UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Sections 13 and 15(d) of
the Securities Exchange Act of 1934
March 10, 1998
Date of Report (Date of earliest event reported)
SA TELECOMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-18048 75-228519
(State Of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
1600 Promenade Center, 15th Floor
Richardson, TX 75080
(Address of Principal Executive Office)
(972) 690-5888
(Registrant's Telephone Number, Including Area Code)
(Not Applicable)
(Former Name or Former Address,
if Changed Since Last Report)
<PAGE>
ITEM 5. OTHER EVENTS
In conjunction with the sale (the "Sale") of substantially all of the
assets of SA Telecommunications, Inc. and its subsidiaries (collectively, the
"Company") to EqualNet Corporation (the "Buyer"), EqualNet Holding Corp.
("EqualNet" and, collectively with the Buyer, the "EqualNet Parties") is
providing debtor-in-possession financing to the Company in the amount of
$1,500,000 to cover operating costs incurred by the Company prior to the closing
of the Sale (the "EqualNet DIP Financing"). On March 13, 1998, the Bankruptcy
Court entered an order approving the EqualNet DIP Financing (the "DIP Order").
Copies of (i) the DIP Order and (ii) the stipulation setting forth the terms of
the EqualNet DIP Financing are attached hereto as Exhibits 99.1 and 2.1,
respectively, and are incorporated herein by reference.
In addition, the Company entered into a Management and Services
Agreement with the EqualNet Parties under which the EqualNet Parties will take
operational control of the Company and the Company will, after the Closing Date,
provide telecommunications services to the EqualNet Parties until the transition
to the Buyer of the Company's customers is completed (the "Management
Agreement"). On March 24, 1998, the Bankruptcy Court entered an order approving
the Management Agreement (the "Management Agreement Order"). Copies of (i) the
Management Agreement Order and (ii) the Management Agreement are attached hereto
as Exhibits 99.2 and 2.2, respectively, and are incorporated herein by
reference.
Closing of the Sale remains contingent upon the receipt by EqualNet of
shareholder approval and several other conditions. However, the holders of at
least 51% of the common stock of EqualNet have agreed to vote their shares in
favor of the purchase by the Buyer of the Company's assets.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits:
99.1 Order Granting Remainder of Relief with Respect to
Motion (i) Pursuant to Sections 363(b) and 105(a) of
the Bankruptcy Code Approving (a) Break-Up Fee and
Expense Reimbursement in Favor of EqualNet Holding
Corp. and (b) Minimum Overbid Provisions and (ii)
Pursuant to Section 364 of the Bankruptcy Code
Approving Overadvance Facility Under the
Post-Petition Lending Facility.
2.1 Stipulation Concerning Debtor-in-Possession
Financing Provided by EqualNet Holding Corp.
99.2 Order Approving Execution of Management and Services
Agreement.
2.2 Management and Services Agreement.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SA TELECOMMUNICATIONS, INC.
DATE: April 8, 1998 By: /s/ Albert B. Gordon, Jr.
------------------------
Albert B. Gordon, Jr.
Chief Executive Officer
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re:
)
SA TELECOMMUNICATIONS, INC., )
ADDTEL COMMUNICATIONS, INC., ) Chapter 11
LONG DISTANCE NETWORK, INC., )
NORTH AMERICAN TELECOMMUNICATIONS CORPORATION, ) Case Nos. 97-2395 (PJW)
UNIQUEST COMMUNICATIONS, INC., ) through 97-2401 (PJW)
U.S. COMMUNICATIONS, INC., )
and SOUTHWEST LONG DISTANCE NETWORK, INC., ) Jointly Administered
)
Debtors. )
)
ORDER GRANTING REMAINDER OF RELIEF WITH RESPECT
TO MOTION (I) PURSUANT TO SECTIONS 363(B) AND
105(A) OF THE BANKRUPTCY CODE APPROVING (A)
BREAK-UP FEE AND EXPENSE REIMBURSEMENT IN FAVOR
OF EQUALNET HOLDING CORP. AND (B) MINIMUM
OVERBID PROVISIONS AND (II) PURSUANT TO SECTION
364 OF THE BANKRUPTCY CODE APPROVING OVERADVANCE
FACILITY UNDER THE POST-PETITION LENDING FACILITY
Upon consideration of the Motion for Order (i) Pursuant to Section
363(b) and 105 (a) Approving (a) Break-Up Fee and Expense Reimbursement in Favor
of Equalnet Holding Corp. and (b) Minimum Overbid Provisions and (ii) Pursuant
to Section 364 of The Bankruptcy Code Approving Overadvance Facility Under The
Post-Petition Lending Facility, dated December 24, 1997 (the "Motion"), filed by
SA Telecommunications, Inc., and certain of its directly and indirectly
wholly-owned subsidiaries, AddTel Communications, Inc., Long Distance Network,
Inc., North American Telecommunications Corporation, Uniquest Communications,
Inc., U.S. Communications, Inc. and Southwest Long Distance Network, Inc.
(collectively, the "Debtors"); and upon the Court's consideration of the Motion
at a hearing held on January 5, 1998 (the "Hearing")1; and the Court having
found that certain provisions of the relief requested in the Motion were in the
best interests of the Debtors and their estates and would expedite the process
leading to the sale of the Debtors' assets as a going concern; and the Court
having entered an order, dated January 8, 1998, approving, inter alia, the
Break-Up Fee, Expense Reimbursement and Overbid portions of the Motion (the
"Partial Relief Order"); and the parties having adjourned that portion of the
Motion dealing with EqualNet Holding Corp.'s2 provision of additional
debtor-in-possession financing pursuant to section 364 of the Bankruptcy Code
(the "Additional DIP Monies" or the "EqualNet Loan"); and the Court having held
a hearing on the remainder of the Motion on March 6, 1998 (the "Remainder
Hearing"); and sufficient notice having been given; and upon the agreement
reached among the Debtors, EqualNet, and the Committee with respect to a
resolution of the Committee's objection to the terms under which EqualNet would
provide the Additional DIP Monies; and it appearing that EqualNet's provision of
the Additional DIP Monies on the terms and conditions described herein is vital
to the Debtors' continued operations during the pendency of these chapter 11
cases; and after due deliberation; and all other objections to the Motion having
been withdrawn or overruled; and no adverse interest being represented; and the
Court having approved the EqualNet Loan on the terms and conditions described at
the Remainder Hearing, subject only to definitive documentation; the Court now
makes the following findings of fact and conclusions of law:
________________________
1 Capitalized terms not defined herein shall have the meaning ascribed to
them in the Partial Relief Order.
2 The Motion contemplated that the additional debtor-in-possession financing
would be provided by Willis. However, due to changed circumstances, the
additional debtor-in-possession financing will be provided by EqualNet
Holding Corp. ("EqualNet").
Findings of Fact and Conclusions of Law3
________________________
3 Findings of fact shall be construed as conclusions of law and conclusions
of law shall be construed as findings of fact when appropriate. See
Bankruptcy Rule 7052.
A. This Court has jurisdiction over this matter pursuant to 28 U.S.C.
1334. The portion of the motion dealing with the EqualNet Loan is a core
proceeding pursuant to 28 U.S.C. ss. 157(b)(2)(D).
B. The Debtors, EqualNet and EqualNet Corporation (the "Buyer" and,
collectively with EqualNet, the "EqualNet Parties") entered into a purchase
agreement dated as of January 15, 1998 (as amended from time to time, the
"Purchase Agreement") which contemplates a sale of substantially all of the
Debtors' assets to EqualNet.
C. On March 4, 1998, the Debtors conducted an auction (the "Auction")
pursuant to the Second Amended Order (i) Authorizing and Scheduling Auction at
Which the Debtors May Sell Substantially All Their Assets Free and Clear of
Liens, Claims and Encumbrances; (ii) Approving Proposed Auction Procedures;
(iii) Scheduling Hearing and Objection Deadline on Motion of Debtors to Sell
Assets; and (iv) Approving Notice and Service of the Sale Approval Motion (the
"Second Amended Scheduling Order").
D. At the Auction, the Buyer enhanced its offer contained in the
Purchase Agreement and the Debtors and the Committee jointly determined in the
reasonable exercise of their business judgment that the enhanced offer of the
Buyer submitted at the Auction is the highest and best offer for the Debtors'
assets.
E. At a hearing held in front of the Court on March 6, 1998, the Court
approved the sale of the Debtors' assets to the Buyer pursuant to the terms of
the Purchase Agreement and the Sale Approval Order.
F. In connection with its bid at the Auction, EqualNet shall provide
the Debtors with $1.5 million of debtor-in-possession financing pursuant to
section 364 of the Bankruptcy Code, commencing no later than March 10, 1998, on
the terms and conditions contained both herein and in that certain Stipulation
Concerning Debtor-in-Possession Financing Provided by EqualNet Holding Corp.,
dated as of March 10, 1998 (the "Stipulation"). The EqualNet Loan shall mature -
and be due and payable - upon the earliest of: (i) the closing date of the sale
to EqualNet; (ii) May 31, 1998; and (iii) the effective date of the Debtors'
chapter 11 plan of reorganization. A true and complete copy of the Stipulation
is attached hereto as Exhibit A.
G. Given the Debtors' prudent determination that a going concern sale
is the best way for the Debtors to maximize creditor returns, the Debtors'
decision to execute the Purchase Agreement and the Stipulation constitutes an
appropriate and prudent exercise of the Debtors' business judgment.
H. The Debtors require the Additional DIP Monies in order to meet
necessary expenses pending consummation of the proposed sale of the Debtors'
assets pursuant to section 363(b) of the Bankruptcy Code. Without the Additional
DIP Monies, the Debtors will be unable to continue as operating entities.
Despite their efforts, the Debtors have been unable to locate alternative DIP
financing from any other source, let alone financing on terms more favorable
than those offered by EqualNet.
I. The conditions under which EqualNet will advance the Additional DIP
Monies are fair and reasonable in light of the vital importance of the
Additional DIP Monies to the Debtors' continued viability as a going concern --
and the lack of any alternative available source of funds.
J. Notice of the Motion has been given to all persons or entities
entitled thereto in accordance with the requirements of the Bankruptcy Code, the
Federal Rules of Bankruptcy Procedure, the Local Rules of this Court and Orders
of this Court granted in these cases. The form, manner of notice, and timing of
the Motion are sufficient and appropriate in the particular circumstances of
these cases and are hereby approved.
ACCORDINGLY, IT IS HEREBY ORDERED, ADJUDGED AND DECREED, THAT:
1. The Court hereby approves all of the terms and conditions of the
EqualNet Loan as described in the Stipulation and paragraph F above.
2. Without limiting the generality of the foregoing and in accordance
with the Stipulation and paragraph F above, EqualNet shall provide the Debtors
with $1.5 million of Additional DIP Monies commencing no later than March 10,
1998 -- on the terms and conditions described herein and therein and pursuant to
an operating budget which shall be distributed to the Committee and EqualNet,
and which EqualNet must approve of prior to disbursing any funds to the Debtors.
3. Concurrently with the first borrowing by the Debtors under the
EqualNet Loan after the entry of this Order, the Debtors shall reimburse
EqualNet for one-half of the reasonable fees and disbursements of its counsel
(such half not to exceed $25,000) in connection with its provision of the
Additional DIP Monies.
4. Subject to the proviso contained in this paragraph, any debt
arising from EqualNet's provision of the Additional DIP Monies shall be --
subject only to the terms and conditions contained in this Order and the
Stipulation - deemed a superpriority administrative expense claim of the
Debtors' estates pursuant to Sections 364(c), 507(a)(1) and 503(b) of the
Bankruptcy Code, with priority over all other administrative expense claims of
the kind specified in sections 503 and 507 of the Code. Such priority shall
continue notwithstanding any appointment of a trustee or any conversion of these
chapter 11 cases to cases under chapter 7 of the Bankruptcy Code, and shall be
superior to the administrative expenses of any superceding chapter 7 case;
provided, however, that all principal, interest, costs, fees and expenses owing
under the EqualNet Loan shall be fully subordinate to (i) the entire amount of
the Greyrock Facility, including, without limitation, any future advances or
loans thereunder, and (ii) the professional fees and expenses incurred by the
retained professionals in the Debtors' chapter 11 cases -- up to an aggregate
amount of $200,000 -- which professional fees and expenses are already expressly
"carved out" of the existing Greyrock Facility pursuant to that certain Order
Granting and Approving Motion for Authority to Borrow, to Use Cash Collateral,
to Enter into Stipulation, and Granting Security Interests and Priorities, dated
November 21, 1997.
5. EqualNet's provision of the Additional DIP Monies to the Debtors is
approved on the terms and conditions set forth herein and in the Stipulation. In
connection therewith, EqualNet shall be afforded all the protections afforded a
good faith lender pursuant to section 364(e) of the Code and shall be granted
liens (as described in the Stipulation) securing this advance of Additional DIP
Monies.
6. This Order shall survive entry of an order which may be entered
converting these cases to chapter 7 cases or any order confirming a plan of
reorganization. The terms and conditions of this Order and the Stipulation, as
well as the priorities, liens and security interests in favor of EqualNet, shall
be binding upon all parties in interest in these chapter 11 cases (and in any
subsequently converted chapter 7 cases). The liens and securities interests
granted herein to EqualNet and GBC shall maintain their priority as provided for
by this Order and pursuant to the Stipulation until all obligations arising from
EqualNet's provision of the Additional DIP Monies and all obligations due GBC
are satisfied and discharged in full.
7. Nothing contained herein shall be deemed to impair the rights, if
any, of telecommunications carriers to surcharge any collateral pursuant to 11
U.S. C.ss. 506(c).
Dated: Wilmington, Delaware
March 13, 1998
/s/ Peter J. Walsh
------------------------------
UNITED STATES BANKRUPTCY JUDGE
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: )
)
SA TELECOMMUNICATIONS, INC., ) Chapter 11
ADDTEL COMMUNICATIONS, INC. )
LONG DISTANCE NETWORK, INC., ) Case No. 97-2395
NORTH AMERICAN TELECOMMUNICATIONS ) Through 97-2401 (PJW)
CORPORATION, )
UNIQUEST COMMUNICATIONS, INC. )
U.S. COMMUNICATIONS, INC., ) Jointly Administered
and SOUTHWEST LONG DISTANCE )
NETWORK, INC., )
Debtors. )
STIPULATION CONCERNING
DEBTOR-IN-POSSESSION FINANCING
PROVIDED BY EQUALNET HOLDING CORP.
STIPULATION dated as of March 10, 1998 by and among SA
Telecommunications, Inc. ("STEL"), U.S. Communications, Inc. ("USC"), Long
Distance Network, Inc. ("LDN"), Southwest Long Distance Network, Inc. ("SWLD"),
AddTel Communications, Inc. ("AddTel"), North American Telecommunications
Corporation ("NTC") and Uniquest Communications, Inc. ("Uniquest") (hereinafter
collectively the "Debtors" and each a "Debtor"), Greyrock Business Credit, a
division of NationsCredit Commercial Corporation ("GBC"), EqualNet Holding Corp.
("EqualNet") and EqualNet Corporation ("Buyer").
R E C I T A L S
A. On November 19, 1997 the Debtors filed petitions for relief under
Chapter 11 of title 11 of the United States Code, Case Nos. 97-2395 (PJW)
through 97-2401 (PJW), in the Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court").
B. Pursuant to that certain Stipulation Re Financing of Debtors and
Debtors in Possession, Use of Cash Collateral, Priority of Advances Made and for
Adequate Protection dated November 21, 1997 (the "Initial GBC DIP Financing
Stipulation") among the Debtors and GBC, as amended by that certain agreement
governing the terms of the final debtor-in-possession financing provided by GBC
to the Debtors dated December 22, 1997 (the "Supplemental GBC DIP Financing
Stipulation" and, collectively with the Initial GBC DIP Financing Stipulation,
the "GBC DIP Financing Stipulations") among the Debtors and GBC, GBC agreed to
provide debtor-in-possession financing to the Debtors on the terms set forth in
the GBC DIP Financing Stipulations, that certain Order Granting and Approving
Motion by Debtors and Debtors-in-Possession Authority to Borrow, to Use Cash
Collateral, to Enter Into Stipulation and Granting Security Interest and
Priority issued on November 21, 1997 by the Bankruptcy Court, as supplemented by
that Supplemental Interim Order Authorizing Debtor in Possession to Borrow, Use
Cash Collateral and Grant Security Interests and Priority issued on December 17,
1997 by the Bankruptcy Court (the "Interim GBC DIP Financing Order"), and in
that certain Final Order Granting Debtors and Debtors-in-Possession Authority to
Borrow, to use Cash Collateral to Enter into Stipulation and Granting Security
Interest and Priority issued on December 23, 1997 by the Bankruptcy Court (the
"Final GBC DIP Financing Order" and, collectively with the Interim GBC DIP
Financing Order, the "GBC DIP Financing Orders"). Capitalized terms used but not
defined herein shall have the meanings specified therefor in the GBC DIP
Financing Stipulations, including, without limitation, the definition of
"Obligations" in the Loan and Security Agreement dated December 26, 1996 entered
into between GBC and Debtors.
C. At the request of the Debtors, EqualNet has agreed to participate
with GBC in providing such debtor-in-possession financing to the Debtors,
subject to the entry by the Bankruptcy Court of a final Order in form and
substance satisfactory to EqualNet approving this Stipulation, such
debtor-in-possession financing and EqualNet's participation therein. Such
debtor-in-possession financing together with EqualNet's participation therein is
herein called the "DIP Financing."
D. The parties hereto wish to provide that the terms of the
Pre-Petition Documentation, as amended by the GBC DIP Financing Stipulations and
the GBC DIP Financing Orders (the Pre-Petition Documentation, as so amended, the
"Post-Petition Documentation"), shall continue to govern the DIP Financing,
subject to the terms of this Stipulation.
ACCORDINGLY, the parties hereto agree and stipulate as follows,
subject to the order of the Bankruptcy Court:
1. The DIP Financing shall consist of two credit facilities, Facility
A and Facility B. GBC shall have a 100% interest in all Obligations, including,
without limitation, all loans made under Facility A (the "A Loans") and EqualNet
shall have a 100% interest in all loans made under Facility B (the "B Loans").
The A Loans and the B Loans together are hereinafter called the "Loans".
2. EqualNet, as a participant in the DIP Financing, shall to the
extent of such participation (namely to the extent of all B Loans, all interest
thereon, all liens for and security interests in collateral therefor, all costs
and expenses incurred by it in connection therewith) have the benefit of all
liens, security interests, priorities, administrative claims and other rights,
benefits, privileges and immunities provided to GBC under the GBC DIP Financing
Orders and the GBC DIP Financing Stipulations; provided, however that said
liens, security interests, priorities, administrative claims, rights, benefits,
privileges and immunities, insofar as they relate to the B Loans and the B
Facility, shall remain in full force and effect, and shall continue to be
binding and enforceable in accordance with the terms of the GBC DIP Financing
Stipulations and the GBC DIP Financing Orders, notwithstanding any avoidance,
disallowance or other limitation with respect to the Pre-Petition Debt, the A
Loans or the A Facility or any liens securing the same.
3. The Pre-Petition Documentation shall remain in full force and
effect with respect to all Pre-Petition Debt owing to GBC.
4. The DIP Financing (namely the A Facility, the B Facility, the A
Loans and the B Loans) shall be governed by the Post-Petition Documentation.
5. Notwithstanding anything to the contrary contained herein, in the
Pre-Petition Documentation, the Post-Petition Documentation, the GBC DIP
Financing Stipulations or the GBC DIP Financing Orders, the respective
priorities of GBC's and EqualNet's interests in the collateral for the DIP
Financing shall be as follows:
The liens securing EqualNet's interest in the DIP Financing
(namely, the B Loans and all interest accrued and unpaid thereon) shall
be junior and subordinate to the liens securing (a) GBC's interest in
the DIP Financing (namely, the A Loans and all interest accrued or
unpaid thereon), (b) the Obligations and (c) plus - in the event (1)
any Debtor fails to make any payment due any provider of
telecommunications services or (2) any provider of telecommunications
services to any Debtor provides written notice that such provider has
not received a payment due from any Debtor - an amount equal to the sum
of (x) any payment by GBC in order to continue such provider service,
plus (y) any payment by GBC to any third party in order to continue any
of the Debtor's operations while GBC seeks to obtain buyer(s) for the
Collateral and concludes a foreclosure sale thereof.
6. In addition to the amendments made to the Pre-Petition
Documentation by the GBC DIP Financing Stipulations and the GBC DIP Financing
Orders, the Pre-Petition Documentation shall be amended as follows (such
amendments to apply equally to the A Facility and B Facility unless otherwise
provided below):
AMENDMENTS TO LOAN AND SECURITY AGREEMENT
(THE "LOAN AGREEMENT")
7. Section 8 (Definitions) of the Loan Agreement is amended by adding
the following defined terms in the appropriate alphabetical order:
"DIP Facility" means the A Facility and the B Facility as defined
in Section 1 of the Schedule hereto, in so far as the A Facility and
the B Facility relate to the period after the Petition Date.
"DIP Financing" means all Loans made to the Borrower after the
Petition Date.
"Petition Date" means the date on which the Borrower filed
petitions for relief under Chapter 11 of title 11 of the United States
Code, Case Nos. 97-2395 (PJW) to 97-2401 (PJW), in the Bankruptcy
Court for the District of Delaware.
8. Section 9.5 (Notices) of the Loan Agreement regarding notices is
amended to provide that copies of notices given to the Debtors shall at the same
time also be given, in the same manner, to the persons listed and at the
addresses indicated on Exhibit A hereto.
AMENDMENTS TO SCHEDULE TO LOAN AGREEMENT
(THE "SCHEDULE")
9. Section 1 (Credit Limit) of the Schedule is amended to read as
follows:
An amount equal to the sum of Facility A and Facility B (the "Overall
Credit Limit"). "Facility A" shall be equal to an amount (inclusive of
outstanding pre-petition advances of GBC) not to exceed the lesser of:
(i) $7,000,000 at any one time outstanding; or (ii) the sum of (x) 80%
of the amount of Borrower's Eligible Receivables (as defined in
Section 8 above) plus (y) $1,276,031. "Facility B" shall be an amount
equal to $1,500,000. All borrowings shall be made first under Facility
A ("A Loans") to the extent of any availability thereunder and then
under Facility B ("B Loans"). The B Loans shall be disbursed to the
Debtors in accordance with the Operating Budget attached as Exhibit B
hereto. EqualNet Holding Corp. ("EqualNet") shall be a 100%
participant in the B Facility and all B Loans. GBC shall have no
obligation whatsoever to make B Loans to the Debtors to the extent
that EqualNet fails to fund its 100% participation in such B Loans.
EqualNet shall remain subordinate to GBC, to the extent GBC funds an A
Loan as a result of EqualNet being required, but failing, to fund a B
Loan. Subject to paragraph 5 of that certain Stipulation Concerning
Debtor-in-Possession Financing Provided by EqualNet Holding Corp.
dated as of March 10, 1998, all repayments of the Loans shall be
applied first to the A Loans and then, to the extent the repayments
exceed the amount of the A Facility, to the B Loans.
10. Section 2 (Interest Rate) of the Schedule is amended to read as
follows:
Subject in all respects to Exhibit C hereto, the interest rate in
effect throughout each calendar month during the term of this
Agreement shall be (a) in the case of the B Loans, 10% per annum and
(b) in the case of the A Loans the highest "Prime Rate" in effect
during such month, plus 2.5% per annum, provided that the interest
rate in effect in each month in respect of A Loans shall not be less
than 9% per annum, and provided further that interest on the Loans
shall not exceed the maximum rate permitted by applicable law. In the
event the interest rate is determined to be in excess of the maximum
permitted by law, (a) the interest rate on the B Loans must first be
reduced to conform with applicable law and the interest rate on the A
Loans shall only be reduced if, once the interest rate on the B Loans
is reduced to the same rate as the rate on the A Loans, the interest
rate is still in excess of applicable law and (b) any requirement that
interest be repaid to Debtors must first be funded from interest paid
on the B Loans (to the extent the interest was charged at a rate above
the A Loans rate). Interest on all Loans shall be calculated on the
basis of a 360-day year for the actual number of days elapsed. "Prime
Rate" means the actual "Reference Rate" or the substitute therefor of
the Bank of America NT & SA whether or not that rate is the lowest
interest rate charged by said bank. If the Prime Rate, as defined, is
unavailable, "Prime Rate" shall mean the highest of the prime rates
published in the Wall Street Journal on the first business day of the
month, as the base rate on corporate loans at large U.S. money center
commercial banks. Interest charged throughout each month on
outstanding A Loans shall be based on the highest Prime Rate in effect
during such month.
11. Section 4 (Maturity Date) of the Schedule is amended by
substituting the following in place of the present maturity date specified
therein.
The maturity date shall be May 31, 1998, subject to automatic renewals
for additional sixty (60) day periods unless either party gives the
other notice of termination at least fifteen (15) days prior to a
scheduled maturity date; provided, however, that (a) the DIP Facility
shall terminate and all Loans shall in any event be immediately due
and payable upon the earlier of (i) the sale of all or a substantial
portion of the assets of the Debtors to any person or entity other
than EqualNet and (ii) the effective date of any plan of
reorganization for the Debtors; (b) the B Facility shall terminate and
all B Loans shall be immediately due and payable upon the sale of all
or a substantial portion of the assets of the Debtors to EqualNet; and
(c) upon the sale of all or a substantial portion of the assets of the
Debtors to EqualNet and the assumption by EqualNet of the obligations
of the Debtors in respect of the A Facility and the A Loans, the
maturity date of the A Facility and the A Loans shall be extended
until the earlier of: (a) full and indefeasible payment of the
Obligations (including, without limitation, the A Facility) in
accordance with paragraph 20 of that certain Stipulation Concerning
Debtor-in-Possession Financing Provided by EqualNet Holding Corp.
dated as of March 10, 1998, or (b) April 1, 1999. In addition to GBC's
collection of the Receivable proceeds described in said paragraph 20,
EqualNet shall, on Thursday, April 1, 1999, pay GBC the remaining
amounts, if any, owed by EqualNet to GBC. In all such instances where
termination is permitted or occurs, or when the A Loans or the B Loans
have become due and payable, the automatic stay shall automatically be
lifted and GBC and EqualNet shall be permitted to enforce their rights
subject to all agreed upon limitations.
12. Section 5 (Reporting) of the Schedule is amended to provide that,
in lieu of the financial statements referred to in paragraphs 1, 2 and 3
thereof, the Debtors shall deliver to GBC and EqualNet the operating statements
required to be prepared and submitted by the Debtors pursuant to the Bankruptcy
Code.
AMENDMENTS TO CROSS-GUARANTY AND CONTINUING GUARANTY
13. The notice provisions of Section 15 of the Cross-Guaranty and
Section 16 of the Continuing Guaranty are amended to provide that copies of
notices given to the Debtors shall, at the same time, also be given, in the same
manner, to the Persons listed and at the addresses indicated on Exhibit A
hereto.
AMENDMENTS TO SECURITY AGREEMENT
14. The provisions of Section 7.2 thereof regarding notices are
amended to provide that copies of notices given to the Debtors shall at the same
time also be given in the same manner to the persons listed and at the addresses
indicated on Exhibit A hereto.
NEW PROVISIONS
15. A termination, default or Event of Default under either the A
Facility or the B Facility shall constitute a termination, default or Event of
Default under the other Facility.
16. Notwithstanding anything to the contrary contained in the
Pre-Petition Documentation or the Post-Petition Documentation, upon the
occurrence of any of the events listed in paragraph 26 of the Supplemental GBC
DIP Financing Stipulation, the automatic stay shall automatically be lifted.
17. Notwithstanding anything to the contrary contained in the
Pre-Petition Documentation and the Post-Petition Documentation: (a) Debtors do
not waive any right to contend that, under the Bankruptcy Code or other
applicable law, the Bankruptcy Court is the required forum for litigating
disputes between the Debtors, GBC and EqualNet, and (b) GBC and EqualNet do not
waive any right to contend that under relevant law the United States District
Court for the Central District of California or the Los Angeles County Superior
Court is the required forum for litigating disputes between the Debtors, GBC and
EqualNet.
18. Concurrently with the first borrowing by the Borrower under the B
Facility after the entry of the order of the Bankruptcy Court approving this
Stipulation, the Borrower shall reimburse EqualNet for one-half of the
reasonable fees and disbursements of its counsel (such half not to exceed
$25,000) in connection with its participation in the DIP Financing.
19. GBC may deal with the Pre-Petition Documentation and Post-Petition
Documentation (collectively the "Documentation") in the same manner as GBC was
permitted to do Pre-Petition except that GBC agrees not to increase the credit
line or the advance rate thereunder or make any other material amendment or
modification to the Documentation without EqualNet's prior written consent,
which cannot be unreasonably withheld.
20. Without limiting GBC's other rights under the Documentation, until
all the liabilities to GBC assumed by Buyer in Section 3(c) of the Purchase
Agreement, dated as of January 15, 1998, among the Debtors, EqualNet and the
Buyer (the "Purchase Agreement")1, are fully and indefeasibly paid in full, GBC
is entitled to receive, as collected, (i) the proceeds of all Receivables
generated prior to the Closing Date (as defined in the Purchase Agreement), (ii)
the proceeds of all Receivables acquired by the Buyer from the Debtors and (iii)
the proceeds of all Receivables generated subsequent to the Closing Date from
the customers acquired by the Buyer from the Debtors.
________________________
1 I.E.: Under Section 3(c) of the Purchase Agreement, EqualNet will, on the
Closing Date, assume "all liabilities and obligations of Sellers in respect
of indebtedness accruing on or before the Closing Date under the Greyrock
Financing (i.e.: "the pre-petition and post-petition financing provided by
Greyrock to Sellers pursuant to that certain Loan and Security Agreement,
dated December 26, 1996, between Greyrock and Sellers, as amended, restated
or otherwise modified.") and all interest, costs and attorneys' fees
accruing under the Greyrock Financing after the Closing Date (limited to
principal (not to exceed $7,000,000), interest and costs and attorneys'
fees, provided that Buyer shall not be required to assume or pay (x) any
Post-Petition Overadvances (i.e.: "advances under the Greyrock Financing
after the Petition Date to the extent that after giving effect thereto the
principal amount of the DIP Financing exceeds the sum of (i) $1,276,031
plus (ii) 80% of the Eligible Receivables (as defined in the DIP Financing
Documents) as of the date of any such advance.") or any interest thereon or
(y) more than $100,000 of costs and attorneys' fees under the Greyrock
Financing, other than any such costs and expenses arising after the Closing
Date and attributable to actions of Buyer after the Closing Date."
21. VOLUNTARY OVERADVANCES.
21.1 GBC will ask for EqualNet's consent prior to making a "Voluntary
Overadvance" (as defined below), provided that GBC retains the right to make a
Voluntary Overadvance without EqualNet's consent, if EqualNet declines to give
its consent, or if the exigencies of the situation make it reasonable for GBC to
make the Voluntary Overadvance without asking for or waiting for EqualNet's
consent.
21.2 Any Voluntary Overadvance made by GBC shall constitute an A Loan
for all purposes of this Stipulation, in accordance with all of the terms and
provisions of this Stipulation. The principal amount of the B Loans shall in no
event exceed $1,500,000.
21.3 As used herein, "Voluntary Overadvance" means a voluntary A Loan
by GBC to the Debtors which increases the total A Loan then outstanding to an
amount in excess of the limitations, loan to collateral ratios, and/or formulas
set forth in the Documentation (collectively, the "A Loan Limit") by more than
the lower of the following at the date of the proposed A Loan is to be made: (i)
10%of the total amount of the outstanding A Loans, which are within the A Loan
Limit; or (ii) $750,000. Thus, for example, if on Day 1 the total amount of the
outstanding A Loans was $2,000,000 and the A Loan Limit was $2,000,000, then A
Loans made on Day 1 which increase the total A Loans up to (but not more than)
$2,200,000 would not constitute "Voluntary Overadvances" which would require
EqualNet's consent hereunder. Whether an A Loan is a Voluntary Overadvance (as
defined above) or not shall be determined at the date the A Loan is made, and
neither subsequent fluctuations in the total amount of outstanding A Loans, nor
in the A Loan Limit nor other subsequent events shall affect whether an A Loan
is a Voluntary Overadvance or not. A Loans which are not Voluntary Overadvances
shall not require EqualNet's consent.
21.4 Notwithstanding the foregoing, EqualNet acknowledges that A Loans
may exceed limitations or loan to collateral ratios or formulas set forth in the
Documentation for various reasons other than as a result of voluntary A Loans by
GBC, including (but not limited to) Collateral becoming ineligible for A Loans,
charges to the A Loan account, proceeds of Collateral not being remitted to GBC,
errors or misstatements in reports submitted to GBC by the Debtors, and other
reasons, and the same shall not constitute "Voluntary Overadvances" for purposes
of this Stipulation.
22. DEFAULT AND ENFORCEMENT.
22.1 If any Enforcement Action (as described in Section 22.2) occurs
under any of the Documentation, which is not waived by GBC, all payments
thereafter received by GBC after deducting all expenses of collection shall be
applied first to (i) costs incurred by GBC effectuating such collections and
then the payment in full of the A Loan and all other Obligations (defined in the
Pre-Petition Documentation) under the Pre-Petition Documentation owed by Debtors
to GBC and (ii) thereafter, to the extent there are funds available, the payment
of the B Loans.
22.2 Upon learning of the existence of any event or condition which
would constitute a material Event of Default under the Documentation, GBC shall
take action, or refrain from taking action, as GBC may determine in its good
faith business judgment subject to the requirements of this Stipulation (an
"Enforcement Action"). Subject to Section 19 above, all decisions regarding the
response to an Event of Default (as defined in the Documentation), including,
without limitation, the decision to institute legal proceedings against the
Debtors or any guarantor, to accelerate the Loans and the other Obligations due
GBC, and to foreclose upon, or exercise any other rights or remedies with
respect to, the Collateral, shall be made by GBC in its good faith business
judgment, after consulting with EqualNet. Nothing contained in this Stipulation
shall create any obligation on the part of GBC to insure that EqualNet recovers,
from any foreclosure, all or any portion of the B Loans.
22.3 If, as the result of any Event of Default, Collateral is acquired
by foreclosure sale or otherwise, title shall, as determined by GBC, be taken in
GBC's name or in the name of a corporation affiliated with GBC or other nominee
designated by GBC, but the same shall be held in trust for GBC and EqualNet in
accordance with their respective interests. The agreement of EqualNet shall not
be required for matters and decisions relating to the management, operation,
repair, sale or disposition of Collateral. This Stipulation shall survive any
foreclosure sale of any of the Collateral and continue in full force and effect.
Prior to selling or otherwise transferring any of the Collateral to a third
party, GBC shall first offer EqualNet the right to acquire the Collateral on the
same terms on which GBC proposed to sell or otherwise transfer it to such third
party, which offer shall be deemed to have been made by GBC providing telephonic
notice of such terms to both (i) Michael Hlinak at (281) 529-4646 and (281)
492-2777 and (ii) Robert Shearer at (713) 546-5275 and (713) 664-1318 or, if
neither of them are available, on their voice mails, providing they are
functioning, and EqualNet shall have (a) two hours thereafter within which to
accept such offer and (b) one day thereafter within which to deliver to GBC the
amount of cash such third party has offered to pay GBC; provided, however, that
EqualNet shall not have any of the foregoing rights if (a) EqualNet fails to
provide the B Loans as required of EqualNet or (b) EqualNet fails to remit or
interferes with the collection of the Receivable proceeds described in paragraph
20 of this Stipulation.
22.4 If either GBC or EqualNet receives, out of the assets of Debtors
or from a guarantor, a payment in excess of the payment to which GBC or EqualNet
is entitled under this Stipulation, whether such amounts are paid or received or
applied voluntarily, involuntarily or by operation of law, by application of
offset or otherwise, the party receiving such excess payment shall make such
payment to the other as shall result in GBC and EqualNet receiving the amount
they are entitled to under this Stipulation; provided, however, if thereafter
any such excess payment or any part thereof is returned by the party receiving
it, such payment by the receiving party to the other party shall be rescinded,
so that GBC and EqualNet shall have received the amount they are entitled to
under this Stipulation.
23. RISKS AND STANDARD OF CARE.
23.1 EqualNet acknowledges that it has become a party to this
transaction in reliance upon its own independent investigation of the Debtors'
financial condition and creditworthiness, to the extent deemed necessary or
advisable by EqualNet, and not in reliance on any information, representation or
advice provided by GBC. EqualNet further acknowledges that EqualNet will,
independently and without reliance on GBC and based on such documents and
information as EqualNet deems appropriate at the time, continue to make its own
independent credit decisions in taking or not taking action under this
Stipulation.
23.2 The sole responsibility of GBC shall be to administer the A Loans
due it in a commercially reasonable manner. GBC shall not be liable to EqualNet
or to any other person for any error of judgment. Without limiting the
generality of the foregoing, GBC: (i) may consult with legal counsel (including
Debtors' counsel), independent public accountants and other experts selected by
GBC and shall not be liable for any action taken or omitted in good faith by GBC
in accordance with the advice of such counsel, accountants or experts; (ii)
makes no warranty or representation, express or implied, with respect to
Debtors, their financial condition, or any other matter, and GBC shall not be
responsible for any statement, warranty or representation made in, or in
connection with, the Documentation or for the financial condition or business
affairs of Debtors or any person liable for the payment of Loans or performance
of Documentation or for the existence or value of any Collateral; (iii) shall
not be responsible for the performance or observance of any term, covenant or
condition in the Documentation on the part of Debtors, and shall not have any
duty to inspect the Collateral, property or books and records of Debtors; (iv)
makes no warranty or representation as to, and shall not be responsible for, the
due execution, legality, validity, enforceability, genuineness, sufficiency or
collectability of the Documentation or Collateral or any other matter; and (v)
shall incur no liability under or in respect of any of the Documentation or
Collateral by acting on any notice, consent, certificate or other document,
instrument or writing (which may be by telegram, cable, telex, telecopy or
similar means) believed by GBC to be genuine or signed or sent by the proper
person.
24. GENERAL.
24.1 EqualNet and GBC shall not be obligated to advise the other of
any information received or obtained by it which reflects adversely upon the
financial condition of the Debtors or any guarantor, or upon the ability of the
Debtors to repay the Loans and otherwise to perform its duties and obligations
under the Documentation.
24.2 GBC and EqualNet specifically agree that in the negotiation,
administration and servicing of the Loans, GBC has been and shall be an
independent contractor. Neither the entry of this Stipulation, nor the sharing
in the Collateral or the Documentation, nor GBC's holding of the Documentation,
nor any other right or duty of GBC under or pursuant to this Stipulation and the
Documentation is intended to be nor shall it be construed to be, the formation
of a partnership or joint venture between GBC and EqualNet, or the creation of
any express, implied or constructive trust relationship between GBC and
EqualNet. The parties agree that GBC is not acting as a trustee for EqualNet.
24.3 This Stipulation sets forth in full the terms of agreement
between the parties and is intended as the full, complete and exclusive contract
governing the relationship between the parties. This Stipulation supersedes all
prior discussions, promises, representations, warranties, agreements and
understandings between the parties. This Stipulation may not be modified or
amended, nor may any rights hereunder be waived, except in a writing signed by
the party against whom enforcement of the modification, amendment or waiver is
sought. No course of dealing between the parties, no usage of trade, and no
parol or extrinsic evidence of any nature shall be used or be relevant to
supplement, explain or modify any term or provision of this Stipulation or any
supplement or amendment thereto.
24.4 Any notice or demand to be given under this Stipulation shall be
duly and properly given if delivered personally or sent by private delivery
service or mailed, postage prepaid, return receipt requested, to the party
entitled to such notice or demand at the address set forth in Exhibit "A" to
this Stipulation, or at such other address as such party may, from time to time,
specify in writing. Notices shall be deemed given on the date of receipt.
24.5 This Stipulation and duties and obligations contained herein
shall be solely for the benefit of the parties hereto and no third party shall
have any rights hereunder as a third-party beneficiary or otherwise.
24.6 In the event of any litigation between the parties based upon or
arising out of this Stipulation, the prevailing party shall be entitled to
recover all of its costs and expenses (including, without limitation, attorneys'
fees) from the non-prevailing party.
24.7 The parties agree to cooperate fully with each other and take all
further actions and execute all further documents as may from time to time be
reasonably necessary to carry out the purposes of this Stipulation.
24.8 To the extent GBC or EqualNet obtains any additional collateral
for, or guarantees of, the A Loans or the B Loans, each of GBC and EqualNet
shall share therein in accordance with the priorities herein provided.
24.9 The Debtors shall have no liability for breach by either GBC or
EqualNet of their obligations to each other hereunder, and neither GBC nor
EqualNet shall be relieved of its obligations to the Debtors hereunder in
regards of the DIP Financing by reason of the breach by either GBC or EqualNet
of its obligations hereunder.
24.10 Should any provision of this Stipulation be held by any court of
competent jurisdiction to be void or unenforceable, such defect shall not affect
the remainder of this Stipulation, which shall continue in full force and
effect.
24.11 Time is of the essence in the performance of each and every
obligation under this Stipulation.
24.12 Except as pre-empted by the Bankruptcy Code, this Stipulation
and all rights and obligations of GBC, EqualNet, Buyer and Debtors shall be
governed by the laws of the State of California. All parties hereto (i) agree
that all actions and proceedings relating directly or indirectly to this
Stipulation shall be litigated in courts located within California, and that the
exclusive venue therefor shall be Los Angeles County; (ii) consent to the
jurisdiction and venue of any such court; and (iii) waive any and all rights to
object to the jurisdiction of any such court, or to transfer or change the venue
of any such action or proceeding; provided, however, that until consummation of
a confirmed plan of reorganization for the Debtors, all actions or proceedings
relating directly or indirectly to this Stipulation or the DIP Financing to
which any Debtor is a party shall be litigated in the Bankruptcy Court.
24.13 DEBTORS, GBC, EQUALNET AND BUYER EACH HEREBY WAIVE THE RIGHT TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY
WAY RELATING TO, THIS STIPULATION OR ANY OTHER PRESENT OR FUTURE INSTRUMENT,
STIPULATION OR AGREEMENT BETWEEN THEM, OR ANY OF THEM, OR ANY CONDUCT, ACTS OR
OMISSIONS OF ANY OF THEM, OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSON AFFILIATED WITH THEM, OR ANY OF THEM, IN
ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
24.14 GBC shall not be required to provide any financing to EqualNet.
24.15 No provision in this Stipulation is intended, nor shall it ever
be construed, to limit the liability of the Debtors to GBC; such liability can
only be eliminated by the full and indefeasible payment to GBC of all
Obligations, the A Loans and all amounts due to GBC under the GBC DIP Financing
Stipulation.
Dated: March 10, 1997
Greyrock Business Credit
By:/s/ Richard Suhl
-------------------------------------------
Name: Richard Suhl
Title: President
EqualNet Holding Corp.
By:/s/ Michael L. Hlinak
-------------------------------------------
Name: Michael L. Hlinak
Title: C.O.O.
EqualNet Corporation
By:/s/ Michael L. Hlinak
-------------------------------------------
Name: Michael L. Hlinak
Title: C.O.O.
SA Telecommunications, Inc.
By:/s/ A.B. Gordon, Jr.
------------------------------------------
Name: A.B. Gordon, Jr.
Title: C.E.O.
Addtel Communications, Inc.
By:/s/ A.B. Gordon, Jr.
------------------------------------------
Name: A.B. Gordon, Jr.
Title: C.E.O.
Long Distance Network, Inc.
By:/s/ A.B. Gordon, Jr.
------------------------------------------
Name: A.B. Gordon, Jr.
Title: C.E.O.
North American Telecommunications Corporation
By:/s/ A.B. Gordon, Jr.
------------------------------------------
Name: A.B. Gordon, Jr.
Title: C.E.O.
Uniquest Communications, Inc.
By:/s/ A.B. Gordon, Jr.
------------------------------------------
Name: A.B. Gordon, Jr.
Title: C.E.O.
U.S. Communications, Inc.
By:/s/ A.B. Gordon, Jr.
---------------------------------------
Name: A.B. Gordon, Jr.
Title: C.E.O.
Southwest Long Distance Network, Inc.
By:/s/ A.B. Gordon, Jr.
------------------------------------------
Name: A.B. Gordon, Jr.
Title: C.E.O.
<PAGE>
EXHIBIT A
ADDRESSES FOR NOTICES
Sellers:
c/o SA Telecommunications, Inc.
1600 Promenade Center
15th Floor
Richardson, Texas 75080
Fax No.: 972-690-5925
972-889-1543
Attn: Albert B. Gordon, Jr.
with copies to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Fax No.: 212-354-8113
Attn: Andrew DeNatale, Esq.
EqualNet Parties:
c/o EqualNet Holding Corp.
1250 Wood Branch Park Drive
Houston, Texas 77079
Fax No.: 281-529-4650
Attn: Michael L. Hlinak
with copies to:
Weil, Gotshal & Manges LLP
700 Louisiana, Suite 1600
Houston, Texas 77002
Fax No.: 713-224-9511
Attn: D. Jansing Baker, Esq.
Greyrock Business Credit:
c/o Greyrock Business Credit
10880 Wilshire Boulevard
Suite 950
Los Angeles, California 90024
Fax No.: 310-234-3343
Attn: Richard Suhl
with copies to:
Levy Small & Lallas
815 Moraga Drive
Los Angeles, California 90049
Fax No.: 310-471-7990
Attn: Charles Levy, Esq.
Official Committee of Unsecured Creditors:
Kelley, Drye & Warren LLP
101 Park Avenue
New York, New York 10178
Fax No.: 212-808-7897
Attn: Mark I. Bane, Esq.
<PAGE>
<TABLE>
EXHIBIT B
SA Telecommunications
3/10/98 3/11/98 3/12/98 3/13/98 3/16/98 3/17/98 3/18/98
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Starting Cash (26,603)
Check Float (198,615)
Unpaid from Previous Periods
Change in Eligible Accounts
80% Assignments - 160,000 8,000 - 212,000 57,600 12,000
20% Collections 29,938 33,179 23,862 27,058 20,000 20,000 20,000
------- ------- ------ ------ ------- ------ ------
Total Cash In (195,280) 193,179 31,862 27,058 232,000 77,600 32,000
Line Costs
Weekly Payments - 267,400 - 61,000 275,270 - -
Monthly Payments 55,983 - - 28,250 - - -
Commissions
Billing, Collections Fees 3,000
Total Line Costs 55,983 267,400 - 92,250 275,270 - -
G&A
Semi Monthly Payroll 48,000
Biweekly Payroll 75,000
CBS Payroll 10,000
Payroll Tax - - - 24,012 - - 31,050
Sale and Use Tax 28,157 38,254
401k 7,264
Health Plan 20,000
Interest Expense
Building Rent 8,005
Bank Charges 1,232
Insurances-Auto
Insurances-Liability
Insurances-Life
Professional Services
Professional Consultants 2,700 2,700
Worker's Comp. 831
Telephone 5,650 5,650
Travel 1,153
Utilities 2,640 2,640
Other G&A 38,117
-------
Total G&A 16,295 38,121 38,117 104,396 831 8,290 147,004
Capital Lease Payments 154,741
Total Expenses 72,278 460,262 38,117 196,646 276,101 8,290 147,004
Cash Flow (267,558) (267,083) (6,255) (169,588) (44,101) 69,310 (115,004)
Cumulative Cash Flow (267,558) (534,641) (540,896) (710,484) (754,585) (685,275) (800,279)
</TABLE>
<PAGE>
SA Telecommunications
<TABLE>
3/19/98 3/20/98 3/23/98 3/24/98 3/25/98 3/26/98 3/27/98
------- ------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Starting Cash
Check Float
Unpaid from Previous Periods
Change in Eligible Accounts
80% Assignments 168,000 156,000 88,000 22,000 3,200 120,000 160,000
20% Collections 20,000 20,000 25,000 25,000 25,000 25,000 25,000
------- ------- ------- ------ ------ ------- -------
Total Cash In 188,000 176,000 113,000 47,000 28,200 145,000 185,000
LINE COSTS
Weekly Payments - 61,000 275,270 - - - 61,000
Monthly Payments - 14,250 - - - - 14,250
Commissions 95,000 10,844
Billing, Collections Fees 3,000 3,000
------ ------
Total Line Costs 173,250 286,114 - - - 78,250
G&A
Semi Monthly Payroll
Biweekly Payroll 75,000
CBS Payroll 10,000
Payroll Tax - - - - 31,050 - 4,140
Sale and Use Tax 81,605
401k
Health Plan 20,000 20,000
Interest Expense
Building Rent
Bank Charges 1,232 1,232
Insurances-Auto
Insurances-Liability
Insurances-Life
Professional Services
Professional Consultants 2,700
Worker's Comp. 831
Telephone 5,650
Travel 1,152 1,152
Utilities 2,640
Other G&A 32,117 32,317
------ ------
Total G&A 32,117 22,384 831 8,290 190,355 32,317 36,524
Capital Lease Payments
Total Expenses 32,117 195,634 286,945 8,290 190,355 32,317 114,774
Cash Flow 155,883 (19,634) (173,945) 38,710 (162,155) 112,683 70,226
Cumulative Cash Flow (644,396) (664,030) (837,975) (799,265) (961,420) (848,737) (778,511)
</TABLE>
<PAGE>
SA Telecommunications
3/30/98 3/31/98
------- -------
Starting Cash
Check Float
Unpaid from Previous Periods
Change in Eligible Accounts
80% Assignment 45,226 -
20% Collections 25,000 25,000
------- -------
Total Cash In 70,226 25,000
LINE COSTS
Weekly Payments 240,500 -
Monthly Payments
Commissions
Billing, Collections Fees
Total Line Costs 240,500 -
G&A
Semi Monthly Payroll 48,000
Biweekly Payroll
CBS Payroll
Payroll Tax 19,872 -
Sale and Use Tax
401k
Health Plan
Interest Expense 70,000 -
Building Rent
Bank Charges
Insurances-Auto 430
Insurances-Liability 2,579
Insurances-Life
Professional Services
Professional Consultants
Worker's Comp. 3,117
Telephone 5,650
Travel
Utilities 2,640
Other G&A
Total G&A 140,989 11,299
Capital Lease Payments 154,741
Total Expenses 381,489 166,040
Cash Flow (311,263) (141,040)
Cumulative Cash Flow (1,089,774) (1,230,814)
<PAGE>
<TABLE>
SA Telecommunications
<CAPTION>
Weekly Line Carrier Payments
3/9/98 3/10/98 3/11/98 3/12/98 3/13/98 3/16/98 3/17/98 3/18/98 3/19/98 3/20/98 3/23/98
------ ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WorldCom 123,000 123,000 123,000
MCI 34,000 34,000 34,000
Qwest 68,900 76,770 76,770
CapRock 4,500 4,500 4,500
USWest 25,000 25,000 25,000
Midcom 4,000 4,000 4,000
SWB 61,000 61,000
US Watts 8,000 8,000 8,000
-------- -------- ---------
Total 267,400 61,000 275,270 61,000 275,270
<CAPTION>
Weekly Line Carrier Payments (continued)
3/24/98 3/25/98 3/26/98 3/27/98 3/30/98
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
WorldCom 123,000
MCI 34,000
Qwest 42,000
CapRock 4,500
USWest 25,000
Midcom 4,000
SWB 61,000
US Watts 8,000
---------
Total 61,000 240,500
</TABLE>
<PAGE>
<TABLE>
SA Telecommunications
<CAPTION>
Monthly Line Carrier Payments
3/9/98 3/10/98 3/11/98 3/12/98 3/13/98 3/16/98 3/17/98 3/18/98 3/19/98 3/20/98 3/23/98
------ ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
IXC - 75,000
GTE 97,000
Pacific Gateway -
USLD 12,500
Netsolve -
TOG 14,000
Independents 3,250 3,250
Others 11,000 11,000
--------- ---------
Total 28,250 14,250
Monthly Line Carrier Payments (continued)
3/24/98 3/25/98 3/26/98 3/27/98 3/30/98
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
IXC
GTE
Pacific Gateway 27,000
USLD 12,500
Netsolve
TOG
Independents 3,250
Others 11,000
--------
Total 14,250
</TABLE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
- ---------------------------------------------------x
In re: )
)
SA TELECOMMUNCATIONS, INC., ) Chapter 11
ADDTEL COMMUNICATIONS, INC., )
LONG DISTANCE NETWORK, INC., )
NORTH AMERICAN TELECOMMUNICATIONS ) Case Nos. 97-2395 (PJW)
CORPORATION, ) through 97-2401 (PJW)
UNIQUEST COMMUNICATIONS, INC., )
U.S. COMMUNICATIONS, INC., ) Jointly Administered
and SOUTHWEST LONG DISTANCE NETWORK, INC., )
)
Debtors. )
- ---------------------------------------------------x
ORDER APPROVING EXECUTION OF
MANAGEMENT AND SERVICES AGREEMENT
Upon the Motion for Order Approving Execution of Management Agreement,
dated January 27, 1998 (the "Motion"), filed by SA Telecommunications, Inc., and
certain of its directly and indirectly wholly-owned subsidiaries, AddTel
Communications, Inc., Long Distance Network, Inc., North American
Telecommunications Corporation, Uniquest Communications, Inc., U.S.
Communications, Inc. and Southwest Long Distance Network, Inc., debtors and
debtors in possession (collectively, the "Debtors" or the "Sellers"); and upon
those modifications to the form of the Management and Services Agreement (the
"Agreement") made on the record at a hearing held before the Court on March 6,
1998 (the "Sale Approval Hearing"); and the Court having considered the Motion
and the modifications made on the record at the Sale Approval Hearing; and the
Court finding that the relief requested therein is in the best interests of the
Debtors and their estates; and after due deliberation; and sufficient cause
appearing therefor; and capitalized terms not defined herein having the same
meanings as ascribed to them in the Motion; and sufficient notice having been
given; and no adverse interest being represented, it is hereby
ORDERED, that, pursuant to Sections 105 and 363 of the Bankruptcy
Code, all of the terms of the Agreement are hereby approved; and it is further
ORDERED, that the Debtors are authorized to enter into the Agreement
substantially in the form attached hereto as Exhibit A, and to take all actions
contemplated therein; and it is further
ORDERED, that nothing contained herein shall be deemed to amend any
terms or conditions, modify any rights or obligations or terminate or extend any
lease, contract or agreement to which any Seller is a party or any rights or
obligations of any non-debtor party thereunder. This Order merely maintains the
status quo regarding such leases and contracts; and it is further
ORDERED, that nothing contained herein shall be deemed to abrogate any
rights that the parties may have under the Bankruptcy Code or to relieve the
Debtors from making pre-payments to telecommunications carriers as required by
the interim orders filed by this Court, with such orders remaining in effect;
and it is further
ORDERED, that the Debtors' and the Buyer's authority under this Order
shall expire at the earlier of: (i) confirmation of a Chapter 11 plan of
reorganization; or (ii) June 30, 1998 and the Debtors' shall not be required to
assume or reject any executory contract or unexpired lease unless an order is
entered by this Court, after notice and a hearing, requiring such assumption or
rejection; provided that nothing in this paragraph shall be with prejudice to
the Debtors' right to move this Court for authorization to extend their
authority under this Order upon a showing of cause. Upon rejection of an
executory contract, the non-debtor party to such contract is authorized to
terminate all services thereunder without further order of the Court. The
automatic stay of 11 U.S.C. ss. 362 is hereby lifted for such purposes; and it
is further
ORDERED, that this Order is entered over the objections of WorldCom,
Inc. and WorldCom Network Services, Inc. and such objections are overruled.
Dated: Wilmington, Delaware
March 24, 1998
/s/ Peter J. Walsh
------------------------------
UNITED STATES BANKRUPTCY JUDGE
MANAGEMENT AND SERVICES AGREEMENT
MANAGEMENT AND SERVICES AGREEMENT dated as of March 12, 1998, by and
among EQUALNET CORPORATION, a Delaware corporation ("Buyer"), EQUALNET HOLDING
CORP., a Texas corporation ("EqualNet" and, collectively with Buyer, the
"EqualNet Parties"), and SA TELECOMMUNICATIONS, INC., a Delaware corporation
("SA Telecom"), and its subsidiaries named on the signature page hereof
(collectively, the "Sellers").
W I T N E S S E T H:
WHEREAS, on November 19, 1997, Sellers filed petitions for
reorganization under Chapter 11 of title 11 of the United States Code (the
"Bankruptcy Code") with the Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court");
WHEREAS, the EqualNet Parties and the Sellers are parties to a
Purchase Agreement dated as of January 15, 1998 (as amended from time to time,
the "Purchase Agreement") (capitalized terms used but not defined herein have
the meanings specified in the Purchase Agreement), pursuant to which the Sellers
agreed to sell to Buyer, and Buyer agreed to purchase from Sellers, all of the
Sellers' rights, titles and interests in and to substantially all of the assets
of the Sellers (the "Assets");
WHEREAS, the Bankruptcy Court has approved the sale of the Assets to
the Buyer pursuant to the Purchase Agreement;
WHEREAS, the Buyer will purchase, as part of the Assets, all of the
accounts (the "Accounts") of the subscribers (the "Subscribers") to the Sellers'
long distance telecommunications services (the "Services");
WHEREAS, the Services are provided to the Subscribers through the
Sellers' network of switching and transmission facilities (the "Sellers' Network
Facilities"), consisting of equipment, switches, software and line capacity;
WHEREAS, the Sellers' Network Facilities are a combination of (i)
owned assets and (ii) leased contractual arrangements (capital and operating)
with third parties (the "Network Contracts");
WHEREAS, the Buyer's purchase of the Assets may be delayed because of
the need to obtain the approval of EqualNet's shareholders and certain
regulatory approvals for such purchases;
WHEREAS, for various technical and operating reasons, the Buyer may be
unable to transition the Subscribers from the Sellers' Network Facilities to its
own network of switching and transmission facilities (the "Transition") by the
Closing Date; and
WHEREAS, in order to facilitate the Transition and to limit the cost
and expense borne by the Sellers in operating the business pending the closing
under the Purchase Agreement, the Sellers and the EqualNet Parties have agreed
to enter into this Agreement whereby from the Effective Date to the conclusion
of the Transition Period (as such terms are defined below), (i) the Buyer will
manage the telecommunications business of the Sellers (the "Business") and (ii)
the Sellers will provide to the Buyer telecommunications services pursuant to
the network contracts to be specified by the Buyer to the Sellers in writing no
later than the Closing Date (the "Specified Network Contracts"), upon the terms
and conditions set forth below;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Appointment of Buyer. Effective as of 12:01 a.m. on the first day
following the date that the Bankruptcy Court approves this Agreement (the
"Effective Date"), the Sellers hereby appoint and retain the Buyer, and the
Buyer hereby agrees, to manage the Business of the Sellers during the term of
this Agreement; provided that the Sellers shall continue to perform all of their
obligations under all contracts in effect during the Transition Period.
2. Authority to be Retained by Sellers. Except as provided herein,
Sellers retain full authority to manage the affairs of the Sellers and their
estates. Without limiting the generality of the foregoing, the Sellers have
exclusive authority to (i) administer the Sellers' Chapter 11 cases, (ii) assume
or reject any executory contract or unexpired lease to which any Seller is a
party to the extent not inconsistent herewith or with the Purchase Agreement,
(iii) sell any of their assets to the extent not prohibited under the Purchase
Agreement, (iv) borrow under each of those certain debtor-in-possession
financings provided by (a) Greyrock Business Credit and (b) EqualNet, (v) pay
all accounts payable and other expenses of any of the Sellers, (vi) enforce,
defend and compromise any claim by or against any Seller or its estate, and
(vii) commence, continue and defend any actions or proceedings involving any
Seller or its estate.
3. Services to be Provided By Sellers. The Sellers shall provide to
Buyer from and after the Closing Date until the conclusion of the Transition
Period telecommunications services under the Specified Network Contracts at a
cost equal to the cost to the Sellers of providing such services, including,
without limitation, all charges payable by the Sellers under the Specified
Network Contracts in connection with the provision of such services.
4. Services to be Provided by Buyer. (a) In the performance of its
duties hereunder, the Buyer shall supervise and assist in the supervision and
management of all aspects of the Business, including the Specified Network
Contracts, during the Transition Period. The Buyer shall devote such reasonable
time, personnel, attention and effort as it may deem necessary to the
performance of its duties hereunder. The Buyer shall have the complete authority
to do whatever it may deem necessary, appropriate or convenient to conduct,
manage and operate the Business, subject, however, to satisfaction and
performance of and full compliance with (i) reasonable business judgment in
accordance with all industry norms and standards, (ii) the terms of the
Specified Network Contracts and all other legal and contractual obligations of
the Sellers, and (iii) all applicable federal and state laws, including, without
limitation, (a) all laws relating to the employment/labor industry, without
limitation, the provision thereof relating to wages, hours, conditions of
employment, collective bargaining and the payment of social security taxes or
other payroll taxes, (b) federal, state or local laws, statutes or regulations
or the common law relating to the environmental or occupational health and
safety, and (c) all federal laws and regulations relating to the performance of
government contracts. Nothing contained herein shall authorize Buyer to take any
action in respect of Sellers' Chapter 11 cases or in respect of any claim by or
against Sellers.
(b) The Sellers shall cause the Sellers and all of their employees,
agents, and representatives to cooperate in all material respects with the
Buyer's activities as contemplated herein and shall make Sellers' books and
records specifically relating to the Business or the Specified Network Contracts
available to the Buyer at all times.
(c) During the Transition Period, Buyer agrees, absent the Sellers'
prior written consent, not to authorize, direct or otherwise take any of the
following actions:
(1) Any action which would be deemed to constitute a breach by the
Sellers of any contractual obligations of the Sellers; 2)" \*
MERGEFORMAT
(2) Sell or otherwise dispose of any equipment, inventory or assets of
the Sellers;
(3) Destroy any of Sellers' books and records, including, without
limitation, any computer data information;
(4) Incur any liability on behalf of the Sellers, except to the extent
(i) necessary or appropriate to manage the Business or perform under
the Specified Network Contracts during the Transition Period; or (ii)
expressly authorized by Sellers in writing;
(5) Assume or reject any executory contract or unexpired lease to
which any Seller is a party; and
(6) Commence any litigation in the name of any Seller, release or
compromise any claim or cause of action of any Seller, file any plan
of reorganization in Sellers' Chapter 11 cases, or waive any defense
or objection of any Seller in respect of any claim against any Seller
or its estate. With respect to the commencement of any litigation,
Sellers will not unreasonably withhold their consent to the
commencement of such action.
5. Term of Agreement. (a) Subject to subsections (c) and (d) below,
the term of this Agreement shall be the period commencing on the Effective Date
and ending 12:01 a.m. on the 60th day following the Closing Date (the
"Transition Period"), subject to extensions of the Transition Period as provided
in this Section; provided, however, that nothing contained herein shall be
deemed to extend the term of any other contract, agreement or lease to which any
of the Sellers is a party.
(b) In the event the Transition is not completed within the Transition
Period, the Buyer shall have the right to extend the Transition Period, for a
period which, in the Buyer's best estimation, shall be sufficient to permit the
completion of the Transition (a "Transition Period Extension"). The Buyer must
provide the Sellers' with ten (10) days' prior written notice of its desire to
extend the Transition Period, which notice shall specify the requested
Transition Period Extension. The terms of this Agreement and, in particular, the
terms contained in subsection (c) below shall govern any such Transition Period
Extension. The term Transition Period shall include any such Transition Period
Extension.
(c) In the event all or any portion of the Transition is completed
prior to the end of the Transition Period, Buyer shall have the right, upon five
days' prior written notice to Sellers, to terminate its receipt of services
under any Specified Network Contracts.
(d) Any party may terminate this Agreement prior to the Closing Date
(i) if the Closing Date does not occur on or before May 31, 1998, (ii) if the
Purchase Agreement is terminated by any party thereto or (iii) upon fifteen (15)
days' prior written notice to the other parties hereto by (x) any Seller if any
EqualNet Party breaches any of its obligations under this Agreement or (y)
either EqualNet Party if any Seller breaches any of its obligations under this
Agreement and, in either case, such breach is not cured within such fifteen (15)
day period.
(e) If this Agreement is terminated prior to the Closing Date, the
EqualNet Parties shall cooperate with the Sellers to restore to the Sellers'
Network Facilities all telecommunications traffic relating to the Subscribers
that had been transferred to the EqualNet Parties' network facilities during the
term of this Agreement and, if so requested by the Sellers, will permit the
Sellers to use for sixty (60) days after the termination of this Agreement the
EqualNet Parties' network facilities to carry such traffic at a cost equal to
the EqualNet Parties' cost of carrying such traffic.
6. Assumption of Liabilities and Funding Requirements. (a) The Buyer
agrees to assume and pay to the Sellers, or as directed by Sellers, (i) all
Increased Costs (as defined below) incurred by the Sellers from the Effective
Date to March 31, 1998 by reason of any action taken by either EqualNet Party
pursuant hereto, (ii) all Operating Losses (as defined below) incurred by
Sellers during the period commencing on April 1, 1998 and ending on the Closing
Date, and (iii) all liabilities incurred or accrued by Sellers to other parties
under or in respect of the Specified Network Contracts during the period
commencing on the Closing Date and ending on the last day of the Transition
Period (the "Specified Network Contracts Liabilities").
(b) Sellers agree to pay to Buyer all Operating Income (as defined
below) of Sellers for the period commencing on April 1, 1998 through the Closing
Date.
(c) The Increased Costs shall be payable as and when they become due,
but, in any event, no later than the last day of the Transition Period, the
Operating Losses or Operating Income shall be payable on the Closing Date, or as
soon thereafter as is practical, but, in no event, later than sixty (60) days
after the Closing Date, and the Specified Network Contracts Liabilities shall be
payable as and when the same are required to be paid under the relevant
Specified Network Contract, but in any event no later than the last day of the
Transition Period.
(d) From the Effective Date to March 31, 1998, prior to implementing
any change in the Sellers' operations that is inconsistent with the Sellers'
plans for such period, the EqualNet Parties and the Sellers shall agree on the
net amount of any increased costs to Sellers that will result from such change
(the "Increased Costs").
(e) For purposes of this Agreement: "Operating Losses" shall, for any
relevant period, be defined as the amount by which (i) all costs and expenses of
the Sellers accrued during such period (including all amounts accrued by the
Sellers during such period under all capital leases, but excluding (x) all
non-cash items, (y) all professional fees and expenses incurred by the Sellers
in connection with the administration of the Sellers' Chapter 11 cases and (z)
all amounts that accrue under the Sellers' self-funded health insurance plan in
excess of the product of (A) $20,000 and (B) the number of weeks from April 1,
1998 to the Closing Date) exceed (ii) all revenues of the Sellers accrued during
such period (excluding all non-cash items); and "Operating Income" shall, for
any relevant period, be defined as the amount by which the amount calculated
pursuant to clause (ii) of the definition of Operating Losses exceeds the amount
calculated pursuant to clause (i) of the definition of Operating Losses.
7. Change in Operations. If the EqualNet Parties wish to take any
action in connection with their management of the Sellers' business pursuant
hereto, which action the EqualNet Parties believe will result in a cost savings
to the Sellers, and for which the Sellers' consent is required, the EqualNet
Parties shall deliver to the Sellers a written request for such consent, which
request shall describe in reasonable detail the action proposed to be taken and
the basis for the EqualNet Parties' belief that such action will result in a
cost savings to the Sellers. In such case, the Sellers shall not unreasonably
withhold their consent to such actions, provided that the granting of such
consent is consistent with the Sellers' fiduciary duties as
debtors-in-possession.
8. True-Up. The Buyer and the Sellers shall use reasonable good faith
efforts to resolve any disputes regarding amounts owing by either party
hereunder. If Sellers and Buyer cannot resolve any such dispute within thirty
(30) days after such dispute arises, such dispute shall be resolved by the
Bankruptcy Court as provided in Section 13 of this Agreement.
9. Outside Activities. Nothing in this Agreement shall prevent, limit
or restrict the Buyer, its officers, directors, employees or agents in any way
from (i) acting for any other entity as administrative manager, management
consultant, or in any other advisory, consultative or professional capacity, or
(ii) engaging in any other business or devoting its, his or her time and
attention to the management or any other aspects of any other business, whether
of a similar or dissimilar nature to the Business.
10. Books and Records. From the Effective Date to the Closing Date, to
the extent any books and records of the Sellers are held or controlled by the
EqualNet Parties, the EqualNet Parties will fully cooperate with and provide
full access to Sellers with respect to such books and records for the purpose of
permitting Sellers to prepare all necessary financial reports and tax returns,
verify, assess, assert or defend claims and for all other purposes relating to
the Sellers' administration of their Chapter 11 cases. Upon termination of this
Agreement, the EqualNet Parties will as promptly as practical return all such
books and records to the Sellers, provided that if such termination occurs after
the Closing Date the EqualNet Parties may retain such books and records that
constitute Assets.
11. Notice of Approval or Disapproval. The Sellers and Buyer each
agree to provide notice by facsimile transmission to the other within one (1)
business day of their receipt of a written objection to this Agreement from any
party to a Specified Network Contracts or its representative (a "Specified
Network Contracts Party").
12. No Representations or Warranties. The EqualNet Parties hereby
acknowledge and agree that the Sellers are not making any representation or
warranty whatsoever, express or implied, that any consent or authorization of
any party for the arrangement provided for in this Agreement will be obtained or
that any of the Specified Network Contracts will remain in effect during the
Transition Period, and Sellers' obligations hereunder are subject to the receipt
of any required consent or authorization. However, the Sellers shall use
reasonable good faith efforts to obtain, as promptly as possible, all consents,
authorizations, orders or approvals, if any, from each and every Specified
Network Contracts Party, whether private or governmental, required in connection
with the arrangement contemplated by this Agreement. Sellers agree that they
will not reject, without Buyer's consent, any Specified Network Contract during
the Transition Period unless the failure to do so would constitute an assumption
of such Specified Network Contract. In no event will Sellers be required by this
Agreement to assume any contract or lease, including any Specified Network
Contract. To the extent Sellers' ability to comply with this Agreement is
conditioned by the Bankruptcy Court upon assumption of one or more contracts or
leases, including any Specified Network Contracts, then Sellers shall be excused
from complying with this Agreement in respect of any such contract or lease.
13. Dispute Resolution and Remedy. (a) If any dispute or disagreement
shall arise in connection with either this Agreement or the interpretation or
performance thereof, then the matter in controversy shall be submitted to the
Bankruptcy Court for prompt resolution.
(b) THE PARTIES HERETO AGREE THAT ANY LEGAL ACTION OR PROCEEDING
RELATING TO OR ARISING UNDER THIS AGREEMENT SHALL BE LITIGATED IN THE BANKRUPTCY
COURT AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH SELLER HEREBY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, AND EACH EQUALNET PARTY
HEREBY ACCEPTS FOR ITSELF, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
THE BANKRUPTCY COURT WITH REGARD TO ALL SUCH ACTIONS OR PROCEEDINGS. THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING IN THE BANKRUPTCY COURT.
14. Notices and Instructions. Any notice or instruction provided for
herein shall be provided to the parties hereto by facsimile transmission.
15. Conditions. This Agreement and all obligations of the Sellers and
the EqualNet Parties hereunder are subject to and expressly conditioned upon
entry of an order by the Bankruptcy Court approving this Agreement.
16. Miscellaneous. (a) This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided that none of the parties hereto may assign their rights and
obligations hereunder, other than for breach of this Agreement, without the
consent of the other parties hereto. No person, other than the parties hereto or
their respective successors and assigns, shall have any legal or equitable
right, remedy or claim under or in respect of this Agreement.
(b) This Agreement contains the entire understanding of the parties
hereto with respect to the subject matter hereof and may not be modified except
by a writing signed by all the parties hereto.
(c) The descriptive headings contained in this Agreement are inserted
for convenience and do not constitute part of this Agreement.
(d) This Agreement may be terminated upon written mutual consent of
the Sellers and the EqualNet Parties.
(e) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO THE CHOICE OF LAW
PRINCIPLES THEREOF WHICH WOULD MAKE THE LAWS OF ANY OTHER JURISDICTION
APPLICABLE TO THIS AGREEMENT.
(f) All capitalized terms used herein which are not defined herein
shall have the meaning given to them in the Purchase Agreement.
(g) The Sellers and the Buyer agree to reasonably cooperate regarding
any written, oral or electronic mail communications made to employees of the
Sellers during the Transition Period.
(h) In the event there is a conflict between the terms of the Purchase
Agreement and the terms of this Agreement, the terms of the Purchase Agreement
shall govern.
(i) Nothing contained herein shall limit, impair, or otherwise affect
any rights or obligations of the EqualNet Parties or Sellers under the Purchase
Agreement.
(j) To the extent that any provision of this Agreement, or any part
thereof, shall be declared invalid or unenforceable, it shall be considered
deleted herefrom and the remainder of such provision and of this Agreement shall
be unaffected and shall continue in full force and effect.
(k) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all or which together shall constitute
one and the same instrument.
(l) Nothing contained herein shall be deemed to amend, modify,
terminate or extend any lease, contract or agreement to which any Seller is a
party or any rights or obligations of any party thereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
EQUALNET CORPORATION
By:/s/ Michael L. Hlinak
--------------------------------
Name: Michael L. Hlinak
Title: C.O.O.
EQUALNET HOLDING CORP.
By:/s/ Michael L. Hlinak
--------------------------------
Name: Michael L. Hlinak
Title: C.O.O.
SA TELECOMMUNICATIONS, INC.
ADDTEL COMMUNICATIONS, INC.
LONG DISTANCE NETWORK, INC.
NORTH AMERICAN TELECOMMUNICATIONS CORPORATION
U.S. COMMUNICATIONS, INC.
SOUTHWEST LONG DISTANCE NETWORK, INC.
UNIQUEST COMMUNICATIONS, INC.
By:/s/ A.B. Gordon, Jr.
--------------------------------
Name: A.B. Gordon, Jr.
Title: C.E.O.
