<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(AMENDMENT NO. 1)
EQUALNET HOLDING CORP.
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(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
294408109
---------------------------
(CUSIP Number)
DAVID R. KING, ESQUIRE
MORGAN, LEWIS & BOCKIUS LLP
2000 ONE LOGAN SQUARE
PHILADELPHIA, PENNSYLVANIA 19103
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
MARCH 9, 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(e)(3), 13d-1(f) or 13d-1(g), check the following
box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Schedules filed in paper format shall include a signed original and give
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 24 pages)
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
CUSIP NO. 294408109 PAGE 2 OF 24
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
THE FURST GROUP, INC. 22-3015385
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW JERSEY
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7 SOLE VOTING POWER
NUMBER 1,822,500 SHARES OF COMMON STOCK, 1,500,000 OF WHICH ARE ISSUABLE UPON CONVERSION OF
3,000 SHARES OF SERIES B CONVERTIBLE PREFERRED STOCK
OF SHARES --------------------------------------------------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY 0 SHARES
OWNED --------------------------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
BY EACH 1,822,500 SHARES OF COMMON STOCK, 1,500,000 OF WHICH ARE ISSUABLE UPON CONVERSION OF
3,000 SHARES OF SERIES B CONVERTIBLE PREFERRED STOCK
REPORTING --------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH 0 SHARES
- -------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,822,500 SHARES OF COMMON STOCK, 1,500,000 OF WHICH ARE ISSUABLE UPON CONVERSION OF 3,000 SHARES OF SERIES
B CONVERTIBLE PREFERRED STOCK
- -------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- -------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.87%
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14 TYPE OF REPORTING PERSON*
CO
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
CUSIP NO. 294408109 PAGE 3 OF 24
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
JAMES D. KAYLOR
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK BOX 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 0 SHARES
-----------------------------------------------------------------------------------------------------------
OF SHARES 8 SHARED VOTING POWER
1,822,500 SHARES OF COMMON STOCK, 1,500,000 OF WHICH ARE ISSUABLE UPON CONVERSION OF
BENEFICIALLY 3,000 SHARES OF SERIES B CONVERTIBLE PREFERRED STOCK
-----------------------------------------------------------------------------------------------------------
OWNED 9 SOLE DISPOSITIVE POWER
0 SHARES
BY EACH -----------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
REPORTING 1,822,500 SHARES OF COMMON STOCK, 1,500,000 OF WHICH ARE ISSUABLE UPON CONVERSION OF
3,000 SHARES OF SERIES B CONVERTIBLE PREFERRED STOCK
PERSON WITH
- ----------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,822,500 SHARES OF COMMON STOCK, 1,500,000 OF WHICH ARE ISSUABLE UPON CONVERSION OF 3,000 SHARES OF SERIES
B CONVERTIBLE PREFERRED STOCK
- ----------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- ----------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.87%
- ----------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 4
CUSIP NO. 294408109 PAGE 4 OF 24
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
JOHN S. STREEP
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) [ ]
- ---------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES OF AMERICA
- ---------------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER 0 SHARES
----------------------------------------------------------------------------------------------------------
OF SHARES 8 SHARED VOTING POWER
1,822,500 SHARES OF COMMON STOCK, 1,500,000 OF WHICH ARE ISSUABLE UPON CONVERSION OF
BENEFICIALLY 3,000 SHARES OF SERIES B CONVERTIBLE PREFERRED STOCK
----------------------------------------------------------------------------------------------------------
OWNED 9 SOLE DISPOSITIVE POWER
0 SHARES
BY EACH ----------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
REPORTING 1,822,500 SHARES OF COMMON STOCK, 1,500,000 OF WHICH ARE ISSUABLE UPON CONVERSION OF
3,000 SHARES OF SERIES B CONVERTIBLE PREFERRED STOCK
PERSON WITH
- ---------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,822,500 SHARES OF COMMON STOCK, 1,500,000 OF WHICH ARE ISSUABLE UPON CONVERSION OF 3,000 SHARES OF SERIES
B CONVERTIBLE PREFERRED STOCK
- ---------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- ---------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.87%
- ---------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 5
CUSIP NO. 294408109 PAGE 5 OF 24
ITEM 1. SECURITY AND ISSUER.
This statement relates to the common stock, $.01 par value
(the "Common Stock"), of EqualNet Holding Corp., a Texas corporation (the
"Issuer"). The principal executive offices of the Issuer are located at
EqualNet Plaza, 1250 Wood Branch Park Drive, Houston, Texas 77079.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This statement is being filed by (i) The Furst Group,
Inc., a New Jersey corporation ("TFG"), with respect to shares beneficially
owned by it and (ii) James D. Kaylor and John S. Streep with respect to shares
of Common Stock beneficially owned by TFG. The foregoing persons are sometimes
referred to herein as the "Filing Persons." Any disclosure herein with respect
to persons other than the Filing Persons are made on information and belief
after making inquiry to the appropriate party.
Messrs. Kaylor and Streep each own 45.5% of the common stock
of TFG and Mr. Kaylor is the Chairman of the Board of Directors of TFG and Mr.
Streep is the Chief Executive Officer of TFG.
(b) The business address of each of the Filing Persons is
Furst Commerce Center, 459 Oakshade Road, Shamong, NJ 08088.
(c) The principal business of TFG is the resale of
long-distance and other telecommunications services.
(d) During the last five years, none of the persons referred
to in paragraph (a) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
(e) During the last five years, none of the persons referred
to in paragraph (a) has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which he was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
(f) Messrs. Kaylor and Streep are United States Citizens.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS.
On March 6, 1998, TFG entered into an Exchange Agreement (the
"Agreement") with the Issuer and certain of the Issuer's subsidiaries, pursuant
to which the Issuer exchanged Notes and Warrants (each as defined herein) held
by TFG for 3,000 shares of Series B Convertible Preferred Stock (the "Preferred
Stock") of the Issuer. Each share of Preferred Stock is convertible into a
number of shares of Common Stock of the Issuer determined in accordance with
the terms of the Preferred Stock. In addition, pursuant to the terms of the
Agreement, the Issuer issued 322,500 shares of Common Stock to TFG,
representing one share of Common Stock for each $1.00 of interest on the Notes
due and payable to TFG on the date of the Agreement. The Notes and Warrants
were issued to TFG pursuant to the Note and Warrant Purchase Agreement dated as
of February 3, 1997 with the Issuer and certain of the Issuer's subsidiaries
pursuant to which TFG acquired $3,000,000 of 10% subordinated notes (the
"Notes") and warrants (the "Warrants") exercisable for 1.5 million shares of
Common Stock at $2.00 per share. The transaction was completed on February 24,
1997. TFG used funds from working capital to purchase the Notes and Warrants.
<PAGE> 6
CUSIP NO. 294408109 PAGE 6 OF 24
ITEM 4. PURPOSE OF TRANSACTION.
The Filing Persons will acquire the shares of Preferred Stock
for investment purposes and intend to evaluate the performance of such
securities as an investment in the ordinary course of business.
None of the Filing Persons has any plans or proposals which
relate to, or could result in, any of the matters referred to in paragraphs (a)
through (j), inclusive, of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Filing Persons beneficially own 1,822,500 shares of
Common Stock, which constitutes 9.87% of the Common Stock outstanding based on
the Issuer's representation in the Agreement that it had 16,637,737 shares of
Common Stock outstanding on the date of the Agreement and including as
outstanding the 1,822,500 shares issuable to TFG under the Agreement and upon
conversion of the Preferred Stock. Such securities were acquired pursuant to
the transactions described in Item 3.
(b) TFG has sole voting power and power to dispose of the
shares of Common Stock beneficially owned by the Filing Persons, and each of
Messrs. Kaylor and Streep, as 45.5% shareholders of TFG, have shared voting and
dispositive power with respect to such shares.
ITEM 6. CONTRACT, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
See Item 4.
Pursuant to the Agreement, the Issuer granted certain
registration rights to holders of the Preferred Stock with respect to shares of
Common Stock acquired under the Agreement and upon the conversion of the
Preferred Stock and any shares issued as a dividend or other distribution with
respect to, or in exchange for or in replacement of, such shares. These rights
include certain shelf and demand registration rights in addition to
"piggy-back" registration rights, each as set forth in the Agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Exchange Agreement (Agreement, as defined
above), dated March 6, 1998, without exhibits.
<PAGE> 7
CUSIP NO. 294408109 PAGE 7 OF 24
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.
March 24, 1998
--------------------------------
(Date)
THE FURST GROUP, INC.
/s/ John S. Streep
--------------------------------
(Signature)
By: John S. Streep
Title: Chief Executive Officer
/s/ James D. Kaylor
--------------------------------
(Signature)
James D. Kaylor
/s/ John S. Streep
--------------------------------
(Signature)
John S. Streep
<PAGE> 1
CUSIP NO. 294408109 PAGE 8 OF 24
EXHIBIT 1
EXCHANGE AGREEMENT
EQUALNET HOLDING CORP.
EQUALNET CORPORATION
TELESOURCE, INC.
EQUALNET WHOLESALE SERVICES, INC.
EQUALNET PLAZA
1250 WOOD BRANCH PARK DRIVE
HOUSTON, TX 77079-1212
March 6, 1998
The Furst Group, Inc.
459 Oakshade Road
Shamong, NJ 08088
Re: Exchange of $3,000,000 10% Notes due December 31, 1998
and Warrants for the Purchase of 1,500,000 Shares of Common
Stock for 3,000 Shares of Series B Convertible Preferred Stock
Gentlemen:
The Furst Group, Inc., a New Jersey corporation ("Furst"), is the holder
of $3,000,000 principal amount of 10% Notes due December 31, 1998 (the "Notes")
of EqualNet Holding Corp., a Texas corporation (the
<PAGE> 2
CUSIP NO. 294408109 PAGE 9 OF 24
"Company"), and its subsidiaries, EqualNet Corporation, a Delaware corporation
("EqualNet Subsidiary"), TeleSource Inc., a Texas corporation ("TeleSource"),
and EqualNet Wholesale Services, Inc., a Delaware corporation ("Wholesale")
(each of the Company, EqualNet Subsidiary, TeleSource and Wholesale are
referred to herein individually as an "EqualNet Company" and collectively as
the "EqualNet Companies"), and Warrants for Purchase of Common Stock (the
"Warrants") relating to the purchase of 1,500,000 shares, as adjusted from time
to time pursuant to the terms of the Warrants, of common stock, par value $.01
per share (the "Common Stock"), of the Company. The EqualNet Companies have
requested that Furst exchange the Notes and the Warrants for shares of
preferred stock of the Company as described herein, and to induce Furst to
effect such exchange, hereby agree with Furst as follows:
ARTICLE 1.
EXCHANGE AND TERMS OF SERIES B PREFERRED STOCK
a. Series B Preferred Stock. The Company shall authorize the
issuance and sale to Furst of 3,000 shares of Series B Senior Convertible
Preferred Stock ("Series B Preferred Stock") of the Company. The Series B
Preferred Stock shall have the terms set forth in Exhibit A attached hereto.
b. Exchange of Notes and Warrants for Series B Preferred Stock.
The Company shall issue and sell to Furst the Series B Preferred Stock, and,
subject to and in reliance upon the representations, warranties, terms and
conditions of this Agreement, Furst shall purchase the Series B Preferred Stock
by surrendering in exchange therefor the Notes and the Warrants. Such exchange
shall take place at a closing (the "Closing") to be held on March 6, 1998 at
10:00 a.m. or on such other date and at such time as may be mutually agreed
upon (the "Closing Date"). At the Closing, the Company will issue and deliver
the Series B Preferred Stock in denominations designated by Furst and
registered in the name of Furst against delivery to the Company of the Notes
and the Warrants.
c. Cancellation of Notes and Warrants. The EqualNet Companies
will cancel the Notes and Warrants delivered by Furst pursuant hereto.
d. Issuance of Common Stock. In connection with the exchange,
the Company shall issue to Furst 322,500 shares of Common Stock of the Company
("Interest Common Stock") representing one share of Common Stock for each $1.00
of interest on the Notes due and payable to Furst on the date hereof. Furst
hereby agrees to accept such shares in lieu of interest payable in cash.
<PAGE> 3
CUSIP NO. 294408109 PAGE 10 OF 24
ARTICLE 2.
CONDITIONS TO FURST'S OBLIGATION
The obligation of Furst to exchange the Notes and Warrants for Series B
Preferred Stock at the Closing is subject to the following conditions:
a. Representations and Warranties. Each of the representations
and warranties of the EqualNet Companies set forth in Article 3 hereof shall be
true on the Closing Date.
b. Documentation at Closing. Furst shall have received all of
the following, each in form and substance satisfactory to Furst and its
counsel:
(i) Copies of all charter documents and bylaws of the
Company and of resolutions of the Board of Directors of each EqualNet Company
evidencing approval of this Agreement and the issuance of the Series B
Preferred Stock, all certified by the Secretary or any Assistant Secretary of
the Company;
(ii) An opinion of Fulbright & Jaworski L.L.P., counsel
for the EqualNet Companies, regarding the due authorization, execution and
delivery of this Agreement and the validity, binding effect and enforceability
thereof, and the due authorization, validity and fully paid and nonassessable
status when issued of the Series B Preferred Stock and the Common Stock to be
issued upon conversion of the Interest Common Stock, the Series B Preferred
Stock (the "Conversion Stock") and such other matters as Furst shall reasonably
request;
(iii) Evidence of the filing with, and acceptance by, the
Secretary of State of the State of Texas, an amendment to the Company's charter
documents to reflect the authorization of the Series B Preferred Stock and the
increase in the number of authorized shares of Common Stock, such that there
will be a number of shares of Common Stock authorized sufficient to permit the
issuance of the Interest Common Stock and the conversion of the Series B
Preferred Stock;
(iv) A certificate of the Secretary or an Assistant
Secretary of each EqualNet Company that shall certify the names of the officers
of such EqualNet Company authorized to sign this Agreement and the
certificate(s) for the Interest Common Stock and the Series B Preferred Stock
to which the Company is a party together with the true signatures of such
officers;
(v) If this Agreement is executed and delivered on a date
other than the Closing Date, a certificate of each EqualNet Company signed by a
duly authorized officer of such EqualNet Company stating that the
representations and warranties of the EqualNet Companies contained in Article 3
hereof are true and correct;
<PAGE> 4
CUSIP NO. 294408109 PAGE 11 OF 24
(vi) A binding payment agreement between the Company and
AT&T providing, among other things, that at no time will the Company be
obligated to pay AT&T more than is called for in the payment schedule attached
hereto as Exhibit B attached hereto; and
(vii) A certificate of the Company stating that the
Proposed Transactions (as hereinafter defined) have been consummated as
described in the Proxy Statement (as hereinafter defined).
c. Performance; No Default. The Company shall have performed and
complied with all agreements and conditions contained in this Agreement
required to be performed or complied with by the Company prior to or at the
Closing.
d. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to Furst and its counsel, and Furst and its counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES AND AGREEMENTS
OF THE EQUALNET COMPANIES
The EqualNet Companies, jointly and severally, represent and warrant to,
and (in the case of Section 3.q. agree with), Furst that:
a. Organization and Standing of the Company. Each EqualNet
Company is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation and has all requisite corporate
power and authority to own and operate its properties, to carry on its business
as now conducted and to enter into and, as applicable, perform its obligations
hereunder. Each EqualNet Company is qualified to do business and is in good
standing in each jurisdiction in which it is required to so qualify and where
the failure to be so qualified would have a material adverse effect on the
business, assets, financial condition or results of operations of the Company
or the EqualNet Companies taken as a whole (a "Material Adverse Effect").
b. Corporate Action. Each EqualNet Company has taken all
corporate action required to make this Agreement valid and enforceable
(including approval of holders of outstanding Series A Preferred Stock (as
hereinafter defined) of the Company).
c. Validity of Documents. This Agreement has been duly
authorized and executed by each EqualNet Company and constitutes a valid and
legally binding obligation of each EqualNet Company,
<PAGE> 5
CUSIP NO. 294408109 PAGE 12 OF 24
enforceable in accordance with its terms. The Interest Common Stock and the
Series B Preferred Stock when issued as contemplated by this Agreement will be
validly issued, fully paid and nonassessable. At Closing, a sufficient number
of shares of duly authorized and unissued Common Stock of the Company will have
been reserved for issuance upon conversion of the Series B Preferred Stock, and
no further corporate action is required for the valid issuance of the
Conversion Stock upon the conversion of the Series B Preferred Stock. The
issuance of the Conversion Stock in accordance with the terms of the Series B
Preferred Stock will not, at the Closing and thereafter, be subject to
preemptive, antidilution or similar rights of any Person, and when issued and
delivered against payment therefor in accordance with the terms of the Series B
Preferred Stock, will be validly issued, fully paid and nonassessable.
d. Consents. The execution and delivery by each EqualNet Company
of this Agreement and the performance of the transactions contemplated hereby
(i) do not and under present law will not violate, or require any consent or
approval pursuant to, any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award, (ii) do not violate any provision
of its certificate or articles of incorporation or bylaws, (iii) do not and
will not give rise to any lien upon any of its assets, except as otherwise
contemplated hereby, and (iv) do not violate any provision of, or cause a
default under, any material agreement, lease, instrument or other contract to
which it is a party.
e. Capitalization; Status of Capital Stock. Upon consummation of
the actions and transactions (the "Proposed Transactions") described in the
Proxy Statement of the Company dated February 17, 1998 (the "Proxy Statement")
and the filing of the amendment to the Company's charter described therein, the
Company will have authorized capitalization consisting of (i) 50,000,000 shares
of Common Stock, par value $.01 per share, of which 16,637,737 will be
outstanding and 1,850,000 will be reserved for issuance upon exercise of
outstanding stock options and warrants and (ii) 5,000,000 shares of Preferred
Stock, par value $.01 per share, of which 5,000 shares of Series A Convertible
Preferred Stock ("Series A Preferred Stock") will be issued and outstanding.
All of the outstanding shares of Common Stock of the Company have been, and all
of the shares of Common Stock to be issued pursuant to the Proposed
Transactions will be, when issued, duly authorized, validly issued and fully
paid and nonassessable. Except as set forth in the Proxy Statement, as
disclosed to Furst in writing or as set forth in this Agreement, no options or
rights to purchase shares of capital stock, or securities convertible into
shares of capital stock, are authorized, issued or outstanding, nor is the
Company obligated in any other manner to issue shares of its capital stock or
securities convertible into or evidencing any right to acquire shares of its
capital stock. There are no restrictions on the transfer of shares of Interest
Common Stock or Conversion Stock, other than those imposed by relevant state
and federal securities laws.
f. Private Offering. Based on and assuming the accuracy of the
representations of Furst set forth in Section 5.b. hereof, the issuance of the
Interest Common Stock and the exchange pursuant to the terms of this Agreement
of the Notes and the Warrants for Series B Preferred Stock, are exempt from
registration under the Securities Act of 1933, as amended (the "Securities
Act").
<PAGE> 6
CUSIP NO. 294408109 PAGE 13 OF 24
g. Title to Assets. Each of the EqualNet Companies has good
title to all of its material properties and assets, free and clear of all
material liens and encumbrances, other than liens and encumbrances described in
the Proxy Statement, the SEC filings (as hereinafter defined) and Section 3.q.
of this Agreement.
h. Insurance. Each of the EqualNet Companies maintains with
financially sound and reputable insurers, risk of physical loss or damage
insurance covering its assets wherever the same may be located, insuring
against the risk of fire, explosion, theft and such other risks as are
prudently insured against by corporations engaged in the same business and
similarly situated with the EqualNet Companies in an amount usually carried by
corporations engaged in the same business and similarly situated with the
Companies.
i. Financial Statements. The Company's consolidated financial
statements, set forth in the Company's Annual Report on Form 10-K for its
latest fiscal year ended, consisting of balance sheets and statements of
operations and cash flows and accompanying footnotes, certified by the
Company's independent accountants, and the interim financial statements, set
forth in the Company's Quarterly Report on Form 10-Q filed after such Form
10-K, as filed with the Securities and Exchange Commission (the "SEC Filings"),
fairly present, in all material respects, the financial condition and results
of operations of the Company and its subsidiaries as of the dates and for the
periods presented therein, all in accordance with generally accepted accounting
principles consistently applied ("GAAP"). Except as set forth in the Proxy
Statement, (i) there are no liabilities, fixed or contingent, which are
material but not reflected in such financial statements other than liabilities
arising in the ordinary course of business since the date of the interim
financial statements and (ii) there has been no material adverse change in the
business, financial condition or operations of the Company since December 31,
1997.
j. Books and Records. The books and records of the EqualNet
Companies accurately reflect in all material respects the transactions to which
any EqualNet Company is a party or by which its properties are subject or
bound, and such books and records have been properly kept and maintained in all
material respects.
k. Accounting Controls. The EqualNet Companies maintain a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general and
specific authorization, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
l. No Litigation. Except as disclosed in the SEC Filings filed
prior to the date of this Agreement or otherwise disclosed in writing to Furst,
no EqualNet Company is now engaged in or threatened in writing with any
litigation or other proceeding in connection with its affairs which would or
could reasonably be expected to have a Material Adverse Effect.
<PAGE> 7
CUSIP NO. 294408109 PAGE 14 OF 24
m. Intentionally omitted.
n. Disclosure Generally. The representations and statements made
by the EqualNet Companies in this Agreement and the information contained in
the Proxy Statement do not and will not contain any untrue statement of a
material fact or, taken collectively, omit to state a material fact or any fact
necessary to make the representations and statements made not materially
misleading. No written information, exhibit, report or financial statement
furnished by the EqualNet Companies to Furst in connection with this Agreement,
including the Proxy Statement, contains or will contain any material
misstatement of fact or, taken collectively, omit to state a material fact or
any fact necessary to make the statements contained therein not materially
misleading.
o. Registration Rights. Except as disclosed in the SEC filings
or the Proxy Statement, (i) no person has rights to the registration of any
securities of the Company or any subsidiary and (ii) neither the Company nor
any of its subsidiaries will have any liability for any rights of any person
for the registration of any securities of the Company.
p. Intentionally omitted.
q. Willis Transactions.
(i) Neither the Company nor any subsidiary or affiliate
thereof has granted, or will at any time grant, to any party providing
financing as part of the Proposed Transactions any security interest in any
assets of the Company or any subsidiary of the Company other than the Switches
(as defined in the Proxy Statement), to secure obligations incurred as part of
the Proposed Transactions.
(ii) For so long as the Series B Preferred Stock is
outstanding, without the prior written consent of Furst, neither the Company
nor any subsidiary of the Company will grant any security interest to Willis
Group LLC or any subsidiary or affiliate thereof in any assets of the Company
or any subsidiary of the Company.
(iii) The amount of the investment of the Willis Group LLC
relating to the Switches to be purchased by the Company is in all material
respects as set forth in the Proxy Statement.
(iv) The investment of the Willis Group LLC in the Company
includes at least $4,000,000 in cash.
(v) The cash invested in the Company by the Willis Group
LLC will be used by the Company for the purposes set forth in the Proxy
Statement in all material respects. The financing for the Switches is to be
provided by Finova.
<PAGE> 8
CUSIP NO. 294408109 PAGE 15 OF 24
ARTICLE 4.
COVENANTS
a. Listing on Nasdaq National Market. The Company agrees to
promptly have the shares of Interest Common Stock and any shares of Conversion
Stock that are issued upon conversion of the Series B Preferred Stock approved
for quotation on the Nasdaq National Market or such other primary market or
trading system on which the Common Stock then trades.
b. Sprint Agreement. The EqualNet Companies shall pay all
amounts due to Sprint no more than 45 days from the date of any future Sprint
invoice to any EqualNet Company, for so long as any EqualNet Company is
provided service under a partition under Furst's contract with Sprint. Furst
shall, after the date of the Closing, be allowed to mark up its cost of Sprint
services to any EqualNet Company by five percent (5%). If Furst receives price
reductions from Sprint, Furst shall keep the first five percent (5%) of any
such reductions in the costs of long distance service purchased from Sprint by
the Company for all bills rendered by Sprint to the Company after the Closing.
Any additional cost savings above such five percent (5%) reduction shall be
shared equally by Furst and the Company. Furst shall maintain similar rights
to those it currently has under the Receivables Funding Corporation agreement
in the event the EqualNet Companies should fail to make payments directly to
Sprint within such 45 day period and may make payments directly to Sprint from
such proceeds prior to distributing any excess to the EqualNet Companies.
Furst agrees to cooperate fully with the Company and any lender the Company may
select in the event the Company decides to replace Receivables Funding
Corporation as its first lien funding source, to place any such substitute
lender in a superior lien position with respect to Furst and to retain Furst's
rights concerning Sprint payments similar to those currently in place under the
Receivables Funding Corporation agreement.
c. Repurchase of Series B Preferred Stock. In the event of any
material breach by any EqualNet Company of any of the representations and
warranties or covenants set forth in Section 3.q. hereof, the EqualNet
Companies hereby jointly and severally agree with Furst to repurchase the
Series B Preferred Stock from Furst at a price of $1,000 per share, payable in
cash, on a date designated by Furst upon not less than 10 days' prior written
notice to the Company.
<PAGE> 9
CUSIP NO. 294408109 PAGE 16 OF 24
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES
AND COVENANTS OF FURST
Furst represents and warrants to the EqualNet Companies and covenants and
agrees with the EqualNet Companies as follows:
a. Authorization. This Agreement constitutes a valid and legally
binding obligation of Furst enforceable in accordance with its terms.
b. Investment Representations; Transfer.
(i) The Series B Preferred Stock is being acquired by
Furst for investment for its own account, and not with a view to the sale or
distribution of any part thereof or of the Conversion Stock or Interest Common
Stock, and it has no present intention of selling, granting participation in,
or otherwise distributing the same except for distributions that are exempt
from the registration requirements of applicable securities laws (other than
any notice provisions thereof) or pursuant to a registered offering.
(ii) Furst understands that the Interest Common Stock, the
Series B Preferred Stock and the Conversion Stock have not been registered
under the Securities Act on the basis that the offer and sale thereof as
provided for in this Agreement and the issuance of the Interest Common Stock
and the Conversion Stock are exempt from registration under the Securities Act
pursuant to Section 4(2) thereof, and that the Company's reliance on such
exemption is predicated on Furst's representations set forth herein.
(iii) Furst is an "accredited investor" within the meaning
of Rule 501 of 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. Furst has made its
own evaluation of its investment in the Interest Common Stock and the Series B
Preferred Stock, based upon such information as is available to it and without
reliance upon the Company or any other person or entity, and Furst agrees that
neither the Company nor any other person or entity has any obligation to
furnish any additional information to Furst except as expressly set forth
herein.
(iv) Furst understands that the Interest Common Stock, the
Series B Preferred Stock and the Conversion Stock may not be sold, transferred,
pledged, hypothecated or otherwise disposed of without registration under the
Securities Act or an exemption therefrom, and that in the absence of an
effective registration statement covering the Interest Common Stock, the Series
B Preferred Stock or the Conversion
<PAGE> 10
CUSIP NO. 294408109 PAGE 17 OF 24
Stock or an available exemption from registration under the Securities Act, the
Interest Common Stock, the Series B Preferred Stock and the Conversion Stock
must be held indefinitely.
c. Legends; Stop Transfer. Furst agrees that all Interest Common
Stock, Series B Preferred Stock and Conversion Stock shall bear legends in
substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE
SECURITIES LAWS OF ANY OTHER STATE. THE SECURITIES REPRESENTED HEREBY
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR OFFERED FOR SALE
OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL OR OTHER
EVIDENCE ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED."
ARTICLE 6.
REGISTRATION RIGHTS
a. As promptly as practicable after the Closing Date, if
requested by Furst, the Company will file a registration statement (the "Shelf
Registration") with the Commission under the Securities Act permitting the
disposition of the Interest Common Stock and the Conversion Stock ("Registrable
Stock") in accordance with the intended methods thereof as specified in writing
by Furst. The Company will use its commercially reasonable efforts to have the
Shelf Registration declared effective by the Commission as soon as practicable
after the filing date and to at all times maintain the effectiveness thereof.
The holders of Series B Preferred Stock (the "Holders") representing (assuming
conversion of all Series B Preferred Stock) more than 50% of the Registrable
Stock ("Majority Holders") may, at any time, request that the Company
supplement or amend the Shelf Registration to effect an underwritten offering
of the Registrable Stock by one or more underwriters selected by the Majority
Holders; provided that the Majority Holders may make such request only a total
of three (3) times. The Company will as promptly as practicable supplement or
amend such Shelf Registration to the extent required to permit the disposition
in accordance with such request and use its commercially reasonable efforts to
have the amendment declared effective by the SEC as soon as practicable after
the filing date. The Company shall enter into an underwriting agreement in
customary form used by such underwriter or underwriters, which shall include,
among other provisions, contribution and indemnities of the Company and the
Holders party thereto to the effect and to the extent provided in this Article
6. The Holders whose Registrable Stock is to be distributed by such
underwriters shall be parties to such underwriting agreement. No Holder may
participate in such underwritten offering unless such Holder agrees to sell its
Registrable Stock on the basis provided in such underwriting agreement and
completes and executes all questionnaires, powers of attorney, indemnities and
other documents
<PAGE> 11
CUSIP NO. 294408109 PAGE 18 OF 24
reasonably required under the terms of such underwriting agreement. The
obligations of the Company under this Article 6 (i) shall terminate on the
earlier to occur of (A) the third anniversary of the date of this Agreement and
(B) at such time as all Holders may transfer, without restriction whatsoever,
all of the Registrable Stock held by them or issuable to them upon conversion
of the Series B Preferred Stock held by them, pursuant to Rule 144(k)
promulgated under the Securities Act.
b. At any time that the Shelf Registration is not available for
any reason or not required pursuant to Section 6.a., upon written notice
("Registration Notice") from the Majority Holders to the Company requesting
that the Company effect the registration under the Securities Act of at least
15% of the Registrable Stock or any lesser percentage so long as the
anticipated proceeds from such offering exceed $500,000, which Registration
Notice shall specify the intended method or methods of disposition of such
Registrable Stock, the Company shall use its commercially reasonable efforts to
effect (at the earliest practicable date) the registration under the Securities
Act of such Registrable Stock (each, a "Demand Registration") for disposition
in accordance with the intended method or methods of disposition stated in such
Registration Notice; provided that a Holder shall have the right to deliver
Registration Notices to effect three (3) demand registrations pursuant to this
Section 6.b. and no more without regard to the number of underwritten offerings
requested pursuant to Section 6.a. hereof.
c. Whenever the Company proposes to file a Registration Statement
with the Commission pursuant to the Securities Act in connection with a public
offering by the Company of its Common Stock, whether for the Company's own
account or for the account of others, other than a Registration Statement on
Form S-4 or Form S-8 or any successor forms thereto (a "Piggyback
Registration"), the Company will give prompt written notice to all Holders and
will include in such Piggyback Registration all Registrable Stock with respect
to which the Company has received written requests for inclusion within 20 days
after the Company's mailing of such notice; provided that if the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
that can be sold in such offering, at a price reasonably related to fair value,
the Company will allocate the securities to be included first to the Company,
then on a pro rata basis among the Holders and any other person with
registration rights not subordinated to those of the Holders.
d. If the proposed filing of a Registration Statement of which
the Company gives notice pursuant to Section 6.c. hereof is for a registered
public offering involving an underwriting, the Company shall so advise the
Holders as part of the written notice given pursuant to Section 6.c. In such
event, if a Holder proposes to distribute Registrable Stock through such
underwriting, such Holder shall (together with the Company and the other
holders of securities of the Company distributing their securities through such
underwriting) enter into an underwriting agreement in such form as shall have
been negotiated and agreed to by the Company with the underwriter or
underwriters selected for such underwriting by the Company. The Company will
give the Holders notice (the "Pricing Notice") of the anticipated range of the
public offering price not later than two weeks prior to the anticipated
effective date of any Registration Statement which includes Registrable Stock
to be sold for the account of a Holder. A Holder may in its discretion
<PAGE> 12
CUSIP NO. 294408109 PAGE 19 OF 24
withdraw any time prior to five days after receipt of the Pricing Notice, but
may not thereafter withdraw any Registrable Stock, unless the public offering
price is below the lowest price in the range of anticipated public offering
prices specified in the Pricing Notice. In order to facilitate the execution
of the underwriting agreement and the closing thereunder, a Holder will, at the
request of the managing underwriter, enter into a custody agreement and power
of attorney consistent with the preceding sentence.
e. Notwithstanding the foregoing, if, at any time after giving
written notice of its proposal to file a Registration Statement pursuant to
Section 6.c. hereof and prior to the effective date of such Registration
Statement, the Company shall determine for any reason not to register the
securities proposed to be covered thereby, the Company may, at its election,
give written notice of such determination to the Holders and upon the
withdrawal of such Registration Statement shall have no further obligation to
register any Registrable Stock held by the Holders in connection with such
registration. In the event of such withdrawal by the Company, the Company
shall promptly reimburse the Holders for the reasonable fees and expenses of
their own legal counsel and other reasonable expenses incurred in connection
with such registration.
f. Subject to subsection 6.g(ii) below, in connection with any
registration effected hereunder, the Company shall bear all expenses incurred
by it in connection therewith and in connection with the related distribution,
which shall include, without limitation, the following costs and expenses: (i)
printing and engraving costs; (ii) transfer agent's and registrar's fees; (iii)
legal and accounting fees and expenses (provided that such expenses shall
include only one counsel for all selling Holders); (iv) registration and filing
fees with the Commission and any other regulatory or self-regulatory agencies
or bodies; and (v) reasonable costs of investigation of matters subject to
disclosure in the Registration Statement, including the fees and appraisers or
other experts. Notwithstanding the foregoing, and subject to subsection 6.g(i)
below, in connection with any registration effected hereunder, a Holder shall
bear all of his own expenses, including, without limitation, any underwriting
commissions or discounts in respect of the sale of its Registrable Stock and
the legal fees of its own counsel.
g. In connection with any Registration Statement filed hereunder
in which the Holder participates as a selling stockholder, the following
provisions as to indemnification shall apply:
(i) The Company shall indemnify and hold harmless the
Holders against any losses, claims, damages or liabilities to which he may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, any preliminary
prospectus, the prospectus or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they are made, not
misleading; and the Company will reimburse any legal or other expenses
reasonably incurred by the Holders in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage, liability, action or proceeding
arises out of or is based upon any untrue statement or alleged untrue
statement, or upon any omission or alleged omission, of any material fact
contained in the Registration Statement, any preliminary prospectus, the
prospectus or any such amendment or supplement, to the extent
<PAGE> 13
CUSIP NO. 294408109 PAGE 20 OF 24
that such fact was included or omitted in reliance upon and in conformity with
information furnished to the Company by or through such Holder specifically for
use in the preparation thereof. This indemnity will be in addition to any
liability which the Company may otherwise have.
(ii) A Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the
Registration Statement and each person, if any, who controls the Company,
within the meaning of the Securities Act or otherwise, against any losses,
claims, damages or liabilities to which it may become subject under the
Securities Act or otherwise insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any preliminary prospectus, the
prospectus or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they are made, not misleading; and a Holder
will reimburse any legal or other expenses reasonably incurred by the Company
or any such director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, action or
proceeding; provided, however, that the Holder will be liable in each case
under this subsection 6.g(ii) to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in the Registration Statement, any preliminary prospectus, the
prospectus or any such amendment or supplement in reliance upon and in
conformity with information furnished to the Company by or through such Holder
specifically for use in the preparation thereof. This indemnity will be in
addition to any liability which the Holder may otherwise have.
(iii) Promptly after receipt by an indemnified party
pursuant to the foregoing provisions of notice of the commencement of any
action or proceeding, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party hereunder, notify the
indemnifying party of the commencement thereof, provided that the omission to
so notify the indemnifying party will not relieve the indemnifying party from
any liability which it may have to any indemnified party under this Agreement
or otherwise unless such failure results in material prejudice to the
indemnifying party. In case any such action or proceeding is brought against
any indemnified party, and such party notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party or its election so to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party hereunder for any legal or other expense subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided, however, that if an
indemnified party determines in good faith that it has existing or potential
claims against, or other conflicts with, the indemnifying party, the
indemnifying party may not assume the defense of such indemnified party but
shall remain liable for the
<PAGE> 14
CUSIP NO. 294408109 PAGE 21 OF 24
separate legal and other expenses of such indemnified party incurred in
connection therewith. An indemnifying party shall not be liable for any
settlement of any action or claim affected without its written consent thereto.
ARTICLE 7.
MISCELLANEOUS
a. Costs, Expenses and Taxes. The EqualNet Companies shall bear
all costs and expenses in connection with the preparation, execution and
delivery of this Agreement and the issuance of the Interest Common Stock, the
Series B Preferred Stock and the Conversion Stock. The EqualNet Companies
shall pay any and all stamp and other taxes payable or determined to be payable
in connection with the execution and delivery of this Agreement, the issuance
of the Interest Common Stock and the exchange of the Notes and the Warrants for
the Series B Preferred Stock.
b. Limitation on Liability; Indemnification.
(i) Furst shall not have any liability to any EqualNet
Company for any matter arising under or relating in any manner to this
Agreement unless caused exclusively by the gross negligence or willful
misconduct of Furst. To the extent permitted by applicable law, in addition to
the payment of costs and expenses pursuant to Section 7.a. hereof, and
irrespective of whether the transactions contemplated hereby shall be
consummated, the EqualNet Companies agree to indemnify, exonerate, pay and hold
Furst, and any holder of any interest in the Interest Common Stock, the Series
B Preferred Stock or the Conversion Stock, and the officers, directors,
employees and agents of Furst or such holders (collectively, the "Indemnitees")
harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, causes of action, judgments, suits, claims, costs,
expenses, and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding, irrespective of whether such Indemnitee shall be designated a party
thereto), which may be imposed on, incurred by, or asserted against such
Indemnitee, in any matter relating to or arising out of this Agreement or in
connection with any claim asserted against Furst by any person or entity
arising out of or in any way connected with this Agreement (collectively, the
"Indemnified Liabilities"); provided however, that the EqualNet Companies shall
have no obligation hereunder with respect to an Indemnitee for any Indemnified
Liabilities proximately caused by the gross negligence or willful misconduct of
such Indemnitee.
(ii) If for any reason the indemnification provided in
paragraph (i) is unavailable to any Indemnitee or insufficient to hold it
harmless as contemplated thereby then the EqualNet Companies shall contribute
to the amount paid or payable by the Indemnitee as a result of such loss,
claim, liability or expense
<PAGE> 15
CUSIP NO. 294408109 PAGE 22 OF 24
in such proportion as is appropriate to reflect not only the relative benefits
received by the EqualNet Companies, on the one hand and such Indemnitee on the
other hand, but also the relative fault of the EqualNet Companies and the
Indemnitee, as well as any equitable considerations.
c. Survival of Representations. The representations and
warranties contained in this Agreement or in any certificate furnished
hereunder shall survive the Closing. Notwithstanding any investigation
conducted by Furst before or after the Closing or the decision of Furst to
complete the Closing, Furst shall be entitled to rely upon the representations
and warranties set forth herein.
d. Prior Agreements. This Agreement constitutes the entire
agreement between the parties concerning the subject matter hereof and
supersede any prior representations, understandings or agreements. There are
no representations, warranties, agreements, conditions or covenants, of any
nature whatsoever (whether express or implied, written or oral) between the
parties hereto with respect to such subject matter except as expressly set
forth herein or therein, and Furst acknowledges not having relied upon any such
representations, warranties, agreements, conditions or covenants which may have
been previously made by or on behalf of the EqualNet Companies or any officers
or agents or any other person or entity.
e. Severability. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
f. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO ITS CHOICE OF LAW RULES.
g. Litigation. Each of the EqualNet Companies and Furst hereby
waives trial by jury in any action or proceeding of any kind or nature in any
court in which an action may be commenced by or against it arising out of or
relating to this Agreement. The EqualNet Companies and Furst hereby agree that
the United States District Court for the Southern District of New York, if a
basis for jurisdiction exists, and otherwise the courts of the State of New
York located in the Borough of Manhattan, the City of New York, shall have
exclusive jurisdiction to hear and determine any claims or disputes between any
of the EqualNet Companies and Furst, pertaining directly or indirectly to this
Agreement or to any matter arising therefrom, provided that notwithstanding the
foregoing, Furst may bring any suit action or proceeding arising out of or
relating to this Agreement, in the courts of any place where Furst can
establish jurisdiction over the EqualNet Companies. The parties hereto
expressly submit and consent in advance to such jurisdiction in any action or
proceeding commenced in such courts, hereby waiving personal service of the
summons and complaint, or other process or papers issued therein and agreeing
that service of such summons and complaint or other process or papers may be
made by registered or certified mail addressed to such party at its address
provided herein. Each of the parties hereto waives any objection that it may
now or hereafter have to the laying of venue brought in the aforementioned
courts and hereby waives and agrees not to plead or claim in such courts that
any such action or proceeding brought in such court is brought in an
inconvenient forum.
<PAGE> 16
CUSIP NO. 294408109 PAGE 23 OF 24
h. Headings. Article and Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
i. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
j. Binding Effect. This Agreement shall be binding upon and
enure to the benefit of the parties hereto and their respective successors and
permitted assigns.
k. Publicity. Except as required by law or the rules of the
Nasdaq Stock Market, neither the EqualNet Companies nor Furst shall, nor shall
they permit their respective stockholders, directors, officers or advisors to,
issue or cause the publication of any press release or make any other public
statement, filing or announcement with respect to this Agreement and the
transactions contemplated hereby without the prior consent of the other
parties. The Company and Furst shall cooperate in issuing press releases or
otherwise making public statements with respect to this Agreement and the
transactions contemplated hereby, which cooperation shall include first
consulting the other party hereto concerning the requirement for, and timing
and content of, such public announcement.
<PAGE> 17
CUSIP NO. 294408109 PAGE 24 OF 24
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have caused this Agreement to be executed by their respective duly authorized
officers, as of the date first above written.
EQUALNET COMPANIES:
EQUALNET HOLDING CORP.
By:
-----------------------------------
President
EQUALNET CORPORATION
By:
-----------------------------------
President
TELESOURCE, INC.
By:
-----------------------------------
President
EQUALNET WHOLESALE SERVICES, INC.
By:
-----------------------------------
President
FURST:
THE FURST GROUP, INC.
By:
-----------------------------------
Executive Vice President
