AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Plan") is made this 4th day
of April, 2000, among Pacific WebWorks, Inc., a Nevada corporation
("Pacific"); IntelliPay, Inc., a Delaware corporation, any and all of its
subsidiaries (hereinafter collectively referred to as "IPI") and its
shareholders (hereinafter "Shareholders").
Pacific wishes to acquire all the issued and outstanding stock of IPI for
and in exchange for stock of Pacific, 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 Shareholders of
IPI agree to assign, transfer, and deliver to Pacific, free and clear of all
liens, pledges, encumbrances, charges, restrictions or known claims of any
kind, nature or description, 1,000 shares of IPI common stock, which
represents 100% of the issued and outstanding stock of IPI, in exchange for
2,400,000 shares of Pacific's stock, par value $.001, subject to the
provisions of this Plan. Subsequent to the date hereof, the Shareholders
shall, upon the surrender of the IPI certificates representing their
respective beneficial and record ownership of the issued and outstanding
shares of IPI to Pacific or as soon as practicable hereafter, and pursuant to
the exemptions from the registration provisions of Section 5 of the Securities
Act of 1933, provided by Sections 3 and 4 of that act, the Shareholders shall
be entitled to receive an exchange certificate(s) evidencing shares of Pacific
stock as provided for herein. Upon the consummation of the transaction
contemplated herein, IPI shall be a wholly owned subsidiary of Pacific.
1.2 Registration of Pacific Shares. In the event, that within two (2)
years from the date hereof, Pacific undertakes to file a Registration
Statement under the Securities Act of 1933, as amended, for the purpose of
offering and selling a minimum of two million dollars ($2,000,000) common
stock in any single registered offering, then if practicable, and subject to
the amount of the underwriter(s) the Shareholders of IPI shall have the right
to include a portion of those shares in the Registration Statement. Said
"Piggy Back" registration right shall allow those shareholders of IPI which
receive Pacific shares in the exchange to offer for sale under the
Registration Statement a minimum of ten percent (10%) of the total shares
being offered under such Registration Statement by Pacific. That percentage
may be increased by the mutual consent of Pacific, the IPI shareholders and
the underwriters(s).
1.3 Anti-Dilution. For all relevant purposes of this Plan, the number
of Pacific 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 Pacific common
stock, which may occur between the date of the execution of this Plan and the
date of the delivery of such shares.
1.4 Delivery of Certificates. The Shareholders shall transfer to
Pacific at the closing provided for in Section 2 (the "Closing") the shares of
common stock of IPI listed opposite their respective names on Exhibit A hereto
(the "IPI Shares") in exchange for shares of the common stock of Pacific as
outlined above in Section 1.1 hereof (the "Pacific Stock"). All of such
shares of Pacific Stock shall be issued at the closing to the Shareholders, in
the numbers shown opposite their respective names in Exhibit A. The transfer
of IPI Shares by the Shareholders shall be effected by the delivery to Pacific
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.
1.5 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 Pacific may reasonably request in
order to more effectively sell, transfer and assign clear title and ownership
in the IPI Shares to Pacific.
Section 2
Closing
2.1 Closing. The Closing contemplated by Section 1.4 shall be held at
the law office of Xxxxxx X. Xxxxxxx, 000 Xxxxx 000 Xxxx, Xxxx Xxxx Xxxx, Xxxx
on April 4, 2000 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.
Section 3
Representations, Warranties and Covenants of Pacific
Pacific represents and warrants to, and covenants with, the Shareholders
and IPI as follows:
3.1 Corporate Status. Pacific is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada. Pacific
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 other 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 Pacific 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 Pacific's Articles of Incorporation or Bylaws. Pacific 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 Pacific as of the
date hereof consists of 50,000,000 common shares, par value $.001. As of the
date hereof there are 10,395,679 common shares of Pacific issued and
outstanding. The foregoing shares constitute fully paid, non-assessable
shares.
3.3 Options, Warrants and Rights. Pacific has warrants outstanding to
purchase 400,000 shares of its authorized but unissued common stock with an
expiration date of January 27, 1904; and warrants outstanding to purchase
January 27, 1905 shares of its authorized but unissued common stock with an
expiration date of January 27, 1905.
3.4 Financial Statements.
(a) Pacific hereby warrants and covenants to IPI that the audited
financial statements for the years ended December 31, 1999 and 1998, fairly
and accurately represent the financial condition of Pacific and that the same
will be prepared along with the period ended as of the date of Closing, for
consolidation by an independent public accountant, which shall be prepared in
accordance with generally accepted accounting principles consistently applied,
on or before the expiration of forty-five days from the date of Closing.
(b) Pacific 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 Pacific as
submitted heretofore to IPI for examination and review.
3.5 Conduct of Business. Pacific 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 IPI, enter into any
material commitments except in the ordinary course of business.
Pacific 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 Pacific.
(b) Capitalization, etc. Pacific 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.
3.6 Title to Property. Pacific 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 Pacific, and the properties and
assets of Pacific 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 Pacific, threatened by or against or
affecting Pacific at law or in equity, or before any governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind;
Pacific 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 until closing, and for any
reasonable period subsequent thereto, Pacific and its present management will
(i) give to the Shareholders and IPI, 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 IPI, or their duly authorized representatives, may
inspect them; and (ii) furnish such information concerning the properties and
affairs of Pacific as the Shareholders and IPI, or their duly authorized
representatives, may reasonably request.
3.9 Confidentiality. Until the Closing (and thereafter if there is no
Closing), Pacific and its representatives will keep confidential any
information which they obtain from the Shareholders or from IPI concerning its
properties, assets and the proposed business operations of IPI. 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 April 4, 2000 or otherwise waived or extended in
writing to a date mutually agreeable to the parties hereto, Pacific will
return to IPI all written matter with regard to IPI 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 any
material agreements or instrument to which Pacific 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 Pacific.
3.11 Corporate Authority. Pacific 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 IPI, 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 Special Covenants and Representations Regarding the Exchanged
Pacific Stock. The consummation of this Plan and the transactions herein
contemplated include the issuance of the exchanged Pacific 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 inter
alia 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 Pacific a Letter(s)
of Investment Intent in the form attached hereto as Exhibit B and incorporated
herein by reference.
3.14 Undisclosed or Contingent Liabilities. Pacific hereby represents
and warrants that it has no undisclosed or contingent liabilities which have
not been disclosed to IPI.
3.15 Information. The information concerning Pacific set forth in this
Plan, and the Pacific 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 IPI or the shareholders of IPI in
connection with this Plan.
3.16 Title and Related Matters. Pacific 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 Pacific balance
sheets, free and clear of any and all liens and encumbrances.
3.17 Contracts or Agreements. Pacific is not bound by any material
contracts, agreements or obligations which it has not already disclosed to IPI
in writing.
3.18 Governmental Authorizations. Pacific 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. 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 Pacific of this Plan and the consummation
by IPI of the transactions contemplated hereby.
3.19 Compliance with Laws and Regulations. Pacific 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 affect the business,
operations, properties, assets, or condition of Pacific or except to the
extent that noncompliance would incur any material liability, not otherwise
disclosed to IPI.
3.20 Approval of Plan. The Board of Directors of Pacific has authorized
the execution and delivery of this Plan by Pacific and have approved the Plan
and the transactions contemplated hereby. Pacific has full power, authority,
and legal right to enter into this Plan and to consummate the transactions
contemplated hereby.
3.21 Investment Intent. Pacific is acquiring the IPI Shares to be
transferred to it under this Plan for investment and not with a view to the
sale or distribution thereof, and Pacific has no commitment or present
intention to liquidate IPI or to sell or otherwise dispose of the IPI Shares.
3.22 Unregistered Shares and Access to Information. Pacific understands
that the offer and sale of the IPI 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 IPI or the IPI Shares. Pacific has
been provided with and reviewed all information concerning IPI, the IPI 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
IPI Shares. Pacific has made an investigation as to the merits and risks of
its acquisition of the IPI Shares and has had the opportunity to ask questions
of, and has received satisfactory answers from, the officers and directors of
IPI concerning IPI, the IPI 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 IPI Shares.
3.23 Pacific Schedules. Pacific has delivered to IPI the following
items pertaining to Pacific, listed below, hereafter referred to as the
"Pacific Schedules", which is hereby incorporated by reference and made a part
hereof. A certification has been executed by a duly authorized officer of
Pacific on or about the date which the Plan is executed to certify that the
Pacific Schedules are true and correct.
(a) Copy of Articles of Incorporation and any amendments, and
Bylaws;
(b) Financial statements;
(c) Shareholder list;
(d) Resolutions 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;
Section 4
Representations, Warranties and Covenants of IPI
IPI represents and warrants to, and covenants with, the Shareholders and
Pacific as follows:
4.1 Corporate Status. IPI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
incorporated on June 1, 1995. IPI 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. Included in the IPI 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 IPI's Articles of Incorporation or Bylaws. IPI 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 IPI as of the date
hereof consists of 1,000 common shares, no par value. As of the date hereof
there are 1,000 common shares of IPI issued and outstanding. The issued and
outstanding common shares of IPI 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 IPI's common stock or
with regard to any options, warrants or other contractual rights to acquire
any of IPI's authorized but unissued common shares.
4.3 Conduct of Business. IPI 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 Pacific, enter into
any material commitments except in the ordinary course of business.
IPI agrees that IPI 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 IPI.
(b) Capitalization, etc. IPI 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. IPI 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 IPI, and the properties and assets of IPI
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 IPI, threatened by or against or
affecting IPI at law or in equity, or before any governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind;
IPI 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, IPI and its present management will (i) give to
Pacific, 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 Pacific, or their duly authorized
representatives, may inspect them; and (ii) furnish such information
concerning the properties and affairs of IPI as Pacific, or their duly
authorized representatives, may reasonably request. Any such request to
inspect IPI's books shall be directed to IPI'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), IPI and its representatives will keep confidential any information
which they obtain from Pacific concerning its properties, assets and the
proposed business operations of IPI. 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 April 4, 2000 or otherwise waived or extended in writing to a date mutually
agreeable to the parties hereto, IPI will return to Pacific all written matter
with regard to Pacific 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 Pacific 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
Pacific 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 Vote Required. The affirmative vote of the holders of at least a
majority of the outstanding IPI Shares is the only vote of the holders of any
class or series of IPI's capital stock necessary to approve and adopt this
Plan.
4.10 Unregistered Shares and Access to Information. IPI and the
Shareholders understand that the offer and sale of Pacific shares to be
exchanged for the IPI 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 Pacific or Pacific stock. IPI and the
Shareholders have been provided with and reviewed all information concerning
Pacific and Pacific shares, to be exchanged for the IPI Shares as they have
considered necessary or appropriate as prudent and knowledgeable investors to
enable them to make informed investment decisions concerning the Pacific
shares, to be exchanged for the IPI Shares. IPI and the Shareholders have
made an investigation as to the merits and risks of their acquisition of the
Pacific shares, to be exchanged for the IPI Shares and have had the
opportunity to ask questions of, and have received satisfactory answers from,
the officers and directors of Pacific concerning Pacific shares to be
exchanged for the IPI 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 Pacific shares to be exchanged for the IPI Shares.
4.11 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 IPI of whatever class or series, which the
Shareholders have contracted to exchange.
4.12 Contracts.
(a) Except for the contracts set forth in the IPI Schedules, IPI is
not a party to any other license agreements, material contracts, written or
oral, nor is IPI a party to any franchise agreements or other commitments.
(b) Except as may be set forth in the IPI Schedules, IPI 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 affect the business, operations, properties, assets, or conditions
of IPI.
(c) Except as set forth in the IPI Schedules, IPI 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
or 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 IPI, except for adequate value and pursuant
to contract. IPI has not entered into any material transaction which is not
listed in the IPI Schedules or reflected in the IPI financial statements.
4.13 Material Contract Defaults. IPI 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 IPI, and there is no event of default or event which, with notice
or 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 IPI 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.
4.14 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 IPI 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 IPI.
4.15 Governmental Authorizations. IPI is in good standing in the State
of Delaware. and qualified to do business in the State of California. 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 IPI of this Plan and the consummation by IPI of the
transactions contemplated hereby.
4.16 Compliance with Laws and Regulations. IPI 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 affect the business, operations, properties,
assets, or condition of IPI or except to the extent that noncompliance would
incur any material liability, not otherwise disclosed to Pacific.
4.17 Approval of Plan. The Board of Directors of IPI have authorized
the execution and delivery of this Plan by IPI and have approved the Plan and
the transactions contemplated hereby. IPI has full power, authority, and
legal right to enter into this Plan and to consummate the transactions
contemplated hereby.
4.18 Information. The information concerning IPI set forth in this
Plan, and the IPI Schedules attached hereto, are complete and accurate in all
material respects and do not contain, or will not contain, when delivered, any
untrue statement of a material fact or omit to state a material fact the
omission of which would be misleading to Pacific in connection with this Plan.
4.19 IPI Schedules. IPI has delivered to Pacific the following items
listed below, hereafter referred to as the "IPI Schedules", which is hereby
incorporated by reference and made a part hereof. A certification has been
executed by a duly authorized officer of IPI on or about the date which the
Plan is executed to certify that the IPI Schedules are true and correct.
(a) Copy of Articles of Incorporation and Bylaws
(b) Financial Statements
(c) A schedule setting forth the shareholders, together with the
number of shares owned beneficially or of record by each (also attached as
Exhibit A)
(d) Resolutions of Board of Directors approving Plan
(e) Consent of Shareholders approving Plan
(f) 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
(g) A schedule showing the name and location of each bank or
other institution with which IPI has an account and the names of the
authorized persons to draw thereon or having access thereto
(h) Officers' Certificate as required by Section 7.2 of the Plan
(i) Certificate of Good Standing
Section 5
Special Covenants
5.1 IPI Information Incorporated in Pacific's Reports. IPI represents
and warrants to Pacific 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. IPI agrees to indemnify and hold Pacific 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 insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based on any untrue statement, intentional untrue
statement, or intentional omission of a material fact contained in such
information delivered hereunder. This indemnity shall only survive as long as
specified within this agreement.
5.2 Special Covenants and Representations Regarding the Exchanged
Pacific Stock. The consummation of this Plan and the transactions herein
contemplated, including the issuance of the Pacific shares in exchange for all
of the issued and outstanding shares of IPI 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. Pacific 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 IPI Shares and the receipt of the Pacific
post-split shares exchanged therefor, shall execute and deliver to Pacific a
letter of investment invent to indicate, among other representations, that the
Shareholder is exchanging the IPI Shares for Pacific post-split 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.
5.3 Action Prior to Closing. Upon the execution hereof until the
Closing date, and the completion of the consolidated audited financial
statements:
(a) IPI and Pacific 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 IPI nor Pacific 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 $5,000.
Section 6
Conditions Precedent to Obligations of
IPI and the Shareholders
All obligations of IPI 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 Pacific in this Plan were true when made and shall be true as of the
Closing date (except for changes therein permitted by this Plan) and have the
same force and effect as if such representations and warranties were made at
and as of the Closing date; and, IPI shall have performed and complied with
the terms and conditions of this Plan prior to the Closing. IPI and its
shareholders shall have been furnished with a certificate, signed by a duly
authorized executive officer of Pacific and dated the Closing date, to the
foregoing effect.
6.2 Officers' Certificate. IPI and the Shareholders shall have been
furnished with a certificate dated the Closing date and signed by a duly
authorized executive officer of Pacific, to the effect that no litigation,
proceeding, investigation, or inquiry is pending, or to the best knowledge of
Pacific, 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 Pacific.
6.3 No Material Adverse Change. Prior to the Closing date, there shall
have not occurred any material adverse change in the condition, business or
operations of Pacific, 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 Pacific, except
as otherwise disclosed to IPI.
6.4 Opinion of Counsel of Pacific. Pacific shall furnish to IPI and the
Shareholders an opinion dated as of the Closing date and in form and substance
satisfactory to IPI and the Shareholders to the effect that:
(a) Pacific 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 Pacific, as presently conducted, including,
upon the consummation hereof, the ownership of all of the issued and
outstanding shares of IPI, does not require it to register it to do business
as a foreign corporation in any jurisdiction other than under the jurisdiction
of its Articles of Incorporation or Bylaws and Pacific 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 Pacific 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 Pacific in any court or before or by any
governmental body which might materially affect the business of Pacific or the
financial condition of Pacific as a whole and no such claims, suits or legal
proceedings are contemplated by governmental authorities against Pacific.
(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 Articles of Incorporation or Bylaws of Pacific, or any
contract, agreement, indenture, mortgage, or order by which Pacific is bound.
(f) This Plan constitutes a legal, valid and binding obligation of
Pacific enforceable in accordance with its terms, subject to the affect of any
bankruptcy, insolvency, reorganization, moratorium, or similar law affecting
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 Pacific and have been duly authorized by its Board of
Directors.
(h) Pacific 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. IPI shall have received a Certificate of Good
Standing from the State of Nevada obtained and delivered, prior to Closing
certifying that Pacific is in good standing as a corporation in the State of
Nevada.
6.6 Other Items. IPI and the Shareholders shall have received such
further documents, certifications or instruments relating to the transactions
contemplated hereby as IPI and the Shareholders may reasonably request.
Section 7
Conditions Precedent to Obligations of Pacific
All obligations of Pacific 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 IPI 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) and have the same force and effect as if such representations and
warranties were made at and as of the Closing date; and Pacific shall have
performed and complied with the terms and conditions of this Plan prior to the
Closing, unless waived or extended in writing by the parties hereto. IPI and
its shareholders shall have been furnished with a certificate, signed by a
duly authorized executive officer of IPI and dated the Closing date, to the
foregoing effect.
7.2 Officers' Certificate. Pacific shall have been furnished with a
certificate dated the Closing date and signed by a duly authorized executive
officer of IPI, to the effect that no litigation, proceeding, investigation,
or inquiry is pending, or to the best knowledge of IPI, 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 IPI.
7.3 No Material Adverse Change. Prior to the Closing date, there shall
have not occurred any material adverse change in the final condition, business
or operations of Pacific, 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 IPI,
except as otherwise disclosed to Pacific.
7.4 Good Standing. Pacific shall have received either a Certificate of
Good Standing from the State of Delaware or some kind of verification
certifying that IPI is in good standing as a corporation in the State of
Delaware.
7.5 Dissenters' Rights Waived. The Shareholders of IPI, and each of
them, agree and hereby waive any dissenters' rights, if any, under the laws of
the State of Delaware 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 IPI.
7.6 Other Items. Pacific shall have received such further documents,
certifications or instruments relating to the transactions contemplated hereby
as Pacific may reasonably request.
7.7 Execution of Investment Letter. The Shareholders shall have
executed and delivered copies of Exhibit B to Pacific.
Section 8
Termination
8.1 Termination by IPI or the Shareholders. This Plan may be terminated
at any time prior to the Closing date by action of IPI or the Shareholders, if
Pacific 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 and
warranties contained herein shall be inaccurate in any material respect.
8.2 Termination by Pacific. This Plan may be terminated at any time
prior to the Closing date by action of Pacific if IPI 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 Pacific, expressed by action of its Board of
Directors, IPI 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.
(c) If the Plan is terminated pursuant to Section 8, the parties
hereto shall sign non-disclosure agreements which shall survive the
cancellation of the Plan.
Section 9
Shareholders' Representative
The Shareholders hereby irrevocably designate and appoint Xxx Xxxx 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 1 hereof or
increase the extent of their obligation to Pacific 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 and deliver 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 Estimated Costs and Fees. Pacific and IPI mutually
determine and agree that Pacific shall pay the actual costs and fees incurred
by any party hereto in connection with the execution and consummation of the
Plan.
10.3 Press Release and Shareholders' Communications. On the date of
Closing, or as soon thereafter as practicable, IPI and the Shareholders shall
cause to have promptly prepared and disseminated a news 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 Pacific'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 Pacific: Pacific WebWorks, Inc.
000 Xxxxx 000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Fax: 000-000-0000
If to IPI or IntelliPay, Inc.
shareholder of IPI: 00000 Xxxxxxxxx Xx., Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
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 Pacific, IPI
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 with respect to the subject matter hereof.
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. IPI
and Pacific 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 reasonable costs, including all 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 in 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.
PACIFIC WEBWORKS, INC.
Attest:
/a/ Xxxxx Xxxxxxxxx /s/ Xxxxxxxxx Xxxxxx
____________________ By: _______________________________________
Its President
INTELLIPAY, INC.
Attest:
/s/ Xxxxx Xxxxxxxxx /s/ Xxx Xxxx
_____________________ By: _______________________________________
Its President
SHAREHOLDERS:
Attest:
/s/ Xxxxx Xxxxxxxxx /s/ Xxx Xxxx
____________________ By: _________________________________________
Xxx Xxxx
Attest:
/s/ Xxxxx Xxxxxxxxx /s/ Xxxxxx Xxxxxxxxx
_____________________ By: _________________________________________
Xxxxxx Xxxxxxxxx
Attest:
/s/ Xxxxx Xxxxxxxxx /s/ Xxxxxxxx Xxxx
_____________________ By: _________________________________________
Xxxxx Xxxx
Attest:
/s/ Xxxxx Xxxxxxxxx /s/ Xxxxxxx Xxxx XX
_____________________ By: _________________________________________
Xxxxxxx Xxxx XX
