<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 27, 1998
2CONNECT EXPRESS, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA
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(State or other jurisdiction of
incorporation or organization)
000-22251 65-9674664
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(Commission I.R.S. Employer
file number) Identification No.
350 Gateway Drive, Suite 101, Pompano Beach, FL 33069
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (954) 971-3555
NOT APPLICABLE
--------------
(Former name, former address and former fiscal year,
if changed since last report)
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Item 2. CHANGES IN CONTROL
2Connect Express, Inc. ("2Connect") entered into an agreement with Sterne,
Agee & Leach, Inc. ("Sterne Agee") whereby Sterne Agee, upon consummation of
the agreement shall own and control 100% of the equity of 2Connect. Also,
pursuant to the agreement, effective August 27, 1998, certain employees of
Sterne Agee were appointed to fill vacancies in the Board of Directors
resulting in Sterne Agee effectively having control of the Board. See Item 5.
Item 5. OTHER EVENTS
On August 27, 1998, 2Connect entered into an agreement ("Agreement") with
Sterne Agee, whereby Sterne Agee will, as of the Effective Date of the Plan of
Reorganization of 2Connect filed with the U.S. Bankruptcy Court, Southern
District of Florida, acquire out of bankruptcy 100% of the equity interests of
2Connect and 2Connect will retain the Coral Square Mall store lease and certain
store fixtures. In consideration for such acquisition, Sterne Agee will make a
new value contribution to the bankruptcy estate for the benefit of 2Connect's
creditors in the amount of $175,000 which funds are currently in escrow. To
effect this transaction and in accordance with the Plan or Reorganization, as
amended on August 7, 1998, upon the Effective Date, all of the current and
existing Common Stock of 2Connect will be forever extinguished and canceled and
2Connect will issue new shares of Common Stock to Sterne Agee which shall
constitute 100% of the issued and outstanding shares. The Bankruptcy Court
scheduled a hearing to confirm the Plan of Reorganization for October 14, 1998.
The Effective Date is to occur ten days after confirmation of the Plan of
Reorganization.
Also pursuant to the terms of the Agreement and effective August 27, 1998, all
of the members of the Board of Directors, except for Marc D. Fishman, resigned
from the Board of Directors and Mr. Fishman, as the sole remaining director,
and in accordance with the Bylaws of 2Connect, appointed James S. Holbrook,
Jr., Craig R. Heyward and F. Eugene Woodham, each of whom are employees of
Sterne Agee, to fill three of the vacancies. The Board of Directors has further
resolved to appoint James S. Holbrook, Jr. as the Chairman of the Board and, in
accordance with the Bylaws of 2Connect, to designate that the Chairman of the
Board is the chief executive officer of the corporation.
A copy of the Agreement is filed as Exhibit 99 hereto.
Item 6. RESIGNATION OF DIRECTORS
Pursuant to the Agreement, five out of six members of the Board of Directors
resigned effective August 27, 1998. However, none resigned because of any
disagreement with 2Connect. See Item 5.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS
Exhibit 99. Agreement by and between 2Connect Express, Inc. and Sterne,
Agee & Leach, Inc. dated August 27, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
2CONNECT EXPRESS, INC.
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(Registrant)
Date: August 31, 1998 /s/ James S. Holbrook, Jr.
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James S. Holbrook, Jr., Chairman of
the Board and Chief Executive Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description Sequentially Numbered Page
- -------------- ----------- --------------------------
<S> <C> <C>
99 Agreement by and between 2Connect Express, 1-10
Inc. and Sterne, Agee & Leach, Inc. dated
August 27, 1998.
</TABLE>
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AGREEMENT
THIS AGREEMENT ("Agreement") made as of the 27th day of August, 1998,
by and among 2CONNECT EXPRESS, INC., a Florida corporation ("2Connect"), STERNE,
AGEE & LEACH, INC., a Delaware corporation ("Sterne Agee"), JAMES S. HOLBROOK,
JR., an individual in his sole capacity as a member of the New Board, CRAIG
HEYWARD, an individual in his sole capacity as a member of the New Board, GENE
WOODHAM, an individual in his sole capacity as a member of the New Board.
R E C I T A L S:
WHEREAS, 2Connect is a specialty retailer and direct, consultative
marketer of communications related products and services;
WHEREAS, on January 12, 1998, 2Connect filed a voluntary petition for
protection under Chapter 11 ("Bankruptcy Case") of the United Stated Bankruptcy
Code in the United States Bankruptcy Court ("Court") for the Southern District
of Florida, Case No. 98-20169-BKC-RBR, in order to protect the interest of its
creditors and shareholders and is a debtor in possession therein;
WHEREAS, 2Connect developed a plan ("Business Plan") for 2Connect to
emerge from the Bankruptcy Case originally set forth in that certain letter of
intent dated February 27, 1998 ("Letter of Intent") and which requires the
completion of several transactions including the merger of Bobby Allison
Cellular Systems of Florida, Inc. d/b/a Bobby Allison Cellular & Pagers, a
Florida corporation ("Bobby Allison") which is a cellular and paging specialty
retailer based in Largo, Florida, into 2Connect Acquisition, Inc., a
wholly-owned subsidiary of 2Connect ("Merger"), the terms of which have been set
forth in that certain Merger Agreement by and among 2Connect, Bobby Allison and
the shareholders of Bobby Allison dated May 1, 1998 ("Merger Agreement"), and a
letter of intent or other agreement for subsequent financing of the merged
entity in the minimum amount of $2.5 million to finance its future business
("Equity Investment") which financing is proposed to be conducted by Sterne Agee
and which financing was contemplated to be a registered offering to 2Connect's
Unitholders;
WHEREAS, Sterne Agee, as an accommodation to the Business Plan and to
induce Bobby Allison to enter into the Letter of Intent, loaned through an
affiliated Alabama general partnership formed on February 23, 1998 and known as
The Sterne Agee Investors No. 3 ("Partnership") $200,000 to Bobby Allison
("Allison Loan") pursuant to that certain Promissory Note dated February 27,
1998 in order to provide Bobby Allison with the working capital from then until
such time as 2Connect could emerge from the Bankruptcy Case and complete the
Merger and the Equity Investment and which Allison Loan shall be repaid from the
proceeds of the Equity Investment and which Allison Loan is collateralized by a
pledge of 10% of the capital stock of Bobby Allison pursuant to that certain
Stock Pledge Agreement dated February 27, 1998; however, 2Connect asserts that
it has no first hand knowledge that this has occurred;
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WHEREAS, because the Partnership made the Allison Loan at the request
of 2Connect, Sterne Agee required that Sterne Agee and 2Connect enter into that
certain agreement by and between Sterne Agee and 2Connect dated February 27,
1998 ("Sterne Agee/2Connect Agreement") whereby 2Connect agreed to use its best
efforts to pursue the Business Plan and the Merger, to get Sterne Agee's
approval on the Plan of Reorganization and to give Sterne Agee notice of Court
hearings on the Plan of Reorganization;
WHEREAS, Sterne Agee asserts that it has further raised approximately
$300,000 of the Equity Financing through the sale of Convertible Debentures
("Debentures") in Bobby Allison as contemplated in the Merger Agreement and may
have to raise an additional $500,000 through the sale of additional Debentures
and 2Connect asserts that it has no first hand knowledge that this has occurred
or may occur;
WHEREAS, 2Connect filed a Plan of Reorganization and Disclosure
Statement with the Court on April 15, 1998, which were subsequently amended
resulting in (i) the "Second Amended Disclosure Statement for Amended Plan of
Reorganization Proposed by the Debtor" approved by the Court on June 16, 1998
and, after certain amendments required by the Court, filed with the Court in
final on June 24, 1998 ("Disclosure Statement") and (ii) the "Debtor's Amended
Plan of Reorganization" filed with the Court on June 24, 1998 ("Plan of
Reorganization") (Disclosure Statement and Plan of Reorganization are
hereinafter collectively referred to as the "Bankruptcy Filings");
WHEREAS, Sterne Agee asserts that 2Connect never obtained Sterne Agee's
approval of the Plan of Reorganization or the Disclosure Statement pursuant to
the Sterne Agee/2Connect Agreement and Sterne Agee has asserted that the Plan of
Reorganization is not accurate; however, 2Connect disagrees with Sterne Agee's
position and asserts that Sterne Agee received all required notice and that the
Plan of Reorganization was accurate;
WHEREAS, the Plan of Reorganization requires the approval of the
creditors who are represented by the creditors' committee formed pursuant to
that certain filing with the Court dated February 17, 1998 ("Creditors'
Committee");
WHEREAS, Sterne Agee negotiated a settlement with the Creditor's
Committee to induce the Creditors' Committee to withdraw a motion to convert the
case to Chapter 7 ("Settlement") and 2Connect asserts that it was equally
involved in such Settlement;
WHEREAS, Sterne Agee asserts that because the Settlement was never
formalized into an agreement, counsel to Sterne Agee sent a letter to counsel
for the Creditors' Committee dated May 6, 1998 to confirm the price to be paid
by Sterne Agee to the creditors and the assets for which such payment would
purchase which included $100,000 for 100% of the corporate shell, the NOL, the
general intangibles and the Coral Square store lease, 80% of cost for inventory
at the Coral Square store and $85,000 for certain store fixtures and a desktop
publishing system, software and computers
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("May 6 Letter"); however, 2Connect disagrees that the Settlement was never
formalized and believes that Sterne Agee is bound thereby;
WHEREAS, counsel to Sterne Agee sent a copy of the May 6 Letter to
counsel for 2Connect under cover of a letter dated May 19, 1998 which stated
that such May 6 Letter should constitute an offer for the acquisition of certain
assets of 2Connect ("May 19 Letter");
WHEREAS, 2Connect and the Creditors' Committee deem the May 6 Letter
and the May 19 Letter as binding agreements among Sterne Agee, 2Connect and the
Creditors' Committee (the May 6 Letter and May 19 Letter are hereinafter
referred to as the "Creditors' Committee Agreement"); however, Sterne Agee has
asserted that the Creditors' Committee Agreement is not enforceable against
Sterne Agee because 2Connect cannot meet the condition precedent required by the
Creditor's Committee Agreement whereas 2Connect believes that it can meet the
condition precedent;
WHEREAS, while the Creditors' Committee Agreement was incorporated into
the Bankruptcy Filings, Sterne Agee does not believe that the Bankruptcy Filings
accurately reflect the Creditors' Committee Agreement and has notified 2Connect
thereof and 2Connect does believe that the Bankruptcy Filings accurately reflect
the Creditors' Committee Agreement and has notified Sterne Agee thereof;
WHEREAS, Sterne Agee assigned Bobby Allison the right under the
Creditors' Committee Agreements to purchase the inventory at the Coral Square
store at 80% of cost and the desktop publishing system, software and computers
for $10,000 and which Bobby Allison has purchased;
WHEREAS, Sterne Agee asserts that Section 1.05(d) of the Merger
Agreement requires that all of the current members of the Board of Directors of
2Connect ("Board") other than Marc Fishman resign from the Board upon the
occurrence of certain events including the execution of the Merger Agreement and
the Creditors' Committee Agreement; however, 2Connect disagrees with Sterne
Agee's position;
WHEREAS, Sterne Agee asserts that all such events have occurred but the
Board has refused to resign; however, 2Connect disagrees with Sterne Agee's
position and believes that it has complied with the Merger Agreement;
WHEREAS, Bobby Allison has given 2Connect formal notice that 2Connect
is in breach of the Merger Agreement and also questions whether certain other
conditions to the Merger will be met including the Equity Financing and
compliance with Article XIII of the Merger Agreement regarding satisfaction of
Bobby Allison that the reorganized 2Connect will not retain any liability from
that certain class action lawsuit filed against the directors of 2Connect on
April 17, 1998 and which reserves the right to add 2Connect as a defendant when
and if possible; however, 2Connect disagrees it has received such notice from
Bobby Allison;
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WHEREAS, Sterne Agee has further notified 2Connect that it does not
believe that the conditions to the Merger will be met and that there is a risk
that the Merger will not occur and that consequently the Creditors' Committee
Agreement would terminate for lack of any enforceable Merger Agreement; however,
2Connect disagrees with such statement and asserts that the Merger is not a
condition to the Creditor's Committee Agreement;
WHEREAS, 2Connect accused Sterne Agee of anticipatorily breaching the
Creditors' Committee Agreement and threatened legal action and filed a motion
with the Court on July 22, 1998 requesting approval of the Debtor's First
Modification to the Second Amended Disclosure Statement ("Modification")
reflecting its perception that Sterne Agee has breached the Creditors' Committee
Agreement;
WHEREAS, Sterne Agee filed with the Court on August 3, 1998 an
objection to such motion stating that Sterne Agee was not in breach,
anticipatorily or otherwise, of the Creditors' Committee Agreement because of
2Connect's failure to meet the conditions precedent to the Creditor's Committee
Agreement and, in response to such objection, 2Connect agreed to amend some of
the language in the Modification to reflect Sterne Agee's position;
WHEREAS, the parties have come to a settlement of their differences
pursuant to letter of counsel to Sterne Agee dated August 13, 1998, and letter
of counsel to the Debtor dated August 14, 1998 which, among other things, (i)
eliminates any requirement for an enforceable Merger Agreement as a condition
precedent and (ii) requires execution of a formal definitive agreement between
Sterne Agee and 2Connect;
WHEREAS, the parties now wish to formalize a definitive agreement to
incorporate the agreed upon terms outlined in such letters;
NOW, THEREFORE, for and in consideration of the foregoing Recitals and
the mutual covenants contained herein, the parties hereby agree as follows:
1. CAPITALIZED TERMS. All capitalized terms not otherwise defined
herein shall have the meaning given them in the Plan of Reorganization.
2. PURCHASE PRICE. Subject to the terms and conditions contained in
this Agreement, Sterne Agee hereby agrees to pay $175,000 ("Payment") to
2Connect as follows: $100,000 for 100% of the equity of 2Connect, the NOL, the
general intangibles, the Coral Square store lease, and any other leases or
assets of 2Connect in existence on the execution of this Agreement, other than
the Fixtures ("Intangibles") and $75,000 for the store fixtures as previously
identified and inspected by Bobby Allison and which are in the same condition as
when so inspected ("Fixtures") (collectively, the Intangibles and the Fixtures
are hereinafter referred to as the "Assets"). Sterne Agee acknowledges that the
Payment shall constitute the New Value Contribution. The Payment may be made by
Sterne Agee directly, through Bobby Allison, or as Sterne Agee otherwise deems
appropriate and will be made only in accordance with paragraph 6 of this
Agreement.
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3. EXECUTION OF AGREEMENT. Immediately upon and simultaneously with the
EXECUTION of this Agreement and without regard to any approval of this Agreement
by the Court, all the following shall occur:
(a) Each of Thomas H. Hicks ("Hicks"), Bruce S. Foerster
("Foerster"), John Isaac ("Isaac"), David Colby ("Colby") and Arnold Jaffee
("Jaffee") shall submit an original manually executed written resignation dated
the same date as the execution of this Agreement ("Resignations") from the Board
of Directors of 2Connect ("Board") to Markowitz, Davis, Ringel & Trusty, P.A. of
Miami, Florida, Sterne Agee's local counsel ("Markowitz Firm"), and 2Connect
hereby represents and warrants and certifies to Sterne Agee that Hicks,
Foerster, Isaac, Colby, Jaffee and Marc Fishman ("Fishman") constitute all of
the members of the Board as of the date of execution of this Agreement and that
there has been no action taken by the Board or the shareholders of 2Connect,
agreements entered into or other actions which could result in any other person
serving on or having any right to serve on the Board. Hicks shall resign his
position as Chief Executive Officer, President and any other office held for the
Corporation.
(b) 2Connect shall submit to the Markowitz Firm an original
unanimous written consent of the Board in the form and substance as attached
hereto as EXHIBIT "A" ("Unanimous Consent") which has been manually executed by
Fishman in his capacity as the sole remaining member of the Board and dated the
same date as the date of execution of this Agreement appointing James S.
Holbrook, Jr., Craig Heyward and Gene Woodham to the Board ("New Board") to fill
three of the five vacancies on the Board created by the Resignations and
appointing James S. Holbrook, Jr. as Chairman of the Board. Although Hicks shall
have resigned from all directorships and offices of 2Connect, the New Board will
hire Hicks and those persons currently employed by 2Connect ("Employees") as
employees of 2Connect for the sole purpose of assisting the New Board with the
day to day administrative duties regarding administration of the Bankruptcy Case
but such Employees will have no participation in the management of 2Connect as
an ongoing corporation. All salaries for such Employees and expenses of 2Connect
associated with the duties and activities of the Employees shall be paid by the
Estate. The Employees shall be employed by 2Connect at the direction of 2Connect
for the same salaries as in existence immediately prior to this Agreement.
(c) Sterne Agee will deposit $175,000 ("Escrow Deposit"),
representing the entire Payment, into an interest bearing account ("Escrow
Deposit Account") chosen by the Markowitz Firm which shall be part of a separate
escrow account with the Markowitz Firm as the escrow agent ("Escrow Account")
pursuant to an escrow agreement in the form and substance attached hereto as
EXHIBIT "B" ("Escrow Agreement") and all interest accrued on the Escrow Deposit
Account at the time of the termination of the Escrow Account shall be paid to
Sterne Agee.
(d) Sterne Agee shall deliver original manually executed
indemnity agreements dated the same date as the execution of this Agreement in
the form and substance as attached hereto as EXHIBIT "C" ("Indemnity Agreement")
whereby Sterne Agee indemnifies each of Hicks, Foerster, Isaac, Colby, Jaffee
and Fishman ("Old Board"), but Fishman only if and when Fishman resigns, for any
liability they may incur (including reasonable attorney's fees and expenses) in
their capacity as
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prior members of the Board resulting from and as a consequence of the actions of
the New Board during the period of time beginning with the execution of the
Indemnity Agreement until the earlier to occur of (i) the termination of the
Escrow Account or (ii) the release of the Escrow Deposit ("Indemnification
Expiration"). However, with regard to Hicks, his Indemnity Agreement shall
extend to the later to occur of (i) the Indemnification Expiration or (ii) until
Hicks is no longer an Employee. Also, Sterne Agee shall indemnify Fishman
pursuant to an Indemnity Agreement for any liability which Fishman may incur as
a member of the New Board from the date of the Agreement until the earlier to
occur of (i) Fishman's resignation or (ii) the date the entry of the
Confirmation Order (as defined below).
4. [THIS SECTION 4 HAS BEEN INTENTIONALLY DELETED]
5. EXISTING BANKRUPTCY PROCEEDINGS AND D&O POLICY.
(a) Unless ordered by the Court or recommended by Kelley Drye & Warren
LLP as bankruptcy counsel for 2Connect as the debtor-in-possession, neither
Sterne Agee nor the New Board will take any action (i) to interfere with the
confirmation process or the timing of the confirmation process of the Amended
Plan of Reorganization (as defined in Section 6(b) below) and the distribution
of the proceeds of the assets of 2Connect designated for the creditors pursuant
to the Amended Plan of Reorganization or (ii) to remove Kelley Drye & Warren LLP
as bankruptcy counsel for 2Connect as the debtor-in-possession. In addition,
Sterne Agee and the New Board shall take such actions as they may legally take
to consummate the issuance of the common stock of 2Connect to Sterne Agee in
accordance with Section 6(d) below.
(b) Upon execution of this Agreement, each member of the New Board
shall become an insured person under the existing Directors & Officers Policy
("Policy") in effect immediately prior to the execution of this Agreement which
has been extended by the Old Board until September 15, 1998 and without cost to
the New Board. Sterne Agee and/or the members of the New Board will pay for any
extension of the Policy from September 15, 1998 until the Effective Date;
however, the New Board will not cancel the Policy or fail to extend/renew the
Policy beyond Septmber 15, 1998 or any subsequent termination date of the
Policy, as extended ("Termination Date"), without first giving the Old Board
notice through Paul Battista of Kelley Drye & Warren LLP 10 calendar days prior
to such cancellation or Termination Date which may occur on September 15, 1998.
In the event that the New Board cancels or fails to extend/renew the Policy,
then the New Board shall assign 2Connect's rights to the Policy to the Old Board
and the Old Board may either extend the Policy or purchase tail coverage
("Tail") insurance from the date of cancellation or the Termination Date forward
at the Old Board's sole expense and such extension or Tail shall continue to
include the members of the New Board.
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6. RELEASE OF ESCROW ACCOUNT AND PAYMENT. Upon the occurrence of and
completion of each and all of the following, the Escrow Account shall terminate
and the Escrow Deposit shall be released and the Markowitz Firm shall transfer
the Escrow Deposit to 2Connect or its nominee:
(a) 2Connect shall have filed with the Court the Continuance
Motion which Continuance Motion shall be attached to this Agreement as an
exhibit. The Continuance Motion shall have been approved in writing by Sterne
Agee. Counsel to 2Connect shall use its best efforts to seek approval of the
Continuance Motion. Upon approval by the Court of the Continuance Motion and in
accordance with the Continuance Order, 2Connect will distribute ("Distribution")
the Continuance Order to each of the creditors, holders of Equity Securities and
securities convertible into Equity Securities (including persons who purchased
Units of 2Connect during its initial public offering) and other interested
parties of 2Connect (collectively, "Interested Persons") at 2Connect's cost.
Sterne Agee and 2Connect shall cooperate and each use their best efforts to
obtain an accurate list of Interested Persons for the Distribution and 2Connect
shall amend its schedules to schedule all such persons as claimants in the
Bankruptcy Case to the extent not already listed thereon. 2Connect shall
cooperate with Sterne Agee to give notice by publication if Sterne Agee so
desires at Sterne Agee's cost.
(b) 2Connect shall have filed with the Court an amendment to
the Plan of Reorganization ("Amended Plan of Reorganization") which shall have
been approved in writing by Sterne Agee and which shall provide, among other
things, that (i) all Equity Securities and any other securities convertible into
Equity Securities which have been issued by 2Connect shall be canceled and
extinguished, (ii) that neither Sterne Agee nor the Reorganized Debtor will pay
any reorganization trustee fees of any kind based on disbursements made by
2Connect ("Fees") and that all such Fees shall be borne solely by the estate and
paid from the funds derived from the liquidation of 2Connect's assets including
the Assets and (iii) that the Coral Square lease shall be assumed by 2Connect in
accordance with 11 U.S.C. ss. 365. Counsel to 2Connect shall use its best
efforts to seek confirmation of the Amended Plan of Reorganization.
(c) The Court shall have entered an order ("Confirmation
Order") which, subject to Section 8 below, shall have become final and
non-appealable (i) confirming the Amended Plan of Reorganization which
contemplates the Merger and is not a plan of liquidation and (ii) finding
substantially that (a) notification by publication, if made, constitutes
adequate notice to Interested Parties, (b) all Interested Persons have been
given adequate notice of the Amended Plan of Reorganization and (iii) all
Interested Parties are bound by the Amended Plan of Reorganization.
(d) Upon the Effective Date, Sterne Agee shall be issued
30,000 shares of the common stock of 2Connect, par value $.01 per share, which
shall constitute one hundred percent (100%) of the issued and outstanding
capital stock of 2Connect ("Post-Petition Equity") as of the Effective Date
making Sterne Agee the sole shareholder and owner of 2Connect on a fully diluted
basis.
7. POST-PETITION EQUITY. Sterne Agee acknowledges that the
Post-Petition Equity shall not be registered with the U.S. Securities and
Exchange Commission ("SEC") but will be issued to Sterne Agee pursuant to the
exemption from registration with the SEC contained in Section 4(2) of the
Securities Act of 1933 and shall be subject to the customary restrictions on
resale. 2Connect represents and warrants that 2Connect has not filed a
certificate with the SEC pursuant to Section
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12(g)(4) of the Securities Exchange Act of 1934, as amended. Each certificate
representing the Post- Petition Equity shall bear the following legend:
The securities have not been registered under the United States
Securities Act of 1933, as amended (the "Securities Act"), or any state
securities laws, and may not be offered or sold, transferred, pledged,
hypothecated or otherwise disposed of except (i) pursuant to an
effective registration statement under the Securities Act (ii) to the
extent applicable, Rule 144 under the Securities Act (or any similar
Rule under the Securities Act relating to the distribution of
securities) or (iii) if an exemption from registration under the
Securities Act is available.
8. APPEALS. Should there be an appeal of the Confirmation Order, Sterne
Agee agrees that if no stay of such order is obtained by the Effective Date, the
Markowitz Firm, as the escrow agent for the Escrow Account, shall release the
Escrow Deposit to the estate of 2Connect or its nominee and consummate the
transactions in this Agreement.
9. AUTHORITY. Subject to Court approval of this Agreement, 2Connect
hereby represents and warrants to Sterne Agee that 2Connect has all requisite
power and authority to execute, deliver, and perform this Agreement and that all
necessary corporate proceedings of 2Connect have been duly taken to authorize
the execution, delivery, and performance by 2Connect of this Agreement. Subject
to Court approval of this Agreement, this Agreement has been duly authorized,
executed, and delivered by the Company, is the legal, valid, and binding
obligation of 2Connect, and is enforceable as to 2Connect in accordance with its
terms.
10. NOTICES. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to Sterne Agee,
shall be either hand delivered or by facsimile and confirmed by letter, to
Sterne, Agee & Leach, Inc., 1901 Sixth Avenue North, 2100 AmSouth Harbert Plaza,
Birmingham, Alabama 35203-2675, Attention: James S. Holbrook, Jr., facsimile
number (205) 252-6141, with a copy to Burr & Forman LLP, 3100 SouthTrust Tower,
420 North Twentieth Street, Birmingham, Alabama 35203, Attention: William K.
Holbrook, Esq., facsimile number (205) 458-5100, or if sent to 2Connect, shall
be either hand delivered or by facsimile and confirmed by letter, to 2Connect
Express, Inc., 3500 Gateway Drive, Suite 101, Pompano Beach, Florida 33069,
Attention: Thomas H. Hicks, facsimile number (954) 797-8636, with a copy to
Kelley Drye & Warren LLP, 201 S. Biscayne Blvd., 2400 Miami Center, Miami,
Florida 33131, Attention: Paul J. Battista, Esq., facsimile number (305)
372-2490. All notices hereunder shall be effective upon receipt by the party to
which it is addressed.
11. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Florida, without giving effect to
conflict of laws.
12. AMENDMENT. No amendment of any provisions of this Agreement shall
be valid unless the same shall be in writing and signed by all of the parties.
No waiver by any party of any default, misrepresentation or breach of warranty
or covenant hereunder, whether intentional or
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not, shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenants hereunder or affect in any
way any rights arising by virtue of any prior or subsequent such occurrence.
13. COUNTERPARTS. This Agreement may be signed in several counterparts,
each of which will constitute an original.
14. TERMINATION. Sterne Agee may unilaterally terminate this Agreement
and the Agreement shall be of no further force and effect and neither party will
have any obligations to the other pursuant to this Agreement upon written notice
by Sterne Agee to 2Connect in the event that either of the following occur (i)
either 2Connect, the Court, the Creditors' Committee or Counsel to 2Connect
converts the Bankruptcy Case in the Court from a reorganization to a
liquidation, even if in Chapter 11 and (ii) an appeal regarding the Confirmation
Order is filed and a stay of the Confirmation Order is granted at any time prior
to the Effective Date.
15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other party.
16. HEADINGS. The headings of the paragraphs herein are inserted for
convenience only and shall not define, limit, extend or describe the scope of
this Agreement or affect the construction hereof.
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IN WITNESS WHEREOF, the parties have caused this instrument to be
properly executed as of the day and year first above written; provided, however,
that James S. Holbrook, Jr., Craig Heyward and Gene Woodham have executed this
Agreement solely in their capacities as members of the New Board and only with
respect to Sections 5 and 3(b) of this Agreement.
2CONNECT EXPRESS, INC.
By: /s/ Thomas H. Hicks
-------------------------------------------
Thomas H. Hicks
Its: Chief Executive Officer
STERNE, AGEE & LEACH, INC.
By: /s/ James S. Holbrook, Jr.
-------------------------------------------
James S. Holbrook, Jr.
Its: Chairman
/s/ James S. Holbrook, Jr.
----------------------------------------------
James S. Holbrook, Jr., as member of New Board
/s/ Craig Heyward
----------------------------------------------
Craig Heyward, as member of New Board
/s/ Gene Woodham
----------------------------------------------
Gene Woodham, as member of New Board
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