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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
AMENDMENT NO. 1
UNDER THE SECURITIES EXCHANGE ACT OF 1934
EQUALNET COMMUNICATIONS CORP.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
294408 10 9
(CUSIP Number)
Robert T. Molinet, Esq.
Smith, Gambrell & Russell, LLP
1230 Peachtree Street, Suite 3100
Atlanta, Georgia 30309-3592
(404) 815-3798
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 28, 1999
(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 that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d- 1(f) or 240.13d-1(g), check the
following box [ ]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.240.13d-7 for other
parties to whom copies are to be sent. *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).
POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED
IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY
VALID OMB CONTROL NUMBER.
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CUSIP No.: 294408 10 9
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
Darryl S. Laddin, as Trustee of the Unsecured Creditors' Trust of
EqualNet Corporation
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [ ]
(b) [ ]
(3) SEC USE ONLY
(4) SOURCE OF FUNDS (See instructions)
OO
(5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS OR ACTIONS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
[ ]
(6) CITIZENSHIP OR PLACE OF ORGANIZATION United States of America
NUMBER OF (7) SOLE VOTING POWER
SHARES 3,000,000
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 0
EACH (9) SOLE DISPOSITIVE POWER
REPORTING 3,000,000
PERSON (10) SHARED DISPOSITIVE POWER
WITH: 0
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,000,000
(12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.5%
(14) TYPE OF REPORTING PERSON (See instructions) OO (individual, as trustee
for unsecured creditors' trust)
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following exhibits are filed with this Amendment.
Exhibit No. Description
----------- -----------
1 Second Amended Joint Plan of Reorganization of
EqualNet Corporation and EqualNet Communications
Corp., as Amended
2 First Modification to Second Amended Joint Plan of
Reorganization of EqualNet Corporation and EqualNet
Communications Corp.
3 Second Modification to Second Amended Joint Plan of
Reorganization of EqualNet Corporation and EqualNet
Communications Corp.
4 Third Modification to Second Amended Joint Plan of
Reorganization of EqualNet Corporation and EqualNet
Communications Corp.
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SIGNATURES
After reasonable inquiry and to the best of its knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Date: June 10, 1999
/s/ Darryl S. Laddin
----------------------------------------------
Darryl S. Laddin, as Trustee of the Unsecured
Creditors' Trust of EqualNet Corporation
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EXHIBIT INDEX
Exhibit No. Description
----------- -----------
1 Second Amended Joint Plan of Reorganization of
EqualNet Corporation and EqualNet Communications
Corp., as Amended
2 First Modification to Second Amended Joint Plan of
Reorganization of EqualNet Corporation and EqualNet
Communications Corp.
3 Second Modification to Second Amended Joint Plan of
Reorganization of EqualNet Corporation and EqualNet
Communications Corp.
4 Third Modification to Second Amended Joint Plan of
Reorganization of EqualNet Corporation and EqualNet
Communications Corp.
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EXHIBIT 1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
IN RE: Ss.
Ss.
EQUALNET CORPORATION, Ss. CASE NO. 98-39561-H5-11
A DELAWARE CORPORATION Ss. (CHAPTER 11)
Ss.
DEBTOR. Ss.
SECOND AMENDED JOINT PLAN
OF REORGANIZATION OF EQUALNET CORPORATION
AND EQUALNET COMMUNICATIONS CORP., AS MODIFIED
Dated: March 1, 1999
KIRKENDALL & ISGUR, L.L.P.
700 Louisiana, Suite 4200
Houston, Texas 77002
(713) 225-4646 (telephone)
(713) 230-0016 (facsimile)
ATTORNEYS FOR EQUALNET CORPORATION, DEBTOR
WEIL, GOTSHAL & MANGES, LLP
700 Louisiana, Suite 1600
Houston, Texas 77002
(713) 546-5110 (telephone)
(713) 224-9511 (facsimile)
ATTORNEYS FOR EQUALNET COMMUNICATIONS CORP.
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TABLE OF CONTENTS
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ARTICLE I--SUMMARY OF THE PLAN....................................................................................1
ARTICLE II--DEFINITIONS...........................................................................................4
2.1 ADMINISTRATIVE CLAIM............................................................................5
2.2 ADMINISTRATIVE CLAIMANT.........................................................................5
2.3 AFFILIATE:......................................................................................5
2.4 ALLOWED CLAIM...................................................................................5
2.5 ALLOWED ADMINISTRATIVE CLAIM....................................................................5
2.6 ALLOWED AMOUNT..................................................................................5
2.7 ALLOWED CONVENIENCE CLAIM.......................................................................5
2.8 ALLOWED LIEN PRIORITY...........................................................................5
2.9 ALLOWED NON-AFFILIATED SECURED CLAIM............................................................5
2.10 ALLOWED PRIORITY NON-TAX CLAIM..................................................................5
2.11 ALLOWED PRIORITY TAX CLAIM......................................................................6
2.12 ALLOWED SECURED CLAIM...........................................................................6
2.13 ALLOWED SUBORDINATED CLAIM......................................................................6
2.14 ALLOWED UNSECURED CLAIM.........................................................................6
2.15 AVERAGE CLOSING PRICE...........................................................................6
2.16 AVOIDANCE ACTION................................................................................6
2.17 AVOIDED LIEN....................................................................................6
2.18 BANKRUPTCY CODE.................................................................................6
2.19 BANKRUPTCY COURT................................................................................6
2.20 BANKRUPTCY RULES................................................................................6
2.21 CASH............................................................................................6
2.22 CHAPTER 11 CASE.................................................................................6
2.23 CLAIM...........................................................................................7
2.24 CLAIMANT........................................................................................7
2.25 COLLATERAL......................................................................................7
2.26 COMMON STOCK....................................................................................7
2.27 CONFIRMATION DATE...............................................................................7
2.28 CONFIRMATION HEARING............................................................................7
2.29 CONFIRMATION ORDER..............................................................................7
2.30 CONTINGENT ECC COMMON STOCK.....................................................................7
2.31 CONVENIENCE CLAIM...............................................................................7
2.32 CREDITOR........................................................................................7
2.33 CREDITORS' COMMITTEE............................................................................8
2.34 DEBTOR..........................................................................................8
2.35 DEBTOR IN POSSESSION............................................................................8
2.36 DEFICIENCY CLAIM................................................................................8
2.37 DISCLOSURE STATEMENT............................................................................8
2.38 DISPUTED CLAIM..................................................................................8
2.39 DISPUTED CLAIMS RESERVE.........................................................................8
2.40 DISTRIBUTION....................................................................................8
2.41 DISTRIBUTION DATE...............................................................................8
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2.42 ECC CASH PAYMENT................................................................................8
2.43 ECC COMMON STOCK................................................................................8
2.44 ECC GUARANTY OBLIGATION.........................................................................8
2.45 ECC PARTIES.....................................................................................9
2.46 EFFECTIVE DATE..................................................................................9
2.47 EQUITY INTEREST.................................................................................9
2.48 ESTATE..........................................................................................9
2.49 FINAL DISTRIBUTION..............................................................................9
2.50 FINAL DISTRIBUTION DATE.........................................................................9
2.51 FINAL ORDER.....................................................................................9
2.52 GENERAL UNSECURED CLAIM.........................................................................9
2.53 INTEREST........................................................................................9
2.54 INTEREST HOLDER.................................................................................9
2.55 INTERNAL REVENUE CODE..........................................................................10
2.56 LIEN...........................................................................................10
2.57 LITIGATION CLAIMS..............................................................................10
2.58 NEW CAPITAL....................................................................................10
2.59 NEW EQUALNET STOCK.............................................................................10
2.60 NEW VALUE CONTRIBUTIONS........................................................................10
2.61 NON-AFFILIATED SECURED CLAIM...................................................................10
2.62 PERSON.........................................................................................10
2.63 PETITION DATE..................................................................................10
2.64 PLAN...........................................................................................10
2.65 PLAN BALLOT....................................................................................10
2.66 PLAN DOCUMENTS.................................................................................10
2.67 PREFERRED STOCK................................................................................10
2.68 PRIORITY NON-TAX CLAIM.........................................................................11
2.69 PRIORITY TAX CLAIM.............................................................................11
2.70 PROPONENTS.....................................................................................11
2.71 PRO RATA.......................................................................................11
2.72 RELEASED ACTIONS...............................................................................11
2.73 RELEASED PARTIES...............................................................................11
2.74 REORGANIZED DEBTOR.............................................................................11
2.75 SCHEDULES......................................................................................11
2.76 SECURED CLAIM..................................................................................12
2.77 SUBORDINATED CLAIM.............................................................................12
2.78 TRUST ASSETS...................................................................................12
2.79 TRUST SURPLUS..................................................................................12
2.80 TRUSTEE........................................................................................12
2.81 UNSECURED CLAIM................................................................................12
2.82 UNSECURED CREDITORS' TRUST.....................................................................12
ARTICLE III--RULES OF CONSTRUCTION AND INTERPRETATION............................................................12
ARTICLE IV--CLASSIFICATION OF CLAIMS AND INTERESTS...............................................................13
4.1 CLASS 1: ALLOWED ADMINISTRATIVE CLAIMS........................................................13
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4.2 CLASS 2: ALLOWED PRIORITY NON-TAX CLAIMS......................................................13
4.3 CLASS 3: ALLOWED PRIORITY TAX CLAIMS..........................................................13
4.4 CLASS 4: ALLOWED CONVENIENCE CLAIMS...........................................................13
4.5 CLASS 5: ALLOWED SECURED CLAIMS OF RFC CAPITAL CORPORATION....................................13
4.6 CLASS 6: ALLOWED SECURED CLAIMS OF ECC........................................................13
4.7 CLASS 7: ALLOWED SECURED CLAIMS OF NETCO ACQUISITION LLC......................................13
4.8 CLASS 8: ALLOWED SECURED CLAIMS OF WILLIS GROUP, LLC..........................................13
4.9 CLASS 9: ALLOWED SECURED CLAIMS OF GENESSEE FUND LIMITED-PORTFOLIO B..........................13
4.10 CLASS 10: ALLOWED NON-AFFILIATED SECURED CLAIMS................................................13
4.11 CLASS 11: ALLOWED GENERAL UNSECURED CLAIMS....................................................13
4.12 CLASS 12: ALLOWED SUBORDINATED CLAIMS.........................................................13
4.13 CLASS 13: ALLOWED EQUITY INTERESTS............................................................13
ARTICLE V--IDENTIFICATION OF CLAIMS
AND INTERESTS IMPAIRED BY THE PLAN......................................................................13
5.1 UNIMPAIRED CLASSES.............................................................................13
5.2 IMPAIRED CLASSES ENTITLED TO VOTE ON PLAN......................................................13
5.3 CONTROVERSY CONCERNING CLASSIFICATION, IMPAIRMENT OF VOTING RIGHTS.............................14
ARTICLE VI--PROVISIONS FOR TREATMENT OF
ALLOWED ADMINISTRATIVE EXPENSE CLAIMS (CLASS 1).........................................................14
6.1 FULL PAYMENT...................................................................................14
6.2 IMPAIRMENT.....................................................................................14
ARTICLE VII--PROVISIONS FOR TREATMENT OF
ALLOWED PRIORITY NON-TAX CLAIMS (CLASS 2)...............................................................14
7.1 FULL PAYMENT...................................................................................14
7.2 IMPAIRMENT.....................................................................................14
ARTICLE VIII--PROVISIONS FOR TREATMENT OF
ALLOWED PRIORITY TAX CLAIMS (CLASS 3)...................................................................14
8.1 DEFERRED PAYMENT...............................................................................14
8.2 IMPAIRMENT.....................................................................................15
ARTICLE IX--PROVISIONS FOR TREATMENT OF
ALLOWED CONVENIENCE CLAIMS (CLASS 4)....................................................................15
9.1 TREATMENT......................................................................................15
9.2 IMPAIRMENT.....................................................................................15
ARTICLE X--PROVISIONS FOR TREATMENT OF THE ALLOWED
SECURED CLAIMS OF RFC CAPITAL CORPORATION (CLASS 5).....................................................15
10.1 TREATMENT......................................................................................15
10.2 LIENS CONTINUED................................................................................15
10.3 IMPAIRMENT.....................................................................................15
ARTICLE XI--PROVISIONS FOR TREATMENT OF THE ALLOWED SECURED
CLAIMS OF EQUALNET COMMUNICATIONS CORP. (CLASS 6).......................................................15
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11.1 TREATMENT......................................................................................15
11.2 LIENS CONTINUED................................................................................16
11.3 IMPAIRMENT.....................................................................................16
ARTICLE XII--PROVISIONS FOR TREATMENT OF THE ALLOWED SECURED
CLAIMS OF NETCO ACQUISITION LLC (CLASS 7)..............................................................16
12.1 TREATMENT......................................................................................16
12.2 LIENS CONTINUED................................................................................16
12.3 IMPAIRMENT.....................................................................................16
ARTICLE XIII--PROVISIONS FOR TREATMENT OF THE ALLOWED SECURED
CLAIMS OF WILLIS GROUP, LLC (CLASS 8).................................................................16
13.1 TREATMENT......................................................................................16
13.2 LIENS CONTINUED................................................................................16
13.3 IMPAIRMENT.....................................................................................16
ARTICLE XIV--PROVISIONS FOR TREATMENT OF THE ALLOWED SECURED
CLAIMS OF GENESSEE FUND LIMITED-PORTFOLIO B (CLASS 9).................................................16
14.1 TREATMENT......................................................................................16
14.2 LIENS CONTINUED................................................................................17
14.3 IMPAIRMENT.....................................................................................17
ARTICLE XV--PROVISIONS FOR TREATMENT OF ALLOWED NON-AFFILIATED
SECURED CLAIMS (CLASS 10)...............................................................................17
15.1 TREATMENT......................................................................................17
15.2 LIENS CONTINUED................................................................................17
15.3 IMPAIRMENT.....................................................................................17
ARTICLE XVI--PROVISIONS FOR TREATMENT OF ALLOWED GENERAL
UNSECURED CLAIMS (CLASS 11).............................................................................17
16.1 TREATMENT......................................................................................17
16.2 IMPAIRMENT.....................................................................................17
ARTICLE XVII--PROVISIONS FOR TREATMENT OF ALLOWED SUBORDINATED
CLAIMS (CLASS 12).......................................................................................17
17.1 TREATMENT......................................................................................17
17.2 IMPAIRMENT.....................................................................................17
ARTICLE XVIII--PROVISIONS FOR TREATMENT OF
EQUITY INTERESTS (CLASS 13).............................................................................17
18.1 TREATMENT......................................................................................17
18.2 IMPAIRMENT.....................................................................................18
ARTICLE XIX--MEANS FOR EXECUTION OF THE PLAN.....................................................................18
19.8 THE UNSECURED CREDITORS' TRUST.................................................................19
(1) CREATION OF TRUST.....................................................................19
(2) FUNDING OF TRUST......................................................................19
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(3) RATIFICATION OF TRUST AGREEMENT AND TRANSFER OF LIABILITIES...........................20
(4) PURPOSE OF THE TRUST..................................................................20
(5) SELECTION OF TRUSTEE..................................................................20
(6) DUTIES AND POWERS OF TRUSTEE..........................................................20
A. POWERS AND RESPONSIBILITIES..................................................20
1. LIMITATION OF LIABILITY..............................................20
B. STANDING.....................................................................20
C. TRUSTEE POWERS...............................................................21
(7) COMPENSATION OF TRUSTEE...............................................................21
(8) RETENTION OF PROFESSIONALS............................................................21
(9) DISTRIBUTIONS.........................................................................22
(11) PAYMENT OF TAXES......................................................................23
(12) FEDERAL INCOME TAX TREATMENT..........................................................23
ARTICLE XX--CLAIM OBJECTION PROCEDURES AND
TREATMENT OF DISPUTED CLAIMS............................................................................24
20.1 OBJECTION DEADLINE AND PROCESS.................................................................24
20.2 DISPUTED CLAIMS RESERVE........................................................................24
20.3 DISTRIBUTIONS TO HOLDERS OF DISPUTED CLAIMS....................................................24
20.4 PROVISIONS GOVERNING DISTRIBUTIONS.............................................................25
(1) DISTRIBUTION RESPONSIBILITY...........................................................25
(2) DELIVERY OF DISTRIBUTIONS.............................................................25
(3) UNCLAIMED DISTRIBUTIONS AND UNCASHED CHECKS...........................................25
ARTICLE XXI--EXECUTORY CONTRACTS AND UNEXPIRED LEASES............................................................25
21.1 ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.........................................25
21.2 REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES..........................................25
21.2 CLAIMS BASED ON REJECTION OF EXECUTORY CONTRACTS OF UNEXPIRED LEASES...........................25
ARTICLE XXII--EFFECT OF REJECTION BY
ONE OR MORE CLASSES OF CLAIMS...........................................................................26
22.1 IMPAIRED CLASSES TO VOTE.......................................................................26
22.2 ACCEPTANCE BY CLASS OF CREDITORS...............................................................26
22.3 RESERVATION OF CRAMDOWN RIGHTS.................................................................26
ARTICLE XXIII--EFFECT OF CONFIRMATION............................................................................26
23.1 LEGALLY BINDING EFFECT.........................................................................26
23.2 REVESTING OF PROPERTY IN DEBTOR................................................................26
23.3 LIENS, CLAIMS AND ENCUMBRANCES.................................................................26
23.4 INJUNCTION.....................................................................................26
23.5 CAUSES OF ACTION...............................................................................26
ARTICLE XXIV--RETENTION OF JURISDICTION..........................................................................27
24.1 EXCLUSIVE BANKRUPTCY COURT JURISDICTION........................................................27
24.2 LIMITATION ON JURISDICTION.....................................................................28
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ARTICLE XXV--CONDITIONS TO CONFIRMATION
AND CONSUMMATION OF PLAN................................................................................28
25.1 CONDITIONS TO CONFIRMATION OF PLAN.............................................................28
25.2 CONDITIONS TO CONSUMMATION OF PLAN.............................................................28
25.3 ANNULMENT OF PLAN IF CONDITIONS NOT WAIVED OR SATISFIED........................................28
ARTICLE XXVI--MISCELLANEOUS PROVISIONS...........................................................................28
26.1 TERMINATION OF COMMITTEE.......................................................................28
26.2 COMPLIANCE WITH TAX REQUIREMENTS...............................................................28
26.3 AMENDMENT OF THE PLAN..........................................................................28
26.4 WITHDRAWAL OF PLAN.............................................................................29
26.5 DUE AUTHORIZATION BY CREDITORS.................................................................29
26.6 FILING OF ADDITIONAL DOCUMENTATION.............................................................29
26.7 IMPLEMENTATION.................................................................................29
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UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
IN RE: Ss.
Ss.
EQUALNET CORPORATION, Ss. CASE NO. 98-39561-H5-11
A DELAWARE CORPORATION Ss. (CHAPTER 11)
Ss.
DEBTOR. Ss.
SECOND AMENDED JOINT PLAN OF REORGANIZATION OF
EQUALNET CORPORATION AND EQUALNET COMMUNICATIONS CORP.
EqualNet Corporation, Debtor and Debtor-in-Possession, (the "Debtor"),
and Equalnet Communications Corp. ("ECC"), an affiliate of the Debtor, propose
this Second Amended Joint Plan of Reorganization of the Debtor and ECC (the
"Plan"), pursuant to section 1121(a) of chapter 11 of title 11, United States
Code, for the resolution of the Debtor's outstanding Claims and Interests.
ARTICLE I--SUMMARY OF THE PLAN
An overview of the Plan is set forth below. If confirmed by the Court,
and in the absence of any applicable stay, the Plan is to take effect on the
Effective Date, which is the later of (i) the date on which all documents
necessary or appropriate to the implementation of the Plan have been executed,
delivered and, where appropriate, filed with the appropriate authorities and all
transactions necessary to the implementation of the Plan shall have been
effected, or (ii) the eleventh day after the Court enters an order confirming
the Plan.
On the Effective Date, except as otherwise provided in the Plan, all
property of the Debtor's bankruptcy estate shall vest in EqualNet Corporation,
as the Reorganized Debtor. The Reorganized Debtor will thereupon be authorized
to manage and continue its business operations without further notice or
bankruptcy court approval. The directors and officers of the Debtor will not
change as a result of the confirmation of the Plan. The Plan does not propose to
modify or supplant any federal or state laws or regulations which may be
applicable to the Reorganized Debtor as a provider of telecommunication services
or as a public utility. The Plan does not provide for any change in the rates
being charged by the Debtor.
On the Effective Date, all executory contracts and unexpired leases to
which the Debtor is a party shall be deemed rejected unless assumed by the
Debtor.
On the Effective Date, ECC--the Debtor's parent corporation--will raise
new capital and make New Value Contributions that will fund an Unsecured
Creditors' Trust for the benefit of holders of unsecured claims who are
non-insiders of, and not affiliated with, the Debtor. The New Value
Contributions funding the Trust shall consist of the following:
(i) $1.350 million in cash (the "ECC Cash Payment");
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(ii) 3 million shares of newly issued shares of ECC common stock (the
"ECC Common Stock"); and
(iii) a collateralized guaranty, providing
(a) that if during any or all of the first four consecutive
six month periods after the Effective Date of the Plan in
which the Trust seeks to sell up to 375,000 shares of its ECC
Common Stock per period, the gross proceeds of such sales,
prior to any commissions, shall not be greater than or equal
to the average price of $1/share, ECC shall pay to the
Unsecured Creditors Trust an amount of cash to make up the
difference between the actual sales price and $1 per share,
and
(b) that such guaranty shall be secured by a security interest
in substantially all the assets of ECC and the Reorganized
Debtor that shall be subordinate only to any lien in favor of
the Reorganized Debtor's working capital lender (RFC Capital
Corporation) or any purchase money lender in regard to
particular collateral.
In addition to the foregoing, ECC will make additional New Value
Contributions funding the Trust having a value equal to five percent of the
dollar amount of Allowed Claims in excess of the amount of undisputed General
Unsecured Claims identified in the Debtor's Schedules, which value shall be in
the form of newly issued shares of ECC Common Stock, valued at $1 per share, and
one half of which value shall be subject to the collateralized guaranty
described above. Finally, in the event that the Average Closing Price is less
than $1 per share, ECC shall make New Value Contributions funding the Trust
consisting of a number of newly issued shares of ECC Common Stock equal to:
(i) (a) [$1 minus the Average Closing Price] times
(b) 1,500,000, divided by
(ii) the Average Closing Price.
On the Effective Date, an Unsecured Creditors' Trust is to be created.
Each holder of a Class 11-Allowed General Unsecured Claim shall receive a
beneficial interest in the Trust in an amount (not to exceed the amount of such
holder's Allowed Claim) that reflects the percentage that such Claim represents
to the total amount of Allowed Class 11 Claims. Such beneficial interests are to
be issued to Class 11 creditors in full satisfaction and discharge of their
Claims against the Debtor and the Reorganized Debtor. An individual selected by
the Creditors' Committee and approved by the Bankruptcy Court pursuant to the
Confirmation Order shall serve as Trustee of the Unsecured Creditors' Trust.
Each holder of a Class 11-General Unsecured Claim will be deemed to have
ratified, and will be bound by the terms of the Trust as set forth in the Plan.
In consideration for the New Value Contributions and other
consideration under the Plan, the Released Parties will be released from any
liability for certain claims and causes of action that the Debtor owns as of the
Confirmation Date ("the Released Actions"). The Released Actions consist of all
rights, claims and causes of action, including Avoidance Actions, against any of
the
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Released Parties belonging to the Debtor or the Debtor's estate immediately
prior to the Effective Date; provided, however, the Released Actions do not
include any rights, demands, liabilities, obligations, entitlements, claims and
causes of action, whether in law or in equity, arising out of any professional
malpractice (whether sounding in tort or contract) of a Released Party or any
alleged action, error or omission by or claim against either Hal Turner or Bill
Stuart, respectively, if Mr. Turner or Mr. Stuart assert any claim against the
Debtor, the Debtor's estate, the Reorganized Debtor, ECC, any affiliate or
insider of the Debtor or ECC, or the Unsecured Creditors' Trust as of the
Confirmation Date or thereafter. The Released Parties are defined under the Plan
to include ECC, the Debtor, USC Telecom, Inc., Netco Acquisition Corp., Willis
Group, LLC, Genesee Group-Portfolio B, and the other persons and entities listed
in the Released Parties definition set forth below. Upon delivery of the New
Value Contributions required under the Plan, the Released Actions against the
Released Parties shall be deemed satisfied, settled, and fully released.
Under the Plan, during each of the first four consecutive six month
periods after the Effective Date, the Unsecured Creditors' Trust may sell up to
375,000 shares of its ECC Common Stock. Based upon the price and trading volume
of ECC Common Stock, ECC may authorize the Unsecured Creditors' Trust to sell
more than 375,000 shares of ECC Common Stock during any of the four six month
periods.
If the gross sales proceeds, prior to any commission, of the Unsecured
Creditors' Trust's stock sales in any six month period are less than the average
price of $1 per share, then ECC shall pay to the Unsecured Creditors' Trust an
amount of cash to make up the difference between the actual sales price and $1
per share ("ECC's Guaranty Obligation"). Accordingly, under the ECC Guaranty
Obligation, the Unsecured Creditors' Trust may sell up to an aggregate of
one-half (1/2) of the Trust's ECC stock during the first two years after the
Effective Date, and ECC guarantees the Trust a minimum aggregate price of $1.5
million for such stock.
At any time during any of the four six month periods, but not
thereafter, ECC may elect to purchase for $1.50 per share the entire balance of
the Unsecured Creditors' Trust's then remaining shares of ECC Common Stock.
Under the Plan, ECC's Guaranty Obligation will be secured by a security
interest in substantially all of ECC's assets and the Reorganized Debtor's
assets that is superior to the security interests in such assets of any ECC
insider or affiliate, but subordinate to RFC Capital Corporation's security
interests and any purchase money security interest in a particular asset held by
a non-insider, non-affiliated third party.
Under the Plan, the Reorganized Debtor will pay Class 1-Administrative
Claims and Class 2- Priority Non-Tax Claims in cash and in full on the
Distribution Date, or upon such other terms as the Reorganized Debtor and any
such creditor may agree. The Reorganized Debtor will pay Allowed Class 3
Priority Tax Claims in cash in full with interest on an installment basis over a
period of six years from their date of assessment, or upon such other terms as
the Reorganized Debtor and any holder of an Allowed Class 3 Claim may agree. The
Reorganized Debtor will pay Class 4 Allowed Convenience Claims of $1,000 or less
in cash and in full on the Distribution Date.
Each holder of a Secured Claim under the Plan is afforded separate
classification and treatment under the Plan. The Classes containing Secured
Claims are: Class 5-RFC Capital
3
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Corporation ("RFC"); Class 6- Equalnet Communications Corp; Class 7-Netco
Acquisition L.L.C.; Class 8-Willis Group, LLC; Class 9-Genesee Fund
Limited-Portfolio B; and Class 10-Non-Affiliated Secured Claims. The Allowed
Secured Claims of Class 5 arising under accounts receivable purchase agreements
between the Debtor and RFC shall be repaid in accordance with such agreements
and from the collections of accounts receivable generated by the Debtor. Any
other Secured Claim of RFC shall be treated as a Class 10 Secured Claim. The
Allowed Secured Claims of Classes 6, 7, 8, and 9 shall be repaid in accordance
with agreements to be entered into between the Reorganized Debtor and the
holders of such Claims prior to the Confirmation Hearing on the Plan, but any
Deficiency Claims held by such creditors shall be excluded from treatment under
Class 11 of the Plan. In addition, no payments may be made by ECC on any Secured
or Unsecured Claim held by any creditor in Classes 6, 7, 8, and 9 without the
written consent of the Unsecured Creditors' Trust so long as the Trust continues
to own any of the ECC Common Stock that it receives under the Plan. The
Reorganized Debtor shall pay Allowed Class 10-Non-Affiliated Secured Claims in
accordance with agreements to be entered into between the Debtor and such
creditors, if any, prior to the Confirmation Hearing on the Plan. Any Allowed
Deficiency Claim held by a Class 10 creditor who is not a Released Party is
entitled to treatment under Class 11 of the Plan.
After the Effective Date, the Reorganized Debtor will file appropriate
objections to claims, including Class 11 and Class 12 Claims.
On the Effective Date, the Debtor and the Reorganized Debtor shall be
discharged from all Claims except as otherwise provided in the Plan or the
Confirmation Order. All Interests in the Debtor shall be deemed void, canceled,
and of no further force or effect, without any further action on the part of any
Person. New EqualNet Stock in the form of new common stock in the Reorganized
Debtor shall be issued to ECC in consideration of the New Value Contributions.
As of the Effective Date, the Reorganized Debtor shall be responsible
for all payments and distributions to be made under the Plan to holders of
Allowed Claims in Classes 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 and 12 of the Plan,
together with any payments which become due under any executory contract or
unexpired lease assumed by the Debtor or the Reorganized Debtor.
As of the Effective Date, the Trustee of the Unsecured Creditors' Trust
shall be responsible to distribute from Trust Assets all payments under the Plan
to holders of Allowed Claims in Class 11. Any surplus remaining in the Unsecured
Creditors' Trust after all Allowed Claims in Class 11 have been paid in full
shall be delivered to the Reorganized Debtor to be distributed pro rata to
non-affiliated or non-insider holders of Allowed Claims in Class 12.
ARTICLE II--DEFINITIONS
As used in the Plan, the following terms shall have the respective
meanings specified below. Any term used in the Plan not defined below or herein
shall be interpreted in accordance with the Rules of Construction and
Interpretation set forth in Article III of this Plan.
2.1 Administrative Claim: Any cost or expense of administration of the
Chapter 11 Case incurred on or before the Effective Date entitled to priority
under section 507(a)(1) and allowed under section 503(b) of the Bankruptcy Code,
including without limitation, any actual and necessary expenses of preserving
the Debtor's estate, including wages, salaries or commissions for services
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rendered after the commencement of the Chapter 11 Case, certain taxes, fines and
penalties, any actual and necessary postpetition expenses of operating the
business of the Debtor, certain postpetition indebtedness or obligations
incurred by or assessed against the Debtor in connection with the conduct of its
business, or for the acquisition or lease of property, or for providing of
services to the Debtor, including all allowances of compensation or
reimbursement of expenses to the extent allowed by the Bankruptcy Court under
the Bankruptcy Code, and any fees or charges assessed against the Debtor's
estate under chapter 123, title 28, United States Code.
2.2 Administrative Claimant: Any Person entitled to payment of an
Administrative Claim.
2.3 Affiliate: An entity related to the Debtor that meets the criteria
included in section 101(2) of the Bankruptcy Code.
2.4 Allowed Claim: Any Claim against the Debtor, proof of which was
filed on or before the last date designated by the Bankruptcy Court as the last
date for filing Proofs of Claim or Interest or such other applicable date as
ordered by the Bankruptcy Court or permitted by the Bankruptcy Rules, or, if no
Proof of Claim or Interest is filed, which has been or hereafter is listed by
the Debtor as liquidated in amount and not disputed or contingent and a Claim or
Interest as to which no objection to the allowance thereof has been interposed,
or in the case of Administrative Expense Claim recognized as such by the Debtor,
or such Claim or Interest has been allowed in whole or in part by a Final Order.
Unless otherwise specified in the Plan, "Allowed Claim" shall not, for the
purposes of computation or Distributions under the Plan, include postpetition
interest on the amount of such Claim.
2.5 Allowed Administrative Claim: An Administrative Claim to the extent
it is or becomes an Allowed Claim.
2.6 Allowed Amount: The amount of an Allowed Claim.
2.7 Allowed Convenience Claim: A Convenience Claim to the extent it is
or becomes an Allowed Claim.
2.8 Allowed Lien Priority: The relative rank or priority afforded the
holder of an Allowed Secured Claim under applicable law, and which for purposes
of the Plan will be determined either by agreement of the Debtor and holders of
Allowed Secured Claims, or the Bankruptcy Court, prior to any Distribution being
made to any holder of an Allowed Secured Claim.
2.9 Allowed Non-Affiliated Secured Claim: A Non-Affiliated Secured
Claim to the extent it becomes an Allowed Secured Claim.
2.10 Allowed Priority Non-Tax Claim: Any Claim, other than an
Administrative Expense Claim or a Priority Tax Claim, to the extent Allowed and
entitled to priority in payment under section 507(a) of the Bankruptcy Code,
including, without limitation, a Claim of an employee of the Debtor for wages,
salaries or commissions but only to the extent of $4,300 for each employee and
earned within 90 days prior to the Petition Date.
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2.11 Allowed Priority Tax Claim: Any Claim, to the extent allowed and
entitled to priority in payment under section 507(a)(8) of the Bankruptcy Code.
2.12 Allowed Secured Claim: A Secured Claim of a creditor to the extent
such Claim is an Allowed Claim, and the Lien securing such Claim has not become
an Avoided Lien.
2.13 Allowed Subordinated Claim: A Subordinated Claim to the extent it
is or becomes an Allowed Claim.
2.14 Allowed Unsecured Claim: An Unsecured Claim to the extent it is or
becomes an Allowed Claim.
2.15 Average Closing Price: The average closing price of ECC stock
during the 25 consecutive trading days immediately preceding the date that is
two years after the Effective Date.
2.16 Avoidance Action: Any and all rights, claims and causes of action
arising under any provision of chapter 5 of the Bankruptcy Code.
2.17 Avoided Lien: A Lien to the extent it has been set aside,
invalidated, or otherwise avoided pursuant to an Avoidance Action.
2.18 Bankruptcy Code: The Bankruptcy Reform Act of 1978, as amended and
codified as title 11, United States Code, as applicable to this Chapter 11 Case.
2.19 Bankruptcy Court: The unit of the United States District Court for
the Southern District of Texas, Houston Division, having jurisdiction over the
Chapter 11 Case, or in the event such Court ceases to exercise jurisdiction over
the Chapter 11 Case, such court or adjunct thereof that exercises jurisdiction
over the Chapter 11 Case in lieu of the United States Bankruptcy Court for the
Southern District of Texas, Houston Division.
2.20 Bankruptcy Rules: The Federal Rules of Bankruptcy Procedure, as
amended, and the Local Rules of Bankruptcy Procedure for the Southern District
of Texas, as applicable to this Chapter 11 Case.
2.21 Cash: Cash, cash equivalents, readily marketable direct
obligations of the United States of America, and certificates of deposit issued
by banks, including interest accrued or earned thereon.
2.22 Chapter 11 Case: The case filed under Chapter 11 of the Bankruptcy
Code by the Debtor on September 10, 1998, with the United States Bankruptcy
Court for the Southern District of Texas, Houston Division, under Case no.
98-39561-H5-11.
2.23 Claim: Any right to payment from the Debtor whether or not such
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured; or any right to any equitable remedy for future performance if such
breach gives rise to a right of payment from the Debtor, whether or not such
right to an
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equitable remedy is reduced to judgment, fixed, contingent, matured, disputed,
undisputed, secured or unsecured.
2.24 Claimant: A person asserting a Claim against the Debtor, property
of the Debtor, or the Debtor's Estate.
2.25 Collateral: Any property of the Debtor or interest in property of
the Debtor which serves as security for the repayment of a debt or the
performance of an obligation owed by the Debtor to the holder of an Allowed
Secured Claim.
2.26 Common Stock: All authorized shares, whether issued or unissued,
of common stock in a corporation, including any warrants or options to acquire
such shares.
2.27 Confirmation Date: The date upon which the Bankruptcy Court enters
the Confirmation Order; provided, however, that if the Confirmation Order is
stayed, then the Confirmation Date shall be the date on which such stay expires
or is otherwise no longer in effect.
2.28 Confirmation Hearing: The hearing to be conducted by the
Bankruptcy Court to determine whether to approve the Plan.
2.29 Confirmation Order: The Order of the Bankruptcy Court approving
and confirming the Plan in accordance with the provisions of chapter 11 of the
Bankruptcy Code.
2.30 Contingent ECC Common Stock: Property to be contributed by ECC to
the Unsecured Creditors' Trust in accordance with the Plan having a value equal
to five percent of the dollar amount of Allowed General Unsecured Claims in
excess of the amount of undisputed General Unsecured Claims identified in the
Debtor's Schedules, which value shall be in the form of newly issued shares of
ECC Common Stock, valued at $1 per share, and one half of which value shall be
subject to the collateralized ECC Guaranty Obligation; and, in the event that
the Average Closing Price is less than $1 per share, a number of newly issued
shares of ECC Common stock to be contributed by ECC to the Unsecured Creditors'
Trust in accordance with the Plan equal to: (i) (a) [$1 minus the Average
Closing Price] times (b) 1,500,000, divided by (ii) the Average Closing Price.
2.31 Convenience Claim: An Unsecured Claim that is either: (i) equal to
or less than $1,000, or (ii) is greater than $1,000, but has been reduced, at
the election of the holder thereof, to $1,000 in accordance with the Plan.
2.32 Creditor: Any person that holds a Claim against the Debtor that
arose on or before the Petition Date, or a Claim against the Debtor of any kind
specified in sections 502(f), 502(g), 502(h) or 502(i) of the Bankruptcy Code.
2.33 Creditors' Committee: The Official Committee of Unsecured
Creditors duly constituted in the Chapter 11 Case pursuant to section 1102 of
the Bankruptcy Code.
2.34 Debtor: EqualNet Corporation.
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2.35 Debtor in Possession: The Debtor in its capacity as debtor in
possession pursuant to sections 1107 and 1108 of the Bankruptcy Code.
2.36 Deficiency Claim: The amount by which an Allowed Claim exceeds the
value of any Collateral securing such Claim as may be determined by the
Bankruptcy Court in accordance with section 506(a) of the Bankruptcy Code. A
Deficiency Claim is a General Unsecured Claim.
2.37 Disclosure Statement: The Disclosure Statement With Respect to the
Chapter 11 Plan of Reorganization filed by the Debtor with the Bankruptcy Court
pursuant to section 1125 of the Bankruptcy Code, as may be amended or
supplemented.
2.38 Disputed Claim: A Claim against the Debtor as to which an
objection has been filed on or before the deadline for objecting to a Claim and
which objection has not been withdrawn or otherwise resolved by Final Order.
2.39 Disputed Claims Reserve: A segregated account to be held in trust
for the benefit of holders of Disputed Claims in accordance with the provisions
of the Plan.
2.40 Distribution: The property required by the Plan to be distributed
to the holders of Allowed Claims.
2.41 Distribution Date: The date upon which the later occurs: (i) the
Effective Date, or (ii) the date upon which a Claim becomes an Allowed Claim by
Final Order.
2.42 ECC Cash Payment: ECC's payment of $1.350 million in cash on the
Effective Date for delivery to the Unsecured Creditors' Trust in accordance with
the Plan.
2.43 ECC Common Stock: The 3 million shares of ECC authorized Common
Stock, which on the Effective Date of the Plan are to be issued to the Unsecured
Creditors' Trust in accordance with the Plan.
2.44 ECC Guaranty Obligation: (a) ECC's obligation to pay the balance
necessary so that the Unsecured Creditors' Trust will receive at least $1 per
share for the sale of up to 375,000 shares of ECC stock during each of the first
four consecutive six month periods after the Effective Date. Consequently, if
the gross sales proceeds, prior to any commission, of the Unsecured Creditors'
Trust's stock sales in any of such six month periods is less than the average
price of $1 per share, then ECC shall pay to the Unsecured Creditors' Trust an
amount of cash to make up the difference between the actual sales price and $1
per share. Accordingly, under the ECC Guaranty Obligation, the Unsecured
Creditors' Trust may sell up to an aggregate of one-half (1/2) of the Trust's
ECC stock during the first two years after the Effective Date, and ECC
guarantees the Trust a minimum aggregate price of $1.5 million for such stock.
ECC shall also be obligated, in the event that the Unsecured Creditors' Trust
receives any Contingent ECC Common Stock, to pay the balance necessary so that
the Unsecured Creditors' Trust will receive at least $1 per share for the sale
of up to 1/8th of such shares of Contingent ECC Common Stock during each of the
first four consecutive six month periods after the Unsecured Creditors' Trust's
receipt of such stock. At any time during any of the four six month periods
after the Effective Date but not thereafter, ECC may elect to
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purchase for $1.50 per share the entire balance of the Unsecured Creditors'
Trust's then remaining shares of ECC stock.
(b) Under the Plan, the ECC Guaranty Obligation will be secured by a
security interest in substantially all of ECC's assets and substantially all of
the Reorganized Debtor's assets that is superior to the security interests in
such assets of any ECC insider or affiliate, but subordinate to RFC Capital
Corporation's security interests or any purchase money security interest in a
particular asset held by a non-insider, non-affiliated third party.
2.45 ECC Parties: ECC, the Debtor, USC Telecom, Inc., Netco Acquisition
Corp., Willis Group, LLC and Genesee Group-Portfolio B.
2.46 Effective Date: The later of (i) the date upon which each of the
conditions precedent set forth in Section 25.2 have been either satisfied or
waived in accordance with Section 25.3, or (ii) the eleventh day after the Court
enters an order confirming the Plan.
2.47 Equity Interest: Any interest in the Debtor represented by
ownership of Common or Preferred Stock including, to the extent provided by
applicable law, any warrant, option or other right to acquire any of the
foregoing.
2.48 Estate: The estate created upon the filing of the Chapter 11 Case
pursuant to section 541 of the Bankruptcy Code, together with all rights, claims
and interests appertaining thereto.
2.49 Final Distribution: A Distribution made under the Plan which
represents the only or last Distribution to be made to a particular Class of
Creditors.
2.50 Final Distribution Date: The date upon which a Final Distribution
is made from the Unsecured Creditors' Trust.
2.51 Final Order: An order or judgment which has not been reversed,
stayed, modified, amended and as to which (a) any appeal, other review or stay
that has been filed has been finally determined or dismissed, or (b) the time
for appeal has expired and no notice of appeal has been filed.
2.52 General Unsecured Claim: A Claim other than a Secured Claim, an
Administrative Claim, a Priority Non-Tax Claim, a Priority Tax Claim, a
Convenience Claim, a Deficiency Claim held by creditors in Classes 6, 7, 8 or 9,
a Claim or Deficiency Claim held by any of the Released Parties, or a
Subordinated Claim.
2.53 Interest: The same as an Equity Interest.
2.54 Interest Holder: Any holder or owner of an Interest.
2.55 Internal Revenue Code: The Internal Revenue Code of 1986, as
amended.
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2.56 Lien: A charge against or interest in property to secure payment
of a debt or performance of an obligation which has not been avoided or
invalidated under any provision of the Bankruptcy Code or other applicable law.
2.57 Litigation Claims: All claims of the Debtor, except for the
Released Actions, existing prior to the Effective Date of the Plan, including,
without limitation, all Avoidance Actions, net with respect to any individual
claim for which a recovery is obtained of any expenses of collection, including
attorneys' fees and expenses, incurred in pursuing such claim.
2.58 New Capital: The sum of $2 million to be contributed by ECC to
facilitate consummation of the Debtor's Plan of Reorganization on the Effective
Date of the Plan.
2.59 New EqualNet Stock: The authorized shares of Common Stock of the
Reorganized Debtor which on the Effective Date of the Plan are to be newly
issued and delivered to ECC in a form and number acceptable to ECC.
2.60 New Value Contributions: The contributions that ECC will make on
and after the Effective Date of the Plan consisting of: (i) the ECC Cash
Payment, and (ii) the ECC Common Stock; (iii) the Contingent ECC Common Stock,
(iv) the ECC Guaranty Obligation, and (v) the New Capital.
2.61 Non-Affiliated Secured Claim: A Secured Claim the holder of which
is not any of the ECC Parties or their respective successors or assigns.
2.62 Person: An individual, a corporation, a partnership, an
association, a joint stock company, a joint venture, an estate, a trust, an
unincorporated association or organization, a governmental unit or any agency or
subdivision thereof or any other entity.
2.63 Petition Date: September 10, 1998, the date on which the Debtor
filed its voluntary chapter 11 petition commencing this Chapter 11 Case.
2.64 Plan: This Second Amended Plan of Reorganization of the Debtor and
ECC, as may be amended or modified.
2.65 Plan Ballot: The form of ballot which the Debtor will transmit to
Creditors and Equity Interest holders who are, or may be, entitled to vote on
the Plan.
2.66 Plan Documents: Any and all documents to be executed under the
terms of the Plan, or as may be approved at the Confirmation Hearing, or which
are attached to the Confirmation Order.
2.67 Preferred Stock: All equity securities and shares, whether issued
or unissued, convertible or non-convertible, voting or non-voting, including any
warrant, option or other security to acquire same, entitling the holder to
certain preferences over the holders of the Common Stock in the same
corporation.
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2.68 Priority Non-Tax Claim: Any Claim (other than an Administrative
Expense Claim or a Priority Tax Claim) to the extent entitled to priority in
payment under section 507(a) of the Bankruptcy Code including, but not limited
to, a Claim of an employee of the Debtor for wages, salaries, or commissions,
including vacation, severance or sick leave pay, earned within ninety (90) days
prior to the Petition Date (to the extent of $4,300 per employee).
2.69 Priority Tax Claim: Any Claim entitled to priority in payment
under section 507(a)(8) of the Bankruptcy Code.
2.70 Proponents: The Debtor and ECC.
2.71 Pro Rata: The proportion that the dollar amount of an Allowed
Claim in a Class bears to the aggregate amount of all Allowed Claims in such
Class.
2.72 Released Actions: Any and all rights, demands, liabilities,
obligations, entitlements, claims and causes of action, whether in law or in
equity (including Avoidance Actions), against any of the Released Parties and
belonging to the Debtor or the Debtor's Estate immediately prior to the
Effective Date of the Plan; provided, however, the Released Actions do not
include any rights, demands, liabilities, obligations, entitlements, claims and
causes of action, whether in law or in equity, arising out of any professional
malpractice (whether sounding in tort or contract) of a Released Party or any
alleged action, error or omission by or claim against either Hal Turner or Bill
Stuart, respectively, if either Mr. Turner or Mr. Stuart assert any claim
against the Debtor, the Debtor's estate, the Reorganized Debtor, ECC, any
affiliate or insider of the Debtor or ECC, or the Unsecured Creditors' Trust as
of the Confirmation Date or thereafter.
2.73 Released Parties: The ECC Parties, Mitchell H. Bodian, Zane
Russell, Ronald Salazar,John Isaac "Ike" Epley, James T. Harris, Michael L.
Hlinak, Walter Klemp, Terry Parker, Dean H. Fisher, David Kerr, Equalnet
Communications Corp. EqualNet Corporation, TeleSource, Inc., USC Telecom, Inc.,
Netco Acquisition Corp., ACMI Acquisition Corp., Willis Group LLC, Michael T.
Willis, Advantage Fund Ltd., Genesee Fund Limited - Portfolio B, The Furst
Group, Inc., James D. Kaylor, James R. Crane, MCM Partners, Byron A. Russell,
Curt Mackey, Carl Schmidt, Mark Van Eman, Phil Barr, Bobby H. Henson, Lance A.
Hack, Joseph A. Krupka, Duane W. Richardson, Steve Reemts, Greg Blauser, Hal
Turner, Bill Stuart, John Streep, Finova Capital Corporation, RFC Capital
Corporation, Netco Acquisition LLC, Sprint Communications Corp., Comerica Bank,
Norwest Bank, Weil, Gotshal & Manges (ECC corporate counsel), Ernst & Young, LLP
(ECC auditors), Fulbright & Jaworski (ECC SEC counsel), Hein & Associates (ECC
accountants in SA Telecom transaction), American Stock Transfer & Trust Company
(transfer agent fees & expenses); Imperial Premium Finance (D&O premium finance
company); National Association of Securities Dealers (stock listing fees, etc.);
Securities & Exchange Commission.
2.74 Reorganized Debtor: As of the Effective Date of the Plan, the
Debtor as reorganized under the terms of this Plan.
2.75 Schedules: The Debtor's Schedules of Assets and Liabilities
previously filed with the Bankruptcy Court in accordance with section 521(1) of
the Bankruptcy Code.
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2.76 Secured Claim: A Claim to the extent of the value, as may be
determined by the Bankruptcy Court pursuant to section 506(a) of the Bankruptcy
Code, of any interest in property of the Debtor's estate securing such Claim, or
any Claim to the extent that it is subject to setoff under section 553 of the
Bankruptcy Code. To the extent that the value of such interest is less than the
amount of the Claim which has the benefit of such security, such Claim is a
Deficiency Claim unless, in any such case, the class of which such Claim is part
makes a valid and timely election under section 1111(b) of the Bankruptcy Code
to have such Claim treated as a Secured Claim to the extent Allowed.
2.77 Subordinated Claim: Any Claim which (i) by its terms or by
agreement is subordinated to the payment of a General Unsecured Claim, (ii)
would otherwise be a General Unsecured Claim or Deficiency Claim held by any of
the Released Parties, (iii) is subordinated to the payment of a General
Unsecured Claim pursuant to any applicable provision of the Plan, or (iv) is
equitably subordinated to the payment of a General Unsecured Claim by a Final
Order of the Bankruptcy Court entered pursuant to section 510(c) of the
Bankruptcy Code or other applicable law.
2.78 Trust Assets: The Trust Assets shall consist of: (i) the ECC Cash
Payment; (ii) the ECC Common Stock; (iii) the Contingent ECC Common Stock, (iv)
the ECC Guaranty Obligation; and (v) the Litigation Claims.
2.79 Trust Surplus: The surplus, if any, of the Trust Assets remaining
after satisfaction in full of all Allowed General Unsecured Claims and payment
of all costs and expenses of administration, including the fees and expenses of
the Trustee, of the Unsecured Creditors' Trust.
2.80 Trustee: The individual selected to serve as the Trustee of the
Unsecured Creditors' Trust by the Unsecured Creditors' Committee, including any
replacement or successor Trustee.
2.81 Unsecured Claim: A Claim not secured by a charge, mortgage or lien
against or interest in property in which the Debtor's estate has an interest,
including but not limited to any Deficiency Claim and any claim for damages
resulting from the rejection of an executory contract or lease.
2.82 Unsecured Creditors' Trust: The Trust to be created and funded on
the Effective Date, the beneficiaries of which shall be the holders of Allowed
Class 11 General Unsecured Claims.
ARTICLE III--RULES OF CONSTRUCTION AND INTERPRETATION
The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Plan as a whole and not to any particular section,
subsection or clause contained in this Plan, unless the context requires
otherwise. Whenever from the context it appears appropriate, each term stated in
either the singular or the plural includes the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender include the
masculine, feminine and the neuter.
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The section headings contained in the Plan are for reference purposes only and
shall not affect in any way the meaning or interpretation of the Plan.
A term used in this Plan and not defined herein but that is defined in
the Bankruptcy Code has the meaning assigned to the term in the Bankruptcy Code.
A term used in this Plan and not defined herein or in the Bankruptcy Code, but
which is defined in the Bankruptcy Rules, has the meaning assigned to the term
in the Bankruptcy Rules.
ARTICLE IV--CLASSIFICATION OF CLAIMS AND INTERESTS
Claims and Interests of the Debtor are classified as follows:
4.1 Class 1: Allowed Administrative Claims
4.2 Class 2: Allowed Priority Non-Tax Claims
4.3 Class 3: Allowed Priority Tax Claims
4.4 Class 4: Allowed Convenience Claims
4.5 Class 5: Allowed Secured Claims of RFC Capital Corporation
4.6 Class 6: Allowed Secured Claims of ECC
4.7 Class 7: Allowed Secured Claims of Netco Acquisition LLC
4.8 Class 8: Allowed Secured Claims of Willis Group, LLC
4.9 Class 9: Allowed Secured Claims of Genessee Fund Limited-
Portfolio B
4.10 Class 10: Allowed Non-Affiliated Secured Claims
4.11 Class 11: Allowed General Unsecured Claims
4.12 Class 12: Allowed Subordinated Claims
4.13 Class 13: Allowed Equity Interests
ARTICLE V--IDENTIFICATION OF CLAIMS
AND INTERESTS IMPAIRED BY THE PLAN
5.1 Unimpaired Classes: Claims of Classes 1, 2, 3, and 4 are not
impaired under the Plan and are not entitled to vote to accept or reject the
Plan.
5.2 Impaired Classes Entitled to Vote on Plan: The Claims specified in
Classes 5, 6, 7, 8, 9, 10, 11, and 12 of the Plan are impaired and Allowed
Claims of these Classes are entitled to vote to accept or reject the Plan. The
Equity Interests included in Class 13 are also impaired,
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but since they are not to receive or retain any property on account of the Plan,
they are deemed to have rejected the Plan.
5.3 Controversy Concerning Classification, Impairment of Voting Rights:
In the event a controversy or dispute should arise involving issues related to
the classification, impairment or voting rights of any Creditor or Interest
Holder under the Plan, whether before or after the Confirmation Date, the
Bankruptcy Court may, after notice and a hearing, determine such controversy.
Without limiting the foregoing, the Bankruptcy Court may estimate for voting
purposes the amount of any contingent or unliquidated Claim the fixing or
liquidation of, as the case may be, would unduly delay the administration of the
Chapter 11 Case. In addition, the Bankruptcy Court may in accordance with
section 506(b) of the Bankruptcy Code conduct valuation hearings to determine
the Allowed Amount of any Secured Claim.
ARTICLE VI--PROVISIONS FOR TREATMENT OF
ALLOWED ADMINISTRATIVE EXPENSE CLAIMS (CLASS 1)
6.1 Full Payment: On the Distribution Date, each Allowed Administrative
Expense Claim shall be paid by the Reorganized Debtor in full in Cash, after
netting the amount of any cash retainer held by the holder of a Class 1 Claim,
or upon such other terms as may be agreed upon in writing by and between the
holder of such Claim and the Debtor or the Reorganized Debtor. Any
Administrative Expense Claims that are not Allowed as of the Effective Date
shall be paid in full upon the entry of a Final Order allowing such Claim. Any
and all requests for allowance of an Administrative Expense Claim must be filed
with the Bankruptcy Court within thirty (30) days following the Effective Date.
Any Class 1 Claims not filed within such time period will be forever barred and
will not be entitled to receive any distribution or payment under the Plan.
6.2 Impairment: Administrative Expense Claims are not impaired under
the Plan.
ARTICLE VII--PROVISIONS FOR TREATMENT OF
ALLOWED PRIORITY NON-TAX CLAIMS (CLASS 2)
7.1 Full Payment: On the Distribution Date, each Allowed Priority
Non-Tax Claim shall be paid by the Debtor or the Reorganized Debtor in full in
Cash or upon such other terms as may be agreed upon in writing by and between
the holder of such Claim and the Debtor or the Reorganized Debtor. If any
Priority Non-Tax Claim does not become an Allowed Claim until after the
Effective Date, then such Claim shall not be paid on the Effective Date, but
shall be paid by the Reorganized Debtor in cash in full when it becomes an
Allowed Claim.
7.2 Impairment: Allowed Priority Non-Tax Claims are not impaired under
the Plan.
ARTICLE VIII--PROVISIONS FOR TREATMENT OF
ALLOWED PRIORITY TAX CLAIMS (CLASS 3)
8.1 Deferred Payment: From and after the Distribution Date, Allowed
Priority Tax Claims will be paid by the Reorganized Debtor over a period of six
years from the date of their respective assessments in level quarterly
installments of principal and interest, or upon such other
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terms as may be agreed upon in writing by and between the holder of such Claim
and the Debtor or the Reorganized Debtor. Interest shall accrue and be payable
at the rate of 8% per annum, unless otherwise agreed by the Debtor and the
holder of such Claim, or at such other rate as may be determined by the
Bankruptcy Court.
8.2 Impairment: Allowed Priority Tax Claims are not impaired under the
Plan.
ARTICLE IX--PROVISIONS FOR TREATMENT OF
ALLOWED CONVENIENCE CLAIMS (CLASS 4)
9.1 Treatment: Allowed Convenience Claims will be paid by the
Reorganized Debtor in full in cash on the Distribution Date. Holders of Allowed
Unsecured Claims in excess of $1,000.00, which would otherwise be treated under
Class 11 of the Plan, must affirmatively indicate on the Plan Ballot their
election to be treated as a Class 4 creditor.
9.2 Impairment: Allowed Convenience Claims are not impaired under the
Plan.
ARTICLE X--PROVISIONS FOR TREATMENT OF THE ALLOWED
SECURED CLAIMS OF RFC CAPITAL CORPORATION (CLASS 5)
10.1 Treatment: Allowed Secured Claims of RFC Capital Corporation
arising under any accounts receivable purchase agreements with, or any
collateralized guaranty of, the Debtor will be paid by the Reorganized Debtor in
full from the collection of its accounts receivable. To this end, RFC Capital
Corporation will first apply against the Allowed Amount of its Class 5 Secured
Claim the collections it receives from those accounts of the Debtor which it has
purchased pursuant to its factoring agreements. To the extent these collections
prove inadequate to pay the Allowed Amount of its Secured Claim in full, the
Reorganized Debtor will pay the difference from the collections of accounts not
sold to RFC Capital Corporation or from the New Capital to be received from ECC.
10.2 Liens continued: Subject to the foregoing, any Lien securing the
Allowed Secured Claim of RFC Capital Corporation shall continue until such time
as its Allowed Secured Claim has been paid in full.
10.3 Impairment: Allowed Secured Claims of RFC Capital Corporation are
impaired under the Plan.
ARTICLE XI--PROVISIONS FOR TREATMENT OF
THE ALLOWED SECURED CLAIMS OF EQUALNET
COMMUNICATIONS CORP. (CLASS 6)
11.1 Treatment: The Allowed Secured Claim of Equalnet Communications
Corp. ("ECC") will be paid in accordance with an agreement to be reached with
the Reorganized Debtor prior to the Confirmation Hearing, but in no event may
any such agreement permit the Reorganized Debtor to repay any Claim owed to ECC,
whether in whole or in part, without the written consent of the Unsecured
Creditors' Trust so long as the Trust continues to own any ECC Common Stock
issued under this Plan.
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11.2 Liens continued: Any Lien securing the Allowed Secured Claim of
ECC shall continue until such time as its Allowed Secured Claim has been paid in
full.
11.3 Impairment: Allowed Secured Claims of ECC are impaired under the
Plan.
ARTICLE XII--PROVISIONS FOR TREATMENT
OF THE ALLOWED SECURED CLAIMS OF
NETCO ACQUISITION LLC (CLASS 7)
12.1 Treatment: Allowed Secured Claims of Netco Acquisition, LLC
("Netco") will be paid by the Reorganized Debtor in accordance with an agreement
to be reached with the Reorganized Debtor prior to the Confirmation Hearing, but
in no event may any such agreement permit the Reorganized Debtor to repay any
Claim owed Netco, whether in whole or in part, without the written consent of
the Unsecured Creditors' Trust so long as the Trust continues to own any ECC
Common Stock issued under this Plan.
12.2 Liens continued: Any Lien securing the Allowed Secured Claim of
Netco shall continue until such time as its Allowed Secured Claim has been paid
in full.
12.3 Impairment: Allowed Secured Claims of Netco are impaired under the
Plan.
ARTICLE XIII--PROVISIONS FOR TREATMENT OF THE
ALLOWED SECURED CLAIMS OF WILLIS GROUP, LLC (CLASS 8)
13.1 Treatment: Allowed Secured Claims of Willis Group, LLC (the
"Willis Group") will be paid by the Reorganized Debtor in accordance with an
agreement to be reached with the Reorganized Debtor prior to the Confirmation
Hearing, but in no event may any such agreement permit the Reorganized Debtor to
repay any Claim owed the Willis Group, whether in whole or in part, without the
written consent of the Unsecured Creditors' Trust so long as the Trust continues
to own any ECC Common Stock issued under this Plan.
13.2 Liens continued: Any Lien securing the Allowed Secured Claim of
the Willis Group shall continue until such time as its Allowed Secured Claim has
been paid in full.
13.3 Impairment: Allowed Secured Claims of the Willis Group are
impaired under the Plan.
ARTICLE XIV--PROVISIONS FOR TREATMENT OF
THE ALLOWED SECURED CLAIMS OF GENESSEE
FUND LIMITED-PORTFOLIO B (CLASS 9)
14.1 Treatment: Allowed Secured Claims of Genessee Fund
Limited-Portfolio B ("Genesee") will be paid by the Reorganized Debtor in
accordance with an agreement to be reached with the Reorganized Debtor prior to
the Confirmation Hearing, but in no event may any such agreement permit the
Reorganized Debtor to repay any Claim owed Genesee, whether in whole or in part,
without the written consent of the Unsecured Creditors' Trust so long as the
Trust continues to own any ECC Common Stock issued under this Plan.
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14.2 Liens continued: Any Lien securing the Allowed Secured Claim of
Genessee shall continue until such time as its Allowed Secured Claim has been
paid in full.
14.3 Impairment: Allowed Secured Claims of Genessee are impaired under
the Plan.
ARTICLE XV--PROVISIONS FOR TREATMENT OF
ALLOWED NON-AFFILIATED SECURED CLAIMS (CLASS 10)
15.1 Treatment: Allowed Non-Affiliated Secured Claims will be paid by
the Reorganized Debtor in accordance with agreements to be reached with such
creditors, if any, prior to the Confirmation Hearing.
15.2 Liens continued: Any Lien securing an Allowed Non-Affiliated
Secured Claim shall continue until such time as such Claim has been paid in
full.
15.3 Impairment: Allowed Secured Claims of Class 10 are impaired under
the Plan.
ARTICLE XVI--PROVISIONS FOR TREATMENT
OF ALLOWED GENERAL UNSECURED CLAIMS (CLASS 11)
16.1 Treatment: The holders of Allowed General Unsecured Claims shall
receive Pro Rata Distributions from the Unsecured Creditors' Trust, in
accordance with the provisions of Section 19.8 hereof, up to the Allowed Amount
of their Claims.
16.2 Impairment: Allowed General Unsecured Claims are impaired under
the Plan.
ARTICLE XVII--PROVISIONS FOR TREATMENT OF
ALLOWED SUBORDINATED CLAIMS (CLASS 12)
17.1 Treatment: Within thirty (30) days after the Reorganized Debtor's
receipt of the Trust Surplus, if any, from the Trustee, the holders of Allowed
Subordinated Claims who are not insiders or Affiliates of the Debtor shall
receive, at the election of the Reorganized Debtor, in kind or the value thereof
in Cash, a Pro Rata Distribution of the Trust Surplus up to the Allowed Amount
of their Claims. The Debtor is not discharged under the Plan from Class 12
Claims held by Affiliates, but Class 12 Claims held by Affiliates may not
receive any distribution from the Reorganized Debtor without the written consent
of the Unsecured Creditors' Trust so long as the Trust remains a holder of ECC
Common Stock.
17.2 Impairment: Allowed Subordinated Claims are impaired under the
Plan.
ARTICLE XVIII--PROVISIONS FOR TREATMENT
OF EQUITY INTERESTS (CLASS 13)
18.1 Treatment: Allowed Equity Interests shall on the Effective Date of
the Plan be deemed void, canceled, and of no further force and effect, without
any further action on the part of any Person.
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18.2 Impairment: The holders of Equity Interests are impaired under the
Plan.
ARTICLE XIX--MEANS FOR EXECUTION OF THE PLAN
19.1 Vesting of Property of the Estate in Reorganized Debtor. On the
Effective Date, all property of the Debtor and of the Estate shall vest in the
Reorganized Debtor free and clear of liens, claims and encumbrances, except as
otherwise provided in the Plan.
19.2 Continuation of Business Operations. From and after the Effective
Date, the Reorganized Debtor is authorized to continue its normal business
operations and enter into such transactions as it deems advisable, free of any
restriction or limitation imposed under any provision of the Bankruptcy Code,
except to the extent otherwise provided in the Plan.
19.3 Post-Confirmation Financing. From and after the Effective Date,
the Reorganized Debtor is authorized to continue existing, or enter into new,
accounts receivable sale agreements or other financing arrangements as it deems
advisable and necessary to the continuation of its business operations.
19.4 Directors and Officers of Reorganized Debtor. The Directors and
Officers of the Debtor are authorized to continue as Directors and Officers of
the Reorganized Debtor from and after the Effective Date of the Plan.
19.5 Discharge of Debtor. Except as otherwise provided in the Plan or
the Confirmation Order, the entry of the Confirmation Order, as of the Effective
Date of the Plan, will act as a complete discharge of all Claims against or
Equity Interests in the Debtor of any nature at all, including, without
limitation, any liability of a kind specified in sections 502(g), 502(h) or
502(i) of the Bankruptcy Code, that arose, or has been asserted against the
Debtor anytime before the Effective Date or that arises from any
pre-confirmation conduct of the Debtor whether or not the Claim is known to or
knowable by the current or any former holder of the Claim or Equity Interest.
The discharge of the Debtor will be effective as to each Claim and Equity
Interest, whether or not the Claim or Equity Interest constituted an Allowed
Claim or Allowed Equity Interest and whether or not the holder of the Claim or
Equity Interest voted to accept the Plan. In addition, the Confirmation Order
will operate as a general resolution with prejudice, as of the Effective Date,
of all pending legal proceedings, if any, against the Debtor and its assets and
properties and any proceedings not yet instituted against the Debtor or its
assets and properties, except as otherwise provided in the Plan. As provided in
section 524 of the Bankruptcy Code, the discharge operates as an injunction
against the prosecution of any Claim or Equity Interest so discharged.
Except as otherwise expressly provided in the Plan or the Confirmation
Order, all Persons who have held, hold, or may hold Claims against the Debtor
and who have held, hold, or may hold Equity Interests in the Debtor are
permanently enjoined on and after the Effective Date from (a) commencing or
continuing in any manner any action or other proceeding of any kind against the
Debtor, or the Reorganized Debtor, or their property, with respect to any such
Claim or Equity Interest, (b) the enforcement, attachment, collection or
recovery by any manner or means of any judgment, award, decree or order with
respect to any such Claim or Equity Interest against the Debtor, or the
Reorganized Debtor, or their property, (c) creating, perfecting, or enforcing
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any encumbrance of any kind against the Debtor, or the Reorganized Debtor, or
their property with respect to such Claim or Equity Interest, and (d) asserting
any right of subrogation of any kind against any obligation due the Debtor, or
the Reorganized Debtor, or the property of the Debtor or the Reorganized Debtor
with respect to any such Claim or Equity Interest. The injunction provision is
not intended to enjoin, and will not enjoin, actions against parties who are not
a Debtor herein, except actions against such non-Debtor parties relating to
Claims against or Equity Interests in the Debtor.
Unless otherwise provided in the Plan or by order of the Bankruptcy
Court, all injunctions or automatic stays provided for in this case pursuant to
section 105, if any, or section 362 of the Bankruptcy Code, or otherwise, and in
existence on the Confirmation Date will remain in full force and effect until
the Effective Date.
19.6 New Value Contributions. On the Effective Date of the Plan, ECC
will make the New Value Contributions, including the ECC Cash Payment, the ECC
Common Stock, and the ECC Guaranty Obligation, which shall be transferred to the
Unsecured Creditors' Trust on the Effective Date. On or after the Effective
Date, as and when it is determined from time to time that the Unsecured
Creditors' Trust is entitled to the Contingent ECC Common Stock, ECC and the
Reorganized Debtor shall transfer to the Unsecured Creditors' Trust the
Contingent ECC Common Stock.
19.7 Release of ECC Parties by Debtor and Debtor's Estate. On the
Effective Date of the Plan, and subject to the New Value Contributions being
made in accordance with the Plan by ECC and received by the Unsecured Creditors'
Trust, the Released Actions shall be deemed to be settled, satisfied, and fully
discharged and the Released Parties shall be deemed to be fully released and
discharged from the Released Actions.
19.8 The Unsecured Creditors' Trust
(1) Creation of Trust.
On the Effective Date, the Unsecured Creditors Trust automatically
shall be established without any further action by the Reorganized Debtor, the
Trustee or the Bankruptcy Court.
(2) Funding of Trust.
The Reorganized Debtor shall, to the extent necessary, transfer and
assign to the Trustee, effective as of the Effective Date, the Trust Assets.
Except as otherwise provided in the Plan, the assets placed into the Unsecured
Creditors' Trust shall automatically vest in the Trust on the Effective Date
without any further action required on the part of the Reorganized Debtor or the
Trustee, and any assignment, execution, delivery, filing or recording as
necessary of documents evidencing such transfer, conveyance and physical
delivery of such property shall occur as soon thereafter as practical. As and
when it is determined from time to time that the Unsecured Creditors Trust is
entitled to the Contingent ECC Common Stock, ECC and the Reorganized Debtor
shall transfer and deliver to the Unsecured Creditors Trust the Contingent ECC
Common Stock. All
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assets transferred to the Unsecured Creditors' Trust shall vest in the Trust
free and clear of all liens, claims and encumbrances, except as otherwise
specifically provided in the Plan.
(3) Ratification of Trust Agreement and Transfer of
Liabilities.
On the Effective Date, each holder of a Class 11 General Unsecured
Claim will be deemed to have ratified, and shall become bound by, the terms of
the Trust as set forth in the Plan. All Claims that are to be satisfied by and
are to receive distributions from the Unsecured Creditors' Trust shall be
transferred to and assumed by the Trust. Such Claims shall thereupon become the
exclusive obligation of the Unsecured Creditors' Trust as of the Effective Date
of the Plan.
(4) Purpose of the Trust.
The Unsecured Creditors' Trust will be created for the primary purpose
of liquidating the assets placed into the Trust and distributing the proceeds
from such liquidation as provided in the Plan in an expeditious but orderly and
commercially reasonable manner, with no objective to continue or engage in the
conduct of a trade or business.
(5) Selection of Trustee.
The Creditors' Committee has designated Darryl Laddin as Trustee of the
Unsecured Creditors' Trust. In the event that the Trustee should resign or be
removed, the United States Trustee shall appoint a successor Trustee. In the
event that the Trustee has a conflict of interest with respect to a particular
matter, the Trustee shall so advise the United States Trustee, and the United
States Trustee shall appoint a substitute Trustee for that particular matter. In
the event that the U.S. Trustee is unable to perform the functions described in
this paragraph, the Creditors' Committee shall designate another person to
perform such functions.
(6) Duties and Powers of Trustee.
a. Powers and Responsibilities.
1. Limitation of Liability.
Neither the Creditors' Committee nor its individual members,
agents, attorneys or advisors shall incur any liability to the Debtor, the
Reorganized Debtor, or any creditor or entity for any act or failure to act
relating to the Unsecured Creditors' Trust. The Trustee shall be entitled to
reimbursement from the assets of the Unsecured Creditors' Trust for any
liability, whether in contract or tort, incurred in the administration of the
Unsecured Creditors Trust in accordance with the provisions hereof. The
Trustee's liability, if any, shall be limited to the assets of the Unsecured
Creditors' Trust. No Trustee or professional acting under this Article shall be
liable for any mistake or error in judgment, except for bad faith, dishonesty or
willful misconduct in their actions hereunder.
b. Standing.
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From and after the Effective Date and continuing through the
date on which a final decree closing the Reorganization Case is entered pursuant
to Bankruptcy Code Section 350 and Bankruptcy Rule 3022, the Trustee shall
possess the rights of a party in interest pursuant to Bankruptcy Code Section
1109(b) for all matters arising in, arising under or related to this Chapter 11
Case and the Reorganized Debtor. In addition to the foregoing, for all matters
arising in, arising under or related to this Chapter 11 Case and the Reorganized
Debtor, the Trustee shall have the right to appear and be heard on matters
brought before the Bankruptcy Court or other courts of competent jurisdiction,
shall be entitled to notice and opportunity for hearing, shall participate at
the Trustee's discretion in all matters brought before the Bankruptcy Court,
including but not limited to adversary proceedings, shall receive notice of all
applications, motions and other papers and pleadings set before the Bankruptcy
Court, and shall possess the powers and duties of a committee pursuant to
Bankruptcy Code Section 1103(c)(5).
c. Trustee Powers.
The Trustee, at his discretion, shall have the power and
authority to take all actions to fulfill his responsibilities hereunder,
including, but not limited to, the following: monitoring the process by which
issues with respect to objections to Claims and Disputed Claims are resolved;
reviewing and participating in the prosecution, defense, compromise or
settlement of all claims assigned to the Unsecured Creditors Trust, including,
without limitation, Avoidance Actions; making continuing efforts to liquidate
the assets of the Unsecured Creditors' Trust; making timely distributions,
filing tax returns, establishing and maintaining the various reserve accounts
contemplated by the Plan; maintaining appropriate records and accountings,
paying reasonable expenses of the Trust; resolving, with the aid of the
Bankruptcy Court, if necessary, any tax issue or liability relating to the
Unsecured Creditors Trust; appointing to the Boards of Directors of the
Reorganized Debtor and of ECC one director who shall serve on such Boards of
Directors so long as the Unsecured Creditors' Trust has rights under the ECC
Guaranty Obligation; and monitoring the Debtor's compliance with the Plan. In
furtherance of all the foregoing powers and in order to fulfill his
responsibilities, the Trustee shall have the right and power to raise objections
to the Reorganized Debtor's treatment of objections to Claims and Disputed
Claims and its treatment of Avoidance Actions, its performance under the Plan,
and such other issues as the Trustee shall raise at his sole and absolute
discretion. The Trustee shall, in addition, and at his sole discretion, have the
power and authority to assert rights and remedies available to a party in
interest or committee as set forth in Section 19.8 of the Plan before the
Bankruptcy Court or such other court of competent jurisdiction.
(7) Compensation of Trustee.
The Trustee shall be entitled to receive from the Unsecured Creditors'
Trust from time to time compensation equal to three percent (3%) of the total
funds disbursed and the value of property distributed in kind by the Trustee
from the Unsecured Creditors' Trust, provided however, the Trustee shall not be
entitled to compensation for funds or property disbursed from the Unsecured
Creditors' Trust to the Trustee or any professionals that the Trustee retains.
(8) Retention of Professionals.
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The Trustee shall retain Smith, Gambrell & Russell, LLP (the "Law
Firm") and Arthur Andersen LLP (the "Accountants") to assist the Trustee in
carrying out his authorized powers and responsibilities hereunder, which such
Law Firm and Accountants shall be compensated at their customary and normal
hourly rates. The Trustee may also engage the services of such other
professionals, at reasonable rates, as the Trustee deems necessary and proper.
The fees and expenses incurred by professionals retained by the Trustee shall be
paid from the Unsecured Creditors Trust. The Reorganized Debtor shall pay to the
Unsecured Creditors Trust, within thirty days of receipt of an invoice, an
amount equal to the fees and expenses incurred by professionals retained by the
Trustee for monitoring the process by which issues with respect to objections to
Claims and Disputed Claims are resolved and for reviewing and participating in
the prosecution, defense, compromise or settlement of all Litigation Claims;
provided, however, that the cash proceeds with respect to the recovery for any
Litigation Claim shall first be paid to the Reorganized Debtor to reimburse the
Reorganized Debtor for all fees and expenses paid by the Reorganized Debtor for
such Litigation Claim.
Although the Trustee shall make timely payment to the Law Firm of the
invoices that the Law Firm submits to the Trustee, so long as Mr. Laddin is the
Trustee and the Law Firm serves as counsel to the Trustee, the Trustee shall
annually submit to the U.S. Trustee or such other person as the Creditors'
Committee shall designate copies of the invoices of the Law Firm so that such
person may determine whether the services described in such invoices are
properly classifiable as services that the Trustee may properly engage attorneys
to perform, as opposed to services that are properly to be discharged by the
Trustee and for which the Trustee is to be compensated by the Trustee's
compensation (as set forth in paragraph 7 above). In the event there is a
discrepancy that cannot be resolved consensually, the Trustee shall submit such
discrepancy to the Bankruptcy Court for a determination.
(9) Distributions.
The Trustee shall establish and administer a Disputed Claims Reserve in
accordance with the provisions of Sections 20.2 and 20.3 hereof. Subject to the
Trustee's responsibilities respecting the Disputed Claims Reserve, the Trustee
shall calculate and make an initial ratable distribution from the Unsecured
Creditors' Trust to holders of Allowed Class 11 General Unsecured Claims as soon
as practicable after the Effective Date. From time to time thereafter, the
Trustee shall continue to make similar distributions to Allowed Class 11 General
Unsecured Claims until the earlier of: (i) such time as there are no remaining
monies or other property of the Unsecured Creditors' Trust to distribute, or
(ii) such time as all Disputed Class 11 Claims have been resolved, and all
Allowed Class 11 General Unsecured Claims have been paid in full. The Trustee
shall prepare and file with the Bankruptcy Court a final report 20 days after
making the final distribution to holders of Allowed Class 11 General Unsecured
Claims of assets of the Unsecured Creditors Trust and shall, contemporaneously
therewith, deliver to the Reorganized Debtor, in kind, the Trust Surplus, if
any.
(10) Irrevocable Nature of Trust.
The provisions of this Article shall be irrevocable, except as
otherwise provided herein. The Debtor and the Reorganized Debtor shall have no
right or power, whether alone or in conjunction with others (in whatever
capacity) to amend this Article, in whole or in part, or to designate the
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persons who shall possess, manage, distribute or otherwise enjoy the assets of
the Unsecured Creditors Trust or any rights related thereto.
(11) Payment of Taxes.
The Trustee is authorized to pay taxes and excises lawfully owing by or
chargeable against the Unsecured Creditors Trust or Trust Assets in the
possession or under the control of the Trustee and to take any action necessary
or advisable to obtain prompt determination of any such tax liability. The
Trustee, in his sole discretion, is authorized to make all tax elections
permitted to be made by the Trust under federal and state laws.
(12) Federal Income Tax Treatment.
The transfer of the ECC Common Stock and Contingent ECC Common Stock to
the Trust shall be treated for federal income tax purposes as a deemed transfer
of such stock to the holders of Class 11 Allowed General Unsecured Claims in
proportion to the amount of their respective anticipated distributions followed
by a deemed transfer of such stock by such creditors. The holders of Class 11
Allowed General Unsecured Claims shall be treated as the deemed owners of the
ECC Common Stock and Contingent ECC Common Stock in proportion to the amount of
their respective anticipated distributions for federal income tax purposes. The
Unsecured Creditors Trust shall file federal tax returns for informational
purposes pursuant to Section 1.671-4(a) of the Federal Income Tax Regulations.
19.9 Protection of Certain Parties in Interest. Provided the respective
affiliates, officers, directors, shareholders, members, representatives,
attorneys, financial advisors, and agents of the Debtor, the Reorganized Debtor,
ECC, and the Creditors' Committee act in good faith, they will not be liable to
any holder of a Claim or Equity Interest, or other party with respect to any
action, forbearance from action, decision, or exercise of discretion taken from
the Petition Date to the Effective Date in connection with (i) the operation of
the Debtor or the Reorganized Debtor; (ii) the proposal or implementation of any
of the transactions provided for, or contemplated in, the Plan or the Plan
Documents; or (iii) the administration of the Plan or the assets and property to
be distributed pursuant to the Plan and the Plan Documents; other than for
willful misconduct or gross negligence. The Debtor, the Reorganized Debtor, ECC,
the Creditors' Committee, and their respective affiliates, officers, directors,
shareholders, members, representatives, attorneys, financial advisors, and
agents may rely upon the opinions of counsel, certified public accountants, and
other experts or professionals employed by the Debtor, the Reorganized Debtor,
ECC or the Creditors' Committee, respectively, and such reliance will
conclusively establish good faith. In any action, suit or proceeding by any
holder of a Claim or Equity Interest or other party in interest contesting any
action by, or non-action of, the Debtor, the Reorganized Debtor, the Creditors'
Committee, or their respective affiliates, officers, directors, shareholders,
members, representatives, attorneys, financial advisors, and agents as not being
in good faith, the reasonable attorneys' fees and costs of the prevailing party
will be paid by the losing party and as a condition to going forward with such
action, suit, or proceeding at the outset thereof, all parties thereto will be
required to provide appropriate proof and assurances of their capacity to make
such payments of reasonable attorneys' fees and costs in the event they fail to
prevail.
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A governmental unit may not deny, revoke, suspend, or refuse to renew a
license, permit, charter, franchise, or other similar grant to, condition such a
grant to, or discriminate with respect to such a grant against, the Debtor, the
Reorganized Debtor, ECC, or another Person with whom the Debtor has been or is
associated or affiliated, solely because of the commencement, continuation, or
termination of the case or because of any provision of the Plan or the legal
effect of the Plan, and the Confirmation Order will constitute an express
injunction against any such discriminatory treatment by a governmental unit.
19.10 Effectuating Documents and Necessary Authorizations. The Plan
Documents, which consist of all documents and exhibits that aid in effectuating
the Plan will be executed and, if appropriate, filed with the appropriate
governmental authorities on or before the Effective Date of the Plan, and they
will become effective on the Effective Date of the Plan.
The Chairman of the Board, the President, the Chief Financial Officer,
or any Vice President of the Reorganized Debtor will have authority to execute,
deliver, file, or record such contracts, instruments, releases, indentures, and
other agreements or documents and take such actions as may be necessary or
appropriate to effectuate and further evidence the terms and conditions of the
Plan. The Secretary or any Assistant Secretary of the Reorganized Debtor will
have authority to certify or attest to any of the foregoing actions.
The Reorganized Debtor, if and to the extent necessary, will seek such
orders, judgments, injunctions, regulatory approvals, and rulings that may be
required to carry out and further the intentions and purposes, and give full
effect to the provisions, of the Plan.
19.11 Regulatory Approvals. As the Plan is not intended to modify or
supplant any regulatory authority over the Debtor or the Reorganized Debtor, all
regulatory approvals required to be obtained in connection with the Plan will be
sought and obtained.
ARTICLE XX--CLAIM OBJECTION PROCEDURES AND
TREATMENT OF DISPUTED CLAIMS
20.1 Objection Deadline and Process. Under the Plan, the Reorganized
Debtor possesses the authority to object to the allowance of any Claim. All
Claim objections must be filed within sixty (60) days after the Effective Date
of the Plan.
20.2 Disputed Claims Reserve. The Trustee shall establish a Disputed
Claims Reserve, to be administered by the Trustee, for the treatment of Disputed
Claims that are General Unsecured Claims. The Trustee shall deposit from the
Unsecured Creditors' Trust into a Disputed Claims Reserve an amount equal to the
Pro Rata share of the distribution allocable to Disputed Claims that are General
Unsecured Claims, as if such Claims were Allowed Claims. The Disputed Claims
Reserve shall be held in trust by the Trustee for the benefit of the holders of
Allowed Claims whose Distributions are unclaimed and the holders of such
Disputed Claims pending a determination of their entitlement thereto under the
terms of the Plan.
20.3 Distributions to Holders of Disputed Claims. At such time as a
Disputed Claim that is a General Unsecured Claim becomes an Allowed Claim, any
Distributions reserved for such Allowed Claim shall be released from the
Disputed Claims Reserve and delivered to the holder of
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such Allowed Claim in an amount proportionate to the Allowed Amount of any such
Claim. In the event that the Disputed Claim is disallowed in its entirety, the
Distributions provided for such Claim shall be placed in the Unsecured
Creditors' Trust for appropriate distribution to holders of other Allowed
Claims.
20.4 Provisions Governing Distributions.
(1) Distribution Responsibility.
The Reorganized Debtor and the Trustee of the Unsecured Creditors'
Trusts will assume the distribution responsibilities as conferred upon them
under the terms of the Plan.
(2) Delivery of Distributions.
Subject to Bankruptcy Rule 9010, distributions to holders of Allowed
Claims will be made at the address of each such holder as set forth on the
proofs of claim filed by such holders, or at the last known address of such
holder if no proof of claim is filed or if the Debtor has been notified in
writing of a change of address. If any holder's distribution is returned as
undeliverable, no further distributions to such holder will be made unless and
until the Reorganized Debtor, or the Trustee of the Unsecured Creditors' Trust,
as the case may be, is notified of such holder's then current address.
(3) Unclaimed Distributions and Uncashed Checks.
All claims for undeliverable distributions must be made on or before
the later of the first anniversary of the Effective Date of the Plan, or the
ninetieth (90th) day following date on which such Claim is Allowed. After such
date, all unclaimed distributions will revert to the Unsecured Creditors' Trust,
as the case may be, and the Claim of any holder with respect to such
distribution will be discharged and forever barred. Checks issued in respect of
Allowed Claims will be null and void if not negotiated within six (6) months
after the date of issuance thereof.
ARTICLE XXI--EXECUTORY CONTRACTS AND UNEXPIRED LEASES
21.1 Assumption of Executory Contracts and Unexpired Leases: Upon the
Effective Date, those executory contracts and unexpired leases of the Debtor set
forth on Exhibit "A" to this Plan shall be deemed assumed by the Debtor in
accordance with section 365 of the Bankruptcy Code.
21.2 Rejection of Executory Contracts and Unexpired Leases: All
executory contracts and leases that are not assumed under this Plan are deemed
rejected, unless otherwise dealt with by the Plan or the Confirmation Order, or
any other Order of the Court entered prior to the Effective Date, or which is
the subject of a motion to assume pending on the Effective Date.
21.2 Claims Based on Rejection of Executory Contracts of Unexpired
Leases: Damages arising from the rejection of an executory contract or lease
shall be a General Unsecured Claim. Any Claim for damages arising from the
rejection of an executory contract or lease must be asserted in a timely filed
proof of claim. All proofs of claim with respect to Claims arising from the
rejection of an executory contract or unexpired lease shall be filed with the
Bankruptcy Court by no later than
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the thirtieth (30th) day following the earlier of: (a) the date of entry of an
order of the Bankruptcy Court approving such rejection, or (b) the Effective
Date. Any Claims not filed within such times shall be forever barred from
assertion against the Debtor or the Unsecured Creditors' Trust.
ARTICLE XXII--EFFECT OF REJECTION BY
ONE OR MORE CLASSES OF CLAIMS
22.1 Impaired Classes to Vote: Each impaired class of Claims and
Interests shall be entitled to vote separately to accept or reject the Plan. A
holder of a Disputed Claim which has not been temporarily allowed for purposes
of voting on the Plan may vote only such Disputed Claim in an amount equal to
the portion, if any, of such Claim shown as fixed, liquidated and undisputed in
the Debtor's Schedules.
22.2 Acceptance by Class of Creditors: A class shall have accepted the
Plan if the Plan is accepted by at least two-thirds (2/3) in amount and more
than one-half (1/2) in number of the Claims (to the extent such Claims are
Allowed Claims or have been temporarily allowed for purposes of voting on the
Plan or are otherwise entitled to be counted pursuant to Section 22.1 above) of
such class that have voted to accept or reject the Plan.
22.3 Reservation of Cramdown rights: In the event that any impaired
class shall fail to accept this Plan in accordance with section 1129(a) of the
Bankruptcy Code, the Debtor reserves the right to request the Bankruptcy Court
to confirm the Plan in accordance with the provisions of the section 1129(b) of
the Bankruptcy Code.
ARTICLE XXIII--EFFECT OF CONFIRMATION
23.1 Legally Binding Effect: The provisions of this Plan shall bind all
Creditors and Interest holders, whether or not they accept this Plan. On and
after the Effective Date, all holders of Claims shall be precluded and enjoined
from asserting any Claim against the Debtor or its assets or properties based on
any transaction or other activity of any kind that occurred prior to the
Confirmation Date except as permitted under the Plan.
23.2 Revesting of Property in Debtor. Upon the Effective Date of the
Plan, other than as otherwise set forth in the Plan, all property of the
Debtor's estate shall vest in and become the property of the Reorganized Debtor.
23.3 Liens, Claims and Encumbrances. Except as otherwise specifically
provided in this Plan, or in the Confirmation Order, on the Effective Date of
the Plan all property vesting in and becoming property of the Reorganized Debtor
shall be free of all liens, claims and encumbrances.
23.4 Injunction. Except as otherwise provided in the Plan, all
Claimants of the Debtor are enjoined from threatening, commencing or continuing
any lawsuit or other legal or equitable action against the Debtor or the
Debtor's property to recover any Claim or Interest.
23.5 Causes of Action: All Litigation Claims, except for the Released
Actions, are hereby preserved and shall automatically vest in the Unsecured
Creditors' Trust on the Effective Date, with the Reorganized Debtor and the
Unsecured Creditors' Trust jointly having the authority and standing
26
<PAGE> 34
to pursue and to compromise such Litigation Claims without further order of the
Bankruptcy Court. The Reorganized Debtor shall be primarily responsible for
prosecuting Litigation Claims, if any, against members of the Creditors'
Committee; the Unsecured Creditors' Trust shall be primarily responsible for
prosecuting Litigation Claims, if any, against entities other than members of
the Creditors' Committee. Nothing contained herein shall impair or otherwise
effect the rights and obligations of the Reorganized Debtor or Unsecured
Creditors' Trust set forth elsewhere in this Plan.
ARTICLE XXIV--RETENTION OF JURISDICTION
24.1 Exclusive Bankruptcy Court Jurisdiction: The Court shall retain
and have exclusive jurisdiction over the Chapter 11 case for the follow purposes
following the Confirmation Date:
(a) To determine any and all objections to the allowance and
classification of Claims or Interests;
(b) To determine the validity and priority of any Lien;
(c) To determine the Allowed Amount of any Secured Claim;
(d) To allow any and all applications for allowances of compensation
and reimbursement of expenses payable from the estate;
(e) To determine any and all applications or motions pending before the
Court on the Effective Date of the Plan, including without limitation any
motions for the rejection, assumption or assumption and assignment of any
executory contract or unexpired lease.
(f) To consider and approve any modification of this Plan, remedy any
defect or omission or reconcile any inconsistency in the Plan, or any order of
the Court, including the Confirmation Order;
(g) To determine all controversies, suits and disputes that may arise
in connection with the interpretation, enforcement or consummation of this Plan;
(h) To consider and act on the compromise and settlement of any claim
or cause of action by or against the Debtor, the Reorganized Debtor or Unsecured
Creditors' Trust;
(i) To issue orders in aid of execution and implementation of this Plan
to the extent authorized by 11 U.S.C. ss.1142 or provided by the terms of this
Plan;
(j) To decide issues concerning the federal or state tax liability of
the Debtor or the Unsecured Creditors' Trust which may arise in connection with
the confirmation or consummation of this Plan ; and
(k) To enter an order closing this Chapter 11 Case.
27
<PAGE> 35
24.2 Limitation on Jurisdiction: The provisions of this Plan shall be
deemed to confer in the Bankruptcy Court jurisdiction coextensive with that
established by the provisions of 28 U.S.C.
ss.157 and 1334.
ARTICLE XXV--CONDITIONS TO CONFIRMATION
AND CONSUMMATION OF PLAN
25.1 Conditions to Confirmation of Plan. The Plan will be withdrawn if
certain conditions are not satisfied or certain events do not occur before
either the entry of the Confirmation Order or the effectiveness of the Plan. It
shall be a condition to the entry of the Confirmation Order that: the
Confirmation Order is in form and substance satisfactory to the Debtor, ECC and
the Creditors' Committee; that ECC has deposited in escrow with counsel for the
Debtor the ECC Cash Payment and the New Capital, to be disbursed in accordance
with the provisions of the Plan; and that the Debtor has deposited in escrow
with counsel for the Debtor cash equal to the dollar amount that the Creditors'
Committee advises the Debtor is the estimated amount of all fees and expenses to
which professionals shall be entitled to compensation under sections 330 and 503
of the Bankruptcy Code from the inception of the Chapter 11 Case through the
Effective Date.
25.2 Conditions to Consummation of Plan. The Plan will not be effective
unless (a) the Confirmation Order shall have been entered and shall not be
stayed; and (b) all Plan Documents and other applicable corporate documents
necessary or appropriate to the implementation of the Plan have been executed,
delivered, and where applicable, filed with the appropriate governmental
authorities and all transactions necessary to the implementation of the Plan
shall have been effected.
25.3 Annulment of Plan if Conditions Not Waived or Satisfied. The
Debtor and ECC, subject to approval of the Creditors' Committee, reserve the
right to waive any of the conditions precedent to entry of the Confirmation
Order or the consummation of the Plan. If any of the conditions precedent are
not waived, and are not satisfied within the specified time periods or can no
longer occur, the Confirmation Order will be annulled and the Debtor and all
parties in interest will return to the status quo ante immediately before the
entry of the Confirmation Order.
ARTICLE XXVI--MISCELLANEOUS PROVISIONS
26.1 Termination of Committee: On the Effective Date, the Creditors'
Committee in the Debtor's Chapter 11 Case shall be terminated.
26.2 Compliance with Tax Requirements: In connection with this Plan,
the Debtor shall comply with all withholding and reporting requirements imposed
by federal, state, and local taxing authorities, and Distributions hereunder
shall be subject to such withholding and reporting requirements.
26.3 Amendment of the Plan: Subject to the approval of the Creditors'
Committee or the Trustee, this Plan may be amended or modified by the Debtor or
the Creditors' Committee before, or by the Reorganized Debtor or Trustee after,
the Effective Date as provided in section 1127 of the Bankruptcy Code.
28
<PAGE> 36
26.4 Withdrawal of Plan: The Debtor reserves the right to withdraw this
Plan at any time prior to the Confirmation Date. If the Debtor withdraws this
Plan prior to the Confirmation Date, or if the Confirmation Date or the
Effective Date does not occur, then this Plan shall be deemed null and void. In
such event, nothing contained herein shall be deemed to constitute an admission,
waiver or release of any Claims by or against the Debtor or any other person, or
to prejudice in any manner the rights of the Debtor, the Debtor's estate or any
person in any further proceedings involving the Debtor.
26.5 Due Authorization By Creditors: Each and every Creditor who elects
to participate in the Distributions provided for herein warrants that he is
authorized to accept in consideration of his Claim against the Debtor the
Distributions provided for in this Plan and that there are no outstanding
commitments, agreements, or understandings, express or implied, that may or can
in any way defeat or modify the rights conveyed or obligations undertaken by him
under this Plan.
26.6 Filing of Additional Documentation: On or before the Effective
Date, the Debtor may file with the Bankruptcy Court such agreements and other
documents as may be necessary or appropriate to effectuate and further evidence
the terms and conditions of this Plan.
26.7 Implementation: The Debtor, the Reorganized Debtor, ECC, the
Creditors' Committee and the Trustee of the Unsecured Creditors' Trust shall be
authorized to perform all reasonable, necessary and authorized acts to
consummate the terms and conditions of the Plan.
DATED: March 1, 1999
Houston, Texas
EQUALNET CORPORATION
By: /s/ Mitchell Bodian
-----------------------------------------------
Mitchell Bodian, President
EQUALNET COMMUNICATIONS CORPORATION
By: /s/ Mitchell Bodian
----------------------------------------------
Mitchell Bodian, Chief Executive Officer
29
<PAGE> 37
UNEXPIRED LEASES AND CONTRACTS TO BE ASSUMED
BY EQUALNET CORPORATION UNDER THE PLAN OF REORGANIZATION
Lease Agreement dated June 28, 1994 from Caroline Partners, Ltd.for office
premises at 1250 Woodbranch Park Drive, Houston, Texas, together with the First,
Second, Third, Fourth and Fifth Amendments thereto
Switchless Resale Operator Agreement with U.S. Republic Communications, Inc.
Equipment Lease Agreements dated May 17, 1996 and July 20, 1995 with IKON Office
Solutions, as successor to Global Services, Inc.
Lease Agreement with Norwest Equipment Finance, Inc. dated November 4, 1994, as
modified by that certain letter agreement dated April 27, 1999
Billing Agreement with USBI
Billing Agreement with ESBI
Lease Agreements dated March 27, 1998, February 9, 1998 and December 8, 1997
with Tokai Financial Services, Inc.
Lease Agreement dated July 11, 1998 with Neopost Leasing
EXHIBIT A
30
<PAGE> 1
EXHIBIT 2
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
IN RE: Ss.
Ss.
EQUALNET CORPORATION, Ss. CASE NO. 98-39561-H5-11
A DELAWARE CORPORATION Ss. (JUDGE BROWN)
Ss. (CHAPTER 11)
Ss.
DEBTOR. Ss.
FIRST MODIFICATION TO
SECOND AMENDED JOINT PLAN OF REORGANIZATION OF
EQUALNET CORPORATION AND EQUALNET COMMUNICATIONS CORP.
TO THE HONORABLE KAREN K. BROWN,
UNITED STATES BANKRUPTCY JUDGE:
EqualNet Corporation, Debtor ("EqualNet") and Equalnet Communications
Corp. ("ECC") modify their Second Amended Joint Plan of Reorganization ("the
Plan") in the following respects.
1. Article 25.1 of the Plan is hereby modified pursuant to the Escrow
Agreement that is attached to this modification and incorporated herein for all
purposes.
DATED: APRIL 27, 1999
Respectfully submitted,
KIRKENDALL & ISGUR, LLP
By: /s/
-------------------------------------------
Thomas Kirkendall
State Bar No. 11517300
Joseph Epstein
State Bar No. 06639320
700 Louisiana, Suite 4200
Houston, Texas 77002
(713) 225-4646
(713) 230-0016 (facsimile)
ATTORNEYS FOR EQUALNET CORPORATION, DEBTOR
EQUALNET COMMUNICATIONS CORP.
FIRST MODIFICATION OF JOINT SECOND AMENDED PLAN OF REORGANIZATION
APRIL 27, 1999
PAGE 1
<PAGE> 2
By: /s/
----------------------------------------
Mitchell Bodian, Chief Executive Officer
1250 Wood Branch Park Drive
Houston, Texas 77079
(281) 529-4600
(281) 529-4650 (fax)
APPROVED:
SMITH, GAMBRELL & RUSSELL, LLP
/s/
- -----------------------------
Darryl S. Laddin
Suite 3100, Promenade II
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309-3592
(404) 815-3798
(404) 685-7098 (fax)
ATTORNEYS FOR THE UNSECURED CREDITORS' COMMITTEE OF EQUALNET CORPORATION
FIRST MODIFICATION OF JOINT SECOND AMENDED PLAN OF REORGANIZATION
APRIL 27, 1999
PAGE 2
<PAGE> 3
EQUALNET COMMUNICATIONS CORP.
1250 WOOD BRANCH PARK DRIVE
HOUSTON, TEXAS 77079
(281) 529-4600
(281) 529-4650 (FAX)
April 26, 1999
Mr. Darryl Laddin
Smith, Gambrell & Russell, LLP
Counsel to the Unsecured Creditors' Committee
of EqualNet Corporation
Suite 3100, Promenade II
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309-3592
Re: Escrow Agreement regarding deposit of $150,000 in connection
with confirmation of EqualNet Corporation and Equalnet
Communications Corp.'s Second Amended Plan of Reorganization
("the Plan")
Dear Mr. Laddin:
This confirms the agreement between the Unsecured Creditors' Committee
of EqualNet Corporation ("the Committee"), Kirkendall & Isgur, LLP, Escrow Agent
("Escrow Agent"), and Equalnet Communications Corp. ("ECC") regarding ECC's
deposit of $150,000 with the Escrow Agent pending confirmation and consummation
of the Plan.
ECC has deposited $150,000 in the Escrow Agent's trust account as
consideration for the Committee's agreement to a modification of the condition
in Article 25.1 of the Plan that ECC deposit the ECC Cash Payment, the New
Capital, and the professional fees and expenses (collectively "the Plan
funding") with the Escrow Agent prior to the Court's entry of the Confirmation
Order. Article 25.1 of the Plan shall be modified in the Confirmation Order to
provide that the Plan funding shall be delivered on or before 5:00 p.m., Central
Time, ten days after the Bankruptcy Court enters the Confirmation Order.
If the Plan funding is timely delivered, then the $150,000 may be used
as a portion of the Plan funding. If the Plan funding is not timely delivered
(except for the two exceptions set forth below), then the $150,000 shall be
delivered to the trust account of counsel for the Committee pending further
Bankruptcy Court Order, and no claim to such funds shall be made by ECC, the
Debtor, or any current or former insider, employee, or affiliate of ECC or the
Debtor.
If Plan funding is not delivered timely because of the following two
reasons, then Escrow Agent shall promptly deliver the $150,000 to ECC:
2. The Confirmation Order or consummation of the Plan is stayed
by an Order of the Bankruptcy Court or appellate court;
<PAGE> 4
LETTER AGREEMENT
APRIL 26, 1999
PAGE 4
3. ECC's stock is delisted by the Nasdaq Exchange on or before
ten days after the Bankruptcy Court's entry of the Confirmation Order,
and such delisting is not the result of (a) failure to obtain the Plan
funding, (b) a material adverse change in the financial condition of
ECC or EqualNet Corporation, or (c) any communication by ECC, the
Debtor, or an employee, insider, or representative of ECC or the Debtor
to the SEC or the Nasdaq Exchange that there is a reason to believe
that either (a) or (b) will occur.
ECC represents and warrants to the Committee that, to the best of its
knowledge, ECC is not aware of any additional facts or circumstances that would
result in the delisting of its stock prior to Plan funding, except for the facts
and circumstances previously disclosed to the Nasdaq Exchange in written or oral
communications.
Between the date of this agreement and the date of Plan funding, ECC
shall promptly advise counsel for the Committee on a confidential basis of the
substance and nature of any communication between ECC and the Nasdaq Exchange
regarding any issues pertaining to delisting.
This letter represents the entire agreement of the parties and shall
not be modified except in writing. This agreement shall be interpreted in
accordance with Texas law, and the Bankruptcy Court shall resolve any dispute
that may arise in regard to this agreement.
Very truly yours,
EQUALNET COMMUNICATIONS CORP.
By: /s/
----------------------------------------
Mitchell Bodian, Chief Executive Officer
APPROVED:
UNSECURED CREDITORS' COMMITTEE OF EQUALNET CORPORATION
By: /s/
---------------------------------------------------
Smith, Gambrell & Russell, LLP., its counsel
ESCROW AGENT
By: /s/
------------------------------
Kirkendall & Isgur, LLP
<PAGE> 1
EXHIBIT 3
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
IN RE: Ss.
Ss.
EQUALNET CORPORATION, Ss. CASE NO. 98-39561-H5-11
A DELAWARE CORPORATION Ss. (JUDGE BROWN)
Ss. (CHAPTER 11)
Ss.
DEBTOR. Ss.
ORDER APPROVING SECOND PLAN MODIFICATION
Came on for consideration EqualNet Corporation, Debtor's Expedited
Motion to Approve Post-Confirmation and Pre-Consummation Modification to the
Second Amended Joint Plan of Reorganization, as Modified ("the Plan") that was
confirmed by this Court under Order entered April 28, 1999. Upon reviewing the
Expedited Motion and comments of counsel on the relief requested, the Court
concludes that the relief requested is reasonable and should be approved. The
Court also having concluded that notice and the hearing on the Plan modification
is reasonable under the circumstances, it is accordingly
ORDERED, ADJUDGED AND DECREED THAT:
Article 25.1 of the Plan and Paragraph 12 of the Order Confirming
Second Amended Joint Plan of Reorganization, as Modified ("the Confirmation
Order") are hereby modified pursuant to the Second Modification to the Plan that
is attached to this modification and incorporated herein by reference for all
purposes;
Paragraph 31 of the Confirmation Order is hereby modified to provide as
follows:
Effect of Plan Funding on Confirmation Order. In accordance with the
Second Modification to the Second Amended Joint Plan of Reorganization attached
to this Order, the Plan is confirmed subject to Plan funding. If Plan funding
does not timely occur pursuant to the Second Modification, then this Order shall
be rendered unenforceable without further order of this Court and this Order
shall be vacated by this Court.
Debtor shall give creditors and parties-in-interest on the Master
Service List in this case
<PAGE> 2
notice of this Order, and any creditor or party-in-interest may file an
objection with the Court and serve a copy of same on counsel for the Debtor and
the Committee within ten (10) days after this Order is entered.
MAY 6, 1999 /s/
- -------------------------- -------------------------------------
DATE THE HONORABLE KAREN K. BROWN,
UNITED STATES BANKRUPTCY JUDGE
<PAGE> 3
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
IN RE: Ss.
Ss.
EQUALNET CORPORATION, Ss. CASE NO. 98-39561-H5-11
A DELAWARE CORPORATION Ss. (JUDGE BROWN)
Ss. (CHAPTER 11)
Ss.
DEBTOR. Ss.
SECOND MODIFICATION TO
SECOND AMENDED JOINT PLAN OF REORGANIZATION, AS MODIFIED
OF EQUALNET CORPORATION AND EQUALNET COMMUNICATIONS CORP.
TO THE HONORABLE KAREN K. BROWN,
UNITED STATES BANKRUPTCY JUDGE:
EqualNet Corporation, Debtor ("EqualNet") and Equalnet Communications
Corp. ("ECC") modify their Second Amended Joint Plan of Reorganization ("the
Plan") in the following respects.
1. Article 25.1 of the Plan is hereby modified pursuant to the Amended
Escrow Agreement that is attached to this modification and incorporated
herein for all purposes.
DATED: MAY 6, 1999
Respectfully submitted,
KIRKENDALL & ISGUR, LLP
By: /s/
------------------------------------------
Thomas Kirkendall
State Bar No. 11517300
Joseph Epstein
State Bar No. 06639320
700 Louisiana, Suite 4200
Houston, Texas 77002
(713) 225-4646
(713) 230-0016 (facsimile)
ATTORNEYS FOR EQUALNET CORPORATION, DEBTOR
EQUALNET COMMUNICATIONS CORP.
SECOND MODIFICATION OF JOINT SECOND AMENDED PLAN OF REORGANIZATION
MAY 6, 1999
PAGE 3
<PAGE> 4
By: /s/
------------------------------------------
Mitchell Bodian, Chief Executive Officer
1250 Wood Branch Park Drive
Houston, Texas 77079
(281) 529-4600
(281) 529-4650 (fax)
APPROVED:
SMITH, GAMBRELL & RUSSELL, LLP
/s/
- --------------------------------
Darryl S. Laddin
Suite 3100, Promenade II
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309-3592
(404) 815-3798
(404) 685-7098 (fax)
ATTORNEYS FOR THE UNSECURED CREDITORS' COMMITTEE OF EQUALNET CORPORATION
SECOND MODIFICATION OF JOINT SECOND AMENDED PLAN OF REORGANIZATION
MAY 6, 1999
PAGE 4
<PAGE> 5
EQUALNET COMMUNICATIONS CORP.
1250 WOOD BRANCH PARK DRIVE
HOUSTON, TEXAS 77079
(281) 529-4600
(281) 529-4650 (FAX)
May 6, 1999
Mr. Darryl Laddin
Smith, Gambrell & Russell, LLP
Counsel to the Unsecured Creditors' Committee
of EqualNet Corporation
Suite 3100, Promenade II
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309-3592
Re: Amended Escrow Agreement regarding additional deposit of
$185,000 in connection with confirmation of EqualNet
Corporation and Equalnet Communications Corp.'s Second Amended
Plan of Reorganization ("the Plan")
Dear Mr. Laddin:
This confirms the agreement between the Unsecured Creditors' Committee
of EqualNet Corporation ("the Committee"), Kirkendall & Isgur, LLP, Escrow Agent
("Escrow Agent"), and Equalnet Communications Corp. ("ECC") regarding ECC's
deposit of an additional $185,000 with the Escrow Agent pending confirmation and
consummation of the Plan.
ECC has already deposited on April 26, 1999 $150,000 in the Escrow
Agent's trust account as consideration for the Committee's agreement to a
modification of the condition in Article 25.1 of the Plan that ECC deposit the
ECC Cash Payment, the New Capital, and the professional fees and expenses
(collectively "the Plan funding") with the Escrow Agent prior to the Court's
entry of the Confirmation Order. As a result of that deposit, the Bankruptcy
Court modified Article 25.1 of the Plan in the Confirmation Order to provide
that the Plan funding shall be delivered on or before 5:00 p.m., Central Time,
ten days after the Bankruptcy Court enters the Confirmation Order, which date
would be May 8, 1999.
ECC will deposit by 5:00 p.m. on May 7, 1999 an additional $185,000 in
the Escrow Agent's trust account as consideration for the Committee's agreement
to a second modification of the condition in Article 25.1 of the Plan that ECC
deposit the ECC Cash Payment, the New Capital, and the professional fees and
expenses (collectively "the Plan funding") with the Escrow Agent as of May 8,
1999. As a result of this additional deposit, the Bankruptcy Court modified
Article 25.1 of the Plan and the Confirmation Order to provide that the Plan
funding shall be delivered on or before 5:00 p.m., Central Time, on Friday, May
21, 1999.
<PAGE> 6
AMENDED ESCROW AGREEMENT
MAY 6, 1999
PAGE 6
If the Plan funding is timely delivered, then the $335,000 deposited
with the Escrow Agent may be used as a portion of the Plan funding. If the Plan
funding is not timely delivered (except for the exception set forth below), then
the $335,000 (or such lesser amount if the Court directs a distribution pursuant
to the following sentence) shall be delivered to the trust account of counsel
for the Committee pending further Bankruptcy Court Order, and no claim to such
funds shall be made by ECC, the Debtor, or any current or former insider,
employee, or affiliate of ECC or the Debtor. The Bankruptcy Court may direct the
Escrow Agent to use a portion of the $335,000 to pay interim allowances of
compensation to professionals of the Committee in this case.
If Plan funding is not delivered timely because the Confirmation Order
or consummation of the Plan is stayed by an Order of the Bankruptcy Court or
appellate court, then the Escrow Agent shall promptly deliver the funds in the
Escrow Account to ECC.
ECC represents and warrants to the Committee that, to the best of its
knowledge, ECC is not aware of any additional facts or circumstances that would
result in the delisting of its stock prior to Plan funding, except for the facts
and circumstances previously disclosed to the Nasdaq Exchange in written or oral
communications.
Between the date of this agreement and the date of Plan funding, ECC
shall promptly advise counsel for the Committee on a confidential basis of the
substance and nature of any communication between ECC and the Nasdaq Exchange
regarding any issues pertaining to delisting.
To the extent that this amended letter agreement conflicts with the
terms of the prior letter agreement dated April 26, 1999, the terms of this
amended letter shall control. This amended letter agreement is the entire
agreement of the parties and shall not be modified except in writing. This
agreement shall be interpreted in accordance with Texas law, and the Bankruptcy
Court shall resolve any dispute that may arise in regard to this agreement.
Very truly yours,
EQUALNET COMMUNICATIONS CORP.
By: /s/
------------------------------------------
Mitchell Bodian, Chief Executive Officer
<PAGE> 7
AMENDED ESCROW AGREEMENT
MAY 6, 1999
PAGE 7
APPROVED:
UNSECURED CREDITORS' COMMITTEE OF EQUALNET CORPORATION
By: /s/
--------------------------------------------------
Smith, Gambrell & Russell, LLP., its counsel
ESCROW AGENT
By: /s/
---------------------------------------------------
Kirkendall & Isgur, LLP
<PAGE> 1
EXHIBIT 4
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
IN RE: Ss.
Ss.
EQUALNET CORPORATION, Ss. CASE NO. 98-39561-H5-11
A DELAWARE CORPORATION Ss. (JUDGE BROWN)
Ss. (CHAPTER 11)
Ss.
DEBTOR. Ss.
ORDER APPROVING THIRD PLAN MODIFICATION
Came on for consideration EqualNet Corporation, Debtor and Equalnet
Communications Corp.'s oral Motion to Approve Third Post-Confirmation and
Pre-Consummation Modification to the Second Amended Joint Plan of
Reorganization, as Modified ("the Plan") that was confirmed by this Court under
Order entered April 28, 1999. Upon the EqualNet's counsel's representations
regarding nature of the relief requested, and upon the representation of
EqualNet's counsel that counsel for the Official Creditors' Committee had
approved the relief requested, the Court concludes that the relief requested is
reasonably likely to facilitate Plan consummation and should be approved. The
Court also concludes that notice and the hearing on the Third Modification is
reasonable under the circumstances. Accordingly, it is
ORDERED, ADJUDGED AND DECREED THAT:
Article 25.1 of the Plan and Paragraph 12 of the Order Confirming
Second Amended Joint Plan of Reorganization, as Modified ("the Confirmation
Order") are hereby modified pursuant to this Third Modification. The Court finds
and concludes that this Third Modification conforms with the requirements of
Sections 1127, 1122, 1123, and 1125 of the Bankruptcy Code.
The Third Modification provides as follows:
In connection with finalizing a merger transaction with Orix Global
Communications, Inc. ("Orix") from which Equalnet Communications Corp.
("ECC") intends to fund the Plan, ECC has arranged for the deposit of
$3,255,000
<PAGE> 2
("the funds") on this date in the trust account of EqualNet's counsel
pending finalization of such merger transaction. If unconditional Plan
funding has not occurred by 5 p.m. on Monday, May 24, 1999, then
EqualNet's counsel shall return the funds--net of $50,000--to the
sources from which the funds were wired into counsel's trust account.
The $50,000 shall remain in the trust account of EqualNet's counsel
pursuant to the terms of the Amended Escrow Agreement dated May 6, 1999
that was previously approved by the Court in connection with the Second
Modification to the Second Amended Plan. If Plan funding has not
occurred by 5 p.m. on Monday, May 24, 1999, then the Confirmation Order
shall be rendered unenforceable without further order of this Court and
this Order shall be vacated by this Court.
Paragraph 31 of the Confirmation Order is hereby modified to provide as
follows:
Effect of Plan Funding on Confirmation Order. In accordance with the
Third Modification to the Second Amended Joint Plan of Reorganization attached
to this Order, the Plan is confirmed subject to Plan funding. If Plan funding
does not timely occur pursuant to the Third Modification, then this Order shall
be rendered unenforceable without further order of this Court and this Order
shall be vacated by this Court.
Debtor shall give creditors and parties-in-interest on the Master
Service List in this case notice of this Order, and any creditor or
party-in-interest may file an objection with the Court and serve a copy of same
on counsel for the Debtor and the Committee within ten (10) days after this
Order is entered.
MAY 21, 1999 /s/
- -------------------------- -------------------------------
DATE THE HONORABLE KAREN K. BROWN,
UNITED STATES BANKRUPTCY JUDGE
