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ASSET PURCHASE AGREEMENT
Between
EQUALNET COMMUNICATIONS CORP.,
EQUALNET CORPORATION, AND
USC TELECOM, INC.
AS SELLERS
and
CCC GLOBALCOM CORP., INC.,
AND ITS PERMITTED ASSIGNS
AS BUYER
Dated as of February __, 2001
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TABLE OF CONTENTS
ARTICLE 1 CERTAIN DEFINITIONS1
ARTICLE 2 SALE AND PURCHASE OF ASSETS.......................................5
2.1 Transfer of Assets.....................................................5
2.2 Assumed Liabilities; Excluded Liabilities..............................7
2.3 Purchase Price.........................................................8
2.4 Closing................................................................8
2.5 Closing Escrow Funds...................................................9
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLERS........................10
3.1 Authority Relative to this Agreement..................................10
3.2 Transfer of Assets....................................................10
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER..........................10
4.1 Organization..........................................................10
4.2 Authority Relative to this Agreement..................................10
4.3 Consents and Approvals; No Violations.................................10
4.4 No Litigation.........................................................11
4.5 Access................................................................11
4.6 Condition of Purchased Assets.........................................11
ARTICLE 5 COVENANTS........................................................11
5.1 Ordinary Course.......................................................11
5.2 Reasonable Efforts....................................................11
5.3 Fees and Expenses.....................................................12
5.4 Submission for Court Approval.........................................12
5.5 Business Records......................................................13
5.6 Buyer Protection Provisions...........................................13
5.7 Access for Inspections and Due Diligence..............................15
5.8 Public Announcements..................................................15
5.9 Confidentiality.......................................................15
ARTICLE 6 CONDITIONS.......................................................16
6.1 Conditions to Each Party's Obligations................................16
6.2 Conditions to Obligations of Buyer....................................16
6.3 Conditions to Obligations of Sellers..................................17
6.4 Failure of Conditions.................................................18
ARTICLE 7 TERMINATION AND AMENDMENT........................................18
7.1 Termination...........................................................18
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7.2 Effect of Termination.................................................19
7.3 Amendment.............................................................19
7.4 Extension; Waiver.....................................................19
ARTICLE 8 ADDITIONAL POST-CLOSING COVENANTS ..............................19
8.1 Further Assurances....................................................19
8.2 Benefits Under Unassignable Contracts.................................19
8.4 Sellers' Employees....................................................20
ARTICLE 9 MISCELLANEOUS....................................................20
9.1 Survival..............................................................20
9.2 Notices...............................................................20
9.3 Descriptive Headings..................................................21
9.4 Counterparts..........................................................21
9.5 Entire Agreement, Draftsmen...........................................21
9.6 Governing Law.........................................................22
9.7 Specific Performance..................................................22
9.8 Assignment............................................................22
9.9 Parties in Interest...................................................22
9.10 Severability..........................................................22
9.11 Exclusive Jurisdiction................................................22
Exhibit A Form of Assignment and Assumption Agreement
Exhibit B Form of Assignment and Bill of Sale
Exhibit C Form of Legal Opinion of Sellers' Counsel
Exhibit D Seller's Certificate
Exhibit E Form of Buyer's Officer's Certificate
Exhibit F Form of Procedures Order
Schedule 1 Contracts to be Assumed
Schedule 2 Certain Excluded Assets
Schedule 3 Certain Excluded Liabilities
Schedule 4 Certain Carrier Codes
Attachment I RFC Term Sheet
Attachment II Agreement with d-Tel Network LLC
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of the
_____ day of February, 2001, by and among CCC GlobalCom Corp., Inc, a Nevada
corporation, and its permitted assigns ("Buyer"), and Equalnet Communications
Corp., a Texas corporation ("ENET"), EqualNet Corporation, a Delaware
corporation ("ENC"), and USC Telecom, Inc., a Delaware corporation ("USC"), as
debtors and debtors-in-possession ("Sellers").
W I T N E S S E T H:
WHEREAS, each of the Sellers filed a voluntary petition for relief
pursuant to chapter 11 of title 11 of the United States Code, 11 U.S.C. ss. 101
et seq., as amended (the "Bankruptcy Code"), in the United States Bankruptcy
Court for the Southern District of Texas, Houston Division (the "Bankruptcy
Court") on or about August 9, 2000, and the Sellers' bankruptcy cases are
currently pending and jointly administered under Case No. 00-
37350-H4-11 (collectively, the "Bankruptcy Cases");
WHEREAS, the business of the Sellers comprises (i) a long distance resale
business (the "LD Business"), (ii) a customer service business ("Service
Business"), and (iii) a telephone debit card sales and service business (the
"Debit Card Business") (collectively, the "Business"); and
WHEREAS, Buyer has agreed to acquire from Sellers, and Sellers have agreed
to sell to Buyer, the Purchased Assets (as defined below), on the terms and
subject to the conditions set forth herein and in accordance with applicable
provisions of the Bankruptcy Code.
NOW, THEREFORE, in consideration of the premises, covenants,
representations and warranties contained herein, and other good and valuable
consideration, the adequacy and receipt of which are hereby acknowledged, the
parties agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
ascribed thereto:
"Acquisition" means the acquisition by Buyer from Sellers of the Purchased
Assets.
"Affiliate" shall mean, with respect to any Person, which, directly or
indirectly, controls, is controlled by, or is under common control with, the
specified Person and any Person that would be deemed to be an "affiliate" or an
"associate" of such Person, as those terms are defined in Rule 12b-2 of the
General Rules and Regulations of the Securities Exchange Act of 1934, as
amended.
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"Assumed Contracts" shall mean those leases and executory contracts
identified on Schedule 1.
"Assumed Liabilities" shall mean (i) all liabilities and obligations
relating to the Assumed Contracts, but only to the extent said liabilities and
obligations are attributable to obligations to be performed under the Assumed
Contracts on or after the Closing Date, and (ii) an amount payable to RFC
Capital Corp. (hereinafter, the "RFC Assumed Indebtedness"), equal to the lesser
of (a) $7,500,000 of the debt owed by Sellers to RFC Capital Corp. as approved
by an order approving the compromise of controversy with RFC Capital Corp.
entered at or before the hearing on the Sale Motion, not to exceed $7,500,000,
and (b) the amount of the actual indebtedness owed by the Sellers to RFC Capital
Corp. as of the Closing Date, excluding, however, in both calculations, all
legal fees and expenses incurred by RFC Capital Corp. in connection with the
Bankruptcy Cases.
"Bankruptcy Code" shall have the meaning set forth in the Recitals.
"Bankruptcy Court" shall have the meaning set forth in the Recitals.
"Bankruptcy Estates" shall mean the chapter 11 bankruptcy estates of ENET,
ENC, and USC, collectively; and each of such Bankruptcy Estates is sometimes
referred to
individually as a "Bankruptcy Estate".
"Bankruptcy Rules" shall mean the Federal Rules of Bankruptcy Procedure as
supplemented by the Local Rules of Bankruptcy Procedure for the Southern
District of Texas.
"Bidding Procedures" shall mean the bidding procedures governing the sale
of the Purchased Assets to be approved by the Bankruptcy Court and set forth in
the Procedures Order.
"Break-Up Fee" shall mean the fee in the amount of $200,000 payable to the
Buyer pursuant to Section 5.6 of this Agreement.
"Business Day" means any day other than Saturday, Sunday or a day on which
national banks in Houston, Texas are authorized or required by law or other
governmental action to close and are, in fact, so closed.
"Buyer's Officer's Certificate" shall have the meaning set forth in Section
6.3(c).
"Closing" shall have the meaning set forth in Section 2.4(a).
"Closing Date" shall have the meaning set forth in Section 2.4(a).
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"Closing Escrow Funds" shall have the meaning set forth in Section 2.5.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Cure Amounts" shall mean the amounts, if any, payable to parties to cure
defaults pursuant to ss.365(b)(1) of the Bankruptcy Code under the Assumed
Contracts.
"Excluded Assets" shall mean (i) any asset in possession of any Seller
that is not owned both legally and beneficially by a Seller; (ii) the articles
or certificates of incorporation, bylaws, seals, and any related organizational
documents and minute books of the Sellers; (iii) any rights of any Seller under
this Agreement or any other agreement between any Seller and Buyer or any
Affiliate of Buyer to the extent listed on Schedule 2 attached hereto; (iv) all
executory contracts, agreements, leases, and subleases that do not constitute
Assumed Contracts; (v) claims for insurance on Purchased Assets to the extent
any such claims are not assignable; (vi) retainer deposits for professional
services; (vii) stock of direct or indirect subsidiaries, and other forms of
equity in non-corporate subsidiaries; (viii) the causes of action listed on
Schedule 2; and (ix) any avoidance actions under the Bankruptcy Code relating to
the Bankruptcy Cases.
"Excluded Liabilities" shall mean all liabilities of the Sellers or their
Bankruptcy Estates that are not Assumed Liabilities, which Assumed Liabilities
shall specifically exclude, without limitation, the following liabilities: (a)
any federal, state and local income taxes, sales or use taxes, franchise taxes,
payroll taxes and any other taxes and tax liability incurred by Sellers prior to
the Closing Date, (b) all attorneys' and accountants' fees and expenses and any
other fees and expenses incurred by Sellers in connection with the consummation
of the transactions contemplated hereby, (c) all auctioneers', brokers', and
other similar fees and expenses incurred by any of the Sellers or any of their
Bankruptcy Estates relating to the sale of the Purchased Assets to Buyer, (d)
all of Sellers' liability and obligation related to or arising in connection
with pre-paid debit cards and accounts issued in connection with or relating to
the Business, and (e) any causes of action against any Seller held by any of its
respective officers, directors or stockholders, including, without limitation,
those causes of action listed in Schedule 3 attached hereto.
"Expense Reimbursement" shall mean Sellers' reimbursement pursuant to
Section 5.6 of Buyer's actual, documented, reasonable out-of-pocket costs and
expenses incurred in furtherance of the Letter Agreement, this Agreement, the
Acquisition and the offer contemplated by this Agreement, up to a maximum of
$75,000. Such reimbursable out-of-pocket costs and expenses shall include but
not be limited to expenses incurred in the performance of due diligence,
investigation, cooperating with Sellers with respect to motions, orders, and
participation in hearings, and reasonable attorney's fees and expenses incurred
by Buyer in connection with such matters.
"Governmental Entity" shall mean any federal, state, municipal or local
court, legislature, governmental agency, commission or regulatory authority or
instrumentality.
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"Instruments of Assignment and Assumption" shall have the meaning set forth
in Section 2.4(b).
"Intellectual Property" means all copyrights, patents, patent
applications, service marks, trademarks, trade names, trade secrets, written
know-how and all other similar proprietary data and intellectual property, and
the goodwill associated therewith, used by any
Seller in connection with the Business.
"Letter Agreement" means that certain letter agreement, dated January 12,
2001, between Buyer and Sellers relating to the matters contemplated by this
Agreement.
"Lien" shall mean any lien, security interest, mortgage, pledge, charge,
claim, conditional sales arrangement, adverse interests (whether legal or
equitable) or encumbrance of any kind.
"Material Adverse Change" shall mean any change, event or effect (or
series of related changes, events or effects) occurring from or after December
31, 2000, which, when taken individually or together, has a material adverse
effect on the Purchased Assets, taken as a whole. "Material Adverse Change"
shall not be interpreted, however, to include a decline of 4% or less per month
in the Sellers' retail customer revenue.
"Person" shall mean any individual, group, corporation, partnership or
other organization or entity (including, without limitation, each Bankruptcy
Estate and any Governmental Entity).
"Permits" shall mean, to the extent transferable, all licenses, permits,
tariffs, authorizations, approvals and certifications issued by any Governmental
Entity and owned by any Seller and used by such Seller in the operation of the
Business.
"Procedures Order" shall mean the order of the Bankruptcy Court,
substantially in the form attached as Exhibit F attached hereto, approving,
among other things, the Bidding Procedures, the Buyer Protection Provisions, the
Expense Reimbursement, the Break-Up Fee
and the Termination Fee.
"Prorated Items" shall mean (i) personal property, real estate, occupancy,
water and other similar ad valorem, property or use taxes ("Property Taxes"), if
any, on or with respect to the Purchased Assets; (ii) post-petition sewer rents
and charges for water, telephone, electricity and other utilities and fuel, to
the extent that final meter readings cannot be arranged; and (iii) all other
post-petition periodic charges applicable to periods both before and after the
Closing normally prorated in connection with similar transactions.
"Purchase Price" shall have the meaning set forth in Section 2.3(a).
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"Purchased Assets" shall mean (i) all assets owned by any of the Sellers
in connection with the Business and all rights and interests of Sellers arising
in connection with or relating to the Business, and (ii) all of Sellers'
interests under any leases or licenses relating to the Business to the extent
such interests are assignable, but in all cases not
including any Excluded Asset.
"Records" shall mean all books, records, customer lists and telephone
numbers, account ledgers, sales and promotional literature, files, data,
supplier lists, drawings, plans, specifications, job and bid files, computer
files and, if assignable, software owned by any of the Sellers, and all other
records of any Seller relating to the ownership or operation of the Business,
except records which are Excluded Assets or which relate exclusively to Excluded
Assets.
"Sale Order" shall have the meaning set forth in Section 5.4.
"Sellers' Certificate" shall have the meaning set forth in Section 6.2(c).
"Tax" or "Taxes" shall mean any and all taxes, levies or other like
assessments (including interest and penalties), including income, transfer,
gross receipts, excise, property, sales, use, payroll and employment taxes,
imposed by the United States, or any state, or local government or subdivision
or agency thereof.
"Tax Return" shall mean any report or return filed with any federal, state
or local taxing authority with respect to Taxes imposed upon or attributable to
the Purchased Assets.
"Transaction Documents" means this Agreement and all bills of sale,
assignment instruments and assumption instruments executed or delivered by the
parties hereto at the Closing.
ARTICLE 2
SALE AND PURCHASE OF ASSETS
Section 2.1 Transfer of Assets.
(a)On the Closing Date and pursuant to the terms and subject to the
conditions of this Agreement, Sellers shall sell, assign and convey to Buyer,
and Buyer shall purchase and accept from Sellers, all of Sellers' right, title,
and interest in and to the Purchased Assets, which include the following to the
extent that they are not Excluded Assets:
(i) All of the fixed assets (including all machinery, equipment, vehicles,
furniture, fixtures, supplies and materials) owned or otherwise used by
Sellers and, to the extent assignable, all rights under warranties,
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representations and guaranties made by suppliers and manufacturers of
the Purchased Assets or the Business;
(ii) All raw materials, work in process, and inventories of Sellers, whether on
hand or on order;
(iii)All accounts receivable, notes receivables, security deposits, and other
obligations owing to any of Sellers, and all rights and interests to
accounts of subscribers of the Business, including, without limitation, all
accounts and/or other rights that may have been sold, transferred or
assigned to RFC Capital Corp. pursuant to the existing factoring and
lending relationship, which accounts and rights shall be re-conveyed to
Sellers and sold to Buyer, subject to the liens and security interests of
RFC Capital Corp. to the extent securing the RFC Assumed Indebtedness, as
part of the Purchased Assets;
(iv) All customer lists owned by Sellers and, to the extent assignable by
Sellers, the Sellers' interests under any leases or licenses of any
customer lists;
(v) All Intellectual Property, computer hardware and computer software owned by
Sellers and, to the extent assignable by Sellers, the Sellers' interests
under any leases or licenses of any Intellectual Property, computer
hardware and computer software;
(vi) All rights owned by Sellers with respect to (and, to the extent assignable,
the Sellers' interest under licenses or leases of) all existing or pending
trade names, trade marks, service marks, copyrights, patents and other
intellectual property and all marketing literature and other materials
owned, licensed or otherwise utilized by Sellers, except to the extent that
any such rights arise under licenses, contracts, or other agreements that
are not Assumed Contracts;
(vii)All existing books and records maintained by Sellers in their conduct of
the Business through the Closing, including, but not limited to, sales
records, customer lists, customer folders and all historical customer
records and files which relate to the Business;
(viii)To the extent permitted by applicable law and/or approved by the
Bankruptcy Court, all Permits owned and/or held by Seller;
(ix) All goodwill of Sellers;
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(x) Sellers' rights in the names "Equalnet", "EqualNet", and "USC", and any
variant, combination and derivative thereof, their logos or assumed names,
along with any common law, state or federal trademark rights to said
names(s), logos or marks;
(xi) All intangible telecommunications assets owned (or licensed, to the extent
the licensee's interest is assignable) by Sellers in connection with the
Business, including, telecommunications numbering codes, locating routing
codes and toll-free numbers and other customer billing and inquiry numbers,
carrier identification codes and other operating codes, including, without
limitation, the codes set forth on Schedule 4 attached hereto;
(xii)To the extent assignable, all of Sellers' rights to all web sites, URL's,
and domain names used by Sellers in connection with the Business;
(xiii)All cash, deposit accounts and other cash equivalents of Sellers existing
on the Closing Date, excluding the cash to be paid by Buyer as part of the
Purchase Price;
(xiv)To the extent assignable, all of Sellers' rights to all telephone numbers
and directory listings used by Sellers in connection with the Business;
(xv) To the extent assignable, all insurance policies of any Seller and any
proceeds thereof and all insurance claims related to the Purchased Assets;
(xvi) All tax refund claims and proceeds thereof;
(xvii)To the extent assignable, all other claims, causes of action and demands
related to or affecting the Purchased Assets, except for any claims, causes
of action or demands which are Excluded Assets; and
(xviiiAll other property owned by Sellers, wherever located.
(b)On the terms and subject to the conditions of this Agreement, Sellers
shall transfer and assign to Buyer, and Buyer shall accept the assignment of,
and assume and duly pay or perform, all of Sellers' right, title and interest in
the Assumed Contracts.
(c)Buyer is not acquiring, and Sellers shall retain all right, title and
interest in, any Excluded Assets.
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Section 2.2 Assumed Liabilities; Excluded Liabilities.
(a)Buyer shall assume and duly pay or perform, and shall hold Sellers
harmless and indemnify Sellers from and against, the Assumed Liabilities. Buyer
shall not assume, and shall not be deemed to have assumed, the Excluded
Liabilities.
(b)The Assumed Contracts shall, under ss.365 of the Bankruptcy Code, be
assumed by Sellers and assigned to Buyer at Closing, pursuant to the Sale Order
entered by the Bankruptcy Court in the Bankruptcy Cases. Buyer shall not assume
or take an assignment of any other leases or contracts, unless otherwise agreed
to in writing prior to Closing. By the Sale Motion, Sellers shall also request
that the Bankruptcy Court establish the amounts of the Cure Payments related to
the Assumed Contracts and Buyer shall pay the Cure Amounts not to exceed the
amounts set forth on Schedule 1 for each Assumed Contract. Sellers shall pay on
or before the Closing Date any amounts in excess of the amount set forth on
Schedule 1 that may be required to cure all defaults under the Assumed
Contracts, and shall otherwise be responsible to cure all defaults under such
Assumed Contracts in connection with the assumption and assignment on the
Closing Date.
(c)With respect to the claim of RFC Capital Corp., which shall constitute a
part of the Purchase Price, the Sellers shall request that the Bankruptcy Court
enter an order approving the compromise of the controversy with RC Capital Corp.
by a Final Order of the Court entered prior to the Closing Date approving the
compromised and settled amount of the claim of RFC Capital Corp. This relief
shall be requested in the Sale Motion. In no event shall the claim exceed the
lesser of (i) $7,500,000 less any payments or credits made after such
determination, as established by the Sale Order and as compromised at the
hearing on the Sale Motion, and (ii) the amount of the actual indebtedness owed
by Sellers to RFC Capital Corp. as of the Closing Date, excluding, however, in
both calculations, all legal fees and expenses incurred by RFC Capital Corp. in
connection with the Bankruptcy Cases. In connection with the Acquisition, RFC
Capital Corp. shall, on or before the Closing Date, re-convey all of its rights,
claims, and interests in any account or other rights purchased from the Sellers,
which accounts and rights shall be sold, transferred and conveyed to Buyer as
part of the Purchased Assets, subject only to any liens held by RFC Capital
Corp. securing the RFC Assumed Indebtedness.
Section 2.3 Purchase Price.
(a)In consideration for the sale and transfer of the Purchased Assets and
the assignment of Sellers' rights under the Assumed Contracts, Buyer shall (i)
assume the Assumed Liabilities and the obligations of the Sellers under the
Assumed Contracts and shall pay Sellers $500,000 in cash (the "Purchase Price"),
and (ii) pay contemporaneously with the Closing, or make arrangements to pay
after the Closing and thereafter pay in accordance with such arrangements, the
Cure Amounts with respect to all Assumed Liabilities and all Purchased Assets.
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(b)The Purchase Price shall be adjusted for the Prorated Items as specified
below; provided, however, that in no event shall the cash portion of the
Purchase Price be increased to an amount in excess of $500,000. Sellers and
Buyer shall prorate (by estimation, if necessary) the Prorated Items as of the
Closing Date, on the basis of the actual number of days each party had
possession or use during the calendar year or, where the billing is for a lesser
period, during such period, except for those Prorated Items where it is possible
to prorate by actual usage. Personal property, real estate and ad valorem taxes
for 2001 shall be prorated on the basis of the allocation of the Purchase Price
to such taxable items as mutually agreed to by Sellers and Purchaser on or
before the Closing, adjusted to reflect changes in assessments or rates of taxes
known to be in effect for 2001. Buyer shall be responsible for paying any
Prorated Items when and as they become due. All prorations shall be made at the
Closing Date shall be final and binding on Sellers and Buyer.
Section 2.4 Closing.
(a)Upon the terms and subject to the conditions of this Agreement, the
consummation of the transactions contemplated by this Agreement (the "Closing")
will take place as soon as practicable following satisfaction (or waiver, if
permissible) of the conditions set forth in Article 6 hereof, at 10:00 a.m., at
the offices of Porter & Hedges, L.L.P., 700 Louisiana St., Suite 3500, Houston,
Texas, or at such other time and place as shall be mutually agreed upon by the
parties, but in any event on or before March 31, 2001. The date on which the
Closing occurs is hereinafter referred to as the "Closing Date."
(b)At the Closing, Sellers shall deliver or cause to be delivered to Buyer
the following: (i) duly executed instruments of assignment and assumption of the
Assumed Contracts substantially in the form of Exhibit A hereto ("Instruments of
Assignment and Assumption"); (ii) duly executed bills of sale and assignment to
Buyer in substantially the form of Exhibit B hereto; (iii) a legal opinion from
Sellers' counsel Porter & Hedges, L.L.P. in the same form and substance as the
letter attached hereto as Exhibit C effective as of the Closing Date; and (iv)
such other instruments and documents as are required by any other provision in
this Agreement or are necessary to convey title to any of the Purchased Assets
to Buyer.
(c)At the Closing, Buyer shall deliver to Sellers the following: (i) the
cash portion of the Purchase Price in immediately available funds by wire
transfer to an account or accounts at a United States bank or banks, as
specified in writing by Sellers at least one Business Day prior to the Closing;
(ii) such documents and instruments as reasonably are required to evidence the
assumption of the Assumed Liabilities; and (iii) documentary evidence reasonably
satisfactory to Sellers that Buyer has paid, or made arrangements to pay, all
Cure Amounts required to be paid by Buyer pursuant to this Agreement.
(d)At Closing, Sellers agrees to provide Buyer with fully executed and duly
authorized articles of amendment to their articles of incorporation, such
amendments changing
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the names of ENC and USC so as not to include "Equalnet," "EqualNet," or "USC"
or any portion thereof. Sellers shall also provide to Buyer all filing fees
required in connection with the foregoing. Buyer agrees that it will promptly
file each articles of amendment with the Secretary of State of the state of the
respective Seller's incorporation and promptly deliver to Sellers each of the
articles of amendment stamped "filed" by the Secretary of State. Following the
Closing, Sellers agrees that ENC and USC will discontinue any and all uses of
such names or names similar thereto. Sellers also agree to file a motion with
the Bankruptcy Court in the Bankruptcy Cases seeking to change the caption and
style of the Chapter 11 cases so as to reference the new names of ENC and USC
and delete any reference to the name "Equalnet", "EqualNet" or "USC" or any
portion thereof, and shall diligently prosecute such motion.
Further, Sellers agree, upon the earlier of any confirmation of a plan of
reorganization involving ENET or the sale of the capital stock of ENET, to cause
ENET to change its name so as not to include "Equalnet," "EqualNet," or "USC" or
any portion thereof. Further, Sellers agree to execute and deliver, from time to
time after the Closing, such consents or other instruments as may be necessary
or convenient to facilitate the use and enjoyment of the names "Equalnet,"
"EqualNet," and "USC" by Buyer.
2.5 Closing Escrow Funds.
Contemporaneously with the entry of the Procedures Order, Buyer shall
deposit in escrow with Sellers' Counsel Porter & Hedges, L.L.P. the sum of
$100,000 (said sum being the "Closing Escrow Funds"). If this Agreement is
terminated for any reason, other than by Sellers pursuant to Section 7.1(f), the
Closing Escrow Funds shall be delivered to Buyer. If this Agreement is
terminated by Sellers pursuant to Section 7.1(f), the Closing Escrow Funds shall
be delivered to Sellers. At the Closing, the Closing Escrow Funds shall be
credited against the Purchase Price to be delivered to Sellers at the Closing.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer as follows:
Section 3.1 Authority Relative to this Agreement.
Subject to the review and approval of the Bankruptcy Court, each Seller has
full authority in its capacity as a chapter 11 debtor-in-possession to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by each
Seller and, subject to the review and approval of the Bankruptcy Court,
constitutes a valid and binding obligation of the Sellers enforceable against
them in accordance with the terms hereof, except or enforcement may be limited
by applicable bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject to general principles of equity.
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Section 3.2 Transfer of Assets.
At the Closing, Sellers will deliver to Buyer all of the Purchased Assets,
subject to the terms of the Sale Order. Buyer acknowledges that no Seller has
any authority to convey any asset pursuant to this Agreement other than that
authority specifically granted by the United States Bankruptcy Court.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
Section 4.1 Organization.
Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Nevada.
Section 4.2 Authority Relative to this Agreement.
Buyer has full power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Buyer and the consummation by Buyer of the
transactions contemplated by this Agreement have been duly and validly
authorized by all necessary corporate action of Buyer, and no other corporate
proceedings on the part of Buyer are necessary to authorize this Agreement or to
consummate the transactions contemplated by this Agreement. This Agreement has
been duly and validly executed and delivered by Buyer and constitutes a valid
and binding obligation of Buyer, enforceable against Buyer in accordance with
its terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally and subject to general principles of equity.
Section 4.3 Consents and Approvals; No Violations.
Subject to entry of the Sale Order, no filing with, and no permit,
authorization, consent or approval of, any Governmental Entity is necessary for
the consummation by Buyer of the transactions contemplated by this Agreement.
Neither the execution and delivery of this Agreement by Buyer nor the
consummation by it of the transactions contemplated by this Agreement nor
compliance by it with any of the provisions hereof will (i) conflict with or
result in any breach of any provision of the articles of incorporation or bylaws
of Buyer, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, contract,
agreement, permit, license, lease, purchase order, sales order, arrangement or
other commitment or obligation to which Buyer is a party or by which Buyer or
any of its properties or assets may be bound, or (iii) violate any order, writ,
injunction, decree, statute, treaty, rule or regulation applicable to Buyer,
except in the case of clauses (ii) or (iii) for
11
violations, breaches or defaults which would not, in the aggregate, prevent or
delay the consummation of the transactions contemplated by this Agreement.
Section 4.4 No Litigation.
As of the date hereof, there is no claim, action, proceeding or, to the
knowledge of Buyer, threatened, nor is there outstanding any writ, order, decree
or injunction, that (i) calls into question the authority or right of Buyer to
enter into this Agreement and consummate the transactions contemplated hereby,
or (ii) would otherwise prevent or delay the transactions contemplated by this
Agreement.
Section 4.5 Access.
Buyer acknowledges that Sellers have provided Buyer with such access to
Sellers' premises, books, records, assets, and personnel as Buyer has requested.
Buyer further acknowledges that it is in the business of providing, among other
things, telecommunications services similar to those provided by Sellers and
fully understands the business risks inherent in acquiring assets in the
telecommunications industry.
Section 4.6 Condition of Purchased Assets.
Buyer represents and agrees that at the Closing it will accept the Purchased
Assets in their AS IS, WHERE IS CONDITION, WITH ALL FAULTS, except as otherwise
expressly set forth in this Agreement.
ARTICLE 5
COVENANTS
Section 5.1 Ordinary Course.
From the date hereof until the Closing Date, the Business shall be conducted
in the ordinary course consistent with Seller's post-petition practices
(including, without limitation, (i) the performance of all of Sellers'
post-petition obligations under the Assumed Contracts, and (ii) the collection
of accounts receivable of the Business and the use of such proceeds in
accordance with the post-petition financing orders entered in the Bankruptcy
Cases), unless an action outside the ordinary course of the Business has been
approved by the Bankruptcy Court. Sellers shall not make commitments for any
additional contracts for network capacity service or any individual capital
expenditure in excess of $25,000 without prior notification of and written
approval from Buyer which shall not be unreasonably withheld, delayed or
conditioned.
Section 5.2 Reasonable Efforts.
Upon the terms and subject to the conditions of this Agreement and any order
of the Bankruptcy Court, each of the parties hereto agrees to use its reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary or advisable under applicable laws and regulations
and consistent with Sellers' duties to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable,
including without limitation: (i) making appropriate filings with the
12
Bankruptcy Court and taking such other actions reasonably necessary in
connection with the application for the Procedures Order and Sale Order; (ii)
preparing and filing all other forms, registrations, consents and notices
required to be filed with governmental authorities and others to consummate the
transactions contemplated by this Agreement; and (iii) obtaining as promptly as
possible all consents, estoppels, confirmations, authorizations, orders or
approvals from each and every third party, whether private or governmental,
required in connection with the transactions contemplated by this Agreement,
except were the failure to obtain such consent would not have a material adverse
affect on the Acquisition or the Buyer's ability to operate the Business after
the Closing Date.
Section 5.3 Fees and Expenses.
Except as otherwise provided in this Agreement, whether or not the
transactions contemplated by this Agreement are consummated, Sellers, on the one
hand, and Buyer, on the other hand, shall bear its own fees and expenses
incurred in connection with the transactions contemplated by this Agreement.
Section 5.4 Submission for Court Approval.
Buyer and Sellers hereby acknowledge that Sellers are currently debtors in
possession in cases under the Bankruptcy Code pending in the Bankruptcy Court
and jointly administered as the Bankruptcy Cases. Seller shall, within three (3)
Business Days from the date of execution of this Agreement, file a motion with
the Bankruptcy Court pursuant to Federal Rule of Bankruptcy Procedure 9013 and
Sections 363 and 365 of the Bankruptcy Code (the "Sale Motion") seeking, inter
alia, (i) approval of this Agreement and entry of an order approving the sale of
the Purchased Assets to Buyer, free and clear of all Liens pursuant to Section
363 of the Bankruptcy Court, (ii) assumption and assignment of the Assumed
Contracts and establishing the amount of the Cure Amounts related thereto under
Section 365 of the Bankruptcy Code, and (iv) an order approving the compromise
of the claim of RFC Capital Corp., not to exceed $7,500,000. Buyer and Sellers
shall use their best efforts to obtain Bankruptcy Court approval of the Sale
Motion as soon as practicable; provided, however, if a Final Order1 of the
Bankruptcy Court is not obtained on or before March 31, 2001, Buyer may
terminate the Acquisition. This Agreement shall be subject to entry of a Final
Order of the Bankruptcy Court (the "Sale Order") approving the (i) the Sale
Motion, (ii) this Agreement, (iii) the sale of the Purchased Assets to Buyer
free and clear of all Liens, except the liens of RFC Capital Corp. to the extent
securing the payment of the RFC Assumed Indebtedness, (iv) the assumption and
assignment of the Assumed Contracts, and (v) approving the compromise of the
claim of RFC Capital Corp. As a condition to Buyer's obligation to consummate
the Acquisition, the Bankruptcy Court shall have entered a Final Sale Order
approving the sale in a form and substance reasonably acceptable to Buyer.
- -------- 1 For purposes of this Agreement, "Final Order" shall mean any order or
judgment of the Bankruptcy Court which has not been reversed, stayed, modified,
or amended and is not subject to appeal or rehearing and as to which the time to
appeal or seek review, rehearing, revision, or relief shall have expired, or
which may be enforced in accordance with the Bankruptcy Code or the Bankruptcy
Rules in the event no motion for stay pending appeal is granted or bond is
approved and filed where a notice of appeal has been filed.
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Provided, however, that if an appeal or motion for rehearing is pending, Buyer
may waive the requirement for a Final Sale Order and close the Acquisition
provided there is no stay of the effects of such Final Sale Order. The Final
Sale Order shall specifically determine that the Buyer is acting in good faith,
and entitled to the protections of Section 363 (m) of the Bankruptcy Code.
Unless waived by Buyer, the Final Sale Order shall also contain a provision that
makes it effective immediately, and shall not be subject to any stay under Rule
6004 (g) of the Federal Rules of Bankruptcy Procedure.
Section 5.5 Business Records.
Buyer shall have the right to receive all Records related to the Purchased
Assets and shall retain such Records in accordance with Sellers' record
retention plan as required by the United States Trustee or as otherwise required
by law from time to time hereafter but, in any event, Records shall either be
retained until the bankruptcy case of each Seller is closed or, if Buyer so
elects, Buyer may return any records that Buyer does not want to retain to
Sellers. From and after the Closing, Buyer shall permit Sellers to have access
to, and make copies of, any or all of the Records at Buyer's business location
from time to time, during regular business hours upon reasonably prior written
notice to Buyer, as Sellers may reasonably request; provided that such access
shall not unreasonably interfere with Buyer's business operations. Buyer
acknowledges that Sellers' records may be incomplete and that Sellers make no
representations or warranties of any kind regarding the content of any Records.
Section 5.6 Buyer Protection Provisions.
(a) As a condition to Buyer's participation in the Acquisition described in
this Agreement, Sellers shall provide Buyer, subject to Bankruptcy Court
approval of such protections as herein contemplated, the following Buyer
Protection (collectively, the "Buyer Protection Provisions"):
(1) Order Approving Buyer Protection Provisions. Within three
(3) Business Days after execution of this Agreement, Sellers shall file a
motion for, and promptly after execution of this Agreement by Sellers and
Buyer but in no case more than fourteen (14) days after execution of this
Agreement, Sellers shall obtain, an order of the Bankruptcy Court
approving the Buyer Protection Provisions and bid procedures ("Interim
Order" or "Procedures Order") in form and substance satisfactory to Buyer.
Sellers shall seek a hearing on the Expedited Motion seeking approval of
the Procedures Order on Friday, March 2, 2001, and shall seek approval of
these Buyer Protection Provisions. Sellers shall amend the pending Sales
Procedures Motion to seek approval of the Buyer Protection Provisions set
forth herein, including, without limitation, the provisions of this
Section 5.6 of this Agreement. If entry of the Procedures Order is not
obtained on or before the date
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that is fourteen (14) days after the execution of this Agreement, Buyer
may terminate this Acquisition.
(2) Reimbursement of Buyer's Expenses. Sellers hereby
acknowledge and agree that Buyer has incurred and will continue to incur
substantial expenses, including the fees and expenses of legal counsel and
financial advisors in connection with investigating the business and
operation of Sellers, and negotiating and preparing various documentation,
including, without limitation, the Letter Agreement, this Agreement, the
pleadings seeking Court approval of the sale and the closing documents
(the "Reimbursable Expenses" or "Expense Reimbursement"). In recognition
of such expenditures and to induce Buyer to continue to incur such
expenses, Sellers shall pay Buyer up to $75,000 in documented Reimbursable
Expenses in the event the Acquisition is not consummated for any reason
other than a material default by Buyer of its obligations under this
Agreement.
(3) Termination Fee. Sellers agree that, in the event of a
termination of the Acquisition as a result of Sellers' failure to
consummate the Acquisition after the satisfaction of all conditions
precedent to Sellers' obligation to effect the transactions contemplated
by this Agreement, Sellers shall, upon demand and after application to and
order from the Bankruptcy Court acting in the Bankruptcy Cases,
pay to Buyer the sum of $200,000 (the "Termination Fee").
(4) Break-Up Fee. If Buyer is prepared to consummate the
Acquisition outlined herein and the Purchased Assets are sold to any other
entity under ss. 363 of the Bankruptcy Code or any plan is confirmed in
the Bankruptcy Cases which does not involve Buyer or does not provide for
Buyer to be the acquiring entity for the Purchased Assets, Sellers shall
pay the Buyer upon closing of such transaction the sum of $200,000 (the
"Break-Up Fee") in cash as compensation for the time incurred and value to
Sellers.
(5) Only Single Fee Recovery. In no event shall Sellers be
liable for both the Termination Fee and the Break-Up Fee. In no event
shall Sellers be liable for both the Break-Up Fee and the Expense
Reimbursement. Likewise, in no event shall Sellers be liable for both the
Termination Fee and the Expense Reimbursement.
(6) Non-Solicitation, Overbid and Standstill.
(A) Sellers hereby agree that, between the date hereof
and either the Closing Date or the earlier termination of this
Agreement, as the case may be, Sellers shall not, directly or
indirectly, through any of Sellers' agents or representatives
initiate or solicit any proposals or offers from any person relating
to any acquisition of Sellers or its material assets, including the
Purchased Assets (an "Alternative Acquisition"), unless they are
advised
15
by their legal counsel in writing that they are required to do so
by the Bankruptcy Code or applicable fiduciary duties.
(B) In the event that Sellers shall receive any offer,
proposal, or inquiry regarding an Alternative Acquisition, Sellers
shall, within two (2) Business Days, (i) notify Buyer, in writing,
of such proposal or offer, or any inquiry or contact with any person
with respect thereto (excluding any informational request), and
shall, in any such notice to Buyer, indicate in reasonable detail
the identity of the offeror and the terms and conditions of any
proposal, and (ii) after the entry of the Interim Order, notify any
such offeror of the entry of the Interim Order.
(C) Subject to entry of an Interim Order by the
Bankruptcy Court approving the terms of this Agreement, Sellers
shall not support nor seek Bankruptcy Court approval of any transfer
of the Purchased Assets so long as Buyer is prepared to consummate
the Acquisition, unless such other transaction (i) provides an
aggregate present value at least $250,000 higher than the amount
Buyer agrees to pay (including assumption of debt) to Sellers'
estate (the "Overbid Amount"), and (ii) provides for payment to
Buyer of the amounts described in 5.6(a)(2), 5.6(a)(3) and 5.6(a)(4)
above, as applicable. Bids beyond the Overbid Amount shall be in
increments of $50,000.
(b)Administrative Expense Status. The Reimbursable Expenses and the
Break-Up Fee or the Termination Fee, as applicable, shall constitute an
administrative expense of Sellers pursuant to ss. 503 of the Bankruptcy Code,
and shall be paid by Sellers upon demand from Buyer and after application to and
order from the Bankruptcy Court acting in the Bankruptcy Cases. From and after
such demand, until payment in full, interest shall accrue on any unpaid portion
at a rate per annum equal to the prime commercial lending rate in effect for
Chase Bank of Texas, N.A.
Section 5.7 Access for Inspections and Due Diligence.
Sellers will, upon the execution of this Agreement and continuing until the
earlier of the Closing Date or the termination of this Agreement, provide Buyer
with access, during regular business hours and upon prior notice, to the
Purchased Assets, Sellers' offices, and all information and documentation in
Sellers' possession related to the Purchased Assets reasonably requested by
Buyer or Buyer's counsel for inspection and due diligence purposes (the "Due
Diligence Review"). Promptly upon Buyer's request, Sellers shall provide Buyer
with true and correct copies of the Assumed Contracts.
Section 5.8 Public Announcements.
All public announcements or statements concerning this Agreement and the
transactions contemplated herein shall be jointly approved by Buyer and Sellers.
If the parties are unable to agree on a public statement or announcement
following the execution of this Agreement, and Sellers or Buyer determines,
after consultation with counsel, that such statement or
16
announcement is required by law, then Sellers or Buyer, as the case may be, may
issue such statement or announcement.
Section 5.9 Confidentiality.
All information furnished by Sellers to Buyer in connection with the Due
Diligence Review shall be held by Buyer as proprietary information of Sellers
(the "Proprietary Information"). The Proprietary Information shall not include,
however, information that has been disclosed to the public by Sellers. Any
Proprietary Information that is subsequently disclosed to the public by Sellers
shall lose its character as proprietary information at the time of disclosure.
Buyer and Sellers shall, and shall cause each of their respective directors,
officers, partners, employees, representatives and agents, to hold in strictest
confidence and not use in any manner whatsoever, other than as contemplated by
this Agreement, any confidential information of the other party, including any
trade secrets or other information not generally available to the public, except
to the Bankruptcy Court and creditors in the Bankruptcy Cases, and their
professionals and advisors.
Section 5.10 Non-Solicitation of Sellers' Employees.
Until the earlier to occur of Closing or conversion of the Bankruptcy Cases
to a case under Chapter 7 of the Bankruptcy Code, Buyer will not, for a period
of six (6) months after the effective date of such termination, directly or
indirectly, without the consent of Sellers, (i) employ any person who during the
nine months preceding the effective date of such termination of this Agreement
was an employee of any Seller, (ii) encourage any employee of any Seller to
terminate his or her employment with any Seller, or (iii) enter into any
consulting arrangement or other arrangement by which Buyer or any of its
Affiliates obtains the services of any person who was an employee of any Seller
at any time during the nine-month period preceding the effective date of such
termination of this Agreement.
ARTICLE 6
CONDITIONS
Section 6.1 Conditions to Each Party's Obligations.
The respective obligations of each party to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of the following conditions:
(a)There shall not be in effect any order of any Governmental Entity
staying the consummation of the transactions contemplated by this Agreement.
(b)The Bankruptcy Court shall have entered the Sale Order in accordance
with the terms of this Agreement on or before March 31, 2001.
(c)The Bankruptcy Court shall have entered the Procedures Order, on or
before the date that is fourteen (14) days after the date of execution of this
Agreement,
17
approving the Bidding Procedures, including payment of the Expense
Reimbursement, the Break-Up Fee and/or the Termination Fee by Sellers to Buyer
pursuant to Section 5.6.
Section 6.2 Conditions to Obligations of Buyer.
The obligation of Buyer to effect the transactions contemplated by this
Agreement shall be further subject to the satisfaction at or prior to the
Closing of the following conditions:
(a)The representations and warranties of Sellers set forth in
Article 3 shall be true and correct in all material respects as of the Closing
Date with the same effect as though such representations and warranties had been
made at and as of the Closing Date, other than representations and warranties
that expressly speak as of a specific date (which need only be true and correct
as of such date).
(b)Sellers shall have performed in all material respects all
obligations required to be performed by Sellers under this Agreement at or prior
to the Closing.
(c)Buyer shall have received from Sellers a certificate executed by
Sellers, dated the Closing Date, to the effect of (a) and (b) above (the
"Sellers' Certificate"), the form of which is attached hereto as Exhibit D.
(d)There shall not have occurred any Material Adverse Change.
(e)RFC Capital Corp. shall be prepared to fund the Acquisition
pursuant to the terms contained in the term sheet attached hereto as Attachment
I or on other terms acceptable to Buyer in its discretion, and RFC Capital Corp.
shall have agreed to sell, transfer and assign to Sellers any accounts or other
rights purchased from Sellers pursuant to the factoring relationship with
Sellers, so that Sellers may sell, transfer and assign such accounts and other
rights to Buyer as part of the Purchased Assets subject to the liens and
security interests of RFC Capital Corp. to the extent securing the RFC Assumed
Indebtedness.
(f)Buyer shall have consummated the transactions made the subject of
the certain agreement with d-Tel Network LLC for the purchase of two Siemens
DCO/CS switches and one CPDI calling platform, a copy of which is attached
hereto as Attachment II (in this regard, Buyer agrees to use its best efforts to
consummate such transactions in accordance with the terms of such agreement).
(g)The Bankruptcy Court shall have entered an order determining the
claim of RFC Capital Corp. as compromised at the hearing on the Sale Motion, not
to exceed $7,500,000, for purpose of determining the Purchase Price, in
accordance with and subject to the terms of this Agreement.
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Section 6.3 Conditions to Obligations of Sellers.
The obligation of Sellers to effect the transactions contemplated by this
Agreement shall be further subject to the satisfaction at or prior to the
Closing of the following conditions:
(a)The representations and warranties of Buyer set forth in Article
4 shall be true and correct in all material respects as of the Closing Date with
the same effect as though such representations and warranties had been made at
and as of the Closing Date, other than representations and warranties that speak
as of a specific date (which need only be true and correct in all material
respects as of such date).
(b)Buyer shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing.
(c)Sellers shall have received from Buyer a certificate executed by
an officer of Buyer, dated the Closing Date, to the effect of (a) and (b) above
(the "Buyer's Officer's Certificate"), the form of which is attached hereto as
Exhibit E.
(d)The parties shall have obtained all board approvals, and such
other consents and approvals of Governmental Entities and other persons, as are
necessary in connection with the consummation of the Acquisition, including,
without limitation, the Sale Order.
Section 6.4 Failure of Conditions.
If any of the conditions to the Closing provided for in this Article 6 are not
satisfied by the Closing Date (hereinafter defined), either party whose
performance hereunder was subject to the satisfaction of such condition will
have the right and option to terminate the Agreement by written notice to the
other party if the failure of such condition was not within the control of the
party seeking termination.
ARTICLE 7
TERMINATION AND AMENDMENT
Section 7.1 Termination.
This Agreement may be terminated at any time prior to the Closing by:
(a)Mutual consent of Sellers and Buyer.
(b)Either Sellers or Buyer if the Closing shall not have occurred on or
before March 31, 2001 (unless the failure to consummate the Closing by such date
shall be due to the failure of the party seeking to terminate this Agreement to
have fulfilled any of its obligations under this Agreement).
19
(c)Either Sellers or Buyer if any court of competent jurisdiction or other
competent Governmental Entity shall have issued a statute, decree or injunction
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such statute, decree or injunction shall have
become final and nonappealable.
(d)By Buyer if any Seller has materially breached any of such Seller's
representations, warranties, covenants or other terms of this Agreement.
(e)By Buyer if any condition to the obligation of Buyer set forth in
Sections 6.1 or 6.2 has not been satisfied on or before the date specified in
such condition, or if no such date is specified, March 31, 2001, unless the
failure of such condition to be satisfied is due to a breach by Buyer of its
obligations hereunder.
(f)By Sellers if Buyer has materially breached any of Buyer's
representations, warranties, covenants or other terms of this Agreement.
(g)By Sellers, if the Bankruptcy Court approves the sale by Sellers of the
Purchased Assets to one or more third parties pursuant to a better or higher
offer or offers from such third party or parties to purchase all of the
Purchased Assets in accordance with the terms of the Bidding Procedures,
provided, however, any such termination is subject to payment of the Expense
Reimbursement, the Break-Up Fee, and/or the Termination Fee to Buyer, and Seller
shall remain fully obligated for same.
(h)By Sellers if any condition to the obligation of Sellers set forth in
Sections 6.1 or 6.3 has not been satisfied on or before the date specified in
such condition, or if no such date is specified, March 31, 2001, unless the
failure of such condition to be satisfied is due to a breach by Sellers of their
obligations hereunder.
Section 7.2 Effect of Termination.
In the event of the termination and abandonment of this Agreement pursuant
to Section 7.1, this Agreement shall terminate without any liability on the part
of any party hereto or its Affiliates, or its or their respective directors,
officers or stockholders, other than as provided by (i) the provisions of
Sections 5.3, (ii) the provisions of Section 5.6 with respect to Sellers'
obligation to pay the Break-Up Fee, the Termination Fee and the Expense
Reimbursement, as applicable, and (iii) the provisions of Section 2.5 with
respect to the payment of the Closing Escrow Funds.
Section 7.3 Amendment.
This Agreement may be amended at any time by Sellers and Buyer but only by
an instrument in writing signed on behalf of Sellers and Buyer. Any amendment
shall be approved by the Bankruptcy Court.
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Section 7.4 Extension; Waiver.
At any time prior to the Closing, Sellers, on the one hand, and Buyer, on
the other hand, may (i) extend the time for the performance of any of the
obligations or acts of the other; (ii) waive any inaccuracies in the
representations and warranties of the other contained herein or in any document
delivered pursuant hereto; (iii) waive compliance with any of the agreements of
the other contained herein; or (iv) waive any condition to its obligations
hereunder. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party.
ARTICLE 8
ADDITIONAL POST-CLOSING COVENANTS
Section 8.1 Further Assurances.
From and after the Closing Date, from time to time, at Buyer's request and
expense, Sellers will execute and deliver such other instruments and take such
other action as Buyer may reasonably request to more effectively put Buyer in
possession and control of all or any part of the Purchased Assets and confirm
its title thereto.
Section 8.2 Benefits Under Unassignable Contracts and Permits.
If a consent of a third party which is required in order to assign any
Purchased Asset (or any claim, right or benefit arising thereunder or resulting
therefrom) is not obtained prior to the Closing Date, or if an attempted
assignment would be ineffective or would adversely affect the ability of Sellers
to convey their interest in question to Buyer, Sellers will cooperate with Buyer
and use reasonable efforts in any lawful arrangement to provide that Buyer shall
receive Sellers' interest in the benefits of such Purchased Asset. If any
consent or waiver is not obtained before the Closing Date and the Closing is
nevertheless consummated, Sellers agree to continue to use their reasonable
efforts for a period of ninety (90) days after the Closing to obtain all such
consents as have not been obtained prior to such date. Further, Sellers agree,
to the extent that any Permits used by Sellers in connection with the Business
are not assignable, then Sellers shall take such action as may be reasonably
necessary to provide Buyer with the use, enjoyment and benefit of Sellers'
interest in such Permits for a period of one hundred twenty (120) days after the
Closing Date; provided, that Buyer agrees to indemnify and hold harmless the
Sellers from any and all taxes and other liabilities arising out of Buyer's use
or enjoyment of such Permits after the Closing.
Section 8.3 Sellers' Employees.
Buyer may, but shall not be required to, offer employment to or employ any
employees or officers of Sellers as Buyer shall determine in its sole discretion
on such terms and conditions as Buyer shall determine in its sole discretion.
Sellers agree to use their reasonable efforts to cause their employees and
officers who have received offers of employment from Buyer to accept such offers
of employment. In the event that Buyer employs any officer or employee of
Sellers, Sellers shall provide Buyer with such information in respect of such
individuals as Buyer reasonably may request, including, without limitation,
personnel files and other records. Buyer shall not have any liability in respect
of any officers or employees of Sellers, whether employed by
21
Buyer or not, resulting from such officers' and employees' termination of
employment with Sellers, including, without limitation, any liability under the
Worker Adjustment and Restraining Notification Act, on account of severance
benefits, bonuses, vacation time or pay or incentive programs of any type, nor
shall Buyer acquire any obligation under any contract, employee benefit plan or
other agreement or arrangement of Sellers with respect to any officer or
employee or former officer or employee of Sellers, except to the extent such
liability is an Assumed Liability.
ARTICLE 9
MISCELLANEOUS
Section 9.1 Survival.
All representations and warranties of the parties contained in this
Agreement, including the Schedules hereto, or any certificate delivered in
connection herewith shall not survive the Closing.
Section 9.2 Notices.
All notices and other communications hereunder shall be in writing and shall
be deemed given upon receipt if delivered personally, sent by registered or
certified mail (return receipt requested) or transmitted by facsimile (with
confirmation of transmittal) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a)if to Buyer, to:
CCC GlobalCom Corp., Inc.
2630 Fountainview, Suite #300
Houston, Texas 77057
Facsimile: (713) 914-3870
Attention: Paul Licata
with a copy to:
Boyar & Miller
4265 San Felipe, Suite 1200
Houston, Texas 77027
Facsimile: (713) 552-1758
Attention: Leonard H. Simon
Trent L. Rosenthal
22
(b)if to Sellers, to:
Mitchell H. Bodian, President
1250 Wood Branch Park Drive
Houston, Texas 77079
Facsimile: (281) 529-4650
with a copy to:
Porter & Hedges, L.L.P.
700 Louisiana, Suite 3500
Houston, Texas 77002
Facsimile: (713) 226-0248
Attention: John F. Higgins
Section 9.3 Descriptive Headings.
The descriptive headings herein are inserted for convenience only and
are not intended to be part of or to affect the meaning or interpretation of
this Agreement. References in this Agreement to a designated "section" are
references to a Section of this Agreement unless otherwise specifically
indicated.
Section 9.4 Counterparts.
This Agreement may be executed in two or more counterparts, all of which
shall be considered one and the same agreement.
Section 9.5 Entire Agreement, Draftsmen.
This Agreement, the exhibits and schedules hereto and the other
documents and instruments executed by either party pursuant hereto constitute
the entire agreement, and supersede all prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter
hereof (including the Letter Agreement, which is hereby terminated) except for
any confidentiality agreements between the parties. The parties acknowledge and
agree that each party has been represented by counsel in the preparation,
execution and delivery of this Agreement, and this Agreement shall be construed
without reference to whether our party or the other was the original draftsman
of any particular provision of this Agreement. As a reference, in construction
of this Agreement, no term or provision shall be "construed against" the
draftsman of that term or provision.
Section 9.6 Governing Law.
This Agreement shall be governed and construed in accordance with the
laws of the State of Texas and applicable federal law, without regard to any
applicable principles of conflicts of law.
23
Section 9.7 Specific Performance.
The parties hereto agree that if any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached, irreparable damage would occur, no adequate remedy at law would exist
and damages would be difficult to determine, and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
Dection 9.8 Assignment.
This Agreement may not be assigned by any party hereto without the
written consent of the other parties; provided, however, that the Buyer may
assign its rights hereunder to an affiliate.
Section 9.9 Parties in Interest.
This Agreement shall be binding upon and inure solely to the benefit of
the parties hereto their successors and permitted assigns, including, without
limitation, any trustee, successor trustee or other responsible person appointed
or elected with respect to any Bankruptcy Estate under any chapter of the
Bankruptcy Code, and nothing in this Agreement, express or implied, is intended
to or shall confer upon any other person or persons any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
Section 9.10 Severability.
This Agreement shall be deemed severable; the invalidity or
unenforceability of any term or provision of this Agreement shall not affect the
validity or enforceability of this Agreement or of any other term hereof, which
shall remain in full force and effect.
Section 9.11 Exclusive Jurisdiction.
The parties hereby agree that, without limitation of any party's right
to appeal any order of the Bankruptcy Court, (i) the Bankruptcy Court shall
retain exclusive jurisdiction to enforce the terms of this Agreement and to
decide any claims or disputes which may arise or result from, or be connected
with this Agreement, any breach or default hereunder, or the transactions
contemplated herein, and (ii) any and all claims, actions, causes of action,
suits and proceedings relating to the foregoing shall be filed and maintained
only in the Bankruptcy Court, and the parties hereby consent and submit to the
jurisdiction of the Bankruptcy Court and shall receive notices at such locations
as indicated in Section 9.2.
[REST OF PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
EQUALNET COMMUNICATIONS CORP.
By:
Mitchell H. Bodian, President
EQUALNET CORPORATION
By:
Mitchell H. Bodian, President
USC TELECOM, INC.
By:
Mitchell H. Bodian, President
CCC GLOBALCOM CORP., INC.
By:
Paul Licata, President
25