EX-10.2 3 a2036119zex-10_2.txt EXHIBIT 10.2 EXHIBIT 10.2 AMENDMENT NO. 2 TO WORKOUT AGREEMENT THIS AMENDMENT NO. 2 TO WORKOUT AGREEMENT (this "AMENDMENT') is entered into as of this 18th day of August, 2000, by and between STAR Telecommunications, Inc., a Delaware corporation ("DEBTOR"), PT-1 Communications, Inc. ("PT-1"), HelveyCom, LLC ("HELVEY"), CEO California Telecommunications, Inc., CEO Telecommunications, Inc., Lucius Enterprises, Inc., AS Telecommunications, Inc.; PT-1 Long Distance, Inc., PT-1 Holdings I, Inc., Phonetime Technologies, Inc., PT-1 Holdings II, Inc., Nationwide Distributors, Inc., Technology Leasing, Inc., Investment Services, Inc., and PT-1 Communications Puerto Rico, Inc. (collectively, the "DEBTOR ENTITIES") and MCI WORLDCOM NETWORK SERVICES, INC., a Delaware corporation having a place of business located at 6929 North Lakewood Avenue, M.D. 5.2-510, Tulsa, Oklahoma 74117 ("WORLDCOM"). WHEREAS, the parties entered into a Workout Agreement dated as of the 12th day of April 2000, as amended by Amendment No. 1 to Workout Agreement dated as of June 30, 2000 (the "Workout Agreement") providing for, INTER ALIA, the restructuring of certain past due indebtedness of the Debtor Entities to WorldCom; and WHEREAS, the parties entered into other agreements incident and related to the Workout Agreement which are included within the meaning of the term "WorldCom Documents" as that term is defined in the Workout Agreement; and WHEREAS, Debtor and WorldCom have entered into a Standby Term Loan Note dated as of June 30th, 2000, as amended by Amendment No. 1 to Standby Term Loan Note dated as of July 31, 2000, as further amended by Amendment No. 2 to Standby Term Loan Note dated as of August 15, 2000 (the "Term Note") for the purpose of, INTER ALIA, providing certain credit to the Debtor Entities to be used for payment of fees, charges and other amounts owed by the Debtor Entities to WorldCom under the Service Agreements, as that term is defined in the Workout Agreement; and WHEREAS, the parties are entering into this Amendment for the purpose of memorializing their agreement and understanding that the Workout Agreement and the security, guarantees and collateral provided by the other WorldCom Documents shall also be applicable to the Term Note. NOW, THEREFORE, the parties hereto, in consideration of the promises contained herein and intending to be legally bound hereby, agree as follows: 1. INCORPORATION OF RECITALS. The parties affirm and acknowledge that the recitals herein set forth are true and correct and are incorporated in this Amendment by reference. 2. AMENDMENT OF THE WORKOUT AGREEMENT. Section 14 of the Workout Agreement is hereby amended and restated as follows: 14. CONSENT BY WORLDCOM TO SALE OF PT-1 OR ITS ASSETS. Notwithstanding any provision in the WorldCom Documents to the contrary, WorldCom consents to the sale of all of PT-1's stock or substantially all of its assets. Notwithstanding the foregoing, WorldCom reserves any and all rights it may have to the proceeds of any such sale and the Debtor Entities agree that an aggregate amount of such proceeds equal to the Obligations evidenced by the Notes shall be be disbursed, without WorldCom's consent, such consent not to be unreasonably withheld. 3. ACKNOWLEDGEMENT AND AFFIRMATION. Each of the undersigned hereby unconditionally consents to all of the provisions of the Workout Agreement, as amended by this Amendment, and acknowledges receipt of a copy of this Amendment and the Notes, including, without limitation, Amendment No. 1 to Promissory Note, dated as of July 31, 2000, Amendment No. 2 to Promissory Note, dated as of August 15, 2000, Amendment No. 1 to Standby Term Loan Note, dated as of July 31, 2000, and Amendment No. 2 to Standby Term Loan Note, dated as of August 15, 2000. 4. CONFIRMATION AND RATIFICATION. Each of the undersigned hereby confirms and ratifies their respective Security Agreements, Pledge Agreements, Guarantys, and any other WorldCom Documents to which it is a party, in their respective entirety and further agrees that the liabilities and obligations evidenced by the Term Note, shall be considered as part of the Obligations, for all purposes, including, without limitation, the guaranty of such Obligations under each of the Guarantys of PT-1 and Helvey, each dated as of April 12, 2000, as the same may be amended, modified of supplemented from time to time, and the security provided therefor under the respective Security Agreements and Pledge Agreements of the Debtor, PT-1 and Helvey, each dated as of April 12, 2000, as the same may be amended, modified or supplemented from time to time. 5. RELEASE OF WORLDCOM. Each of the Debtor Entities forever releases and discharges WorldCom, its agents, servants, employees, directors, officers, attorneys, branches, parent, affiliates, subsidiaries, successors and assigns and all persons, firms, corporations, and organizations acting on WorldCom's behalf (collectively referred to as the "WORLDCOM RELEASED ENTITIES") of and from any and all losses, damages, claims, demands, liabilities, obligations, actions and causes of action, of any nature whatsoever in law or in equity, including, without limitation, any claims or joinders for sole liability, contribution or indemnity (collectively, the "CLAIMS"), which one or more of the Debtor Entities may have or claim to have against WorldCom or any one or more of the WorldCom Released Entities, as of the date of this Amendment, whether presently known or unknown, and of every nature and extent whatsoever, on account of or in any way touching, concerning, arising out of, founded upon or relating to (i) the WorldCom Documents, (ii) the obligations of one or more the Debtor Entities under the WorldCom Documents, (iii) this Amendment, (iv) enforcement or negotiations of this Amendment or any of the WorldCom Documents, and (v) the dealings of the parties to this Amendment with respect to the obligations of the Debtor Entities to WorldCom under the WorldCom Documents or one or more of them. 2 6. EFFECTUATION OF RELEASES. Each of the Debtor Entities agrees to execute all appropriate and necessary documents to enable WorldCom or any of the WorldCom Entities, to plead the effect of the releases contained in Section 5 of this Amendment in any lawsuit. Each of the Debtor Entities also understands and agrees that the covenants and consideration referred to in this Agreement are in consideration for the continued forbearance by the parties in enforcing their respective rights, including, without limitation, WorldCom's forbearance in collecting or otherwise enforcing the Obligations owed to WorldCom, and said forbearance by WorldCom shall not be construed as an admission of any liability on the part of WorldCom or any WorldCom Released Entity, and the Debtor's have not claimed any such liability. 7. CUMULATIVE NATURE OF RELEASE. Nothing contained in this Amendment shall impair or be construed to impair the security of WorldCom or any of the WorldCom Released Entities under the WorldCom Documents, nor affect nor impair any rights or powers that WorldCom or any of the WorldCom Released Entities may have under the WorldCom Documents for the recovery of the indebtedness of the Debtor Entities to WorldCom in case of breach of the terms, provisions and releases contained in this Amendment or breach or nonfulfillment of the terms, agreements and covenants set forth in the WorldCom Documents. All rights, powers and remedies of WorldCom or any of the WorldCom Released Entities under any other agreement or release now or at any time in the future in force between WorldCom and the Debtor with respect to the Obligations shall be cumulative and not alternative and shall be in addition to all rights, powers and remedies given to WorldCom or any of the WorldCom Released Entities by law. 8. BINDING RELEASE. The releases contained in Section 5 of this Amendment shall be binding upon each of the Debtor Entities and shall inure to the benefit of WorldCom and the WorldCom Released Entities, and any of their respective successors and assigns. 9. SEVERABILITY. The provisions of this Amendment are intended to be severable. If any provision of this Amendment shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability of such provision in any other jurisdiction or the remaining provisions of this Amendment in any jurisdiction. 10. GOVERNING LAW, ETC. This Amendment shall be governed by Oklahoma law, without giving effect to principles of conflicts of laws. Each party agrees that service of process may be duly effected by service in accordance with the provisions of the Uniform Interstate and International Procedure Act. 11. CHOICE OF VENUE AND WAIVER OF JURY TRIAL. THE PARTIES AGREE THAT ALL DISPUTES OF EVERY KIND AND NATURE ARISING UNDER OR IN CONNECTION WITH THIS AMENDMENT SHALL BE RESOLVED EXCLUSIVELY IN THE STATE OR FEDERAL COURTS LOCATED IN TULSA, OKLAHOMA. THE PARTIES EACH WAIVE THEIR RIGHTS TO A JURY TRIAL WITH 3 RESPECT TO ANY SUCH DISPUTE AND CONSENT TO THOSE COURTS EXERCISING SUBJECT MATTER AND PERSONAL JURISDICTION WITH RESPECT TO ANY SUCH DISPUTE. 12. EXECUTION OF RELEASE AND WAIVER. EACH OF THE PARTIES REPRESENTS AND WARRANTS TO THE OTHER THAT IT HAS CAREFULLY READ THE FOREGOING TERMS AND CONDITIONS OF THIS AMENDMENT, THAT IT KNOWS AND UNDERSTANDS THE CONTENTS AND EFFECT OF THIS AMENDMENT, THAT THE LEGAL EFFECT OF THIS AMENDMENT, INCLUDING, WITHOUT LIMITATION, THE RELEASE AND WAIVER OF JURY TRIAL PROVISIONS CONTAINED IN THIS AMENDMENT, HAVE BEEN FULLY EXPLAINED TO ITS SATISFACTION BY ITS COUNSEL, AND EXECUTION OF THIS AMENDMENT IS A VOLUNTARY ACT. 13. INTERPRETATION. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, the singular includes the plural, the part includes the whole, "including" is not limiting, and "or" has the inclusive meaning represented by the phrase "and/or." The words "hereof," "herein," "hereunder," and similar terms in this Amendment refer to this Amendment as a whole and not to any particular provision of this Amendment. Terms not defined herein shall have the meaning as set forth in the Workout Agreement. 14. TERM OF AMENDMENT. This Amendment will terminate upon termination of the Workout Agreement. 15. HEADINGS. The headings of the sections in this Amendment are for purposes of reference only, and shall not limit or affect the meaning of such section. 16. NO PARTNERSHIP OR JOINT VENTURE. It is understood by the parties that this Amendment shall not in any way be construed as an agreement of partnership, general or limited, or of creating a joint venture between WorldCom and any other party to this Agreement, or any one or more of them, or of creating any relationship other than that of debtor and creditor. 17. COUNTERPARTS. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same Amendment. 18. JOINT PREPARATION. The preparation of this Amendment has been a joint effort of the parties and the resulting document shall not, solely as a matter of judicial construction, be construed more severely against one of the parties than the other. 19. THIRD PARTY BENEFICIARIES. The terms and conditions of this Amendment are not intended to affect or benefit in any way any third parties other than the WorldCom Entities, all of which are explicitly intended to be third party beneficiaries under this Amendment. 4 20. SUCCESSORS AND ASSIGNS. This Amendment will be binding upon and inure to the benefit of the respective parties, and their respective successors and assigns, including any bankruptcy trustee, except that neither party may assign or transfer any of its rights or delegate any of its duties under this Amendment without the prior written consent of the other party. IN WITNESS WHEREOF, the parties hereto by their authorized representatives have executed this Amendment No. 2 to Workout Agreement, as of the day and year first above written. STAR TELECOMMUNICATIONS, INC. LUCIUS ENTERPRISES, INC. By: /s/ Mary Casey By: /s/ Mary Casey ------------------------------ ------------------------------- Name: Mary Casey Name: Mary Casey ---------------------------- ----------------------------- Title: President Title: President --------------------------- ---------------------------- PT-1 COMMUNICATIONS, INC. AS TELECOMMUNICATIONS, INC. By: /s/ Mary Casey By: /s/ Mary Casey ------------------------------ ------------------------------- Name: Mary Casey Name: Mary Casey ---------------------------- ----------------------------- Title: CEO Title: CEO --------------------------- ---------------------------- HELVEY COM, LLC PT-1 LONG DISTANCE, INC. By: /s/ Mary Casey By: /s/ Mary Casey ------------------------------ ------------------------------- Name: Mary Casey Name: Mary Casey ---------------------------- ----------------------------- Title: MANAGER Title: CEO --------------------------- ---------------------------- CEO TELECOMMUNICATIONS, INC. PT-1 HOLDINGS I, INC. By: /s/ Mary Casey By: /s/ Mary Casey ------------------------------ ------------------------------- Name: Mary Casey Name: Mary Casey ---------------------------- ----------------------------- Title: President Title: CEO --------------------------- ---------------------------- CEO CALIFORNIA TELECOMMUNICATIONS, INC. PT-1 HOLDINGS II, INC. By: /s/ Mary Casey By: /s/ Mary Casey ------------------------------ ------------------------------- Name: Mary Casey Name: Mary Casey ---------------------------- ----------------------------- Title: President Title: CEO --------------------------- ---------------------------- 5 NATIONWIDE DISTRIBUTORS, INC. PT-1 COMMUNICATIONS PUERTO RICO, TECHNOLOGY LEASING, INC. INC. By: /s/ Mary Casey By: /s/ Mary Casey ------------------------------ ------------------------------- Name: Mary Casey Name: Mary Casey ---------------------------- ----------------------------- Title: CEO Title: CEO --------------------------- ---------------------------- INVESTMENT SERVICES, INC. PHONETIME TECHNOLOGIES, INC. By: /s/ Mary Casey By: /s/ Mary Casey ------------------------------ ------------------------------- Name: Mary Casey Name: Mary Casey ---------------------------- ----------------------------- Title: CEO Title: CEO --------------------------- ---------------------------- MCI WORLDCOM NETWORK SERVICES, INC. By: /s/ Robert S. Vetera 8/18/00 ------------------------------- Robert S. Vetera Vice President, Corporate Credit 6