EXHIBIT 10.6
NOTE EXCHANGE, RESTRUCTURE AND CONVERSION AGREEMENT
THIS NOTE EXCHANGE, RESTRUCTURE AND CONVERSION AGREEMENT (this
"Agreement") is made and entered into as of this 28th day of September, 2001, by
and between EQUITEL, INC., a Delaware corporation ("equitel"), WOLFPACK
CORPORATION, a Delaware corporation ("Wolfpack") and LANCER PARTNERS, LIMITED
PARTNERSHIP and LANCER OFFSHORE (the "Debt Holders," "you" or "your").
RECITALS:
Prior to the date hereof, Capital Research, Ltd., Xxxxxxx Xxxxx and
Xxxxxx Fund, Ltd. transferred all of their right, title and interest in all
debt obligations of equitel to Debt Holders.
This Agreement provides that the debt of equitel held by or owed to the
Debt Holders (the "equitel Debt") will be converted (i) into Wolfpack Debt and
(ii) thereafter, into Wolfpack common stock on a dollar for dollar basis based
upon the aggregate amount of gross proceeds raised by Wolfpack from the sale of
common stock or other equity securities convertible into, or exchangeable for,
the common stock of Wolfpack, sold solely through the efforts of Capital
Investment Partners, LLC (or its affiliates) (collectively "CIP") on or prior to
February 28, 2002 pursuant to a placement agent agreement or underwriting
agreement (hereinafter referred to as the "Financing Agreement") containing such
terms and conditions as are acceptable to the Board of Directors of Wolfpack; to
the extent the Wolfpack Debt is not so converted by February 28, 2002, Debt
Holders will have the right at any time thereafter to convert the outstanding
Debt into common stock at a thirty percent (30%) discount to the average closing
price of a share of Wolfpack common stock for the ten (10) trading days prior to
conversion.
NOW, THEREFORE, for and in consideration of the recitals and premises,
which constitute an integral part of this Agreement, and the mutual covenants of
the parties hereto, and for other good and valuable consideration, the receipt
and sufficiency of which are acknowledged, the parties hereto do hereby agree as
follows:
Section 1. Definitions
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"equitel companies" means equitel, equitel communications
corporation, equitel development, inc. and by any predecessor entity
thereof;
"equitel Company" refers to any of the equitel Companies;
"equitel Debt" means all indebtedness, including principal,
accrued interest and all other accrued interest thereunder thereon owed
to the Debt Holders by any equitel Company as of the date of this
Agreement. The parties believe amount of such debt is set forth on
Schedule 1 hereto.
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"Share Equivalent Price" means the price per share of Wolfpack
common stock sold in the applicable Equity Financing or in the case of
securities other than common stock the common-equivalent price per
share applicable to the securities sold in the Equity Financing.
"Stock Swap Agreement" means that certain Stock Purchase
Agreement dated as of an even date herewith by and among equitel,
Lancer Partners, Limited Partnership, Lancer Offshore, Inc., Capital
Research, Ltd., Alpha Omega Group, Inc. ("AOGI") and Wolfpack.
"Wolfpack Debt" means the unconditional obligation of Wolfpack to
pay to Debt Holders an amount equal to the equitel Debt, plus interest
thereon, as described and subject to the terms of the Senior
Subordinated Convertible Promissory Note (Exhibit A).
Section 2. Cancellation and Exchange. Notwithstanding any agreement
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between the Debt Holders and the equitel companies entered into prior to the
date of this Agreement, all equitel Debt outstanding on the Closing Date,
whether or not evidenced by a written note, shall be cancelled and the
outstanding principal and accrued but unpaid interest thereon shall be converted
into a like amount of Wolfpack Debt in the form of a Senior Subordinated
Convertible Note in substantially the form attached hereto as Exhibit A (the
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"Wolfpack Notes"). All warrants and all rights to receive warrants to acquire
common stock of equitel or the capital stock of any of the equitel Companies
("equitel Warrants") (whether or not acquired pursuant to, or in connection
with, the equitel Debt) shall be cancelled and shall be of no further force or
effect; and specifically the warrants to be issued to Capital Research, Ltd.
under the Senior Subordinated Convertible Note Payable Agreement shall be
retroactively cancelled from the date they were to be issued. From and after the
Initial Closing, and until the surrender of the notes representing the cancelled
equitel Debt, and the cancellation of such notes (or in lieu thereof, the
delivery by the noteholder of a fully executed lost note affidavit in form
satisfactory to Wolfpack), such notes shall be deemed to represent Wolfpack Debt
as held in the name of the noteholder.
Section 3. Waiver. The Debt Holders hereby (i) waive any default or
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event of default under the equitel Debt existing on or prior to the date of this
Agreement, (ii) waive any default or event of default arising out of the
consummation of the transactions contemplated by the Stock Swap Agreement
(whether or not acquired pursuant to, or in connection with, the equitel Debt),
and (iii) waive all rights with respect to equitel Warrants or the right to
receive equitel Warrants and any default thereunder.
Section 4. Conversion of the Wolfpack Notes
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(a) Effective as of the close of business on the Follow-on Closing
Date(s) (as defined below), your Wolfpack Debt shall be cancelled and converted
into that number of shares of Wolfpack common stock as follows: the amount of
cash received by Wolfpack in an Equity Financing on a Follow-on Closing will be
divided by the Share Equivalent Price (as defined above, to produce the number
of shares of Wolfpack common stock you are to receive in
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cancellation of a like amount of your Wolfpack Debt. You may determine (voting
based on amount of outstanding Wolfpack Debt held by each of you) the order in
which your notes evidencing the Wolfpack Debt are converted. At each Follow-on
Closing, you are obligated to deliver your original Wolfpack Note (or in lieu
thereof, lost note affidavit reasonably acceptable to us). In the event of a
partial conversion and cancellation of a Wolfpack Note, we will issue a new note
to the holder thereof to reflect the remaining balance in connection with the
cancellation of the Wolfpack Note.
(b) From and after the time of such conversion and cancellation (and to
the extent thereof) at a Follow-on Closing, with respect to the amount of
Wolfpack Debt converted and cancelled, neither Wolfpack nor any equitel Company
shall have any liability (whether for principal, interest, premium or penalty)
to any person or entity with respect thereto, under the Wolfpack Notes or
Wolfpack Debt or otherwise, all such indebtedness being deemed discharged at
such Follow-on Closing. From and after such Follow-on Closing, and until the
surrender of the Wolfpack Notes representing the cancelled Wolfpack Debt, and
the cancellation of such Wolfpack Notes (or in lieu thereof, the delivery by the
noteholder of a lost note affidavit reasonably acceptable to us), such Wolfpack
Notes shall be deemed to represent the shares of Wolfpack common stock as held
in the name of the noteholder.
Section 5. Closing(s). The closing(s) of the transactions contemplated
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herein will take place at the offices of equitel, 0000 Xxxxxxx Xxxxx Xxxxx,
Xxxxx 000, Xxxxxx, Xxxxx Xxxxxxxx 00000, (i) in the case of the transactions
described in Section 2, on the date hereof (the "Initial Closing"; on the
"Initial Closing Date"), and (ii) in the case of the transactions described in
Section 4, on the dates funds are received and accepted by Wolfpack for the sale
of Equity Securities under the Financing Agreement or within five days
thereafter (each, a "Follow-on Closing"; on a "Follow-on Closing Date(s)"; there
may be several Follow-on Closings).
Section 6. Waiver of Notices. Each of the parties hereto, by executing
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this Agreement, does hereby waive any and all notices which are, or may be,
required pursuant to the terms of the equitel Debt and Wolfpack Debt and the
notes evidencing the same, in connection with the conversion and/or cancellation
thereof provided for in this Agreement.
Section 7. Representations and Warranties of Debt Holder. As an
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inducement to Wolfpack and equitel to enter into and perform this Agreement,
Debt Holder hereby represents and warrants to Wolfpack and equitel as follows:
(a) Debt Holder has had the opportunity to discuss this
Agreement, the Stock Purchase Agreement and related documents with
Debt Holder's legal counsel.
(b) Debt Holder understands that no federal or state agency has
made any finding or determination regarding the fairness of the
offering of the shares of Wolfpack common stock (the "Shares")
issuable in connection with the conversion of the Wolfpack Notes, for
investment, or any recommendation or endorsement of the offering of
the Shares, and Debt Holder must forego the security, if any, such a
review would provide.
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(c) Debt Holder will acquire the Shares for Debt Holder's own account,
with the intention of holding the Shares for investment, with no intention
of dividing or allowing others to participate in this investment or of
reselling or otherwise participating, directly or indirectly, in a
distribution of the Shares; and shall not make any sale, transfer or other
disposition of the Shares without registration under the Securities Act of
1933, as amended (the "1933 Act"), and any applicable securities laws of
any state or unless an exemption from registration is available under those
Federal and state laws.
(d) Debt Holder represents that it has no need for liquidity in its
investment in the Shares, and at the present time, could afford a complete
loss of such investment.
(e) Debt Holder is an accredited investor as that term is defined in
Section 501(a) under Regulation D promulgated by the Securities and
Exchange Commission under the 1933 Act. Debt Holder is financially able to
bear the economic risk of this investment, including the ability to afford
holding the Shares for an indefinite period.
(f) The address shown under Debt Holder's signature at the end of this
Agreement is Debt Holder's principal business or residential address, as
applicable.
(g) Except as otherwise noted, Debt Holder and/or its purchaser
representative has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an
investment in the Shares.
(h) Debt Holder has made an independent evaluation of the merits of
the investment and acknowledges the high risk nature of the investment.
(i) Debt Holder understands that the provisions of Rule 144
promulgated under the 1933 Act may not be available to permit resales of
the Shares, and that registration or compliance with some other
registration exemption will be required.
(j) Debt Holder agrees that there will be placed on the certificates
for the Shares, or any substitutions therefor, a legend stating in
substance as follows:
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"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE, IN RELIANCE
UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE
1933 ACT AND SUCH LAWS. THESE SECURITIES MAY NOT BE
TRANSFERRED, NOR WILL ANY ASSIGNEE OR ENDORSEE HEREOF BE
RECOGNIZED AS AN OWNER HEREOF BY THE ISSUER FOR ANY PURPOSES,
EXCEPT IN TRANSACTIONS REGISTERED UNDER THE 1933 ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, UNLESS THE AVAILABILITY OF
AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT AND ANY
APPLICABLE STATE SECURITIES LAWS WITH RESPECT TO ANY PROPOSED
TRANSFER OR DISPOSITION OF SUCH SECURITIES SHALL BE
ESTABLISHED TO THE SATISFACTION OF COUNSEL FOR THE ISSUER."
(k) Debt Holder is not subscribing for Wolfpack Notes or the
Shares as a result of or subsequent to any advertisement, article,
notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, or presented at
any seminar or meeting, or any solicitation of a subscription by a
person not previously known to Debt Holder in connection with
investments the Wolfpack Notes and Shares generally.
Section 8. Governing Law. This Agreement, and the rights and
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obligations of the parties hereunder, shall be construed and governed under the
laws of the State of Delaware.
Section 9. Counterparts. This Agreement may be executed in ,
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counterparts, all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
Section 10. Effect of Headings. The Section headings herein are for
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convenience only, and shall not affect the construction hereof.
Section 11. Entire Agreement. This Agreement includes the parties'
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complete agreement with respect to the matters described herein. This Agreement
includes Schedules and Exhibits thereto.
[SIGNATURES APPEAR ON THE NEXT PAGE]
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IN WITNESS WHEREOF the parties hereto have executed this Agreement
effective as of the date first above written.
EQUITEL, INC.
By:____________________________________
Title:_________________________________
WOLFPACK CORPORATION
By:____________________________________
Title:_________________________________
"DEBT HOLDERS"
LANCER OFFSHORE, INC.
By:____________________________________
Its:___________________________________
LANCER PARTNERS, LIMITED PARTNERSHIP
By: ___________________________________
Its:___________________________________
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Acknowledgment:
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The undersigned have reviewed this Note Exchange, Restructure and Conversion
Agreement and acknowledge and agree (i) that they currently own no equitel Debt,
(ii) that they have transferred all right, title and interest to any and all
equitel Debt to Lancer Partners, Limited Partnership and/or Lancer Offshore,
Inc., and (iii) that they hereby waive any past defaults and (iv) all existing
equitel Warrants and any rights to receive equitel Warrants are cancelled and of
no further force or effect and all rights to receive any unissued warrants are
waived. "equitel Debt" and "equitel Warrants" have the meaning provided in the
Note Exchange, Restructure and Conversion Agreement.
VIATOR FUND LTD.
By: _________________________________________________
Its: ________________________________________________
CAPITAL RESEARCH, LTD.
By:__________________________________________________
Its: ________________________________________________
_____________________________________________________
XXXXXXX XXXXX
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