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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)
Equalnet Holding Corp.
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(Name of the Issuer)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
294408109
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(CUSIP Number)
Dean H. Fisher
1250 Wood Branch Park Dr.
Houston, Texas 77079
281/529-4686
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 6, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1 (b)(3) or (4), check the following box [ ].
Page 1 of 9 Pages
Exhibit Index on Page 9
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CUSIP No. 294408109 13D Page 2 of 9 Pages
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1 NAMES OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Willis Group, LLC (76-0537286)
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)[ ]
(b)[X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
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7 SOLE VOTING POWER
NUMBER OF
SHARES 9,081,633
BENEFICIALLY -----------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING -0-
PERSON -----------------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
9,081,633
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,081,633 shares of Common Stock beneficially owned or underlying
currently exercisable warrants and a convertible note.
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
59%
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14 TYPE OF REPORTING PERSON
OO
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CUSIP No. 294408109 13D Page 3 of 9 Pages
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1 NAMES OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Michael T. Willis
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)[ ]
(b)[X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
AF
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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7 SOLE VOTING POWER
NUMBER OF
SHARES 500,000
BENEFICIALLY -----------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 9,081,633
PERSON -----------------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
500,000
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
9,081,633
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,581,633 shares of Common Stock beneficially owned or underlying
currently exercisable warrants and a convertible note.
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
60%
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14 TYPE OF REPORTING PERSON
IN
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CUSIP No. 294408109 13D Page 4 of 9 Pages
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1 NAMES OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Mark Willis
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)[ ]
(b)[X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
AF
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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7 SOLE VOTING POWER
NUMBER OF
SHARES -0-
BENEFICIALLY -----------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 9,081,633
PERSON -----------------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
-0-
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
9,081,633
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,081,633 shares of Common Stock beneficially owned or underlying
currently exercisable warrants and a convertible note.
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
59%
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14 TYPE OF REPORTING PERSON
IN
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CUSIP No. 294408109 13D Page 5 of 9 Pages
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1 NAMES OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
James T. Harris
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)[ ]
(b)[X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
AF
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES -0-
BENEFICIALLY -----------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 9,081,633
PERSON -----------------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
-0-
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
9,081,633
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,081,633 shares of Common Stock beneficially owned or underlying
currently exercisable warrants and a convertible note.
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
59%
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14 TYPE OF REPORTING PERSON
IN
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CUSIP No. 294408109 13D Page 6 of 9 Pages
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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On March 5, 1998, Michael T. Willis ("Mike Willis") entered into a
Warrant Agreement with the Issuer pursuant to which he received, in exchange for
a guarantee of certain financing, a warrant for the purchase of an additional
500,000 shares of Common Stock at $1.00 per share.
On March 6, 1998, the Filing Persons and the Issuer consummated the
transactions contemplated by the Agreements (as defined below).
ITEM 4. PURPOSE OF TRANSACTION.
The Filing Persons acquired their shares of Common Stock as part of
their previously described plan to acquire control of the Issuer. The Filing
Persons currently do not intend to acquire additional shares of the Common Stock
materially above their current ownership; however, the Filing Persons intend to
review their investment in the Issuer on a continuing basis and, depending upon
the price of the Common Stock, subsequent developments affecting the Issuer, the
Issuer's business and prospects, general stock market and economic conditions,
tax considerations and other factors deemed relevant, may decide to increase or
decrease their investment in the Common Stock of the Issuer.
On March 5, 1998, Mike Willis entered into the agreement described in
Item 3 above (collectively with certain agreements described in Amendment No. 1
and Amendment No. 2 to this Schedule 13D, the "Agreements") and on March 6,
1998, the Filing Persons consummated the transactions contemplated by the
Agreements. The Filing Persons intend to control the board of directors of the
Issuer as a result of its acquisition of these and additional shares of Common
Stock.
Except as set forth above in this Item 4, none of the Filing Persons
nor, to the best of each Filing Person's knowledge, any of the executive
officers or directors of such Filing Persons, as applicable, has any plans or
proposal that relate to or would result in any of the actions specified in
clauses (a) through (j) of Item 4 to Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) The Filing Persons, other than Mike Willis, beneficially own or
have the right to acquire in the form of currently exercisable warrants and a
convertible note, directly or indirectly, 9,081,633 shares of Common Stock of
the Issuer, which constitutes 59% of the Common Stock outstanding, and Mike
Willis beneficially owns or has the right to acquire in the form of currently
exercisable warrants and a convertible note, directly or indirectly, 9,581,633
shares of Common Stock of the Issuer, which constitutes 60% of the Common Stock
outstanding, each based on the number of securities assumed to be outstanding on
the Record Date (6,282,271) as contained in the Issuer's Definitive Proxy
Statement on Schedule 14A, filed with the Securities and Exchange Commission on
February 17, 1998 and including as outstanding the 9,081,633 shares and, in the
case of Mike Willis, the additional 500,000 shares, owned by or issuable to The
Willis Group or Mike Willis, as the case may be, under currently exercisable
warrants and a convertible note. Such securities, or the rights thereto, were
acquired pursuant to the transactions described in Item 3 hereof, the initial
filing of, Amendment No. 1 and Amendment No. 2 to this Schedule 13D.
(b) Of the shares beneficially owned by the Filing Persons, The Willis
Group has, or will have, sole voting power and power to dispose of the 9,081,633
shares of Common Stock they own or have the right to acquire under currently
exercisable warrants and a convertible note and each of Messrs. Mike Willis,
Mark Willis and Harris, as 47.5%, 47.5% and 5% membership interest owners,
respectively, of The Willis Group, have shared voting and dispositive power with
respect to all such shares. Mr. Mike Willis will have sole voting power and
power to dispose of the 500,000 shares of Common Stock he has the right to
acquire under a currently exercisable warrant.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
See Items 3 and 4 hereof.
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CUSIP No. 294408109 13D Page 7 of 9 Pages
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Warrant Agreement between the Issuer and Michael T. Willis dated
March 5, 1998.
2. Joint Filing Agreement, dated as of March 11, 1998, among The
Willis Group, Michael T. Willis, Mark Willis and James T. Harris.
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CUSIP No. 294408109 13D Page 8 of 9 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
THE WILLIS GROUP, LLC
March 11, 1998 By: /S/ MARK WILLIS
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Date Mark Willis, President
/S/ MICHAEL T. WILLIS
--------------------------------------
Michael T. Willis
/S/ MARK WILLIS
--------------------------------------
Mark Willis
/S/ JAMES T. HARRIS
--------------------------------------
James T. Harris
The original statement shall be signed by each person on whose behalf
the statement is filed or his authorized representative. If the statement is
signed on behalf of a person by his authorized representative (other than an
executive officer or general partner of this filing person), evidence of the
representative's authority to sign on behalf of such person shall be filed with
the statement, provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by reference.
The name and any title of each person who signs the statement shall be typed or
printed beneath his signature.
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE
FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001)
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CUSIP No. 294408109 13D Page 9 of 9 Pages
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EXHIBIT INDEX
Exhibit
- -------
1. Warrant Agreement between the Issuer and Michael T. Willis dated March 5,
1998.
2. Joint Filing Agreement, dated as of March 11, 1998, among The Willis
Group, Michael T. Willis, Mark Willis and James T. Harris.
<PAGE> 1
EXHIBIT 1
WARRANT AGREEMENT
(GUARANTEE OF SWITCH FINANCING)
This WARRANT AGREEMENT, dated as of March 5, 1998, between EQUALNET
HOLDING CORP., a Texas corporation (the "Company"), and MICHAEL T. WILLIS, a
resident of Harris County, Texas ("Willis" and, together with any transferee of
Warrants or Warrant Shares, the "Warrant Holders(s)").
WHEREAS, Willis Group, LLC ("WG"), the Company, EqualNet Corporation,
Telesource, Inc., and EqualNet Wholesale Services, Inc., have entered into a
certain Note and Warrant Purchase Agreement (the "Note Purchase Agreement")
dated October 1, 1997, and WG, the Company and EQ Acquisition Sub, Inc., a
Delaware corporation ("Sub"), have entered into a certain Switch Agreement (the
"Switch Agreement") dated December 2, 1997; and
WHEREAS, the Company proposes to issue to Willis as consideration for
Willis' guarantee of certain financing obtained by Sub, common stock purchase
warrants (the "Warrants") to purchase up to 500,000 shares (the "Warrant
Shares") of the Company's common stock, par value $0.01 per share (the "Common
Stock"), each Warrant entitling the holder thereof to purchase one share of
Common Stock.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein and in the Agreement set forth and for other good and
valuable consideration, the parties hereto agree as follows:
1. ISSUANCE OF WARRANTS; FORM OF WARRANT. As of the date hereof
the Company will issue and deliver the Warrants to Willis. The aggregate number
of Warrants to be issued and delivered shall be 500,000 (subject to any further
limitation provided herein). The Warrants shall be exercisable on or after the
date hereof. The text of each Warrant shall be substantially as set forth in
the Warrant Certificate attached as Exhibit A hereto. The Warrants shall be
executed on behalf of the Company by the manual or facsimile signature of the
present or any future Chairman of the Board, President, or Vice President of
the Company, attested by the manual or facsimile signature of the present or
future Secretary or an Assistant Secretary of the Company. A Warrant bearing
the manual or facsimile signature of individuals who were at any time the
proper officers of the Company shall bind the Company notwithstanding that such
individuals or any of them shall have ceased to hold such offices prior to the
delivery of such Warrant or did not hold such offices on the date of this
Warrant Agreement.
Warrants shall be dated as of the date of execution thereof by the
Company either upon initial issuance or upon division, exchange, substitution
or transfer.
The demand and the piggy-back registration rights set forth in Section
16 hereof may be exercised at any time during the term of the Warrants.
<PAGE> 2
2. REPRESENTATIONS AND WARRANTIES.
(a) The Company hereby represents and warrants as follows:
(i) POWER AND AUTHORITY. The Company has all requisite
corporate power and authority, and has taken all corporate action
necessary, to execute, deliver and perform this Warrant Agreement, to
grant, issue, and deliver the Warrants and to authorize and reserve
for issuance and, upon payment from time to time of the Exercise
Price, to issue and deliver the shares of Common Stock or other
securities issuable upon exercise of the Warrants. This Warrant
Agreement has been duly executed and delivered by the Company.
(ii) RESERVATION, ISSUANCE AND DELIVERY OF COMMON STOCK.
There have been reserved for issuance, and the Company shall at all
times keep reserved, out of the authorized and unissued shares of
Common Stock, a number of shares sufficient to provide for the
exercise of the rights of purchase represented by the Warrants, and
such shares, when issued upon receipt of payment therefor or upon a
net exercise in accordance with the terms of the Warrants and of this
Warrant Agreement, will be legally and validly issued, fully paid and
non- assessable and will be free of any preemptive rights of
shareholders or any restrictions.
(b) The Warrant Holder hereby represents and warrants as follows:
(i) ACCREDITED INVESTOR. The Warrant Holder is an
"accredited investor" within the meaning of Rule 501 under Regulation
D promulgated under the Securities Act, is experienced in evaluating
investments in companies such as the Company, has such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of its investment and has the ability
to bear the entire economic risk of its investment. The Warrant
Holder has made its own evaluation of its investment in the Warrants,
based upon such information as is available to it and without reliance
upon the Company or any other person or entity, and the Warrant Holder
agrees that neither the Company nor any other person or entity has any
obligation to furnish any additional information to the Warrant Holder
except as expressly set forth herein.
3. CONDITIONS TO PURCHASE. Willis's obligations hereunder shall
be subject to satisfaction of the following conditions on or before the date
hereof:
(a) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Warrant
Agreement and the Warrants and all other legal matters relating to
this Warrant Agreement, the Warrants and the transactions contemplated
hereby shall be satisfactory in all respects to Vinson & Elkins
L.L.P., counsel for Willis, in their reasonable judgment, and the
Company shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass
judgment upon such matters.
(b) There shall have been duly tendered to Willis or upon
the order of Willis a certificate or certificates representing the
Warrants.
<PAGE> 3
4. REGISTRATION. The Warrants shall be numbered and shall be
registered on the books of the Company (the "Warrant Register") as they are
issued. The Warrants shall be registered initially in such names and such
denominations as Willis has specified to the Company.
5. EXCHANGE OF WARRANT CERTIFICATES. Subject to any restriction
upon transfer set forth in this Warrant Agreement, each Warrant certificate may
be exchanged at the option of the Warrant Holder thereof for another
certificate or certificates of different denominations entitling the Warrant
Holder thereof to purchase upon surrender to the Company or its duly authorized
agent a like aggregate number of Warrant Shares as the certificate or
certificates surrendered then entitle such Warrant Holder to purchase. Any
Warrant Holder desiring to exchange a Warrant certificate or certificates shall
make such request in writing delivered to the Company, and shall surrender,
properly endorsed, the certificate or certificates to be so exchanged.
Thereupon, the Company shall execute and deliver to the person entitled thereto
a new Warrant certificate or certificates, as the case may be, as so requested.
Any Warrant issued upon exchange, transfer or partial exercise of the Warrants
shall be the valid obligation of the Company, evidencing the same generic
rights and entitled to the same generic benefits under this Warrant Agreement
as the Warrants surrendered for such exchange, transfer or exercise.
6. TRANSFER OF WARRANTS. Subject to the provisions of Section 14
hereof, the Warrants shall be transferrable only on the Warrant Register upon
delivery to the Company of the Warrant certificate or certificates duly
endorsed by the Warrant Holder or by his duly authorized attorney-in-fact or
legal representative, or accompanied by proper evidence of succession,
assignment or authority to transfer. In all cases of transfer by an
attorney-in-fact, the original power of attorney, duly approved, or an official
copy thereof, duly certified, shall be deposited with the Company. In case of
transfer by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority shall be
produced, and may be required to be deposited with the Company in its
discretion. Upon any registration of transfer, the Company shall deliver a new
Warrant or Warrants to the person entitled thereto.
7. TERM OF WARRANTS; EXERCISE OF WARRANTS.
(a) Each Warrant entitles the Warrant Holder thereof to purchase
one share of Common Stock during the time period and subject to the conditions
set forth in the respective Warrant Certificates at an exercise price of $1.00
per share, subject to adjustment in accordance with Section 12 hereof (the
"Exercise Price"). Each Warrant terminates on the tenth anniversary of the
date on which such Warrant becomes exercisable in accordance with its terms
(the "Expiration Date").
(b) The Exercise Price and the number of shares issuable upon
exercise of Warrants are subject to adjustment upon the occurrence of certain
events, pursuant to the provisions of Section 12 of this Warrant Agreement.
Subject to the provisions of this Warrant Agreement, each Warrant Holder shall
have the right, which may be exercised as expressed in such Warrants, to
purchase from the Company (and the Company shall issue and sell to such Warrant
Holder) the number of fully paid and nonassessable shares of Common Stock
specified in such Warrants, upon surrender to the Company, or its duly
authorized agent, of such Warrants, with the purchase form on the reverse
thereof duly filled in and signed, and upon payment to the Company of the
Exercise Price, as
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<PAGE> 4
adjusted in accordance with the provisions of Section 12 of this Warrant
Agreement or upon a net exercise pursuant to this subsection of this Warrant
Agreement, for the number of shares in respect of which such Warrants are then
exercised. The Warrant Holder may (i) pay the Exercise Price in cash, by
certified or official bank check payable to the order of the Company, or (ii)
make an exercise of Warrants for "Net Warrant Shares." The number of Net
Warrant Shares will be determined as described by the following formula: Net
Warrant Shares = [WS x (MP-EP)]/MP. "WS" is the number of Warrant Shares
issuable upon exercise of the Warrants or portion of Warrants in question.
"MP" is the Market Price of the Common Stock on the last trading day preceding
the date of the request to exercise the Warrants. "Market Price" shall mean
the then current market price per share of Common Stock, as determined in
paragraph 12.1(e). "EP" shall mean the Exercise Price.
Upon such surrender of Warrants, and payment of the Exercise Price,
with cash or securities, or upon a net exercise as aforesaid, the Company at
its expense shall issue and cause to be delivered with all reasonable dispatch
to or upon the written order of the Warrant Holder and in such name or names as
the Warrant Holder may designate, a certificate or certificates for the number
of full shares of Common Stock so purchased upon the exercise of such Warrants,
together with cash, as provided in Section 12 of this Warrant Agreement, in
respect of any fraction of a share of such stock otherwise issuable upon such
surrender. Such certificate or certificates shall be deemed to have been
issued, and any person so designated to be named therein shall be deemed to
have become a holder of record of such shares, as of the date of the surrender
of such Warrants and payment of the Exercise Price or receipt of shares by net
exercise as aforesaid. The rights of purchase represented by the Warrants
shall be exercisable, at the election of the Warrant Holders thereof, either in
full or from time to time in part and, in the event that any Warrant is
exercised in respect of less than all of the shares purchasable on such
exercise at any time prior to the Expiration Date, a new certificate evidencing
the remaining Warrant or Warrants will be issued.
8. COMPLIANCE WITH GOVERNMENT REGULATIONS. The Company covenants
that if any share of Common Stock required to be reserved for purposes of
exercise or conversion of Warrants require, under any federal or state law or
applicable governing rule or regulation of any national securities exchange,
registration with or approval of any governmental authority, or listing on any
such national securities exchange, before such shares may be issued upon
exercise, the Company will use its commercially reasonable efforts to cause
such shares to be duly registered, approved or listed on the relevant national
securities exchange, as the case may be.
9. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants and any securities issued pursuant to Section 12 hereof;
provided, however, that the Company shall not be required to pay any tax or
taxes which may be payable in respect of any transfer involved in the issue or
delivery of any Warrants or certificates for Warrant Shares and any securities
issued pursuant to Section 12 hereof in a name other than that of the Warrant
Holder of such Warrants.
10. MUTILATED OR MISSING WARRANTS. In case any of the Warrants
shall be mutilated, lost, stolen or destroyed, the Company shall issue and
deliver in exchange and substitution for and upon cancellation of the mutilated
Warrant, or in lieu of and in substitution for the Warrant lost, stolen, or
destroyed, a new Warrant of like tenor and representing an equivalent right or
interest.
-4-
<PAGE> 5
11. RESERVATION OF WARRANT SHARES; PURCHASE AND CANCELLATION OF
WARRANTS. The Company shall at all times reserve, out of the authorized and
unissued shares of Common Stock, a number of shares sufficient to provide for
the exercise of the rights of purchase represented by the Warrants, and the
transfer agent for the Common Stock ("Transfer Agent") and every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of any of the rights of purchase aforesaid are hereby irrevocably
authorized and directed at all times until the Expiration Date to reserve such
number of authorized and unissued shares as shall be requisite for such
purpose. The Company will keep a copy of this Warrant Agreement on file with
the Transfer Agent and with every subsequent transfer agent for any shares of
the Company's capital stock issuable upon the exercise of the rights of
purchase represented by the Warrants. The Company will supply the Transfer
Agent and any such subsequent transfer agent with duly executed stock
certificates for such purpose and will itself provide or otherwise make
available any cash which may be issuable as provided by Section 13 of this
Warrant Agreement. The Company will furnish to the Transfer Agent and any such
subsequent transfer agent a copy of all notices of adjustments, and
certificates related thereto, transmitted to each Warrant Holder pursuant to
Section 12.3 hereof. All warrants surrendered in the exercise of the rights
thereby evidenced shall be canceled, and such canceled Warrants shall
constitute sufficient evidence of the number of shares of stock which have been
issued upon the exercise of such Warrants (subject to adjustment as herein
provided). No shares of stock shall be subject to reservation in respect of
the Warrants subsequent to the Expiration Date except to the extent necessary
to comply with the terms of this Warrant Agreement.
12. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
The number and kind of securities purchasable upon the exercise of each Warrant
and the Exercise Price shall be subject to adjustment from time to time upon
the occurrence of certain events, as hereafter defined.
12.1. MECHANICAL ADJUSTMENTS. The number of Warrant Shares
purchasable upon the exercise of each Warrant and the Warrant Price
shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend
to holders of Common Stock in shares of Common Stock or make a
distribution to holders of Common Stock in shares of Common
Stock, (ii) subdivide its outstanding shares of Common Stock
into a larger number of shares of Common Stock, (iii) combine
its outstanding shares of Common Stock into a smaller number
of shares of Common Stock or (iv) issue by reclassification of
its shares of Common Stock other securities of the Company
(including any such reclassification in connection with a
consolidation or merger in which the Company is the surviving
corporation), the number of Warrant Shares purchasable upon
exercise of each Warrant immediately prior thereto shall be
adjusted so that the Warrant Holder shall be entitled to
receive the kind and number of Warrant Shares or other
securities of the Company which he would have owned or have
been entitled to receive after the happening of any of the
events described above, had such Warrant been exercised
immediately prior to the happening of such event or any record
date with respect thereto regardless of whether the Warrants
are exercisable at the time of the happening of such event or
at the time of any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become
effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
-5-
<PAGE> 6
(b) In case the Company shall issue rights,
options, or warrants to holders of its outstanding Common
Stock, without any charge to such holders, entitling them to
subscribe for or purchase shares of Common Stock at a price
per share which is lower at the record date mentioned below
than the Exercise Price, then (i) the Exercise in effect
immediately prior to such issuance shall immediately be
reduced to the price that is equivalent to such consideration
received by the Company upon such issuance and (ii) the number
of Warrant Shares thereafter purchasable upon the exercise of
each Warrant shall be increased in direct proportion to the
increase in the number of shares of Common Stock outstanding
on a fully diluted basis immediately prior to such issuance;
provided that if such shares of Common Stock, options or other
convertible securities (other than Excluded Stock (as defined
in the Note Purchase Agreement)) are issued for consideration
per share less than the Exercise Price at the date of such
issue or sale, the number of shares of Common Stock that
immediately prior to such issuance the Warrant Holder shall
have been entitled to purchase pursuant to this Warrant shall
be increased to the greater of (i) that number of shares of
Common Stock that immediately prior to such issuance the
Warrant Holder shall have been entitled to purchase pursuant
to this Warrant multiplied by a fraction, the numerator of
which is the Exercise Price and the denominator of which is
such consideration per share, and (ii) the number of shares of
Common Stock otherwise calculated under this Section 12.1.
Such adjustment shall be made whenever such rights, options,
or warrants are issued, and shall become effective immediately
after the record date for the determination of stockholders
entitled to receive such rights, options, or warrants;
provided that this Section 12.1(b) shall expire and be of no
force and effect on or after April 1, 1998.
(c) In case the Company shall distribute to
holders of its shares of Common Stock evidences of its
indebtedness or assets (including cash dividends or other cash
distributions) or rights, options, or warrants, or convertible
or exchangeable securities containing the right to subscribe
for or purchase shares of Common Stock (excluding those
referred to in paragraph (b) above), then in each case the
number of Warrant Shares thereafter purchasable upon the
exercise of each Warrant shall be determined by multiplying
the number of Warrant Shares theretofore purchasable upon the
exercise of each Warrant by a fraction, of which the numerator
shall be the then current market price per share of Common
Stock (as determined in accordance with paragraph (e) below)
on the date of such distribution, and of which the denominator
shall be the then current market price per share of Common
Stock, less the then fair value (as determined in good faith
by the Board of Directors of the Company) of the portion of
the assets or evidences of indebtedness so distributed or of
such subscription rights, options, or warrants, or of such
convertible or exchangeable securities applicable to one share
of Common Stock. Such adjustment shall be made whenever any
such distribution is made, and shall become effective on the
date of distribution retroactive to the record date for the
determination of stockholders entitled to receive such
distribution.
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<PAGE> 7
In the event of distribution by the Company to holders
of its shares of Common Stock of stock of a subsidiary or
securities convertible into or exercisable for such stock, then
in lieu of an adjustment in the number of Warrant Shares
purchasable upon the exercise of each Warrant, the Warrant
Holder, upon the exercise thereof at any time after such
distribution, shall be entitled to receive from the Company,
such subsidiary, or both, as the Company shall determine, the
stock or other securities to which such Warrant Holder would
have been entitled if such Warrant Holder had exercised such
Warrant immediately prior thereto regardless of whether the
Warrants are exercisable at such time, all subject to further
adjustment as provided in this subsection 12.1; provided,
however, that no adjustment in respect of dividends or interest
on such stock or other securities shall be made during the term
of a Warrant or upon the exercise of a Warrant; provided
further that this Section 12.1(c) shall expire and be of no
force and effect on or after April 1, 1998.
(d) In case the Company shall sell and issue
shares of Common Stock (other than pursuant to rights,
options, warrants, or convertible securities initially issued
before the date of this Agreement) or rights, options,
warrants, or convertible securities containing the right to
subscribe for or purchase shares of Common Stock (excluding
shares, rights, options, warrants, or convertible securities
issued in any of the transactions described in paragraphs (a),
(b) or (c) above) at a price per share of Common Stock
(determined, in the case of such rights, options, warrants or
convertible securities, by dividing (w) the total of the
amount received or receivable by the Company (determined as
provided below) in consideration of the sale and issuance of
such rights, options, warrants, or convertible securities, by
(x) the total number of shares of Common Stock covered by such
rights, options, warrants, or convertible securities) lower
than the Exercise Price in effect immediately prior to such
sale and issuance, then (i) the Exercise in effect immediately
prior to such issuance shall immediately be reduced to the
price that is equivalent to such consideration received by the
Company upon such issuance and (ii) the number of Warrant
Shares thereafter purchasable upon the exercise of the
Warrants shall be increased in direct proportion to the
increase in the number of shares of Common Stock outstanding
on a fully diluted basis immediately prior to such issuance;
provided that if such shares of Common Stock, options or other
convertible securities (other than Excluded Stock) are issued
for consideration per share less than the Exercise Price at
the date of such issue or sale, the number of shares of Common
Stock that immediately prior to such issuance the Warrant
Holder shall have been entitled to purchase pursuant to this
Warrant shall be increased to the greater of (i) that number
of shares of Common Stock that immediately prior to such
issuance the Warrant Holder shall have been entitled to
purchase pursuant to this Warrant multiplied by a fraction,
the numerator of which is the Exercise Price and the
denominator of which is such consideration per share, and (ii)
the number of shares of Common Stock otherwise calculated
under this Section 12.1. Such adjustment shall be made
successively whenever such as issuance is made; provided that
this Section 12.1(d) shall expire and be of no force and
effect on or after April 1, 1998. For the purposes of such
adjustments, the consideration received or receivable by the
Company for rights, options, warrants, or convertible
securities shall be deemed to
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<PAGE> 8
be the consideration received by the Company for such rights,
options, warrants, or convertible securities, plus the
consideration or premiums stated in such rights, options,
warrants, or convertible securities to be paid for the shares
of Common Stock covered thereby. In case the Company shall
sell and issue shares of Common Stock, or rights, options,
warrants, or convertible securities containing the right to
subscribe for or purchase shares of Common Stock, for a
consideration consisting, in whole or in part, of property
other than cash or its equivalent, then in determining the
"price per share of Common Stock" and the "consideration
received or receivable by the Company" for purposes of the
first sentence of this paragraph (d), the Board of Directors
shall determine, in its discretion, the fair value of said
property.
(e) For the purpose of any computation under
paragraphs (b), (c), and (d) of this Section, the current
market price per share of Common Stock at any date shall be
the average of the daily closing prices of the Company's
Common Stock, for five consecutive trading days ending one
trading day before the date of such computation. The closing
price for each day shall be the last such reported sales price
regular way or, in case no such reported sale takes place on
such day, the average of the closing bid and asked prices
regular way for such day, in each case on the principal
national securities exchange on which the shares of Common
Stock are listed or admitted to trading or, if not listed or
admitted to trading, the average of the closing bid and asked
prices of the Common Stock in the over-the-counter market as
reported by NASDAQ or any comparable system. In the absence
of one or more such quotations, the Board of Directors of the
Company shall determine the current market price, in good
faith, on the basis of such quotations as it considers
appropriate. Notwithstanding the foregoing, for the purpose
of any calculation under paragraph (d) above (A) with respect
to any issuance of options under the Company's employee or
director compensation stock option plans as in effect or as
adopted by the Board of Directors of the Company on the date
hereof, the term "current market price", in such instances,
shall mean the fair market price on the date of the issuance
of any such option determined in accordance with the Company's
employee compensation stock option plans as in effect or
adopted by the Board of Directors of the Company on the date
hereof; and (B) with respect to any issuances of Common Stock
(or rights, options, warrants, or convertible securities
containing the right to subscribe for or purchase shares of
Common Stock) in connection with bona fide corporate
transactions (other than issuances in such transactions for
cash or similar consideration), the term "fair market price"
shall mean the fair market price per share as determined in
arm's-length negotiations by the Company and such other
parties (other than affiliates or subsidiaries of the Company)
to such transactions as reflected in the definitive
documentation with respect thereto, unless such determination
is not reasonably related to the closing market price on the
date of such determination.
(f) In any case in which this Section 12.1 shall
require that any adjustment in the number of Warrant Shares be
made effective as of immediately after a record date for a
specified event, the Company may elect to defer until the
occurrence of the event the issuing to the holder of any
Warrant exercised after that record date the shares of Common
Stock and other securities of the Company, if any,
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<PAGE> 9
issuable upon the exercise of any Warrant over and above the
shares of Common Stock and other securities of the Company, if
any, issuable upon the exercise of any Warrant prior to such
adjustment; provided, however, that the Company shall deliver
to such Warrant Holder a due bill or other appropriate
instrument evidencing the holder's right to receive such
additional shares or securities upon the occurrence of the
event requiring such adjustment.
(g) No adjustment in the number of Warrant Shares
purchasable hereunder shall be required unless such adjustment
would require an increase or decrease of at least one percent
(1%) in the number of Warrant Shares purchasable upon the
exercise of each Warrant; provided, however, that any
adjustments which by reason of this paragraph (g) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations shall
be made to the nearest one-thousandth of a share.
(h) Whenever the number of Warrant Shares
purchasable upon the exercise of each Warrant is adjusted, as
herein provided, the Warrant Price payable upon the exercise
of each Warrant shall be adjusted by multiplying such Warrant
Price immediately prior to such adjustment by a fraction, of
which the numerator shall be the number of Warrant Shares
purchasable upon the exercise of such Warrant immediately
prior to such adjustment, and of which the denominator shall
be the number of Warrant Shares purchasable immediately.
(i) No adjustment in the number of Warrant Shares
purchasable upon the exercise of each Warrant need be made
under paragraphs (b), (c) and (d) if the Company issues or
distributes to each Warrant Holder the rights, options,
warrants, or convertible or exchangeable securities, or
evidences of indebtedness or assets referred to in those
paragraphs which each Warrant Holder would have been entitled
to receive had the Warrants been exercised prior to the
happening of such event or the record date with respect
thereto regardless of whether the Warrants are exercisable at
the time of the happening of such event or at the time of any
record date with respect thereto. No adjustment need be made
for a change in the par value of the Warrant Shares.
(j) For the purpose of this Section 12.1, the
terms "shares of Common Stock" shall mean (i) the class of
stock designated as the Common Stock of the Company at the
date of this Agreement, or (ii) any other class of stock
resulting from successive changes or reclassifications of such
shares consisting solely of changes in par value, or from par
value to no par value, or from no par value to par value. In
the event that at any time, as a result of an adjustment made
pursuant to paragraph (a) above, the Warrant Holders shall
become entitled to purchase any securities of the Company
other than shares of Common Stock, thereafter the number of
such other securities so purchasable upon exercise of each
Warrant and the Exercise Price of such securities shall be
subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions
with respect to the Warrant Shares contained in paragraphs (a)
through (i), inclusive, above, and the provisions
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<PAGE> 10
of Section 7 and Section 12.2 through 12.5, inclusive, with
respect to the Warrant Shares, shall apply on like terms to
any such other securities.
(k) Upon the expiration of any rights, options,
warrants, or conversion or exchange privileges, if any thereof
shall not have been exercised, the Warrant Price and the
number of shares of Common Stock purchasable upon the exercise
of each warrant shall, upon such expiration, be readjusted and
shall thereafter be such as it would have been had it been
originally adjusted (or had the original adjustment not been
required, as the case may be) as if (A) the only shares of
Common Stock so issued were the shares of Common Stock, if
any, actually issued or sold upon the exercise of such rights,
options, warrants, or conversion or exchange rights and (B)
such shares of Common Stock, if any, were issued or sold for
the consideration actually received by the Company upon such
exercise plus the aggregate consideration, if any, actually
received by the Company for the issuance, sale or grant of all
such rights, options, warrants, or conversion or exchange
rights whether or not exercised; provided, however, that no
such readjustment shall have the effect of increasing the
Warrant Price or decreasing the number of Warrant Shares by an
amount in excess of the amount of the adjustment initially
made with respect to the issuance, sale or grant of such
rights, options, warrants, or conversion or exchange rights.
(l) In addition to the adjustments set forth
above, the Exercise Price shall be immediately reduced and the
number of Warrant Shares shall be immediately increased, in
each case, on a pari passu basis with the conversion,
exercise, or strike price of any other derivative securities
of the Company whether now outstanding or hereafter issued.
12.2. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company
may, at its option, at any time during the term of the Warrants,
reduce the then current Exercise Price to any amount determined
appropriate by the Board of Directors of the Company.
12.3. NOTICE OF ADJUSTMENT. When the number of Warrant
Shares purchasable upon the exercise of each Warrant or the Exercise
Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail by first class, postage prepaid, to each
Warrant Holder notice of such adjustment or adjustments and a
certificate of a firm of independent public accountants selected by
the Board of Directors of the Company (who may be the regular
accountants employed by the Company) setting forth the number of
Warrant Shares purchasable upon the exercise of each Warrant and the
Exercise Price of such Warrant Shares after such adjustment and
setting forth a brief statement of the facts requiring such adjustment
and setting forth the computation by which such adjustment was made.
Such certificate, absent manifest error, shall be conclusive evidence
of the correctness of such adjustment.
12.4. PRESERVATION OF PURCHASE RIGHTS UPON MERGER,
CONSOLIDATION, ETC. In case of any consolidation of the Company with
or merger of the Company into another person or in case of any sale,
transfer, or lease to another person of all of or substantially all
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<PAGE> 11
the assets of the Company, the Company or such successor or purchaser,
as the case may be, shall execute with each Warrant Holder an
agreement that each Warrant Holder shall have the right thereafter
upon payment of the Exercise Price in effect immediately prior to such
action to purchase upon exercise of each Warrant the kind and amount
of shares and other securities and property which the Warrant Holder
would have owned or have been entitled to receive after the happening
of such consolidation, merger, sale, transfer, or lease had such
Warrant been exercised immediately prior to such action regardless of
whether the Warrants are exercisable at the time of such action. Such
agreement shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in
this Section 12. The provisions of this Section 12.4 shall similarly
apply to successive consolidations, mergers, sales, transfers, or
leases.
12.5. STATEMENT ON WARRANTS. Even though Warrants
heretofore or hereafter issued may continue to express the same price
and number and kind of shares as are stated in the Warrants initially
issuable pursuant to this Warrant Agreement, the parties understand
and agree that such Warrants will represent rights consistent with any
adjustments in the Exercise Price or the number or kind of shares
purchasable upon the exercise of the Warrants.
13. FRACTIONAL INTERESTS. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
Warrant Holder, the number of full Warrant Shares which shall be issuable upon
the exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section
13, be issuable on the exercise of any Warrant (or specified portion, thereof),
the Company shall pay an amount in cash equal to the closing price for one
share of the Common Stock on the trading day immediately preceding the date the
Warrant is presented for exercise, multiplied by such fraction.
14. REGISTRATION UNDER THE SECURITIES ACT OF 1933. Willis
represents and warrants to the Company that it will not dispose of the Warrant
or Warrant Shares except pursuant to (i) an effective registration statement,
or (ii) an applicable exemption from registration under the Securities Act of
1933 (the "Act"). In connection with any sale by Willis pursuant to clause
(ii) of the preceding sentence, it shall furnish to the Company an opinion of
counsel reasonably satisfactory to the Company to the effect that such
exemption from registration is available in connection with such sale.
15. CERTIFICATE TO BEAR LEGENDS. The Warrants shall be subject to
a stop-transfer order and the certificate or certificates therefor shall bear
the following legend by which each Warrant Holder shall be bound:
"THE WARRANTS REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
OTHER STATE. THE WARRANTS REPRESENTED HEREBY AND THE
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<PAGE> 12
SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE
TRANSFERRED, EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, OR (II) AN APPLICABLE EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT. ANY SALE PURSUANT TO
CLAUSE (II) OF THE PRECEDING SENTENCE MUST BE ACCOMPANIED BY AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE
EFFECT THAT SUCH EXEMPTION FROM REGISTRATION IS AVAILABLE IN
CONNECTION WITH SUCH SALE."
The Warrant Shares or other securities issued upon exercise of the
Warrants shall, unless issued pursuant to an effective registration statement,
be subject to a stop-transfer order and the certificate or certificates
evidencing any such Warrant Shares or securities shall bear the following
legend by which the Warrant Holder thereof shall be bound:
"THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE TRANSFERRED,
EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, OR (II) AN APPLICABLE EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT. ANY SALE PURSUANT TO CLAUSE (II) OF THE
PRECEDING SENTENCE MUST BE ACCOMPANIED BY AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH
EXEMPTION FROM REGISTRATION IS AVAILABLE IN CONNECTION WITH SUCH
SALE."
16. REGISTRATION RIGHTS. The Warrant Shares shall be covered by
and subject to the registration rights set forth in Section 4.1.11 of the Note
Purchase Agreement.
17. NO RIGHTS AS STOCKHOLDERS; NOTICE TO WARRANT HOLDERS. Nothing
contained in this Warrant Agreement or in any of the Warrants shall be
construed as conferring upon the Warrant Holders or their transferees the right
to vote or to receive dividends or to consent or to receive notice as
stockholders in respect of any meeting of stockholders for the election of
directors of the Company or any other matter, or any rights whatsoever as
stockholders of the Company. If, however, at any time prior to the expiration
of the Warrants and prior to their exercise, any of the following events shall
occur:
(a) the Company shall declare any dividend payable in any
securities upon its shares of Common Stock or make any distribution
(other than a cash dividend) to the holders of its shares of Common
Stock; or
(b) the Company shall offer to the holders of its shares
of Common Stock any additional shares of Common Stock or securities
convertible into or exchangeable for shares of Common Stock or any
right to subscribe to or purchase any thereof; or
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<PAGE> 13
(c) a dissolution, liquidation, or winding up of the
Company (other than in connection with a consolidation, merger, sale,
transfer, or lease or all or substantially all of its property,
assets, and business as an entirety) shall be proposed,
then in any one or more of said events the Company shall give notice in writing
of such event to the Warrant Holders as provided in Section 20 hereof, with
such notice to be completed at least 15 days prior to the date fixed as a
record date or the date of closing the transfer books for the determination of
the stockholders entitled to such dividend, distribution, or subscription
rights, or for the determination of stockholders entitled to vote on such
proposed dissolution, liquidation or winding up. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to provide or receive such notice or any defect therein or in the
mailing thereof shall not affect the validity of any action taken in connection
with such dividend, distribution, or subscription rights, or such proposed
dissolution, liquidation ,or winding up.
18. EXPENSES. The Company shall pay all legal and other
reasonable out-of-pocket expenses of the Warrant Holders and of their counsel
(up to a maximum of $25,000). The Company agrees to reimburse Willis upon
demand for its reasonable out-of-pocket costs and expenses incurred in
connection with the preparation, review, negotiation, execution, and delivery
of this Warrant Agreement and all other related documents.
19. RIGHT TO INFORMATION. The Company, in accordance with Section
16(c) above, will provide to all Warrant Holders and to all holders of Warrant
Shares, on a timely basis, copies of all documents and reports delivered to its
shareholders.
20. NOTICES. Any notice pursuant to this Warrant Agreement to be
given or made by the holder of any Warrant or Warrant Shares to or on the
Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed as follows:
EqualNet Holding Corp.
1250 Wood Branch Park Drive
Houston, Texas 77079
Attention: General Counsel
Notices or demands authorized by this Warrant Agreement to be given or made to
or on the Warrant Holder of any Warrant or Warrant Shares shall be sufficiently
given or made (except as otherwise provided in this Warrant Agreement) if sent
by registered mail, return receipt requested, postage prepaid, addressed to
such Warrant Holder at the address of such Warrant Holder as shown on the
Warrant Register or the Common Stock Register, as the case may be.
21. GOVERNING LAW. THIS WARRANT AGREEMENT, THE WARRANTS AND ALL
RELATED DOCUMENTS SHALL BE DEEMED TO BE CONTRACTS MADE UNDER AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. ANY DISPUTE HEREUNDER
OR UNDER THE WARRANTS OR RELATED DOCUMENTS SHALL BE DETERMINED EXCLUSIVELY IN
ACCORDANCE WITH SECTION 8.7 OF THE NOTE PURCHASE AGREEMENT.
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<PAGE> 14
22. SUPPLEMENTS AND AMENDMENTS. The Company and the Warrant
Holders may from time to time supplement or amend this Warrant Agreement in
order to cure any ambiguity or to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions in regard to matters or questions arising
hereunder which the Company and the Warrant Holder may deem necessary or
desirable and which shall not be inconsistent with the provisions of the
Warrants and which shall not adversely affect the interests of the Warrant
Holders. Any amendment to this Warrant Agreement may be effected with the
consent of Warrant Holders of at least a majority of the total then outstanding
Warrants (for this purpose Warrant Shares shall be deemed to be Warrants in the
proportion that Warrant Shares are then issuable upon the exercise of
Warrants); provided that any amendment which shall have the effect of
materially adversely affecting the interests of any Warrant Holder shall not be
effective with respect to such Warrant Holder if such Warrant Holder shall not
have consented thereto.
23. SURVIVAL OF COVENANTS. All covenants and agreements made
herein shall survive the execution and delivery of this Warrant Agreement and
the Warrants and shall remain in force and effect until the Expiration Date of
all Warrants.
24. SUCCESSORS. All representations and warranties of the Company
and all covenants and agreements of this Warrant Agreement by or for the
benefit of the Company or the Warrant Holders shall bind and inure to the
benefit of their respective successors and assigns hereunder.
25. BENEFITS OF THIS WARRANT AGREEMENT. Nothing in this Warrant
Agreement shall be construed to give to any person or corporation other than
the Company and the Warrant Holders, any legal or equitable right, remedy, or
claim under this Warrant Agreement, but this Warrant Agreement shall be for the
sole and exclusive benefit of the Company and the holders of the Warrants and
Warrant Shares.
26. CAPTIONS. The captions of the sections and subsections of
this Warrant Agreement have been inserted for convenience and shall have no
substantive effect.
27. COUNTERPARTS. This Warrant Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but such counterparts together shall constitute but one and the same
instrument.
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<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed on the day, month and year first above written.
EQUALNET HOLDING CORP.
By: /s/ MICHAEL L. HLINAK
-------------------------
Name: MICHAEL L. HLINAK
-----------------------
Title: C.O.O.
-----------------------
----------------------------
MICHAEL T. WILLIS
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<PAGE> 16
EXHIBIT A
FORM OF
WARRANT CERTIFICATE
THE WARRANTS REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY OTHER STATE. THE
WARRANTS REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR OFFERED FOR SALE OR
OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, OR (ii) AN APPLICABLE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT. ANY SALE PURSUANT TO CLAUSE (ii) OF THE
PRECEDING SENTENCE MUST BE ACCOMPANIED BY AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH EXEMPTION FROM REGISTRATION
IS AVAILABLE IN CONNECTION WITH SUCH SALE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS AND COMMON STOCK UNDERLYING SUCH
WARRANTS REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE
WARRANT AGREEMENT REFERRED TO HEREIN.
No. _____________ 500,000 Warrants
VOID AFTER 5:00 P.M. NEW YORK, TIME
ON MARCH 4, 2003
EQUALNET HOLDING CORP.
WARRANT CERTIFICATE
THIS CERTIFIES THAT for value received MICHAEL T. WILLIS the
registered holder hereof or registered assigns (the "Warrant Holder"), is the
owner of the number of the Warrants set forth above, each of which entitles the
owner thereof to purchase at any time from 9:00 A.M., New York time, on March
5, 1998 until 5:00 P.M., New York time on March 4, 2008 one fully paid and
nonassessable share of the common stock (subject to adjustment), par value
$0.01 per share (the "Common Stock"), of EQUALNET HOLDING CORP., a Texas
corporation (the "Company"), at the exercise price of $1.00 per share, subject
to adjustment and limitation as described in the Warrant Agreement referred to
below (the "Exercise Price"). The Warrant Holder may pay the Exercise Price in
cash, or by certified or official bank check or make a net exercise for Net
Warrant Shares as described in the Warrant Agreement.
This Warrant Certificate is subject to, and entitled to the benefits
of, all of the terms, provisions and conditions of an agreement dated March 5,
1998 (the "Warrant Agreement"), between the Company and Michael T. Willis,
which Warrant Agreement is hereby incorporated herein by reference and made a
part hereof and to which Warrant Agreement reference is hereby made for a
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<PAGE> 17
full description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Company and the Warrant Holders of the Warrant
Certificates. Copies of the Warrant Agreement are on file at the principal
office of the Company.
The Warrant Holder hereof may be treated by the Company and all other
persons dealing with this Warrant Certificate as the absolute owner hereof for
any purpose and as the person entitled to exercise the rights represented
hereby, or to the transfer hereof on the books of the Company, any notice to
the contrary notwithstanding, and until such transfer on such books, the
Company may treat the Warrant Holder hereof as the owner for all purposes.
The Warrant Certificate, with or without other Warrant Certificates,
upon surrender at the principal office of the Company, may be exchanged for
another Warrant Certificate or Warrant Certificates of like tenor and date
evidencing Warrants entitling the Warrant Holder to purchase a like aggregate
number of shares of Common Stock as the Warrants evidenced by the Warrant
Certificate or Warrant Certificates surrendered entitled to such Warrant Holder
to purchase. If this Warrant Certificate shall be exercised in part, the
Warrant Holder shall be entitled to receive upon surrender hereof, another
Warrant Certificate or Warrant Certificates for the number of whole Warrants
not exercised.
No fractional shares of Common Stock will be issued upon the exercise
of any Warrant or Warrants evidenced hereby, but in lieu thereof a cash payment
will be made, as provided in the Warrant Agreement.
Neither the Warrants nor the Warrant Certificate entitles any Warrant
Holder hereof to any of the rights of a stockholder of the Company.
THIS WARRANT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
-2-
<PAGE> 18
IN WITNESS WHEREOF, the Company has caused the signature of its
President and Secretary to be printed hereon.
EQUALNET HOLDING CORP.
By:____________________________
President
ATTEST:
By:____________________________________
Secretary
-3-
<PAGE> 1
EXHIBIT 2
JOINT FILING AGREEMENT
The undersigned, and each of them, do hereby agree and consent to the
filing of a single statement on behalf of all of them on Schedule 13D and
amendments thereto, in accordance with the provisions of Rule 13d-1(f)(1) of
the Securities Exchange Act of 1934, as amended.
Dated: March 11, 1998
THE WILLIS GROUP, LLC
By: /s/ MARK WILLIS
----------------------------
Mark Willis, President
/s/ MICHAEL T. WILLIS
--------------------------------
Michael T. Willis
/s/ MARK WILLIS
--------------------------------
Mark Willis
/s/ JAMES T. HARRIS
---------------------------------
James T. Harris
