EXHIBIT 2.2
FIRST AMENDMENT
TO
SHARE EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
among
ACHIEVE NETWORKS, INC.
a Nevada corporation
("Company"),
XXXX X. XXXXXXX, XXXXXX XXXXXXX XXXXXXX,
XXXXXX X. XXXXXX, XXX XXXXXX
AND DGN SECURITIES, INC.
("Original Shareholders"),
XXXXX XXXXXX, XX., XXXXXX X. XXXXX,
XXXX X. XXXXXXXX, XXXXX XXXX,
XXXX XXXX, XXXX XXXX,
XXXXXX X. XXXXXX,
STRIKER MANAGEMENT LLC,
THE STRIKER FOUNDATION,
XXXX XXXXXX,
and
XXXXX XXXXXX, XX.
("Additional Shareholders")
and
PIPELINE TECHNOLOGIES, INC.
a Colorado corporation
("Buyer")
As of November 26, 2001
SHARE EXCHANGE AGREEMENT
TABLE OF CONTENTS
-----------------
1. DEFINITIONS........................................................... 2
2. ADDITIONAL SHAREHOLDERS TO JOIN AS "SHAREHOLDERS"..................... 2
3. MODIFICATION OF SECTION 1 OF ORIGINAL AGREEMENT -
PURCHASE, SALE AND EXCHANGE OF SHARES................................. 3
4. MODIFICATION OF SECTION 2.1 OF ORIGINAL AGREEMENT -
PURCHASE PRICE........................................................ 3
5. ADDITIONAL SHARES ISSUED TO SHAREHOLDERS' AGENT....................... 3
6. MODIFICATION OF SECTION 3.1(g) OF ORIGINAL AGREEMENT -
CAPITALIZATION OF THE COMPANY......................................... 4
7. MODIFICATION OF SECTION 4.9 OF THE ORIGINAL AGREEMENT -
OUTSTANDING SHARES OF BUYER........................................... 5
8. USE OF XXXXXXX WARRANT TO COMPROMISE COMPANY DEBT..................... 5
9. ENGAGEMENT OF XXXX XXXXXXX............................................ 5
10. DELETION OF CONDITION................................................. 5
11. ACKNOWLEDGEMENT OF RECEIPT OF DISCLOSURE FROM
BUYER................................................................. 6
12. SHAREHOLDERS' RELEASE OF ADDITIONAL CLAIMS AGAINST
THE COMPANY AND ITS AGENTS............................................ 6
13. ORIGINAL SECTION 5.10 DELETED........................................ 6
14. ORIGINAL SECTION 5.11 DELETED......................................... 6
15. REAFFIRMATION......................................................... 7
16. COUNTERPARTS.......................................................... 7
FIRST AMENDMENT
TO
SHARE EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
FIRST AMENDMENT TO SHARE EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
(this "Agreement") dated as of November 12, 2001, by and among PIPELINE
TECHNOLOGIES, INC., a Colorado corporation ("Buyer"), ACHIEVE NETWORKS, INC., a
Nevada corporation ("Company"), XXXX X. XXXXXXX, XXXXXX XXXXXXX XXXXXXX XXXXXX
X. XXXXXX, XXX XXXXXX and DGN SECURITIES, INC. (individually "Shareholder" and
collectively, the "Original Shareholders"), and XXXXX XXXXXX, XX., XXXXXX X.
XXXXX, XXXX X. XXXXXXXX, XXXXX XXXX, XXXX XXXX, XXXX XXXX, XXXXXX X. XXXXXX,
STRIKER MANAGEMENT LLC, THE STRIKER FOUNDATION, XXXX XXXXXX, XXXXX XXXXXX, XX.
and (individually "Shareholder" and together, jointly and severally, the
"Additional Shareholders", and together with Original Shareholders, the
"Shareholders"), and XXXX X. XXXXXXX, as agent (the "Shareholders' Agent").
FACTUAL BACKGROUND
A. The Company is engaged in the business of providing long distance
telephone and telecommunication services over the Internet. The Company has
developed and presently owns and operates a voice over internet protocol
("VoIP") network, including the hardware and software necessary to provide VoIP
to customers. (the "Business").
B. The Buyer also engages in the VoIP business.
C. The Buyer is willing to acquire not less than 81% of the Company's
outstanding common stock in order that Buyer may consolidate the Company's
results for financial reporting and federal income tax purposes. The Buyer
originally agreed to exchange 3.0 million of the Buyer's common shares with the
Company's shareholders, pro rata, for 100% of the Company's outstanding shares.
The transaction is being revised so that the Buyer shall pay 3 million of the
Buyer's common shares for the Shareholders' 21,676,700 Achieve Shares and
Warrant for 500,000 Achieve Shares, representing approximately 84% of the
Company's shares held by the Shareholders. The Buyer has now agreed to a
modification of the arrangement so that participating Shareholders will
participate on the same exchange ratio for the sale of their Achieve shares, but
approximately 550,000 additional Buyer's Common Shares will be delivered by
Shareholders' Agent for distribution as agreed by Shareholders consistent with
the securities laws.
D. The Original Shareholders and the Additional Shareholders collectively
own approximately 84% of the Company's outstanding common stock. The
Shareholders are willing to exchange their shares of the Company to Buyer
pursuant to the terms and conditions of the Agreement. The parties intend that
the transaction be treated as a "stock-for-stock" tax-free reorganization
pursuant to Section 368(a)(1)(B) of the Internal Revenue Code, to the extent
possible.
E. Following Closing, the Shareholders may direct the Shareholders' Agent
to distribute the additional approximately 550,000 of Buyer's Common Shares to
the remaining shareholders of the Company (the "Minority Shareholders"). The
Shareholders may, but shall not be required, to make this distribution to the
remaining Minority Shareholders to prevent any criticism of unfairness in the
transaction.
F. The Company, the Original Shareholders and the Buyer entered into a
Share Exchange Agreement and Plan of Reorganization dated as of September 27,
2001 (the "Original Agreement").
G. The parties desire to permit the Additional Shareholders to join in the
Original Agreement, as amended hereby, as parties. The Additional Shareholders
agree to be legally bound by the terms of the Original Agreement, as amended.
H. The parties also desire to amend certain provisions of the Original
Agreement as hereinafter set forth.
I. The provisions of the Original Agreement regarding Buyer's subsequent
offer to Company's remaining Minority Shareholders for exchange is eliminated.
The Minority Shareholders will remain shareholders of the Company following the
Closing.
J. Except for adding the Additional Shareholders as parties and the
modifications and amendments to the Original Agreement as set forth herein, the
Original Agreement remains in full force and effect.
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
and for other good and valuable consideration, and intending to be legally
bound, the parties hereto agree that the Original Agreement is incorporated
herein by this reference and is amended and supplemented as set forth
hereinafter, effective as of the date hereof:
1. DEFINITIONS
Unless otherwise defined herein, the terms used in this Agreement shall
have the meaning ascribed to them in the Original Agreement.
2. ADDITIONAL SHAREHOLDERS TO JOIN AS "SHAREHOLDERS"
The Additional Shareholders hereby join in, become parties to, and agree to
become legally bound by, the Original Agreement, as modified herein. The
Additional Shareholders shall be "Shareholders" under the Original Agreement, as
modified herein. Without limiting the generality of the foregoing, the
Additional Shareholders agree that they shall have all of the obligations and
liabilities of "Shareholders" and they agree to sell to Buyer all their shares
of Common Stock ($0.01 par value) of the Company, together with all the
Additional Shareholders' other right, title and interest in and to any equity or
ownership of the Company, if any. The Additional Shareholders, by execution of
this First Amendment, hereby constitute and appoint the Shareholders' Agent as
true and lawful attorney-in-fact and agent, as set forth in Section 14.9 of the
Original Agreement and authorize the Shareholder's Agent to act on their behalf.
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3. MODIFICATION OF SECTION 1 OF ORIGINAL AGREEMENT - PURCHASE, SALE AND
EXCHANGE OF SHARES
Section 1 of the Original Agreement is hereby amended and restated in its
entirety as follows:
Subject to the terms and conditions of this Agreement, on
the Closing Date (as hereinafter defined), Shareholders shall
sell to Buyer and Buyer shall purchase from Shareholders
21,676,700 shares of common stock, $0.01 par value, of the
Company (the "Shares"), together with all the Shareholders' other
right, title and interest in and to any equity or ownership of
the Company, if any.
4. MODIFICATION OF SECTION 2.1 OF ORIGINAL AGREEMENT - PURCHASE PRICE
Section 2.1 of the Original Agreement is hereby amended and restated in its
entirety as follows:
The purchase price (the "Purchase Price") payable for the
Shares shall be 2,449,012 common shares, par value $0.001, of the
Buyer (the "Exchange Shares"), for pro rata distribution among
the Shareholders in accordance with their respective ownership of
Shares as set forth in Amended Schedule 3.1(g). The parties
acknowledge that this exchange ratio is based upon Buyer's
original desire to exchange 3.0 million of Buyer's common shares
for all stock of all classes of the Company on a fully-diluted
basis (including the 500,000 common shares subject to issuance
upon exercise of the warrant), on a pro rata basis.
The Amended Schedule 3.1(g) attached as Exhibit "A" to this First Amendment
(referred to herein as "Amended Schedule 3.1(g)") shall be substituted for and
entirely replace the Schedule 3.1(g) contained in the Original Disclosure
Schedule. The parties agree that the number of Exchange Shares set forth next to
each Shareholder's name on Amended Schedule 3.1(g) is the correct number of
Exchange Shares which they are to receive in this transaction.
5. ADDITIONAL SHARES ISSUED TO SHAREHOLDERS' AGENT
The following new Section 2.4 is hereby added to the Original Agreement:
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2.4 Additional Shares Issued to Shareholders' Agent.
------------------------------------------------
At the Closing, Buyer shall deliver 550,988 common shares (the
"Additional Shares") to Shareholders' Agent, which shall be used
by the Shareholders' Agent, for distribution to Shareholders
and/or some or all of the Minority Shareholders of the Company in
a manner which Shareholders determine, provided that any
distribution shall be made in accordance with all applicable
laws. The Additional Shares are not registered. Shareholders'
Agent agrees that his distribution of the Additional Shares to
any Minority Shareholders of the Company shall be in full
compliance with all securities laws. The Buyer shall not control
or be able to direct how the Shareholders dispose of the
Additional Shares. The Buyer has provided no legal advice to the
Shareholders or the Company regarding this provision or the
Additional Shares. The Shareholders agree to provide the Buyer's
transfer agent with the customary legal opinions in connection
with the Shareholders' Agent's transfer of the Additional Shares.
Shareholders hereby release the Company and Buyer from any claims
against the Shareholders' Agent relating to the Additional Shares
and the disposition thereof.
6. MODIFICATION OF SECTION 3.1(g) OF ORIGINAL AGREEMENT - CAPITALIZATION OF
THE COMPANY
Section 3.1(g) of the Original Agreement is hereby amended and restated in
its entirety as follows:
3.1(g) Capitalization of the Company.
------------------------------
The authorized capital stock of the Company consists entirely of
50,000,000 shares of common stock, par value $0.001 per share. A
total of Twenty-six Million, Fifty-three Thousand, Six Hundred
Eleven (26,053,611) shares of common stock are issued or
outstanding, of which 21,676,700 shares of common stock of the
Company are owned of record and beneficially by Shareholders in
the respective numbers set forth in Amended Schedule 3.1(g). No
preferred shares are outstanding.
No other securities of the Company are issued or outstanding
as of the date hereof. All such shares of capital stock of the
Company are validly issued, fully paid and nonassessable. Except
for the Company's warrant to issue 500,000 Shares to Xxxx Xxxxxxx
or his nominee (the "Xxxxxxx Warrant") in exchange for a payment
of $10.00, which warrant expires if not exercised on or before
December 31, 2001, there are no (a) securities convertible into
or exchangeable for any of the Company's capital stock or other
securities, (b) options, warrants or other rights to purchase or
subscribe to capital stock or other securities of the Company or
securities which are convertible into or exchangeable for capital
stock or other securities of the Company, or (c) contracts,
commitments, agreements, understandings or arrangements of any
kind relating to the issuance, sale or transfer of any capital
stock or other equity securities of the Company, any such
convertible or exchangeable securities or any such options,
warrants or other rights.
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7. MODIFICATION OF SECTION 4.9 OF THE ORIGINAL AGREEMENT - OUTSTANDING SHARES
OF BUYER
Section 4.9 of the Original Agreement is hereby amended and restated in its
entirety as follows:
Immediately after the Closing of the exchange of the Buyer's
stock for the Company's stock, assuming all 750,000 shares of the
Buyer are immediately issued to Xx. Xxxxxxx pursuant to his consulting
agreement, the Buyer shall have no more than 15,750,000 shares of
common stock outstanding, inclusive of the 3,000,000 shares that are
issued to the Shareholders and assuming that all shares issuable
pursuant to the consulting agreement described in Section 5.13 have
been issued as of the Closing Date.
8. USE OF XXXXXXX WARRANT TO COMPROMISE COMPANY DEBT.
Xxxx Xxxxxxx shall use his good faith, reasonable efforts to use the Shares
issuable to Xxxxxxx upon exercise of the Xxxxxxx Warrant to settle, compromise
and discharge debts of the Company on or before December 15, 2001. In the event
Xxxxxxx in unable to settle, compromise and discharge debts of the Company with
such Shares, Xxxxxxx may exercise the Xxxxxxx Warrant prior to its expiration by
written notice to the Company, provided that Xxxxxxx agrees to exchange
immediately any such Shares into common shares of the Buyer at the exchange
ratio provided in Section 2.1 of the Agreement (as amended by this First
Amendment).
9. ENGAGEMENT OF XXXX XXXXXXX
Section 5.13 of the Original Agreement is hereby amended and restated in
its entirety as follows:
The Company agrees to employ Xxxx Xxxxxxx and Xxxxxxx agrees to
work for the Company as an independent consultant pursuant to the
terms of a Consulting Agreement attached as Exhibit "B" to the
First Amendment. Notwithstanding his status as an independent
consultant, Xxxxxxx shall still be required to devote
substantially full time to the affairs of the Company during the
term of the Consulting Agreement.
Attached hereto as Exhibit "B" is the form of Consulting Agreement to be
executed by Xxxx Xxxxxxx at Closing.
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10. DELETION OF CONDITION
Section 7.4 of the Original Agreement is hereby deleted in its entirety.
11. ACKNOWLEDGEMENT OF RECEIPT OF DISCLOSURE FROM BUYER
The Shareholders and the Company hereby acknowledge and confirm that Buyer
has disclosed to them that Buyer is presently experiencing difficulties as a
result of a telemarketing campaign conducted by Xxxxx-Xxxx & Associates,
including certain potential unauthorized enrollment of new customers, potential
unauthorized credit card use, credit card "chargebacks" to the Buyer and
potential government investigations related to the telemarketing campaign and
Buyer's alleged "slamming" of customers. The Company and the Shareholders
further acknowledge that they have had the opportunity to ask questions of
representatives of the Buyer and to investigate all aspects of the foregoing
matters, and the potential adverse impact upon the Buyer and its business and
financial condition and that the Buyer has provided full access to the
Shareholders and Company to all documents, records and books pertaining to the
foregoing matters and all documents requested by the Shareholders or the Company
have been made available and delivered. The Company's representations in
Sections 4.4, 4.7 and 4.8 of the Original Agreement are hereby modified to
exclude all matters relating to or arising from the foregoing telemarketing
campaign and the potential negative impact upon the financial condition and
business of the Buyer and its subsidiaries on a consolidated basis. Shareholders
and Company acknowledge that they understand the potential, material adverse
change in Buyer's Business which may arise as a result of such matters and
Shareholders and Company shall have no claim or cause of action for breach of a
representation or warranty for these matters.
12. SHAREHOLDERS' RELEASE OF ADDITIONAL CLAIMS AGAINST THE COMPANY AND ITS
AGENTS
The Shareholders (including the Additional Shareholders) hereby remise,
release, and forever discharge the Company and the Company's directors,
officers, agents, and employees (collectively, the "Released Parties"), of and
from all actions, causes, causes of action, suits, debts, claims, covenants,
potential lawsuits and demands, whatsoever, at law or in equity, which any of
the Shareholders now has or ever had against any of the Released Parties for,
upon, or by reason of any matter, cause or thing whatsoever existing as of the
date hereof and/or as of the date of Closing, including without limitation, the
Shareholders' investment in the Company and management of the Company. This
release shall be unconditional and irrevocable. The Shareholders represent that
they have read and understand that this is a General Release and that the
Shareholders intend to be and are legally bound by this General Release in
accordance with its terms. This Release contained in this section shall be
effective upon Closing.
13. ORIGINAL SECTION 5.10 DELETED
Section 5.10 of the Original Agreement (Buyer's Subsequent Offer to Company
Shareholders for Exchange) is hereby deleted in its entirety.
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14. ORIGINAL SECTION 5.11 DELETED
Section 5.11 of the Original Agreement (Buyer's Registration of Buyer's
Shares Issued to Shareholders) is hereby deleted in its entirety.
15. REAFFIRMATION
Except to the extent modified herein, all provisions of the Original
Agreement shall remain in full force and effect. In consideration of and as a
material inducement to the parties' execution and delivery of this Amendment,
the parties hereby expressly reaffirm each and every covenant, agreement,
undertaking and waiver set forth in the Original Agreement to the same extent as
if each and every of said covenants, agreements, undertakings, and waivers were
fully set forth in this Amendment and made and entered into by the parties as of
the date hereof, except as expressly modified by this Agreement.
16. COUNTERPARTS
This Amendment may be executed by the parties in separate counterparts, no
one of which need be executed by all parties. The Amendment shall be effective
when executed and delivered by all parties. It may be delivered by telecopy.
In the event that this Amendment is executed by some, but not all, of the
Additional Shareholders, the parties hereby authorize the Shareholders' Agent to
modify this Amendment to exclude the Additional Shareholders which have not
executed this Amendment and to appropriately adjust the Exchange Shares being
issued, in which case the Additional Shareholders which have executed this
Amendment shall be legally bound hereby.
DATED as of the day and year first above written.
ACHIEVE NETWORKS, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Its: President
/s/ Xxxx X. Xxxxxxx
-------------------------------------
XXXX X. XXXXXXX
/s/ Xxxx X. Xxxxxxx, AIF
-------------------------------------
XXXXXX XXXXXXX XXXXXXX
/s/ Xxxx X. Xxxxxxx, AIF
-------------------------------------
XXXXXX X. XXXXXX
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/s/ Xxxx X. Xxxxxxx, AIF
-------------------------------------
XXX XXXXXX
/s/ Xxxx X. Xxxxxxx, AIF
-------------------------------------
DGN SECURITIES, INC.
(the "Original Shareholders")
/s/ Xxxx X. Xxxxxxx, AIF
-------------------------------------
XXXXX XXXXXX, XX.
/s/ Xxxx X. Xxxxxxx, AIF
-------------------------------------
XXXXXX X. XXXXX
/s/ Xxxx X. Xxxxxxx, AIF
-------------------------------------
XXXX X. XXXXXXXX
/s/ Xxxx X. Xxxxxxx, AIF
-------------------------------------
XXXXX XXXX
/s/ Xxxx X. Xxxxxxx, AIF
-------------------------------------
XXXX XXXX
/s/ Xxxx X. Xxxxxxx, AIF
-------------------------------------
XXXX XXXX
/s/ Xxxx X. Xxxxxxx, AIF
-------------------------------------
XXXXXX X. XXXXXX
STRIKER MANAGEMENT LLC
By: /s/ Xxxx X. Xxxxxxx, AIF
----------------------------------
Its:
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THE STRIKER FOUNDATION
By: /s/ Xxxx X. Xxxxxxx, AIF
----------------------------------
Its:
/s/ Xxxx X. Xxxxxxx, AIF
-------------------------------------
XXXX XXXXXX
/s/ Xxxx X. Xxxxxxx, AIF
-------------------------------------
XXXXX XXXXXX, XX.
(the "Additional Shareholders")
PIPELINE TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Its: C.E.O.
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LIST OF EXHIBITS
Exhibit A List of Shareholders
Exhibit B Consulting Agreement
-10-
Exhibit A - List of Shareholders
Name Achieve Shares Converted Shares
---- -------------- ----------------
1. Xxxxxx X. Xxxxxx 350,000 39,543
2. DGN Securities, Inc. 400,000 45,192
3. Xxxxx Xxxxxx, Xx 1,000,000 112,979
4. Xxxxxx X. Xxxxx 500,000 56,489
5. Xxx Xxxxxx 200,000 22,596
6. Xxxx X. Xxxxxxxx 300,000 33,894
7. Xxxxx Xxxx 195,000 22,031
8. Xxxx Xxxx 468,000 52,874
9. Xxxx Xxxx 52,000 5,875
10. Xxxxxx X. Xxxxxx 100,000 11,298
11. Striker Management Company LLC 125,000 14,122
12. The Stiker Foundation 50,500 5,705
13. Xxxx Xxxxxx 300,000 33,894
14. Xxxxx Xxxxxx, Xx 20,000 2,260
15. Xxxxxx Xxxxxxx Xxxxxxx 1,000,000 112,979
16. Xxxx X. Xxxxxxx 16,616,200 1,877,281
-------------- ----------------
Total 21,676,700 2,449,012
