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EXHIBIT 2.2
AMENDMENT TO MERGER AGREEMENT
This AMENDMENT TO MERGER AGREEMENT("Amendment") dated as of October 26,
1998, is made by and among 2CONNECT EXPRESS, INC., a Florida corporation
("2Connect"), 2CONNECT ACQUISITION CORP., a Florida corporation ("Acquisition"),
and XXXXX XXXXXXX CELLULAR SYSTEMS OF FLORIDA, INC., a Florida corporation (the
"Company"), and all of the shareholders of the Company(collectively, the
"Shareholders")and amends certain provisions of that certain Merger Agreement
dated May 1, 1998 by and among the foregoing parties.
W I T N E S S E T H
WHEREAS, 2Connect, Acquisition, the Company and the Shareholders
entered into that certain Merger Agreement dated May 1, 1998 ("Merger
Agreement") which generally provides that the Company will be merged ("Merger")
into Acquisition, a wholly-owned subsidiary of 2Connect; and
WHEREAS, since the execution of the Merger Agreement, the parties have
determined that certain conditions precedent to the Merger contained in the
Merger Agreement will not be satisfied and the parties have agreed to amend the
Merger Agreement subject to the conditions contained herein to amend and or
eliminate such conditions precedent such that the Merger Agreement shall again
be enforceable upon its terms; and
WHEREAS, the exchange ratio of the Merger Agreement must be amended to
address certain changes regarding the treatment of the existing shareholders of
2Connect in the bankruptcy proceedings in the United States Bankruptcy Court for
the Southern District of Florida in connection with Case No. 98-20169-BKC-RBR
resulting (i) in the elimination of all pre-petition Equity Securities (as
defined in the Sterne Agee Agreement defined below) and securities convertible
into Equity Securities of 2Connect and (ii) the issuance of all post-petition
Equity Securities to Sterne, Agee & Xxxxx, Inc., a Delaware corporation ("Sterne
Agee"), in connection with that certain Agreement by and among Sterne Agee,
2Connect, Xxxxx X. Xxxxxxxx, Xx., Xxxxx X. Xxxxxxx and Xxxx Xxxxxxx dated August
27, 1998 ("Sterne Agee Agreement").
NOW, THEREFORE, in consideration of the above and the mutual
representations, warranties, covenants and agreements set forth herein, and
subject to the terms and conditions set forth herein, the parties hereto,
intending to be legally bound, agree as follows:
1. Subsection A of the preliminary statements shall be amended by
deleting the existing language in its entirety and inserting in lieu
thereof as follows:
A. 2Connect intends to submit a Plan of Reorganization (the
"Plan") to the United States Bankruptcy Court for the
Southern District of Florida (the "Bankruptcy Court") in
connection with the Case Number 98-20169-BKC-RBR (the
"Bankruptcy Case").
2. Section 1.03(a)(i) of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting in lieu
thereof as follows:
(i) At the Effective Time, by virtue of the Merger,
and without any action on the part of the parties
hereto, all of the shares of the Company's common
stock, par value $.10 per share ("Company Common
Stock"), owned by the Shareholders immediately
prior to the Effective Time shall be converted
into the right to receive three-hundred fifty
thousand (350,000) shares of Common Stock of
2Connect.
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3. Section 1.03(a)(ii) of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting in lieu
thereof as follows:
(ii) At the Effective Time, by virtue of the Merger,
and without any action on the part of the parties
hereto, each share of the Company Series A
Preferred Stock and the Company Series B Preferred
Stock (each as defined in Section 1.05(b) of the
Merger Agreement as amended by this Amendment and
collectively referred to as the "Company Preferred
Stock"), issued and outstanding immediately prior
to the Effective Time shall be converted into the
right to receive one share of 2Connect's Series A
Preferred Stock or 2Connect's Series B Preferred
Stock (each as defined in Section 1.05(d) of the
Merger Agreement as amended by this Amendment),
respectively.
4. Section 1.03(a)(iii) of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting in lieu
thereof as follows:
(iii) After the Effective Time, no share of Company
Common Stock or Company Preferred Stock shall be
deemed to be outstanding, and each share of the
Company Common Stock and Company Preferred Stock
and any options or warrants or other securities
convertible or exchangeable for shares of Company
Common Stock or Company Preferred Stock shall
automatically be canceled and retired and shall
cease to exist, and each holder of any such
securities of the Company shall cease to have any
rights with respect thereto, except the right to
receive the Common Stock of 2Connect as stated in
subsection 1.03(a)(i), the right to receive
2Connect Series A Preferred Stock and 2Connect
Series B Preferred Stock pursuant to subsection
1.03(a)(ii) and the right to receive the
Shareholder Debentures pursuant to subsection
1.03(a)(v).
5. The Merger Agreement shall be amended by adding the following
language to the Merger Agreement as Section 1.03(a)(v) of the Merger
Agreement:
(v) At the Effective Time, by virtue of the Merger,
and without any action on the part of the parties
hereto, the Shareholders shall be issued
debentures of 2Connect ("Shareholder Debentures")
in the aggregate principal amount of $250,000,
$125,000 of principal amount to each Shareholder,
which Shareholder Debentures shall be on terms
acceptable to 2Connect but shall, at a minimum
contain the following terms: (A) amortized over
three (3) years at an annual simple interest of
7.5% with principal and accrued interest on the
outstanding balance payable in quarterly
installments and (B) redeemable in whole or in
part at anytime by 2Connect.
6. Section 1.05(a) of the Merger Agreement shall be amended by deleting
the existing language in its entirety and inserting in lieu thereof
as follows:
(a) As of the Effective Date and pursuant to the Sterne Agee
Agreement and the Plan, Sterne Agee shall be issued
30,000 shares of Common Stock which shall constitute one
hundred percent (100%) of the equity
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of 2Connect at such time. Also, on or before the
Effective Time, 2Connect shall have issued 100,000
shares of Common Stock to a trust with The Trust Company
of Sterne, Agee & Xxxxx, Inc. for the benefit of certain
holders of Common Stock of 2Connect to be determined by
Sterne Agee.
7. Section 1.05(b) of the Merger Agreement shall be amended by deleting
the existing language in its entirety and inserting in lieu thereof
as follows:
(b) Prior to the Effective Time and as soon as practicable
after the execution of this Amendment, the Company shall
take all actions necessary to recapitalize the Company
in the following manner, any part or all of which may be
waived at the sole discretion of 2Connect, and, upon
such waiver by 2Connect, the Merger Agreement shall be
binding without regard to this provision upon such time
as the Company no longer has a negative equity:
(i) Convert at least three (3) of the four (4)
$125,000 One Hundred Twenty Five Thousand Dollars
1-Year 15 Percent Convertible Unsecured Debenture
Notes due April 23, 1997 as extended, June 30,
1997 as extended, September 24, 1997 as extended
and October 24, 1997 as extended, respectively
("Company Working Capital Debentures"), into
Series A Preferred Stock of the Company, par value
$1.00 per share ("Company Series A Preferred
Stock"), each with a face value or purchase price
of $25,000 and convertible into forty-seven (47)
shares of Company Common Stock commencing June 30,
1999.
(ii) Converted each of (A) the Series A 7.5%
Convertible Subordinated Debentures of the
Company, as amended ("Series A Debentures"), (B)
the Promissory Note of the Company to The Sterne
Agee Investors No. 3, an affiliate of Sterne Agee,
dated February 27, 1998 in the principal amount of
$200,000 ("Sterne Agee Note") and (C) the two
promissory notes of the Company, one to each of
the Shareholders, in the aggregate principal
amount of $150,000 ("Shareholder Notes") into
Series B Preferred Stock of the Company, par value
$1.00 per share ("Company Series B Preferred
Stock"), each with a face value or purchase price
of $25,000 and convertible into forty-seven (47)
shares of Company Common Stock commencing June 30,
1999.
(iii) Based upon the capitalization of the Company as of
the date of the execution of this Amendment, the
above recapitalization will result in the Company
having the following capital structure excluding
debt to AT&T Wireless Services and Southern
Commerce Bank: (A) 4,000 shares of Company Common
Stock issued and outstanding and owned by the
Shareholders, (B) twenty (20) shares of Company
Series A Preferred Stock convertible into
nine-hundred forty (940) shares of Company Common
Stock commencing June 30, 1999 and (C)
thirty-eight
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(38) shares of Company Series B Preferred Stock
convertible into one thousand seven hundred
eighty-six (1,786) shares of Company Common Stock
commencing June 30, 1999. Any additional Series A
Debentures issued after the execution of this
Amendment shall also be converted to Company
Series B Preferred Stock at the time of the
recapitalization referred to herein.
8. As a consequence of paragraph 7 above, the definition of "Voting
Stock" is eliminated and consequently all references in the Merger
Agreement to the capitalized term Voting Stock shall refer to the
term Common Stock.
9. Section 1.05(d) of the Merger Agreement shall be amended by deleting
the existing language in its entirety and inserting in lieu thereof
as follows:
(d) Prior to the Effective Time and as soon as practical after the
execution of this Amendment and the Effective Date, 2Connect
shall take all action to amend the Articles of Incorporation
of 2Connect as follows:
(i) Establish Series A Preferred Stock, par value $1.00 per
share, of 2Connect ("2Connect Series A Preferred Stock")
with a face value or purchase price per share of
$25,000.
(ii) Establish Series B Preferred Stock par value $1.00 per
share, of 2Connect ("2Connect Series B Preferred Stock")
with a face value or purchase price per share of
$25,000.
(iii) Each of the 2Connect Series A Preferred Stock and the
2Connect Series B Preferred Stock shall have the
following terms and obligations (A) a cumulative annual
preferred dividend of 7.5% payable semi-annual
commencing one hundred eighty (180) days following
issuance, (B) callable by the Company at anytime, in
whole or in part by lot, (C) mandatory redemption at par
value five (5) years after issuance, (D) convertible
into four thousand one hundred sixty-six (4,166) shares
of Common Stock of 2Connect, (E) a majority of the
2Connect Series B Preferred Stock shall have the right
to appoint 1/3 of the members of the Board of Directors
of 2Connect, (F) shall be generally non-voting except
that 2Connect shall not issue any preferred stock or
debentures or incur any debt superior to the 2Connect
Series A Debentures without the affirmative consent of
the holders of a majority of each of the 2Connect Series
A Preferred Stock and the 2Connect Series B Preferred
Stock and further 2Connect shall not issue 2Connect
Series A Preferred Stock without the affirmative consent
of the holders of a majority of the 2Connect Series B
Preferred Stock, (G) upon any default in the payment of
any dividends or any other of 2Connect's obligations to
the holders of 2Connect Series A Preferred Stock or
2Connect Series B Preferred Stock, the 2Connect Series A
Preferred Stock or the 2Connect Series B Preferred
Stock, as the case may be, shall immediately convert
from limited voting
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to fully voting as if converted into Common Stock of
2Connect, (H) contain standard anti-dilution provisions
regarding conversion to Common Stock of 2Connect, (I)
the 2Connect Series B Preferred Stock shall be
subordinated in right upon any liquidation to the
2Connect Series A Preferred Stock and each of the
2Connect Series A Preferred Stock and the 2Connect
Series B Preferred Stock shall be superior in right upon
any liquidation to the Shareholder Debentures and (J)
all proceeds from the sale of Series B Preferred Stock
will be used in the same manner as the Series A
Debentures.
10. Section 1.05(e) of the Merger Agreement shall be amended by deleting
the existing language in its entirety and inserting in lieu thereof
as follows:
(e) Immediately after the Effective Time, the Board of Directors
of 2Connect will consist of three (3) directors, two (2) of
whom shall be the Shareholders, and one of whom shall be Xxxxx
X. Xxxxxxxx, Xx. or such other designee of Sterne, Agee &
Xxxxx, Inc. (the "XXX Director"). To effect this result, each
of Xxxxx X. Xxxxxxx, F. Xxxxxx Xxxxxxx and Xxxx X. Xxxxxxx
shall resign from the Board of Directors effective either on
or before the Effective Time, and Xxxxx X. Xxxxxxxx, Xx., as
the sole remaining director shall resolve that the Board shall
consist of three (3) directors and shall appoint each of the
Shareholders to fill the two (2) vacancies on the Board of
Directors. Also, the Board of Directors shall appoint each of
the Shareholders to their respective offices in accordance
with the employment agreements attached as Exhibit C and
Exhibit D of the Merger Agreement.
11. Section 2.02(i) of the Merger Agreement shall be amended by deleting
the existing language in its entirety and inserting in lieu thereof
as follows:
(i) [INTENTIONALLY DELETED]
12. Section 2.03(ii) of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting in lieu
thereof as follows:
(ii) [INTENTIONALLY DELETED]
13. Section 2.04 of the Merger Agreement shall be amended by changing
the date contained therein from "_______, 1998" to June 30, 1999.
14. Section 7.01(d) of the Merger Agreement shall be amended by deleting
the existing language in its entirety and inserting in lieu thereof
as follows:
(d) [INTENTIONALLY DELETED]
15. Section 7.02(g) of the Merger Agreement shall be amended by deleting
the existing language in its entirety and inserting in lieu thereof
as follows:
(g) [INTENTIONALLY DELETED]
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16. Section 7.02(h) of the Merger Agreement shall be amended by deleting
the existing language in its entirety and inserting in lieu thereof
as follows:
(h) [INTENTIONALLY DELETED]
17. Section 7.03(f) of the Merger Agreement shall be amended by deleting
the existing language in its entirety and inserting in lieu thereof
as follows:
(f) The Company shall have completed the transactions contemplated
in Section 1.05(b) of the Merger Agreement as amended by this
Amendment and 2Connect shall have completed the transactions
in Section 1.05(d) of the Merger Agreement as amended by this
Amendment.
18. Section 7.03(g) of the Merger Agreement shall be amended by deleting
the existing language in its entirety and inserting in lieu thereof
as follows:
(g) The Company shall have provided to 2Connect the Company's
Financial Statements which shall have been audited by the
Company's independent certified public accountants and
accompanied by report of such certified public accountants.
All costs related to such audit, regardless of whether or not
the Merger is consummated, shall be paid from the proceeds
received by the Company pursuant to the Series A Debentures.
19. Section 7.03(l) of the Merger Agreement shall be amended by deleting
the existing language in its entirety and inserting in lieu thereof
as follows:
(l) With respect to each of the debt obligations of the Company to
AT&T Wireless Services and Southern Commerce Bank,
approximately $280,000 to AT&T and approximately $376,000 to
Southern Commerce Bank, the Company shall have received either
(i) a written consent to the Merger as required by those
certain respective agreements representing the debt
obligations of the Company to AT&T Wireless Services and
Southern Commerce Bank, (ii) a relinquishment of the debt
obligations or (iii) a commitment letter from a new lender to
refinance the debt.
20. Section 10.05 of the Merger Agreement shall be amended by deleting
the existing language in its entirety and inserting in lieu thereof
as follows:
Section 10.05 [INTENTIONALLY DELETED]
21. Section 10.06 of the Merger Agreement shall be amended by deleting
the existing language in its entirety and inserting in lieu thereof
as follows:
Section 10.06 [INTENTIONALLY DELETED]
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22. Section 10.07 of the Merger Agreement shall be amended by deleting
the existing language in its entirety and inserting in lieu thereof
as follows:
Section 10.07 [INTENTIONALLY DELETED]
23. Section 10.08 of the Merger Agreement shall be amended by deleting
the existing language in its entirety and inserting in lieu thereof
as follows:
Section 10.08 REGISTRATION OF CAPITAL STOCK OF 2CONNECT. After
the Closing Date, 2Connect shall, as soon as reasonably
practical in the course of its business, use reasonable
commercial efforts to offer to the holders of the Common Stock
of 2Connect, the holders of the 2Connect Series A Preferred
Stock and the holders of the 2Connect Series B Preferred
Stock, securities of 2Connect in such form deemed appropriate
by 2Connect which have been registered with the U. S.
Securities and Exchange Commission under the Securities Act of
1933, as amended, and applicable states securities commission,
if required, or otherwise cause such holders to have freely
tradeable securities. Registration may be conducted by any
available means including, but not limited to, exchange of the
Common Stock of 2Connect, the 2Connect Series A Preferred
Stock and the 2Connect Preferred B Stock for registered
securities in a recapitalization conducted under Section
368(a)(1)(E) of the Internal Revenue Code of 1986, as amended.
24. Section 11.02 of the Merger Agreement shall be amended by replacing
Xxxxxx Xxxx & Xxxxxx, LLP, therein with and changing the address of
2Connect to Xxxx & Xxxxxx LLP, 3100 SouthTrust Tower, 000 Xxxxx 00xx
Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000, Telecopy: (000) 000-0000.
25. Article XIII of the Merger Agreement shall be amended by deleting
Article XIII in its entirety and inserting in lieu thereof as
follows:
ARTICLE XIII
The Bankruptcy Court shall have entered the order confirming the
Amended Plan of Reorganization (as and as hereinafter defined in the
Sterne Agee Agreement), a copy of which is attached hereto as
Schedule XIII.
26. Exhibit B of the Merger Agreement shall be amended by adding the
following language to the Exhibit for purposes of Section 1.03(c):
o The directors shall be Xxxxx X. Xxxxxxxx, Xx., Xxxxxx X.
XxXxxxxx and Xxxxx X. Xxxxx.
o The officers shall be as follows:
Xxxxxx X. XxXxxxxx - President and Chairman of the Board
Xxxxx X. Xxxxx - Vice-President, Secretary and Treasurer.
27. Exhibit E of the Merger Agreement shall be amended by deleting
Exhibit E in its entirety.
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28. Except as herein modified and/or supplemented, all provisions of the
Merger Agreement shall remain in full force and effect.
29. This Agreement may be executed in two or more counterparts, each of
which may be an original but all of which together shall be deemed
one instrument.
30. All capitalized terms not otherwise defined in this Agreement shall
have the same meaning as such terms in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereto duly authorized all as of the day and year first
above written.
2CONNECT EXPRESS, INC.
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
------------------------------------
Xxxxx X. Xxxxxxxx, Xx.
Chairman and Chief Executive Officer
ATTEST:
/s/ F. Xxxxxx Xxxxxxx
-----------------------------------
Secretary
[CORPORATE SEAL]
2CONNECT ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
------------------------------------
Xxxxx X. Xxxxxxxx, Xx.
Chairman and Chief Executive Officer
ATTEST:
/s/ F. Xxxxxx Xxxxxxx
-----------------------------------
Secretary
[CORPORATE SEAL]
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XXXXX XXXXXXX CELLULAR SYSTEMS
OF FLORIDA, INC.
By: /s/ Xxxxxx X. XxXxxxxx,
------------------------------------
Xxxxxx X. XxXxxxxx,
Chief Executive Officer
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Xxxxx X. Xxxxx, President
ATTEST:
/s/
-----------------------------------
Secretary
[CORPORATE SEAL]
/s/ Xxxxxx X. XxXxxxxx
------------------------------------
Xxxxxx X. XxXxxxxx, Shareholder
/s/ Xxxxx X. Xxxxx
------------------------------------
Xxxxx X. Xxxxx, Shareholder
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AMENDMENT TO MERGER AGREEMENT
This AMENDMENT TO MERGER AGREEMENT("Amendment") dated as of October 26,
1998, is made by and among 2CONNECT EXPRESS, INC., a Florida corporation
("2Connect"), 2CONNECT ACQUISITION CORP., a Florida corporation ("Acquisition"),
and XXXXX XXXXXXX CELLULAR SYSTEMS OF FLORIDA, INC., a Florida corporation (the
"Company"), and all of the shareholders of the Company(collectively, the
"Shareholders") and amends certain provisions of that certain Merger Agreement
dated May 1, 1998 by and among the foregoing parties.
W I T N E S S E T H
WHEREAS, 2Connect, Acquisition, the Company and the Shareholders
entered into that certain Merger Agreement dated May 1, 1998 ("Merger
Agreement") which generally provides that the Company will be merged ("Merger")
into Acquisition, a wholly-owned subsidiary of 2Connect; and
WHEREAS, since the execution of the Merger Agreement, the parties have
determined that certain conditions precedent to the Merger contained in the
Merger Agreement will not be satisfied and the parties have agreed to amend the
Merger Agreement subject to the conditions contained herein to amend and or
eliminate such conditions precedent such that the Merger Agreement shall again
be enforceable upon its terms; and
WHEREAS, the exchange ratio of the Merger Agreement must be amended to
address certain changes regarding the treatment of the existing shareholders of
2Connect in the bankruptcy proceedings in the United States Bankruptcy Court for
the Southern District of Florida in connection with Case No. 98-20169-BKC-RBR
resulting (i) in the elimination of all pre-petition Equity Securities (as
defined in the Sterne Agee Agreement defined below) and securities convertible
into Equity Securities of 2Connect and (ii) the issuance of all post-petition
Equity Securities to Sterne, Agee & Xxxxx, Inc., a Delaware corporation ("Sterne
Agee"), in connection with that certain Agreement by and among Sterne Agee,
2Connect, Xxxxx X. Xxxxxxxx, Xx., Xxxxx X. Xxxxxxx and Xxxx Xxxxxxx dated August
27, 1998 ("Sterne Agee Agreement").
NOW, THEREFORE, in consideration of the above and the mutual
representations, warranties, covenants and agreements set forth herein, and
subject to the terms and conditions set forth herein, the parties hereto,
intending to be legally bound, agree as follows:
1. Subsection A of the preliminary statements shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
A. 2Connect intends to submit a Plan of Reorganization
(the "Plan") to the United States Bankruptcy Court
for the Southern District of Florida (the "Bankruptcy
Court") in connection with the Case Number
98-20169-BKC-RBR (the "Bankruptcy Case").
2. Section 1.03(a)(i) of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
(i) At the Effective Time, by virtue
of the Merger, and without any action on the
part of the parties hereto, all of the
shares of the Company's common stock, par
value $.10 per share ("Company Common
Stock"), owned by the Shareholders
immediately prior to the Effective Time
shall be converted into the right to receive
three-hundred fifty thousand (350,000)
shares of Common Stock of 2Connect.
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3. Section 1.03(a)(ii) of the Merger Agreement shall be amended
by deleting the existing language in its entirety and
inserting in lieu thereof as follows:
(ii) At the Effective Time, by virtue of the
Merger, and without any action on the part
of the parties hereto, each share of the
Company Series A Preferred Stock and the
Company Series B Preferred Stock (each as
defined in Section 1.05(b) of the Merger
Agreement as amended by this Amendment and
collectively referred to as the "Company
Preferred Stock"), issued and outstanding
immediately prior to the Effective Time
shall be converted into the right to receive
one share of 2Connect's Series A Preferred
Stock or 2Connect's Series B Preferred Stock
(each as defined in Section 1.05(d) of the
Merger Agreement as amended by this
Amendment), respectively.
4. Section 1.03(a)(iii) of the Merger Agreement shall be amended
by deleting the existing language in its entirety and
inserting in lieu thereof as follows:
(iii) After the Effective Time, no share of
Company Common Stock or Company Preferred
Stock shall be deemed to be outstanding, and
each share of the Company Common Stock and
Company Preferred Stock and any options or
warrants or other securities convertible or
exchangeable for shares of Company Common
Stock or Company Preferred Stock shall
automatically be canceled and retired and
shall cease to exist, and each holder of any
such securities of the Company shall cease
to have any rights with respect thereto,
except the right to receive the Common Stock
of 2Connect as stated in subsection
1.03(a)(i), the right to receive 2Connect
Series A Preferred Stock and 2Connect Series
B Preferred Stock pursuant to subsection
1.03(a)(ii) and the right to receive the
Shareholder Debentures pursuant to
subsection 1.03(a)(v).
5. The Merger Agreement shall be amended by adding the following
language to the Merger Agreement as Section 1.03(a)(v) of the
Merger Agreement:
(v) At the Effective Time, by virtue of the
Merger, and without any action on the part
of the parties hereto, the Shareholders
shall be issued debentures of 2Connect
("Shareholder Debentures") in the aggregate
principal amount of $250,000, $125,000 of
principal amount to each Shareholder, which
Shareholder Debentures shall be on terms
acceptable to 2Connect but shall, at a
minimum contain the following terms: (A)
amortized over three (3) years at an annual
simple interest of 7.5% with principal and
accrued interest on the outstanding balance
payable in quarterly installments and (B)
redeemable in whole or in part at anytime by
2Connect.
6. Section 1.05(a) of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
(a) As of the Effective Date and pursuant to the
Sterne Agee Agreement and the Plan, Sterne
Agee shall be issued 30,000 shares of Common
Stock which shall constitute one hundred
percent (100%) of the equity
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of 2Connect at such time. Also, on or before
the Effective Time, 2Connect shall have
issued 100,000 shares of Common Stock to a
trust with The Trust Company of Sterne, Agee
& Xxxxx, Inc. for the benefit of certain
holders of Common Stock of 2Connect to be
determined by Sterne Agee.
7. Section 1.05(b) of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
(b) Prior to the Effective Time and as soon as
practicable after the execution of this
Amendment, the Company shall take all
actions necessary to recapitalize the
Company in the following manner, any part or
all of which may be waived at the sole
discretion of 2Connect, and, upon such
waiver by 2Connect, the Merger Agreement
shall be binding without regard to this
provision upon such time as the Company no
longer has a negative equity:
(i) Convert at least three (3) of the
four (4) $125,000 One Hundred Twenty
Five Thousand Dollars 1-Year 15
Percent Convertible Unsecured
Debenture Notes due April 23, 1997
as extended, June 30, 1997 as
extended, September 24, 1997 as
extended and October 24, 1997 as
extended, respectively ("Company
Working Capital Debentures"), into
Series A Preferred Stock of the
Company, par value $1.00 per share
("Company Series A Preferred
Stock"), each with a face value or
purchase price of $25,000 and
convertible into forty-seven (47)
shares of Company Common Stock
commencing June 30, 1999.
(ii) Converted each of (A) the Series A
7.5% Convertible Subordinated
Debentures of the Company, as
amended ("Series A Debentures"), (B)
the Promissory Note of the Company
to The Sterne Agee Investors No. 3,
an affiliate of Sterne Agee, dated
February 27, 1998 in the principal
amount of $200,000 ("Sterne Agee
Note") and (C) the two promissory
notes of the Company, one to each of
the Shareholders, in the aggregate
principal amount of $150,000
("Shareholder Notes") into Series B
Preferred Stock of the Company, par
value $1.00 per share ("Company
Series B Preferred Stock"), each
with a face value or purchase price
of $25,000 and convertible into
forty-seven (47) shares of Company
Common Stock commencing June 30,
1999.
(iii) Based upon the capitalization of the
Company as of the date of the
execution of this Amendment, the
above recapitalization will result
in the Company having the following
capital structure excluding debt to
AT&T Wireless Services and Southern
Commerce Bank: (A) 4,000 shares of
Company Common Stock issued and
outstanding and owned by the
Shareholders, (B) twenty (20) shares
of Company Series A Preferred Stock
convertible into nine-hundred forty
(940) shares of Company Common Stock
commencing June 30, 1999 and (C)
thirty-eight
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(38) shares of Company Series B
Preferred Stock convertible into one
thousand seven hundred eighty-six
(1,786) shares of Company Common
Stock commencing June 30, 1999. Any
additional Series A Debentures
issued after the execution of this
Amendment shall also be converted to
Company Series B Preferred Stock at
the time of the recapitalization
referred to herein.
8. As a consequence of paragraph 7 above, the definition of
"Voting Stock" is eliminated and consequently all references
in the Merger Agreement to the capitalized term Voting Stock
shall refer to the term Common Stock.
9. Section 1.05(d) of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
(d) Prior to the Effective Time and as soon as
practical after the execution of this
Amendment and the Effective Date, 2Connect
shall take all action to amend the Articles
of Incorporation of 2Connect as follows:
(i) Establish Series A Preferred Stock,
par value $1.00 per share, of
2Connect ("2Connect Series A
Preferred Stock") with a face value
or purchase price per share of
$25,000.
(ii) Establish Series B Preferred Stock
par value $1.00 per share, of
2Connect ("2Connect Series B
Preferred Stock") with a face value
or purchase price per share of
$25,000.
(iii) Each of the 2Connect Series A
Preferred Stock and the 2Connect
Series B Preferred Stock shall have
the following terms and obligations
(A) a cumulative annual preferred
dividend of 7.5% payable semi-annual
commencing one hundred eighty (180)
days following issuance, (B)
callable by the Company at anytime,
in whole or in part by lot, (C)
mandatory redemption at par value
five (5) years after issuance, (D)
convertible into four thousand one
hundred sixty-six (4,166) shares of
Common Stock of 2Connect, (E) a
majority of the 2Connect Series B
Preferred Stock shall have the right
to appoint 1/3 of the members of the
Board of Directors of 2Connect, (F)
shall be generally non-voting except
that 2Connect shall not issue any
preferred stock or debentures or
incur any debt superior to the
2Connect Series A Debentures without
the affirmative consent of the
holders of a majority of each of the
2Connect Series A Preferred Stock
and the 2Connect Series B Preferred
Stock and further 2Connect shall not
issue 2Connect Series A Preferred
Stock without the affirmative
consent of the holders of a majority
of the 2Connect Series B Preferred
Stock, (G) upon any default in the
payment of any dividends or any
other of 2Connect's obligations to
the holders of 2Connect Series A
Preferred Stock or 2Connect Series B
Preferred Stock, the 2Connect Series
A Preferred Stock or the 2Connect
Series B Preferred Stock, as the
case may be, shall immediately
convert from limited voting
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to fully voting as if converted into
Common Stock of 2Connect, (H)
contain standard anti-dilution
provisions regarding conversion to
Common Stock of 2Connect, (I) the
2Connect Series B Preferred Stock
shall be subordinated in right upon
any liquidation to the 2Connect
Series A Preferred Stock and each of
the 2Connect Series A Preferred
Stock and the 2Connect Series B
Preferred Stock shall be superior in
right upon any liquidation to the
Shareholder Debentures and (J) all
proceeds from the sale of Series B
Preferred Stock will be used in the
same manner as the Series A
Debentures.
10. Section 1.05(e) of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
(e) Immediately after the Effective Time, the
Board of Directors of 2Connect will consist
of three (3) directors, two (2) of whom
shall be the Shareholders, and one of whom
shall be Xxxxx X. Xxxxxxxx, Xx. or such
other designee of Sterne, Agee & Xxxxx, Inc.
(the "XXX Director"). To effect this result,
each of Xxxxx X. Xxxxxxx, F. Xxxxxx Xxxxxxx
and Xxxx X. Xxxxxxx shall resign from the
Board of Directors effective either on or
before the Effective Time, and Xxxxx X.
Xxxxxxxx, Xx., as the sole remaining
director shall resolve that the Board shall
consist of three (3) directors and shall
appoint each of the Shareholders to fill the
two (2) vacancies on the Board of Directors.
Also, the Board of Directors shall appoint
each of the Shareholders to their respective
offices in accordance with the employment
agreements attached as Exhibit C and Exhibit
D of the Merger Agreement.
11. Section 2.02(i) of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
(i) [INTENTIONALLY DELETED]
12. Section 2.03(ii) of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
(ii) [INTENTIONALLY DELETED]
13. Section 2.04 of the Merger Agreement shall be amended by
changing the date contained therein from "_______, 1998" to
June 30, 1999.
14. Section 7.01(d) of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
(d) [INTENTIONALLY DELETED]
15. Section 7.02(g) of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
(g) [INTENTIONALLY DELETED]
5
15
16. Section 7.02(h) of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
(h) [INTENTIONALLY DELETED]
17. Section 7.03(f) of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
(f) The Company shall have completed the
transactions contemplated in Section 1.05(b)
of the Merger Agreement as amended by this
Amendment and 2Connect shall have completed
the transactions in Section 1.05(d) of the
Merger Agreement as amended by this
Amendment.
18. Section 7.03(g) of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
(g) The Company shall have provided to 2Connect
the Company's Financial Statements which
shall have been audited by the Company's
independent certified public accountants and
accompanied by report of such certified
public accountants. All costs related to
such audit, regardless of whether or not the
Merger is consummated, shall be paid from
the proceeds received by the Company
pursuant to the Series A Debentures.
19. Section 7.03(l) of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
(l) With respect to each of the debt obligations
of the Company to AT&T Wireless Services and
Southern Commerce Bank, approximately
$280,000 to AT&T and approximately $376,000
to Southern Commerce Bank, the Company shall
have received either (i) a written consent
to the Merger as required by those certain
respective agreements representing the debt
obligations of the Company to AT&T Wireless
Services and Southern Commerce Bank, (ii) a
relinquishment of the debt obligations or
(iii) a commitment letter from a new lender
to refinance the debt.
20. Section 10.05 of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
Section 10.05 [INTENTIONALLY DELETED]
21. Section 10.06 of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
Section 10.06 [INTENTIONALLY DELETED]
6
16
22. Section 10.07 of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
Section 10.07 [INTENTIONALLY DELETED]
23. Section 10.08 of the Merger Agreement shall be amended by
deleting the existing language in its entirety and inserting
in lieu thereof as follows:
Section 10.08 REGISTRATION OF CAPITAL STOCK OF
2CONNECT. After the Closing Date, 2Connect shall, as
soon as reasonably practical in the course of its
business, use reasonable commercial efforts to offer
to the holders of the Common Stock of 2Connect, the
holders of the 2Connect Series A Preferred Stock and
the holders of the 2Connect Series B Preferred Stock,
securities of 2Connect in such form deemed
appropriate by 2Connect which have been registered
with the U. S. Securities and Exchange Commission
under the Securities Act of 1933, as amended, and
applicable states securities commission, if required,
or otherwise cause such holders to have freely
tradeable securities. Registration may be conducted
by any available means including, but not limited to,
exchange of the Common Stock of 2Connect, the
2Connect Series A Preferred Stock and the 2Connect
Preferred B Stock for registered securities in a
recapitalization conducted under Section 368(a)(1)(E)
of the Internal Revenue Code of 1986, as amended.
24. Section 11.02 of the Merger Agreement shall be amended by
replacing Xxxxxx Xxxx & Xxxxxx, LLP, therein with and changing
the address of 2Connect to Xxxx & Xxxxxx LLP, 3100 SouthTrust
Tower, 000 Xxxxx 00xx Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000,
Telecopy: (000) 000-0000.
25. Article XIII of the Merger Agreement shall be amended by
deleting Article XIII in its entirety and inserting in lieu
thereof as follows:
ARTICLE XIII
The Bankruptcy Court shall have entered the order confirming
the Amended Plan of Reorganization (as and as hereinafter
defined in the Sterne Agee Agreement), a copy of which is
attached hereto as Schedule XIII.
26. Exhibit B of the Merger Agreement shall be amended by adding
the following language to the Exhibit for purposes of Section
1.03(c):
* The directors shall be Xxxxx X. Xxxxxxxx,
Xx., Xxxxxx X. XxXxxxxx and Xxxxx X. Xxxxx.
* The officers shall be as follows:
Xxxxxx X. XxXxxxxx - President and Chairman
of the Board
Xxxxx X. Xxxxx - Vice-President, Secretary and
Treasurer.
27. Exhibit E of the Merger Agreement shall be amended by deleting Exhibit E in
its entirety.
7
17
28. Except as herein modified and/or supplemented, all provisions
of the Merger Agreement shall remain in full force and effect.
29. This Agreement may be executed in two or more counterparts,
each of which may be an original but all of which together
shall be deemed one instrument.
30. All capitalized terms not otherwise defined in this Agreement
shall have the same meaning as such terms in the Merger
Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereto duly authorized all as of the day and year first
above written.
2CONNECT EXPRESS, INC.
By:
------------------------------------------
Xxxxx X. Xxxxxxxx, Xx.
Chairman and Chief Executive Officer
ATTEST:
----------------------------------------
Secretary
[CORPORATE SEAL]
2CONNECT ACQUISITION CORP.
By:
------------------------------------------
Xxxxx X. Xxxxxxxx, Xx.
Chairman and Chief Executive Officer
ATTEST:
----------------------------------------
Secretary
[CORPORATE SEAL]
8
