AMENDMENT
dated as of March 10, 1998
to
PURCHASE AGREEMENT
dated as of January 15, 1998
WHEREAS, EqualNet Corporation, a Delaware corporation ("Buyer"),
EqualNet Holding Corp., a Texas Corporation ("EqualNet"), and SA
Telecommunications, Inc., a Delaware corporation ("SA Telecom"), and its
subsidiaries named as Sellers on the signature pages hereto (SA Telecom and such
subsidiaries collectively, "Sellers") are parties to a Purchase Agreement dated
as of January 15, 1998 (the "Purchase Agreement," capitalized terms used but not
defined herein having the meaning specified in the Purchase Agreement) pursuant
to which Buyer agreed to purchase from Sellers, and Sellers agreed to sell to
Buyer, on the terms and conditions set forth therein, the assets of Sellers
specified therein (the "Assets");
WHEREAS, on March 4, 1998, Sellers conducted an auction of their
assets (the "Auction") pursuant to a Second Amended Order (i) Authorizing and
Scheduling Auction at Which the Sellers May Sell Substantially All Their Assets
Free And Clean Of All Liens, Claims, and Encumbrances; (ii) Approving Proposed
Auction Procedures; (iii) Scheduling Hearing and Objections Deadline on Motion
of Debtors to Sell Assets; and (iv) Approving Notice and Service of the Sale
approval Motion (the "Amended Scheduling Order"), which Amended Scheduling Order
was entered by the Bankruptcy Court on February 23, 1998;
WHEREAS, at the Auction Buyer enhanced its offer contained in the
Purchase Agreement for the Assets;
WHEREAS, the Buyer's offer, as so enhanced, was determined by Sellers
and the Creditors' Committee to be the highest and best offer for the Assets;
and
WHEREAS, Buyer has agreed to provide Sellers with a
debtor-in-possession financing in the amount of $1,500,000, available commencing
no later than March 10, 1998, on the terms and conditions set forth in the
Stipulation dated as of March 10, 1998, among Sellers, Buyer and Greyrock,
subject to the approval by the Bankruptcy Court of the sale of the Assets to
Buyer pursuant to the Purchase Agreement as modified hereby;
WHERAS, Sellers, Buyer and EqualNet wish to Amend the Purchase
Agreement to reflect said enhancement of Buyer's offer and to clarify other
matters;
NOW, THEREFORE, Buyer, EqualNet and Sellers hereby agree as follows:
1. The definitions of the terms "Adjusted Pre-Closing Monthly Minute",
"Pre-Closing Monthly Minutes", "Post-Closing Monthly Minutes", "Closing Date
Market Value", "Billable Minute" "Escrow Agreement", "Escrowed Shares", and
"Xxxxxx Group" contained in Section 1 of the Purchase Agreement are hereby
deleted.
2. The definition of the term "Conversion Rate" set forth in Section 1
of the Purchase Agreement is amended to read in its entirety as follows:
"'Conversion Rate' shall mean the number of shares of Common Stock
that the holder of Preferred Shares shall receive upon conversion of one
Preferred Share. Subject to adjustment as set forth in the Preferred Stock
Provisions for the effect of dilutive and concentrative events affecting
the Common Stock, one Preferred Share shall be convertible into ten shares
of Common Stock."
3. There is inserted the following new definitions in Section 1 of the
Purchase Agreement, in appropriate alphabetical sequence:
"'EqualNet DIP Financing' shall mean the debtor-in-possession
financing in the principal amount of $1,500,000 provided or to be provided
by EqualNet to Sellers."
All references in the Purchase Agreement to the "Xxxxxx Group DIP Financing"
shall be to the EqualNet DIP Financing and all references in the Purchase
Agreement to the "Xxxxxx Group" shall be to EqualNet.
4. The definition of the term "Revenue Amount" set forth in Section 1
of the Purchase Agreement is amended to read it its entirety as follows:
"Revenue Amount" shall mean the gross revenue of Sellers, determined
in accordance with GAAP, during the months of December 1997 and January
1998; provided, however, that if the gross revenue of Sellers during the
month of February 1998 is less than 92% of the average monthly gross
revenue of Sellers during the months of December 1997 and January 1998,
then "Revenue Amount" shall mean the gross revenue of Sellers, determined
in accordance with GAAP, during the months of January and February 1998."
5. Section 3(d) of the Purchase Agreement is amended by adding the
following new sentence at the end thereof:
"If on the Closing Date the amount of principal and interest owing by
Sellers in respect of the EqualNet DIP Financing is less than $1,500,000
(the amount by which it is less herein called the "Available EqualNet DIP
Amount") , then (i) an amount equal to the lesser of (x) $300,000 or (y)
the Available EqualNet DIP Amount shall be applied by Sellers to the
repayment of the Greyrock Financing and (ii) EqualNet shall issue to SA
Telecom, as agent for Sellers, a promissory note in an amount equal to the
amount specified in clause (i) above, which promissory note (x) shall bear
interest at the rate of 10% per annum, payable quarterly on the last day of
each calender quarter and at maturity, (y) shall mature on the first
anniversary of the issuance thereof and (z) after the payment in full of
the Greyrock Financing, shall be prepaid on the last day of each calender
quarter by an amount equal to 25% of the original principal amount of such
promissory note (but the entire outstanding balance of such promissory note
and all accrued interest thereon shall, in any event, be due and payable on
the first anniversary of the issuance date thereof). The amount applied to
the payment of the Greyrock Financing pursuant to clause (i) of the
preceding sentence shall be in addition to the payment required to be made
by Sellers to Greyrock pursuant to Section 9(n)."
6. All references in the Purchase Agreement to "Scheduling Order"
shall be to the Amended Scheduling Order.
7. Clause (i) of Section 4(b) of the Purchase Agreement is amended to
read in its entirety as follows:
"(i) Buyer shall pay the cash portion of the Consideration by a wire
transfer in immediately available funds to such account or accounts as SA
Telecom, as agent for Sellers, shall specify by a notice in writing to
Buyer at least two business days prior to the Closing Date;"
8. Sections 4(d) and 5(b) and the last sentence of Section 5(a)(v) of
the Purchase Agreement are hereby deleted.
9. Section 5(a) of the Purchase Agreement is amended by deleting the
words "fifteen days after the Closing Date" set forth therein and substituting
therefor the words "April 1, 1998."
10. The third sentence of Section 8(b) of the Purchase Agreement is
amended to read as follows:
"No other corporate proceedings on the part of any EqualNet Party, other
than the approval of the shareholders of EqualNet, are necessary to
authorize this Agreement, the other Transaction Documents, the issuance of
the Preferred Shares to Sellers pursuant hereto or the transactions
contemplated herein or therein."
11. Section 9 of the Purchase Agreement is amended by adding the
following new paragraph (n) at the end thereof:
"(n) Greyrock Overadvances. On the Closing Date the Sellers shall pay
to Greyrock, for application to the Greyrock Financing, an amount equal to
the lesser of (i) the Post-Petition Overadvances or (ii) $73,969. Such
payment shall be in addition to the payment, if any, on the Greyrock
Financing required to be made pursuant to the penultimate sentence of
Section 3(d)."
12. Sections 10(e), 11(g), 11(i) and 12(e) of the Purchase Agreement
are hereby deleted.
13. Section 11 of the Purchase Agreement is hereby amended by adding
the following new paragraph (n) at the end thereof:
"(n) Shareholder Approval The shareholders of EqualNet shall have
approved the transactions contemplated by this Agreement."
14. Section 12 of the Purchase Agreement is amended by adding at the
end thereof the following new paragraph (k):
"(k) EqualNet DIP Financing. Buyer shall have provided to Sellers the
EqualNet DIP Financing."
15. Clause (v) of Section 13(a) is amended to read as follows:
"(v) by any party (unless such party is in default under this
Agreement) if the Sale Order is not entered on or before March 13, 1998 or
if the Closing does not occur on or before May 31, 1998."
16. Section 14(b) of the Purchase Agreement is amended by (a) changing
the dates "February 13, 1998" and "March 31, 1998" set forth therein to,
respectively, "March 13, 1998" and "May 31, 1998"; and (b) adding the following
new clause (iv) to the proviso at the end of said paragraph 14(b):
"or (iv) if Buyer fails to purchase the Assets because the conditions
specified in Sections 10(d) or 11(n) are not satisfied or Sellers refuse to
sell the Assets to Buyer because the condition specified in Section 12(k)
is not satisfied."
17. Exhibit B to the Purchase Agreement is hereby deleted.
18. Provided that Sellers turn over to the EqualNet Parties
operational control of Sellers' business on or before March 17, 1998 pursuant to
a Management and Services Agreement to be entered into by Sellers and the
EqualNet Parties, all Operating Losses and Operating Income (as such terms are
defined in such Management and Services Agreement) of Sellers accruing on or
after April 1, 1998, and until the Closing Date, shall be for the account of
Buyer. Buyer shall pay to Sellers or shall reimburse Sellers for the amount of
any such Operating Losses, and Sellers shall pay to Buyer the amount of any such
Operating Income, all in accordance with the terms of said Management and
Services Agreement. Any such payment by Buyer shall be in addition to the
Consideration to be paid by Buyer for the Assets pursuant to Section 3(d) of the
Purchase Agreement.
19. The Sellers have been advised by the EqualNet Parties that in
connection with the solicitation of the consent of EqualNet's shareholders to
the transactions contemplated by the Purchase Agreement, an audit of Sellers'
financial statements may be required. In the event such audit is required,
Sellers shall permit an accounting firm selected by the EqualNet Parties to
conduct such audit, at the sole cost and expense of the EqualNet Parties, and
shall cooperate fully with such accounting firm in its performance of such
audit.
20. Except as amended hereby, the Purchase agreement and the
respective rights and obligations of the parties thereunder, shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
Buyer:
EQUALNET CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: COO
EqualNet:
EQUALNET HOLDING CORP.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: COO
Sellers:
SA TELECOMMUNICATIONS, INC.
ADDTEL COMMUNICATIONS, INC.
LONG DISTANCE NETWORK, INC.
NORTH AMERICAN TELECOMMUNICATIONS CORPORATION
U.S. COMMUNICATIONS, INC.
SOUTHWEST LONG DISTANCE NETWORK, INC.
UNIQUEST COMMUNICATION, INC.
Debtors and Debtors-in-possession
By: /s/ X.X. Xxxxxx, Xx.
----------------------------
Name: X.X. Xxxxxx, Xx.
Title: CEO
Xxxxxx Group LLC and Xx. Xxxx Xxxxxxx (collectively, the
"Shareholders"), being the holders, collectively, of not less than 51% of the
outstanding shares of the common stock of EqualNet Holding Corp., hereby confirm
to the Sellers referred to in the foregoing Amendment that the Shareholders will
vote their respective shares of EqualNet Holding Corp. stock in favor of the
transactions contemplated by the Purchase Agreement referred to in, and as
amended by, the foregoing Amendment.
XXXXXX GROUP LLC
By: /s/ Xxxx Xxxxxx
----------------------------
Name: Xxxx Xxxxxx
Title: President
/s/ Xxxx Xxxxxxx
---------------------------
Xxxx Xxxxxxx
