be spun
out to a separate entity controlled by Cimerman in accordance with federal and
state securities laws. HMLF has filed a Definitive 14C Information Statement
with the SEC approving such transaction and distributed the 14C to its
shareholders. Furthermore, Cimerman agrees that he shall sign a lock up
agreement at Closing which states that the 240,000 shares can be sold as
follows: (i) the first 90 days after Closing, no shares can be sold (Cimerman is
an affiliate and his shares of HMLF can not be sold under Rule 144(k) of the
1933 Securities Act until 90 days after Closing); (ii) for the twelve (12) month
period after such 90 day period, Cimerman can sell up to 20,000 shares per
month, in accordance with federal and state securities laws.
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Section 3.5 Events Prior to Closing. Upon execution hereof or as soon
thereafter as practical, management of HMLF and MIT shall execute, acknowledge
and deliver (or shall cause to be executed, acknowledged and delivered) any and
all certificates, opinions, financial statements, schedules, agreements,
resolutions rulings or other instruments required by this Agreement to be so
delivered, together with such other items as may be reasonably requested by the
parties hereto and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby, subject only to the conditions to
Closing referenced herein below.
Section 3.6 Reverse Stock Split. As a condition to Closing, HMLF hereby
agrees to undertake an approximately one (1) for 4.2 reverse stock split of its
issued and outstanding shares, as directed by MIT prior to the Closing Date.
Except as set forth in this Section 3.6, HMLF shall not effect another reverse
stock split during the 12 month period immediately following the Closing Date.
Section 3.7 Closing. The closing of the Merger shall take place at the
offices of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
or such other place as the parties may mutually agree (the "Closing"). The date
on which the Closing occurs is referred to herein as the "Closing Date". MIT and
HMLF shall use their best efforts to cause the closing to occur not later than
September 29, 2006.
Section 3.8 Termination.
(a) This Agreement may be terminated by either HMLF or MIT at any time
prior to the Closing Date if:
(i) there shall be any action or proceeding before any court or any
governmental body which shall seek to restrain, prohibit or invalidate the
transactions contemplated by this Agreement and which, in the judgment of such
party, made in good faith and based on the advice of its legal counsel, makes it
inadvisable to proceed with the transactions contemplated by this Agreement; or
(ii) any of the transactions contemplated hereby are disapproved by
any regulatory authority whose approval is required to consummate such
transactions.
In the event of termination pursuant to this paragraph (a) of this Section
3.8, no obligation, right, or liability shall arise hereunder and each party
shall bear all of the expenses incurred by it in connection with the
negotiation, drafting and execution of this Agreement and the transactions
herein contemplated.
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(b) This Agreement may be terminated at any time prior to the Closing Date
by HMLF if MIT shall fail to comply in any material respect with any of its
covenants or agreements contained in this Agreement or if any of the
representations or warranties of MIT contained herein shall be inaccurate in any
material respect, which noncompliance or inaccuracy is not cured within 20 days
after written notice thereof is given to MIT. If this Agreement is terminated
pursuant to this paragraph (b) of this Section 3.8, this Agreement shall be of
no further force or effect and no obligation, right or liability shall arise
hereunder.
(c) This Agreement may be terminated at any time prior to the Closing Date
by action of MIT if HMLF shall fail to comply in any material respect with any
of its covenants or agreements contained in this Agreement or if any of the
representations or warranties of HMLF contained herein shall be inaccurate in
any material respect, which noncompliance or inaccuracy is not cured within 20
days after written notice thereof is given to HMLF. If this Agreement is
terminated pursuant to this paragraph (c) of this Section 3.8, this Agreement
shall be of no further force or effect and no obligation, right or liability
shall arise hereunder.
This Agreement shall terminate automatically if the Closing has not taken
place or on before October 31, 2006, unless adjourned to a later date by mutual
consent in writing. Notwithstanding the foregoing, if HMLF fails to fulfill any
of the conditions precedent set forth in Article VI, MIT may, in its discretion,
toll the automatic termination date set forth in this Section 3.8(c) for up to
as many days that such condition precedent remains unfulfilled, and provided,
however, the parties acknowledge the transactions described in Section 6.6 shall
occur on the Closing Date.
In the event of termination pursuant to paragraph (b) or (c) of this
Section 3.8, the breaching party shall bear all of the expenses incurred by the
other party in connection with the negotiation, drafting and execution of this
Agreement and the transactions herein contemplated, not to exceed $20,000.
ARTICLE IV
SPECIAL COVENANTS
Section 4.1 Access to Properties and Records. Prior to closing, HMLF and
MIT will each afford to the officers and authorized representatives of the other
full access to the properties, books and records of each other, in order that
each may have full opportunity to make such reasonable investigation as it shall
desire to make of the affairs of the other and each will furnish the other with
such additional financial and operating data and other information as to the
business and properties of each other, as the other shall from time to time
reasonably request.
Section 4.2 Availability of Rule 144. HMLF and MIT shareholders holding
"restricted securities," as that term is defined in Rule 144 promulgated
pursuant to the Securities Act will remain as "restricted securities". HMLF is
under no obligation to register such shares under the Securities Act, or
otherwise. The covenants set forth in this Section 4.2 shall survive the Closing
and the consummation of the transactions herein contemplated.
Section 4.3 Special Covenants and Representations Regarding the HMLF
Common Shares to be Issued in the Merger. The transactions contemplated by this
Agreement constitutes the offer and sale of securities under the Securities Act,
and applicable state statutes. Such transaction shall be consummated in reliance
on exemptions from the registration and prospectus delivery requirements of such
statutes which depend, inter alia, upon the circumstances under which the MIT
shareholders acquire such securities.
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Section 4.4 Third Party Consents. HMLF and MIT agree to cooperate with
each other in order to obtain any required third party consents to this
Agreement and the transactions herein contemplated.
Section 4.5 Actions Prior and Subsequent to Closing.
(a) From and after the date of this Agreement until the Closing Date,
except as permitted or contemplated by this Agreement, HMLF and MIT will each:
(i) maintain and keep its properties in states of good repair and
condition as at present, except for depreciation due to ordinary wear and tear
and damage due to casualty;
(ii) maintain in full force and effect insurance comparable in
amount and in scope of coverage to that now maintained by it;
(iii) perform in all material respects all of its obligations under
material contracts, leases and instruments relating to or affecting its assets,
properties and business; and
(iv) conduct its business in the ordinary course, except that MIT
shall be able to consummate the Financing.
(b) From and after the date of this Agreement until the Closing Date, HMLF
will not, without the prior consent of MIT:
(i) except as otherwise specifically set forth herein, make any
change in its articles of incorporation or bylaws;
(ii) declare or pay any dividend on its outstanding Common Shares or
otherwise change its capitalization, except as provided herein;
(iii) enter into or amend any employment, severance or agreements or
arrangements with any directors or officers;
(iv) grant, confer or award any options, warrants, conversion rights
or other rights not existing on the date hereof to acquire any Common Shares; or
(v) purchase or redeem any Common Shares.
Section 4.6 Indemnification by MIT. In addition to and not in limitation
of MIT's indemnification obligations set forth elsewhere in this Agreement, MIT
shall, defend, indemnify, and hold harmless HMLF and its affiliates and its
respective officers, directors, shareholders, agents and employees
(individually, a "HMLF Indemnitee" and collectively the "HMLF Indemnitees"),
from and against any and all claims, losses, deficiencies, liabilities,
obligations, damages, penalties, punitive damages, costs, and expenses
(including, without limitation, reasonable legal, accounting and consulting
fees), whether or not resulting from third party claims (collectively,
"Losses"), suffered by a HMLF Indemnitee, which arise out of or result from:
(a) Any material inaccuracy or misrepresentation in or material breach of
any of the representations, warranties, covenants or agreements made by MIT in
this Agreement or in any document, certificate or affidavit delivered by MIT
pursuant to the provisions of this Agreement;
(b) any material obligation, liability, debt or commitment of MIT which is
not incurred in the ordinary course of business or not disclosed herein or in
the financial statements, whether or not paid by HMLF; and
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(c) any other matter relating to the conduct of business by MIT prior to
the Closing (including, but not limited to, all acts, omissions and conditions
existing or occurring prior to the Closing for which any of the HMLF Indemnitees
is alleged to be liable pursuant to any successor or similar theory of
liability) not incurred in the ordinary course of business and which is not
disclosed herein or in the financial statements.
Section 4.7 Indemnification By HMLF and Cimerman.
(a) In addition to and not in limitation of HMLF's indemnification
obligations set forth elsewhere in this Agreement, HMLF defend, indemnify, and
hold harmless the MIT Indemnitees, from and against any and all claims, losses,
deficiencies, liabilities, obligations, damages, penalties, punitive damages,
costs, and expenses (including, without limitation, reasonable legal, accounting
and consulting fees), whether or not resulting from third party claims
(collectively, "Losses"), suffered by a MIT Indemnitee, which arise out of or
result from:
(i) any inaccuracy or misrepresentation in or breach of any of the
representations, warranties, covenants or agreements made by HMLF in this
Agreement; or in any document, certificate or affidavit delivered by HMLF
pursuant to the provisions of this Agreement;
(ii) any obligation, liability, debt or commitment of HMLF which is
not disclosed herein; and
(iii) any other matter relating to the conduct of business by HMLF
prior to the Closing (including, but not limited to, all acts, omissions and
conditions existing or occurring prior to the Closing for which any of the MIT
Indemnitees is alleged to be liable pursuant to any successor or similar theory
of liability).
(b) As provided in this Section 4.7 (b) Cimerman shall indemnify the MIT
Indemnitees: (i) with respect to Losses which are not Franchise Losses, in an
amount of up to $100,000 and such indemnity obligation shall expire 24 months
from the date hereof with respect to Losses which are not Franchise Losses and
(ii) with respect to Franchise Losses such indemnity obligations shall be
unlimited but restricted to the losses resulting from the franchise agreement
and, shall continue as long as such franchise agreement exists. "Franchise
Losses" shall mean any liabilities, costs or expenses incurred by HMLF as a
result of HMLF's or any affiliate or subsidiary of HMLF's failure to comply with
state or federal franchise laws or in connection with the franchise operations
of HMLF or its subsidiaries or affiliates that occurred prior to Closing. The
obligation of Cimerman shall be in addition to and not in limitation of HMLF's
indemnification obligations set forth elsewhere in this Agreement.
Section 4.8 Indemnification Payments. All indemnity payments, whether by
HMLF, Cimerman or MIT, to be made under this Agreement, shall be made in
immediately available funds within 30 days of the claim for indemnification.
Section 4.9 Procedure for Third Party Claims.
(a) Notice to the indemnifying party shall be given promptly after receipt
by MIT, Cimerman or HMLF of actual knowledge of the commencement of any action
or the assertion of any claim that will likely result in a claim by it for
indemnity pursuant to this Agreement. Such notice shall set forth in reasonable
detail the nature of such action or claim to the extent known, and include
copies of any written correspondence or pleadings from the party asserting such
claim or initiating such action. The indemnified party shall be entitled, at its
own expense, to assume or participate in the defense of such action or claim. If
the indemnifying party assumes the defense of such action or claim, it shall be
conducted by counsel chosen by such party and approved by the party seeking
indemnification, which approval shall not be unreasonably withheld.
15
(b) For actions where the indemnifying party does not exercise its right
to assume the defense, the party seeking indemnification shall assume and
control the defense of and contest such action. The indemnifying party shall be
entitled to participate in the defense of such action, the cost of such
participation to be at its own expense. The indemnifying party shall pay the
reasonable attorneys' fees and expenses of the party seeking indemnification to
the extent that such fees and expenses relate to claims as to which
indemnification is payable under this Agreement, as such expenses are incurred.
(c) Both the indemnifying party and the indemnified party shall cooperate
fully with one another in connection with the defense, compromise, or settlement
of any such claim or action, including, without limitation, by making available
to the other all pertinent information and witnesses within its control.
(d) No indemnified party shall have the right to settle any action brought
against it without the consent of the indemnifying party, unless the
indemnifying party does not assume the defense and control of such action. The
indemnifying party shall be responsible for the costs of such settlement. The
indemnifying party shall have the right to settle any action brought against an
indemnified party as long as the indemnified party has been delivered a complete
release as a condition of the settlement.
Section 4.10 MIT and HMLF will each use its reasonable best efforts to
take all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement.
Section 4.11 HMLF will continue at least one significant historic business
line of MIT, or use at least a significant portion of MIT's historic business
assets in a business, in each case within the meaning of Reg. ss.1.368-1(d),
except that the HMLF may transfer MIT's historic business assets (i) to a
corporation that is a member of the HMLF's "qualified group," within the meaning
of Reg. ss.1.368-1(d)(4)(ii), or (ii) to a partnership if (A) one or more
members of the HMLF's "qualified group" have active and substantial management
functions as a partner with respect to the MIT's historic business or (B)
members of the HMLF's "qualified group" in the aggregate own an interest in the
partnership representing a significant interest in MIT's historic business, in
each case within the meaning of Reg. ss.1.368-1(d)(4)(iii).
Section 4.12 HMLF agrees to use its best efforts to change its name as
soon as practicable after HMLF files a Schedule 14C or Schedule 14A with the
Securities and Exchange Commission and obtains the requisite number of votes
from its shareholders; provided however that HMLF shall not be required to file
a Schedule 14A or Schedule 14C in connection with its covenants pursuant to this
Section. Upon changing its name, HMLF agrees to use its best efforts to change
its symbol on the OTCBB.
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ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF HMLF
The obligations of HMLF under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.1 Accuracy of Representations. The representations and
warranties made by MIT in this Agreement were true when made and shall be true
at the Closing Date with the same force and effect as if such representations
and warranties were made at the Closing Date (except for changes therein
permitted by this Agreement), and MIT shall have performed or compiled with all
covenants and conditions required by this Agreement to be performed or complied
with by MIT prior to or at the Closing. HMLF shall be furnished with a
certificate, signed by a duly authorized officer of MIT and dated the Closing
Date, to the foregoing effect.
Section 5.2 Approval. The Board of Directors and shareholders of MIT shall
have approved this Agreement and the transactions contemplated herein.
Section 5.3 Officer's Certificate. HMLF shall have been furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
MIT to the effect that: (a) the representations and warranties of MIT set forth
in the Agreement and in all Exhibits, Schedules and other documents furnished in
connection herewith are in all material respects true and correct as if made at
the Effective Time; (b) MIT has performed all covenants, satisfied all
conditions, and complied with all other terms and provisions of this Agreement
to be performed, satisfied or complied with by it as of the Effective Time; (c)
since such date and other than as previously disclosed to HMLF, MIT has not
entered into any material transaction other than transactions which are usual
and in the ordinary course of its business; and (d) no litigation, proceeding,
investigation or inquiry is pending or, to the best knowledge of MIT,
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or, to the
extent not disclosed in the attached schedules provided by MIT, by or against
MIT which might result in any material adverse change in any of the assets,
properties, business or operations of MIT.
Section 5.4 No Material Adverse Change. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business or operations of nor shall any event have occurred which, with the
lapse of time or the giving of notice, may cause or create any material adverse
change in the financial condition, business or operations of MIT.
Section 5.5 Other Items. HMLF shall have received such further documents,
certificates or instruments relating to the transactions contemplated hereby as
HMLF may reasonably request.
Section 5.6 Audited Financial Statements. MIT agrees to provide HMLF with
the following financial statements prior to Closing:
(a) Annual Financial Statements. An audited balance sheet as of the end of
MIT's most recent fiscal year and audited statements of income, cash flows and
changes in stockholders' equity for each of the two fiscal years preceding the
date of such audited balance sheet (or such shorter period as MIT has been in
business);
17
(b) Interim Financial Statements. An unaudited balance sheet as of the end
of MIT's most recent fiscal quarter if the most recent fiscal quarter ended at
least 45 days from the Closing Date or the prior fiscal quarter if the most
recent fiscal quarter ended within 45 days of the Closing Date, and income
statements and statements of cash flows for such interim period up to the date
of such balance sheet and the comparable period of the preceding fiscal year.
Such Interim financial statements may be unaudited; however such interim
financial statements shall be reviewed by an independent public accountant using
professional standards and procedures for conducting such reviews, as
established by generally accepted auditing standards.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF MIT
The obligations of MIT under this Agreement are subject to the
satisfaction, at or before the Closing Date (unless otherwise indicated herein),
of the following conditions:
Section 6.1 Accuracy of Representations. The representations and
warranties made by HMLF in this Agreement were true when made and shall be true
as of the Closing Date (except for changes therein permitted by this Agreement)
with the same force and effect as if such representations and warranties were
made at and as of the Closing Date, and HMLF shall have performed and complied
with all covenants and conditions required by this Agreement to be performed or
complied with by HMLF prior to or at the Closing. MIT shall have been furnished
with a certificate, signed by a duly authorized executive officer of HMLF and
dated the Closing Date, to the foregoing effect.
Section 6.2 Approval. The Board of Directors of HMLF and Board of
Directors and shareholders of Acquisition Sub shall have approved this Agreement
and the transactions contemplated herein.
Section 6.3 Officer's Certificate. MIT shall be furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
HMLF to the effect that: (a) the representations and warranties of HMLF set
forth in the Agreement and in all Exhibits, Schedules and other documents
furnished in connection herewith are in all material respects true and correct
as if made on the Effective Time; and (b) HMLF had performed all covenants,
satisfied all conditions, and complied with all other terms and provisions of
the Agreement to be performed, satisfied or complied with by it as of the
Effective Time; (c) since such date and other than as previously disclosed to
MIT, HMLF has not entered into any material transaction other than transactions
which are usual and in the ordinary course of its business; and (d) no
litigation, proceeding, investigation or inquiry is pending or, to the best
knowledge of HMLF, threatened, which might result in an action to enjoin or
prevent the consummation of the transactions contemplated by this Agreement or,
to the extent not disclosed in the attached schedules provided by HMLF, by or
against HMLF which might result in any material adverse change in any of the
assets, properties, business or operations of HMLF.
Section 6.4 No Material Adverse Change. There shall not have occurred any
material adverse change in the financial condition, business or operations of
nor shall any event have occurred which, with the lapse of time or the giving of
notice, may cause or create any material adverse change in the financial
condition, business or operations of HMLF.
Section 6.5 SEC Filings. HMLF shall have made all filings required of it
by the Exchange Act on a timely basis, including but not limited to its Form
10-KSB for the fiscal year 2005, and shall have made such other fillings such
that HMLF is "current" in its reporting requirements pursuant to the Exchange
Act.
18
Section 6.6 Spin-Out Transaction; Cancellation. At closing, HMLF shall
complete the spin-out transaction in the manner contemplated in "Proposal 2" of
its Definitive 14C Information Statement filed with the Securities Exchange
Commission on June 2, 2006, whereby all of the assets and all of the liabilities
of HMLF shall be transferred to Cimerman, and the Preferred Stock and the amount
of shares of HMLF common stock that must be retired after Cimerman retains
240,000 shares of HMLF Common Stock after the reverse stock split set forth in
section 3.6 is undertaken, and any outstanding indebtedness due to Cimerman
shall be cancelled (the "Spin-out").
Section 6.7 Reverse Stock Split. The reverse stock split set forth in
section 3.6 hereof shall have been effected.
Section 6.8 Fairness Opinion.
(a) HMLF shall have delivered to MIT a fairness opinion that, in form and
substance is satisfactory to MIT, with respect to the Spin-out and the Merger.
(b) HMLF shall be responsible for the cost and expense of obtaining the
▇▇▇▇▇▇▇ opinion referred to in Section 6.8(a), provided, however, that MIT will
pay for the fairness opinion, up to a maximum amount of $25,000, in the event
this Agreement fails to close because of MIT's uncured breach of this Agreement
or MIT does not satisfy a condition of closing set forth in Article V hereof.
Section 6.9 Delivery of Financials. HMLF shall have delivered to MIT
unaudited financial statements of their most recent fiscal quarter, reviewed by
an independent auditor, not later than ten business days prior to Closing.
Section 6.10 Officer Resignations. HMLF shall have delivered to MIT the
resignations of all of the incumbent officers of HMLF, each effective as of the
Closing Date.
Section 6.11 Director Resignations. On the Closing Date, all but two of
the incumbent directors of HMLF shall resign from office and deliver their
written resignations to MIT, which shall appoint two persons to fill the vacant
positions. Should HMLF have only one director as of the Closing Date, that
person shall remain on the Board of Directors, and MIT shall appoint one member
to the Board of Directors. Simultaneously with the either the resignation of
one-half of the incumbent directors or the appointment of a single director
chosen by MIT, the Board of Directors shall create an executive committee
consisting solely of directors selected by MIT. The Board of Directors shall
delegate all of the directors' powers that may be delegated to committees
pursuant to Nevada Corporate Law to the executive committee. HMLF shall
distribute to its shareholders information with respect to the new directors to
be elected to the Board in accordance with Rule 14f-1 of the Exchange Act and
following the expiration of any applicable notice period, HMLF's incumbent
directors shall resign, and be replaced by the directors chosen by the holders
of a majority of the then outstanding shares of common stock of HMLF. Each
resigning person shall confirm in writing that he or she does not owe and is not
owed anything by HMLF. Other than the foregoing actions, the incumbent HMLF
director(s) that remain(s) in office shall not authorize any other actions by
HMLF or any subsidiary without the written consent of the holders of a majority
of the shares of MIT common stock. As soon as practicable after Closing, HMLF
shall send a notice to its stockholders in order to comply with Rule 14f-1 of
the Exchange Act.
19
Section 6.12 Use of Cash Consideration. HMLF shall use the Cash
Consideration (as defined in Section 3.4) for no other purposes than the
repayment of those obligations set forth in Schedule 6.12, attached.
Section 6.13. Indemnity Agreement. Cimerman shall deliver to MIT an
Indemnity Agreement of Cimerman Holding Co., Inc. (an entity by this name or a
similar name to be formed prior to Closing) whereby Cimerman Holding Co., Inc.
indemnifies MIT from all liabilities assumed by HMLF which is, in form and
substance, satisfactory to MIT.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Brokers and Finders. Each party hereto hereby represents and
warrants that it is under no obligation, express or implied, to pay certain
finders in connection with the bringing of the parties together in the
negotiation, execution, or consummation of this Agreement. The parties each
agree to indemnify the other against any claim by any third person for any
commission, brokerage or finder's fee or other payment with respect to this
Agreement or the transactions contemplated hereby based on any alleged agreement
or understanding between the indemnifying party and such third person, whether
express or implied from the actions of the indemnifying party.
Section 7.2 Section 7.2 Law, Forum and Jurisdiction. This Agreement shall
be governed and construed in accordance with the laws of the State of New York,
without regard to any applicable conflicts of law. The parties hereto
irrevocably further consent to the jurisdiction of the courts of the State of
New York and of any Federal court located in New York City in connection with
any action or proceeding arising out of or relating to this Agreement, any
document or instrument delivered pursuant to, in connection with or
simultaneously with this Agreement, or a breach of this Agreement or any such
document or instrument.
Section 7.3 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered to a
party or sent by registered mail or certified mail, postage prepaid, or by
prepaid telegram addressed as follows:
To HMLF: Homelife, Inc. With a ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
Attn. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President copy to: Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (714) Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To MIT: MIT Holding, Inc. With a ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
Attn. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President Copy to: Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: _(▇▇▇) ▇▇▇-▇▇▇▇
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or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed or telegraphed.
Section 7.4 Attorneys' Fees. In the event that any party institutes any
action or suit to enforce this Agreement or to secure relief from any default
hereunder or breach hereof, the breaching party or parties shall reimburse the
non-breaching party or parties for all costs, including reasonable attorneys'
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
Section 7.5 Confidentiality. Each party hereto agrees with the other party
that, unless and until the transactions contemplated by this Agreement have been
consummated, they and their representatives will hold in strict confidence all
data and information obtained with respect to another party or any subsidiary
thereof from any representative, officer, director or employee, or from any
books or records or from personal inspection, of such other party, and shall not
use such data or information or disclose the same to others, except: (i) to the
extent such data is a matter of public knowledge or is required by law to be
published; or (ii) to the extent that such data or information must be used or
disclosed in order to consummate the transactions contemplated by this
Agreement.
Section 7.6 Third Party Beneficiaries. This contract is solely between
HMLF and MIT and except as specifically provided, no director, officer,
stockholder, employee, agent, independent contractor, creditor or any other
person or entity shall be deemed to be a third party beneficiary of this
Agreement.
Section 7.7 Entire Agreement. This Agreement represents the entire
agreement between the parties relating to the subject matter hereof. This
Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understanding, agreements, representations or warranties, written or oral,
except as set forth herein. This Agreement may not be amended or modified,
except by a written agreement signed by all parties hereto.
Section 7.8 Survival. Except as otherwise provided herein, the
representations, warranties and covenants of the respective parties shall
survive the Closing Date and the consummation of the transactions herein
contemplated for 24 months. Notwithstanding the foregoing, the representations,
warranties and covenants of the respective parties on matters of or relating to
federal and state taxes shall extend to the expiration of the matters'
applicable statute of limitations.
Section 7.9 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
Section 7.10 Amendment or Waiver. Every right and remedy provided herein
shall be cumulative with every other right and remedy, whether conferred herein,
at law, or in equity, and may be enforced concurrently herewith, and no waiver
by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may be amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance hereof may be extended by a
writing signed by the party or parties for whose benefit the provision is
intended.
21
Section 7.11 Expenses. Each party herein shall bear all of their
respective costs and expenses incurred in connection with the negotiation of
this Agreement and in the consummation of the transactions provided for herein
and the preparation thereof, except as provided in Section 7.16. HMLF shall pay
its expenses in connection with this Agreement on the Closing Date.
Section 7.12 Headings; Context. The headings of the sections and
paragraphs contained in this Agreement are for convenience of reference only and
do not form a part hereof and in no way modify, interpret or construe the
meaning of this Agreement.
Section 7.13 Benefit. This Agreement shall be binding upon and shall inure
only to the benefit of the parties hereto, and their permitted assigns
hereunder. This Agreement shall not be assigned by any party without the prior
written consent of the other party.
Section 7.14 Public Announcements. Except as may be required by law,
neither party shall make any public announcement or filing with respect to the
transactions provided for herein without the prior consent of the other party
hereto. Notwithstanding the foregoing, MIT may disclose this Agreement in
connection with obtaining additional financing.
Section 7.15 Severability. In the event that any particular provision or
provisions of this Agreement or the other agreements contained herein shall for
any reason hereafter be determined to be unenforceable, or in violation of any
law, governmental order or regulation, such unenforceability or violation shall
not affect the remaining provisions of such agreements, which shall continue in
full force and effect and be binding upon the respective parties hereto.
Section 7.16 Failure of Conditions; Termination. In the event any of the
conditions specified in this Agreement shall not be fulfilled on or before the
Closing Date, then the party which benefits from the satisfaction of such
condition has the right either to proceed or, upon prompt written notice to the
other, to terminate and rescind this Agreement. In such event, the party that
has failed to fulfill the conditions specified in this Agreement will liable for
the other party's legal fees. The election to proceed shall not affect the right
of such electing party reasonably to require the other party to continue to use
its efforts to fulfill the unmet conditions.
Section 7.17 No Strict Construction. The language of this Agreement shall
be construed as a whole, according to its fair meaning and intendment, and not
strictly for or against either party hereto, regardless of who drafted or was
principally responsible for drafting the Agreement or terms or conditions
hereof.
Section 7.18 Execution Knowing and Voluntary. In executing this Agreement,
the parties each acknowledge and represent that each: (a) has fully and
carefully read and considered this Agreement; (b) has been or has had the
opportunity to be fully apprised by its attorneys of the legal effect and
meaning of this document and all terms and conditions hereof; (c) is executing
this Agreement voluntarily, free from any influence, coercion or duress of any
kind.
Section 7.19 Amendment. At any time after the Closing Date, this Agreement
may be amended by a writing signed by all parties, with respect to any of the
terms contained herein, and any term or condition of this Agreement may be
waived or the time for performance hereof may be extended by a writing signed by
the party or parties for whose benefit the provision is intended.
22
Section 7.20 Completion of Schedules. The parties hereto acknowledge that
this Agreement has been executed prior to the completion of the Schedules
attached hereto. As soon as practicable, but in no event later than the five
days following the date hereof (the "Delivery Period"), each of the parties
hereto shall deliver full and complete Schedules. The Schedules shall be
organized in a reasonable manner to facilitate each party's evaluation of such
material. Each party shall have the right to terminate this Agreement within
five days after the receipt of the Schedules of the other party hereto. In the
event that both parties have not delivered the Schedules within the Delivery
Period, unless extended, then this Agreement shall automatically terminate
without any further action by the parties hereto. In the event that this
Agreement is terminated pursuant to this paragraph, then neither party hereto
shall have any liability to any party hereto pursuant to this Agreement or in
connection with the transactions contemplated hereby.
[SIGNATURES FOLLOW ON SUBSEQUENT PAGE]
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IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed and entered into as of the date first above written.
HOMELIFE, INC.
By: s/s
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
HOMELIFE ACQUISITION CORP.
By: s/s
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
MIT HOLDING, INC.
By: s/s
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
s/s
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Indvidually
CONSENTED TO:
ABSTAINED
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Director
s/s
▇▇▇▇▇ May, Director
s/s
▇▇▇▇▇ ▇. ▇▇▇▇▇, Ph.D., Director
s/s
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Director
24