1
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
eVENTURES GROUP, INC.,
eVENTURES HOLDINGS, L.L.C.,
IEO HOLDINGS LIMITED,
INFINITY INVESTORS LIMITED,
MICK Y. WETTREICH,
THE PURCHASERS LISTED ON SCHEDULE 1-A HERETO
AND
THE CONTRIBUTING PERSONS LISTED ON SCHEDULE 1-B HERETO
SEPTEMBER 22, 1999
2
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS............................................................................. 1
ARTICLE II THE TRANSACTIONS........................................................................ 4
2.1 Stock Sale.............................................................................. 4
2.2 Asset Sale.............................................................................. 4
2.3 The Merger and the Surviving Entity..................................................... 5
2.3.1 Merger......................................................................... 5
2.3.2 Certificate of Formation....................................................... 5
2.3.3 Operating Agreement............................................................ 5
2.3.4 Management of Surviving Entity................................................. 5
2.3.5 Officers....................................................................... 5
2.4 Effectiveness of Merger................................................................. 5
2.4.1 Articles of Merger............................................................. 5
2.4.2 Effective Date................................................................. 5
2.5 Exchange Mechanics...................................................................... 5
2.5.1 Exchange of Securities......................................................... 5
2.5.2 Redemption of Management Shares................................................ 6
2.5.3 Records........................................................................ 6
2.5.4 Stock Certificates............................................................. 6
2.5.5 Fractional Shares.............................................................. 6
2.6 Securities Law Matters.................................................................. 6
2.6.1 Private Offering............................................................... 6
2.6.2 Blue Sky Filings............................................................... 7
2.7 Further Assurances...................................................................... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES.......................................................... 7
3.1 Representation and Warranties of IEOH................................................... 7
3.1.1 Organization of IEOH........................................................... 7
3.1.2 Capitalization................................................................. 7
3.1.3 Subsidiaries................................................................... 7
3.1.4 Real Estate.................................................................... 7
3.1.5 Authority Relative to the Closing Documents; Enforceability.................... 7
3.1.6 Title to Assets................................................................ 8
3.1.7 Material Contracts............................................................. 8
3.1.8 Labor Matters.................................................................. 8
3.1.9 Compliance with Other Instruments; Consents.................................... 8
3.1.10 Financial Statements; Undisclosed Liabilities.................................. 8
3.1.11 Taxes.......................................................................... 9
3.1.12 Litigation..................................................................... 9
3.1.13 Brokerage...................................................................... 9
3.1.14 Permits........................................................................ 9
3.2 Representations and Warranties of eVentures, Merger Sub and the Principal Stockholder... 9
3.2.1 Organization of eVentures and Merger Sub; Foreign Qualification................ 9
3.2.2 Capitalization; Ownership of Transferred Shares................................ 9
3.2.3 Subsidiaries................................................................... 10
3.2.4 Real Estate.................................................................... 10
3.2.5 Authority Relative to the Closing Documents; Enforceability.................... 10
3.2.6 Title to Assets................................................................ 11
3.2.7 Material Contracts............................................................. 11
3.2.8 Labor Matters.................................................................. 11
i
3
3.2.9 Compliance with Other Instruments; Consents.................................... 11
3.2.10 Financial Statements........................................................... 11
3.2.11 Litigation..................................................................... 12
3.2.12 Brokerage...................................................................... 12
3.2.13 Permits........................................................................ 12
3.2.14 SEC Documents.................................................................. 12
3.2.15 Absence of Certain Changes or Events........................................... 12
3.2.16 Taxes.......................................................................... 12
3.2.17 Compliance with Law and Government Regulations................................. 13
3.2.18 Trade Names and Rights......................................................... 13
3.2.19 No Disqualifying Orders........................................................ 13
3.2.20 Bank Accounts.................................................................. 13
3.2.21 HSR............................................................................ 13
3.2.22 Transactions with Affiliates................................................... 13
3.2.23 Stock Price Manipulation....................................................... 13
3.2.24 Nasdaq SmallCap Market Eligibility............................................. 13
3.2.25 Investment Company Act......................................................... 13
3.2.26 Integration.................................................................... 14
3.2.27 SEC Correspondence............................................................. 14
3.2.28 Full Disclosure................................................................ 14
3.3 Representations and Warranties of Infinity.............................................. 14
3.3.1 Organization of Infinity....................................................... 14
3.3.2 Authorization.................................................................. 14
3.3.3 Title to Assets................................................................ 14
3.3.4 Brokerage...................................................................... 14
3.4 Representations and Warranties of Contributing Persons (other than Infinity)............ 14
3.4.1 Authorization.................................................................. 14
3.4.2 Title to Assets................................................................ 14
3.4.3 Axistel Contributions.......................................................... 14
ARTICLE IV ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES...................................... 15
4.1 Filing with Securities and Exchange Commission.......................................... 15
4.2 Brokers or Finders...................................................................... 15
ARTICLE V CLOSING DELIVERIES...................................................................... 15
5.1 The Closing............................................................................. 15
5.2 Deliveries by eVentures and the Principal Stockholder................................... 15
5.2.1 Certified Resolutions.......................................................... 15
5.2.2 Charter Documents.............................................................. 15
5.2.3 Account Transfer Documents..................................................... 15
5.2.4 Registration Rights Agreement.................................................. 15
5.2.5 Transferred Shares............................................................. 15
5.2.6 Merger Shares.................................................................. 16
5.2.7 Additional Shares.............................................................. 16
5.2.8 Certificate of Merger.......................................................... 16
5.2.9 Resignations................................................................... 16
5.3 Deliveries by Purchasers................................................................ 16
5.3.1 Corporate Approvals............................................................ 16
5.3.2 Purchase Price................................................................. 16
5.3.3 Investment Letter.............................................................. 16
5.3.4 Stockholder Consent............................................................ 16
5.4 Deliveries by Contributing Persons...................................................... 16
5.4.1 Corporate Approvals............................................................ 16
5.4.2 Contributing Persons' Assets................................................... 16
5.4.3 Axistel Books and Records...................................................... 16
ii
4
5.4.4 [Reserved]..................................................................... 17
5.4.5 Axistel Options................................................................ 17
5.4.6 [Reserved]..................................................................... 17
5.4.7 Investment letter.............................................................. 17
5.4.8 Letter of Transmittal.......................................................... 17
5.4.9 Registration Rights Agreement.................................................. 17
5.4.10 Stockholder Consent............................................................ 17
5.5 Deliveries by IEOH...................................................................... 17
5.5.1 Necessary Corporate Approvals.................................................. 17
5.5.2 Redemption of IEOH Management Shares........................................... 17
5.5.3 Investment letter.............................................................. 17
5.5.4 Registration Rights Agreement.................................................. 17
5.5.5 Letter of Transmittal.......................................................... 17
5.5.6 Stockholder Consent............................................................ 17
5.5.7 Certificate of Merger.......................................................... 17
5.6 Other Deliveries........................................................................ 17
5.6.1 Stock Options.................................................................. 17
5.6.2 Employment Agreements.......................................................... 17
5.6.3 Repayment of Axistel Indebtedness.............................................. 17
5.7 Infinity Contribution................................................................... 18
ARTICLE VI SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION......................................... 18
6.1 Representations to Survive Closing...................................................... 18
6.2 Indemnification......................................................................... 18
6.3 Enforcement of Indemnification Rights................................................... 18
6.3.1 Notification................................................................... 18
6.3.2 Disputes....................................................................... 18
6.3.3 Time Limit..................................................................... 18
6.3.4 Litigation Procedure........................................................... 18
6.3.5 Waiver of Rights of Contribution or Similar Rights............................. 19
6.4 Remedies Cumulative..................................................................... 19
ARTICLE VII MISCELLANEOUS........................................................................... 19
7.1 Notices................................................................................. 19
7.2 Assignability and Parties in Interest................................................... 20
7.3 Expenses................................................................................ 20
7.4 Governing Law........................................................................... 20
7.5 Counterparts............................................................................ 20
7.6 Headings................................................................................ 20
7.7 Pronouns, Etc........................................................................... 20
7.8 Complete Agreement...................................................................... 20
7.9 Modifications, Amendments and Waivers................................................... 20
7.10 Severability............................................................................ 20
iii
5
APPENDICES
DESCRIPTION
Appendix A Letter of Transmittal
Appendix B Investment Letter
Appendix C Registration Rights Agreement
Appendix D 1999 Stock Option Plan
Appendix E Amended and Restated Bylaws of eVentures
Appendix F Stockholder Consent
SCHEDULES
DESCRIPTION
Schedule 1-A List of Purchasers; Purchase Price and Share Allocation
Schedule 1-B List of Contributing Persons; Contributed Assets and Share
Allocations
Schedule 2.3.5 Officers of Surviving Entity
Schedule 3.1.3 IEOH Investments
Schedule 3.1.7 IEOH Material Contracts
Schedule 3.1.10 IEOH Financial Statements
Schedule 3.2.14 eVentures SEC Documents
Schedule 3.2.18 eVentures Exceptions to Trade Names and Rights
Schedule 3.2.20 eVentures Bank Accounts
Schedule 3.2.22 eVentures Affiliate Agreements
Schedule 5.2.1 Directors of eVentures Upon Closing; Option Grants
Schedule 5.2.3 Authorized Signatories for eVenture's Bank Accounts
Schedule 5.3.2 Wire Transfer Instructions for Principal Stockholder
Schedule 5.4.2 Wire Transfer Instructions for Infinity Contribution
Schedule 5.4.5 Axistel Replacement Options
Schedule 5.6.2 Persons to Receive Employment Agreements Upon Closing
iv
6
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("AGREEMENT") has been made
and entered into as of this 22nd day of September, 1999, among eVENTURES GROUP,
INC., a Delaware corporation ("eVENTURES"), eVENTURES HOLDINGS, L.L.C., a
Delaware limited liability company and wholly-owned subsidiary of eVentures
("MERGER SUB"), IEO HOLDINGS LIMITED, a NeVis, West Indies corporation ("IEOH"),
INFINITY INVESTORS LIMITED, a NeVis, West Indies corporation ("INFINITY"), MICK
Y. WETTREICH, an individual resident of London, England (the "PRINCIPAL
Stockholder"), the persons listed on Schedule 1-A to this Agreement
(collectively, the "PURCHASERS"), and the persons listed on Schedule 1-B to this
Agreement (collectively, together with Infinity, are herein sometimes
collectively referred to as the "CONTRIBUTING PERSONS," whether one or more).
R E C I T A L S:
A. The parties hereto desire to effect a reorganization (the
"REORGANIZATION") pursuant to which the Purchasers will purchase from the
Principal Stockholder an aggregate of 8,500,000 shares (the "TRANSFERRED
SHARES") of the common stock of eVentures, par value $0.00002 per share (the
"eVENTURES STOCK"), to be purchased by each Purchaser in the amounts and for the
consideration set forth in Schedule 1-A attached hereto (the "STOCK SALE"), and
immediately thereafter each of the following transactions will occur
simultaneously: (i) IEOH will be merged with and into Merger Sub (the "MERGER"),
with Merger Sub continuing as the surviving entity under the laws of the State
of Delaware, and (ii) the Contributing Persons will sell or contribute certain
of his or its assets to eVentures (the "ASSET SALE") in exchange for the number
of shares of eVentures Stock to be issued by eVentures as set forth in Schedule
1-B attached hereto.
B. The respective Boards of Directors or Managers of eVentures, Merger
Sub and IEOH, and each Contributing Person and Purchaser that is a corporation
or limited liability company, have determined that it is in the best interests
of each entity and its respective stockholders or members that the
Reorganization be consummated in the manner and on the terms and conditions set
forth herein.
C. Pursuant to the Stock Sale, the Principal Stockholder will sell, and
the Purchasers will collectively purchase, the Transferred Shares.
D. Pursuant to the Asset Sale, the Contributing Persons will transfer
certain of their respective assets (including (a) cash and (b) securities in or
indebtedness of (i) e.Volve Technology Group, Inc., a NeVada corporation
formerly known as Orix Global Communications, Inc. ("e.VOLVE"), and (ii) Axistel
Communications, Inc., a Delaware corporation ("AXISTEL")), to eVentures in
exchange for shares of eVentures Stock.
E. Pursuant to the Merger, the outstanding shares of IEOH (the "IEOH
SHARES") will be converted into the right to receive shares of eVentures Stock,
as further provided herein.
F. The respective Boards of Directors or Managers of eVentures, Merger
Sub and IEOH desire to effectuate the Merger as a tax free reorganization for
United States federal income tax purposes.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
contained herein, the parties hereto agree as follows and do thereby adopt this
Agreement and Plan of Reorganization.
ARTICLE I.
DEFINITIONS
The terms defined in this Article (except as otherwise expressly
provided in this Agreement) for all purposes of this Agreement shall have the
respective meanings specified in this Article.
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 1
eVENTURES GROUP, INC.
7
"AFFILIATE" shall mean any entity controlling or controlled by another
person, under common control with another person, or controlled by any entity
which controls such person.
"AGREEMENT" shall mean this Agreement, and all the exhibits, schedules
and other documents attached to or referred to in the Agreement, and all
amendments and supplements, if any, to this Agreement.
"AXISTEL COMMON STOCK" shall mean the shares of common stock of
Axistel.
"CLOSING" shall mean the meeting of the parties at which the Closing
Documents shall be exchanged by the parties, except for those documents or other
items specifically required to be exchanged at a later time.
"CLOSING DATE" shall mean September 22, 1999, or such other date as
agreed in writing to by the parties on which the Closing occurs.
"CLOSING DOCUMENTS" shall mean the papers, instruments and documents
required to be executed and delivered at the Closing pursuant to this Agreement.
"CODE" shall mean the Internal Revenue of 1986, or any successor law,
and regulations issued by the Internal Revenue Service pursuant to the Internal
Revenue Code or any successor law.
"DEBENTURES" shall mean those certain debentures, as amended, renewed
and/or extended, which have been issued pursuant to that certain Securities
Purchase Agreement dated as of June 11, 1998, by and between Orix Global
Communications, Inc., a Nevada corporation (now known as e.Volve) and Infinity,
a 50% interest in which has been participated/assigned by Infinity to IEOH,
including the following (a) Amended and Restated $7,050,000 Debenture dated
April 15, 1999, and executed by Orix Global Communications, Inc., a Nevada
corporation (now known as e.Volve), in favor of Infinity, which represents a
consolidation of three separate debentures: (i) $6,000,000 Debenture dated June
11, 1998, executed by Orix Global Communications, Inc., a Nevada corporation
(now known as e.Volve), in favor of Infinity; (ii) $850,000 Debenture dated
August 19, 1998, executed by Orix Global Communications, a Nevada corporation
(now known as e.Volve), in favor of Infinity; and (iii) $200,000 Debenture dated
April 15, 1999, executed by Orix Global Communications, Inc., a Nevada
corporation (now known as e.Volve), (b) $390,000 Debenture dated February 9,
1999, and executed by Orix Global Communications, Inc., a Nevada corporation
(now known as e.Volve), in favor of Infinity, (c) $500,000 Debenture dated April
29, 1999, and executed by Orix Global Communications, Inc., a Nevada corporation
(now known as e.Volve), in favor of Infinity, and (d) $100,000 Debenture dated
April 30, 1999, and executed by Orix Global Communications, Inc., a Nevada
corporation (now known as e.Volve), in favor of Infinity.
"ENCUMBRANCE" shall mean any charge, claim, encumbrance, community
property interest, condition, equitable interest, lien, option, pledge, security
interest, right of first refusal, or restriction of any kind, including any
restriction on use, voting (in the case of any security), transfer, receipt of
income, or exercise of any other attribute of ownership other than (a) liens for
taxes not yet due and payable, or (b) liens that secure the ownership interests
of lessors of equipment.
"e.VOLVE COMMON STOCK" shall mean the shares of common stock of
e.Volve.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"GAAP" shall mean generally accepted accounting principles applied in a
manner consistent with prior periods.
"INVESTMENT LETTER" shall mean the investment letter in the form
attached hereto as Appendix B.
"LETTER OF TRANSMITTAL" shall mean a letter of transmittal in the form
attached hereto as Appendix A.
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 2
eVENTURES GROUP, INC.
8
"MATERIAL ADVERSE EFFECT" means any change (individually or in the
aggregate) in the general affairs, management, business, goodwill, results of
operations, condition (financial or otherwise), assets, liabilities or prospects
(whether or not the result thereof would be covered by insurance) that would be
material and adverse to the designated party.
"ORDINARY COURSE OF BUSINESS" shall mean actions consistent with the
past practices of the designated party which are similar in nature and style to
actions customarily taken by the designated party and which do not require, and
in the past have not received, specific authorization by the Board of Directors
of the designated party.
"PERMITS" shall mean any permit, license, exemption, order or approval
of any federal, state or local governmental entity necessary for the conduct of
the designated party's respective business as currently conducted.
"PROPOSED PLACEMENT" means eVentures' proposed private offering of up
to $1.5 million of preferred stock (convertible into shares of common stock of
eVentures at $5.00 per share) and of up to $1.5 million of common stock at an
offering price of $2.00 per share.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement in the form attached hereto as Appendix C.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"TAXES" shall include federal, state and local income taxes, capital
gains tax, value-added taxes, franchise, personal property and real property
taxes, levies, assessments, tariffs, duties (including any customs duty),
business license or other fees, sales, use and any other taxes relating to the
assets of the designated party or the business of the designated party for all
periods up to and including the Closing Date, together with any related charge
or amount, including interest, fines, penalties and additions to tax, if any,
arising out of tax assessments.
"TRANSACTIONS" shall mean the Reorganization contemplated by this
Agreement, together with each of the other transactions contemplated by the
Closing Documents, including, without limitation, the Merger, the Asset Sale and
the Stock Sale.
"WARRANTS" shall mean those Common Stock Purchase Warrants,
collectively, which are described as follows: (a) that certain Common Stock
Purchase Warrant No. 1 ("WARRANT NO. 1"), dated as of April 15, 1999, executed
by Orix Global Communications, Inc., now known as e.Volve Technology, Inc., a
Nevada corporation, in favor of Infinity Investors Limited, or its assigns, as
the holder thereunder granting such holder the right to acquire up to 170 fully
paid and nonassessable shares of e.Volve Common Stock upon the terms and
conditions therein specified, and (b) that certain Common Stock Purchase Warrant
No. 2 ("WARRANT NO. 2"), dated as of April 15, 1999, executed by Orix Global
Communications, Inc., now known as e.Volve Technology, Inc., a Nevada
corporation, in favor of IEO Holdings Limited, or its assigns, as the holder
thereunder, granting such holder the right to acquire up to 170 fully paid and
nonassessable shares of e.Volve Common Stock upon the terms and conditions
therein specified.
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 3
eVENTURES GROUP, INC.
9
Terms Defined in Other Sections. The following terms are defined
elsewhere in this Agreement in the following Sections:
Term Section
---- -------
Affiliate Agreements........................ 3.2.22
Asset Sale.................................. Recitals
Axistel..................................... Recitals
Contributing Persons........................ Introduction
Contributing Persons' Assets................ 2.2
DLLCA....................................... 2.3.1
Effective Date.............................. 2.3.1
eVentures................................... Introduction
eVentures Financial Statements.............. 3.2.10.1
eVentures SEC Documents..................... 3.2.14
eVentures Stock............................. Recitals
e.Volve..................................... Recitals
IEOH........................................ Introduction
IEOH Financial Statements................... 3.1.10
IEOH Investments............................ 3.1.3
IEOH Management Shares...................... 2.5.2
IEOH Participating Shares................... 2.5.1.1
IEOH Shares................................. Recitals
IEOH Stockholders........................... 2.5.4
Insolvency/Equity Exceptions................ 3.1.5
Merger...................................... Recitals
Merger Sub.................................. Introduction
Merger Sub Interests........................ 2.5.1.2
Nasdaq-SCM.................................. 3.2.24
Nevis Law................................... 2.4.1
1999 Stock Option Plan...................... 5.2.1
Principal Stockholder....................... Introduction
Purchase Price.............................. 2.1
Purchasers.................................. Recitals
Regulation D................................ 2.6.1
Reorganization.............................. Recitals
Stock Sale.................................. Recitals
Surviving Entity............................ 2.3.1
Transferred Shares.......................... Recitals
ARTICLE II.
THE TRANSACTIONS
2.1. STOCK SALE. Subject to the terms and conditions of the Closing
Documents, the Principal Stockholder hereby sells, transfers and delivers to the
Purchasers, and the Purchasers hereby collectively purchase and accept, the
number of Transferred Shares set forth beside such Purchasers' name on Schedule
1-A hereto, in consideration for an aggregate purchase price payable by the
Purchasers to the Principal Stockholder of TWO HUNDRED THOUSAND DOLLARS
($200,000) ("PURCHASE PRICE"), payable by each Purchaser in the respective
portion of the Purchase Price set forth beside such Purchaser's name on Schedule
1-A hereto.
2.2. ASSET SALE. Subject to the terms and conditions of the Closing
Documents and subject to and immediately following the consummation of the Stock
Sale, the Contributing Persons hereby sell, transfer and deliver to eVentures,
to the extent owned by such Contributing Person, and eVentures hereby purchases
and
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 4
eVENTURES GROUP, INC.
10
accepts, all of the assets described in Schedule 1-B (collectively, the
"CONTRIBUTING PERSONS' ASSETS"), in exchange for the number of shares of
eVentures Stock set forth in Schedule 1-B attached hereto.
2.3. THE MERGER AND THE SURVIVING ENTITY.
2.3.1. Merger. Upon the date on which the Merger is to be
effective, as determined pursuant to Section 2.4.2 hereof (the "EFFECTIVE
DATE"), (a) IEOH shall be merged with and into Merger Sub, (b) Merger Sub shall
be the Surviving Entity (the "SURVIVING ENTITY"), (c) the separate existence of
IEOH shall cease and all rights, privileges, powers, immunities and franchises
of IEOH shall be automatically vested in Merger Sub, and (d) the existence of
Merger Sub shall continue unaffected and unimpaired by the Merger, with all of
the rights, privileges, immunities and powers, and subject to all of the duties
and liabilities of a limited liability company organized under, the Delaware
Limited Liability Company Act (the "DLLCA"). All real and personal property of
IEOH, tangible and intangible, of every kind and description, shall become
vested in Merger Sub and all liabilities, claims and obligations of IEOH may be
enforced against Merger Sub, all without further action or deed by any party
hereto. In all other respects, the effect of the Merger shall be as set forth in
the DLLCA.
2.3.2. Certificate of Formation. The Certificate of Formation of
Merger Sub shall be and remain the Certificate of Formation of the Surviving
Entity following the Effective Date, until the same shall be altered or amended.
2.3.3. Operating Agreement. The Operating Agreement of Merger Sub
shall be the Regulations of the Surviving Entity following the Effective Date,
until the same shall be altered or amended.
2.3.4. Management of Surviving Entity. From and after the
Effective Date, the Surviving Entity shall be managed by its members, as
provided in the Operating Agreement of the Surviving Entity.
2.3.5. Officers. From and after the Effective Date, the officers
of the Surviving Entity shall consist of the persons listed on Schedule 2.3.5
holding the respective office(s) listed opposite such person's name, until their
respective successors shall be duly elected or appointed and qualified.
2.4. EFFECTIVENESS OF MERGER.
2.4.1. Articles of Merger. Promptly following the execution of
this Agreement by all parties hereto, IEOH and Merger Sub shall cause
appropriate Articles of Merger to be executed and filed with the Registrar of
Companies of the Island of Nevis as provided in Section 90(5) of the Nevis
Business Corporation Ordinance (the "NEVIS LAW") and with the Secretary of State
of the State of Delaware, as provided in Section 18-209 of the DLLCA.
2.4.2. Effective Date. The Merger shall become effective following
the consummation of the Stock Sale immediately upon the filing of the Articles
of Merger referred to in Section 2.4.1 hereof with the Registrar of Companies of
the Island of Nevis and with the Secretary of State of the State of Delaware.
2.5. EXCHANGE MECHANICS.
2.5.1. Exchange of Securities. On the Effective Date, by virtue of
the Merger and without any action on the part of any stockholder:
2.5.1.1. Each non-voting, redeemable, participating share
of IEOH (the "IEOH PARTICIPATING SHARES") outstanding immediately prior to the
Effective Date shall be converted into the right to receive 14,763.475 shares of
eVentures Stock, subject to upward adjustment in accordance with Section 2.5.5
below.
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 5
eVENTURES GROUP, INC.
11
2.5.1.2. The membership interests of Merger Sub ("MERGER
SUB INTERESTS") outstanding immediately prior to the Effective Date shall be
converted into one (1) duly issued, validly authorized, fully paid and
nonassessable membership interest of the Surviving Entity, so that thereafter
eVentures will be the sole and exclusive owner of all outstanding membership
interests or other securities of the Surviving Entity.
2.5.1.3. The Surviving Entity shall be the owner of all of
the business, rights, assets and other attributes of, or held by, either IEOH or
Merger Sub.
2.5.2. Redemption of Management Shares. Immediately before or
simultaneously with the Merger, such voting, non-redeemable, non-participating
shares of IEOH (the "IEOH MANAGEMENT SHARES") outstanding prior to the Effective
Date shall be redeemed by IEOH from the owners of such IEOH Management Shares
for an aggregate of $1.00, and as a result, there will be no IEOH Management
Shares outstanding at the time the Merger takes effect.
2.5.3. Records. For the purposes of this Agreement, the stock
transfer books of IEOH shall be closed as of the Effective Date, and no transfer
of record of any shares of IEOH Participating Shares or IEOH Management Shares
shall take place after the Effective Date.
2.5.4. Stock Certificates. On or immediately after the Effective
Date, each holder of IEOH Participating Shares (the "IEOH STOCKHOLDERS") shall
be entitled to receive a certificate or certificates representing the number of
whole shares of eVentures Stock into which their IEOH Participating Shares shall
have been converted and exchanged in the Merger. Upon the surrender by a holder
of record of certificates representing IEOH Participating Shares (the "IEOH
CERTIFICATES") for cancellation to eVentures, together with a duly executed
Letter of Transmittal, the holder of an IEOH Certificate shall be entitled to
receive and exchange therefor the number of shares of eVentures Stock determined
pursuant to Section 2.5.1.1 above. Until surrendered as contemplated by this
Section 2.5.4, each IEOH Certificate shall be deemed from and after the
Effective Date to represent only the right to receive upon surrender the
eVentures Stock issuable pursuant to the Merger contemplated by this Agreement.
Neither eVentures nor any party hereto shall be liable to the holder of IEOH
Participating Shares for any amount paid to a public official as required by any
applicable abandoned property, escheat or similar law. If any IEOH Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
the fact by the person claiming such IEOH Certificate to be lost, stolen or
destroyed, eVentures will issue and exchange for such lost, stolen or destroyed
IEOH Certificate the number of shares of eVentures Stock issuable pursuant to
the Merger contemplated by this Agreement, without the requirement that any bond
or other security be posted in connection with such affidavit of lost IEOH
Certificate.
2.5.5. Fractional Shares. No certificates or scrip representing
fractional shares of eVentures Stock shall be issued as a consequence of the
Merger and, in lieu thereof, each IEOH Stockholder otherwise entitled to a
fraction of a share of eVentures Stock shall have his, her or its stock
certificate representing eVentures Stock rounded up to the nearest whole share.
2.6. SECURITIES LAW MATTERS.
2.6.1. Private Offering. Each Purchaser, Contributing Person and
IEOH Stockholder understands that the eVentures Stock to be issued and delivered
to them pursuant to terms of this Agreement or the Merger will not be registered
under the Securities Act but will be issued in reliance upon the exemption
afforded by Section 4(2) of the Securities Act and/or Regulation D promulgated
by the SEC thereunder ("REGULATION D") or, with regard to sales by the Principal
Stockholder to each Purchaser, in reliance upon exemptions available for resales
by affiliates in private transactions, and that eVentures is relying upon the
truth and accuracy of the representations set forth in the Investment Letter
delivered concurrently with the execution of this Agreement. Each certificate of
eVentures Stock issued to each Purchaser, Contributing Person or IEOH
Stockholder pursuant to terms of this Agreement or the Merger shall bear the
following legend:
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 6
eVENTURES GROUP, INC.
12
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED
UNLESS THEY ARE SO REGISTERED OR, IN THE OPINION OF COUNSEL
ACCEPTABLE TO THIS CORPORATION, SUCH TRANSFER IS EXEMPT FROM
REGISTRATION. FURTHER, THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE SOLD UNDER RULE 144 PRIOR TO SEPTEMBER 21, 2001 OTHER
THAN IN COMPLIANCE WITH THE REGISTRATION RIGHTS AGREEMENT DATED
SEPTEMBER 22, 1999.
eVentures shall give instructions to its transfer agent consistent with
the foregoing legend.
2.6.2. Blue Sky Filings. eVentures shall promptly institute and
diligently prosecute such proceedings before, and make such filings with, such
state regulatory agencies as may be necessary or appropriate in connection with,
or preliminary to, the issuance of eVentures Stock to be issued to each
Purchaser, Contributing Person or IEOH Stockholder pursuant to the terms of this
Agreement or the Merger and any solicitation of such persons for their approval
of this Agreement and the transactions related hereto.
2.7. FURTHER ASSURANCES. If at any time after the Effective Date,
eVentures or the Surviving Entity shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Entity its right, title or interest in, to or under any of the rights,
properties or assets of IEOH acquired or to be acquired by the Surviving Entity
as a result of, or in connection with, the Merger or otherwise to carry out the
Transactions, the officers of the Surviving Entity shall be authorized to
execute and deliver, in the name and on behalf of IEOH or otherwise, all such
deeds, bills of sale, assignments and assurances and to take and do all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to or under such rights,
properties or assets in the Surviving Entity or otherwise to carry out the
purposes of this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATIONS AND WARRANTIES OF IEOH. IEOH represents and
warrants to eVentures as follows:
3.1.1. Organization of IEOH. IEOH is a business corporation, duly
organized, validly existing, and in good standing under the laws of the
Island of Nevis, West Indies, and has all requisite corporate power,
franchises and licenses to own its property and conduct the business in
which it is engaged.
3.1.2. Capitalization.
3.1.2.1. IEOH has an authorized capital stock consisting of
IEOH Participating Shares, of which one thousand (1,000) shares
are issued and outstanding, and IEOH Management Shares, of which
one (1) share is issued and outstanding. All of the IEOH
Participating Shares and the IEOH Management Share have been
validly issued, fully paid and are non-assessable.
3.1.2.2.IEOH does not have outstanding subscriptions,
options, rights, warrants, convertible securities or other
agreements or commitments to issue, or contracts or any other
agreements obligating IEOH to issue, or to transfer from treasury,
any shares of its capital stock of any class or kind, or
securities convertible into such stock.
3.1.3. Subsidiaries. IEOH does not directly or indirectly have any
wholly-owned subsidiaries. Schedule 3.1.3 sets forth a description of
each material equity investment IEOH holds as of the date of this
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 7
eVENTURES GROUP, INC.
13
Agreement in any corporation, partnership, joint venture or other
business entity (the "IEOH INVESTMENTS"). IEOH holds the IEOH
Investments free and clear of any Encumbrance.
3.1.4. Real Estate. IEOH does not own any real estate or any
interest in any real estate. IEOH does not lease any real estate from
or to any person.
3.1.5. Authority Relative to the Closing Documents;
Enforceability. IEOH has the requisite corporate power and authority to
execute and deliver the Closing Documents and, subject to the adoption
of the Agreement by the holders of the IEOH Management Shares, to
consummate the Transactions. The execution and delivery of the Closing
Documents by IEOH, and the consummation by IEOH of the Transactions,
have been duly authorized by the Board of Directors of IEOH and,
subject to the adoption of the Agreement by the holders of the IEOH
Management Shares, no other corporate action on the part of IEOH is
necessary to authorize the execution and delivery by IEOH of the
Closing Documents and the consummation by it of the Transactions. The
Closing Documents executed by IEOH are the legal, valid and binding
obligations of IEOH, enforceable against IEOH in accordance with their
respective terms, except insofar as its enforcement may be limited by
(a) bankruptcy, insolvency, moratorium or similar laws affecting the
enforcement of creditors, rights generally and (b) equitable principles
limiting the availability of equitable remedies (collectively, the
"INSOLVENCY/EQUITY EXCEPTIONS"). All persons who execute the Closing
Documents on behalf of IEOH will have been duly authorized to do so.
3.1.6. Title to Assets. IEOH has good and marketable title in and
to the IEOH Investments, which constitute all assets owned by IEOH as
of the date hereof, which assets and properties are free and clear of
any Encumbrance.
3.1.7. Material Contracts. Schedule 3.1.7 hereto identifies the
following contracts, leases and other obligations to which IEOH is a
party or by which it is bound and which are not identified elsewhere in
any other Schedule to this Agreement: (a) contracts with or loans to
any of IEOH's stockholders, officers or directors; (b) secured and
unsecured loans and lines of credit evidencing indebtedness owed by
IEOH; (c) contracts restricting IEOH from doing business in any areas
or in any way limiting competition; (d) contracts calling for aggregate
payments by IEOH in excess of $50,000 and which are not terminable
without cost or liability on notice of 60 days or less; and (e)
guarantees by IEOH of the obligations of any other party. Except as
disclosed on Schedule 3.1.7, IEOH has, in all material respects,
performed or complied with all material obligations required on its
part to be performed or complied with through the date hereof under any
of such contracts, obligations or commitments to which it is a party or
otherwise bound and no default has occurred thereunder, whether waived
or not waived, which could reasonably be expected to have a Material
Adverse Effect. All parties to such contracts, obligations or
commitments with IEOH are in substantial compliance therewith and no
event has occurred which, through the giving of notice or the passage
of time or both, would cause or constitute a material default under any
such contracts, obligations or commitments, or would cause the
acceleration of any obligation of any party thereto. Copies of the
contracts listed or referred to in Schedule 3.1.7 have been or will
promptly be delivered or made available to eVentures.
3.1.8. Labor Matters. There are presently no employment or
consulting contracts with or covenants against competition by, any
present or former employees of IEOH. IEOH does not have any employees.
3.1.9. Compliance with Other Instruments; Consents. Neither the
execution of any Closing Document, nor the consummation of the
Transactions, will conflict with, violate or result in a breach or
constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default), or result in the termination of,
or accelerate the performance required by, or result in the creation of
any Encumbrance upon any of the assets of IEOH under any provision of
any provision of the Articles of Incorporation, Bylaw, indenture,
mortgage, lien, lease, agreement, contract, instrument, order,
judgment,
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 8
eVENTURES GROUP, INC.
14
decree, statute, ordinance, regulation or any other restriction of any
kind or character to which IEOH is subject or by which IEOH is bound,
or require the consent of any third party or governmental agency.
3.1.10. Financial Statements; Undisclosed Liabilities. IEOH has
delivered to eVentures the financial statements of Axistel
Communications, Inc. and e.Volve Technology Group, Inc. (formerly known
as Orix Global Communications, Inc.) attached as Schedule 3.1.10 hereto
(the "IEOH FINANCIAL STATEMENTS"). IEOH has no assets or operations
other than the IEOH Investments. Except for IEOH's investment in
i2v2.com, Inc. of approximately $2.1 million (representing, at the time
of the investment, an approximate 21% interest in i2v2 on a "fully
diluted" basis at that time) for which no financial statements are
available, the IEOH Financial Statements fairly present, in all
material respects, the properties, assets and results of operations of
the entities in which IEOH holds the IEOH Investments as of the dates
and for the periods indicated. IEOH has not received notice of any
liabilities or claims of any nature, whether absolute, accrued,
unmatured, contingent or otherwise, other than as set forth on the IEOH
Financial Statements.
3.1.11. Taxes.
3.1.11.1. IEOH either (a) has timely filed with the
appropriate taxing authority all Tax and information returns
required to have been filed by IEOH or (b) has timely filed for
any required extensions with regard to such returns. All Taxes of
IEOH have been paid (or estimated Taxes have been deposited) to
the extent such payments are required prior to the date hereof or
accrued on the books of IEOH. The returns were correct when filed.
3.1.11.2. IEOH has not received any notice of any pending
investigations of IEOH concerning any Tax returns by any federal,
state or local taxing authority. There are no federal, state,
local or foreign Tax liens upon any of IEOH's assets.
3.1.12. Litigation. There are no legal, administrative,
arbitration or other proceedings or claims pending against IEOH nor is
IEOH subject to any existing judgment which might affect the financial
condition, business, property or prospects of IEOH; nor has IEOH
received any inquiry from an agency of the federal or of any state or
local government about the Transactions, or about any violation or
possible violation of any law, regulation or ordinance affecting its
business or assets.
3.1.13. Brokerage. No broker or finder has rendered services to
IEOH in connection with the Transactions.
3.1.14. Permits. IEOH does not have any Permits nor is it required
to maintain any Permits.
3.2. REPRESENTATIONS AND WARRANTIES OF eVENTURES, MERGER SUB AND THE
PRINCIPAL STOCKHOLDER. eVentures, Merger Sub and the Principal Stockholder
hereby jointly and severally represent and warrant to IEOH, the IEOH
Stockholders, the Contributing Persons and the Purchasers that:
3.2.1. Organization of eVentures and Merger Sub; Foreign
Qualification. Each of eVentures and Merger Sub is duly organized,
validly existing, and in good standing under the laws of the state of
Delaware and has all requisite corporate power, franchises, and
licenses to own its property and conduct the business in which it is
engaged. Each of eVentures, Merger Sub and the Principal Stockholder
have the full power and authority (corporate or otherwise) to execute,
deliver and perform their respective obligations under this Agreement
and the Closing Agreements to which it is a party. Complete copies of
eVenture's and Merger Sub's Certificate of Incorporation or Articles of
Organization, Bylaws or Regulations, minutes, transfer records and
agreements, if any, among some or all of the stockholders of eVentures
have been delivered or made available to IEOH, the Purchasers and the
Contributing Persons. eVentures is duly qualified and in good standing
as a foreign corporation in every jurisdiction in which
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 9
eVENTURES GROUP, INC.
15
such qualification is necessary, except to the extent the failure to be
so qualified is not reasonably expected to result in a Material Adverse
Effect.
3.2.2. Capitalization; Ownership of Transferred Shares.
3.2.2.1. eVentures has an authorized capital stock
consisting of 75,000,000 shares of common stock, par value
$0.00002 per share, of which 10,330,610 shares are issued and
outstanding and 5,000,000 shares of preferred stock, none of which
are issued or outstanding. All of the shares of eVentures Stock
have been validly issued, fully paid, are non-assessable, and were
issued in compliance with any preemptive or similar rights and in
compliance with applicable federal and state securities laws. All
of the authorized, issued and outstanding Merger Sub Interests are
owned and held by eVentures, and all of the issued and outstanding
Merger Sub Interests have been duly authorized and validly issued
and are fully paid and nonassessable, issued in compliance with
any preemptive or similar rights and in compliance with applicable
federal and state securities laws.
3.2.2.2.Other than the Proposed Placement, neither
eVentures nor Merger Sub has any outstanding subscriptions,
options, rights, warrants, convertible securities or other
agreements or commitments to issue, or contracts or any other
agreements obligating either eVentures or Merger Sub to issue, or
to transfer from treasury, any shares of its capital stock or
membership interests, as applicable, of any class or kind, or
securities convertible into such stock or interests. No persons
who are now holders of eVentures Stock or Merger Sub Interests,
and no persons who previously were holders of eVentures Stock or
Merger Sub Interests, are or ever were entitled to preemptive
rights other than persons who exercised or waived those rights.
3.2.2.3.Other than the Transactions, there is no
outstanding vote, plan, pending proposal or right of any person to
cause any redemption of eVentures Stock or the merger or
consolidation of Merger Sub with or into any other entity. Neither
eVentures, Merger Sub, nor any of their respective Affiliates is
under any obligation, contract or other arrangement to register
any of its or their securities under federal or state securities
laws.
3.2.2.4.There are no agreements, voting trusts, proxies or
other agreements or understanding of any character, whether
written or oral, among stockholders of eVentures with respect to
or concerning the purchase, sale or transfer or voting of the
eVentures Stock or any other security of eVentures.
3.2.2.5.Neither eVentures nor the Principal Stockholder has
any legal obligations, absolute or contingent, to any other person
or entity to sell the assets, or any capital stock or any other
security of eVentures or any of its subsidiaries or affect any
merger, consolidation or other reorganization of eVentures or any
of its subsidiaries or to enter into any agreement with respect
thereto, except pursuant to this Agreement, or any Related
Agreement or the Proposed Placement.
3.2.2.6.The Principal Stockholder is the sole beneficial
and record holder of the Transferred Shares. The Principal
Stockholder holds the Transferred Shares free and clear of any
Encumbrance of any kind whatsoever.
3.2.3. Subsidiaries. The only subsidiary of eVentures is Merger
Sub and such subsidiary does not hold any assets, conducts any
business, or, prior to the execution hereof, have any liabilities or
obligations whatsoever.
3.2.4. Real Estate. Neither eVentures nor Merger Sub owns any real
estate or any interest in any real estate.
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 10
eVENTURES GROUP, INC.
16
3.2.5. Authority Relative to the Closing Documents,
Enforceability.
3.2.5.1. eVentures and Merger Sub have the requisite
corporate power and authority to execute and deliver the Closing
Documents and to consummate the Transactions. The execution and
delivery of the Closing Documents by eVentures and Merger Sub, and
the consummation by eVentures and Merger Sub of the Transactions,
have been duly authorized by the Boards of Directors or Managers
of each and no other corporate or other action on the part of
eVentures or Merger Sub is necessary to authorize the execution
and delivery by eVentures and Merger Sub of the Closing Documents
and the consummation by them of the Transactions. The Closing
Documents executed by eVentures and Merger Sub are the legal,
valid and binding obligations of eVentures and Merger Sub, as the
case may be, enforceable against them in accordance with their
respective terms, except insofar as the enforcement thereof may be
limited by the Insolvency/Equity Exceptions. All persons who
execute the Closing Documents on behalf of either eVentures or
Merger Sub have been duly authorized to do so.
3.2.5.2.The Principal Stockholder is not suffering from any
legal disability which would (a) prevent him from executing,
delivering or performing his obligations under the Closing
Documents or consummating the Transactions, (b) make such
execution, delivery, performance or consummation voidable or
subject to necessary ratification, and (c) require the signature
or consent of any third party in connection therewith for the
Transactions to be binding and enforceable against the Principal
Stockholder and his property. The Closing Documents have been duly
and validly executed and delivered by the Principal Stockholder
and each constitutes the legal, valid and binding obligation of
the Principal Stockholder, enforceable against him in accordance
with their respective terms, except insofar as the enforcement
thereof may be limited by the Insolvency/Equity Exceptions.
3.2.6. Title to Assets. eVentures has good and marketable title in
and to all of the assets and properties reflected in the most recent
eVentures Financial Statements, plus all assets and properties
purchased or acquired by eVentures since the date of that eVentures
Financial Statement, less all assets and properties which eVentures has
disposed of in the Ordinary Course of Business, which assets and
properties are free and clear of any Encumbrance.
3.2.7. Material Contracts. eVentures is not a party to or bound by
any agreement or contract that should properly be disclosed and/or
included as an exhibit to any of the eVentures SEC Documents.
3.2.8. Labor Matters. There are presently no employment or
consulting contracts with, or covenants against competition by, any
present or former employees of eVentures or Merger Sub. Neither
eVentures nor Merger Sub has any employees.
3.2.9. Compliance with Other Instruments; Consents. Neither the
execution of any Closing Document nor the consummation of the
Transactions will conflict with, violate or result in a breach or
constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default), or result in a termination of, or
accelerate the performance required by, or result in the creation of
any Encumbrance upon any assets of eVentures or Merger Sub under any
provision of the Certificate of Incorporation or Organization, Bylaws,
Regulations, indenture, mortgage, lien, lease, agreement, contract,
instrument, order, judgment, decree, statute, ordinance, regulation or
any other restriction of any kind or character to which eVentures or
Merger Sub is bound.
3.2.10. Financial Statements.
3.2.10.1. eVenture's audited financial statements (the
"eVENTURES FINANCIAL Statements") for the years ended April 30,
1997, 1998 and 1999 and unaudited quarterly financial statements
for the three month period ended July 31, 1999, copies of which
have been delivered to
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 11
eVENTURES GROUP, INC.
17
IEOH, the IEOH Stockholders, the Purchasers and the Contributing
Persons, are true and complete in all material respects, and have
been prepared in accordance with GAAP for the period covered by
such statements, and fairly present, in accordance with GAAP, the
properties, assets and financial condition of eVentures, and
results of its operations as of the dates and for the periods
covered thereby. eVentures maintains a system of internal
accounting controls sufficient to provide reasonable assurance
that (a) transactions are executed with management's
authorizations, (b) transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP
and to maintain accountability for assets, (c) access to assets is
permitted only in accordance with management's authorizations and
(d) the recorded accountability for assets if compared with
existing assets at reasonable intervals and appropriate action is
taken with respect to any difference. eVentures has not engaged in
any transaction, maintained any bank account or used any corporate
funds except for transactions, bank accounts or funds which have
been and are reflected in the normally maintained books and
records. There has been no material adverse change in the business
operations, assets, properties, prospects or condition (financial
or otherwise) of eVentures, taken as a whole, from that reflected
in the eVentures Financial Statements.
3.2.10.2. As of the date hereof, eVentures does not have
any debts, liabilities or obligations of any nature, whether
accrued, absolute, unmatured, contingent, or otherwise, whether
due or to become due, that are not fully reflected in the
eVentures Financial Statements.
3.2.11. Litigation. There are no legal, administrative,
arbitration or other proceedings or claims pending against eVentures or
Merger Sub, nor is eVentures or Merger Sub subject to any existing
judgment which might affect the financial condition, business, property
or prospects of eVentures or Merger Sub; nor has eVentures received any
inquiry from an agency of the federal or of any state or local
government about the Transactions, or about any violation or possible
violation of any law, regulation or ordinance affecting its business or
assets.
3.2.12. Brokerage. No broker or finder has rendered services to
eVentures in connection with the Transactions.
3.2.13. Permits. eVentures does not have any Permits nor is it
required to maintain any Permits.
3.2.14. SEC Documents. eVentures has furnished or made available
to IEOH, the IEOH Stockholders, the Purchasers and the Contributing
Persons with a true and complete copy of each report, schedule,
registration statement and proxy statement filed by eVentures with the
SEC since January 1, 1987 (as such documents have since the time of
their filing been amended, the "eVENTURES SEC Documents"), a list of
which is attached as Schedule 3.2.14. eVentures has timely filed with
the SEC all documents required to have been filed pursuant to the
Securities Act and Section 15(d) of the Exchange Act. As of their
respective dates, the eVentures SEC Documents complied in all material
respects with the requirements of the Securities Act, or the Exchange
Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such eVentures SEC Documents, and none of the
eVentures SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of eVentures included in the eVentures SEC Documents comply
as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC
with respect thereto; are accurate, complete and in accordance with the
books and records of eVentures; have been prepared in accordance with
GAAP (except as may be indicated in the notes thereto or, in the case
of the unaudited statements, as permitted by Form 10-Q of the SEC) and
fairly present (subject, in the case of the unaudited statements, to
normal, recurring audit adjustments) the financial position of
eVentures as and at the dates thereof and the results of its operations
and cash flows for the periods then ended.
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 12
eVENTURES GROUP, INC.
18
3.2.15. Absence of Certain Changes or Events. Since the date of
the latest eVentures Financial Statements and except for the Proposed
Placement or as disclosed otherwise herein, eVentures has not (a)
issued or sold any promissory note, stock, bond, option or other
security of which it was an issuer or other obligor, (b) discharged or
satisfied any Encumbrance or paid any obligation or liability, whether
absolute or contingent, direct or indirect, (c) incurred or suffered to
be incurred any liability or obligation whatsoever, (d) caused or
permitted any Encumbrance to be created or arise on or in any of its
properties or assets, (e) declared or made any dividend, payment or
distribution to stockholders or purchased or redeemed or agreed to
purchase or redeem any shares of its capital stock, (f) reclassified
its shares of capital stock, (g) acquired any equity interest in any
other entity, or (h) entered into any agreement or transaction except
in connection with the execution and performance of this Agreement.
Neither eVentures nor Merger Sub has entered into any agreement to do
any of the foregoing action described in this Section 3.2.15.
3.2.16. Taxes.
3.2.16.1. eVentures and Merger Sub either (a) have timely
filed with the appropriate taxing authority all Tax and
information returns required to have been filed by either
eVentures or Merger Sub or (b) have timely filed for any required
extensions with regard to such returns. All Taxes of either
eVentures or Merger Sub have been paid (or estimated Taxes have
been deposited) to the extent such payments are required prior to
the date hereof or accrued on the books of eVentures. The returns
were correct when filed.
3.2.16.2. There are no pending investigations of either
eVentures or Merger Sub concerning any Tax returns by any federal,
state or local Taxing authority, and there are no federal, state,
local or foreign Tax liens upon any of eVenture's or Merger Sub's
assets.
3.2.17. Compliance with Law and Government Regulations. eVentures
and Merger Sub are in compliance with, and are not in violation of,
applicable federal, state, local or foreign statutes, laws and
regulations (including without limitation, any applicable
environmental, building, zoning or other law, ordinance or regulation)
affecting eVentures, Merger Sub or either of its properties or the
operation of its businesses. eVentures and Merger Sub are not subject
to any order, decree, judgment or other sanction of any court,
administrative agency or other tribunal.
3.2.18. Trade Names and Rights. eVentures does not use any trade
mark, service mark, trade name, or copyright in its business, nor does
it own any trade marks, trade mark registrations or applications, trade
names, service marks, copyrights, copyright registrations or
applications. Except as set forth on Schedule 3.2.18, no person owns
any trade mark, trade mark registration or application, service mark,
trade name, copyright or copyright registration or application, the use
of which is necessary or contemplated in connection with the operation
of eVenture's business.
3.2.19. No Disqualifying Orders. Neither eVentures, Merger Sub,
the Principal Stockholder nor any of their affiliates, directors,
officers or principals is subject to any disqualifying order under the
"Bad Boy" provisions of the federal or any state's securities law. As
used herein, "Bad Boy" provisions include Rule 262 of Regulation A,
Rule 507 of Regulation D and other similar disqualifying provisions of
federal and state securities laws.
3.2.20. Bank Accounts. eVentures and Merger Sub maintain only the
bank accounts listed on Schedule 3.2.20 hereto.
3.2.21. HSR. Immediately prior to the Closing, the "Person" (as
defined in the regulations issued by the Federal Trade Commission under
the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as amended)
within which eVentures is included will have total assets (as shown on
its last regularly prepared
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 13
eVENTURES GROUP, INC.
19
balance sheet) and annual net sales (as shown on its last regularly
prepared annual statement of income and expenses) of less than $10
million.
3.2.22. Transactions with Affiliates. Except as set forth on
Schedule 3.2.22 hereto, neither (a) any director or officer of
eVentures or Merger Sub, nor (b) the Principal Stockholder (or any
member of their immediate family) nor (c) any Affiliate of either of
the foregoing, in each such case either (i) is a party to any contract
or other business arrangement or relationship of any kind with
eVentures, or (ii) has an ownership interest in any business (corporate
or otherwise) that is a party to, or in any property that is the
subject of, business arrangements or relationships of any kind with
eVentures (such arrangements, relationships or agreements listed in
Schedule 3.2.22 being referred to as "AFFILIATE AGREEMENTS").
3.2.23. Stock Price Manipulation. Neither eVentures nor the
Principal Stockholder has taken (and none will take), directly or
indirectly, any action designed to or that would reasonably be expected
to cause or result in stabilization or manipulation of the price of the
eVentures Stock.
3.2.24. Nasdaq SmallCap Market Eligibility. eVentures currently
meets all eligibility requirements for listing on the Nasdaq Stock
Market's SmallCap Market ("NASDAQ-SCM") except for such provisions
requiring a minimum stockholder equity or minimum stock price for
continued trading on the Nasdaq-SCM. eVentures shall take all necessary
action to continue to maintain its eligibility for listing on the
Nasdaq-SCM.
3.2.25. Investment Company Act. eVentures is not, and upon
completion of the Transactions will not be, subject to registration as
an investment company under the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
3.2.26. Integration. eVentures has not offered, sold or issued any
shares of eVentures Stock during the six-month period preceding the
Closing Date.
3.2.27. SEC Correspondence. eVentures has not received any oral or
written communication from the SEC concerning eVentures or its status
as a "public-company."
3.2.28. Full Disclosure. None of the representations and
warranties made by eVentures, Merger Sub or the Principal Stockholder
herein, or in any Closing Document furnished or to be furnished by them
hereunder contains or will contain any untrue statement of material
fact, or omits any material fact, the omission of which would be
misleading.
3.3. REPRESENTATIONS AND WARRANTIES OF INFINITY. Infinity hereby
represents and warrants to eVentures that:
3.3.1. Organization of Infinity. Infinity is a business
corporation under the laws of the Island of Nevis, West Indies which
was statutorily dissolved on June 14, 1999, and is currently in a phase
of winding-up its affairs under applicable provisions of Nevis Law.
3.3.2. Authorization. Pursuant to that Plan of Liquidation
approved by the Board of Directors of Infinity, Infinity has the
requisite corporate power and authority to execute and deliver the
Closing Documents and to consummate the Transactions. The Closing
Documents executed by Infinity are the legal, valid and binding
obligations of Infinity, enforceable against Infinity in accordance
with their respective terms, except insofar as its enforcement may be
limited by the Insolvency/Equity Exceptions. All persons who execute
the Closing Documents on behalf of Infinity have been duly authorized
to do so.
3.3.3. Title to Assets. Infinity has good and marketable title in
and to the Contributing Persons' Assets owned by Infinity free and
clear of any Encumbrance.
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 14
eVENTURES GROUP, INC.
20
3.3.4. Brokerage. No broker or finder has rendered services to
Infinity in connection with the Transactions.
3.4. REPRESENTATIONS AND WARRANTIES OF CONTRIBUTING PERSONS (OTHER THAN
INFINITY). Each Contributing Persons (other than Infinity), on his or its own
behalf but not on behalf of the other Contributing Persons, hereby represent and
warrant to eVentures that:
3.4.1. Authorization. Each of the Contributing Persons has the
requisite power and authority to execute and deliver the Closing
Documents and to consummate the transactions. The Closing Documents
executed by each of the Contributing Persons are the legal, valid and
binding obligations of each of the respective Contributing Persons,
enforceable against each of the respective Contributing Persons in
accordance with their respective terms, except insofar as its
enforcement may be limited by the Insolvency/Equity Exceptions.
3.4.2. Title to Assets. Each Contributing Persons has good and
marketable title in and to the Contributing Person's Assets owned by
each respective Contributing Person, free and clear of any Encumbrance.
3.4.3. Axistel Contributions. For each Contributing Person that is
a shareholder of Axistel, the Contributed Assets include all equity
interests in, or options or other rights to acquire equity interests
in, Axistel held by such Contributing Person, other than any options
that are being exchanged for options to acquire shares of common stock
of eVentures as provided in Section 5.4.5.
ARTICLE IV.
ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES
4.1. FILING WITH SECURITIES AND EXCHANGE COMMISSION. The parties
recognize that eVentures may report the Transactions to the SEC on Form 8-K, and
agree to cooperate in the preparation and filing of such report or any other
filings to be filed with the SEC.
4.2. BROKERS OR FINDERS. Each party agrees to hold the others harmless
and to indemnify them against the claims of any persons or entities claiming to
be entitled to any brokerage commission, finder's fee, advisory fee or like
payment from such other party based upon actions of the indemnifying party in
connection with the Transactions.
ARTICLE V.
CLOSING DELIVERIES
5.1. THE CLOSING. The Closing shall take place upon the execution of
this Agreement by all parties and the delivery of the items to be delivered at
Closing by each party hereto (unless such delivery has been waived by the
party(ies) to have received such closing item), at the offices of Arter & Hadden
LLP, 1717 Main Street, Suite 4100, Dallas, Texas 75201.
5.2. DELIVERIES BY eVENTURES AND THE PRINCIPAL STOCKHOLDER. eVentures,
Merger Sub and the Principal Stockholder hereby deliver to IEOH, the Purchasers
and each of the Contributing Persons, as applicable, the following items:
5.2.1. Certified Resolutions. To IEOH, each Purchaser and each
Contributing Person, copies of the resolutions, certified by the Secretary or an
Assistant Secretary of eVentures and Merger Sub, as applicable, dated on or
before the date hereof (a) of the Board of Directors or Managers of eVentures or
Merger Sub, as applicable, (i) authorizing the execution of this Agreement and
the consummation of the transactions and other acts contemplated by this
Agreement, (ii) adopting the Amended and Restated Bylaws of eVentures in the
form attached as Appendix E, (iii) duly electing the persons set forth on
Schedule 5.2.1 to serve as directors of eVentures upon the
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 15
eVENTURES GROUP, INC.
21
Closing, (iv) adopting the 1999 Stock Option Plan of eVentures in the form
attached hereto as Appendix D (the "1999 OPTION PLAN"), (v) authorizing the
option grants under the 1999 Option Plan to the persons listed on Schedule 5.2.1
upon the Closing; and (vi) authorizing, recommending and approving the Merger,
and (b) of the Principal Stockholder of eVentures and members of Merger Sub, as
applicable, (i) authorizing the Merger and (ii) adopting and approving the 1999
Option Plan.
5.2.2. Charter Documents. To IEOH, each Purchaser and each
Contributing Person, copies of (a) the Certificate of Incorporation of eVentures
(as amended to authorize the issuance of "blank check" preferred shares) and
Certificate of Formation of Merger Sub, each certified by the Secretary of State
of Delaware, (b) the Amended and Restated Bylaws of eVentures in the form
attached as Appendix E and as adopted by the Board of Directors of eVentures,
and the regulations or operating agreement of Merger Sub, each certified by the
Secretary or an Assistant Secretary of eVentures or Merger Sub, as applicable,
and (c) good standing certificates and certificates of existence from the
Secretary of State of Delaware, evidencing that eVentures and Merger Sub are in
existence and in good standing under the laws of the State of Delaware.
5.2.3. Account Transfer Documents. To Purchasers, all such
instruments as may be necessary to authorize persons identified on Schedule
5.2.3 to become a signatory on the eVentures' bank account listed on Schedule
3.2.20.
5.2.4. Registration Rights Agreement. To each IEOH Stockholder,
Purchaser and Contributing Person, the Registration Rights Agreement in the form
attached as Exhibit C, executed by eVentures.
5.2.5. Transferred Shares. To each Purchaser, certificates
representing the Transferred Shares, with stock powers duly endorsed in blank,
representing the Transferred Shares that each Purchaser is entitled to receive
as set forth on Schedule 1-A.
5.2.6. Merger Shares. Upon the delivery to eVentures of a duly
executed Letter of Transmittal by an IEOH Stockholder (which Letter of
Transmittal may be presented at Closing), together with the IEOH Certificates,
certificates representing the number of shares of eVentures Stock such IEOH
Stockholder is entitled to receive pursuant to Section 2.5.1.1.
5.2.7. Additional Shares. To each Contributing Person, the number
of shares of eVentures Stock to be issued to such Contributing Person as set
forth in Schedule 1-B, upon the delivery of the consideration to be provided by
such Contributing Person set forth in Schedule 1-B.
5.2.8. Certificate of Merger. The certificate or articles of
Merger to be filed with the Registrar of Companies of the Island of Nevis, and
the Secretary of State of Delaware, executed by Merger Sub.
5.2.9. Resignations. A copy of the resignation of the existing
director and officers of eVentures.
5.3. DELIVERIES BY PURCHASERS. Each Purchaser hereby delivers to the
Principal Stockholder and eVentures, as applicable, the following items:
5.3.1. Corporate Approvals. To the Principal Stockholders, copies
of the resolutions of the Board of Directors of each Purchaser that is a
corporation, dated on or before the date hereof, authorizing the execution,
delivery and performance of this Agreement, the terms of the Stock Purchase and
the transactions contemplated in connection therewith, in each case certified by
the Secretary or an Assistant Secretary of each such Purchaser.
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 16
eVENTURES GROUP, INC.
22
5.3.2. Purchase Price. To the Principal Stockholder, each
Purchaser's pro rata portion of the Purchase Price, by wire transfer to the
account set forth on Schedule 5.3.2, or by check payable to the order of the
Principal Stockholder.
5.3.3. Investment Letter. To eVentures and the Principal
Stockholder, an Investment Letter, executed by each Purchaser.
5.3.4. Stockholder Consent. To eVentures, a stockholder consent in
the form attached as Appendix F, evidencing such Purchaser's approval,
authorization and ratification of the 1999 Stock Option Plan.
5.4. DELIVERIES BY CONTRIBUTING PERSONS. Each Contributing Person
hereby delivers to eVentures the following items:
5.4.1. Corporate Approvals. Copies of the resolutions of the Board
of Directors of each Purchaser that is a corporation, dated on or before the
date hereof, authorizing the execution, delivery and performance of this
Agreement, the terms of Asset Purchase and the transactions contemplated in
connection therewith, in each case certified by the Secretary or an Assistant
Secretary of each such Contributing Person.
5.4.2. Contributing Persons' Assets. The Contributing Persons'
Assets to be contributed by each Contributing Person as set forth on Schedule
1-B attached hereto. To the extent that any Contributing Persons' assets consist
of cash, such amounts shall be payable to eVentures by wire transfer to the
account set forth in Schedule 5.4.2. To the extent that any Contributing
Persons' Assets consist of shares of stock or other securities, the certificate
evidencing such security shall be delivered to eVentures, together with stock
powers, duly endorsed, to eVentures. To the extent that the Contributing
Person's assets consist of notes or similar instruments, the original such
instruments shall be delivered to eVentures, together with an endorsement
thereon or an allonge thereto endorsing such instrument to the order of
eVentures.
5.4.3. Axistel Books and Records. The Contributing Persons who are
shareholders of Axistel shall cause the books and records of Axistel to be
delivered to eVentures.
5.4.4. [RESERVED]
5.4.5. Axistel Options. The Contributing Persons who are
shareholders of Axistel hereby agree that all option plans and convertible
securities of Axistel that remain unexercised as of the date of this Agreement
are hereby exchanged by the Contributing Persons set forth on Schedule 5.4.5 for
options, to purchase the number of shares of eVentures at the price and subject
to the vesting schedule set forth in Schedule 5.4.5.
5.4.6. [RESERVED]
5.4.7. Investment Letter. An Investment Letter, executed by each
Contributing Person.
5.4.8. Letter of Transmittal. For each Contributing Person that is
contributing securities to eVentures, a Letter of Transmittal, executed by each
Contributing Person.
5.4.9. Registration Rights Agreement. A Registration Rights
Agreement, executed by each Contributing Person.
5.4.10. Stockholder Consent. A written consent in the form
attached as Appendix F evidencing such Contributing Person's approval,
authorization and ratification of the 1999 Stock Option Plan.
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 17
eVENTURES GROUP, INC.
23
5.5. DELIVERIES BY IEOH. IEOH hereby delivers to eVentures the
following items:
5.5.1. Necessary Corporate Approvals. Copies of the resolutions of
the Board of Directors of IEOH, dated on or before the date hereof, authorizing
the execution, delivery and performance of this Agreement by IEOH and
recommending; adopting and approving the Merger as fair to and in the best
interests of an IEOH Stockholder, certified by the Secretary or an Assistant
Secretary of IEOH.
5.5.2. Redemption of IEOH Management Share. Evidence reasonably
satisfactory to eVentures that the IEOH Management Share has been redeemed.
5.5.3. Investment letter. The Investment letter, executed by each
IEOH Stockholder.
5.5.4. Registration Rights Agreement. The Registration Rights
Agreement, executed by each IEOH Stockholder.
5.5.5. Letter of Transmittal. The Letter of Transmittal, executed
by each IEOH Stockholder.
5.5.6. Stockholder Consent. A written consent in the form attached
as Appendix F evidencing each IEOH Stockholder's approval, authorization and
ratification of 1999 Stock Option Plan.
5.5.7. Certificate of Merger. The certificate or articles of
merger to be filed with the registrar of Companies of the Island of Nevis and
the Secretary of State of Delaware, executed by IEOH.
5.6. OTHER DELIVERIES. In connection with the Transactions, eVentures
shall deliver the following items to the following persons:
5.6.1. Stock Options. To the persons listed on Schedule 5.2.1,
Option Agreements evidencing the grant of the options set forth in Schedule
5.2.1.
5.6.2. Employment Agreements. To each of the persons listed on
Schedule 5.6.2, Employment Agreements in a form reasonably satisfactory to each
such person, eVentures and Infinity.
5.6.3. Repayment of Axistel Indebtedness. If upon the Closing
eVentures has received $3.0 million or more in cash contributions for the
purchase of equity securities of eVentures, eVentures shall cause Axistel to
repay the $750,000 loan to Axistel from Infinity Emerging Holdings Subsidiary
Limited.
5.7. INFINITY CONTRIBUTION. On or before 5:00 p.m. on September 28,
1999, Infinity shall contribute to eVentures an amount of cash equal to no less
than (a) $2 million, minus (b) the amount of cash contributed to eVentures prior
to such time, and shall receive in exchange for such contribution shares of
eVentures Common Stock at $2.00 per share.
ARTICLE VI.
SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION
6.1. REPRESENTATIONS TO SURVIVE CLOSING. The representations and
warranties of eVentures, Merger Sub, the Principal Stockholder, each Purchaser
and each Contributing Person contained herein or in any document furnished
pursuant hereto shall survive the Closing of the Transaction. Each party
acknowledges and agrees that, except as expressly set forth in this Agreement or
any Closing Document, no party has made (and no party is relying on) any
representation or warranties of any nature, express or implied, regarding any or
relating to any of the transactions contemplated by this Agreement.
6.2. INDEMNIFICATION. The Principal Stockholder and eVentures,
jointly and severally, agree to and do hereby indemnify, and agree to defend and
hold the Purchasers, the Contributing Persons, the IEOH Stockholders
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 18
eVENTURES GROUP, INC.
24
and their respective directors, officers, employees, fiduciaries, agents and
affiliates, and each other person, if any, who controls such persons, harmless
against any claims, actions, suits, proceedings, investigations, losses,
expenses, damages, obligations, liabilities, judgments, fines, fees, costs and
expenses (including costs and reasonable attorneys' fees) and amounts paid in
settlement of any pending, threatened or completed claim, action, suit,
proceeding or investigation (collectively "LOSS" or "LOSSES") which arise or
result from or are related to (i) any breach or failure of eVentures, Merger Sub
or the Principal Stockholder to perform any of their covenants or agreements set
forth herein or in the Closing Documents or (ii) the inaccuracy of any
representation or warranty made by the Principal Stockholder, eVentures or
Merger Sub contained herein or in the Closing Documents.
6.3. ENFORCEMENT OF INDEMNIFICATION RIGHTS.
6.3.1. Notification. Any person or entity seeking enforcement of
indemnification rights hereunder shall notify each potentially liable
person or entity of (a) any payment made in respect of any liability,
obligation or claim to which the foregoing indemnity applies, (b) any
Loss which such person or entity may sustain or incur, to which the
foregoing indemnity relates, and (c) any claim made or suit filed
against such person or entity or this Agreement. Such notification
shall include a specific demand for indemnification and defense if such
person or entity wishes to assert his or its indemnification rights
hereunder.
6.3.2. Disputes. If there is any dispute as to the right to
indemnification and defense hereunder, the disputing party shall give
the other party written notice of such dispute, specifying in detail
the basis of the dispute, not later than 20 days after receipt of
demand for indemnification.
6.3.3. Time Limit. If there is no dispute as to the right to
indemnification with respect to any such demand within such 20 day
period, or upon resolution of any such dispute by the parties or by a
court, the person or entity entitled to indemnification shall be
promptly paid the amount of such demand, the amount agreed to by the
parties or the amount ordered by a court.
6.3.4. Litigation Procedure. If a party entitled to be indemnified
pursuant to this Article VI notifies the other party of the
commencement of an action against it, the party obligated to provide
indemnification will be entitled, at his or its own expense, to (a)
participate in, and (b) except in the case of a claim that relates to a
tax liability, assume the defense of the action. If the indemnifying
party wishes to assume the defense of that action, counsel selected by
the indemnifying party shall be reasonably satisfactory to the
indemnified party, and the indemnified party shall cooperate in all
reasonable respects, at its cost and expense, with the indemnifying
party and such counsel in the investigation and defense of such action
and any appeal arising therefrom. After the indemnifying party shall
notify the indemnified party of its election to assume the defense of
any such action, the indemnifying party will not be liable to the
indemnified party under this Article VI for any legal fees or other
expense subsequently incurred by the indemnified party in connection
with the defense thereof. Even if the indemnifying party should assume
the defense of any such actions, the indemnified party shall have the
right at its expense to participate in the defense thereof. If the
indemnifying party assumes the defense of any such actions, it shall
not settle or otherwise compromise any such action without the prior
written consent of the indemnified party. If the indemnifying party
should fail or refuse to assume the defense of any such action, the
indemnifying party shall jointly and severally reimburse the
indemnified party for the fees and expenses of counsel engaged by it to
defend that action.
6.3.5. Waiver of Rights of Contribution or Similar Rights. The
Principal Stockholder hereby waives any rights of contribution or
similar rights against eVentures arising from claims made against the
Principal Stockholder arising hereunder, notwithstanding that any such
liability or obligation is to be "joint and several" hereunder.
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 19
eVENTURES GROUP, INC.
25
6.4. REMEDIES CUMULATIVE. Persons or entities entitled to
indemnification hereunder shall be entitled to such indemnification from time to
time and shall be entitled to rely upon one or more provisions of this Agreement
without waiving its right to rely upon any other provisions at the same time or
any other time.
ARTICLE VII.
MISCELLANEOUS
7.1. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed delivered if delivered by
hand, by telecopier, by courier or mailed by certified or registered mail,
postage prepaid, addressed as follows:
IF TO eVENTURES OR THE PRINCIPAL STOCKHOLDER:
eVentures Group, Inc.
Attn: Danny Wettreich
6959 Arapaho, Suite 122
Dallas, Texas 75248
Tel: (972) 386-8907
Fax No.: (972) 239-8581
IF TO IEOH OR INFINITY:
c/o Loughran & Co.
Attn: J. A. Loughran
38 Hertford Street
London WIY 7IG
ENGLAND
Tel.: 0171-355-2051
Fax No.: 0171-355-4975
with copy to:
Arter & Hadden L.L.P.
Attn: Victor B. Zanetti, Esq.
1717 Main Street, Suite 4100
Dallas, Texas 75201
Fax No.: 214.741.7139
IF TO THE PURCHASERS:
To the address set forth below each Purchaser's name on
Schedule 1-A hereto.
IF TO THE CONTRIBUTING PERSONS (OTHER THAN INFINITY):
To the address set forth below each Contributing Person's name
on Schedule 1-B hereto.
7.2. ASSIGNABILITY AND PARTIES IN INTEREST. This Agreement shall not be
assignable by any of the parties hereto without the consent of all other parties
hereto. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors. Nothing in this Agreement is
intended to confer, expressly or by implication, upon any other person any
rights or remedies under or by reason of this Agreement.
7.3. EXPENSES. Each party shall, except as otherwise specifically
provided, bear its own expenses and costs, including the fees of any attorney
retained by it, incurred in connection with the preparation of the Closing
Documents and consummation of the Transactions.
7.4. GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Texas. Each of the
parties hereto consents to the personal jurisdiction of
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 20
eVENTURES GROUP, INC.
26
the federal and state courts in the State of Texas in connection with any action
arising under or brought with respect to this Agreement.
7.5. COUNTERPARTS. This Agreement may be executed as of the same
effective date in one or more counterparts, each of which shall be deemed an
original.
7.6. HEADINGS. The headings and subheadings contained in this Agreement
are included solely for ease of reference, and are not intended to give a full
description of the contents of any particular Section and shall not be given any
weight whatever in interpreting any provision of this Agreement.
7.7. PRONOUNS, ETC. Use of male, female and neuter pronouns in the
singular or plural shall be understood to include each of the other pronouns as
the context requires. The word "and" includes the word "or". The word "or" is
disjunctive but not necessarily exclusive.
7.8. COMPLETE AGREEMENT. This Agreement, the Appendices hereto, and the
documents delivered pursuant hereto or referred to herein or therein contain the
entire agreement between the parties with respect to the Transaction and, except
as provided herein, supersede all previous negotiations, commitments and
writings.
7.9. MODIFICATIONS, AMENDMENTS AND WAIVERS. This Agreement shall not be
modified or amended except by a writing signed by each of the parties hereto.
Prior to the Closing, either eVentures or the IEOH may amend any of the
disclosure schedules referenced herein by giving the other party notice of such
amendments. If such amended disclosures reveal material adverse information
about the party making the change, the recipient of the information may
terminate this Agreement without liability to the other party.
7.10. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or legal substance of
the Transactions is not affected in any manner adverse to any party hereto. Upon
any such determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the parties hereto will negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in any acceptable manner to the end that the Transactions
are consummated to the extent possible.
[SIGNATURE PAGES FOLLOWS]
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 21
eVENTURES GROUP, INC.
27
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
eVENTURES:
eVENTURES GROUP, INC.
By: /s/ DANNY WETTREICH
------------------------------------
Name: Danny Wettreich
----------------------------------
Title: President
---------------------------------
MERGER SUB:
eVENTURES HOLDINGS, L.L.C.
By: /s/ DANNY WETTREICH
------------------------------------
Name: Danny Wettreich
----------------------------------
Title:
---------------------------------
IEOH:
IEO HOLDINGS LIMITED
By: /s/ JOHN A. BROOKS
------------------------------------
Name: John A. Brooks
----------------------------------
Title: President
---------------------------------
INFINITY:
INFINITY INVESTORS LIMITED
By: /s/ JOHN A. LOUGHRAN
------------------------------------
Name: John A. Loughran
----------------------------------
Title: Director
---------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 22
eVENTURES GROUP, INC.
28
Continued from page 22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRINCIPAL STOCKHOLDER:
/s/ MICK Y. WETTREICH
----------------------------------------
MICK Y. WETTREICH, individually
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 23
eVENTURES GROUP, INC.
29
SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION BY AND AMONG
EVENTURES GROUP, INC., EVENTURES HOLDINGS, L.L.C., IEO HOLDINGS LIMITED,
INFINITY INVESTORS LIMITED, MICK Y. WETTREICH, THE PURCHASERS LISTED ON SCHEDULE
1-A, AND THE CONTRIBUTING PERSONS LISTED ON SCHEDULE 1-B HERETO
PURCHASERS:
INFINITY INVESTORS LIMITED
By: /s/ JAMES A. LOUGHRAN
------------------------------------
Name: James A. Loughran
----------------------------------
Title: Director
---------------------------------
INFINITY EMERGING SUBSIDIARY LIMITED
By: /s/ PIERCE LOUGHRAN
------------------------------------
Name: Pierce Loughran for Dungate
Limited
----------------------------------
Title: Director
---------------------------------
IEO INVESTMENTS LIMITED
By: /s/ PIERCE LOUGHRAN
NAME: Pierce Loughran for Dungate Ltd.
TITLE: Director
By: /s/ STUART J. CHASANOFF
------------------------------------
Name: Stuart J. Chasanoff
----------------------------------
By: /s/ STEVEN R. LOGLISCI
------------------------------------
Name: Steven R. Loglisci
----------------------------------
By: /s/ TREVOR L. HUFFARD
------------------------------------
Name: Trevor L. Huffard
----------------------------------
CONTRIBUTING PERSONS:
INFINITY INVESTORS LIMITED
By: /s/ JAMES A. LOUGHRAN
------------------------------------
Name: James A. Loughran
----------------------------------
Title: Director
---------------------------------
By: /s/ MITCHELL C. ARTHUR
------------------------------------
Name: Mitchell C. Arthur
----------------------------------
By: /s/ WILLIAM S. CARROLL
------------------------------------
Name: William S. Carroll
----------------------------------
By: /s/ MICHAEL S. FISCUS
------------------------------------
Name: Michael S. Fiscus
----------------------------------
By: /s/ ANNETTE DICKSON
------------------------------------
Name: Annette Dickson
----------------------------------
By: /s/ SAMUEL LITWIN
------------------------------------
Name: Samuel Litwin
----------------------------------
By: /s/ CHARLES S. MURDOCK IV
------------------------------------
Name: Charles S. Murdock IV
----------------------------------
By: /s/ TOM BAINBRIDGE
------------------------------------
Name: Tom Bainbridge
----------------------------------
By: /s/ KEITH OSER
------------------------------------
Name: Keith Oser
----------------------------------
By: /s/ KEVIN J. LIDDY
------------------------------------
Name: Kevin J. Liddy
----------------------------------
By: /s/ JOHN S. ROBLING, JR.
------------------------------------
Name: John S. Robling, Jr.
----------------------------------
By: /s/ DANIEL E. STRYKER, JR.
------------------------------------
Name: Daniel E. Stryker, Jr.
----------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 24
eVENTURES GROUP, INC.
30
SCHEDULE 1-A
LIST OF PURCHASERS, PURCHASE PRICE AND SHARE ALLOCATION
NUMBER OF SHARES OF COMMON
STOCK, $0.00002 PAR VALUE, IN
NAME OF PURCHASER eVENTURES GROUP, INC., PURCHASED
(ADDRESS) FROM MICK Y. WETTREICH
1. Stuart Chasanoff 45,000 shares
6528 Mimosa Lane
Dallas, Texas 75230
2. Steve Loglisci 150,000 shares
eVolve Technology
2920 N. Green Valley Parkway
Building 3 Suite 321
Henderson, NV 89014
3. Trevor Huffard 50,000 shares
17 West 71st Street, Apt. 1B
New York, NY 10023
4. IEOH Shareholders:
IEO Investments Limited 3,422,552 shares
("IEOIL")
Infinity Emerging Subsidiary 2,515,255 shares
Limited ("IESL")
c/o Loughran & Co.
38 Hertford Street
London W1Y 7TG
ENGLAND
---------
Total 5,937,807 shares
5. Infinity Investors Limited 2,317,193 shares
c/o Loughran & Co.
38 Hertford Street
London W1Y 7TG
ENGLAND
---------
TOTAL 8,500,000 shares
=========
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
eVENTURES GROUP, INC.
31
SCHEDULE 1-B
LIST OF CONTRIBUTING PERSONS, CONTRIBUTED ASSETS AND SHARE ALLOCATIONS
NUMBER OF SHARES OF COMMON STOCK,
PAR VALUE $0.00002 IN eVENTURES
ASSETS CONTRIBUTED TO eVENTURES GROUP, GROUP, INC., RECEIVED BY
NAMES OF CONTRIBUTING PERSONS INC., IN ASSET SALE CONTRIBUTING PERSON
----------------------------- -------------------------------------- ----------------------------------
1. Infinity Investors Limited a. 1,200 shares of stock in e.Volve;
c/o Loughran & Co. b. Warrant No. 1; and
38 Hertford Street c. 50% interest in the Debentures. 5,682,807 shares
London W1Y 7TG
ENGLAND
2. Samuel L. Litwin 500 shares of stock in Axistel 2,000,000 shares
Axistel Communications, Inc.
One Evertrust Plaza, 8th Floor
Jersey City, NJ 07302
3. Mitchell C. Arthur 500 shares of stock in Axistel 2,000,000 shares
Axistel Communications, Inc.
One Evertrust Plaza, 8th Floor
Jersey City, NJ 07302
4. Michael Fiscus 500 shares of stock in Axistel 2,000,000 shares
Axistel Communications, Inc.
One Evertrust Plaza, 8th Floor
Jersey City, NJ 07302
5. Steve Robling 30 shares of stock in Axistel 120,000 shares
Axistel Communications, Inc.
One Evertrust Plaza, 8th Floor
Jersey City, NJ 07302
6. Thomas Bainbridge 30 shares of stock in Axistel 120,000 shares
Axistel Communications, Inc.
One Evertrust Plaza, 8th Floor
Jersey City, NJ 07302
7. William Carroll 15 shares of stock in Axistel 60,000 shares
Axistel Communications, Inc.
One Evertrust Plaza, 8th Floor
Jersey City, NJ 07302
8. Annette Dickson 3.75 shares of stock in Axistel 15,000 shares
Axistel Communications, Inc.
One Evertrust Plaza, 8th Floor
Jersey City, NJ 07302
9. Charles Murdock 7.5 shares of stock in Axistel 30,000 shares
Axistel Communications, Inc.
One Evertrust Plaza, 8th Floor
Jersey City, NJ 07302
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
eVENTURES GROUP, INC.
32
NUMBER OF SHARES OF COMMON STOCK,
PAR VALUE $0.00002 IN eVENTURES
ASSETS CONTRIBUTED TO eVENTURES GROUP, GROUP, INC., RECEIVED BY
NAMES OF CONTRIBUTING PERSONS INC., IN ASSET SALE CONTRIBUTING PERSON
----------------------------- -------------------------------------- ----------------------------------
10. Keith Oser 3.0 shares of stock in Axistel 12,000 shares
Axistel Communications, Inc.
One Evertrust Plaza, 8th Floor
Jersey City, NJ 07302
11. Daniel E. Stryker, Jr. 3.0 shares of stock in Axistel 12,000 shares
Axistel Communications, Inc.
One Evertrust Plaza, 8th Floor
Jersey City, NJ 07302
12. Kevin Liddy 3.0 shares of stock in Axistel 12,000 shares
Axistel Communications, Inc.
One Evertrust Plaza, 8th Floor
Jersey City, NJ 07302
Total 12,063,807 shares
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
eVENTURES GROUP, INC.
33
SCHEDULE 2.3.5
OFFICERS OF SURVIVING ENTITY
Fred Vierra Chairman of the Board
Barrett Wissman President and Chief Executive Officer
Stuart Chasanoff Vice President, Chief Development Officer, General
Counsel and Secretary
Steve Robling Vice President, Chief Financial Officer and
Assistant Secretary
Sam Litwin Managing Director of Communications Holdings
Mitch Arthur Managing Director of Communications Holdings
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
eVENTURES GROUP, INC.
34
SCHEDULE 3.1.3
IEOH INVESTMENTS
1. e.Volve
o 50% interest in the Debentures
o Warrant No. 2
o 1,200 shares of common stock (representing a 1/3 equity interest based
upon the outstanding common shares as of August 31, 1999)
2. Axistel
o One Class B Share convertible into one Class A Common Share of Axistel;
one Warrant exercisable for 1,449 Class A Common Shares for aggregate
consideration of $3.5 million (which, when exercised and combined with
the one Class B Share represents 50% of the outstanding common shares
as of August 31, 1999)
o $3.5 million principal balance promissory note
3. i2v2.com
o 1,832,880 common shares purchased for $2.1 million on June 25, 1999,
representing approximately 21% of the shares of outstanding common
stock on a "fully diluted" basis at the time of purchase, and believed
to represent approximately 17% of the outstanding common shares in a
"fully diluted" basis as of August 31, 1999.
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
eVENTURES GROUP, INC.
35
SCHEDULE 3.1.7
IEOH MATERIAL CONTRACTS
Debentures
Warrant No. 2
Securities Purchase Agreement between IEOH and i2v2.com and related
documentation executed in connection therewith
Securities Purchase Agreement between IEOH and Axistel and related
documentation executed in connection therewith
Securities Purchase Agreement between IEOH and Orix Global Communication, now
known as e.Volve Technology Group, Inc. and related documentation
executed in connection therewith
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
eVENTURES GROUP, INC.
36
SCHEDULE 3.1.10
IOEH FINANCIAL STATEMENTS
Axistel Communications, Inc.
Balance Sheets as of December 31, 1998 (audited) and June 30, 1999 (unaudited).
Statements of Operations for the year ended December 31, 1998 (audited) and
six months ended June 30, 1999 (unaudited).
e.Volve Technology Group, Inc.
Balance Sheets as of May 31, 1998 (audited) and February 28, 1999 (unaudited).
Statements of Operations for the year ended May 31, 1998 (audited) and nine
months ended February 29, 1999 (unaudited).
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
eVENTURES GROUP, INC.
37
SCHEDULE 3.2.14
eVENTURES SEC DOCUMENTS
(See Attached)
[ATTACH SEC FILING HISTORY]
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
eVENTURES GROUP, INC.
38
SCHEDULE 3.2.18
eVENTURES EXCEPTIONS TO TRADE NAMES AND RIGHTS
eVentures understands that other persons may be using or assert rights
to the name eVentures or derivations thereof.
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
eVENTURES GROUP, INC.
39
SCHEDULE 3.2.20
eVENTURES BANK ACCOUNTS
North Dallas Bank & Trust, Preston Rd @ LBJ Frwy.
Account No. 3103785
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
eVENTURES GROUP, INC.
40
SCHEDULE 3.2.22
eVENTURES AFFILIATE AGREEMENTS
Transfer Agent Agreement between eVentures, Inc. and Stock Transfer Company of
America, Inc. dated February 15, 1988.
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
eVENTURES GROUP, INC.
41
SCHEDULE 5.2.1
DIRECTORS OF eVENTURES UPON CLOSING; OPTION GRANTS
eVENTURES DIRECTORS UPON CLOSING
Fred Vierra
Clark Hunt
Barrett Wissman
Mark Graham
Olaf-Guerrand Hermes
eVENTURES STOCK OPTIONS/GRANTS
Name Number Price
---- ------ -----
A. Stuart Chasanoff (500,000 total) 166,666 $ 2.50
166,667 $ 5.00
166,667 $ 7.50
B. Samuel L. Litwin 425,000 $ 10.00
C. Mitchell C. Arthur 425,000 $ 10.00
D Steve Robling 425,000 $ 10.00
E. New Grants to Existing Axistel Employees - 75,000 $ 2.50
see Schedule 5.4.5
Total 1,850,000
=========
Options have 3 year vesting, with 1/3 vesting at the end of each
year.
Directors' Options
Name Number Price
---- ------ -----
A. Fred Vierra (Chairman) 200,000 $ 10.00
B. Clark Hunt 100,000 $ 10.00
C. Barrett Wissman 100,000 $ 10.00
D. Mark Graham 100,000 $ 10.00
E. Olaf-Guerrand Hermes 100,000 $ 10.00
=======
600,000
[All are two year vesting, 50% at the end of each year]
Total Options
Employees 1,850,000
Directors 600,000
---------
2,450,000
=========
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
eVENTURES GROUP, INC.
42
SCHEDULE 5.2.3
AUTHORIZED SIGNATURES FOR eVENTURES' BANK ACCOUNTS
Barrett Wissman
Steve Robling
Stuart Chasanoff
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
eVENTURES GROUP, INC.
43
SCHEDULE 5.3.2
WIRE TRANSFER INSTRUCTIONS FOR PRINCIPAL STOCKHOLDER
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
eVENTURES GROUP, INC.
44
SCHEDULE 5.4.2
WIRE TRANSFER INSTRUCTIONS FOR INFINITY CONTRIBUTION
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
eVENTURES GROUP, INC.
45
SCHEDULE 5.4.5
AXISTEL REPLACEMENT OPTIONS
AXISTEL EMPLOYEE OPTION SHARES IN eVENTURES* EXERCISE PRICE
- ---------------- --------------------------- --------------
Annette Dickson 15,000 $2.50
William Carroll 60,000 $2.50
* 3 year vesting, with 1/3 vested at end of each year.
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
eVENTURES GROUP, INC.
46
SCHEDULE 5.6.2
PERSONS TO RECEIVE EMPLOYMENT AGREEMENTS UPON CLOSING
eVentures (new Agreements)
Stuart Chasanoff
Steve Robling
Axistel (Amendments to existing agreements)
Samuel L. Litwin
Mitchell C. Arthur
Michael Fiscus
e.Volve (none)
Existing Employment and Consulting Agreements continue unchanged
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
eVENTURES GROUP, INC.