EXHIBIT 10.6
STOCK WARRANT PURCHASE AGREEMENT
This STOCK AND WARRANT PURCHASE AGREEMENT (this "Agreement") is made as
of January 31, 1999, by and among XxXxxxx Management Family Limited Partnership,
A Nevada Limited Partnership ("Purchaser" or "XxXxxxx"), and EQUALNET
COMMUNICATIONS CORP., a Texas corporation (the "Company" or "Equalnet").
RECITALS
Purchaser desires to purchase from the Company, and the Company desires
to issue and sell to Purchaser, subject to the terms and conditions set forth
herein, an aggregate of 500,000 shares of Common Stock (as herein defined) of
the Company and warrants to purchase an aggregate of 150,000 additional shares
of Common Stock.
AGREEMENTS
In consideration of the recitals and the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Purchase and Sale of Securities, Closing
1.1 Purchase and Sale of Securities
(a) Subject to the terms and conditions herein set forth, the
Company agrees to sell to Purchaser and Purchaser agrees to purchase from the
Company, an aggregate of 769,000 shares (the "XxXxxxx Share") of the Company's
Common Stock, par value $.01 per share (the "Common Stock") and warrants,
exercisable for three (3) years from the date of issuance, for the purchase of
50,000 additional shares of Common Stock with purchase price at $1.00 per share;
50,000 additional shares of Common Stock with purchase price at $1.50 per share;
and 50,000 additional shares of Common Stock with purchase price at $2.00 per
share (the "XxXxxxx Warrants"), for an aggregate purchase price of $500,000.
(b) The Company shall cause Intelesis Group, Inc. to issue
250,000 shares of their Common Stock to purchase for $1.00 and shall furnish
Intelesis Group, Inc. with at least one half of the consideration to be paid by
XxXxxxx and shall furnish the Intelesis Group, Inc. with at least one half of
the consideration to be paid by XxXxxxx.
(c) The Company will nominate C. Xxxxx XxXxxxx for a seat on its
Board of Directors.
1.2 Closing. The purchase and delivery of the Securities shall take
place at a closing (the "Closing") at the offices of Equalnet, Houston, Texas,
at 10:00 a.m. local time, on February 5, 1999, or at such other time and place
or on such other business day thereafter as the parties hereto may agree
(herein called the "Closing Date"). On the Closing Date, the Company will
deliver the Securities in definitive form against receipt of the purchase price
therefor by wire transfer of immediately available funds to the Company, or by
such other payment method as is mutually agreed to by the Purchaser and the
Company.
1.3 Payment. Purchaser agrees to pay 75,000 by wire transfer on or
before Closing Date with remainder balance of 925,001 due on or before March 4,
1999 by wire transfer.
2. Purchaser's Conditions of Closing. The Purchaser's obligation to
purchase and pay for the Securities is subject to the satisfaction or waiver, on
or before the Closing Date, of the conditions contained in this Section 2.
2.1 Representations and Warranties. The representations and warranties
contained in Paragraph 4 hereof shall be true in all material respects on and as
of the Closing Date, except to the extent of changes caused by the transactions
herein comtemplated; and the Company shall have delivered to the Purchaser a
certificate of a duly authorized officer of the Company, dated the Closing Date,
to such effect.
2.2 Purchase Permitted by Applicable Laws. The purchase of and payment
for the Securities shall not be prohibited by any applicable law or governmental
regulation.
2.3 Compliance with Securities Laws. The offering and sale of the
Securities under this Agreement shall have complied with all applicable
requirements of federal and state securities laws.
3. Company's Conditions of Closing. The Company's obligations to sell
the Securities hereunder is subject to the satisfaction or waiver, on or before
the Closing Date, of the conditions contained in this Section 3.
3.1 Representations and Warranties. The representations and warranties
contained in Paragraph 5 hereof shall be true in all material respects on and as
of the Closing Date, of the conditions contained in this Section 3.
3.2 Purchase of Securities. The Purchaser shall have purchased and paid
for the Securities.
3.3 No Adverse Action or Decision. There shall be no action, suit,
investigation or proceeding pending, or to the Company's knowledge, threatened,
against or affecting the Company or any of its properties or rights, or any of
its affiliates, associates, officers, or directors, before any court, arbitrator
or administrative or governmental body which (i) seeks to restrain, enjoin,
prevent the consummation of or otherwise adversely affect the transactions
contemplated by this Agreement or (ii) questions the validity or legality of any
such transaction or seeks to recover damages or to obtain other relief in
connection with any such transaction.
4. Representations and Warranties of the Company. The Company
represents and warrants to the Purchaser as of the date hereof and as of the
Closing Date that:
4.1 Corporate Existence. The Company is a corporation duly organized,
legally existing, and in good standing under the laws of the State of Texas.
4.2 Corporate Power and Authorization. The Company has the requisite
corporate power and authority to issue the Securities and to execute, deliver,
and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby (including the issuance, against payment
therefore, of the shares of Common Stock issuable on exercise of the Warrants
(the "Warrant Shares"). All action on the Company's part requisite for the due
issuance against payment therefor of the Securities and the Warrant Shares and
for the due execution, delivery, and performance of this Agreement has been duly
and effectively taken.
4.3 Binding Obligations. This Agreement is enforceable in accordance
with its terms (except that enforcement may be subject to (i) any applicable
bankruptcy, insolvency or similar laws generally affecting the enforcement of
creditors' rights (ii) general principles in equity regardless of whether such
enforcement is sought in a proceeding in equity or at law, and except to the
extent enforceability of the indemnification provisions may be limited under
applicable securities laws).
5. Representations and Warranties of Purchaser. To induce the Company
to enter into this Agreement, XxXxxxx represents and warrants to the Company
that:
5.1 Purchase for Investment:
(a) Purchaser is acquiring the Securities for its own account
and not with a view to the public resale or distribution of all or any part
thereof in any transaction which would constitute a "distribution" within the
meaning of the Securities Act of 1933 (the "Securities Act"). Purchaser
acknowledges that it does not currently intend to assign its rights under this
Agreement to any third party prior to the Closing.
(b) Purchaser acknowledges that the Securities have not been
registered under the Securities Act and that the Warrant Shares will not be
registered under the Securities Act.
(c) Purchaser is an "accredited invertor" within the meaning of
Rule 501 under Regulation D promulgated under the Securities Act, is experienced
in evaluating investments in companies such as the Company, has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of its investment and has the ability to bear the entire
economic risk of its investment. Purchaser has made its own evaluation of its
investment in the Securities, based upon such information as is available to it
and without reliance upon the Company or any other person or entity, and
Purchaser agrees that neither the Company nor any other person or entity has any
obligation to furnish any additional information to Purchaser except as
expressly set forth herein.
(d) Purchaser acknowledges that it has been provided with copies
of the Company's Annual Report on Form 10-K for the year ended June 30, 1998, as
amended, each of the Company's Quarterly Reports on Form 10-Q for the quarter
ended September 30, 1998, a the Company's Current Report on Form 8-K filed
September 21, 1998. Purchaser also acknowledges that the Company has advised it
of the facts set forth on Schedule A hereto (the "Material Non-public
Information"). Purchaser acknowledges that they are aware that the United States
securities laws prohibit them, their representatives, and any person who has
received Material Non-public Information about the Company from purchasing or
selling securities of the Company or from communicating such information to any
other person under circumstances in which it is reasonably forseeable that such
person will purchase or sell such securities in reliance on such information.
Purchaser covenant and agree not to purchase or sell any securities of the
Company (other than pursuant to this Agreement) or to communicate Material
Non-public Information to any person until such time as all of the Material
Non-public Information has been made public by the Company or the Company has
informed the Purchaser that such information is no longer material.
(e) Purchaser acknowledges that the Securities and the Warrant
Shares may not be sold, transferred, pledged, hypothecated, or otherwise
disposed of without registration under the Securities Act or an exemption
therefrom, and that in the absence of an effective registration statement
covering the Securities (or the Warrant Shares, as applicable), or an available
exemption from registration under the Securities Act, the Securities (or the
Warrant Shares, as applicable) must be held indefinitely.
(f) Purchaser agrees that the Shares (and the Warrant Shares)
shall bear legends in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE SOLD OR OFFERED FOR SALE OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (ii) AN APPLICABLE
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT. ANY SALE PURSUANT TO
CLAUSE (ii) OF THE PRECEDING SENTENCE MUST BE ACCOMPANIED BY AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY TO THE EFFECT THAT SUCH EXEMPTION FROM REGISTRATION IS AVAILABLE IN
CONNECTION WITH SUCH SALE."
5.2 Authorization; No Conflict. XxXxxxx is a Nevada limited partnership
duly organized, legally existing and in good standing under the laws of the
State of Florida. XxXxxxx has all requisite corporate power and authority to
enter into this Agreement and to carry out and perform its obligations under the
terms of this Agreement. This Agreement is a legal, valid, and binding
obligation of Purchaser. The execution, delivery, and performance of this
Agreement by Purchaser and the consummation by Purchaser of the transactions
contemplated hereby will not conflict with or result in a default under the
terms of the partnership agreement of XxXxxxx or any material contract,
agreement, obligation or commitment applicable to Purchaser.
6. Termination, Amendment and Waiver.
6.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual written consent of Purchaser and the Company;
(b) by either Purchaser or the Company:
(i) if the transaction contemplated by this Agreement shall not
have been consummated on or before February 28, 1999,
unless the failure to consummate the transaction
contemplated by this Agreement is the result of a material
breach of this Agreement by the party seeking to terminate
this Agreement; or
(ii) if any permanent injunction or other order of a court or
other competent authority preventing the consummation of
the transactions contemplated by this Agreement shall have
become final an nonapplicable.
(c) by Purchase, if the Company breaches any of its representations
or warranties herein or fails to perform in any material respect any of
its covenants, agreements or obligations under this Agreement; and
(d) by the Company, if Purchaser breaches any of its representations
or warranties herein or fails to perform in any material respect any of
its covenants, agreements or obligations under this Agreement.
6.2 Effect of Termination. In the event of termination of this Agreement
by either the Company or Purchaser as provided in Section 8A, this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of Purchaser or the Company.
7. Miscellaneous.
7.1 Amendment. This Agreement may be amended by the parties hereto at
any time. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties.
7.2 Extension; Waiver. At any time prior to the Closing Date, the
parties may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or the other acts of the other parties,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (c) waive compliance with
any of the agreements or conditions contained herein. Any agreement on the part
of a party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
7.3 Assignment. This Agreement shall not be assigned by operation of
law or otherwise, and any attempt at assignment shall be void.
7.4 Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by or on behalf of any party to
this Agreement in connection herewith shall survive the execution and deliver of
this Agreement and shall terminate on the fourth anniversary of the Closing
Date.
7.5 Successors and Assigns; No Third Party. All covenants and
agreements in this Agreement contained by or on behalf of the parties hereto
shall bind and inure to the benefit of the respective successors and assigns of
the parties hereto and, to the extent provided in this Agreement. Subject to
the foregoing, nothing in this Agreement shall confer upon any person or entity
not a party to this Agreement, or the legal representatives of such person or
entity, any rights or remedies of any nature or kind whatsoever under or by
reason of this Agreement.
7.6 Notices. All communications provided for hereunder shall be
delivered personally or sent by registered or certified mail and, if to the
Purchaser, to the address set forth on the signature page hereto and if to the
Company addressed to it as EqualNet Holding Corp., 0000 Xxxx Xxxxxx Xxxx Xxxxx,
Xxxxxxx, Xxxxx 00000-0000. Attn: General Counsel, or to such other address with
respect to any party as such party shall notify the other in writing. Within 5
days after the date of such mailing (save for any postal interruption) such
communication shall be deemed to have been received.
7.7 Descriptive Headings. The descriptive headings of the several
Paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
7.8 Governing Law; Consent to Jurisdiction. This Agreement shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the law of the State of Texas without giving effect to the
choice of law or conflicts principles thereof. Any legal action or proceeding
with respect to this Agreement may be brought in the courts of the State of
Texas or of the United States of America for the Southern District of Texas,
and, by execution and delivery of this Agreement, the Company hereby accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Purchaser and the Company irrevocably
consents to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to its address set forth herein, such service
to become effect 30 days after such mailing. Nothing herein shall affect the
right of the Company or the Purchaser to serve process in any other manner
permitted by law.
7.9 Remedies. In case any one or more of the covenants and/or
agreements set forth in this Agreement shall have been breached by the Company
or the Purchaser, the Company or the Purchaser, as applicable, may proceed to
protect and enforce its or their rights either by suit in equity and/or by
action at law.
7.10 Entire Agreement. This Agreement, including the Schedules hereto,
and the other writings referred to herein or delivered pursuant hereto contain
the entire agreement among the parties with respect to the subject matter hereof
and supersede all prior and contemporaneous arrangements or understandings with
respect thereto.
7.11 Severability. Any provisions of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
7.12 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but which
together shall constitute a single agreement.
7.13 Brokerage. Each party hereto will indemnify and hold harmless the
others against and in respect of any claim for brokerage or other commissions
relative to this Agreement or to the transactions contemplated hereby, based in
any way on agreements, arrangements or understandings made or claimed to have
been made by such party with any third party.
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly executed
and delivered as of the date first above written.
EQUALNET HOLDING CORP.
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
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Title: Chairman
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XXXXXXX MANAGEMENT FAMILY LIMITED PARTNERSHIP
By: /s/ C. Xxxxx XxXxxxx
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Name: C. Xxxxx XxXxxxx
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Title: CEO
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address for notices:
0000 Xxx Xxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxx 00000
