AMENDMENT NUMBER ONE TO SECURITIES EXCHANGE AGREEMENT BETWEEN EGPI FIRECREEK, INC., WADE CLARK, DAVID SHEPARD, AND TERRA TELECOM, LLC
Exhibit
10.1
AMENDMENT
NUMBER ONE TO SECURITIES EXCHANGE AGREEMENT
BETWEEN
XXXX
XXXXX,
XXXXX
XXXXXXX,
AND
TERRA
TELECOM, LLC
This
Amendment Number One to Securities Exchange Agreement (“Amendment One”) is
entered into by and between EGPI FIRECREEK, INC., a Nevada corporation (“EGPI”),
XXXX XXXXX, an individual who resides at the address indicated on the signature
page hereof (“XXXX”), XXXXX XXXXXXX, an individual who resides at the address on
the signature page hereof (“XXXXX”) and the other individuals listen on Exhibit
A, residing at the locations listed on Exhibit A, (who together are hereinafter
sometimes referred to individually as a “SELLER” and collectively as, the
“SELLERS”), and TERRA TELECOM, LLC., (the “COMPANY”) (EGPI, Wade, David, Sellers
and the Company are hereinafter collectively referred to as the
“Parties”).
Whereas
on or about September 30th, 2010
the Parties executed that certain Securities Exchange Agreement (the
“Agreement”) and desire to amend the Agreement as hereinafter set forth;
and
WHEREAS,
the Agreement is incorporated herein by reference for all purposes, and all
capitalized terms herein shall have the same meaning as defined in the
Agreement; and
NOW,
THEREFORE, in consideration of the mutual covenants and premises contained
herein, and for other good and valuable consideration, the receipt and adequacy
of which are hereby conclusively acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
1. Amendment to the Recitals of
the Agreement. Recital A, Recital C, Recital D, Recital E,
Paragraph 1.1 Purchase and Sale, Paragraph 1.2 are hereby amended as
follows:
(a) Recital
A of the Agreement is deleted and restated in its entirety as
follows:
“The
Sellers own all of the issued and outstanding ownership interests of the Company
and desire to exchange all of their interests in the Company for Common Stock of
Purchaser as set forth herein (the “Common Stock” or the
“Securities”)”
(b) Recital
C is stricken from the Agreement
(c) Recital
D of the Agreement is deleted and restated in its entirety as
follows:
“In
exchange for each of the Sellers’ ownership interest in the Company which in the
aggregate equal 100%, the Sellers’ shall each acquire upon the terms and
conditions stated in this Agreement, (i) that aggregate number of shares of
Common Stock set forth opposite such person’s name in column (3) on the
Schedule of Buyers attached hereto as Exhibit A”
(d) Recital
E of the Agreement is deleted and restated in its entirety as
follows:
“Contemporaneously
with the execution and delivery of this Agreement and in consideration for the
issuance of the Common Stock, the Sellers’ shall transfer 100% of the
unencumbered ownership interest in the Company owned by each of them, upon the
terms and conditions set forth herein”
(e) Paragraph
1.1 Purchase and Sale of the Agreement is amended to read as
follows:
1
2. Article
1 of the Agreement is amended as follows:
(a) Section
1.1 is deleted and restated in its entirety as follows:
1.1 “PURCHASE
AND SALE. Subject to the terms and conditions of this Agreement, the Sellers
each agree to exchange all of the outstanding ownership interests of the Company
owned by each of them (“MEMBER UNITS” or “UNITS” or “SHARES”)
for that aggregate number of shares of Common Stock set
forth opposite such person’s name in column (3) on the Schedule of
Buyers attached hereto as Exhibit A. The aggregate number of shares of Common
Stock reflected on Exhibit A is Thirty Million (30,000,000) which is hereinafter
referred to as the “Purchase Price”, subject to effects and adjustments
retroactively of a 1:50 reverse stock split of EGPI’s common stock effective on
November 9, 2010 (see Exhibit A1).
(b) Section
1.2 of the Agreement is deleted and restated in its entirety as
follows:
“1.2 Sellers’
Earn-Out
1.2.1 In
addition to the Purchase Price, the Sellers
shall, for a period of twenty-four
(24) months following the Closing Date (the "EARN-OUT TERM"), be
entitled to receive additional shares of Common Stock (the “Earn-out
Provision” or “Earn-out”) based upon the financial performance of the Company
set forth below:
1.2.1(a). If
as of January 1, 2013 (the “FIRST EARN-OUT DATE”) the average annual revenues of
the Company for the two (2) previous calendar years (i.e. the
calendar years ending January 1, 2012 and January 1, 2013 and which are
hereinafter referred to as the “First Earn Out Period”) is determined to be (the
“Revenue Determination”) not less than Twenty Million Dollars ($20,000,000) (the
“Revenue Milestone”) and the average EBITDA of the Company for the First Earn
Out Period is determined to be (the “EBITDA Determination”) not less than two
(2) million dollars ($2,000,000) (the “EBITDA Milestone”) then the Company
shall issue to the Sellers in the same proportion as appears on
Exhibit A, the amount of 30,000,000 shares of the Purchaser’s common
stock (the “First Earn Out Maximum”).. The Revenue Determination and the EBITDA
Determination shall be weighted equally and made within One Hundred and Twenty
(120) days following the end of the First Earn Out period and shall be made
according to GAAP by an independent certified public accounting firm acceptable
to the Parties the cost of which shall be split equally between Purchaser and
Sellers. In the event either the Revenues Determination or the EBITDA
Determination is less than either the Revenue Milestone or the EBITDA Milestone,
respectively then the First Earn Out Maximum shall be prorated giving equal
weight to Revenue and EBITDA. For example, if the Revenue Determination at the
First Earn-Out Date is $19,975,000.00 rather than $20,000,000.00, the quotient
obtained by dividing $19,975,000.00 by $20,000,000.00 is 0.9988. The
weighted quotient for revenue obtained is .4994. If the EBITDA Determination at
the First Earn-Out Date is $1,875,000.00 rather than $2,000,000.00, the quotient
obtained by dividing $1,875,000.00 by $2,000,000.00 is 0.9375. The
weighted quotient for EBITDA obtained is .4688. The sum of the weighted quotient
for revenue and EBITDA is .9681. The 30,000,000 number of shares of the EGPI
Common Stock will then be multiplied by 0.9681 with a result of
29,043,750. Thereafter, 956,250 number of shares of the EGPI Common Stock
will then remain issuable upon the Company meeting the performance criteria
outlined below for the Second Earn-Out Date.
1.2.1(b). If
the performance criteria in section.1.2.1 (a) is not met for the First Earn-Out
Period, then on January 1, 2014 (“SECOND EARN-OUT DATE”) Sellers shall have the
opportunity to earn any remaining amount of the First Earn Out Maximum as
follows: if as of the Second Earn Out Date the average annual revenues of the
Company for the three (3) previous calendar years (i.e. the calendar
years ending January 1, 2012, January 1, 2013 and January 1, 2014 and which are
hereinafter referred to as the “Second Earn Out Period”) is determined to be
(the “ Second Revenue Determination”) not less than Thirty Million Dollars
($30,000,000) (the “Second Revenue Milestone”) and the average EBITDA of the
Company for the Second Earn Out Period is determined to be (the “Second EBITDA
Determination”) not less than three (3) million dollars ($3,000,000) (the
“Second EBITDA Milestone”) then the Company shall issue to the
Sellers in the same proportion as appears on Exhibit A, the remainder of the
First Earn Out Maximum. The Second Revenue Determination and the Second EBITDA
Determination shall be weighted equally and made within One Hundred and Twenty
(120) days following the end of the Second Earn Out period and shall be made
according to GAAP by an independent certified public accounting firm acceptable
to the Parties the cost of which shall be split equally between Purchaser and
Sellers.
1.2.1(c) Adjustment
for Stock Splits, Stock Dividends, Recapitalizations, Etc. The Number
of Shares issuable under this Section shall be appropriately adjusted to reflect
any stock dividend, stock split, and combination of shares, reclassification,
recapitalization or other similar event affecting the number of outstanding
shares of stock or securities.
2
3. Amendment to Article 8 of
the Agreement. Section 8.4 of the Agreement is deleted and restated in its
entirety as follows:
“Purchaser shall have
delivered to Sellers the Common Stock constituting the Purchase Price, at
Closing. .
4. Amendment
to Section 12.3 of the Agreement. The following is added to Section
12.3
“EBITDA”
shall mean Earnings Before Interest Taxes Depreciation and Amortization in
accordance with GAAP.
5. Ratification and
Republication Except as amended by this Agreement, the parties do hereby
ratify and republish the Agreement.
6. Benefit. All
the terms and provisions of this Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto, and their respective
heirs, executors, administrators, personal representatives, successors and
permitted assigns.
7. Construction. Words
of any gender used in this Agreement shall be held and construed to include any
other gender, and words in the singular number shall be held to include the
plural, and vice versa, unless the context requires otherwise.
8. Multiple
Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9. Entire
Agreement. This Agreement and the Agreement contain the entire
understanding of the parties with respect to the subject matter hereof, and may
not be changed orally, but only by an instrument in writing signed by the party
against whom enforcement of any waiver, change, modification, extension, or
discharge is sought. In the event of any conflict between the terms of this
Amendment One and the Agreement, the terms of this Amendment One shall
control.
IN
WITNESS WHEREOF, this Agreement has been executed in multiple counterparts on
the November 23, 2010.
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TERRA
TELECOM, LLC
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/s/Xxxxxx
X. Xxxxxxxxx
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Xxxxxx
X. Xxxxxxxxx, Chief Executive Officer
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Xxxx
Xxxxx, Chief Executive Officer
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Effective
December 6, 2010
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Xxxxx
Xxxxxxx, Chief Technical Officer
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Xxxx
Xxxxxxxxx
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Xxxxxx
Xxxxxxxxx
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Xxxxx
XxXxxx
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Xxxx
Xxxxxxx
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Xxxxxxx
Xxxxxx
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3
Exhibit
A
Schedule of
Buyers
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Number
of
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|||||
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Shares
of
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|||||
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Name
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Address
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Common
Stock
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||||
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Xxxxx
XxXxxx
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000
Xxxx Xxxx
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0,000,000 | ||||
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Xxxxxxx,
XX 00000
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||||||
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Xxxx
Xxxxxxxxx
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0000
XX 000xx
XX
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0,000,000 | ||||
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Xxxxxx,
XX 00000
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||||||
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Xxxx
Xxxxxxx
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00000
Xxxxx Xxxxxx Xxx
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0,000,000 | ||||
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Xxxxx,
XX 00000
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Xxxxxx
Xxxxxxxxx
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00000
Xxxxxxx Xxxx
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0,000,000 | ||||
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Xxxx
Xxxxx, XX 00000
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||||||
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Xxxxx
Xxxxxxx
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0000
Xxxxx 00xx Xxxx Xxx
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0,000,000 | ||||
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Xxxxx,
XX 00000
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||||||
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Xxxx
Xxxxx
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0000
Xxxxx 00xx Xxxx Xxx
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0,000,000 | ||||
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Xxxxx,
XX 00000
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||||||
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Xxxxxxx
Xxxxxx
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0000
Xxxx 00xx Xxxxx
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000,000 | ||||
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Xxxxx,
XX 00000
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4
Exhibit
A1
Reverse
stock split calculations / adjustments
EGPI Firecreek, Inc. has filed Form DEF
14C to effect a 1 for 50 reverse stock split of its common stock which has not
been declared effective as of close of the Agreement, but which when declared
effective will be applied uniformly to shares to be issued under this Agreement
such that if the entire sixty million (60,00,000) shares were to be due to be
issued under the terms of this Agreement prior to the reverse split being
declared effective, would be reduced to one million two hundred thousand
(1,200,000) shares when, and if, the reverse is declared effective.
The
effect of the reverse is listed below:
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Name
|
Dollar Amount
of Debt
|
Percentage
of Total
Debt
|
Number of Common
Shares Issued
($.001 Par Value)
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Number of Common
Shares after 1:50
reverse split
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Xxxxx
XxXxxx
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$ | 998,320.00 | 29 | % | 11,600,000 | 232,000 | ||||||||||
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Xxxx
Xxxxxxxxx
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$ | 681,548.00 | 19 | % | 7,600,000 | 152,000 | ||||||||||
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Xxxx
Xxxxxxx
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$ | 250,000.00 | 7 | % | 2,800,000 | 56,000 | ||||||||||
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Xxxxxx
Xxxxxxxxx
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$ | 1,435,226.32 | 41 | % | 16,400,000 | 328,000 | ||||||||||
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Xxxxx
Xxxxxxx
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$ | - | 0 | % | 10,000,000 | 200,000 | ||||||||||
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Xxxx
Xxxxx
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$ | - | 0 | % | 10,000,000 | 200,000 | ||||||||||
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Xxxx
Xxxxxx
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$ | 137,676.96 | 4 | % | 1,600,000 | 32,000 | ||||||||||
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Total
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$ | 3,502,771.28 | 60,000,000 | 1,200,000 | ||||||||||||
5
