EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Plan") is made this 1st day of
January 1999, among Asphalt Associates, Inc., a Nevada corporation ("Asphalt");
Utah WebWorks, Inc., a Utah corporation, any and all of its subsidiaries and
fictitious names (hereinafter collectively referred to as "WebWorks") and its
shareholders (hereinafter "Shareholders").
Asphalt wishes to acquire one hundred percent (100%) of the issued and
outstanding stock of WebWorks for and in exchange for stock of Asphalt, in a
stock for stock transaction intending to qualify as a tax-free exchange pursuant
to Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended. The
parties intend for this Plan to represent the terms and conditions of such
tax-free reorganization, which Plan the parties hereby adopt.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, IT IS AGREED:
Section 1
Terms of Exchange
1.1 Number of Shares. Upon the execution hereof, the holders of all the
issued and outstanding stock of WebWorks agree to assign, transfer, and deliver
to Asphalt, free and clear of all liens, pledges, encumbrances, charges,
restrictions or known claims of any kind, nature or description, all of their
shares of WebWorks stock, and Asphalt agrees to acquire such shares on the date
thereof, or as soon as practicable thereafter, by issuing and delivering in
exchange therefore solely common shares of Asphalt's stock, par value $0.001, in
the aggregate of 5,000,000 shares, of the then issued and outstanding shares of
Asphalt subject to the provisions of this Plan. Such shares will represent at
least fifty percent (50%) of the issued and outstanding shares of Asphalt.
Subsequent to the date hereof, the Shareholders shall, upon the surrender of the
WebWorks certificates representing their respective beneficial and record
ownership one hundred percent (100%) of the issued and outstanding shares of
WebWorks to Asphalt, as soon as practicable hereafter, the Shareholders shall be
entitled to receive a certificate(s) evidencing shares of the exchanged Asphalt
stock as provided for herein. Upon the consummation of the transaction
contemplated herein, Asphalt shall merge with WebWorks and become the surviving
corporation.
1.2 Anti-Dilution. For all relevant purposes of this Plan, the number
of Asphalt shares to be issued and delivered pursuant to this Plan shall be
appropriately adjusted to take into account any stock split, stock dividend,
reverse stock split, recapitalization, or similar change in Asphalt common
stock, which may occur between the date of the execution of this Plan and the
date of the delivery of such shares.
1.3 Delivery of Certificates. The Shareholders shall transfer to
Asphalt at the closing provided for in Section 2 (the "Closing") the shares of
common stock of WebWorks listed opposite their respective names on Exhibit A
hereto (the "WebWorks shares") in exchange for shares of the common stock of
Asphalt as outlined above in Section 1. 1 hereof (the "Asphalt Stock"). All of
such shares of Asphalt stock shall be issued at the closing to the Shareholders,
in the numbers shown opposite their respective names in Exhibit "A." The
transfer of WebWorks, shares by the Shareholders shall be effected by the
delivery to Asphalt at the Closing of certificates representing the transferred
shares endorsed in blank or accompanied by stock powers executed in blank, with
all signatures guaranteed by a national bank and with all necessary transfer
taxes and other revenue stamps affixed and acquired at the Shareholders'
expense.
1.4 Further Assurances. Subsequent to the execution hereof, and from
time to time thereafter, the Shareholders shall execute such additional
instruments and take such other action as Asphalt may request in order to more
effectively sell, transfer and assign clear title and ownership in the WebWorks
shares to Asphalt.
Section 2
Closing
2.1 Closing. The Closing contemplated by Section 1.3 shall be held at
the law offices of Xxxxxx X. Xxxxxxx, Esq. on or before January 29, 1999 or at
such other time or place as may be mutually agreed upon in writing by the
parties. The Closing may also be accomplished by wire, express mail or other
courier service, conference telephone communications or as otherwise agreed by
the respective parties or their duly authorized representatives. In any event,
the closing of the transactions contemplated by this Plan shall be effected as
soon as practicable after all of the conditions contained herein have been
satisfied.
2.2 Closing Events. At the Closing, each of the respective parties
hereto shall execute, acknowledge and deliver (or shall cause to be executed,
acknowledged, and delivered) any agreements, resolutions, rulings, or other
instruments required by this Plan to be so delivered at or prior to Closing,
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
transaction contemplated hereby.
2.3 Mediation Arbitration. If a dispute arises out of or relates to
this Plan, or the breach thereof, and if said dispute cannot be settled through
direct discussions, the parties agree to first endeavor to settle the dispute in
an amicable manner by mediation under the Commercial Mediation Rules of the
American Arbitration Association, before resorting to arbitration. Thereafter,
any unresolved controversy or claim arising out of or relating this Plan, or
breach thereof, shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the Award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
Section 3
Representations, Warranties and Covenants of Asphalt
Asphalt represents and warrants to, and covenants with, the
Shareholders and WebWorks as follows:
3.1 Corporate Status. Asphalt is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada. Asphalt has
full 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
on all material respects as it is now being conducted, and there is no
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
the Asphalt schedules (defined below) are complete and correct copies of its
Articles of Incorporation and Bylaws as in effect on the date hereof. The
execution and delivery of this Plan does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of Asphalt's
Articles of Incorporation or Bylaws. Asphalt has taken all action required by
law, its Articles of Incorporation, its Bylaws, or otherwise, to authorize the
execution and delivery of this Plan.
3.2 Capitalization. The authorized capital stock of Asphalt as of the
date hereof consists of 20,000,000 common shares, par value $0.001. The common
shares of Asphalt issued and outstanding are fully paid, non-assessable shares.
There are no outstanding options, warrants, obligations convertible into shares
of stock, or calls or any understanding, agreements, commitments, contracts or
promises with respect to the issuance of Asphalt's common stock or with regard
to any options, warrants or other contractual rights to acquire any of Asphalt's
authorized but unissued common shares. There are no issued and outstanding
preferred shares. As of the Closing, Asphalt shall have not more than 10,000,000
shares issued and outstanding.
3.3 Financial Statements.
(a) Asphalt hereby warrants and covenants to WebWorks that the
audited financial statements dated February 28, 1998 and December 31, 1997 and
1996, fairly and accurately represent the financial condition of Asphalt and
that no material change has occurred in the financial condition of Asphalt.
(b) Asphalt hereby warrants and represents that the audited
financial statements for the periods set forth in subparagraph (a), supra,
fairly and accurately represent the financial condition of Asphalt as submitted
heretofore to WebWorks for examination and review.
3.4 Conduct of Business. Asphalt will use its best efforts to maintain
and preserve its business organization, employee relationships and goodwill
intact, and will not, without the prior written consent of WebWorks, enter into
any material commitments except in the ordinary course of business.
Asphalt will conduct itself in the following manner pending the
Closing:
(a) Certificate of Incorporation and Bylaws. No change will be
made in the Articles of Incorporation or Bylaws of Asphalt. Except as
contemplated in Sections 3.13, 3.14 and 3.15 of this Plan.
(b) Capitalization, etc. Asphalt will not make any change in its
authorized or issued shares of my class, declare or pay any dividend or other
distribution, or issue, encumber, purchase or otherwise acquire any of its
shares of any class.
3.5 Options, Warrants and Rights. Asphalt has no options, warrants or
stock appreciation rights related to the authorized but unissued Asphalt common
stock. There are no existing options, warrants, calls, or commitments of any
character relating to the authorized and unissued Asphalt common stock, except
options, warrants, calls, or commitments, if any, to which Asphalt is not a
party and by which it is not bound.
3.6 Title to Property. Asphalt has good and marketable title to all of
its properties and assets, real and personal, proprietary or otherwise, as will
be reflected in the balance sheets of Asphalt, and the properties and assets of
Asphalt are subject to no mortgage, pledge, lien or encumbrance, unless as
otherwise disclosed in its financial statements.
3.7 Litigation. There are no material actions, suits, or proceedings,
pending, or, to the best knowledge of Asphalt, threatened by or against or
effecting Asphalt at law or in equity, or before any governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind;
Asphalt does not have any knowledge of any default on its part with respect to
any judgment, order, writ, injunction, decree, warrant, rule, or regulation of
any court, arbitrator, or governmental agency or instrumentality.
3.8 Books and Records. From the date hereof, and for any reasonable
period subsequent thereto, Asphalt and its present management will (i) give to
the Shareholders and WebWorks, or their duly authorized representatives, full
access, during normal business hours, to all of its books, records, contracts
and other corporate documents and properties so that the Shareholders and
WebWorks, or their duly authorized representatives, may Inspect them; and (ii)
furnish such information concerning the properties and affairs of Asphalt as the
Shareholders and WebWorks, or their duly authorized representatives, may
reasonably request. Any such request to inspect Asphalt's books shall be
directed to Asphalt's counsel, Xxxxxx X. Xxxxxxx, at the address set forth
herein under Section 10.4 Notices.
3.9 Confidentiality. Until the Closing (and thereafter if there is no
Closing), Asphalt and its representatives will keep confidential any information
which they obtain from the Shareholders or from WebWorks concerning its
properties, assets and the proposed business operations of WebWorks. If the
terms and conditions of this Plan imposed on the parties hereto are not
consummated on or before 5:00 p.m. MST on January 29, 1999 or otherwise waived
or extended in writing to a date mutually agreeable to the parties hereto,
Asphalt will return to WebWorks all written matter with regard to WebWorks
obtained in connection with the negotiations or consummation of this Plan.
3.10 Conflict with Other Instruments. The transactions contemplated by
this Plan will not result in the breach of any term or provision of, or
constitute a default under any indenture, mortgage, deed of trust, or other
material agreements or instrument to which Asphalt was or is a party, or to
which any of its assets or operations are subject, and will not conflict with
any provision of the Articles of Incorporation or Bylaws of Asphalt.
3.11 Corporate Authority. Asphalt has full corporate power and
authority to enter into this Plan and to carry out its obligations hereunder and
will deliver to the Shareholders and WebWorks, or their respective
representatives, at the Closing, a certified copy of resolutions of its Board of
Directors authorizing execution of this Plan by its officers and performance
thereunder.
3.12 Consent of Shareholders. Asphalt hereby warrants and represents
that the Shareholders of Asphalt, being the owners of a majority of the issued
and outstanding stock of the Corporation consented in writing to the
authorization to execute this Agreement and Plan of Reorganization as between
Asphalt and WebWorks pursuant to a stock-for-stock transaction in which Asphalt
would acquire one hundred percent of the issued and outstanding shares of
WebWorks in exchange for the issuance of a total of 5,000,000 common shares of
Asphalt and thereby WebWorks shall merge with and into Asphalt.
3.13 Resignation of Directors. Upon the Closing, the current directors
of Asphalt shall submit their resignations.
3.14 Name of the Corporation. At the Closing, the Board of Directors of
Asphalt will adopt a resolution to change the name of Asphalt to Pacific
WebWorks, Inc.
3.15 Authorized Capital. At the Closing, the Board of Directors of
Asphalt will adopt a resolution to increase the authorized capital stock of the
Asphalt from 20,000,000 common shares to 50,000,000.
3.16 Special Covenants and Representations Regarding the Exchanged
Asphalt Stock. The consummation of this Plan and the transactions herein
contemplated include the issuance of the exchanged Asphalt shares to the
Shareholders, which constitutes an offer and sale of securities under the
Securities Act of 1933, as amended, and applicable states' securities laws. Such
transaction shall be consummated in reliance on exemptions from the registration
and prospectus requirements of such statutes which depend interlace on the
circumstances under which the Shareholders acquire such securities. In
connection with the reliance upon exemptions from the registration and
prospectus delivery requirements for such transactions, at the Closing,
Shareholders shall cause to be delivered to Asphalt a Letter(s) of Investment
Intent in the form attached hereto as Exhibit B and incorporated herein by
reference.
3.17 Undisclosed or Contingent Liabilities. Asphalt hereby represents
and warrants that it has no undisclosed or contingent liabilities which have not
been disclosed to WebWorks in writing or in this Agreement or in any Exhibit
attached hereto.
3.18 Information. The information concerning Asphalt set forth in this
Plan, and the Asphalt schedules attached hereto, are complete and accurate in
all material respects and do not contain, or will not contain, when delivered,
any untrue statement or a material fact or omit to state a material fact the
omission of which would be misleading to WebWorks in connection with this Plan.
3.19 Title and Related Matters. Asphalt has good and marketable title
to all of its properties, interests in properties, and assets, real and
personal, which are reflected, or will be reflected, in the Asphalt balance
sheets, free and clear of any and all liens and encumbrances.
3.20 Contracts or Agreements. Asphalt is not bound by any material
contracts, agreements or obligations which it has not already disclosed to
WebWorks in writing or in this Agreement or in any Exhibit attached hereto.
3.21 Governmental Authorizations. Asphalt has all licenses, franchises,
permits and other government authorizations that are legally required to enable
it to conduct its business in all material respects as conducted on the date
hereof.
3.22 Compliance with State and Federal Reporting Requirements. Asphalt
is not nor has it ever been subject to the reporting requirements of section
12(g) of the Securities Exchange Act of 1934 or 15(d) of the Securities Act of
1933 (15 U.S.C. 78m or 78o (d)) and is not an investment company registered or
required to be registered under the Investment Company Act of 1940 (15 U.S.C.
80a-l et seq). There is publicly available information concerning Asphalt as
specified in paragraph (a)(5)(i) to (xiv), inclusive, and paragraph (a)(5)(xvi)
of Rule I 5c2-1 I under the Securities Exchange Act of 1934.
3.23 Compliance with Laws and Regulations. Asphalt has complied with
all applicable statutes and regulations of any federal, state, or other
applicable jurisdiction or agency thereof, except to the extent that
noncompliance would not materially and adversely effect the business,
operations, properties, assets, or condition of Asphalt or except to the extent
that noncompliance would not result in the occurrence of any material liability,
not otherwise disclosed to WebWorks.
3.23 Approval of Plan. The Board of Directors of Asphalt has authorized
the execution and delivery of this Plan by Asphalt and have approved the Plan
and the transactions contemplated hereby. Asphalt has full power, authority, and
legal right to enter into this Plan and to consummate the transactions
contemplated hereby.
3.24 Investment Intent. Asphalt is acquiring the WebWorks shares to be
transferred to it under this Plan for the purpose of merging with WebWorks and
not with a view to the sale or distribution thereof, and Asphalt shall cancel
the WebWorks shares upon the completion of the merger.
3.25 Unregistered Shares and Access to Information. Asphalt understands
that the offer and sale of the WebWorks shares have not been registered with or
reviewed by the Securities and Exchange Commission under the Securities Act of
1933, as amended, or with or by any state securities law administrator, and no
federal, state securities law administrator has reviewed or approved any
disclosure or other material concerning WebWorks or the WebWorks shares. Asphalt
has been provided with and reviewed all information concerning WebWorks, the
WebWorks shares as it has considered necessary or appropriate as a prudent and
knowledgeable investor to enable it to make an informed investment decision
concerning the WebWorks shares. Asphalt has made an investigation as to the
merits and risks of its acquisition of the WebWorks Shares and has had the
opportunity to ask questions of, and has received satisfactory answers from, the
officers and directors of WebWorks concerning WebWorks, the WebWorks shares and
related matters, and has had an opportunity to obtain additional information
necessary to verify the accuracy of such information and to evaluate the merits
and risks of the proposed acquisition of the WebWorks shares.
3.26 Obligations. Asphalt is not aware of any outstanding obligations
to any of its employees or consultants as of the Closing.
3.27 Asphalt Schedules. Asphalt has delivered to WebWorks the following
items listed below, hereafter referred to as the "Asphalt Schedules", which is
hereby incorporated by reference and made a part hereof. A certification
executed by a duly authorized officer of Asphalt on or about the date within the
Plan is executed to certify that the Asphalt Schedules are true and correct.
(a) Copy of Articles of Incorporation, as amended, and Bylaws;
(b) Financial statements;
(c) Shareholder list;
(d) Resolution of Directors approving Plan;
(e) Officers' Certificate as required under Section 6.2 of the
Plan;
(f) Opinion of counsel as required under Section 6.4 of the Plan;
(g) Certificate of Good Standing;
(h) Consent of Shareholders approving Plan.
Section 4
Representations, Warranties and Covenants of WebWorks
WebWorks represents and warrants to, and covenants with, the
Shareholders and Asphalt as follows:
4.1 Corporate Status. WebWorks is a corporation duly organized, validly
existing and in good standing under the laws of the State of Utah incorporated
on April 10, 1997. WebWorks has full 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 on all material respects as it is now being
conducted, and there is no 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 the WebWorks schedules (defined below) are complete
and correct copies of its Articles of Incorporation and Bylaws as in effect on
the date hereof. The execution and delivery of this Plan does not, and the
consummation of the transactions contemplated hereby will not, violate any
provision of WebWorks's Articles of Incorporation or Bylaws. WebWorks has taken
all action required by law, its Articles of Incorporation, its Bylaws, or
otherwise, to authorize the execution and delivery of this Plan.
4.2 Capitalization. The authorized capital stock of WebWorks as of the
date hereof consists of 100,000 common shares. As of the date hereof all common
shares of WebWorks issued and outstanding are fully paid, non-assessable shares.
There are no outstanding options, warrants, obligations convertible into shares
of stock, or calls or any understanding, agreements, commitments, contracts or
promises with respect to the issuance of WebWorks's common stock or with regard
to any options, warrants or other contractual rights to acquire any of
WebWorks's authorized but unissued common shares.
4.3 Conduct of Business. WebWorks will use its best efforts to maintain
and preserve its business organization, employee relationships and goodwill
intact, and will not, without the prior written consent of Asphalt, enter into
any material commitments except in the ordinary course of business.
WebWorks agrees that WebWorks will conduct itself in the following
manner pending the Closing:
(a) Certificate of Incorporation and Bylaws. No change will be
made in the Certificate of Incorporation or Bylaws of WebWorks.
(b) Capitalization. etc. WebWorks will not make any change in its
authorized or issued shares of any class, declare or pay any dividend or other
distribution, or issue, encumber, purchase or otherwise acquire any of its
shares of any class.
4.4 Title to Property. WebWorks has good and marketable title to all of
its properties and assets, real and personal, proprietary or otherwise, as will
be reflected in the balance sheets of WebWorks, and the properties and assets of
WebWorks are subject to no mortgage, pledge, lien or encumbrance, unless as
otherwise disclosed in its financial statements.
4.5 Litigation. There are no material actions, suits, or proceedings,
pending, or, to the best knowledge of WebWorks, threatened by or against or
effecting WebWorks at law or in equity, or before any governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind;
WebWorks does not have any knowledge of any default on its part with respect to
any judgment, order, writ, injunction, decree, warrant, rule, or regulation of
any court, arbitrator, or governmental agency or instrumentality.
4.6 Books and Records. From the date hereof, and for any reasonable
period subsequent thereto, WebWorks and its present management will (i) give to
Asphalt, or their duly authorized representatives, full access, during normal
business hours, to all of its books, records, contracts and other corporate
documents and properties so that Asphalt, or their duly authorized
representatives, may inspect them; and (ii) furnish such information concerning
the properties and affairs of WebWorks as the Shareholders and WebWorks, or
their duly authorized representatives, may reasonably request. Any such request
to inspect WebWorks's books shall be directed to WebWorks's representative, at
the address set forth herein under Section 10.4 Notices.
4.7 Confidentiality. Until the Closing (and thereafter if there is no
Closing), WebWorks and its representatives will keep confidential any
information which they obtain from the Shareholders or from WebWorks concerning
its properties, assets and the proposed business operations of WebWorks. If the
terms and conditions of this Plan imposed on the parties hereto are not
consummated on or before 5:00 p.m. MST on January 29, 1999 or otherwise waived
or extended in writing to a date mutually agreeable to the parties hereto,
WebWorks will return to Asphalt all written matter with regard to Asphalt
obtained in connection with the negotiations or consummation of this Plan.
4.8 Investment Intent. The Shareholders represent and covenant that
they are acquiring the unregistered and restricted common shares of Asphalt to
be delivered to them under this Plan for investment purposes and not with a view
to the subsequent sale or distribution thereof, and as agreed, supra, the
Shareholders, their successors and assigns agree to execute and deliver to
Asphalt on the date of Closing or no later than the date on which the restricted
shares are issued and delivered to the Shareholders, their assigns, or
designees, an Investment Letter similar in form to that attached hereto as
Exhibit B.
4.9 Unregistered Shares and Access to Information. WebWorks and the
Shareholders understand that the offer and sale of Asphalt shares to be
exchanged for the WebWorks shares have not been registered with or reviewed by
the securities and Exchange Commission under the Securities Act of 1933, as
amended, or with or by any state securities law administrator, and no federal or
state securities law administrator has reviewed or approved any disclosure or
other material facts concerning Asphalt or Asphalt stock. WebWorks and the
Shareholders have been provided with and reviewed all information concerning
Asphalt and Asphalt shares, to be exchanged for the WebWorks shares as they have
considered necessary or appropriate as prudent and knowledgeable investors to
enable them to make informed investment decisions concerning the Asphalt shares,
to be exchanged for the WebWorks shares. WebWorks and the Shareholders have made
an investigation as to the merits and risks of their acquisition of the Asphalt
shares, to be exchanged for the WebWorks shares and have had the opportunity to
ask questions of, and have received satisfactory answers from, the officers and
directors of Asphalt concerning Asphalt shares to be exchanged for the WebWorks
shares and related matters, and have had an opportunity to obtain additional
information necessary to verify the accuracy of such information and to evaluate
the merits and risks of the proposed acquisition of the Asphalt shares to be
exchanged for the WebWorks shares.
4.10 Title to Shares. The Shareholders are the beneficial and record
owners, free and clear of any liens and encumbrances, of whatever kind or
nature, of all of the shares of WebWorks of whatever class or series, which the
Shareholders have contracted to exchange.
4.11 Contracts.
(a) Set forth in the WebWorks Schedules are copies or descriptions
of all material contracts which written or oral, all agreements, franchises,
licenses, or other commitments to which WebWorks is a party or by which WebWorks
or its properties are bound.
(b) Except as may be set forth in the WebWorks Schedules, WebWorks
is not a party to any contract, agreement, corporate restriction, or subject to
any judgment, order, writ, injunction, decree, or award, which materially and
adversely effect the business, operations, properties, assets, or conditions of
WebWorks.
(c) Except as set forth in the WebWorks Schedules, WebWorks is not
a party to any material oral or written (i) contract for employment of any
officer which is not terminable on 30 days (or less) notice; (ii) profit
sharing, bonus, deferred compensation, stock option, severance, or any other
retirement plan of arrangement covered by Title IV of the Employee Retirement
Income Security Act, as amended, or otherwise covered; (iii) agreement providing
for the sale, assignment or transfer of any of its rights, assets or properties,
whether tangible or intangible, except sales of its property in the ordinary
course of business with a value of less than $2,000; or (iv) waiver of any right
of any value which in the aggregate is extraordinary or material concerning the
assets or properties scheduled by WebWorks, except for adequate value and
pursuant to contract. WebWorks has not entered into any material transaction
which is not listed in the WebWorks Schedules or reflected in the WebWorks
financial statements.
4.12 Material Contract Defaults. WebWorks is not in default in any
material respect under the terms of any contract, agreement, lease or other
commitment which is material to the business, operations, properties or assets,
or condition of WebWorks, and there is no event of default or event which, with
notice of lapse of time or both, would constitute a default in any material
respect under any such contract, agreement, lease, or other commitment in
respect of which WebWorks has not taken adequate steps to prevent such default
from occurring, or otherwise compromised, reached a satisfaction of, or provided
for extensions of time in which to perform under any one or more contract
obligations, among others.
4.13 Conflict with Other Instruments. The consummation of the within
transactions will not result in the breach of any term or provision of, or
constitute a default under any indenture, mortgage, deed of trust, or other
material agreement or instrument to which WebWorks was or is a party, or to
which any of its assets or operations are subject, and will not conflict with
any provision of the Articles of Incorporation or Bylaws of WebWorks.
4.14 Governmental Authorizations. WebWorks is in good standing in the
State of Utah. Except for compliance with federal and state securities laws, 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 WebWorks of this Plan and the consummation by
WebWorks of the transactions contemplated hereby.
4.15 Compliance with Laws and Regulations. WebWorks has complied with
all applicable statutes and regulations of any federal, state, or other
applicable jurisdiction or agency thereof, except to the extent that
noncompliance would not materially and adversely effect the business,
operations, properties, assets, or condition of WebWorks or except to the extent
that noncompliance would not result in the occurrence of any material liability,
not otherwise disclosed to Asphalt.
4.16 Approval of Plan. The Board of Directors of WebWorks have
authorized the execution and delivery of this Plan by WebWorks and have approved
the Plan and the transactions contemplated hereby. WebWorks has full power,
authority, and legal right to enter into this Plan and to consummate the
transactions contemplated hereby.
4.17 Information. The information concerning WebWorks set forth in this
Plan, and the WebWorks Schedules attached hereto, are complete and accurate in
all material respects and do not contain, or will not contain, when delivered,
any untrue statement or a material fact or omit to state a material fact the
omission of which would be misleading to Asphalt in connection with this Plan.
4.18 WebWorks Schedules. WebWorks has delivered to Asphalt the
following items listed below, hereafter referred to as the "WebWorks Schedules",
which is hereby incorporated by reference and made a part hereof. A
certification executed by a duly authorized officer of WebWorks on or about the
date within the Plan is executed to certify that the WebWorks Schedules are true
and correct.
(a) Copy of Articles of Incorporation and Bylaws;
(b) Financial Statements;
(c) Resolutions of Board of Directors approving Plan;
(d) Consent of Shareholders approving Plan;
(e) A list of key employees, including current compensation, with
notation as to job description and whether or not such employee is subject to
written contract, and if subject to a contract or employment agreement, a copy
of the same;
(f) A schedule showing the name and location of each bank or other
institution with which WebWorks has an account and the names of the authorized
persons to draw thereon or having access thereto;
(g) A schedule setting forth the shareholders, together with
the number of shares owned beneficially or of record by each (also attached as
Exhibit A);
(h) A schedule setting forth all material contracts
(i) Officers' Certificate as required by Section 7.2 of the Plan;
(j) Schedule of all debts, mortgages, security interests, pledges,
liens, encumbrances, claims and the like;
(k) Certificate of Good Standing
Section 5
Special Covenants
5.1 WebWorks Information Incorporated in Asphalt's Reports. WebWorks
represents and warrants to Asphalt that all the information furnished under this
Plan shall be true and correct in all material respects and that there is no
omission of any material fact required to make the information stated not
misleading. WebWorks agrees to indemnify and hold Asphalt harmless, including
each of its Directors and Officers, and each person, if any, who controls such
party, under any applicable law from and against any and all losses, claims,
damages, expenses or liabilities to which any of them may become subject under
applicable law, or reimburse them for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such actions,
whether or not resulting in liability, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based on any untrue
statement, alleged untrue statement, or omission of a material fact contained in
such information delivered hereunder.
5.2 Asphalt Information Incorporated in WebWorks's Reports. Asphalt
represents and warrants to WebWorks that all the information furnished under
this Plan shall be true and correct in all material respects and that there is
no omission of any material fact required to make the information stated not
misleading. The current officers and directors of Asphalt agree to indemnify and
hold WebWorks harmless, including each of its Directors and Officers, and each
person, if any, who controls such party, under any applicable law from and
against any and all losses, claims, damages, expenses or liabilities to which
any of them may become subject under applicable law, or reimburse them for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such actions, whether or not resulting in
liability, insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based on any untrue statement, alleged untrue
statement, or omission of a material fact contained in such information
delivered hereunder.
5.3 Special Covenants and Representations Regarding the Exchanged
Asphalt Stock. The consummation of this Plan and the transactions herein
contemplated, including the issuance of the Asphalt shares in exchange for one
hundred percent (100%) of the issued and outstanding shares of WebWorks to the
Shareholders constitutes the offer and sale of securities under the Securities
Act and the applicable state statutes, which depend, inter alia, on the
circumstances under which the Shareholders acquire such securities. Asphalt
intends to rely on the exemption of the registration provision of Section 5 of
the Securities Act as provided for under Section 4.2 of the Securities Act of
1933, which states "transactions not involving a public offering", among others.
Each Shareholder upon submission of his WebWorks shares and the receipt of the
Asphalt shares exchanged therefor, shall execute and deliver to Asphalt a letter
of investment intent to indicate, among other representations, that the
Shareholder is exchanging the WebWorks shares for Asphalt shares for investment
purposes and not with a view to the subsequent distribution thereof. A proposed
Investment Letter is attached hereto as Exhibit B and incorporated herein by
reference for the general use by the Shareholders, as they may determine.
5.4 Action Prior to Closing. Upon the execution hereof until the
Closing Date, and the completion of the consolidated audited financials,
(a) WebWorks and Asphalt will (i) perform all of its obligations
under material contracts, leases, insurance policies and/or documents relating
to its assets and business; (ii) use its best efforts to maintain and preserve
its business organization intact, to retain its key employees, and to maintain
its relationship with existing potential customers and clients; and (iii) fully
comply with and perform in all material respects all duties and obligations
imposed on it by all federal and state laws and all rules, regulations, and
orders imposed by all federal or state governmental authorities.
(b) Neither WebWorks nor Asphalt will (i) make any change in its
Articles of Incorporation or Bylaws except and unless as contemplated pursuant
to Section 3 of this Plan; (ii) enter into or amend any contract, agreement, or
other instrument of the types described in the parties' schedules, except that a
party may enter into or amend any contract or other instrument in the ordinary
course of business involving the sale of goods or services, provided that such
contract does not involve obligations in excess of $ 10,000.
Section 6
Conditions Precedent to Obligations of
WebWorks and the Shareholders
All obligations of WebWorks and the Shareholders under this Plan are
subject to the satisfaction, on or before the Closing date, except as otherwise
provided for herein, or waived or extended in writing by the parties hereto, of
the following conditions:
6.1 Accuracy of Representations. The representations and warranties
made by Asphalt in this Plan were true when made and shall be true as of the
Closing date (except for changes therein permitted by this Plan) with the same
force and effect as if such representations and warranties were made at and as
of the Closing date; and, Asphalt shall have performed and complied with all
aspects of this Agreement, unless waived or extended in writing by the parties
hereto. WebWorks shall have been furnished with a certificate, signed by a duly
authorized executive officer of Asphalt and dated the Closing date, to the
foregoing effect.
6.2 Officers' Certificate. WebWorks and the Shareholders shall have
been furnished with a certificate dated the Closing date and signed by a duly
authorized executive officer of Asphalt, to the effect that no litigation,
proceeding, investigation, claim, demand or inquiry is pending, or to the best
knowledge of Asphalt, threatened, which might result in an action to enjoin or
prevent the consummation of the transactions contemplated by this Plan, or which
might result in any material adverse change in the assets, properties, business,
or operations of Asphalt, and that this Agreement has been complied with in all
material respects.
6.3 No Material Adverse Change. Prior to the Closing date, there shall
have not occurred any material adverse change in the financial condition,
business or operations of Asphalt, nor shall any event have occurred which, with
lapse of time or the giving of notice or both, may cause or create any material
adverse change in the financial condition, business or operations of Asphalt,
except as otherwise disclosed to WebWorks.
6.4 Opinion of Counsel of Asphalt. Asphalt shall furnish to WebWorks
and the Shareholders an opinion dated as of the Closing date and in form and
substance satisfactory to WebWorks and the Shareholders to the effect that:
(a) Asphalt is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Nevada, and with all requisite
corporate power to perform its obligations under this Plan.
(b) The business of Asphalt, as presently conducted, including,
upon the consummation hereof, the ownership of all of the issued and outstanding
shares of WebWorks, does not require it to register it to do business as a
foreign corporation on any jurisdiction other than under the jurisdiction of its
Articles of Incorporation or Bylaws and Asphalt has complied to the best of its
knowledge in all material respects with all the laws, regulations, licensing
requirements and orders applicable to its business activities and has filed with
the proper authorities, including the Department of Commerce, Division of
Corporations, and Secretary of State for the State of Nevada, all statements and
reports required to be filed.
(c) The authorized and outstanding capital stock of Asphalt as set
forth in Section 3.2 above, and all issued and outstanding shares have been duly
and validly authorized and issued and are fully paid and non-assessable.
(d) There are no material claims, suits or other legal proceedings
pending or threatened against Asphalt of any court or before or by any
governmental body which might materially effect the business of Asphalt or the
financial condition of Asphalt as a whole and no such claims, suits or legal
proceedings are contemplated by governmental. authorities against Asphalt.
(e) To the best knowledge of such counsel, the consummation of the
transactions contemplated by this Plan will not violate or contravene the
provisions of the Certificate of Incorporation or Bylaws of Asphalt, or any
contract, agreement, indenture, mortgage, or order by which Asphalt is bound.
(f) This Plan constitutes a legal, valid and binding obligation of
Asphalt enforceable in accordance with its terms, subject to the effect of any
bankruptcy, insolvency, reorganization, moratorium, or similar law effecting
creditors' rights generally and general principles of equity (regardless of
whether such principles are considered in a proceeding in equity or law).
(g) The execution and delivery of this Plan and the consummation
of the transactions contemplated hereby have been ratified by a majority of the
Shareholders of Asphalt and have been duly authorized by its Board of Directors.
(h) Asphalt has not, nor will it undertake any action, the result
of which would endanger the tax-free nature of the Plan.
6.5 Good Standing. WebWorks shall have received a Certificate of Good
Standing from the State of Nevada, dated within sixty (60) days prior to
Closing, but in no event later than ten days subsequent to the execution hereof
certifying that Asphalt is in good standing as a corporation in the State of
Nevada.
6.6 Other Items. WebWorks and the Shareholders shall have received such
further documents, certifications or instruments relating to the transactions
contemplated hereby as WebWorks and the Shareholders may reasonably request.
Section 7
Conditions Precedent to Obligations of Asphalt
All obligations of Asphalt under this Plan are subject, at its option,
to the fulfillment, before the Closing, of each of the following conditions:
7.1 Accuracy of Representations. The representations and warranties
made by WebWorks and the Shareholders under this Plan were true when made and
shall be true as Of the Closing date (except for changes therein permitted by
this Plan) with the same force and effect as if such representations and
warranties were made at and as of the Closing date; and, Asphalt shall have
performed and complied with all aspects of this Agreement, unless waived or
extended in writing by the parties hereto. Asphalt shall have been furnished
with a certificate, signed by a duly authorized executive officer of WebWorks
and dated the Closing date, to the foregoing effect.
7.2 Officers' Certificate. Asphalt shall have been furnished with a
certificate dated the Closing date and signed by a duly authorized executive
officer of WebWorks, to the effect that no litigation, proceeding,
investigation, claim, deed, or inquiry is pending, or to the best knowledge of
WebWorks, threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Plan, or which might
result in any material adverse change in the assets, properties, business, or
operations of WebWorks, and that this Agreement has been complied with in all
material respects.
7.3 No Material Adverse Change. Prior to the Closing date, there shall
have not occurred any material adverse change in the financial condition,
business or operations of Asphalt, nor shall any event have occurred which, with
lapse of time or the giving of notice or both, may cause or create any material
adverse change in the financial condition, business or operations of WebWorks,
except as otherwise disclosed to Asphalt.
7.4 Good Standing. Asphalt shall have received a Certificate of Good
Standing from the State of Utah, dated within sixty (60) days prior to Closing,
but in no event later than ten days subsequent to the execution hereof
certifying that WebWorks is in good standing as a corporation in the State of
Utah.
7.5 Dissenters' Rights Waived. Shareholders representing at one hundred
percent (100%) of the issued and outstanding shares of WebWorks, and each of
them, have agreed and hereby waive any dissenters' rights, if any, under the
laws of the State of Utah in regards to any objection to this Plan as outlined
herein and otherwise consent to and agree and authorize the execution and
consummation of the within Plan in accordance to the terms and conditions of
this Plan by the management of WebWorks.
7.6 Other Items. Asphalt shall have received such further documents,
certifications or instruments relating to the transactions contemplated hereby
as Asphalt may reasonably request.
7.7 Execution of Investment Letter. The Shareholders shall have
delivered copies of Exhibit B to Asphalt.
Section 8
Termination
8.1 Termination by WebWorks or the Shareholders. This Plan may be
terminated at any time prior to the Closing date by action of WebWorks or the
Shareholders, if Asphalt shall fall to comply in any material respect with any
of the covenants or agreements contained in this Plan, or if any of its
representations and warranties contained herein shall be inaccurate in any
material respect.
8.2 Termination by Asphalt. This Plan may be terminated at any time
prior to the Closing date by action of Asphalt if WebWorks shall fail to comply
in any material respect with any of the covenants or agreements contained in
this Plan, or if any of its representations or warranties contained herein shall
be inaccurate in any material respect.
8.3 Termination by Mutual Consent.
(a) This Plan may be terminated at any time prior to the Closing
date by mutual consent of Asphalt, expressed by action of its Board of
Directors, WebWorks or the Shareholders.
(b) If this Plan is terminated pursuant to Section 8, this
Plan shall be of no further force and effect and no obligation, right or
liability shall arise hereunder. Each party shall bare its own costs in
connection herewith.
Section 9
Shareholders' Representative
The Shareholders hereby irrevocably designate and appoint Xxxxx Xxxxxx,
as their agent and attorney in fact (the "Shareholders' Representative") with
full power and authority until the Closing to execute, deliver and receive on
their behalf all notices, requests and other communications hereunder; to fix
and alter on their behalf the date, time and place of the Closing; to waive,
amend or modify any provisions of this Plan and to take such other action on
their behalf in connection with this Plan, the Closing and the transactions
contemplated hereby as such agent deems appropriate; provided, however, that 'no
such waiver, amendment or modification may be made if it would decrease the
number of shares to be issued to the Shareholders under Section I hereof or
increase the extent of their obligation to Asphalt hereunder, unless agreed in
writing by the Shareholders.
Section 10
General Provisions
10.1 Further Assurances. At any time, and from time to time, after the
Closing date, each party will execute such additional instruments and take such
action as may be reasonably requested by the other party to confirm or perfect
title to any property transferred hereunder or otherwise to carry out the intent
and purposes of the Plan.
10.2 Payments of Costs and Fees. Asphalt and WebWorks shall each bear
their own costs and expenses, including any legal and accounting fees in
connection with the negotiation, execution and consummation of the Plan.
10.3 Press Release and Shareholders' Communications. On the date of
Closing, or as soon thereafter as practicable, WebWorks and the Shareholders
shall cause to have promptly prepared and disseminated a WebWorks release
concerning the execution and consummation of the Plan, such press release and
communication to be released promptly and within the time required by the laws,
rules and regulations as promulgated by the United States Securities and
Exchange Commission, and concomitant therewith to cause to be prepared a full
and complete letter to Asphalt's shareholders which shall contain information
required by Regulation 240.14f-1 as promulgated under Section 14(f) as mandated
under the Securities and Exchange Act of 1934, as amended.
10.4 Notices. All notices and other communications required or
permitted hereunder shall be sufficiently given if personally delivered, sent by
registered mail, or certified mail, return receipt requested, postage prepaid,
or by facsimile transmission addressed to the following parties hereto or at
such other addresses as follows:
If to Asphalt: Asphalt Associates, Inc.
000 Xxxxx 000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
With a copy to: Xxxxxx X. Xxxxxxx
000 Xxxxx 000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
If to WebWorks: Utah WebWorks, Inc.
000 Xxxxx 000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
With a copy to: Xxxxx Xxxxx Xxxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
or at 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, sent by
facsimile transmission, or telegraphed.
10.5 Entire Agreement. This Plan represents the entire agreement
between the parties relating to the subject matter hereof, including any
previous letters of intent, understandings, or agreements between Asphalt,
WebWorks and the Shareholders with respect to the subject matter hereof, all of
which are hereby merged into this Plan, which alone fully and completely
expresses the agreement of the parties relating to the subject matter hereof.
Excepting the foregoing agreement, there are no other courses of dealing,
understandings, agreements, representations, or warranties, written or oral,
except as set forth herein.
10.6 Governing Law. This Plan shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada, except to the
extent preempted by federal law, in which event (and to that extent only)
federal law shall govern.
10.7 Tax Treatment. The transaction contemplated by this Plan is
intended to qualify as a "tax-free" reorganization under the provisions of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended. WebWorks
and Asphalt acknowledge, however, that each are being represented by their own
tax advisors in connection with this transaction, and neither has made any
representations or warranties to the other with respect to treatment of such
transaction or any part or effect thereof under applicable tax laws, regulations
or interpretations; and no attorney's opinion or tax revenue ruling has been
obtained with respect to the tax consequences of the transactions contemplated
by the within Plan.
10.8 Attorney Fees. In the event that any party prevails in any action
or suit to enforce this Plan, or secure relief from any default hereunder or
breach hereof, the nonprevailing party or parties shall reimburse the prevailing
party or parties for all costs, including reasonable attorney fees, incurred in
connection therewith.
10.9 Amendment of 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 or separately, 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, therefore, or
thereafter occurring or existing. Any time prior to the expiration of thirty
(30) days from the date hereof, this Plan 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 Plan may be waived or the time for performance thereof
may be extended by a writing signed by the party or parties for whose benefit
the provision is intended.
10.10 Counterparts. This Plan may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which together shall constitute one and the same
instruments..
10.11 Headings. The section and subsection headings in this Plan are
inserted for convenience only and shall not effect in any way the meaning or
interpretation of the Plan.
10.12 Parties in Interest. Except as may be otherwise expressly
provided herein, all terms and provisions of this Plan shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
beneficiaries, personal and legal representatives and assigns.
IN WITNESS WHEREOF, the parties have executed this Plan and Agreement
of Reorganization effective the day and year first set forth above.
ASPHALT ASSOCIATES, INC.
Attest:
/s/
------------------------- By: /s/
-----------------------------
Its President
UTAH WEBWORKS, INC.
Attest:
/s/
------------------------- By: /s/
-----------------------------
Its President
SHAREHOLDERS:
LVT INVESTMENTS, LLC
Attest:
/s/
------------------------- By: /s/
-----------------------------
Xxxxx Xxxxxx, Member
NET STRATEGIC INVESTMENTS, LLC
Attest:
/s/
------------------------- By: /s/
-----------------------------
Xxxxxx X. Xxxxxx, Member
Attest:
/s/
------------------------- By: /s/
-----------------------------
Xxxxx Xxxxxxx
Attest:
/s/
------------------------- By: /s/
-----------------------------
Xxxx Xxxxxxxxx
Attest:
/s/
------------------------- By: /s/
-----------------------------
Xxxxxxxx Xxxxx
Attest:
/s/
------------------------- By: /s/
-----------------------------
Xxxxx Xxxxxxxx
SHAREHOLDERS OF UTAH WEBWORKS, INC.
Name Ownership Percentage
---- --------------------
LVT Investments, LLC 49.5%
Net Strategic Investments, LLC 14.5%
Xxxxx Xxxxxxx 14.5%
Xxxx Xxxxxxxxx 10.0%
Xxxxxxxx Xxxxx 10.0%
Xxxxx Xxxxxxxx 1.5%
