Exhibit 10.1
EXECUTED COPY
AGREEMENT AND PLAN OF MERGER
among
PSYCHIC FRIENDS NETWORK INC.,
PFN SUB CORP. and
321 LEND, INC.
Dated as of July 17, 2014
EXECUTED COPY
AGREEMENT AND PLAN OF MERGER
AMONG
PSYCHIC FRIENDS NETWORK INC.
PFN SUB CORP.
321 LEND, INC.,
Dated as of July 17, 2014
THIS AGREEMENT AND PLAN OF MERGER, dated as of July 17, 2014 (this
"Agreement") by and among 321 LEND, INC., a Delaware corporation ("321"),
PSYCHIC FRIENDS NETWORK, INC., a Nevada corporation ("PFNI"), and PFN Sub Corp.
a Colorado corporation and a direct, wholly owned subsidiary of PFNI ("PFN
Sub"), 321 and the PFN Sub being sometimes referred to herein as the
"Constituent Corporations."
WHEREAS, the board of directors of 321 and PFNI deems it advisable that 321
and PFN Sub merge into a single corporation ("the Merger");
NOW, THEREFORE, in consideration of the premises and the respective mutual
covenants, representations and warranties herein contained, the parties agree as
follows:
1. SURVIVING CORPORATION. PFN Sub shall be merged with and into 321 which
shall be the surviving corporation (hereinafter the "Surviving Corporation") in
accordance with the applicable laws of the State of Delaware, and as a result of
the Merger, 321 will become a direct, wholly owned subsidiary of PFNI.
2. MERGER DATE. The Merger shall become effective (the "Merger Date") upon
the completion of:
(i) Adoption of this Agreement by PFNI, as sole stockholder of PFN Sub
pursuant to the General Corporation Law of Delaware and by the shareholders of
321 pursuant to the General Corporation Law of Delaware; and
(ii) Execution and filing of the Certificate of Merger with the Secretary
of State of the State of Delaware in accordance with the General Corporation Law
of Delaware.
(iii) Execution and filing of the Statement of Merger with the Secretary of
State of the State of Colorado in accordance with the Colorado Revised Statutes.
3. TIME OF FILINGS. The Certificates of Merger shall be filed with the
Secretary of State of Delaware and Colorado upon the approval of this Agreement
by the boards of directors of PFNI, 321 and PFN Sub, and the shareholders of
each of 321, and PFN Sub, and the fulfillment or waiver of the terms and
conditions herein.
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4. ACCOUNTING PERIOD. For all accounting purposes the effective date of the
Merger shall be as of the Merger Date.
5. GOVERNING LAW
The Surviving Corporation shall be a Delaware corporation.
6. CERTIFICATE OF INCORPORATION
On the Merger Date, the Certificate of Incorporation of 321 shall be the
certificate of incorporation of the Surviving Corporation until thereafter
amended in accordance with the provisions thereof and this Agreement and
applicable law.
7. BYLAWS
On the Merger Date and without any further action on the part of PFNI or
PFN Sub, the bylaws of 321 shall be the bylaws of the Surviving Corporation
until thereafter amended in accordance with the provisions thereof and this
Agreement and applicable law.
8. NAME OF SURVIVING CORPORATION
The Surviving Corporation shall be "321 Lend" or such name as it may choose
and shall be available.
9. TAX CONSEQUENCES
It is intended by the parties hereto that the Merger constitutes a
reorganization within the meanings of section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). The parties hereto adopt this Agreement
as a plan of reorganization within the meaning of Treasury Regulation sections
1.368-1(c) and 1.368-2(g).
10. EFFECT OF MERGER ON CAPITAL STOCK OF 321 AND PFN SUB
On the Merger Date, by virtue of the Merger and without any action on the
part of 321, PFN Sub or the holders of any securities of 321 or PFN Sub:
(a) Conversion of 321 Common Shares. Subject to Section 11, total number of
common share of 321 (the "321 Common Stock") issued and outstanding immediately
prior to the Merger Date, shall, on the Merger Date, be converted into and shall
thereafter represent the right to receive 18,000,000 shares of common stock, no
par value per share, of PFNI (the "PFNI Stock") as stated in Section 11
hereunder (the "Merger Share Consideration"), in each case upon surrender of the
certificate(s) representing such 321 Common Stocks, and all 321 Common Stocks
that have been converted into the right to receive the Merger Share
Consideration as provided in this Section 10 shall be automatically cancelled
and shall cease to exist. All other non-issued 321 Common Stock shall by virtue
of the Merger and without any action on the part of the holder thereof, be
cancelled and retired and shall cease to exist, and no consideration shall be
delivered in exchanger thereof or in respect thereof.
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(b) Conversion of PFN Sub Common Shares. On the Merger Date, by virtue of
the Merger and without any action on the part of the holder thereof, each share
of common stock, no par value of PFN Sub issued and outstanding immediately
prior to the Merger Date shall be converted into and become one validly issued,
fully paid and nonassessable share of common stock, no par value of the
Surviving Corporation, with the same rights, powers and privileges as the shares
so converted and those shares of common stock of the Surviving Corporation shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation. From and after the Merger Date, all certificates representing
common shares of PFN Sub will for all purposes represent the number of common
shares of the Surviving Corporation into which they were converted in accordance
with the immediately preceding sentence.
11. CONDITION FOR MERGER
The Merger will occur in several steps with conditions as follows:
(a) Upon consummation of the Merger, the Surviving Corporation will acquire
100% of the website/platform of 000xxxx.xxx (the "Website") and related
intellectual property (the "321 IP") from Xxxxxx Xxxx, Xxxxx Xx, and Rajin So
(the "321 Owners") in exchange for 18,000,000 shares of PFNI's Common Stock,
valued at $270,000 at $0.015 per share. The 18,000,000 shares of PFNI's Common
Stock, will be split among 321 Owners in equal shares. The transfer of 321 IP to
the Surviving Corporation will occur at the Closing (as defined in Section
23.1).
(b) 321 shall use its reasonable efforts to raise a minimum amount of
$500,000 (the "Capital Raising") for a period of ninety calendar days (90 days)
from the time of Closing (the "Capital Raising Period") by issuing PFNI Common
Stock, warrants or obtaining debt financing on behalf of PFNI with such capital
raise requiring consent of the majority of the directors of PFNI's Board of
Directors (including 321 Representative in such majority).
(c) During the Capital Raising Period, unless consent by a majority of the
directors of PFNI's Board of Directors (including 321 Representative in such
majority) is received, PFNI shall not issue additional PFNI Common Stock,
warrants, or debt obligations on behalf of PFNI.
(d) 321 shall receive one board seat (the "321 Representative") on PFNI's
Board of Directors at the time of Closing.
(e) Until the Capital Raising is successful, the Website and the 18,000,000
PFNI shares will be placed in "escrow", which shall be held by JPMorgan Chase &
Co. Upon successful Capital Raising, JPMorgan Chase & Co shall release the
Website to the Surviving Corporation and the 18,000,000 PFNI shares to 321
Owners.
(f) Immediately (within one (1) business day) following the successful
Capital Raising, 321 Owners shall receive from PFNI, warrants to purchase
100,000,000 shares of PFNI's Common Stock with a strike price of $0.02 per
share. These warrants shall be fully transferrable, have a seven (7) year
expiration date, and shall be exercisable, in whole or in part, with a minimum
of one (1) million shares of PFNI's Common Stock if exercised in part. These
warrants shall be split among 321 Owners in equal shares.
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(g) If the Capital Raising is successful, PFNI shall immediately and
without any delay (within two (2) business days), move to take a shareholder
vote to increase its board size by two (2) members, thereby creating a five (5)
member Board of Directors and 321 Owners shall receive two more seats (the "321
Representatives") on PFNI's Board of Directors.
(h) If the Capital Raising is unsuccessful, the 18,000,000 shares of PFNI's
Common Stock will be returned to PFNI and the Website and 321 IP will be given
without any monetary charge or liabilities to an entity controlled and
designated by the 321 Representative. Immediately afterwards, the 321
Representative shall resign from PFNI's board of directors. There shall not be
any legal or financial penalty to PFNI, 321, PFN Sub, or Surviving Corporation
in an event of an unsuccessful Capital Raising. These warrants shall be split
among 321 Owners in equal shares.
(i) When the Website is launched and made available to the general public,
and 321 issues its first loan to a borrower, 321 Owners shall immediately and
without delay (within one (1) business day) receive from PFNI, warrants to
purchase an additional 36,000,000 shares of PFNI's Common Stock with a strike
price of $0.05 per share. These warrants shall be fully transferrable, have a
seven (7) year expiration date, and shall be exercisable, in whole or in part,
with a minimum of one (1) million shares of PFNI's Common Stock if exercised in
part. These warrants shall be split among 321 Owners in equal shares.
(j) When 321 issues $2,500,000 in loan originations, 321 Owners shall
immediately and without delay (within one (1) business day) receive from PFNI,
warrants to purchase an additional 72,000,000 shares of PFNI's Common Stock with
a strike price of $0.10 per share. These warrants shall be fully transferrable,
have a seven (7) year expiration date, and shall be exercisable, in whole or in
part, with a minimum of one (1) million shares of PFNI's Common Stock if
exercised in part.
12. RETENTION AND SEVERANCE AGREEMENT
At the Closing, PFNI agrees to enter into or commit to enter into retention
and severance agreement (the "Retention and Severance") with Marc Xxxxxxx Xxxxx,
Xxxxxxx Xxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxx Xxxx, and Xxxxx Xx (the "PFNI
Employees") as set forth in Exhibit 1 annexed hereto. At the time of the
Closing, PFNI shall have no other employees aside from PFNI Employees.
13. BOARD OF DIRECTORS AND OFFICERS
(a) Immediately after the Closing (within one (1) business day), PFNI's
board shall vote to designate 321 Representative as a member of the PFNI Board
of Directors.
(b) Once the Capital Raising is successful, the approving PFNI Stockholders
and the owners of the 18,000,000 PFNI Shares as Merger Consideration, among
other things, agree to immediately approve an amendment to PFNI's bylaws (the
"PFNI Bylaw Amendment") to increases the size of PFNI's board of directors to
five members.
(c) Immediately following the PFNI Bylaw Amendment, and as part of
approving this Agreement, PFNI's board shall vote to designate 321
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Representatives as members of the PFNI Board of Directors. As Part of this
Agreement, the approving PFNI Stockholders, among other things, agree to vote
all of the stock of PFNI owned by such stockholders following the PFNI Bylaw
Amendment to designate 321 Representatives as a member of the PFNI Board of
Directors.
(d) The officers of the Surviving Corporation shall be the officers of 321
on the Merger Date.
(e) The board members of the Surviving Corporation shall be the board
members of 321 on the Merger Date.
14. EFFECT OF THE MERGER
On the Merger Date, the separate existence of PFN Sub shall cease (except
insofar as continued by statute), and it shall be merged with and into the
Surviving Corporation. All the property, real, personal, and mixed, of each of
the Constituent Corporations, and all debts due to either of them, shall be
transferred to and vested in the Surviving Corporation, without further act or
deed. The Surviving Corporation shall thenceforth be responsible and liable for
all the liabilities and obligations, and any claim or judgment against either of
the Constituent Corporations may be enforced against the Surviving Corporation.
At and after the Merger Date, the officers and directors of the Surviving
Corporation will be authorized to execute and deliver, in the name and on behalf
of PFN Sub, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of PFN Sub, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the properties, assets or
rights of PFN Sub. From and after the Merger Date, PFNI and the Surviving
Corporation shall trade under the symbol "PFNI" on Nasdaq.
15. APPROVAL OF SHAREHOLDERS
15.1 SHAREHOLDER APPROVAL. This Agreement shall be adopted by the
shareholders of each of PFN Sub, and 321 at meetings of such shareholders called
for that purpose or by written consent pursuant to the laws applicable thereto.
There shall be required for the adoption of this Agreement the affirmative vote
of the holders of at least a majority of the holders of all the shares of the
Common Stock issued and outstanding and entitled to vote for each of PFNI, PFN
Sub, and 321.
15.2 PFNI BOARD APPROVAL. Pursuant to this Agreement, the board of
directors of PFNI shall vote in favor of (a) the issuance of the Merger Share
Consideration, (b) the expansion of the PFNI board of directors to three (3)
members pursuant to the PFNI bylaws; (c) the Retention and Severance pursuant to
Section 11, the matters in clauses (a), (b), and (dc collectively, the "PFNI
Board Approval Matters".
16. REPRESENTATIONS AND WARRANTIES OF PFNI AND PFN SUB
PFNI and PFN Sub jointly and severally represent and warrant that:
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16.1 CORPORATE ORGANIZATION AND GOOD STANDING. PFNI is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Nevada, and PFN Sub is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Colorado, and each of PFNI and PFN
Sub is qualified to do business as a foreign corporation in each jurisdiction,
if any, in which its property or business requires such qualification.
16.2 REPORTING COMPANY. PFNI has filed with the Securities and Exchange
Commission a registration on Form SB-2 which was declared effective pursuant to
the Securities Exchange Act of 1933 (the "1933 Act") and became a reporting
company pursuant to Section 15d of the Securities Exchange Act of 1934.
16.3 REPORTING COMPANY STATUS. PFNI has timely filed and is current on all
reports required to be filed by it pursuant to Section 15d of the Securities and
Exchange Act of 1934.
16.4 CAPITALIZATION.
(a) The authorized capital stock of PFN Sub consists of 1,500 shares of
common stock, par value $0.01 per share, of which 1,500 are validly issued and
outstanding and all of the issued and outstanding capital stock of PFN Sub is,
and until the Merger Date will be, owned by PFNI. PFN Sub will not have
outstanding any option, warrant, right, or any other agreement pursuant to which
any person may acquire any equity security of PFN Sub.
(b) The authorized capital stock of PFNI consists of 750,000,000 shares of
common stock, par value $0.001 per share, of which 88,977,543 are validly issued
and outstanding, and no preferred stock. PFNI will not have outstanding any
option, warrant, right, or any other agreement pursuant to which any person may
acquire any equity security of PFNI.
(c) PFN Sub has not conducted any business prior to the date of this
Agreement and prior to the Merger Date, will have no assets, liabilities or
obligations of any nature other than those incident to its formation and
pursuant to this Agreement and the Merger and the other transactions
contemplated by this Agreement.
16.5 ISSUED STOCK. All the outstanding shares of PFNI and PFN Sub's Common
Stock are duly authorized and validly issued, fully paid and nonassessable.
16.6 DIRECTORS. The directors of PFNI are Marc Xxxxxxx Xxxxx and Xxxxxxx
Xxxxxx Xxxxx at the time of the Merger Date. The director of PFN Sub is Marc
Xxxxxxx Xxxxx at the time of the Merger Date.
16.7 CORPORATE AUTHORITY. Each of PFNI and PFN Sub has all requisite
corporate power and authority to own, operate and lease its properties, to carry
on its business as it is now being conducted and to execute, deliver, perform
and conclude the transactions contemplated by this Agreement and all other
agreements and instruments related to this Agreement.
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16.8 AUTHORIZATION.
The PFNI Board of Directors, at a meeting duly called and held or by
written consent, has by unanimous vote of all of its members duly adopted
resolutions (1) determining that it is in the best interests of PFNI and its
stockholders, and declared it advisable, to enter into this Agreement, and (2)
approving this Agreement and authorizing the execution, delivery and performance
of this Agreement, and the consummation of the transactions contemplated hereby,
including the Merger. This Agreement has been duly and validly executed and
delivered by PFNI and PFN Sub and, assuming this Agreement constitutes the valid
and binding agreement of 321, this Agreement constitutes the valid and binding
agreement of PFNI and PFN Sub, enforceable against each of PFNI and PFN Sub in
accordance with its terms.
16.9 SUBSIDIARIES. PFNI has no other subsidiaries besides PFN Sub. PFN Sub
has no subsidiaries.
16.10 FINANCIAL STATEMENTS. PFNI unaudited balance sheets and the related
statements of income and retained earnings dated March 31, 2014, and PFNI's
audited financial statements for the years ended December 31, 2012 and December
31, 2013, copies of which will have been delivered by PFNI to 321 prior to the
Merger Date (the "PFNI Financial Statements"), fairly present the financial
condition of PFNI as of the date therein and the results of its operations for
the periods then ended in conformity with generally accepted accounting
principles consistently applied.
16.11 ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent reflected or
reserved against in the PFNI Financial Statements, PFNI and PFN Sub did not have
at that date any liabilities or obligations (secured, unsecured, contingent, or
otherwise) of a nature customarily reflected in a corporate balance sheet
prepared in accordance with generally accepted accounting principles.
16.12 NO MATERIAL CHANGES. There has been no material adverse change in the
business, properties, prospects or financial condition of PFNI and PFN Sub since
the date of the PFNI Financial Statements.
16.13 LITIGATION. There is not, to the knowledge of PFNI and PFN Sub, any
pending, threatened, or existing litigation, bankruptcy, criminal, civil, audit,
assessment, regulatory proceeding or investigation, threatened or contemplated
against PFNI or against any of its officers.
16.14 CONTRACTS. Each of PFNI and PFN Sub is not a party to any material
contract not in the ordinary course of business that is to be performed in whole
or in part at or after the date of this Agreement.
16.15 INTELLECTUAL PROPERTY.
(a) PFNI owns, licenses, sublicenses or otherwise possesses legally
enforceable rights to use all Intellectual Property material to the conduct of
the business of PFNI, as currently conducted and as currently proposed to be
conducted (in each case excluding generally commercially available,
off-the-shelf software programs).
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(b) The execution and delivery of this Agreement by PFNI and the
consummation of the Merger will not result in the breach of or loss of rights
under, or create on behalf of any third party the right to terminate or modify,
(i) any license, sublicense or other agreement relating to any Intellectual
Property owned by PFNI under which PFNI has granted an exclusive license or
which is otherwise material to the business of PFNI, as currently conducted and
as currently proposed to be conducted (the "PFNI Intellectual Property") or (ii)
any license, sublicense or other agreement to which PFNI is a party and pursuant
to which PFNI is authorized to use any third party's Intellectual Property on an
exclusive basis or that is otherwise material to the business of PFNI, as
currently conducted and as currently proposed to be conducted, excluding
generally commercially available, off-the-shelf software programs (the "PFNI
Third Party Intellectual Property") execution and delivery of this Agreement by
PFNI and the consummation of the Merger will not, as a result of any contract to
which PFNI is a party, result in 321 or PFNI granting to any third party any
rights or licenses to any Intellectual Property or the release or disclosure of
any trade secrets that would not have been granted or released absent such
execution or consummation
16.16 TITLE. PFNI and PFN Sub have good and marketable title to all the
real property and good and valid title to all other property included in the
PFNI Financial Statements. Except as set out in the balance sheet thereof, the
properties of PFNI are not subject to any mortgage, encumbrance, or lien of any
kind except minor encumbrances that do not materially interfere with the use of
the property in the conduct of the business of PFNI.
16.17 NO VIOLATION. Consummation of the Merger will not constitute or
result in a breach or default under any provision of any charter, bylaw,
indenture, mortgage, lease, or agreement, or any order, judgment, decree, law,
or regulation to which any property of PFNI and PFN Sub is subject or by which
PFNI and PFN Sub are bound.
16.18 EMPLOYEES
(a) Exhibit 2 contains a complete and accurate list of the following
information for each employee, director, independent contractor, consultant and
agent of PFNI and PFN Sub that is engaged in 321's business, including each
employee on leave of absence or layoff status: employer; name; job title; date
of hiring or engagement; date of commencement of employment or engagement;
current compensation paid or payable and any change in compensation since its
inception; sick and vacation leave that is accrued but unused; and service
credited for purposes of vesting and eligibility to participate under any
Employee Plan, or any other employee or director benefit plan.
(b) No officer, director, agent, employee, consultant, or contractor of 321
that was or is engaged in 321's business is bound by any contract that purports
to limit the ability of such officer, director, agent, employee, consultant, or
contractor (i) to engage in or continue or perform any conduct, activity, duties
or practice relating to 321's business, or (ii) to assign to 321 or to any other
person any rights to any invention, improvement, or discovery. No former or
current employee of 321 is a party to, or is otherwise bound by, any contract
that in any way adversely affected, affects, or will affect the ability of 321
or PFNI to conduct the business as heretofore carried on by 321.
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16.19 LABOR DISPUTES; COMPLIANCE
(a) 321 has complied in all material respects with all legal requirements
relating to employment practices, terms and conditions of employment, equal
employment opportunity, nondiscrimination, immigration, wages, hours, benefits,
collective bargaining and other employment practices, the payment of social
security and similar taxes and occupational safety and health. 321 is not liable
for the payment of any taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing legal requirements.
(b) 321 has not been, and is not now, a party to any collective bargaining
agreement or other labor contract; (ii) since its inception, there has not been,
there is not presently pending or existing, there is not threatened, any strike,
slowdown, picketing, work stoppage or employee grievance process involving 321;
(iii) no event has occurred or circumstance exists that could provide the basis
for any work stoppage or other labor dispute; (iv) there is not pending or
threatened against or affecting 321 any proceeding relating to the alleged
violation of any legal requirement pertaining to labor relations or employment
matters, including any charge or complaint filed with the National Labor
Relations Board or any comparable governmental body, and there is no
organizational activity or other labor dispute against or affecting 321; (v) no
application or petition for an election of or for certification of a collective
bargaining agent is pending; (vi) no grievance or arbitration Proceeding exists
that might have an adverse effect upon 321 or the conduct of the Business; (vii)
there is no lockout of any employees by 321, and no such action is contemplated
by 321; and (viii) there has been no charge of discrimination filed against or
threatened against 321 with the Equal Employment Opportunity Commission or
similar governmental body.
16.20 TAX MATTERS
(1) PFNI and PFN Sub have prepared in material compliance with the
prescribed manner and filed within the time required by applicable law (taking
into account any extension of time within which to file) all Tax Returns
required to be filed by them with all relevant Governmental Entities, and all
such Tax Returns are true, correct and complete in all material respects;
(2) PFNI and PFN Sub have timely paid all Taxes whether or not shown on any
Tax Return that are required to have been paid by them;
(3) The PFNI Financial Statements reflect adequate reserves for all unpaid
Taxes payable by PFNI and PFN Sub for all taxable periods and portions thereof
through the date of such financial statements and PFNI and PFN Sub have not
incurred any tax liability since the date of such financial statements other
than for taxes arising in the ordinary course of business; and
(4) There are no waivers of any statute of limitations in respect of
assessment or collection of taxes or any agreements or requests for an extension
of time for assessment or collection of any tax, which waiver or extension is
currently effective.
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(5) PFNI and PFN Sub are not parties to any agreement relating to tax
allocation, tax indemnification or tax sharing and PFNI and PFN Sub do not have
any liability for taxes of any person (other than members of the affiliated
group, within the meaning of section 1504(a) of the Code, filing consolidated
federal income tax Returns of which PFNI and PFN Sub are the common parent)
under Treasury Regulation section 1.1502-6, Treasury Regulation section
1.1502-78 or any similar state, local or non-U.S. laws, as a transferee or
successor, by contract or otherwise.
(6) No claim in writing has been made against PFNI and PFN Sub by any
governmental entity in a jurisdiction where PFNI and PFN Sub have not filed tax
returns that PFNI and PFN Sub are or may be subject to taxation by that
jurisdiction. All deficiencies for taxes asserted or assessed in writing against
PFNI and PFN Sub have been fully and timely paid, settled or properly reflected
in the PFNI Financial Statements.
(7) PFNI and PFN Sub have made available to 321 correct and complete copies
of all U.S. federal income tax returns, state income tax apportionment data,
examination reports and statements of deficiencies for which the applicable
statutory periods of limitations have not yet expired.
(8) There are no material liens, claims, mortgages, encumbrances, pledges,
security interests, equities or charges of any kind (each, a "Lien") for taxes
upon any of the assets of PFNI and PFN Sub.
(9) PFNI and PFN Sub have withheld and paid to the appropriate governmental
entity all material taxes required to have been withheld and paid by PFNI and
PFN Sub in connection with amounts paid to any employee, independent contractor,
creditor, stockholder, or third party for all periods ending on or before the
Closing.
(10) PFNI and PFN Sub have not constituted a "distributing corporation" or
a "controlled corporation" (within the meaning of section 355(a)(1)(A) of the
Code) in a distribution that could constitute part of a "plan" or "series of
related transactions" (within the meaning of section 355(e) of the Code) in
conjunction with the transactions contemplated by this Agreement.
(11) Any closing agreements under section 7121 of the Code or any similar
provision of state, local or non-U.S. laws or full acceptance letters which PFNI
and PFN Sub have executed, entered into or received is valid and enforceable in
accordance with their terms. PFNI and PFN Sub have not committed fraud,
collusion, concealment or malfeasance or made a misrepresentation of material
fact in connection with the execution or entering into of any closing agreement
with, or the receipt of any full acceptance letter or private letter ruling from
any governmental entity.
(12) PFNI and PFN Sub have never participated in any reportable transaction
within the meaning of Treasury Regulation section 1.6011-4(b) or taken any
position on any Tax Return that would subject it to a substantial understatement
of Tax penalty under section 6662 of the Code which has not been properly
disclosed to the IRS as required by the Code and the Treasury Regulations
promulgated thereunder.
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(13) PFNI and PFN Sub have not agreed to and are not required to make any
adjustment pursuant to section 481(a) of the Code or any similar provision of
applicable law, and PFNI and PFN Sub have no knowledge that any governmental
entity has proposed any such adjustment, nor do PFNI and PFN Sub have any
application pending with any governmental entity requesting permission for any
change in accounting methods. There is no taxable income of PFNI and PFN Sub
that will be required under any applicable law to be reported in a taxable
period beginning after the Closing which taxable income was realized (or
reflects economic income) arising prior to the Closing as a result of any: (i)
change in method of accounting for a taxable period ending on or prior to the
Merger Date; (ii) "closing agreement" as described in section 7121 of the Code
executed on or prior to the Merger Date; (iii) installment sale or open
transaction disposition made on or prior to the Merger Date; or (iv) election
under section 108(i) of the Code.
16.21 DISCLOSURE. No representation or warranty or other statement made by
PFNI and PFN Sub in this Agreement or otherwise in connection with the
transactions contemplated herein contains any untrue statement or, to PFNI and
PFN Sub's knowledge, omits to state a material fact necessary to make any of
them, in light of the circumstances in which it was made, not misleading.
17. REPRESENTATIONS AND WARRANTIES OF 321
321 represents and warrants that:
17.1 CORPORATE ORGANIZATION AND GOOD STANDING. 321 is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, and is qualified to do business as a foreign corporation in each
jurisdiction, if any, in which its property or business requires such
qualification.
17.2 ENFORCEABILITY; AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid and binding obligation of
321, enforceable against 321 in accordance with its terms. Upon the execution
and delivery by 321of each agreement and certificate to be executed or delivered
by 321 at the Closing pursuant to Section 23.3, each of 321's delivered
materials will constitute the legal, valid and binding obligation of 321,
enforceable against 321 in accordance with its terms. 321 has the absolute and
unrestricted right, power and authority to execute and deliver this Agreement
and to perform its obligations under this Agreement, and such action has been
duly authorized by all necessary action by 321's stockholders and directors. 321
and its stockholders have all necessary legal capacity to enter into this
Agreement to which they are a party and to perform their obligations hereunder
and thereunder.
(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of any parts of the Agreement will, directly or
indirectly (with or without notice or lapse of time), (i) breach any provision
of any of the governing documents of 321 or any resolution adopted by the board
or the stockholders of 321, (ii) breach or give any governing body or any other
person the right to challenge any of the Agreement or to exercise any remedy or
obtain any relief under any legal requirement or any order to which 321, or any
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of its assets, may be subject; (iii) contravene, conflict with or result in a
violation or breach of any of the terms or requirements of, or give any
governing body the right to revoke, withdraw, suspend, cancel, terminate or
modify, any government authorization that is held by 321 or that otherwise
relates to the assets or to the business; (iv) breach any provision of, or give
any person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or payment under, or to cancel,
terminate or modify, any parts of the Agreement; (v) result in the imposition or
creation of any Encumbrance upon or with respect to any of the assets; or (vi)
result in any stockholders of 321 having the right to exercise dissenters'
appraisal rights.
17.3 CAPITALIZATION. 321's authorized capital stock consists of 75,000,000
shares of Common Stock, $0.001 par value, of which 3,000 shares are issued and
outstanding, and no preferred stock.
17.4 FINANCIAL RECORDS. 321 has delivered to PFNI such financial records,
including any available banking statements and tax returns, as has been
requested by PFNI (collectively, the "321 Financial Records"). The financial
data contained in 321 Financial Records is true and correct in all material
respects as at the respective dates of and for the periods referred to in 321
Financial Records.
17.5 BOOKS AND RECORDS. The books and account and other 321 Financial
Record related to 321's ordinary course of business, all of which have been made
available to PFNI at PFNI's request, are complete and correct in all material
respects, and represent actual, bona fide transactions and have been maintained
in accordance with sound business practices. The minute books of 321, to the
extent they exist, all of which have been made available to PFNI to the extent
they relate to 321's ordinary course of business, contain accurate and complete
Records of all meetings held of, and corporate action taken by, the stockholders
and board of 321, and no meeting relating to the business of any stockholders,
board has been held for which minutes have not been prepared or are not
contained in such minute books.
17.6 OWNED AND LEASED REAL PROPERTY. 321 has no ownership of any real
estate whether in leasehold interest or any other real estate interests.
17.7 ACCOUNTS PAYABLE. 321 has no liability to any of its material
affiliates or partners at the Closing, nor any accounts payables not disclosed
on the 321 Financial Records.
17.8 NO UNDISCLOSED LIABILITIES. 321 has no liabilities not disclosed on
the 321 Financial Records.
17.9 TAX RETURNS FILED AND TAXES PAID. 321 has filed or caused to be filed
on a timely basis all tax returns and all reports with respect to taxes that are
or were required to be filed pursuant to applicable federal, state, and local
laws. All tax returns and reports filed by 321 if any, are true, correct and
complete. 321 has paid, or made provision for the payment of, all taxes that
have or may have become due for all periods covered by the tax returns or
otherwise, or pursuant to any assessment received by 321. No claim has ever been
made or is expected to be made by any governmental body in a jurisdiction where
321 does not file tax returns that it is or may be subject to taxation by that
jurisdiction. There are no encumbrances on any of the assets that arose in
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connection with any failure (or alleged failure) to pay any tax, and 321 has no
knowledge of any basis for assertion of any claims attributable to Taxes which,
if adversely determined, would result in any such encumbrance.
17.10 NO MATERIAL ADVERSE CHANGE; ABSENCE OF CERTAIN CHANGES AND EVENTS.
There has not been any material adverse change in 321's ordinary course of
business, including its operations, prospects, assets, results of operations or
condition (financial or other), and no event has occurred or circumstance exists
that may result in such a material adverse change. Since its inception, 321 has
conducted its business only in the ordinary course of business.
17.11 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) 321 is, and at all times since its inception has been, in compliance in
all material respects with each legal requirement that is or was applicable to
it or to the conduct or operation of its business or the ownership or use of any
of the assets.
(b) No event has occurred or circumstance exists that (with or without
notice or lapse of time) (A) may constitute or result in a violation by 321 of,
or a failure on the part of 321 to comply with, any legal requirement or (B) may
give rise to any obligation on the part of 321 to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature.
(c) 321 has not received, at any time since its inception, any notice or
other communication (whether oral or written) from any governmental body or any
other person regarding (A) any actual, alleged, possible or potential violation
of, or failure to comply with, any legal requirement or (B) any actual, alleged,
possible or potential obligation on the part of 321 to undertake, or to bear all
or any portion of the cost of, any remedial action of any nature.
17.12 ABSENCE OF CERTAIN CHANGES AND EVENTS. Since its inception, 321 has
conducted its business only in the ordinary course of business and there has not
been any event, whether individually or in the aggregate, which could reasonably
be expected to have a material adverse effect on the assets, the business, the
321, or PFNI. Since its inception, there has not been (i) any sale, lease or
other disposition of any asset or property of 321 necessary to operate 321's
business including 321 IP or the creation of any encumbrance on any of the
assets, (ii) any indication by any customer or supplier of an intention to
discontinue or change the terms of its relationship with 321; (iii) any entry
into, termination of or receipt of notice of termination of any license,
distributorship, dealer, sales representative, joint venture, credit or similar
contract relating to 321's business; (iv) any indication by any customer or
supplier of any intention to discontinue or change the terms of its relationship
with 321, (v) payment (except in the ordinary course of business) or increase by
321 of any bonuses, salaries or other compensation to officer or employee or
entry into any employment, severance or similar contract with any officer or
employee related to 321's business; and (vi) any damage to or destruction or
loss of any asset, whether or not covered by insurance.
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17.13 CONTRACTS; NO DEFAULTS
(a) 321 is, and at all times since its inception has been, in compliance in
all material respects with all applicable terms and requirements of any of its
contracts which is being assumed by PFNI;
(ii) each other person that has or had any obligation or liability under
any of 321's contract which is being assigned to PFNI is, and at all times since
its inception has been, in compliance in all material respects with all
applicable terms and requirements of such contract;
(iii) to 321's knowledge, no event has occurred or circumstance exists that
(with or without notice or lapse of time) may contravene, conflict with or
result in a breach of, or give 321 or other Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or payment under, or to cancel, terminate or modify, any 321
contract that is being assigned to or assumed by PFNI; and
(iv) to 321's knowledge no event has occurred or circumstance exists under
or by virtue of any contract that (with or without notice or lapse of time)
would cause the creation of any encumbrance affecting any of the Assets.
17.14 INSURANCE
(a) 321 has delivered to PFNI (i) accurate and complete copies of all
policies of insurance (and correspondence relating to coverage thereunder),
including pending applications, to which 321 is a party or under which 321 is or
has been covered at any time since its inception, as well as any (ii)
self-insurance arrangements, (iii) reserves for losses, and (iv) contracts
involving a transfer of the risk of loss.
(b) All policies of insurance to which 321 is a party or that provide
coverage to 321 are (i) valid, outstanding and enforceable, and (ii) to 321's
knowledge, issued by an insurer that is financially sound and reputable.
17.15 EMPLOYEES
(a) Exhibit 3 contains a complete and accurate list of the following
information for each employee, director, independent contractor, consultant and
agent of 321 that is engaged in 321's business, including each employee on leave
of absence or layoff status: employer; name; job title; date of hiring or
engagement; date of commencement of employment or engagement; current
compensation paid or payable and any change in compensation since its inception;
sick and vacation leave that is accrued but unused; and service credited for
purposes of vesting and eligibility to participate under any Employee Plan, or
any other employee or director benefit plan.
(b) No officer, director, agent, employee, consultant, or contractor of 321
that was or is engaged in 321's business is bound by any contract that purports
to limit the ability of such officer, director, agent, employee, consultant, or
contractor (i) to engage in or continue or perform any conduct, activity, duties
or practice relating to 321's business, or (ii) to assign to 321 or to any other
person any rights to any invention, improvement, or discovery. No former or
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current employee of 321 is a party to, or is otherwise bound by, any contract
that in any way adversely affected, affects, or will affect the ability of 321
or PFNI to conduct the business as heretofore carried on by 321.
17.16 LABOR DISPUTES; COMPLIANCE
(a) 321 has complied in all material respects with all legal requirements
relating to employment practices, terms and conditions of employment, equal
employment opportunity, nondiscrimination, immigration, wages, hours, benefits,
collective bargaining and other employment practices, the payment of social
security and similar taxes and occupational safety and health. 321 is not liable
for the payment of any taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing legal requirements.
(b) 321 has not been, and is not now, a party to any collective bargaining
agreement or other labor contract; (ii) since its inception, there has not been,
there is not presently pending or existing, there is not threatened, any strike,
slowdown, picketing, work stoppage or employee grievance process involving 321;
(iii) no event has occurred or circumstance exists that could provide the basis
for any work stoppage or other labor dispute; (iv) there is not pending or
threatened against or affecting 321 any proceeding relating to the alleged
violation of any legal requirement pertaining to labor relations or employment
matters, including any charge or complaint filed with the National Labor
Relations Board or any comparable governmental body, and there is no
organizational activity or other labor dispute against or affecting 321; (v) no
application or petition for an election of or for certification of a collective
bargaining agent is pending; (vi) no grievance or arbitration Proceeding exists
that might have an adverse effect upon 321 or the conduct of the Business; (vii)
there is no lockout of any employees by 321, and no such action is contemplated
by 321; and (viii) there has been no charge of discrimination filed against or
threatened against 321 with the Equal Employment Opportunity Commission or
similar governmental body.
17.17 INTELLECTUAL PROPERTY ASSETS
(a) 321 owns, licenses, sublicenses or otherwise possesses legally
enforceable rights to use all Intellectual Property material to the conduct of
the business of 321, as currently conducted and as currently proposed to be
conducted (in each case excluding generally commercially available,
off-the-shelf software programs), including the website and domain "321lend".
(b) The execution and delivery of this Agreement by 321 and the
consummation of the Merger will not result in the breach of or loss of rights
under, or create on behalf of any third party the right to terminate or modify,
(i) any license, sublicense or other agreement relating to any Intellectual
Property owned by 321 under which 321 has granted an exclusive license or which
is otherwise material to the business of 321, as currently conducted and as
currently proposed to be conducted (the "321 IP"), or (ii) any license,
sublicense or other agreement to which 321 is a party and pursuant to which 321
is authorized to use any third party's Intellectual Property on an exclusive
basis or that is otherwise material to the business of 321, as currently
conducted and as currently proposed to be conducted, excluding generally
commercially available, off-the-shelf software programs (the "321 Third Party
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Intellectual Property"). The execution and delivery of this Agreement by 321 and
the consummation of the Merger will not, as a result of any contract to which
321 is a party, result in 321 or PFNI granting to any third party any rights or
licenses to any Intellectual Property or the release or disclosure of any trade
secrets that would not have been granted or released absent such execution or
consummation
17.18 COMPLIANCE WITH THE FOREIGN CORRUPT PRACTICES ACT AND EXPORT CONTROL
AND ANTIBOYCOTT LAWS. 321 and its representatives have at all times acted in
compliance with the Foreign Corrupt Practices Act. 321 has at all times been in
compliance with all legal requirements relating to export control and trade
embargoes. 312 has not violated the antiboycott prohibitions contained in 50
U.S.C. ss.2401 et seq. or taken any action that can be penalized under Section
999 of the Code.
17.19 BROKERS OR FINDERS. Neither 321 nor any of its Representatives have
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payments in connection
with the sale of the Business, the Assets or the Contemplated Transactions.
17.20 DISCLOSURE
(a) No representation or warranty or other statement made by 321 in this
Agreement contains any untrue statement or omits to state a material fact
necessary to make any of them, in light of the circumstances in which it was
made, not misleading.
(b) 321 does not have knowledge of any fact that has specific application
to 321 (other than general economic or industry conditions) that may materially
adversely affect the assets, business, prospects, financial condition or results
of operations of 321 that has not been set forth in this Agreement.
17.21 NO VIOLATION. Consummation of the Merger will not constitute or
result in a breach or default under any provision of any charter, bylaw,
indenture, mortgage, lease, or agreement, or any order, judgment, decree, law,
or regulation to which any property of PFNI and PFN Sub is subject or by which
PFNI and PFN Sub are bound.
17.22 STOCK RIGHTS. There are no stock grants, options, rights, warrants or
other rights to purchase or obtain the 321 Common or Preferred Stock issued or
committed to be issued.
17.23 ISSUED STOCK. All the outstanding shares of its Common Stock were
duly authorized and validly issued, fully paid and non-assessable.
17.24 CORPORATE AUTHORITY. 321 has all requisite corporate power and
authority to own, operate and lease its properties, to carry on its business as
it is now being conducted and to execute, deliver, perform and conclude the
transactions contemplated by this Agreement and all other agreements and
instruments related to this Agreement.
17.25 AUTHORIZATION. Execution of this Agreement has been duly authorized
and approved by 321's board of directors.
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17.26 SUBSIDIARIES. 321 has no subsidiaries.
18. CONDUCT OF PFNI PENDING THE MERGER DATE
PFNI covenants that between the date of this Agreement and the Merger Date:
18.1 No change will be made in PFNI's articles of incorporation or bylaws.
18.2 PFNI will not make any change in its authorized or issued capital
stock, declare or pay any dividend or other distribution or issue, encumber,
purchase, or otherwise acquire any of its capital stock other than as provided
herein.
18.3 PFNI will use its best efforts to maintain and preserve its business
organization, employee relationships, and goodwill intact, and will not enter
into any material commitment except in the ordinary course of business.
19. CONDITIONS PRECEDENT TO OBLIGATION OF PFNI
PFNI's obligation to consummate the Merger shall be subject to fulfillment
on or before the Merger Date of each of the following conditions, unless waived
in writing by PFNI:
19.1 321'S REPRESENTATIONS AND WARRANTIES. The representations and
warranties of 321 set forth herein shall be true and correct on the Merger Date
as though made at and as of that date, except as affected by transactions
contemplated hereby.
19.2 321'S COVENANTS. 321 shall have performed all covenants required by
this Agreement to be performed by it on or before the Merger Date.
19.3 SHAREHOLDER APPROVAL. This Agreement shall have been approved by the
required number of shareholders of each of PFN Sub and 321.
19.4 SUPPORTING DOCUMENTS OF 321. 321 shall have delivered to PFNI
supporting documents in form and substance satisfactory to PFNI , to the effect
that:
(i) 321 is a corporation duly organized, validly existing, and in good
standing.
(ii) 321's authorized and issued capital stock is as set forth herein.
(iii) The execution and consummation of this Agreement have been duly
authorized and approved by 321's board of directors and shareholders.
20. CONDITIONS PRECEDENT TO OBLIGATION OF 321
321's obligation to consummate this merger shall be subject to fulfillment
on or before the Merger Date of each of the following conditions:
20.1 PFNI'S REPRESENTATIONS AND WARRANTIES. The representations and
warranties of PFNI set forth herein shall be true and correct on the Merger Date
as though made at and as of that date, except as affected by transactions
contemplated hereby.
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20.2 PFNI'S COVENANTS. PFNI shall have performed all covenants required by
this Agreement to be performed by it on or before the Merger Date.
20.3 SHAREHOLDER APPROVAL. This Agreement shall have been approved by the
required number of shareholders of each of PFN Sub, and 321.
20.4 SUPPORTING DOCUMENTS OF THE PFNI. PFNI shall have delivered to 321
supporting documents in form and substance satisfactory to 321 to the effect
that:
(i) PFNI is a corporation duly organized, validly existing, and in good
standing.
(ii) PFNI's authorized and issued capital stock is as set forth herein.
(iii) The execution and consummation of this Agreement have been duly
authorized and approved by PFNI's board of directors.
21. ACCESS
From the date hereof to the Merger Date, 321 and PFNI shall provide each
other with such information and permit each other's officers and representatives
such access to its properties and books and records as the other may from time
to time reasonably request. If the merger is not consummated, all documents
received in connection with this Agreement shall be returned to the party
furnishing such documents, and all information so received shall be treated as
confidential.
22. TERMINATION AND ABANDONMENT
22.1 Notwithstanding anything contained in this Agreement to the contrary,
this Agreement may be terminated and abandoned at any time prior to the Merger
Date, and except as provided below, whether before or after receipt of the 321
Stockholder Approval or the PFNI Stockholder Approval:
(a) by the mutual written consent of 321 and PFNI;
(b) by either PFNI or 321 if the Merger shall not have been consummated by
August 31, 2014 (the "Outside Closing Date Termination Right") provided,
however, that the right to terminate this Agreement under Section 22 shall not
be available to any party hereto whose action or failure to act has been a
principal cause of the failure of the Merger to occur on or before such date and
such action or failure to act constitutes a breach of this Agreement;
(c) by either 321 or PFNI if an injunction, order, decree or ruling of a
governmental entity of competent jurisdiction shall have been entered
permanently restraining, enjoining or otherwise prohibiting the consummation of
the Merger and such injunction shall have become final and non-appealable (the
"Transaction Prohibition Termination Right") provided, however, that the right
to terminate this Agreement under this Section 22(c) shall not be available to
any party whose material breach of a representation, warranty, covenant or
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agreement in this Agreement has been a principal cause of the entry of such
final and non-appealable injunction, order, decree or ruling;
(d) by 321, if PFNI shall have breached or failed to perform any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any of such representations and warranties shall have become untrue as of any
date subsequent to the date of this Agreement, which breach, failure to perform
or untruth (i) would give rise to the failure of a condition set forth in
Section 10, Section 11, Section 18or Section 20 (assuming, in the case of any
untruth, that such subsequent date was the Merger Date) and (ii) is not capable
of being cured prior to the Closing or, if capable of being cured, shall not
have been cured by PFNI by the 30th calendar day following receipt of written
notice of such breach or failure to perform from 321 (the "PFNI Breach
Termination Right"); provided, however, that 321 shall not be entitled to
terminate this Agreement under this Section 22(e) if 321 is then in breach of
its representations, warranties, covenants or agreements contained in this
Agreement, which breach would give rise to the failure of a condition to Closing
set forth herein (assuming, in the case of any untruth, that such subsequent
date was the date of termination); or
(e) by 321, if (i) the PFNI Board of Directors (or any committee thereof)
has failed to approve this Agreement or any of its conditions or (ii) PFNI shall
have failed to include the PFNI's set of recommendations in accordance with
Sections 11 and 13 (the "PFNI Recommendations") set forth in this Agreement in
the Proxy Statement.
22.2 EFFECT OF TERMINATION AND ABANDONMENT. In the event of the termination
of this Agreement and the abandonment of the Merger pursuant to this Section 22,
this Agreement shall become void and of no effect with no liability on the part
of any party hereto (or of any of its directors, officers, employees,
consultants, contractors, agents, attorneys or other representatives); provided,
however, that no such termination shall relieve any party hereto of any
liability or damages resulting from any willful breach of this Agreement by such
party.
23. CLOSING
23.1 The closing of the Merger (the "Closing") will take place remotely via
the exchange of documents and signature pages on a date and time to be specified
by the parties (the "Closing Date"), which shall be the second Business Day
after the satisfaction or waiver (to the extent waiver is permitted by
applicable law) of the conditions set forth in Section 11 (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the satisfaction or waiver (if legally permissible) of those conditions) or
at such other place, date and time as PFNI and 321 may agree in writing.
23.2 Immediately prior to the Closing, PFNI shall deliver to 321 in
satisfactory form, if not already delivered:
(i) A list of the holders of the shares of PFN Sub Common Stock being
exchanged with an itemization of the number of shares held by each, the address
of each holder, and the aggregate number of shares of 321 Common Stock to be
issued to each holder;
(ii) Evidence of up-to-date filings with the Securities and Exchange
Commission.
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(iii) Certificate of the Secretary of State of Nevada as of a recent date
as to the good standing of PFNI ;
(iv) Certified copies of the resolutions of the board of directors of PFNI
authorizing the execution of this Agreement and the consummation of the Merger;
(v) PFNI Financial Statements;
(vi) Secretary's certificate of incumbency of the officers and directors of
PFNI;
(vii) All the tax related document that are specified in Section 16.20;
(viii) All the documents that are required to satisfy the conditions,
representations and warranties enumerated elsewhere herein.
23.3 Immediately prior to the Closing, 321 shall deliver to PFNI in
satisfactory form, if not already delivered to PFNI :
(i) A list of the shareholders of record of 321, including, wherever
available, addresses and telephone numbers;
(ii) Evidence of the consent of shareholders of 321 to this Agreement;
(iii) Evidence of Intellectual Property Assignment to 321 by 321 Owners,
and any employees, consultants, or any other individuals affiliated with 321;
(iv) A severance agreement that is mutually agreed upon by 321 Owners, Shin
Xxxxx, Xxxx Xxxxxxx Xxxxx, and Xxxxxxx Xxxxxx Xxxxx. Such severance agreement
shall be modeled after the Retention and Severance set forth in Exhibit 1
annexed hereto;
(v) Certificate of the Secretary of State of Delaware as of a recent date
as to the good standing of 321; and
(vi) Certified copies of the resolutions of the board of directors of 321
authorizing the execution of this Agreement and the consummation of the Merger.
23.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
(1) The representations and warranties of each of PFNI, PFN Sub, and 321
set out in this Agreement shall survive the Merger Date.
(2) Subject to the terms and conditions set forth herein, PFNI shall
indemnify and hold harmless 321 and its directors, officers, stockholders,
employees, agents, and affiliates (the "321 Indemnified Persons"), and will
reimburse the 321 Indemnified Persons for, any loss, liability, damage or
expense, including reasonable out-of-pocket costs of investigation and defense
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of claims and reasonable attorneys' fees and expenses (the "Losses") incurred by
the 321 Indemnified Persons arising or resulting from or in connection with any
of the following:
(a) any breach of any representation or warranty made by PFNI and PFN Sub
in Section 16 of this Agreement;
(b) any breach of any conditions or agreement of PFNI and PFN Sub in
Section 11 or Section 24 of this Agreement; or
(c) breach of any covenants or agreement of PFNI and the PFN Sub in the
Agreement.
(3) All claims for indemnification under this Section 23.4 shall be
administered by 321 for itself and on behalf of all other 321 Indemnified
Persons. For purposes of this Section 23.4, notwithstanding anything to the
contrary contained herein, Losses shall include, and 321 Indemnified Persons
shall be compensated for, any consequential, special, incidental or punitive
damages included in a claim asserted by any person who is not a 321 Indemnified
Person.
24. POST-CLOSING OBLIGATIONS
(a) PFNI shall not issue any Common Stock, Warrant, and/or debt obligations
for the duration of the Capital Raising Period unless it is issued pursuant to
Section 11 of the Agreement.
(b) PFNI will not make any change in its authorized or issued capital
stock, declare or pay any dividend or other distribution or issue, encumber,
purchase, or otherwise acquire any of its capital stock for the duration of the
Capital Raising Period.
(c) PFNI shall not make any change to PFNI's articles of incorporation or
bylaws during the Capital Raising Period.
(d) PFNI shall not remove or attempt to remove 321 Representative from PFNI
Board of Directors during the Capital Raising Period unless the failure to
remove such director would be a breach of the Director's fiduciary duties.
(e) During the Capital Raising Period, PFNI shall use its best efforts to
maintain and preserve its business organization, employee relationships, and
goodwill intact, and will not enter into any material commitment except in the
ordinary course of business.
(f) The officers and board members of 321 will remain the officers and
board members of the Surviving Corporation during the Capital Raising Period.
(g) PFNI shall not interfere with 321 Owners' efforts to manage the
Surviving Corporation during the Capital Raising Period.
(h) PFNI shall not interfere with 321 Owners' Capital Raising efforts
during the Capital Raising Period.
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(i) If the Capital Raising is successful, PFNI will immediately (within two
(2) business days) submit for its shareholders' approval with a favorable
recommendation to increase the size of PFNI Board of Directors by two (2) to
create a five (5) member board and to add two additional 321 Representatives as
board members of PFNI Board of Directors.
25. ARBITRATION
(a) SCOPE. The parties hereby agree that any and all claims (except only
for requests for injunctive or other equitable relief) whether existing now, in
the past or in the future as to which the parties or any affiliates may be
adverse parties, and whether arising out of this agreement or from any other
cause, will be resolved by arbitration before the American Arbitration
Association.
(b) SITUS. The parties hereby irrevocably consent to the jurisdiction of
the American Arbitration Association and the situs of the arbitration within the
State of Delaware at a time and place chosen by American Arbitration
Association. Any award in arbitration may be entered in any domestic or foreign
court having jurisdiction over the enforcement of such awards.
(c) APPLICABLE LAW. The law applicable to the arbitration and this
agreement shall be that of the State of Delaware, determined without regard to
its provisions which would otherwise apply to a question of conflict of laws.
Any dispute as to the applicable law shall be decided by the arbitrator.
(d) DISCLOSURE AND DISCOVERY. The arbitrator may, in its discretion, allow
the parties to make reasonable disclosure and discovery in regard to any matters
which are the subject of the arbitration and to compel compliance with such
disclosure and discovery order. The arbitrator may order the parties to comply
with all or any of the disclosure and discovery provisions of the Federal Rules
of Civil Procedure, as they then exist, as may be modified by the arbitrator
consistent with the desire to simplify the conduct and minimize the expense of
the arbitration.
25.2 RULE OF LAW. Regardless of any practices of arbitration to the
contrary, the arbitrator will apply the rules of contract and other law of the
jurisdiction whose law applies to the arbitration so that the decision of the
arbitrator will be, as much as possible, the same as if the dispute had been
determined by a court of competent jurisdiction.
25.3 FINALITY AND FEES. Any award or decision by the American Arbitration
Association shall be final, binding and non-appealable except as to errors of
law. Each party to the arbitration shall pay its own costs and counsel fees.
25.4 MEASURE OF DAMAGES. In any adverse action, the parties shall restrict
themselves to claims for compensatory damages and no claims shall be made by any
party or affiliate for lost profits, punitive or multiple damages.
25.5 COVENANT NOT TO XXX. The parties covenant that under no conditions
will any party or any affiliate file any action against the other (except only
requests for injunctive or other equitable relief) in any forum other than
before the American Arbitration Association, and the parties agree that any such
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action, if filed, shall be dismissed upon application and shall be referred for
arbitration hereunder with costs and attorney's fees to the prevailing party.
25.6 INTENTION. It is the intention of the parties and their affiliates
that all disputes of any nature between them, whenever arising, from whatever
cause, based on whatever law, rule or regulation, whether statutory or common
law, and however characterized, be decided by arbitration as provided herein and
that no party or affiliate be required to litigate in any other forum any
disputes or other matters except for requests for injunctive or equitable
relief. This agreement shall be interpreted in conformance with this stated
intent of the parties and their affiliates.
26. GENERAL PROVISIONS
26.1 FURTHER ASSURANCES. From time to time, each party will execute such
additional instruments and take such actions as may be reasonably required to
carry out the intent and purposes of this Agreement.
26.2 WAIVER. Any failure on the part of either party hereto to comply with
any of its obligations, agreements, or conditions hereunder may be waived in
writing by the party to whom such compliance is owed.
26.3 BROKERS. Each party agrees to indemnify and hold harmless the other
party against any fee, loss, or expense arising out of claims by brokers or
finders employed or alleged to have been employed by the indemnifying party.
26.4 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or sent by
prepaid first-class certified mail, return receipt requested, or recognized
commercial courier service, as follows:
If to 321, to:
321 Lend, Inc.
0000 Xxxxxxxx Xx. Xxx. 000
Xxx Xxxxxxxxx, XX 00000, Xxxxxx Xxxxxx
with a copy to:
McGuirewoods LLP
0000 Xxxxxx xx xxx Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Older and TaeSoo Xxxx Xxx
If to PFNI, to:
PFNI, Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000x
Xxxxxxxxx, XX 00000-000, Xxxxxx Xxxxxx
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27. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware.
28. ASSIGNMENT. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their successors and assigns; provided,
however, that any assignment by either party of its rights under this Agreement
without the written consent of the other party shall be void.
29. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Signatures sent by
facsimile transmission shall be deemed to be evidence of the original execution
thereof.
30. EFFECTIVE DATE. This effective date of this Agreement shall be July 17,
2014.
[Signature Page to Follow]
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
BETWEEN 321 LEND, INC. AND
PFNI, INC.
IN WITNESS WHEREOF, the parties have executed this Agreement.
321 Lend, Inc.
By: /s/ Xxxx Xxxxx
------------------------------------------
Xxxx Xxxxx
Chief Executive Officer
PFNI, Inc.
By: /s/ Marc Xxxxxxx Xxxxx
------------------------------------------
Marc Xxxxxxx Xxxxx
Chief Executive Officer
PFN Sub
By: /s/ Marc Xxxxxxx Xxxxx
------------------------------------------
Marc Xxxxxxx Xxxxx
President
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EXHIBIT 1
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EXHIBIT 2
27
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EXHIBIT 3
28
