AMENDMENT TO STOCK EXCHANGE AGREEMENT
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This Amendment to Stock Exchange Agreement, dated August 25, 1997 is
by and between Matrix Telecom, Inc. ("Matrix") and AvTel Communications,
Inc. ("AvTel").
W I T N E S S E T H
WHEREAS, Matrix and AvTel have entered into that certain Stock
Exchange Agreement, dated April 29, 1997 (the "Stock Exchange Agreement")
which provided for, among other things, the exchange by the stockholders of
Matrix of all of the issued and outstanding capital stock and options of
Matrix for capital stock and options of AvTel;
WHEREAS, by letter agreement, dated July 28, 1997 (the "Letter
Agreement") the date by which completion of the transactions by the Stock
Exchange Agreement is required to be completed was extended through
November 30, 1997; and
WHEREAS, as contemplated by Paragraph 9(b) of the Stock Exchange
Agreement, AvTel and Matrix have agreed to effect the Reverse Stock Split
(as defined in the Stock Exchange Agreement) by the conversion of each
share of AvTel common stock into the right to receive 1/4 of a share of
common stock of Newco (thereby effecting a four to one reverse stock split)
pursuant to the terms of the Merger (as defined in the Stock Exchange
Agreement);
WHEREAS, since the date of the Stock Exchange Agreement, Matrix
has acquired all of the issued and outstanding capital stock of Best
Connections, Inc. in exchange for 376,727 shares of Matrix common stock;
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Defined Terms. Capitalized terms used herein, unless otherwise
defined or the context requires otherwise, are used herein as defined in
the Stock Exchange Agreement.
2. Amendment to Paragraph 1. Paragraph 1 of the Stock Exchange
Agreement is hereby amended to read in its entirety as follows:
"At Closing (as hereinafter defined), the stockholders of
Matrix listed on Schedule I (the "Stockholders") will
deliver to AvTel 3,860,987 properly endorsed,
unencumbered shares of Matrix common stock, representing
100% of the outstanding Matrix common stock, in exchange
for 9,582,514 shares of common stock of AvTel, after
giving effect to the Merger and Reverse Stock Split
(defined below), which will not be registered under the
Securities Act of 1933, as amended."
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3. Amendment to Paragraph 2. Paragraph 2 of the Stock Exchange
Agreement is hereby amended by adding the following sentence at the end of
the paragraph:
"Prior to the Closing, Matrix shall deliver to AvTel a
duly executed Exchange Statement from each holder of a
non-qualified stock option of Matrix in the form attached
as Exhibit B."
4. Amendment to Paragraph 3. Paragraph 3 of the Stock Exchange
Agreement is hereby amended to read in its entirety as follows:
"At Closing, Matrix will cancel all non-qualified stock
options (covering 9,000 Matrix shares) that it has granted and
that remain outstanding as of the date hereof, and AvTel will
issue to the beneficiaries thereof, 22, 338 AvTel non-qualified
stock options, after giving effect to the Merger and Reverse Stock
Split, having the exercise period and exercise price set forth in
Exhibit B hereto."
5. Amendment to Paragraph 6. Paragraph 6 of the Stock Exchange
Agreement, including the heading thereto, is hereby deleted and replaced
entirely by the following:
"[Intentionally Omitted.]"
6. Amendment to Paragraph 9(a). The last sentence of Paragraph
9(a) of the Stock Exchange Agreement is hereby amended to read in its
entirety as follows:
"At the effective time of the Merger, by virtue of the
Merger, and without any action on the part of AvTel or
Newco or the stockholders of Newco, each share of common
stock and preferred stock, and each option of AvTel
issued and outstanding immediately prior to the effective
time of the Merger shall by virtue of the Merger be
canceled and extinguished and be converted into the right
to receive one quarter of a share of common stock or
preferred stock or an option to acquire one quarter of a
share of common stock, as applicable, of Newco; provided,
however, that Newco shall not be required to issue any
fractional shares of common stock or preferred stock but
instead shall be entitled to purchase any fractional
shares resulting from the Merger at the fair market value
thereof. This 1/4 to 1 conversion of shares is referred
to herein as the "Reverse Stock Split."
7. Amendment to Paragraph 9(b). Paragraph 9(b) of the Stock
Exchange Agreement shall be deleted in its entirety.
8. Amendments to Paragraph 12.
(a) The $500,000 amount set forth in the first sentence
of Paragraph 12 is hereby deleted and replaced with $750,000.
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(b) The following clause is hereby inserted after clause
(b) of Paragraph 12 and clauses (c), (d) and (e) of Paragraph 12
are hereby renumbered to be clauses (d), (e) and (f),
respectively:
"(c) up to an additional $250,000 may be drawn by AvTel
at any time on or after July 1, 1997 and prior to the
earlier of (i) September 30, 1997, or (ii) the
termination of this Agreement."
(c) The date "August 31, 1997" set forth in the first
sentence of clause (d) of Paragraph 12 of the Stock Exchange
Agreement (which after giving effect to this Amendment will become
clause (e)) is hereby deleted and replaced with the date "October
31, 1997."
9. Amendment to Paragraph 15. Clause (f) of Paragraph 15 of the
Stock Exchange Agreement is hereby amended to read in its entirety as
follows:
"Stockholders holding at least 90% of the issued and
outstanding common stock of Matrix shall have executed
and delivered to Matrix an Exchange Statement."
10. Amendment to Paragraph 19. The date "July 1, 1997" set forth
in the first sentence of Paragraph 19 is hereby deleted and replaced with
the date "November 30, 1997", consistent with the terms of the Letter
Agreement.
11. Amendment to Schedules. Schedules I, II, and VII of the Stock
Exchange Agreement are hereby deleted and replaced with Schedules I, II,
and VII attached hereto.
12. Amendment to Registration Rights Agreement. The Registration
Rights Agreement included as Exhibit B to the Stock Exchange Agreement
(Exhibit C after giving effect to this Agreement) is hereby amended by
deleting Section 2(b) thereof.
13. Amendment to Exhibits. Any references in the Stock Exchange
Agreement to Exhibit B are hereby amended to refer to Exhibit C to the
Stock Exchange Agreement and the Registration Rights Agreement previously
included as Exhibit B to the Stock Exchange Agreement is hereby amended to
become Exhibit C thereto. Exhibit B to the Stock Exchange Agreement shall
read entirely as set forth in Exhibit B attached hereto.
14. Effectiveness of Amendment. This Amendment shall become
effective upon the execution hereof by each of the parties hereto. Except
as amended hereby, the Stock Exchange Agreement shall remain in full force
and effect.
15. Counterparts. This Amendment may be executed simultaneously in
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one
and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed on the dated first above written by their duly authorized
representatives.
MATRIX TELECOM, INC. AVTEL COMMUNICATIONS, INC.
By:______________________________ By:__________________________________
Title:___________________________ Title:_______________________________
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