<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _____)*
EQUALNET COMMUNICATIONS CORP.
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(Name of Issuer)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
294408109
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(CUSIP Number)
Stuart J. Chasanoff, Esq.
HW Partners, L.P.
1601 Elm Street, Suite 4000
Dallas, Texas 75201
(214) 720-1600
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 24, 1999
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(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box. / /
NOTE: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7 for the
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 the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
CUSIP NUMBER 294408109
<TABLE>
<CAPTION>
<S> <C> <C>
(1) Name of Reporting Persons. Infinity Investors Limited
I.R.S. Identification
Nos. of Above Persons (entities only) N/A
(2) Check the Appropriate Box if a (a) / /
Member of a Group (see instructions) (b) /X/
(3) SEC Use Only
(4) Source of Funds (see instructions) WC
(5) Check if Disclosure of Legal
Proceedings is Required Pursuant / /
to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization Nevis, West Indies
Number of Shares (7) Sole Voting 27,953,722
Power
Beneficially
(8) Shared Voting 2,083,333
Owned by Each Power
Reporting Person (9) Sole Dispositive 2,083,333
Power
with: (10) Shared Dispositive 2,083,333
Power
(11) Aggregate Amount Beneficially Owned 30,037,055
by Each Reporting Person
(12) Check if the Aggregate Amount in /X/
Row (11) Excludes Certain Shares (see instructions)
(13) Percent of Class Represented by 79%
Amount in Row (11)
(14) Type of Reporting Person (see instructions) CO
<PAGE>
CUSIP NUMBER 294408109
(1) Name of Reporting Persons IEO Holdings Limited
I.R.S. Identification
Nos. of Above Persons (entities only)
(2) Check the Appropriate Box if a (a) / /
Member of a Group* (b) /X/
(3) SEC Use Only
(4) Source of Funds (see instructions) WC
(5) Check if Disclosure of Legal
Proceedings is Required Pursuant / /
to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization Nevis, West Indies
Number of Shares (7) Sole Voting 27,953,722
Power
Beneficially
(8) Shared Voting 2,083,333
Owned by Each Power
Reporting Person (9) Sole Dispositive 2,083,333
Power
with:
(10) Shared Dispositive 2,083,333
Power
(11) Aggregate Amount Beneficially Owned 30,037,055
by Each Reporting Person
(12) Check if the Aggregate Amount in /X/
Row (11) Excludes Certain Shares (see instructions)
(13) Percent of Class Represented by 79%
Amount in Row (11)
(14) Type of Reporting Person (see instructions) CO
</TABLE>
<PAGE>
SCHEDULE 13D
Filed Pursuant to Rule 13d-1
ITEM 1. SECURITY AND ISSUER.
This Statement on Schedule 13D ("Statement") relates to common stock,
$.01 par value (the "Common Stock"), of EQUALNET COMMUNICATIONS CORP., a Texas
corporation ("Issuer"). The principal executive offices of the Issuer are
located at 1250 Wood Branch Park Drive, Houston, Texas 77079.
ITEM 2. IDENTITY AND BACKGROUND.
(a) Pursuant to Rule 13d-1(a) of Regulation 13D of the General Rules
and Regulations Promulgated under the Securities Exchange Act of
1934, as amended (the "Act"), this Statement is hereby filed
jointly by Infinity Investors Limited ("Infinity") and IEO
Holdings Limited ("IEO") (the "Reporting Persons").
Additionally, pursuant to Instruction C to Schedule 13D,
information is included herein with respect to the following
persons (collectively, the "Controlling Persons"):
HW Partners, L.P. ("HW Partners"), HW Finance, L.L.C.
("HW Finance"), Infinity Emerging Opportunities Limited
("Emerging"), and Barrett Wissman ("Wissman"). The Reporting
Persons and the Controlling Persons are sometimes hereinafter
collectively referred to as the "Item 2 Persons." The Reporting
Persons have included as Exhibit 99.1 to this Statement an
agreement in writing that this Statement is filed on behalf of
each of them.
(b) and (c) REPORTING PERSONS
The Reporting Persons are Nevis, West Indies Corporations. The
principal business of each Reporting Person is the purchase,
sale, exchange, acquisition and holding of investment
securities. The principal address of each Reporting Person,
which also serves as its principal office, is Hunkins
Waterfront Plaza, Main Street, P.O. Box 556, Charlestown,
Nevis, West Indies.
The names, business addresses, principal occupations or
employments and citizenships of each officer and director of the
Reporting Persons are set forth on Schedule A attached hereto
and incorporated herein by reference.
<PAGE>
CONTROLLING PERSONS
Pursuant to Instruction C to Schedule 13D of the Act,
information with respect to the Controlling Persons is set forth
below. The principal address of each Controlling Person, which
also serves as such person's principal office, is 1601 Elm
Street, Suite 4000, Dallas, Texas 75201.
Infinity:
No single shareholder has a controlling interest in Infinity.
HW Partners is a Texas limited partnership, the principal
business of which is acting as advisor to Infinity and IEO and
activities related thereto.
HW Finance is a Texas limited liability company, the principal
business of which is serving as the general partner of HW
Partners and activities related thereto. Wissman is the Manager
of HW Finance.
The principal occupation of Wissman is financial management.
IEO:
IEO is 100% owned by Emerging.
Emerging is a Nevis, West Indies corporation, the principal
business of which is the purchase, sale, exchange, acquisition
and holding of investment securities. No single shareholder has
a controlling interest in Emerging.
HW Partners is a Texas limited partnership, the principal
business of which is acting as advisor to Infinity and IEO and
activities related thereto.
HW Finance is a Texas limited liability company, the principal
business of which is serving as the general partner of HW
Partners and activities related thereto. Wissman is the Manager
of HW Finance.
(d) and (e) During the last five (5) years, no Item 2 Person has been
convicted in any criminal proceeding (excluding traffic
violations or similar misdemeanors) and no Item 2 Person was a
party to a civil proceeding of a judicial or administrative body
of competent jurisdiction such that, as a result of such
proceeding, any Item 2 Person was or is subject to a judgment,
decree of final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such
laws.
(f) The Reporting Persons and Emerging are Nevis, West Indies
corporations. Wissman is a citizen of the United States.
<PAGE>
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to a Common Stock Subscription Agreement dated May 24,
1999 (the "Subscription Agreement"), Infinity and IEO purchased
1,666,666 shares of Common Stock (the "Purchased Shares") at a
purchase price of $.60 per share. In addition, pursuant to the
Subscription Agreement, Infinity and IEO have been granted an
option to purchase up to an additional $1,500,000 in Common
Stock (the "Option Shares") on or before the Merger (as defined
below) at a purchase price of $.60 per share. The source of
funds for the purchase by Infinity and IEO of the Purchased
Shares was working capital. Should Infinity and IEO exercise
their option to purchase the Option Shares, the source of funds
will be working capital. The description contained in this Item
3 of the transactions contemplated by the Subscription Agreement
is qualified in its entirety by reference to the full text of
the Subscription Agreement, a copy of which is filed as Exhibit
99.2 to this Statement.
The irrevocable proxies granted to Infinity and IEO through HW
Partners apply only with respect to the matters described in
Item 4 below. Neither Infinity nor IEO paid any additional
consideration to any Proxy Stockholder (as defined below) in
connection with the execution or delivery of the Irrevocable
Proxy Agreements (as defined below) or his, her or its
irrevocable proxy.
ITEM 4. PURPOSE OF TRANSACTION.
The Subscription Agreement was executed in connection with an
Agreement and Plan of Merger dated as of May 24, 1999 (the
"Merger Agreement") by and among e. Volve Technology Group,
Inc., a Nevada corporation (f.k.a. Orix Global Communications,
Inc. and referred to herein as "Orix"), the Issuer and Equalnet
Acquisition Corporation, a Nevada corporation and wholly-owned
subsidiary of Issuer ("Merger Sub"), pursuant to which Merger
Sub will be merged with and into Orix (the "Merger"). Pursuant
to the Merger Agreement, all of the shares of the common stock
of Orix shall be converted into that number of shares of Common
Stock equal to fifty-five percent (55%) of the issued and
outstanding shares of the Common Stock upon consummation of the
Merger.
The Consummation of the Merger is subject to the satisfaction of
closing conditions for the benefit of all parties, closing
conditions for the benefit of the Issuer and closing conditions
for the benefit of Orix, as set forth in Articles 7 and 8 of the
Merger Agreement, respectively. The description contained in
this Item 4 of the transactions contemplated by the Merger
Agreement is qualified in its entirety by reference to the full
text of the Merger Agreement, a copy of which is filed as
Exhibit 99.3 to this Statement.
To facilitate the consummation of the Merger, certain
shareholders of the Issuer (the "Proxy Stockholders") have
entered into Irrevocable Proxy Agreements dated as of May 21,
1999 (the "Irrevocable Proxy Agreements") pursuant to which
Infinity and IEO, through their advisor, HW Partners, have been
granted an irrevocable proxy to
<PAGE>
vote the Common Stock of the Proxy Stockholders (the "Voting
Shares" and, collectively with the Purchase Shares and the
Option Shares, (the "Shares")) (a) in favor of (i) the Merger
Agreement and the transactions contemplated thereby, (ii) the
amendment of the Articles of Incorporation of the Issuer to
increase the authorized number of shares of Common Stock, (iii)
the authorization of the issuance of shares of Common Stock in
connection with the transactions contemplated by the Merger
Agreement, and (iv) in some cases, the conversion into Common
Stock of each convertible security held by each Proxy
Stockholder prior to the merger at any meeting (whether special
or annual), and whether or not adjourned or by written action of
the stockholders of Issuer, and (b) against any proposal brought
before the stockholders of Issuer which would conflict with the
Merger and the transactions contemplated by the Merger Agreement
including, without limitation, any proposal to remove any one or
more directors of the Issuer designated by Orix pursuant to the
Merger Agreement. The Proxy Stockholders retain the right to
vote their Common Stock with respect to matters other than those
identified in the Irrevocable Proxy Agreements. The description
contained in this Item 4 of the transactions contemplated by the
Irrevocable Proxy Agreements is qualified in its entirety by
reference to the full text of the Irrevocable Proxy Agreements,
copies of which are filed as Exhibits 99.4 to 99.12 of this
Schedule 13D.
The Reporting Persons may, at some other future time, purchase
additional shares of Common Stock, by open market purchase,
private purchase or otherwise. Whether the Reporting Persons
purchase or otherwise acquire any additional shares of Common
Stock, and the amount, method and timing of any such purchases
or acquisitions, will depend upon the Reporting Persons'
continuing assessment of pertinent factors including, among
other things, the following: the availability of shares of
Common Stock for purchase or acquisition at particular price
levels or upon particular terms; the business and prospects of
the Reporting Persons and the Issuer; other business and
investment opportunities available to the Reporting Persons;
economic conditions; stock market conditions; the actions of
other shareholders of the Issuer; the availability and nature
of opportunities to dispose of Common Stock; and other plans
and requirements of the Reporting Persons. Depending on the
assessment of the factors noted above, the Reporting Persons
may also, at some future time, dispose of shares of the Common
Stock that they own.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The following table provides the aggregate number and percentage
of Common Stock beneficially owned by the Reporting Persons on
May 24, 1999 (based on 20,972,111 shares of Common Stock
outstanding as reported on the Issuer's Form 10-Q for the period
ended March 31, 1999). For purposes of calculating the number of
voting shares and the total percentages listed below, each is
calculated as if each Proxy Stockholder has converted all
convertible securities held by such Proxy Stockholder into Common
Stock, as described in Item 4 of this Statement, yielding
38,119,952 shares of Common Stock outstanding:
<PAGE>
<TABLE>
<CAPTION>
Purchased Option Voting Aggregate Number of Percentage of
Name Shares Shares Shares Common Stock Common Stock
- ---- ------ ------ ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Infinity Investors Limited 833,333 1,250,000 25,870,389 27,953,722 73.3%
IEO 833,333 1,250,000 25,870,389 27,953,722 73.3%
</TABLE>
CONTROLLING PERSONS
Each of (1) HW Partners, as advisor to each of Infinity and IEO,
and (2) HW Finance, as the general partner of HW Partners, may
be deemed to be the beneficial owner of the Shares beneficially
owned by each of Infinity (the "Infinity Shares") and IEO (the
"IEO Shares") pursuant to Rule 13d-3 of the Act.
In his capacity as a controlling person of HW Partners, Wissman
may be deemed to be the beneficial owner of the Infinity Shares
and the IEO Shares pursuant to Rule 13d-3 of the Act.
Emerging, as the sole shareholder of IEO, may be deemed to be
the beneficial owner of the IEO Shares pursuant to Rule 13d-3 of
the Act.
(b) REPORTING PERSONS
Acting through its advisor, HW Partners, Infinity would have the
sole power to vote or to direct the vote and to dispose or to
direct the disposition of the Infinity Shares.
Acting through its advisor, HW Partners, IEO would have the sole
power to vote or to direct the vote and to dispose or direct the
disposition of the IEO Shares.
Pursuant to the Irrevocable Proxy Agreements, Infinity and IEO,
acting through their advisor, HW Partners, would have the sole
power to vote or to direct the vote of the Proxy Shares on the
questions and matters set forth in the Irrevocable Proxy
Agreements.
CONTROLLING PERSONS
Acting through its sole general partner HW Finance, HW Partners
would have the sole power to vote or to direct the vote and to
dispose or to direct the disposition of the Infinity Shares and
the IEO Shares and the sole power to vote or direct the vote of
the Proxy Shares as set forth in the Irrevocable Proxy
Agreements.
In his capacity as a controlling person of HW Partners, Wissman
would have the sole power to vote or to direct the vote and to
dispose or to direct the disposition of the Infinity Shares and
the IEO Shares and the sole power
<PAGE>
to vote or direct the vote of the Proxy Shares as set forth in
the Irrevocable Proxy Agreements.
As sole shareholder of IEO, Emerging would have the sole power
to vote or direct the vote and to dispose or to direct the
disposition of the IEO Shares.
(c) Except as set forth herein, the Item 2 Persons have
not effected any transaction in the Common Stock during the past
sixty days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, OR UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
This Statement contains summaries of certain provisions of the
Subscription Agreement, the Merger Agreement and the Irrevocable
Proxy Agreements, copies of which have been filed as Exhibits
99.2, 99.3 and 99.4-99.12, respectively. Such summaries are
qualified by, and subject to, the more complete information
contained in such agreements.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NO. TITLE OF EXHIBIT
99.1 Joint Filing Agreement, dated June 2, 1999.
99.2 Common Stock Subscription Agreement, dated as of
May 24, 1999, by and among Infinity Investors
Limited, IEO Holdings Limited and Equalnet
Commnications Corp.
99.3 Agreement and Plan of Merger, dated as of May 24,
1999, by and among e. Volve Technology Group, Inc.
(f.k.a. Orix Global Communications, Inc.).
99.4 Irrevocable Proxy Agreement, dated as of May 21,
1999, made by and between the Willis Group, L.L.C.
and HW Partners, L.P., as representative for
Infinity Investors Limited and IEO Holdings
Limited.
<PAGE>
99.5 Irrevocable Proxy Agreement, dated as of May 21,
1999, made by and between Advantage Fund, Ltd. and
HW Partners, L.P., as representative for Infinity
Investors Limited and IEO Holdings Limited.
99.6 Irrevocable Proxy Agreement, dated as of May 21,
1999, made by and between MCM Partners and HW
Partners, L.P., as representative for Infinity
Investors Limited and IEO Holdings Limited.
99.7 Irrevocable Proxy Agreement, dated as of May 21,
1999, made by and between Genesse Fund
Limited-Portfolio B and HW Partners, L.P., as
representative for Infinity Investors Limited and
IEO Holdings Limited.
99.8 Irrevocable Proxy Agreement, dated as of May 21,
1999, made by and between James R. Crane and HW
Partners, L.P., as representative for Infinity
Investors Limited and IEO Holdings Limited.
<PAGE>
99.9 Irrevocable Proxy Agreement, dated as of May 21,
1999, made by and between C. Keith LaMonda and HW
Partners, L.P., as representative for Infinity
Investors Limited and IEO Holdings Limited.
99.10 Irrevocable Proxy Agreement, dated as of May 21,
1999, made by and between Zane Russell and HW
Partners, L.P., as representative for Infinity
Investors Limited and IEO Holdings Limited.
99.11 Irrevocable Proxy Agreement, dated as of May 21,
1999, made by and between Frank Hevrdejs and HW
Partners, L.P., as representative for Infinity
Investors Limited and IEO Holdings Limited.
99.12 Irrevocable Proxy Agreement, dated as of May 21,
1999, made by and between First Sterling Ventures
Corp. and HW Partners, L.P., as representative for
Infinity Investors Limited and IEO Holdings
Limited.
(SIGNATURE PAGE FOLLOWS)
<PAGE>
After reasonable inquiry, and to the best of their knowledge and
belief, the undersigned certify that the information set forth in this Statement
is true, complete and correct.
Date: June 2, 1999
INFINITY INVESTORS LIMITED
By: /s/ James A. Loughran
Name: James A. Loughran
Title: Director
IEO HOLDINGS LIMITED
By: /s/ Suzanne Sheehy
Name: Suzanne Sheehy
Title: Director
Attention: Intentional misstatements or
omissions of fact constitute Federal
criminal violations (See 18 U.S.C. ss. 1001).
<PAGE>
SCHEDULE A
Set forth below is the name, citizenship (or place of organization, as
applicable), business address and present principal occupation or employment of
each director and executive officer of Infinity Investors Limited.
<TABLE>
<CAPTION>
Name and Citizenship Present Principal Occupation Position
or or with
Place of Organization Business Employment Reporting Person
--------------------- -------- ----------------------------- -----------------
<S> <C> <C> <C>
James A. Loughran 38 Hertford Street Lawyer Director
(Irish) London, England W1Y 7TG
James E. Martin 38 Hertford Street Accountant Director
(British) London, England W1Y 7TG
</TABLE>
<PAGE>
Set forth below is the name, citizenship (or place of organization, as
applicable), business address and present principal occupation or employment of
each director and executive officer of IEO Holdings Limited.
<TABLE>
<CAPTION>
Name and Citizenship Present Principal Occupation Position
or or with
Place of Organization Business Employment Reporting Person
--------------------- -------- ----------------------------- -----------------
<S> <C> <C> <C>
John A. Brooks 38 Hertford Street Solicitor Director, President and
(UK) London, England W1Y 7TG Treasurer
Suzanne Sheehy 38 Hertford Street Director and Secretary
(Irish) London, England W1Y 7TG Secretary
Sophia Leacocos 37 Shepherd Street Executive Director
(USA) London, England W1Y 7LH
Siobhan Mareuse 38 Hertford Street Attorney Director
(Irish) London, England W1Y 7TG
</TABLE>
<PAGE>
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k)(1) under the Securities Exchange Act
of 1934, as amended, the persons named below agree to the joint filing on behalf
of each of them of a Statement on Schedule 13D (including any amendments
thereto) with respect to the Common Stock of EQUALNET COMMUNICATIONS CORP. This
Joint Filing Agreement shall be included on an exhibit to such filing. In
evidence thereof, each of the undersigned, having duly authorized where
appropriate, hereby executes this Joint Filing Agreement as of the 2nd day of
June, 1999.
Date: June 2, 1999
INFINITY INVESTORS LIMITED
By: /s/ James A. Loughran
Name: James A. Loughran
Title: Director
IEO HOLDINGS LIMITED
By: /s/ Suzanne Sheehy
Name: Suzanne Sheehy
Title: Director
<PAGE>
Exhibit 99.2
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COMMON STOCK SUBSCRIPTION AGREEMENT
Dated as of May 24, 1999
By and Among
INFINITY INVESTORS LIMITED
and
IEO HOLDINGS LIMITED
and
EQUALNET COMMUNICATIONS CORP.
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<PAGE>
COMMON STOCK SUBSCRIPTION AGREEMENT
COMMON STOCK SUBSCRIPTION AGREEMENT dated as of May 24, 1999 by
and among INFINITY INVESTORS LIMITED, a Nevis West Indies corporation
("Infinity"), IEO HOLDINGS LIMITED, a Nevis West Indies corporation ("IEO" and,
together with Infinity, the "Purchasers") and EQUALNET COMMUNICATIONS CORP., a
Texas corporation ("Equalnet").
W I T N E S S E T H :
WHEREAS, the Purchasers desire to subscribe for, and Equalnet
desires to issue, and to grant an option for the additional issuance of, certain
shares of common stock, par value $ 0.01 per share, of Equalnet (the "Common
Stock");
WHEREAS, certain investors satisfactory to the Purchasers have
subscribed for $1,500,000 worth of equity securities of Equalnet and Equalnet
has incurred $500,000 of loans from its lenders; and
WHEREAS, the respective Boards of Directors of e.Volve Technology
Group, Inc. , a Nevada corporation (f.k.a Orix Global Communications, Inc., and
referred to herein as "Orix"), Equalnet and Equalnet Acquisition Corporation, a
Nevada corporation ("Merger Sub"), desire to combine their businesses by the
merger of Orix with and into Merger Sub, a wholly owned subsidiary of Equalnet,
upon the terms and subject to the conditions set forth in the definitive
agreement and plan of merger entered into on the date hereof (the "Merger
Agreement").
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
DEFINITIONS
Section 1.0 DEFINITIONS. As used in this Agreement, and
unless the context requires a different meaning, the following terms have the
meanings indicated:
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by, or under direct or
indirect common control with, such Person; provided, however, that, an Affiliate
shall include any entity that directly or indirectly (including through limited
partner or general partner interests) owns more than 5% of any class of the
equity of any other entity.
"Agreement" shall mean this Agreement, as the same may be
amended, supplemented or modified in accordance with the terms hereof, from time
to time.
<PAGE>
"Closing" shall have the meaning set forth in Section 4.3 of this
Agreement.
"Closing Date" shall have the meaning set forth in Section 4.3 of
this Agreement.
"Commission" shall mean, at any time, the Securities and Exchange
Commission or any other Federal agency then administering the Securities Act and
other Federal securities laws.
"Common Stock" shall have the meaning set forth in the recitals
of this Agreement.
"Company Notice" shall have the meaning set forth in Section
7.2(a) of this Agreement.
"Convertible Note" shall mean the $7,650,000 note evidencing debt
owed by the Surviving Corporation (as defined in the Merger Agreement) to
Infinity and IEO, and which is to be guaranteed by Equalnet in connection with
the Merger.
"Damages" shall have the meaning set forth in Section 10.1 of
this Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Incidental Registration" shall have the meaning set forth in
Section 7.2(a) of this Agreement.
"Irrevocable Proxy Agreements" shall mean the irrevocable proxy
and voting agreements which, among other things, grant HW Partners L.P. the
irrevocable right to vote securities of Equalnet owned by such person on certain
matters described therein.
"Junior Preferred Stock" shall have the meaning set forth in
Section 2.1.
"Merger" shall have the meaning provided therefor in the Merger
Agreement.
"Merger Agreement" shall have the meaning provided in the
recitals to this Agreement.
"Option" shall have the meaning set forth in Section 4.1 of this
Agreement.
"Option Common Stock" shall have the meaning set forth in Section
4.1 of this Agreement.
"Person" shall mean and include natural persons, corporations,
limited partnerships, general partnerships, limited liability companies, joint
stock companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
-2-
<PAGE>
"Purchase Price" shall have the meaning set forth in section 4.2
of this Agreement.
"Purchased Common Stock" shall have the meaning provided in
Section 4.1 of this Agreement.
"Purchasers" shall have the meaning set forth in the first
paragraph of this Agreement.
"Registrable Securities" shall mean any and all Common Stock
acquired by, or issuable to, the Purchasers or any of their Affiliates on or
after the date hereof (including, without limitation, the Purchased Common Stock
and the Option Common Stock) and any securities issued or issuable with respect
to the Common Stock by way of conversion, exchange, stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (A) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, or (B) such securities shall have been sold in accordance with Rule
144 (or any successor provision) under the Securities Act.
"Registration" shall mean each Shelf Registration and each
Incidental Registration.
"Registration Expenses" shall mean all expenses incident to
Equalnet's performance of or compliance with Article VII, inclusive, including,
without limitation, all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), expenses of printing certificates for the Registrable
Securities in a form eligible for deposit with The Depository Trust Company,
messenger and delivery expenses, internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), and fees and disbursements of counsel for Equalnet
and its independent certified public accountants (including the expenses of any
management review, cold comfort letters or any special audits required by or
incident to such performance and compliance), securities acts liability
insurance (if Equalnet elects to obtain such insurance), the reasonable fees and
expenses of any special experts retained by Equalnet in connection with such
registration, fees and expenses of other Persons retained by Equalnet and
reasonable fees and expenses of counsel (including local counsel) for holders of
Registrable Securities, selected by the holders of a majority of the Registrable
Securities to be included in such Registration; but not including any
underwriting fees, discounts or commissions attributable to the sale of
securities or fees.
"Rule 144" shall mean Rule 144 promulgated under the Securities
Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder.
-3-
<PAGE>
"Series A Convertible Preferred Stock" shall have the meaning set
forth in Section 2.1.
"Series B Convertible Preferred Stock" shall have the meaning set
forth in Section 2.1.
"Series C Convertible Preferred Stock" shall have the meaning set
forth in Section 2.1.
"Series D Convertible Preferred Stock" shall have the meaning set
forth in Section 2.1.
"Shelf Registration" shall have the meaning set forth in Section
7.1(a) of this Agreement.
"Subsidiary" with respect to any Person, shall mean and include
(x) any partnership of which the Person or any Subsidiary is a general partner
or (y) any other entity in which the Person or any of its Subsidiaries owns or
has the power to vote 50% or more of the equity interests in such entity having
general voting power to participate in the election of the governing body of
such entity.
ARTICLE II
REPRESENTATIONS OF EQUALNET
Section 2.0 REPRESENTATIONS OF EQUALNET. Each of the
representations and warranties made by Equalnet contained in the Merger
Agreement as in effect on the Closing Date are hereby confirmed and restated,
each such representation and warranty, together with all related definitions and
ancillary provisions and any information contained in any schedule to the Merger
Agreement, as in effect on the date hereof relating thereto, being hereby
incorporated by reference into this Agreement (without duplication) as a
representation and warranty to the Purchaser as if specifically set forth in
this Section 2.0.
Section 2.1 CAPITAL STOCK. Immediately prior to giving effect
to the transactions contemplated hereby, Equalnet had an authorized
capitalization consisting of (i) 50,000,000 shares of Common Stock, of which
20,972,111 shares of Common Stock were outstanding, (ii) 2,500 shares of Series
A Convertible Preferred Stock, par value $.01 per share ("Series A Convertible
Preferred Stock") of which 2,000 shares were outstanding, (iii) 3,000 shares of
Series B Convertible Preferred Stock, par value $.01 per share ("Series B
Convertible Preferred Stock") of which 3,000 shares were outstanding, (iv)
300,000 shares of Series C Convertible Preferred Stock, par value $.01 per share
("Series C Convertible Preferred Stock") of which 206,707 shares were
outstanding, (v) 6,500 shares of Series D Convertible Preferred Stock, par value
$.01 per share ("Series D Convertible Preferred Stock") of which 3,850 shares
were outstanding, and (vi) 900,000 shares of Junior Preferred Stock ("Junior
Preferred Stock") with an aggregate liquidation preference for all such shares
of Junior Preferred Stock equal to $5.00 mandatorily convertible to Common Stock
at a price of at least $.60 per share of Common Stock following stockholder
approval, of which 833,333 shares were outstanding. All outstanding
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shares of capital stock of Equalnet (including, without limitation, those
purchased by the Purchasers hereunder) have been, and will, on the Closing
Date, be duly authorized and validly issued and fully paid and
non-assessable. Except as set forth on SCHEDULE 2.1, there will be no
outstanding subscriptions, options, warrants, rights, calls, commitments,
conversion rights, rights of exchange, plans or other agreements or
commitments, contingent or otherwise, of any character providing for the
purchase, redemption, acquisition, retirement, issuance or sale by Equalnet
or any of its Subsidiaries of any shares of capital stock of Equalnet or any
of its Subsidiaries or other securities exchangeable or convertible into
capital stock of Equalnet or its Subsidiaries and there are no stock
appreciation rights or phantom stock plans outstanding. SCHEDULE 2.1 sets
forth the number of shares of Common Stock which Equalnet is obligated to
issue in connection with each specific item set forth on SCHEDULE 2.1 and
described in the immediately preceding sentence, after giving effect to the
transactions contemplated thereby. In addition, except for the Irrevocable
Proxy Agreement and as set forth herein and on SCHEDULE 2.1, there are no
rights, agreements, restrictions or encumbrances (such as preemptive rights,
rights of first refusal, rights of first offer, proxies, voting agreements,
voting trusts, registration rights agreements, shareholders agreements, etc.,
whether or not any Equalnet or any of its Subsidiaries is a party thereto)
nor are there any restrictions on the transferability or sale of such capital
stock pursuant to any provision of law, contract or otherwise with respect to
the purchase, sale or voting of any shares of capital stock of Equalnet or
any of its Subsidiaries (whether outstanding or issuable upon conversion,
exchange or exercise of any other security of Equalnet or any of its
Subsidiaries). Except as set forth in SCHEDULE 2.1, Equalnet has no
outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote (or which are convertible into or exercisable
for securities the holders of which have the right to vote). Upon issuance
of the capital stock of Equalnet to the Purchasers pursuant to Section 4.1,
the Purchasers will have good and marketable title to such securities free
and clear of all encumbrances, liens and claims of any kind.
Section 2.2 AUTHORIZATION AND VALIDITY OF THE DOCUMENTS.
Equalnet has the requisite power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement by Equalnet and the performance of its obligations
hereunder have been duly authorized and approved by all necessary action
(including, without limitation, all action of the Board of Directors and
stockholders of Equalnet) and no other action on the part of such persons is
necessary to authorize the execution, delivery and performance of this Agreement
by Equalnet. This Agreement has been duly executed and delivered by Equalnet
and, assuming due execution hereof by the other parties hereto, is a valid and
binding obligation of Equalnet, enforceable against Equalnet in accordance with
its terms, except to the extent that its enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding brought in equity or at law).
Section 2.3 CONSENTS AND APPROVALS; NO VIOLATIONS. The
execution and delivery of this Agreement by Equalnet and compliance by Equalnet
with the terms and provisions hereof and the issuance of the Purchased Common
Stock by Equalnet and the consummation of the transactions contemplated hereby
does not and will not (a) violate or contravene any provision of
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the Certificates, Articles of Incorporation or Bylaws of Equalnet or any of
its Subsidiaries, (b) violate or contravene any statute, rule, regulation,
licensing requirement, order or decree of any court, arbitrator or any other
public body or authority by which Equalnet or any of its Subsidiaries is
bound or by which any of its properties or assets are bound, (c) require any
filing with, or permit, consent, authorization, qualification or approval of,
or exemption from, or the giving of any notice to, any governmental or
regulatory body, agency or authority, or any other Person or (d) result in a
violation or breach of, conflict with, constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of
termination, cancellation, payment or acceleration) under, or result in the
creation of any encumbrance upon any of the properties or assets of Equalnet
or any of its Subsidiaries under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, franchise, permit,
agreement, lease, franchise agreement or any other instrument or obligation
to which Equalnet or any of its Subsidiaries is bound, or by which the
properties or assets of Equalnet or any of its Subsidiaries may be bound.
ARTICLE III
REPRESENTATIONS OF THE PURCHASER
Section 3.0 REPRESENTATIONS OF THE PURCHASER. In order to
induce Equalnet to enter into this Agreement and in order to induce Equalnet to
issue the Purchased Common Stock, the Purchasers represent, warrant and agree as
follows:
Section 3.1 EXISTENCE AND GOOD STANDING; POWER AND AUTHORITY.
Each Purchaser is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization. Each Purchaser has the
requisite power and authority to execute and deliver this Agreement and perform
its obligations hereunder. This Agreement has been duly authorized and approved
by each Purchaser, and assuming due execution by Equalnet is a valid and binding
obligation of each Purchaser enforceable against each Purchaser in accordance
with its terms, except to the extent that its enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws effecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding brought in equity or law).
Section 3.2 RESTRICTIVE DOCUMENTS. Neither Purchaser is
subject to any mortgage, lien, lease, agreement, instrument, order, law, rule,
regulation, judgment or decree, or any other restriction of any kind or
character, which would prevent consummation by the Purchasers of the
transactions contemplated hereby or which would result in a violation of breach
of, conflict with, constitute (with or without due notice or lapse of time or
both) a default under, or result in the creation of any encumbrance on the
Purchased Common Stock under the terms of any agreement to which either
Purchaser is a party.
Section 3.3 PURCHASE FOR INVESTMENT. (a) Each Purchaser will
acquire the Purchased Common Stock for its own account for investment purposes
only and not with a view toward any resale or distribution thereof and not for
offer or sale in connection therewith.
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(b) Each Purchaser understands that the Purchased Common
Stock (i) will constitute "restricted securities" within the meaning of such
term in the Securities Act and (ii) has not been registered under the Securities
Act or under any state securities laws and may not be sold or transferred unless
they are subsequently registered under the Securities Act and any applicable
state or other securities laws, or unless exemptions from registration under
such laws are available.
(c) Each Purchaser represents that it is experienced in
business and investment matters, fully understands the transactions contemplated
by this Agreement, has the knowledge and experience in financial matters as to
be capable of evaluating the merits and risks of its investment and has the
financial ability and resources to bear the economic risks of its investment.
(d) Each Purchaser acknowledges that it has received no
general solicitation or general advertising, and that the Purchaser's
representatives have attended no seminar or meeting with respect to the
Purchased Common Stock, nor is it aware of any such solicitation or
advertisement that may have been received by others.
(e) Each Purchaser is an "accredited investor" as defined in
Rule 501(a) under the Securities Act.
ARTICLE IV
ISSUANCE OF SECURITIES; PAYMENT OF SUBSCRIPTION PRICE; CLOSING
Section 4.1 ISSUANCE OF SECURITIES. Subject to the terms and
conditions set forth in this Agreement, Equalnet agrees to sell to the
Purchasers, and the Purchasers severally and not jointly agree to purchase, on
the Closing Date, up to $1,000,000 worth of shares of Common Stock or such
lesser amount as the Purchasers shall be permitted to purchase without obtaining
stockholder approval under applicable NASDAQ rules (the "Purchased Common
Stock"), with certificates to be issued and delivered in the names of Infinity
and IEO representing the number of shares of Common Stock purchased by Infinity
and IEO, respectively. Equalnet also hereby grants to the Purchasers an option
(the "Option") to purchase an additional $1,500,000 worth of shares of Common
Stock (the "Option Common Stock"). The Option may be exercisable in the sole
discretion of the Purchasers in two equal increments of $750,000 worth of Option
Common Stock. The first increment of the Option may be exercised by the
Purchasers on or prior to the later of (i) the date on which the delivery
described in Section 4.4(ix) is made and (ii) the 60th day following the date of
this Agreement. The second increment of the Option may be exercised by the
Purchasers in the sole discretion of the Purchasers at any time prior to the
consummation of the Merger.
Section 4.2 PRICE. In full consideration for the sale by
Equalnet of the Purchased Common Stock to the Purchasers, the Purchasers are
hereby obligated to deliver to Equalnet an amount equal to the number of shares
of Purchased Common Stock multiplied by $.60 per share of Purchased Common Stock
(the "Purchase Price") on the Closing Date, by wire transfer of immediately
available funds to the accounts specified by Equalnet. Upon any exercise of the
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Option granted pursuant to Section 4.1, the Purchasers shall deliver to Equalnet
an amount equal to the number of shares of Option Common Stock being purchased
multiplied by $.60 per share of Option Common Stock being purchased by wire
transfer of immediately available funds to the accounts specified by Equalnet.
Section 4.3 CLOSING. The sales referred to in Section 4.1
(each a "Closing") shall take place at such times and dates as the Purchaser
shall designate. Each such date is herein referred to as a "Closing Date."
Section 4.4 CLOSING DELIVERIES. At each Closing, as
applicable, Equalnet shall deliver, or cause to be delivered, to the Purchasers
the following: (i) certificates representing the number of shares of to be
issued and delivered as described in Section 4.1, free and clear of all
encumbrances with all necessary share transfer and other documentary stamps
attached at the expense of Equalnet, (ii) evidence or copies of any consents,
approvals, orders, qualifications, agreements or waivers required pursuant to
Article V, (iii) all certificates and other instruments and documents required
by this Agreement to be delivered by Equalnet to the Purchasers at or prior to
Closing; (iv) an opinion from the general counsel of Equalnet, dated the Closing
Date, in form and substance satisfactory to the Purchasers, (v) (A) a copy of
the Articles of Incorporation or other organizational documents of Equalnet,
including all amendments thereto, certified by the Secretary of State of Texas,
(B) a certificate from the Secretary of State or other appropriate official of
the State of Texas to the effect that Equalnet is in good standing and listing
all charter documents, (C) a certificate from the Secretary of State or other
appropriate official in each State or country in which Equalnet is qualified to
do business to the effect that Equalnet is in good standing in each such State
or country and (D) a copy of the Bylaws of Equalnet and the resolutions of the
Board of Directors of Equalnet authorizing the transactions contemplated hereby,
certified by the Secretary of Equalnet as being true and correct and in effect
on such Closing Date, (vi) a certificate of the chief financial officer or other
authorized officer of Equalnet certifying that (A) the representations and
warranties contained in the Merger Agreement are true and correct as of the
Closing Date, (B) all consents and approvals required by this Agreement and the
Merger Agreement have been obtained by the Closing Date and (C) Equalnet has
performed and complied in all material respects with all agreements covenants
and conditions required by this Agreement and the Merger Agreement as of the
Closing Date, (vii) evidence of the consummation of the Second Amended Joint
Plan Of Reorganization, as modified through the date hereof, of Equalnet's
wholly-owned subsidiary, Equalnet Corporation, by the United States Bankruptcy
Court for the Southern District of Texas, Houston Division, (viii) (a) valid and
enforceable irrevocable resignations of four directors of Equalnet and the
Chairman and the Chief Executive Officer of Equalnet, effective as of the
Effective Time (except in the case of the resignation of the Chief Executive
Officer which shall be effective upon the satisfaction, or deemed satisfaction,
of the condition set forth in Section 7.1(k) of the Merger Agreement), and (b)
valid and enforceable resolutions of the Board of Directors of Equalnet taking
all necessary action to appoint, effective as of the Effective Time,
representatives of Orix to the Board of Directors which shall constitute a
majority of the Board of Directors of Equalnet, appointing Fred Vierra (or such
other individual as Orix shall designate) as Chairman of the Board of Directors
of Equalnet and, effective as of May 25, 1999, appointing Barrett Wissman as
Co-Chief Executive Officer of Equalnet until such time as the condition set
forth in Section 7.1(k) of the Merger Agreement is satisfied or deemed to have
been satisfied at which time
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Barrett Wissman shall become the Chief Executive Officer and (ix) other than
for the first Closing, delivery of the Irrevocable Proxy Agreements
representing sufficient shares of Common Stock (on a fully-diluted basis) to
effect the amendment of the Articles of Incorporation of Equalnet necessary
to consummate the transactions contemplated by the Merger Agreement and the
issuance of Equalnet Common Stock pursuant to the Merger Agreement under all
applicable laws, rules and regulations including, without limitation, the
rules of NASDAQ.
ARTICLE V
CONDITIONS TO THE PURCHASER'S OBLIGATIONS
Section 5.1 CONDITIONS TO THE PURCHASER'S OBLIGATIONS. The
several obligations of the Purchasers to purchase the Purchased Common Stock at
the first Closing contemplated by this Agreement is conditioned upon
satisfaction, at or prior to such Closing, of the following conditions:
Section 5.2 CLOSING DELIVERIES. Receipt by the Purchasers of
the documents referred to in Section 4.4.
Section 5.3 NO MATERIAL ADVERSE CHANGE. Prior to the Closing
there shall have been no material adverse change in the business, operations,
assets, nature of assets, accounting treatment, liabilities, condition
(financial or otherwise), results of operations or prospects of Equalnet or its
Subsidiaries since the date of Equalnet's last audited financial statements.
Section 5.4 TRUTH OF REPRESENTATIONS AND WARRANTIES. Each of
the representations and warranties of Equalnet contained in this Agreement,
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of such date.
Section 5.5 NO LITIGATION THREATENED. No action or
proceedings shall have been instituted or, to the knowledge of Equalnet,
threatened before a court or other government body or by any public authority to
restrain, prohibit or make more costly any of the transactions contemplated by
this Agreement or which could reasonably be expected to have a material adverse
effect on the business, assets, liabilities, results of operations, condition
(financial or otherwise) of Equalnet and its Subsidiaries.
Section 5.6 THIRD PARTY CONSENTS; GOVERNMENTAL APPROVALS. All
consents, approvals or waivers, if any, disclosed on any schedule attached
hereto or required in connection with the consummation of the transactions
contemplated by this Agreement shall have been received. All of the consents,
approvals, authorizations, exemptions and waivers from governmental agencies
that shall be required in order to enable the Purchasers to consummate the
transactions contemplated hereby shall have been obtained.
Section 5.7 PROCEEDINGS. All proceedings to be taken in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be satisfactory in form and substance to the
Purchasers and their counsel, and the Purchasers shall have received copies of
all such documents and other evidences as it or its counsel may
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reasonably request in order to establish the consummation of such
transactions and the taking of all proceedings in connection therewith.
Section 5.8 SUBSCRIPTION FOR JUNIOR PREFERRED STOCK. The
Willis Group, LLC or other investors satisfactory to the Purchasers shall have
subscribed for securities of Equalnet at a price such that the proceeds received
by Equalnet on the Closing Date from the subscription from The Willis Group, LLC
is equal to the amount of $2,500,000 less the Purchase Price. The Willis Group
shall purchase the maximum number of Equalnet Shares that it is able to purchase
without obtaining shareholder approval under applicable NASDAQ rules at a price
of $.60 per share and the remainder of such securities shall be in the form of
Junior Preferred Shares.
Section 5.9 CONVERSION RATES. The Purchasers shall have
received (either directly or through a representative) the written agreement of
all holders of any shares of stock and any debt securities which have a
conversion price of less than $.75 or a floating conversion price that,
notwithstanding any agreement to the contrary in the terms of such security or
any documentation relating to such security that such security shall not be
converted to shares of Common Stock at a price of less than $.75 per share of
Common Stock.
Section 5.10 RECEIPT OF FORM 10-Q. The Purchasers shall have
received the draft Form 10-Q of Equalnet for the quarter ended March 31, 1999,
which shall be in form and substance reasonably satisfactory to the Purchasers.
The receipt by Equalnet of the Purchase Price shall constitute a
representation and warranty by Equalnet that all of the conditions in this
Section 5 have been satisfied.
ARTICLE VI
CONDITIONS TO EQUALNET'S OBLIGATIONS
Section 6.0 CONDITIONS TO EQUALNET'S OBLIGATIONS. The
issuance of the Purchased Common Stock by Equalnet is conditioned upon
satisfaction, at or prior to the first Closing, of the following conditions:
Section 6.1 TRUTH OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Purchasers contained in this Agreement
shall be true and correct on and as of such Closing Date other than such
representatives and warranties made as of a specific date, which shall be true
and correct in all material respects as of such date, with the same effect as
though such representations and warranties had been made on and as of such date.
Section 6.2 THIRD PARTY CONSENTS; GOVERNMENTAL APPROVALS. All
consents, approvals authorizations, exemptions or waivers, if any, required in
connection with the consummation of the transactions contemplated by this
Agreement shall have been received.
Section 6.3 PERFORMANCE OF AGREEMENT. The Purchasers shall
have performed in all material respects, their obligations under this Agreement.
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Section 6.4 NO LITIGATION THREATENED. No action or proceeding
shall be instituted or, to the knowledge of the Purchasers, threatened before a
court or other government body or any public authority to restrain or prohibit
any of the transactions contemplated hereby, and the Purchasers shall have
delivered to Equalnet certificates, dated on such Closing Date, to such effect.
The receipt by the Purchasers of the Purchased Common Stock shall
constitute a several representation and warranty by each of the Purchasers that
all of the conditions in this Section 6 have been satisfied.
ARTICLE VII
REGISTRATION RIGHTS
Section 7.1 SHELF REGISTRATION. (a) OBLIGATION TO FILE AND
MAINTAIN. Equalnet shall file a registration statement covering all of the
Registrable Securities, on a continuous or delayed basis in the future (the
"Shelf Registration"). The Shelf Registration shall be amended from time to
time to include a number of shares of Common Stock sufficient to include all
shares of Common Stock held by the Purchasers including shares which may be
obtained upon conversion of the Convertible Note (as defined the Merger
Agreement). The Common Stock registered under the Shelf Registration shall be
reserved for the Securities held by the Purchasers and their Affiliates. The
Shelf Registration shall be on an appropriate form and such Registration and any
form of prospectus included therein or prospectus supplement relating thereto
shall reflect such plan of distribution or method of sale as the holders of
Registrable Securities may from time to time notify Equalnet, including (I) the
sale of some or all of the Registrable Securities in a public offering or, (II)
if requested by the any holder of Registrable Securities, subject to receipt by
Equalnet of such information (including information relating to purchasers) as
Equalnet reasonably may require, (i) a transaction constituting an offering
outside the United States which is exempt from the registration requirements of
the Securities Act in which any holder of Registrable Securities undertakes to
effect registration after the completion of such offering in order to permit
such shares to be freely tradable in the United States, (ii) a transaction
constituting a private placement under Section 4(2) of the Securities Act in
connection with which any holder of Registrable Securities undertakes to effect
a registration after the conclusion of such placement to permit such shares to
be freely tradable by the purchasers thereof, or (iii) a transaction under Rule
144A of the Securities Act in connection with which any holder of Registrable
Securities undertakes to effect a registration after the conclusion of such
transaction to permit such shares to be freely tradable by the purchasers
thereof.
(b) TIME FOR FILING AND EFFECTIVENESS. On or before the date
which is 30 days after the request by the Purchasers, Equalnet shall file with
the Commission the Shelf Registration with respect to all Registrable Securities
and shall use its best efforts to cause such Shelf Registration to become
effective as promptly as practicable after filing thereon, but in no event later
than the date which is 60 days after the date of such request. Equalnet shall
keep the Shelf Registration filed pursuant to this Section 7.1 continuously
effective until the date of termination set forth in Section 7.1(d) of this
Agreement. During the period during which the Shelf Registration is effective,
Equalnet shall supplement or make amendments to the Shelf
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Registration, if required by the Securities Act and the policies, rules and
regulations of the Commission as announced from time to time, or if
requested by the Purchaser or an underwriter of Registrable Securities,
including to reflect any specific plan of distribution or method of sale, and
shall use its best efforts to have such supplements and amendments declared
effective, if required, as soon as practicable after filing.
(c) BLACK-OUT PERIODS OF THE PURCHASERS. Notwithstanding
anything herein to the contrary, Equalnet shall have the right from time to time
to require any holder of Registrable Securities not to sell Registrable
Securities pursuant to any Shelf Registration or to suspend the effectiveness
thereof during the period starting with the date 7 days prior to Equalnet's good
faith estimate, as certified in writing by an executive officer of Equalnet to
the holders of Registrable Securities, of the proposed date of filing of a
registration statement or a preliminary prospectus supplement relating to an
underwritten public offering of equity securities of Equalnet for the account of
Equalnet, and ending on the date 90 days following the delivery of such
estimate. Equalnet shall not be entitled to exercise the rights granted to
Equalnet pursuant to this Section 7.1(c) at any time prior to two years
following the Closing, and then only to the extent the Purchasers shall not be
deemed to be "affiliates" of Equalnet for purposes of Rule 144. In any event,
Equalnet shall not be entitled to exercise the rights granted to Equalnet
pursuant to this Section 7.1(c) more than once in any one year period.
(d) BLACK-OUT PERIODS OF EQUALNET. Subject to the conditions
of this Section 7.1(d), each holder of Registrable Securities shall have the
right to require Equalnet not to sell, and cause any employee, director, agent
or representative, who is also a holder of common equity securities or
securities convertible into common equity securities of Equalnet not to sell,
any equity securities of Equalnet or any securities convertible into equity
securities of Equalnet under any registration statement or prospectus
supplement, or to suspend the effectiveness thereof, during the period starting
with the date 30 days prior to such holders' good faith estimate, as certified
in writing by an executive officer of such holder to Equalnet, of the proposed
date of filing of a preliminary prospectus supplement relating to a Shelf
Registration filed pursuant to Section 7.1(a), pertaining to an underwritten
offering of Registrable Securities, and ending on the date 90 days following the
date of filing of the final prospectus supplement.
(e) PRIORITY ON SHELF REGISTRATIONS. If the managing
underwriter for any underwritten offering contemplated by this Section 7.1 shall
advise Equalnet in writing that, in such underwriter's opinion, the amount of
securities requested to be included in such Shelf Registration would adversely
affect the offering and sale (including pricing) of such securities then
Equalnet will include in such Shelf Registration, the number of securities that
Equalnet is so advised can be sold in such offering, in the following priority:
(i) first, all Registrable Securities requested to be sold
PRO RATA among such holders on the basis of the number of Registrable
Securities requested to be sold by such holders pursuant to this Section
7.1;
(ii) second, securities proposed to be sold by Equalnet for
its own account; and
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(iii) third, any other securities requested to be included in
such Registration in such manner as Equalnet may determine.
(f) NOTICE. Equalnet shall give each holder of Registrable
Securities prompt notice in the event that Equalnet has suspended sales of
Registrable Securities under Section 7.1(c).
(g) SELECTION OF UNDERWRITERS. Any and all underwriters or
other agents involved in any sale of Registrable Securities pursuant to a Shelf
Registration shall include one or more underwriting firms of nationally
recognized standing selected by the Purchasers and reasonably acceptable to
Equalnet.
(h) EXPENSES. All Registration Expenses incurred in
connection with any Shelf Registration shall be borne by Equalnet. Equalnet
shall, in any event, bear its internal costs (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and expenses
of any Person, including special experts, retained by Equalnet.
Section 7.2 INCIDENTAL REGISTRATIONS. (a) NOTIFICATION AND
INCLUSION. If Equalnet proposes to register for its own account or the account
of any other securityholder, any equity securities of Equalnet or any securities
convertible into equity securities of Equalnet under the Securities Act (other
than pursuant to a registration on Form S-4 or Form S-8 or any similar form),
Equalnet shall, at each such time after the date hereof, promptly give notice to
each holder of Registrable Securities (the "Company Notice") of such
registration and of such holder's rights under this Section 7.2(a). Upon the
written request of any holder of Registrable Securities given within 20 days
after receipt of a Company Notice by such holder of Registrable Securities,
Equalnet shall include in such proposed registration such Registrable Securities
as such holders shall request and shall use its best efforts to cause a
registration statement covering all of the Registrable Securities that such
holders have requested to be registered to become effective under the Securities
Act (an "Incidental Registration").
(b) PRIORITY ON INCIDENTAL REGISTRATION. If an Incidental
Registration pursuant to this Section 7.2 involves an underwritten offering and
the managing underwriter of such underwritten offering shall advise Equalnet in
writing that, in such underwriter's opinion, the amount of securities requested
to be included in such Incidental Registration, would adversely affect the
offering and sale (including price) of such securities, then Equalnet will
include in such Incidental Registration, the number of securities that Equalnet
is so advised can be sold in such offering, in the following priority:
(i) first, all the securities of Equalnet which Equalnet
proposes to sell for its own account;
(ii) second, all Registrable Securities requested to be sold
PRO RATA among such holders on the basis of the number of Registrable
Securities requested to be sold by such holders pursuant to this Section
7.2; and
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(iii) third, any other securities requested to be included in
such Registration, in such manner as Equalnet may determine.
(c) EXPENSES. All Registration Expenses incurred in
connection with any Incidental Registration shall be borne by Equalnet.
Equalnet shall, in any event, bear its internal costs (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expenses of any annual audit and the fees and
expenses of any Person, including special experts, retained by Equalnet.
(d) DURATION OF EFFECTIVENESS. At the request of a majority
of the Registrable Securities, Equalnet shall use its best efforts to keep any
registration statement for which Registrable Securities are included in an
Incidental Registration effective and usable for not less than 180 days unless
the distribution of securities registered thereunder has been earlier completed.
Section 7.3 REGISTRATION PROCEDURES. In connection with the
filing of any registration statement as provided in Section 7.1 or 7.2 of this
Agreement, Equalnet shall use its best efforts to effect the Registration and
sale of Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto, Equalnet will as expeditiously as
possible:
(a) prepare and (within 30 days after the end of the period
within which requests for registration may be given to Equalnet) file
with the Commission the requisite registration statement (including a
prospectus therein) to effect such Registration and use its best efforts
to cause such registration statement to become effective, provided that
before filing such registration statement or any amendments or
supplements thereto, Equalnet will furnish to the counsel selected by
the Purchaser copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel before any such
filing is made, and Equalnet will comply with any reasonable request
made by such counsel to make changes in any information contained in
such documents relating to such holders, and upon filing such documents,
Equalnet shall promptly notify in writing such counsel of the receipt by
Equalnet of any comments by the Commission with respect to such
registration statement or prospectus or any amendment or supplement
thereto or any request by the Commission for the amending or
supplementing thereof or for additional information with respect
thereto;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness
of such registration and to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities
covered by such registration statement until, in the case of Section
7.1, the termination of the period during which the Shelf Registration
is required to be kept effective, or, in the case of Section 7.2, the
earlier of such time as all of such securities have been disposed of and
the date which is 180 days after the date of initial effectiveness of
such registration statement;
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(c) furnish to each holder of Registrable Securities
included in a Registration hereunder and the underwriter or
underwriters, if any, without charge, at least one signed copy of the
registration statement and any post-effective amendments thereto, and
upon request, such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each
case including all exhibits), such number of copies of the prospectus
contained in such registration statements (including each preliminary
prospectus, complete prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, including documents incorporated by reference, as such
holders and the underwriters may request (it being understood that
Equalnet consents to the use of the prospectus and any amendment or
supplement thereto by each holder of Registrable Securities covered by
such registration statement and the underwriters, if any, in connection
with the offering and sale of the Registrable Securities covered by the
prospectus or any amendment or supplement thereto);
(d) register or qualify all Registrable Securities under such
other securities or blue sky laws of such jurisdictions as the
Purchasers shall request, to keep such registration or qualification in
effect for so long as such registration statement remains in effect, and
take any other action which may be necessary or advisable to enable such
holders to consummate the disposition in such jurisdictions of the
securities owned by such holders, except that Equalnet shall not for any
such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this paragraph be obligated to be so qualified, or to
consent to general service of process in any such jurisdiction, or to
subject Equalnet to any material tax in any such jurisdiction where it
is not then so subject;
(e) cause all Registrable Securities covered by such
registration statement to be registered with or approved by such other
government authority as may be necessary to enable such holder to
consummate the disposition of such Registrable Securities;
(f) furnish to each holder of Registrable Securities included
in a Registration hereunder a signed counterpart, addressed to such
holders (and the underwriters, if any), of (i) an opinion of counsel for
Equalnet, dated the effective date of such registration statement (and,
if such Registration includes an underwritten public offering, dated the
date of the closing under the underwriting agreement), reasonably
satisfactory in form and substance to the Purchaser, and (ii) a "cold
comfort" letter, dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering,
dated the date of the closing under the underwriting agreement), signed
by the independent public accountants who have certified Equalnet's
financial statements included in such registration statement, covering
substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of
such financial statements, all as are customarily covered in opinions of
issuer's counsel and in accountants' "cold comfort" letters delivered to
the underwriters in underwritten public offerings of securities;
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(g) immediately notify each holder of Registrable Securities
included in a registration statement hereunder at any time when Equalnet
becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, upon discovery that, or upon the
discovery of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
under which they were made, and at the request of such holders promptly
prepare and furnish to such holders a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances under which they were made;
(h) comply or continue to comply in all material respects
with the Securities Act and the Exchange Act and with all applicable
policies, rules and regulations of the Commission, as announced from
time to time, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at
least 12 months, but not more than 18 months, beginning with the first
full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act, and not file any amendment or
supplement to such registration statement or prospectus to which the
Purchaser shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material respects with
the requirements of the Securities Act, having been furnished with a
copy thereof at least five business days prior to the filing thereof;
(i) provide a transfer agent and registrar for all
Registrable Securities covered by such registration statement not later
than the effective date of such registration statement;
(j) list all Registrable Securities covered by such
registration statement on any securities exchange on which any shares of
Common Stock are then listed;
(k) in connection with any sale pursuant to a Registration,
cooperate with the holders of Registrable Securities and the managing
underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive
legends) representing securities to be sold under such Registration, and
enable such securities to be in such denominations and registered in
such names as the managing underwriter or underwriters, if any, or such
holders may request;
(l) enter into such agreements (including underwriting
agreements in customary form) and take such other actions as the
Purchaser shall reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities; and
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(m) cause its employees and personnel to use their best
efforts to support the marketing of the Registrable Securities
(including, without limitation, the participation in "road shows," at
the request of the underwriters or the Purchaser).
Section 7.4 REQUESTED UNDERWRITTEN OFFERINGS. If requested by
the underwriters for any Registration, Equalnet will enter into a customary
underwriting agreement with such underwriters for such offering, which shall
contain such representations and warranties by Equalnet and such other terms as
are customarily contained in agreements of this type, including indemnities to
the effect and to the extent provided in Section 7.6 hereof. Each holder of
Registrable Securities may be a party to such underwriting agreement and may, at
its option, require that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders. The holders of Registrable
Securities included in an underwritten registration hereunder shall not be
required to (i) make any representations or warranties to or agreement with
Equalnet or the underwriters other than representations, warranties or
agreements regarding such holder and such holder's intended method of
distribution and (ii) undertake any indemnification or contribution obligations
to Equalnet or the underwriters with respect thereto, except such
indemnification or contribution obligations otherwise provided in Section 7.6
hereof.
Section 7.5 PREPARATION; REASONABLE INVESTIGATION. In
connection with the preparation and filing of any registration statement under
the Securities Act, Equalnet will give the Purchaser, its underwriters, if any,
and their respective counsel, the opportunity to participate in the preparation
of such registration statement, each prospectus included therein or filed with
the Commission, and each amendment thereof or supplement thereto, and will give
each of them such access to its books and records and such opportunities to
discuss the business of Equalnet with its officers, its counsel and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of the Purchaser, such underwriters and their
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act.
Section 7.6 INDEMNIFICATION. (a) INDEMNIFICATION BY
EQUALNET. In the event of any registration of any Registrable Securities of
Equalnet under the Securities Act, Equalnet will, and hereby does, indemnify and
hold harmless the holders of such securities, their officers, directors,
members, employees, agents, representatives, stockholders and general and
limited partners and each Person who controls such holder (within the meaning of
the Securities Act and Exchange Act) against any losses, claims, damages,
liabilities, costs and expenses (or actions or proceedings, whether commenced or
threatened, in respect thereof), joint or several, insofar as such losses,
claims, damages, liabilities, costs and expenses (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of, are based
upon or are incurred in connection with, any untrue statement or alleged untrue
statement of any material fact contained in the registration statement under
which such Registrable Securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and Equalnet will reimburse such
indemnified persons for any legal or any other expenses incurred by them in
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connection with investigating or defending any such loss, claim, liability,
action or proceedings; PROVIDED, HOWEVER, that Equalnet shall not be liable to a
holder of Registrable Securities in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof),
costs or expense arises out of, is based upon or are incurred in connection
with, an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to Equalnet by such holder
of Registrable Securities specifically stating that it is for use in the
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of each holder of
Registrable Securities and shall survive the transfer of such securities by such
holders.
(b) INDEMNIFICATION BY THE HOLDER OF REGISTRABLE SECURITIES.
Equalnet may require, as a condition to including any Registrable Securities in
any registration statement pursuant to Section 7.1, that Equalnet shall have
received an undertaking satisfactory to it from each holder of Registrable
Securities to indemnify and hold harmless (in the same manner and to the same
extent as set forth in paragraph (a) of this Section 7.6) Equalnet, each
director of Equalnet, each officer of Equalnet and each other person, if any,
who controls Equalnet within the meaning of the Securities Act with respect to
any untrue statement or alleged untrue statement of a material fact in or
omission or alleged omission to state a material fact from such registration
statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, if such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to
Equalnet by such holders specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of Equalnet or any such director, officer, or controlling person and
shall survive the transfer of such securities by the holders of Registrable
Securities; PROVIDED, HOWEVER, that the obligation to indemnify will be
individual, not joint and several, for each holder and will be limited to the
net amount of proceeds received by such holder from the sale of Registrable
Securities pursuant to such registration statement.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding paragraphs of this Section 7.6,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action; PROVIDED, HOWEVER, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding paragraphs of this Section 7.6, except to the
extent that the indemnifying party is actually prejudiced by such failure to
receive such notice. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such claim, the indemnifying party shall be entitled to participate in and to
assume the defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying
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party shall not be liable to the indemnified party for any legal or other
expenses subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation and the indemnifying
party shall not, without the consent of the indemnified party, consent to
entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof, a release from all liability in respect of
such claim or litigation provided by the claimant or plaintiff to such
indemnified party.
(d) CONTRIBUTION. If, for any reason, the foregoing
indemnity is unavailable, or is insufficient to hold harmless an indemnified
party, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such expenses, losses, damages,
liabilities or expenses, (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other (determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission
relates to information supplied by the indemnifying party or the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law
or provides a lesser sum to the indemnified party than the amount hereinafter
calculated, in the proportion as is appropriate to reflect not only the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other, but also the relative fault of the indemnifying party on the
one hand and the indemnified party on the other, as well as any other relevant
equitable considerations. Notwithstanding the foregoing, no holder of
Registrable Securities shall be required to contribute any amount in excess of
the amount such holder would have been required to pay to an indemnified party
if the indemnity under Section 7.6(b) was available. No indemnified party
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any indemnifying
party who was not guilty of such fraudulent misrepresentation. The obligation
of any Person to contribute pursuant to this Section 7.6 shall be several and
not joint.
Section 7.7 RULE 144. With a view to making available the
benefits of certain rules and regulations of the Commission that may at any time
permit the sale of the Registrable Securities to the public without
registration, Equalnet shall:
(a) use its best efforts to facilitate the sale of the
Registrable Securities to the public, without registration under the
Securities Act, pursuant to Rule 144;
(b) make and keep public information available, as those
terms are understood and defined in Rule 144 at all times;
(c) use its best efforts to then file with the Commission in
a timely manner all reports and other documents required of Equalnet
under the Securities Act and the Exchange Act; and
(d) deliver a written statement as to whether it has complied
with such requirements of this section, to the holders of Registrable
Securities upon any such holder's request.
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ARTICLE VIII
COVENANTS
Section 8.1 COVENANTS. Equalnet agrees to comply with each of
the covenants contained in the Merger Agreement as in effect on the Closing Date
as if such covenants were included in this Agreement.
Section 8.2 USE OF PROCEEDS. Equalnet covenants and agrees to
use the proceeds from the sale of the Purchased Common Stock to subscribe for
the new common stock of reorganized Equalnet Corporation pursuant to, and in
full compliance with the Second Amended Joint Plan Of Reorganization, as
modified through the date hereof, of Equalnet Corporation by the United States
Court for the Southern District of Texas, Houston Division.
Section 8.3 AMENDMENT OF ARTICLES OF INCORPORATION. Equalnet
covenants and agrees to take all action necessary to solicit from its
stockholders proxies, and shall take all other action necessary and advisable,
to secure the vote of stockholders required by applicable law and Equalnet's
Articles of Incorporation and By-laws to obtain the approval required (a) under
NASDAQ rules to approve the issuance of Common Stock in the Merger and (b) to
amend the Articles of Incorporation to authorize for issuance such number of
shares of Common Stock as shall be required upon the consummation of the Merger.
ARTICLE IX
SURVIVAL
Section 9.1 SURVIVAL. The representations, warranties and
covenants of Equalnet and the Purchasers contained in this Agreement and the
schedules and certificates delivered in connection herewith shall survive the
Closing and may be relied upon by the Purchasers and Equalnet respectively,
regardless of any investigation made at any time by or on behalf of the
Purchasers or Equalnet, as the case may be.
ARTICLE X
INDEMNIFICATION
Section 10.1 INDEMNIFICATION. Equalnet agrees to indemnify and
hold the Purchasers and their respective officers, directors, employees,
Affiliates (including, without limitation, Orix Global Communications, Inc.) and
agents, and any successors thereto (and any officers, directors, employees,
Affiliates and agents of such successors) harmless from any liability (whether
fixed or unfixed, liquidated or unliquidated), actual or consequential damage,
deficiency, demand, claim, suit, action, or cause of action, fine, penalty,
loss, cost, expense, including without limitation, reasonable attorney fees
("Damages") incurred or suffered as a result of, in connection with, or arising
out of, the transactions contemplated hereby (including, without limitation, the
transactions contemplated by the Merger Agreement), including without
limitation, any Damages incurred or suffered as a result of, or in connection
with, or arising out of, the failure of (a) any representation or warranty made
by Equalnet pursuant to this Agreement, any schedule or exhibit to this
Agreement or any certificates delivered pursuant hereto (without regard to any
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"materiality", "material adverse effect", "substantial compliance" or similar
exception or qualifier and without regard to any knowledge or similar exception
or qualifier) to be true and correct as of the date hereof and on the Closing
Date, (b) Equalnet to comply with any of its agreements contained herein or in
the Merger Agreement or (c) any investigation, litigation or other proceeding
(whether or not any such indemnified person is a party thereto) relating to the
transactions contemplated hereby or by the Merger Agreement.
Section 10.2 CONTRIBUTION. To the extent that the undertaking
to indemnify, pay or hold harmless the Purchaser pursuant to Section 10.1 of
this Agreement may be unenforceable, Equalnet shall make the maximum
contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under applicable law.
ARTICLE XI
MISCELLANEOUS
Section 11.1 EXPENSES. Equalnet agrees to pay the costs and
expenses incurred by the Purchasers in connection with the transactions
contemplated hereby and the Purchasers' investment in Equalnet (including
without limitation, reasonable attorney's fees and expenses incurred in
connection with the (a) preparation, execution and delivery of this Agreement,
(b) any subsequent amendments, modifications or waivers relating thereto and (c)
any regulatory filings) and all costs and expenses incurred by the Purchasers
(including without limitation, the reasonable attorney's fees and expenses and
the fees and expenses of any experts retained by the Purchasers) in connection
with the exercise or enforcement of any rights contained in this Agreement.
Section 11.2 GOVERNING LAW. The interpretation and
construction of this Agreement, and all matters relating hereto, shall be
governed by the laws of the State of New York applicable to agreements executed
and to be performed solely within such State.
Section 11.3 CAPTIONS. The Article and Section captions used
herein are for reference purposes only, and shall not in any way affect the
meaning or interpretation of this Agreement.
Section 11.4 PUBLICITY. Except as otherwise required by law,
none of the parties hereto shall issue any press release or make any other
public statement, in each case relating to, connected with or arising out of
this Agreement or the matters contained herein or therein, without obtaining the
prior approval of the Purchasers and Equalnet to the contents and the manner of
presentation and publication thereof. No references to the Purchasers shall be
made in any public statement without the Purchasers' consent.
Section 11.5 NOTICES. Any notice or other communication
required or permitted under this Agreement shall be sufficiently given if
delivered in person or sent by telecopy or by registered or certified mail,
postage prepaid, addressed as follows:
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if to Equalnet:
Notice Address:
Equalnet Communications Corp.
1250 Wood Branch Park Drive
Houston, Texas 77079
Attention: Mitchell H. Bodian
Telephone: (281) 529-4602
Telecopier: (281) 529-4650
with a copy to:
Weil, Gotshal & Manges LLP
700 Louisiana, Suite 1600
Houston, Texas 77002
Attention: Charles E. Harrel
Telephone: (713) 546-5000
Telecopier: (713) 224-9511
and if to the Purchasers:
HW Partners, L.P.
1601 Elm Street, Suite 4000
Dallas, Texas 75201
Attention: Stuart Chasanoff
Telephone: (214) 720-1608
Telecopier: (214) 720-1667
with a copy to its counsel,
White & Case LLP
200 S. Biscayne Blvd., Suite 4900
Miami, FL 33131
Attention: Thomas E. Lauria
Telephone: (305) 371-2700
Telecopier: (305) 358-5744
or such other address or number as shall be furnished in writing by any such
party, and such notice or communication shall be deemed to have been given upon
automatic confirmation of receipt by the receiving machine if sent by
telecopier, upon delivery if delivered in person, and upon mailing if mailed.
Section 11.6 PARTIES IN INTEREST. Equalnet may not transfer,
assign or pledge any of its rights in, or otherwise grant any rights to any
Person in, this Agreement. The Purchasers may transfer any of their rights
hereunder (including, without limitation, the option rights granted in Section
4.1) and any assignee or transferee of the Purchased Common Stock or the Option
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Common Stock (other than transferees receiving the Securities pursuant to a
registered sale or a sale pursuant to Rule 144) shall have all the rights of the
transferring Purchaser hereunder. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and permitted assigns.
Section 11.7 COUNTERPARTS. This Agreement may be executed in
two or more counterparts, all of which taken together shall constitute one
instrument.
Section 11.8 ENTIRE AGREEMENT. This Agreement, including the
exhibits, schedules, and other documents referred to herein and therein which
form a part hereof and thereof, contain the entire understanding of the parties
hereto with respect to the subject matter contained herein and therein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
Section 11.9 AMENDMENTS. This Agreement may not be changed
orally, but only by an agreement in writing signed by the Purchasers and
Equalnet.
Section 11.10 SEVERABILITY. In case any provision in this
Agreement shall be held invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions hereof will not in any
way be affected or impaired thereby.
Section 11.11 THIRD PARTY BENEFICIARIES. Each party hereto
intends that this Agreement shall not benefit or create any right or cause of
action in or on behalf of any Person other than the parties hereto (and, in the
case of the Purchasers, their transferees) and those Persons entitled to
indemnification pursuant to Article X hereof.
Section 11.12 JURISDICTION. (a) Each of the parties hereto
hereby irrevocably acknowledges and consents that any legal action or proceeding
brought with respect to any of the obligations arising under or relating to this
Agreement may be brought in the courts of the State of New York or in the United
States Southern District Court of New York, as the party bringing such action or
proceeding may elect and each of the parties hereto hereby irrevocably submits
to and accepts with regard to any such action proceeding, for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each party hereby further irrevocably waives any claim that
any such courts lack jurisdiction over such party, and agrees not to plead or
claim, in any legal action or proceeding with respect to this Agreement or the
transactions contemplated hereby brought in any of the aforesaid courts, that
any such court lacks jurisdiction such party. Each party irrevocably consents
to the service of process in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to such party,
at its address for notices set forth in Section 11.5, such service to become
effective 10 days after such mailing. Each party hereby irrevocably waives any
objection to such service of process and further irrevocably waives and agrees
not to plead or claim in any action or proceeding commenced hereunder or under
any other documents contemplated hereby that service of process was in any way
invalid or ineffective. The foregoing shall not limit the rights of any party
to serve process in any other manner permitted by law. The foregoing consents
to jurisdiction shall not constitute general consents to service of process for
any purpose except as
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provided above and shall not be deemed to confer rights on any Person other
than the respective parties to this Agreement.
(b) To the fullest extent permitted by applicable law, each
of the parties hereto hereby irrevocably waives the objection which it may not
or hereafter have to the laying of the venue of any suit, action or proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby in any of the Courts referred to in Section 11.12(a) and hereby further
irrevocably waives and agrees not to plead or claim that any such court is not a
convenient forum for any such suit, action or proceeding.
(c) The parties hereto agree that any judgment obtained by
any party hereto or its successors or assigns in any action, suit or proceeding
referred to above may, in the discretion of such party (or its successors, or
assigns), be enforced in any jurisdiction, to the extent permitted by applicable
law.
* * * * *
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IN WITNESS WHEREOF the Purchasers have signed this Common Stock
Subscription Agreement and Equalnet has caused its corporate name to be hereunto
subscribed by its officers thereunto duly authorized, all as of the day and year
first above written.
EQUALNET COMMUNICATIONS CORP.
By: /s/ Mitchell H. Bodian
------------------------------------
Name: Mitchell H. Bodian
Title: Chief Executive Officer
INFINITY INVESTORS LIMITED
By: /s/ James A. Loughran
------------------------------------
Name: James A. Loughran
Title: Director
IEO HOLDINGS LIMITED
By: /s/ Suzanne Sheehy
------------------------------------
Name: Suzanne Sheehy
Title: Director
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.0 Definitions. . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
REPRESENTATIONS OF EQUALNET. . . . . . . . . . . . . . . . 4
Section 2.0 Representations of Equalnet. . . . . . . . . . . . . . . . 4
Section 2.1 Capital Stock. . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2 Authorization and Validity of the Documents. . . . . . . . 5
Section 2.3 Consents and Approvals; No Violations. . . . . . . . . . . 5
ARTICLE III
REPRESENTATIONS OF THE PURCHASER . . . . . . . . . . . . . 6
Section 3.0 Representations of the Purchaser . . . . . . . . . . . . . 6
Section 3.1 Existence and Good Standing; Power and Authority . . . . . 6
Section 3.2 Restrictive Documents. . . . . . . . . . . . . . . . . . . 6
Section 3.3 Purchase for Investment. . . . . . . . . . . . . . . . . . 6
ARTICLE IV
ISSUANCE OF SECURITIES; PAYMENT OF SUBSCRIPTION
PRICE; CLOSING . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.1 Issuance of Securities . . . . . . . . . . . . . . . . . . 7
Section 4.2 Price. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.3 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.4 Closing Deliveries . . . . . . . . . . . . . . . . . . . . 8
ARTICLE V
CONDITIONS TO THE PURCHASER'S OBLIGATIONS. . . . . . . . . 9
Section 5.1 Conditions to the Purchaser's Obligations. . . . . . . . . 9
Section 5.2 Closing Deliveries . . . . . . . . . . . . . . . . . . . . 9
Section 5.3 No Material Adverse Change . . . . . . . . . . . . . . . . 9
Section 5.4 Truth of Representations and Warranties. . . . . . . . . . 9
Section 5.5 No Litigation Threatened . . . . . . . . . . . . . . . . . 9
Section 5.6 Third Party Consents; Governmental Approvals . . . . . . . 9
Section 5.7 Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.8 Subscription for Junior Preferred Stock. . . . . . . . . . 10
Section 5.9 Conversion Rates . . . . . . . . . . . . . . . . . . . . . 10
Section 5.10 Receipt of Form 10-Q . . . . . . . . . . . . . . . . . . . 10
</TABLE>
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ARTICLE VI
CONDITIONS TO EQUALNET'S OBLIGATIONS . . . . . . . . . . . 10
Section 6.0 Conditions to Equalnet's Obligations . . . . . . . . . . . 10
Section 6.1 Truth of Representations and Warranties. . . . . . . . . . 10
Section 6.2 Third Party Consents; Governmental Approvals . . . . . . . 10
Section 6.3 Performance of Agreement . . . . . . . . . . . . . . . . . 10
Section 6.4 No Litigation Threatened . . . . . . . . . . . . . . . . . 10
ARTICLE VII
REGISTRATION RIGHTS. . . . . . . . . . . . . . . . . . . . 11
Section 7.1 Shelf Registration . . . . . . . . . . . . . . . . . . . . 11
Section 7.2 Incidental Registrations . . . . . . . . . . . . . . . . . 13
Section 7.3 Registration Procedures. . . . . . . . . . . . . . . . . . 14
Section 7.4 Requested Underwritten Offerings . . . . . . . . . . . . . 17
Section 7.5 Preparation; Reasonable Investigation. . . . . . . . . . . 17
Section 7.6 Indemnification. . . . . . . . . . . . . . . . . . . . . . 17
Section 7.7 Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VIII
COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.1 Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.2 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . 20
Section 8.3 Amendment of Articles of Incorporation . . . . . . . . . . 20
ARTICLE IX
SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE X
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . 20
Section 10.1 Indemnification. . . . . . . . . . . . . . . . . . . . . . 20
Section 10.2 Contribution . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE XI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 11.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 11.2 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 21
Section 11.3 Captions . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 11.4 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 11.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 11.6 Parties in Interest. . . . . . . . . . . . . . . . . . . . 22
Section 11.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 23
Section 11.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
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Section 11.9 Amendments . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 11.10 Severability . . . . . . . . . . . . . . . . . . . . . . . 23
Section 11.11 Third Party Beneficiaries. . . . . . . . . . . . . . . . . 23
Section 11.12 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . 23
<CAPTION>
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EXHIBITS
A Opinion of Dean Fisher, General Counsel of Equalnet
</TABLE>
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<PAGE>
Exhibit 99.3
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- -------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
by and among
e.VOLVE TECHNOLOGY GROUP, INC.,
EQUALNET COMMUNICATIONS CORPORATION
and
EQUALNET ACQUISITION CORPORATION
Dated as of May 24, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 24, 1999, by and among
e.Volve Technology Group, Inc., a Nevada corporation (f.k.a. Orix Global
Communications, Inc. and referred to herein as "Orix"), Equalnet Communications
Corp., a Texas corporation ("EQUALNET") and Equalnet Acquisition Corporation, a
Nevada corporation ("MERGER SUB").
WHEREAS, the respective Boards of Directors of Orix, Equalnet and Merger
Sub deem it advisable and in the best interests of their respective stockholders
that each of Merger Sub and Orix combine their businesses by the merger of
Merger Sub, a wholly owned subsidiary of Equalnet, with and into Orix upon the
terms and subject to the conditions set forth herein (the "MERGER");
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "CODE");
WHEREAS, certain holders of securities of Equalnet have each executed
and delivered irrevocable proxy and voting agreements (the "IRREVOCABLE PROXY
AGREEMENT") to HW Partners L.P. ("HW Partners") as representative for Infinity
Investors Limited ("INFINITY") and IEO Holdings Limited ("IEO") which
Irrevocable Proxy Agreements, among other things, grant HW Partners, as
representative for Infinity and IEO the irrevocable right to vote the shares of
Common Stock, par value $.01 per share, of Equalnet ("EQUALNET SHARES") owned by
such person on any question or matter related to the Merger and the other
transactions contemplated hereby including, without limitation, the Merger, the
amendment of the Articles of Incorporation of Equalnet to increase the
authorized number of Equalnet Shares and the authorization of the issuance of
Equalnet Shares under all applicable laws, rules and regulations including those
of the Nasdaq Small Cap Market ("NSCM"); and
WHEREAS, Infinity and IEO have, on the date hereof purchased Equalnet
Shares for up to $1,000,000 at a purchase price of $.60 per share and been
granted an option to purchase up to an additional $1,500,000 of Equalnet Shares
on, or before, the Merger at a purchase price of $.60 per share pursuant to a
Common Stock Subscription Agreement between Infinity, IEO and Equalnet dated as
of the date hereof (the "STOCK SUBSCRIPTION AGREEMENT").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.2 hereof) Merger Sub
shall be merged with and into Orix,
<PAGE>
with Orix being the surviving corporation in the Merger (the "SURVIVING
CORPORATION") and the separate existence of Merger Sub shall thereupon cease.
The Merger shall have the effects set forth in Section 92A.250 of the Nevada
General Corporation Law (the "NGCL").
1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective
upon the completion of the filing of properly executed Articles of Merger with
the Department of State of the State of Nevada, which filing shall be made on
the Closing Date (as hereinafter defined). When used in this Agreement, the
term "EFFECTIVE TIME" shall mean the date and time at which such Articles of
Merger are filed.
ARTICLE II
MERGER SUB AND THE SURVIVING CORPORATION
2.1 ARTICLES OF INCORPORATION OF THE SURVIVING CORPORATION. The
Articles of Incorporation of Orix shall be the Articles of Incorporation of the
Surviving Corporation until thereafter amended in accordance with such Articles
and applicable law.
2.2 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of Orix as in
effect at the Effective Time shall be the By-Laws of the Surviving Corporation
until thereafter amended in accordance with applicable law.
2.3 DIRECTORS AND OFFICERS OF EQUALNET AND OF EQUALNET'S AND THE
SURVIVING CORPORATION. At the Effective Time, the directors of Orix immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
each of such directors to hold office, subject to the applicable provisions of
the Articles of Incorporation and By-Laws of the Surviving Corporation, until
the next annual stockholders' meeting of the Surviving Corporation and until
their respective successors shall be duly elected or appointed and qualified.
At the Effective Time, the officers of Orix immediately prior to the Effective
Time shall, subject to the applicable provisions of the Articles of
Incorporation and By-Laws of the Surviving Corporation, be the officers of the
Surviving Corporation until their respective successors shall be duly elected or
appointed and qualified.
ARTICLE III
CONVERSION OF SHARES
3.1 EXCHANGE RATIO. At the Effective Time, by virtue of the Merger
and without any action on the part of the holder thereof:
(a) Each share of common stock of Orix (each, a "SHARE" and
collectively, the "SHARES") issued and outstanding immediately prior to the
Effective Time shall be converted at the Effective Time into the right to
receive Equalnet Shares at the Exchange Ratio (as hereinafter defined). All
Shares in the aggregate shall be converted into the right to receive a number of
Equalnet Shares equal to fifty-five percent (55%) of the issued and outstanding
Equalnet Shares on a fully diluted basis (the "AGGREGATE CONSIDERATION") and
each Share shall be converted into the number of Equalnet Shares equal to a
fraction, the numerator of which is the Aggregate
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<PAGE>
Consideration and the denominator of which is the total number of Orix Shares
outstanding (the "MERGER CONSIDERATION"). For purposes of determining how
many Equalnet Shares are to be issued so that such Equalnet Shares represent
fifty-five (55%) of the issued and outstanding Equalnet Shares on a fully
diluted basis (after giving effect to the issuance of Equalnet Shares in the
Merger and after giving effect to all antidilution adjustments arising as a
result of such issuance), all convertible or exchangeable securities shall be
deemed to be converted and/or exchanged, all warrants, options and similar
securities shall be deemed to be exercised and all other obligations of any
type to issue Equalnet shares or securities convertible or exercisable into
Equalnet Shares (contingent or otherwise) shall be deemed to have been issued
other than the Agreed Shares, it being understood that to the extent any such
convertible or exchangeable securities or warrants, options or similar
securities have any type of floating conversion ratio or floating exercise
price, then for purposes of determining the amount of Equalnet Shares which
would be issued upon the conversion, exchange or exercise thereof, the
conversion or exercise price shall be deemed to be the lowest such conversion
or exercise price resulting in the maximum number of securities which may be
issued (i.e. if a securities conversion price is tied to an Equalnet Shares
trading price and on the relevant date would give rise to a $2.0 conversion
price but the conversion price could float to a price as low as $.75, then
for purposes of determining the number of Equalnet Shares which could be
issued, $.75 shall be the applicable conversion price. In addition, for
purposes of determining whether the holders of Shares hold fifty-five (55%)
of the Equalnet Shares after giving effect to the transactions contemplated
hereby, the Equalnet Shares purchased pursuant to the Stock Subscription
Agreement and the Equalnet Shares into which the Convertible Note is
convertible shall be included in the denominator but not the numerator and
the Agreed Shares shall not be included in the denominator.
(b) At the Effective Time, each certificate previously representing
any Shares shall thereafter represent the Equalnet Shares into which such Shares
have been converted. Certificates representing Shares shall be exchanged for
certificates representing whole Equalnet Shares issued in consideration therefor
upon the surrender of such certificate in accordance with the provisions hereof.
(c) Each Share held in the treasury of Orix shall be canceled and
retired and cease to exist, and no Equalnet Shares shall be issued in exchange
therefor.
(d) Each share of Merger Sub shall be converted into one share of the
Surviving Corporation.
3.2 EXCHANGE OF SHARES.
(a) No later than the Effective Time, Equalnet shall make available,
and each holder of Shares will be entitled to receive, upon surrender to
Equalnet of one or more certificates representing such Shares for cancellation,
certificates representing the number of Equalnet Shares into which such Shares
are converted in the Merger. The Equalnet Shares into which Shares shall be
converted in the Merger shall be deemed to have been issued at the Effective
Time.
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<PAGE>
(b) As soon as reasonably practicable after the Effective Time,
Equalnet shall mail to each holder of record of a certificate or certificates
which immediately prior to the Effective Time represented outstanding Shares
(the "CERTIFICATES") whose Shares were converted into Equalnet Shares pursuant
to Section 3.1, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to Equalnet and shall be in such form and
have such other provisions as Orix may reasonably specify) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing Equalnet Shares. Upon surrender of a Certificate for
cancellation to Equalnet together with such letter of transmittal, duly
executed, the holder of the Shares represented by such Certificate shall be
entitled to receive in exchange therefor a certificate representing that number
of whole Equalnet Shares which such holder has the right to receive in respect
of the Shares represented by the Certificates surrendered pursuant to the
provisions of this Article III.
(c) In the event that any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact and execution and
delivery of a customary indemnity by the person claiming such Certificate to be
lost, stolen or destroyed, Equalnet will issue or cause to be issued in exchange
for such lost, stolen or destroyed certificate the number of Equalnet Shares
into which such Shares are converted in the Merger in accordance with this
Article III.
(d) At and after the Effective Time, the holders of Certificates
shall cease to have any rights as stockholders of Orix except for the right to
surrender such Certificates in exchange for Equalnet Shares as provided
hereunder.
3.3 TRANSFER TAXES. If any certificates for any Equalnet Shares are
to be issued in a name, other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of such exchange that
the person requesting such exchange shall pay to Equalnet any transfer or other
taxes required by reason of the issuance of certificates for such Equalnet
Shares in a name other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of Equalnet that such tax
has been paid or is not applicable. Notwithstanding the foregoing, no party
hereto shall be liable to a holder of Shares for any Equalnet Shares or
dividends thereon or, in accordance with Section 3.4 hereof, the cash payment
for fractional interests, delivered to a public official pursuant to applicable
escheat laws.
3.4 NO FRACTIONAL SECURITIES. No certificates or scrip representing
fractional Equalnet Shares shall be issued upon the surrender for exchange of
Certificates pursuant to this Article III and no dividend, stock split or other
change in the capital structure of Equalnet shall relate to any fractional
security, and such fractional interests shall not entitle the owner thereof to
vote or to any rights of a security holder. In lieu of any such fractional
securities, each holder of Shares who would otherwise have been entitled to a
fraction of a Equalnet Share upon surrender of Certificates for exchange
pursuant to this Article III shall be paid cash upon such surrender in an amount
equal to the product of such fraction multiplied by the average closing price
for an Equalnet Share on the NSCM for the five (5) trading days immediately
following the Closing Date (as defined below).
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<PAGE>
3.5 DISSENTING STOCK. Notwithstanding anything contained in this
Agreement to the contrary but only to the extent required by the NGCL, Shares
that are issued and outstanding immediately prior to the Effective Time and are
held by holders who comply with all the provisions of the law of the State of
Nevada concerning the rights of holders of Shares (such holders, "DISSENTING
STOCKHOLDERS") shall not be converted into the right to receive Merger
Consideration but shall become the right to receive such consideration as may be
determined to be due such Dissenting Stockholder pursuant to the law of the
State of Nevada; PROVIDED, HOWEVER, that (i) if any Dissenting Stockholder who
demands appraisal of such holder's shares under the NGCL shall effectively
withdraw or lose (through failure to perfect or otherwise) his right to
appraisal, then as of the Effective Time or the occurrence of such event,
whichever later occurs, such holder's Shares shall thereupon be deemed to have
been converted as of the Effective Time into the right to receive Merger
Consideration, without any interest thereon, and such stockholders shall no
longer be Dissenting Stockholders. The Surviving Corporation shall give
Equalnet (x) notice of any written demands for appraisal, withdrawals of demands
for appraisal and any other related instruments received by the Surviving
Corporation, and (y) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal. The Surviving Corporation shall not
voluntarily make any payment with respect to any demands for appraisal and shall
not, except with the prior written consent of Equalnet, settle or offer to
settle any demand.
3.6 CLOSING OF TRANSFER BOOKS. At the Effective Time, the stock
transfer books of Orix shall be closed and no transfer of shares or options
shall thereafter be made. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or Equalnet, they shall be cancelled and
exchanged for the Merger Consideration in accordance with Section 3.1, subject
to applicable law in the case of Dissenting Shares. From and after the
Effective Time, no Shares shall be deemed to be outstanding, and holders of
Certificates shall cease to have any rights with respect thereto except as
provided herein or by law.
3.7 CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of White & Case LLP,
1155 Avenue of the Americas, New York, New York, on the first business day (the
"CLOSING DATE") after the later of (a) the day on which the stockholders'
meetings referred to in Section 6.4 hereof shall have occurred, and (b) the day
on which all of the conditions set forth in Articles VII and VIII hereof are
satisfied or waived, or at such other date, time and place as the parties shall
agree.
3.8 OPTIONS. All unexercised options with respect to Shares shall be
cancelled without any payment thereon.
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<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EQUALNET AND MERGER SUB
Section 4. REPRESENTATIONS AND WARRANTIES OF EQUALNET AND MERGER SUB.
Except as set forth in the Equalnet Disclosure Letter, Equalnet hereby
represents and warrants to Orix that:
Section 4.1 DUE ORGANIZATION, GOOD STANDING AND CORPORATE POWER.
Equalnet and each of its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and each such Person has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Equalnet and each of its Subsidiaries is duly qualified
or licensed to do business and is in good standing in each Jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except in such jurisdictions
where the failure to be so qualified or licensed and in good standing could not
reasonably be expected to have a Material Adverse Effect. Equalnet has, prior
to the date of this Agreement, made available to Orix complete and correct
copies of the Articles or Certificate of Incorporation, as amended, and By-Laws
for each of Equalnet and its Subsidiaries.
Section 4.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of Equalnet
and Merger Sub have the requisite corporate power and authority to execute and
deliver the Merger Agreement, to perform its respective obligations hereunder
and (subject to the approval of the stockholders of the Company) to consummate
the transactions contemplated thereby. The execution, delivery and performance
of the Merger Agreement by each of the Company and the Merger Sub, and the
consummation by each of them of the transactions contemplated thereby, have been
duly authorized and approved by their respective Boards of Directors and no
other corporate action on the part of either Equalnet or Merger Sub is necessary
to authorize the execution, delivery and performance of this Agreement by either
Equalnet or Merger Sub and the consummation of the transactions contemplated
hereby (other than the approval of this Agreement and the transactions
contemplated hereby by the stockholders of Equalnet and the filing of
appropriate documents to effect such transactions, including, without
limitation, merger documents as required by the NGCL). This Agreement has been
duly executed and delivered by each of Equalnet and Merger Sub and is a valid
and binding obligation of each of Equalnet and Merger Sub enforceable against
each of Equalnet and the Merger Sub in accordance with its terms, except that
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and general equitable principles.
Section 4.3 CAPITALIZATION. As of the date of this Agreement, Equalnet
had an authorized capitalization consisting of (i) 50,000,000 shares of Common
Stock, of which 20,972,111 shares of Common Stock are outstanding, (ii) 2,500
shares of Series A Convertible Preferred Stock, par value $.01 per share of
which 2,000 shares are outstanding, (iii) 3,000 shares of Series B Convertible
Preferred Stock, par value $.01 per share of which 3,000 shares are outstanding,
(iv) 300,000 shares of Series C Convertible Preferred Stock, par value $.01 per
share of which 206,707 shares are outstanding, (v) 6,500 shares of Series D
Convertible Preferred Stock, par value $.01 per share of which 3,850 shares are
outstanding and 900,000 shares of Junior Series of
-6-
<PAGE>
which 833,333 shares are outstanding. As of the date of this Agreement, all
of the capital stock of Merger Sub is owned by Equalnet. All outstanding
shares of capital stock of Equalnet and Merger Sub are duly authorized and
validly issued and fully paid and non-assessable. Except as set forth on
SCHEDULE 4.3, there are no outstanding subscriptions, options, warrants,
rights, calls, commitments, conversion rights, rights of exchange, plans or
other agreements or commitments, contingent or otherwise, of any character
providing for the purchase, redemption, acquisition, retirement, issuance or
sale by Equalnet or any of its Subsidiaries (including Merger Sub) of any
shares of capital stock of Equalnet or any of its Subsidiaries (including
Merger Sub) or other securities exchangeable or convertible into capital
stock of Equalnet or its Subsidiaries (including Merger Sub) and there are no
stock appreciation rights or phantom stock plans outstanding. SCHEDULE 4.3
sets forth the number of shares of Common Stock which Equalnet is obligated
to issue in connection with each specific item set forth on SCHEDULE 4.3. In
addition, except for the Irrevocable Proxy Agreement and as set forth herein
and on SCHEDULE 4.3, there are no rights, agreements, restrictions or
encumbrances (such as preemptive rights, rights of first refusal, rights of
first offer, proxies, voting agreements, voting trusts, registration rights
agreements, shareholders agreements, etc., whether or not Equalnet or any of
its Subsidiaries (including Merger Sub) is a party thereto) nor are there any
restrictions on the transferability or sale of such capital stock pursuant to
any provision of law, contract or otherwise with respect to the purchase,
sale or voting of any shares of capital stock of Equalnet or any of its
Subsidiaries (including Merger Sub) (whether outstanding or issuable upon
conversion, exchange or exercise of any other security of Equalnet or any of
its Subsidiaries (including Merger Sub)). Except as set forth in SCHEDULE
4.3, Equalnet has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities the holders of which have the
right to vote). Set forth on Schedule 4.3 are the names of any Person who
owns, directly or indirectly, five percent (5%) or more of any class of the
capital stock of Equalnet along with the type of security owned and the
amount held.
Section 4.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Assuming (i) the
filings required under the HSR Act are made and the waiting period thereunder
has been terminated or has expired, (ii) the requirements of the Securities Act
relating to the issuance of the Equalnet Shares and the Exchange Act relating
to the proxy statement or information statement required in connection with the
Stockholders' Meeting (the "PROXY STATEMENT"), are met, (iii) the filing of the
Articles of Merger and other appropriate merger documents, if any, as required
by the NGCL, are made and (iv) approval of the Merger, this Agreement and the
transactions contemplated hereby by the stockholders of each of Equalnet and
Merger Sub are duly obtained, the execution and delivery of this Agreement by
Equalnet and Merger Sub and the consummation by Equalnet and Merger Sub of the
transactions contemplated hereby will not: (A) violate or conflict with any
provision of the Certificate of Incorporation or By-Laws of either Equalnet or
Merger Sub; (B) violate or conflict with any statute, ordinance, rule,
regulation, order or decree of any court or of any governmental or regulatory
body, agency or authority applicable to Equalnet or any of its Subsidiaries or
by which any of their respective properties or assets may be bound, except such
violations or conflicts which could not reasonably be expected to have a
Material Adverse Effect on Equalnet, (C) require any filing with, or permit,
consent or approval of, or the giving of any notice to, any governmental or
regulatory body, agency or authority, except such filings, permits, consents or
approvals the failure to make or obtain could not reasonably be expected to have
-7-
<PAGE>
a Material Adverse Effect on Equalnet or (D) result in a violation or breach of,
conflict with, constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Equalnet or any of
its Subsidiaries under, or give rise to any obligation, right of termination,
cancellation, acceleration or increase of any obligation or a loss of a material
benefit under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, franchise, permit, agreement, contract, lease,
franchise agreement or other instrument or obligation to which Equalnet or any
of its Subsidiaries is a party, or by which any such Person or any of its
properties or assets are bound except such violations, breaches or defaults
which could not reasonably be expected to have a Material Adverse Effect on
Equalnet.
Section 4.5 REPORTS AND FINANCIAL STATEMENTS. Since January 1, 1996,
Equalnet and its Subsidiaries have filed all forms, reports and documents with
the Commission required to be filed by it pursuant to the federal securities
laws and the Commission rules and regulations thereunder, and all forms,
reports, schedules, statements, registration statements and other documents
filed with the Commission by Equalnet and its Subsidiaries have complied in all
material respects with all applicable requirements of the Securities Act or the
Exchange Act, as the case may be, and the Commission rules and regulations
promulgated thereunder. Equalnet has, prior to the date of this Agreement, made
available to Orix true and complete copies of all forms, reports, registration
statements and other filings filed by Equalnet and its Subsidiaries with the
Commission since January 1, 1996 (such forms, reports, registration statements
and other filings, together with any exhibits, any amendments thereto and
information incorporated by reference therein, are sometimes collectively
referred to as the "COMMISSION FILINGS") and drafts of the consolidated balance
sheets, consolidated statements of operations, consolidated statements of
shareholders' equity and consolidated statements of cash flows for the period
ending on and at March 31, 1999 forming a part of the draft Form 10-Q for such
period in the form in which such Form 10-Q will be filed with the Commission
(the "1999 10-Q") (the "Equalnet Financial Statements"). As of their respective
dates or, if amended, as of the date of the last such amendment prior to the
date hereof, the Commission Filings and the 1999 10-Q did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the
consolidated balance sheets, consolidated statements of operations, consolidated
statements of shareholders' equity and consolidated statements of cash flows of
Equalnet and its consolidated Subsidiaries contained in the Commission Filings
and the 1999 10-Q were prepared in accordance with GAAP applied on a consistent
basis (except as may be indicated therein or in the notes or schedules thereto)
and present fairly, in all material respects, the consolidated financial
position of Equalnet and its consolidated Subsidiaries as of the dates thereof
and the consolidated results of their operations and changes in cash flows for
the periods then ended.
Section 4.6 ABSENCE OF CERTAIN CHANGES. Since December 31, 1998, (i)
there has not been any Material Adverse Effect on Equalnet, (ii) the businesses
of Equalnet has been conducted only in the ordinary course consistent with past
practice and (iii) Equalnet has not taken any of the actions prohibited to be
taken pursuant to Section 6.1.
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Section 4.7 TITLE TO PROPERTIES; ENCUMBRANCES. Equalnet and each of
its Subsidiaries has good, valid and marketable title to, or, in the case of
leased properties and assets, valid leasehold interests in, (i) all of its
material tangible properties and assets (real and personal), including, without
limitation, all the properties and assets reflected in the most recent
consolidated balance sheet contained in the Commission Filings, except as
indicated in the notes thereto and except for properties and assets which have
been sold or otherwise disposed of in the ordinary course of business after such
date and except where the failure to have such good, valid and marketable title
could not reasonably be expected to have a Material Adverse Effect on Equalnet,
and (ii) all the tangible properties and assets purchased by Equalnet and any of
its Subsidiaries since such date, except for such properties and assets which
have been sold or otherwise disposed of in the ordinary course of business and
except where the failure to have such good, valid and marketable title could not
reasonably be expected to have a Material Adverse Effect on Equalnet; in each
case subject to no encumbrance, lien, charge or other restriction of any kind or
character, except for such encumbrances, liens, charges or other restrictions
which could not reasonably be expected to have a Material Adverse Effect on
Equalnet.
Section 4.8 COMPLIANCE WITH LAWS. (i) Equalnet and its Subsidiaries
are in compliance with all applicable federal, state, local and foreign
statutes, laws, regulations, orders, judgments and decrees except where the
failure to so comply could not reasonably be expected to have a Material Adverse
Effect on Equalnet.
(ii) Equalnet and its Subsidiaries hold, to the extent required by
applicable law, all federal, state, local and foreign permits, approvals,
licenses, authorizations, certificates, rights, exemptions and orders from
governmental authorities (the "EQUALNET PERMITS") that are material to and
required for the operation of the business of Equalnet or its Subsidiaries as
now conducted, and there has not occurred any default under any such Equalnet
Permit, except to the extent that the failure to so hold or such default could
not reasonably be expected to have a Material Adverse Effect on Equalnet.
Section 4.9 LITIGATION. There is no action, suit, proceeding at law or
in equity, or any arbitration or any administrative or other proceeding by or
before (or to the best knowledge of Equalnet any investigation by) any
governmental or other instrumentality or agency, pending, or, to the best
knowledge of Equalnet, threatened, against or affecting Equalnet or any of its
Subsidiaries, or any of their respective properties or rights which could
reasonably be expected to have a Material Adverse Effect on Equalnet. Neither
Equalnet nor any of its Subsidiaries is subject to any judgment, order or decree
entered in any lawsuit or proceeding which could reasonably be expected to have
a Material Adverse Effect on Equalnet.
Section 4.10 EMPLOYEE BENEFIT PLANS. (a) "EQUALNET EMPLOYEE BENEFIT
PLAN" shall mean each domestic and foreign employee benefit plan, within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations thereunder ("ERISA"), whether or not
subject to ERISA, and each stock option, stock appreciation right, restricted
stock, stock purchase, incentive, bonus, profit-sharing, savings, deferred
compensation, health, medical, dental, life insurance, disability, accident,
supplemental unemployment or retirement, employment, severance or salary or
benefits continuation or material fringe benefit plan, program, arrangement,
agreement or commitment maintained by
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Equalnet or any Subsidiary thereof (including, for this purpose and for the
purpose of all of the representations in this Section 4.10, and all employers
(whether or not incorporated) that would be treated together with Equalnet as
a single employer within the meaning of Section 414 of the Code) for the
benefit of any employee, director, former employee, former director of
Equalnet or any of its Subsidiaries or to which Equalnet or any Subsidiary
thereof contributes (or has any obligation to contribute), has any liability
or is a party.
(b)(i) Each Equalnet Employee Benefit Plan is in substantial compliance
with all applicable laws (including, without limitation, ERISA and the Code) and
has been administered and operated in all material respects in accordance with
its terms; (ii) each Equalnet Employee Benefit Plan which is intended to be
"qualified" within the meaning of Section 401(a) of the Code has, after 1993,
received a favorable determination letter from the Internal Revenue Service and,
to the best knowledge of Equalnet, no event has occurred and no condition exists
which could reasonably be expected to result in the revocation of any such
determination; (iii) the actuarial present value of the accumulated plan
benefits (whether or not vested) under each Equalnet Employee Benefit Plan
covered by Title IV of ERISA (other than any Equalnet Employee Benefit Plan
which is a "Multiemployer Plan" (as defined in Section 4001(a)(3) of ERISA) (a
"MULTIEMPLOYER PLAN")) as of the close of its most recent plan year did not
exceed the market value of the assets allocable thereto; (iv) no Equalnet
Employee Benefit Plan covered by Title IV of ERISA (other than any Multiemployer
Plan) has been terminated and no proceedings have been instituted to terminate
or appoint a trustee under Title IV of ERISA to administer any such plan; (v) no
"reportable event" (as defined in Section 4043 of ERISA) has occurred with
respect to any Equalnet Employee Benefit Plan covered by Title IV of ERISA
(other than events for which the notice period has been waived or with respect
to any Multiemployer Plan); (vi) no Equalnet Employee Benefit Plan (other than
any Multiemployer Plan) subject to Section 412 of the Code or Section 302 of
ERISA has incurred any accumulated funding deficiency within the meaning of
Section 412 of the Code or Section 302 of ERISA, or obtained a waiver of any
minimum funding standard or an extension of any amortization period under
Section 412 of the Code or Section 303 or 304 of ERISA; (vii) as of the date of
this Agreement, none of Equalnet nor any of its Subsidiaries has incurred any
unsatisfied withdrawal liability under Part 1 of Subtitle E of Title IV of ERISA
to any Multiemployer Plan, and neither Equalnet nor any of its Subsidiaries
would be subject to any material withdrawal liability if, as of the close of the
most recent fiscal year of any such plan ended prior to the date hereof,
Equalnet or any such Subsidiary were to engage in a complete withdrawal (as
defined in Section 4203 of ERISA) or partial withdrawal (as defined in Section
4205 of ERISA) from any such plan; (viii) full payment has been timely made of
all amounts which Equalnet and/or its Subsidiaries is required under applicable
law or under any Equalnet Employee Benefit Plan or related agreement to have
paid as of the last day of the most recent fiscal year of such Equalnet Employee
Benefit Plan ended prior to the date hereof, and Equalnet and each such
Subsidiary have made adequate provisions, in accordance with GAAP, in their
financial statements for all obligations and liabilities under all Equalnet
Employee Benefit Plans that have accrued but have not been paid because they are
not yet due under the terms of any such Equalnet Employee Benefit Plan or any
related agreement or applicable law, and, to the best knowledge of Equalnet, no
event has occurred or condition exists that would reasonably be expected to
result in a material increase in the level of such amounts paid or accrued for
the most recently ended fiscal year; (ix) no Equalnet Employee Benefit Plan
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provides for post-employment or retiree health, life insurance or other welfare
benefits which could reasonably be expected to result in a material liability of
Equalnet or any Subsidiary thereof; (x) neither Equalnet nor any of its
Subsidiaries has any unfunded liabilities pursuant to any Equalnet Employee
Benefit Plan which is an "employee pension benefit plan" (within the meaning of
Section 3(2) of ERISA) that is not intended to be qualified under Section 401(a)
of the Code; (xi) neither Equalnet nor any of its Subsidiaries, nor any of their
respective directors, officers or employees, nor, to the best knowledge of
Equalnet, any other "disqualified person" or "party in interest" (as defined in
Section 4975(e)(2) of the Code and Section 3(14) of ERISA, respectively) has
engaged in any transaction, act or omission to act in connection with any
Equalnet Employee Benefit Plan that could reasonably be expected to result in
the imposition on Equalnet or any of its Subsidiaries of a material penalty or
fine pursuant to Section 502 of ERISA, damages pursuant to Section 409 of ERISA
or a tax pursuant to Section 4975 of the Code; (xii) the execution of this
Agreement and the consummation of the transactions contemplated hereby do not
constitute a triggering event under any Equalnet Employee Benefit Plan, policy,
arrangement, statement, commitment or agreement, which (either alone or upon the
occurrence of any additional or subsequent event) will or may result in any
payment, "parachute payment" (as such term is defined in Section 280G of the
Code), severance, bonus, retirement or job security or similar-type benefit, or
increase any benefits or accelerate the payment or vesting of any benefits to
any employee or former employee or director of Equalnet or any of its
Subsidiaries; and (xiii) no liability, claim, action, audit, examination or
litigation has been made, commenced or, to the best knowledge of Equalnet,
threatened with respect to any Equalnet Employee Benefit Plan (other than
routine claims for benefits payable in the ordinary course) which could result
in a material liability of Equalnet or any Subsidiary thereof; (xiv) neither
Equalnet nor any of its Subsidiaries has incurred or expects to incur any
material liability (including, without limitation, additional contributions,
fines, taxes or penalties) as a result of a failure to administer or operate any
Equalnet Employee Benefit Plan that is a "group health plan" (as such term is
defined in Section 607(1) of ERISA or Section 5000(b)(1) of the Code) in
compliance with the applicable requirements of Part 6 of Subtitle B of Title I
of ERISA or Section 4980B of the Code; and (xv) no Equalnet Employee Benefit
Plan provides for the payment of severance, termination, change in control or
similar-type payments or benefits.
Section 4.11 EMPLOYMENT RELATIONS AND AGREEMENTS. (i) Each of
Equalnet and its Subsidiaries is in substantial compliance with all federal,
foreign, state or other applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and has not
and is not engaged in any unfair labor practice; (ii) no material unfair labor
practice charge or complaint against Equalnet or any of its Subsidiaries is
pending before the National Labor Relations Board or an equivalent tribunal
under applicable foreign law; (iii) there is no labor strike, slowdown, stoppage
or material dispute actually pending or, to the best knowledge of Equalnet,
threatened against or involving Equalnet or any of its Subsidiaries; (iv) no
representation question exists respecting the employees of Equalnet or any of
its Subsidiaries; (v) no collective bargaining agreement is currently being
negotiated by Equalnet or any of its Subsidiaries; (vi) neither Equalnet nor any
of its Subsidiaries has experienced any material labor difficulty during the
last three years and (vii) there has been no "mass layoff" or "plant closing" by
Equalnet as defined in WARN or state law equivalent, or any
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other mass layoff or plant closing that would trigger notice pursuant to WARN
or state law equivalent, within ninety (90) days prior to the Closing Date.
Section 4.12 TAXES.
(a) TAX RETURNS. Equalnet and each of its Subsidiaries has timely
filed or caused to be timely filed with the appropriate taxing authorities all
federal and other returns, statements, forms and reports for Taxes (as
hereinafter defined) ("EQUALNET RETURNS") that are required to be filed by, or
with respect to, Equalnet and such Subsidiaries on or prior to the Closing Date.
The Equalnet Returns reflect accurately all liability for Taxes of Equalnet and
each of its Subsidiaries for the periods covered thereby. "TAXES" shall mean all
taxes, assessments, charges, duties, fees, levies or other governmental charges
including, without limitation, all Federal, state, local, foreign and other
income, franchise, profits, capital gains, capital stock, transfer, sales, use,
occupation, property, excise, severance, windfall profits, stamp, license,
payroll, withholding and other taxes, assessments, charges, duties, fees, levies
or other governmental charges of any kind whatsoever (whether payable directly
or by withholding and whether or not requiring the filing of any return), all
estimated taxes, deficiency assessments, additions to tax, penalties and
interest and shall include any liability for such amounts as a result of being a
member of a combined, consolidated, unitary or affiliated group.
(b) PAYMENT OF TAXES. Equalnet and its Subsidiaries have timely paid
all Taxes that are currently due and payable except for those contested in good
faith and for which adequate reserves have been made on the financial statements
of Equalnet and its Subsidiaries in accordance with GAAP.
(c) OTHER TAX MATTERS. (i) Equalnet and each of its Subsidiaries have
not been the subject of an audit or other examination of Taxes by the tax
authorities of any nation, state or locality with respect to any taxable period
for which the statute of limitations has not expired, nor has Equalnet or any of
its Subsidiaries received any written notices with respect to such taxable
periods from any tax authority relating to any issue which could affect the Tax
liability of Equalnet or any of its Subsidiaries that has not been resolved or
paid in full.
(ii) Neither Equalnet nor any of its Subsidiaries has been included in
any "consolidated," "unitary" or "combined" Equalnet Return (other than Equalnet
Returns which include only Equalnet and any Subsidiaries) provided for under the
laws of the United States, any foreign jurisdiction or any state or locality
with respect to Taxes for any taxable period for which the statute of
limitations has not expired.
(iii) All Taxes which Equalnet or any of its Subsidiaries is (or was)
required by law to withhold or collect have been duly withheld or collected, and
have been timely paid over to the proper authorities to the extent due and
payable.
(iv) There are no tax sharing, allocation, indemnification or similar
agreements or arrangements in effect as between Equalnet, any Subsidiary, or any
predecessor or Affiliate of any of them and any other party under which Orix or
Equalnet (or any of its Subsidiaries) could
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be liable for any Taxes or other claims of any party other than Equalnet or
any Subsidiary of Equalnet.
(v) Neither Equalnet nor any of its Subsidiaries has been required to
include in income any adjustment pursuant to Section 481 or any similar
provision of the Code or the corresponding tax laws of any nation, state or
locality by reason of a voluntary change in accounting method initiated by
Equalnet or any of its Subsidiaries, and the Internal Revenue Service or other
taxing authority has not initiated or proposed any such adjustment or change in
accounting method.
(vi) Neither Equalnet nor any of its Subsidiaries has, as of the
Closing Date: entered into an agreement or waiver extending any statute of
limitations relating to the payment or collection of Taxes of Equalnet or any of
its Subsidiaries or (B) is presently contesting the Tax liability of Equalnet or
any of its Subsidiaries before any court, tribunal or agency.
(vii) No election under 341(f) of the Code has been made or shall be
made prior to the Closing Date to treat Equalnet as a consenting corporation, as
defined in Section 341 of the Code.
Section 4.13 LIABILITIES. Neither Equalnet nor any of its Subsidiaries
has any claims, liabilities or indebtedness, contingent or otherwise of any kind
whatsoever except claims, liabilities or indebtedness which could not reasonably
be expected to have a Material Adverse Effect on Equalnet.
Section 4.14 INTELLECTUAL PROPERTY. (a) Equalnet owns or is licensed
to use, the rights to all patents, trademarks, trade names, service marks,
copyrights together with any registrations and applications therefor, Internet
domain names, schematics, technology, trade secrets, source codes, know-how,
computer software programs or applications including, without limitation, all
object and source codes and tangible or intangible proprietary information or
material used in and material to the business of Equalnet and any of its
Subsidiaries as currently conducted or as proposed to be conducted (the
"EQUALNET INTELLECTUAL PROPERTY"), except where the failure to so own or license
could not reasonably be expected to have a Material Adverse Effect on Equalnet.
Neither Equalnet nor any of its Subsidiaries is, or as a result of the
execution, delivery or performance of Equalnet's obligations hereunder will be,
in violation of, or lose any rights pursuant to, any license or agreement,
except as could not reasonably be expected to have a Material Adverse Effect on
Equalnet.
(b) No claims with respect to Equalnet Intellectual Property have
been asserted or, to the best knowledge of Equalnet, are threatened by any
Person (i) that the manufacture, sale or use of any product or process as now
used or offered or proposed for use or sale by Equalnet or any of its
Subsidiaries infringes on any copyright, trade secret, patent or other
intellectual property right of any Person, or (ii) challenging the ownership,
validity, enforceability or effectiveness of any of Equalnet Intellectual
Property. To the best knowledge of Equalnet, all issued patents, all registered
trademarks and service marks and all copyrights owned by Equalnet or any of its
Subsidiaries are valid, enforceable and subsisting. To Equalnet's best
knowledge, there has not been and there is not any material unauthorized use,
infringement or misappropriation of any of
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Equalnet Intellectual Property by any third Person, including, without
limitation, any employee or former employee.
(c) No Equalnet Intellectual Property owned by Equalnet is subject to
any outstanding order, judgment, decree, stipulation or agreement restricting in
any material manner the licensing thereof by Equalnet or any of its
Subsidiaries.
Section 4.15 BROKER'S OR FINDER'S FEE. No agent, broker, Person or
firm acting on behalf of Equalnet is, or will be, entitled to any fee,
commission or broker's or finder's fees from any of the parties hereto, or from
any Person controlling, controlled by, or under common control with any of the
parties hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
Section 4.16 ENVIRONMENTAL LAWS AND REGULATIONS. Except as could not
reasonably be expected to have a Material Adverse Effect on Equalnet, (i)
Hazardous Materials have not at any time been Released or disposed of, on any
Equalnet Property, or by Equalnet on or to the knowledge of Equalnet no
Hazardous Materials Released by Equalnet have migrated to or been transmitted to
any property adjoining or adjacent to any Equalnet Property or any business or
operations of Equalnet or any of its Subsidiaries, (ii) Equalnet and each of its
Subsidiaries are in compliance with all Environmental Laws and the requirements
of any permits issued under such Environmental Laws with respect to any Equalnet
Property, (iii) there are no past, pending or to the knowledge of Equalnet any
threatened Environmental Claims against Equalnet or any of its Subsidiaries or
any Equalnet Property and (iv) to the knowledge of Equalnet, there are no facts
or circumstances, conditions or occurrences regarding any Equalnet Property or
any property adjoining or adjacent to any currently or formerly owned Equalnet
Property that could reasonably be anticipated (A) to form the basis of an
Environmental Claim against Equalnet or any of its Subsidiaries or any Equalnet
Property or (B) to cause such Equalnet Property to be subject to any
restrictions on its ownership, occupancy, use or transferability under any
Environmental Law.
For purposes of this Agreement, the following terms shall have the
following meanings: (i) "EQUALNET PROPERTY" means any real property owned,
leased or operated by Equalnet or any of its Subsidiaries; (ii) "HAZARDOUS
MATERIALS" means (A) any petroleum or petroleum products, radioactive materials,
asbestos in any form that has become friable, urea formaldehyde foam insulation,
transformers or other equipment that contain dielectric fluid containing levels
of polychlorinated biphenyls, gas; (B) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous wastes," "extremely
hazardous substances," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," or words of similar import, under any applicable Environmental Law;
and (iii) "ENVIRONMENTAL LAW" means any federal, state, foreign or local
statute, law, rule, regulation, ordinance, guideline, policy, code in effect and
in each case as amended as of the date hereof and Closing Date, and any judicial
interpretation thereof or administrative order applicable to a Person or its
operations or property as of the date hereof and Closing Date, including any
judicial or administrative order, consent decree or judgment, relating to the
environment, health, safety or Hazardous Materials, including without limitation
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. Section 9601 ET SEQ.; the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. Section
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6901 ET SEQ.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
Section 1251 ET SEQ.; the Toxic Substances Control Act, 15 U.S.C. Section
2601 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET SEQ.; Occupational
Safety and Health Act, 29 U.S.C. 651 ET SEQ.; Oil Pollution Act of 1990, 33
U.S.C. Section 2701 ET SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section
300f ET SEQ., and their state and local counterparts and equivalents; and
(iv) "ENVIRONMENTAL CLAIMS" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or proceedings under any
Environmental Law or any permit issued under any such Environmental Law (for
purposes of this subclause (iv), "CLAIMS"), including without limitation (A)
any and all Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant to
any applicable Environmental Law and (B) any and all Claims by any third
party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or
arising from alleged injury or threat of injury to health, safety or the
environment; and (v) "RELEASE" means disposing, discharging, injecting,
spilling, leaking, leaching, dumping, emitting, escaping, emptying or seeping
into or upon any land or surface water or ground water except for releases
into the air or surface water in compliance with Environmental Laws and all
applicable permits.
Section 4.17 STATE TAKEOVER STATUTES; CHARTER PROVISIONS. The Board
of Directors of Equalnet has approved the Merger, this Agreement, the issue of
the Equalnet Shares, the parties thereto entering into the Irrevocable Proxy
Agreement and the Stock Subscription Agreement and such approval is sufficient
to render inapplicable to the Merger, this Agreement, the Stock Subscription
Agreement, the Irrevocable Proxy Agreement and the other transactions
contemplated by this Agreement the provisions of the Texas Business Combination
Law. No other takeover statutes are applicable to any such transactions.
Section 4.18 VOTING REQUIREMENTS. The affirmative vote of the holders
of at least two-thirds of the outstanding shares of Common Stock and the Series
B Convertible Preferred Stock (voting as one class, with each share of Series B
Convertible Preferred Stock having the number of votes into which such shares
are convertible) entitled to be cast approving this Agreement are the only votes
of the holders of any class or series of capital stock of Equalnet necessary to
approve the amendment of the Articles of Incorporation of Equalnet to increase
the authorized number of Equalnet Shares and the authorization of the issuance
of Equalnet Shares under applicable laws, rules and regulations including those
of the NSCM.
Section 4.19 INTENTIONALLY OMITTED.
Section 4.20 AGREEMENTS WITH AFFILIATES. Set forth on Schedule 4.20 is
a list of all agreements, arrangements or understandings, whether written or
oral, between Equalnet and any Affiliate of Equalnet.
Section 4.21 CONVERTIBLE SECURITIES. The Equalnet Disclosure Letter
lists all securities issued and outstanding as of the date of this Agreement
which have a conversion price, exercise price or similar price or conversion or
exchange ratio of less than $.75 per Equalnet Share and all debt or equity
securities with a conversion price, exercise price or similar price or
conversion or exchange ratio which is subject to adjustment or change.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ORIX
Section 5. REPRESENTATIONS AND WARRANTIES OF ORIX. Except as set forth
in the Orix Disclosure Letter, Orix hereby represents and warrants to Equalnet
and Merger Sub that:
Section 5.1 DUE ORGANIZATION, GOOD STANDING AND CORPORATE POWER. Each
of Orix and its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
each such Person has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Orix and each of its Subsidiaries is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary, except in such jurisdictions where the failure to be so
qualified or licensed and in good standing could not reasonably be expected to
have a Material Adverse Effect on Orix. Orix has, prior to the date of this
Agreement, made available to Equalnet complete and correct copies of the
Articles or Certificate of Incorporation, as amended, and By-Laws for each of
Orix and its Subsidiaries.
Section 5.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Orix has the
requisite corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and (subject to the approval of the
stockholders of Orix) to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by Orix, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized and approved by its Board of Directors and no other corporate action
on the part of Orix is necessary to authorize the execution, delivery and
performance of this Agreement by Orix and the consummation of the transactions
contemplated hereby (other than the approval of this Agreement by the
stockholders of Orix and the filing of appropriate merger documents as required
by the NGCL). This Agreement has been duly executed and delivered by Orix and
is a valid and binding obligation of Orix enforceable against Orix in accordance
with its terms, except that such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, and general equitable
principles.
Section 5.3 CAPITALIZATION. As of the date of this Agreement, the
authorized capital stock of Orix consists of 100,000 Shares of which 3,600
Shares are outstanding. All issued and outstanding Shares are duly authorized,
validly issued, fully paid and nonassessable. Except as disclosed in the Orix
Disclosure Letter, there is no outstanding subscription, option, warrant, call,
right, agreement, commitment, understanding or arrangement relating to the
issuance, sale, delivery, transfer, voting, registration or redemption of any
Shares.
Section 5.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Assuming (i) the
filings required under the HSR Act are made and the waiting period thereunder
has been terminated or has expired, (ii) the filing of the Articles of Merger
and other appropriate merger documents, if any, as required by the NGCL, are
made and (iii) approval of the Merger and this Agreement by the stockholders of
Orix is received, the execution and delivery of this Agreement by Orix and the
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consummation by Orix of the transactions contemplated hereby will not: (A)
violate or conflict with any provision of Orix's Certificate of Incorporation,
or Orix's By-Laws; (B) violate or conflict with any statute, ordinance, rule,
regulation, order or decree of any court or of any governmental or regulatory
body, agency or authority applicable to Orix or any of its Subsidiaries or by
which any of their respective properties or assets may be bound, except such
violations or conflicts which could not reasonably be expected to have a
Material Adverse Effect on Orix, (C) require any filing with, or permit, consent
or approval of, or the giving of any notice to, any governmental or regulatory
body, agency or authority, except such filings, permits, consents or approvals
which the failure to make or obtain could not reasonably be expected to have a
Material Adverse Effect on Orix; or (D) result in a violation or breach of,
conflict with, constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Orix or any of its
Subsidiaries under, or give rise to any obligation, right of termination,
cancellation, acceleration or increase of any obligation or a loss of a material
benefit under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, franchise, permit, agreement, contract, lease,
franchise agreement or other instrument or obligation to which Orix or any of
its Subsidiaries is a party, or by which any such Person or any of its
properties or assets are bound except such violations, breaches or conflicts
which could not reasonably be expected to have a Material Adverse Effect on
Orix.
Section 5.5 COMPANY REPORTS AND FINANCIAL STATEMENTS. Each of the
consolidated balance sheets of Orix and its consolidated Subsidiaries for the
period from June 26, 1996 to May 31, 1997 and as of the end of the fiscal year
ended May 31, 1998 and as of the ten-month period ended March 31, 1999 and the
consolidated statements of operations, consolidated statements of stockholders'
equity and consolidated statements of cash flows of Orix and its consolidated
Subsidiaries for the fiscal years ended May 31, 1998 and May 31, 1997 and for
the ten-month period ended March 31, 1999 (the "ORIX FINANCIAL STATEMENTS") were
prepared in accordance with GAAP applied on a consistent basis (except as may be
indicated therein or in the notes or schedules thereto) and present fairly, in
all material respects, the consolidated financial position of Orix and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and changes in cash flows for the periods then ended.
Section 5.6 ABSENCE OF CERTAIN CHANGES. Since March 31, 1999, the
businesses of Orix has been conducted only in the ordinary course consistent
with past practice and Orix has not taken any of the actions prohibited to be
taken pursuant to Section 6.1.
Section 5.7 TITLE TO PROPERTIES; ENCUMBRANCES. Orix and each of its
Subsidiaries has good, valid and marketable title to, or, in the case of leased
properties and assets, valid leasehold interests in, (i) all of its material
tangible properties and assets (real and personal), including, without
limitation, all the properties and assets reflected in its most recent
consolidated balance sheet contained in the Orix Financial Statements, except as
indicated in the notes thereto and except for properties and assets reflected
in its most recent consolidated balance sheet contained in the Orix Financial
Statements which have been sold or otherwise disposed of in the ordinary course
of business after such date and except where the failure to have such good,
valid and marketable title could not reasonably be expected to have a Material
Adverse Effect on Orix, and
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(ii) all the tangible properties and assets purchased by Orix and any of its
Subsidiaries since such date, except for such properties and assets which
have been sold or otherwise disposed of in the ordinary course of business
and except where the failure to have such good, valid and marketable title
could not reasonably be expected to have a Material Adverse Effect on Orix;
in each case subject to no encumbrance, lien, charge or other restriction of
any kind or character, except for such encumbrances, liens, charges or other
restrictions which could not reasonably be expected to have a Material
Adverse Effect on Orix.
Section 5.8 COMPLIANCE WITH LAWS. (i) Orix and its Subsidiaries are
in compliance with all applicable federal, state, local and foreign statutes,
laws, regulations, orders, judgments and decrees except where the failure to so
comply could not reasonably be expected to have a Material Adverse Effect on
Orix.
(ii) Orix and its Subsidiaries hold, to the extent required by
applicable law, all federal, state, local and foreign permits, approvals,
licenses, authorizations, certificates, rights, exemptions and orders from
governmental authorities (the "ORIX PERMITS") that are material to and required
for the operation of the business of Orix or its Subsidiaries as now conducted,
and there has not occurred any default under any such Orix Permit, except to the
extent that the failure to so hold or such default could not reasonably be
expected to have a Material Adverse Effect on Orix.
Section 5.9 LITIGATION. There is no action, suit, proceeding at law or
in equity, or any arbitration or any administrative or other proceeding by or
before (or to the best knowledge of Orix any investigation by) any governmental
or other instrumentality or agency, pending, or, to the best knowledge of Orix,
threatened, against or affecting Orix or any of its Subsidiaries, or any of
their respective properties or rights which could reasonably be expected to have
a Material Adverse Effect on Orix. Neither Orix nor any of its Subsidiaries is
subject to any judgment, order or decree entered in any lawsuit or proceeding
which could reasonably be expected to have a Material Adverse Effect on Orix.
Section 5.10 EMPLOYEE BENEFIT PLANS. (a) "ORIX EMPLOYEE BENEFIT PLAN"
shall mean each domestic and foreign employee benefit plan, within the meaning
of Section 3(3) of ERISA, whether or not subject to ERISA, and each stock
option, stock appreciation right, restricted stock, stock purchase, incentive,
bonus, profit-sharing, savings, deferred compensation, health, medical, dental,
life insurance, disability, accident, supplemental unemployment or retirement,
employment, severance or salary or benefits continuation or material fringe
benefit plan, program, arrangement, agreement or commitment maintained by Orix
or any Subsidiary thereof (including, for this purpose and for the purpose of
all of the representations in this Section 5.10, and all employers (whether or
not incorporated) that would be treated together with Orix as a single employer
within the meaning of Section 414 of the Code) for the benefit of any employee,
director, former employee, former director of Orix or any of its Subsidiaries or
to which Orix or any Subsidiary thereof contributes (or has any obligation to
contribute), has any liability or is a party.
(b) (i) Each Orix Employee Benefit Plan is in substantial compliance
with all applicable laws (including, without limitation, ERISA and the Code) and
has been administered and
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operated in all material respects in accordance with its terms; (ii) each
Orix Employee Benefit Plan which is intended to be "qualified" within the
meaning of Section 401(a) of the Code has, after 1993, received a favorable
determination letter from the Internal Revenue Service and, to the best
knowledge of Orix, no event has occurred and no condition exists which could
reasonably be expected to result in the revocation of any such determination;
(iii) the actuarial present value of the accumulated plan benefits (whether
or not vested) under each Orix Employee Benefit Plan covered by Title IV of
ERISA (other than any Orix Employee Benefit Plan which is a Multiemployer
Plan) as of the close of its most recent plan year did not exceed the market
value of the assets allocable thereto; (iv) no Orix Employee Benefit Plan
covered by Title IV of ERISA (other than any Multiemployer Plan) has been
terminated and no proceedings have been instituted to terminate or appoint a
trustee under Title IV of ERISA to administer any such plan; (v) no
"reportable event" (as defined in Section 4043 of ERISA) has occurred with
respect to any Orix Employee Benefit Plan covered by Title IV of ERISA (other
than events for which the notice period has been waived or with respect to
any Multiemployer Plan); (vi) no Orix Employee Benefit Plan (other than any
Multiemployer Plan) subject to Section 412 of the Code or Section 302 of
ERISA has incurred any accumulated funding deficiency within the meaning of
Section 412 of the Code or Section 302 of ERISA, or obtained a waiver of any
minimum funding standard or an extension of any amortization period under
Section 412 of the Code or Section 303 or 304 of ERISA; (vii) as of the date
of this Agreement, none of Orix nor any of its Subsidiaries has incurred any
unsatisfied withdrawal liability under Part 1 of Subtitle E of Title IV of
ERISA to any Multiemployer Plan, and neither Orix nor any of its Subsidiaries
would be subject to any material withdrawal liability if, as of the close of
the most recent fiscal year of any such plan ended prior to the date hereof,
Orix or any such Subsidiary were to engage in a complete withdrawal (as
defined in Section 4203 of ERISA) or partial withdrawal (as defined in
Section 4205 of ERISA) from any such plan; (viii) full payment has been
timely made of all amounts which Orix and/or its Subsidiaries is required
under applicable law or under any Orix Employee Benefit Plan or related
agreement to have paid as of the last day of the most recent fiscal year of
such Orix Employee Benefit Plan ended prior to the date hereof, and Orix and
each such Subsidiary have made adequate provisions, in accordance with GAAP,
in their financial statements for all obligations and liabilities under all
Orix Employee Benefit Plans that have accrued but have not been paid because
they are not yet due under the terms of any such Orix Employee Benefit Plan
or any related agreement or applicable law, and, to the best knowledge of
Orix, no event has occurred or condition exists that would reasonably be
expected to result in a material icrease in the level of such amounts paid or
accrued for the most recently ended fiscal year; (ix) no Orix Employee
Benefit Plan provides for post-employment or retiree health, life insurance
or other welfare benefits which could reasonably be expected to result in a
material liability of Orix or any Subsidiary thereof; (x) neither Orix nor
any of its Subsidiaries has any unfunded liabilities pursuant to any Orix
Employee Benefit Plan which is an "employee pension benefit plan" (within the
meaning of Section 3(2) of ERISA) that is not intended to be qualified under
Section 401(a) of the Code; (xi) neither Orix nor any of its Subsidiaries,
nor any of their respective directors, officers or employees, nor, to the
best knowledge of Orix, any other "disqualified person" or "party in
interest" (as defined in Section 4975(e)(2) of the Code and Section 3(14) of
ERISA, respectively) has engaged in any transaction, act or omission to act
in connection with any Orix Employee Benefit Plan that could reasonably be
expected to result in the imposition on Orix or any of its Subsidiaries of a
material penalty or fine pursuant to Section
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502 of ERISA, damages pursuant to Section 409 of ERISA or a tax pursuant to
Section 4975 of the Code; (xii) the execution of this Agreement and the
consummation of the transactions contemplated hereby do not constitute a
triggering event under any Orix Employee Benefit Plan, policy, arrangement,
statement, commitment or agreement, which (either alone or upon the
occurrence of any additional or subsequent event) will or may result in any
payment, "parachute payment" (as such term is defined in Section 280G of the
Code), severance, bonus, retirement or job security or similar-type benefit,
or increase any benefits or accelerate the payment or vesting of any benefits
to any employee or former employee or director of Orix or any of its
Subsidiaries; (xiii) no liability, claim, action, audit, examination or
litigation has been made, commenced or, to the best knowledge of Orix,
threatened with respect to any Orix Employee Benefit Plan (other than routine
claims for benefits payable in the ordinary course) which could result in a
material liability of Orix or any Subsidiary thereof; (xiv) neither Orix nor
any of its Subsidiaries has incurred or expects to incur any material
liability (including, without limitation, additional contributions, fines,
taxes or penalties) as a result of a failure to administer or operate any
Orix Employee Benefit Plan that is a "group health plan" (as such term is
defined in Section 607(1) of ERISA or Section 5000(b)(1) of the Code) in
compliance with the applicable requirements of Part 6 of Subtitle B of Title
I of ERISA or Section 4980B of the Code; and (xv) no Orix Employee Benefit
Plan provides for the payment of severance, termination, change in control or
similar-type payments or benefits.
Section 5.11 EMPLOYMENT RELATIONS AND AGREEMENTS. (i) Each of Orix
and its Subsidiaries is in substantial compliance with all federal, foreign,
state or other applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, and has not and is not
engaged in any unfair labor practice; (ii) no material unfair labor practice
charge or complaint against Orix or any of its Subsidiaries is pending before
the National Labor Relations Board or an equivalent tribunal under applicable
foreign law; (iii) there is no labor strike, slowdown, stoppage or material
dispute actually pending or, to the best knowledge of Orix, threatened against
or involving Orix or any of its Subsidiaries; (iv) no representation question
exists respecting the employees of Orix or any of its Subsidiaries; (v) no
collective bargaining agreement is currently being negotiated by Orix or any of
its Subsidiaries; (vi) neither Orix nor any of its Subsidiaries has experienced
any material labor difficulty during the last three years and (vii) there has
been no "mass layoff" or "plant closing" by Orix as defined in WARN or state law
equivalent, or any other mass layoff or plant closing that would trigger notice
pursuant to WARN or state law equivalent, within ninety (90) days prior to the
Closing Date.
Section 5.12 TAXES.
(a) TAX RETURNS. Orix and each of its Subsidiaries has timely filed or
caused to be timely filed with the appropriate taxing authorities all federal
and other returns, statements, forms and reports for Taxes (as hereinafter
defined) ("ORIX RETURNS") that are required to be filed by, or with respect to,
Orix and such Subsidiaries on or prior to the Closing Date. The Orix Returns
reflect accurately all liability for Taxes of Orix and each of its Subsidiaries
for the periods covered thereby.
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(b) PAYMENT OF TAXES. Orix and its Subsidiaries have timely paid all
Taxes that are currently due and payable except for those contested in good
faith and for which adequate reserves have been made on the financial statements
of Orix and its Subsidiaries in accordance with GAAP.
(c) OTHER TAX MATTERS. (i) Orix and each of its Subsidiaries have not
been the subject of an audit or other examination of Taxes by the tax
authorities of any nation, state or locality with respect to any taxable period
for which the statute of limitations has not expired, nor has Orix or any of its
Subsidiaries received any written notices with respect to such taxable periods
from any tax authority relating to any issue which could affect the Tax
liability of Orix or any of its Subsidiaries that has not been resolved or paid
in full.
(ii) Neither Orix nor any of its Subsidiaries has been included in any
"consolidated," "unitary" or "combined" Orix Return (other than Orix Returns
which include only Orix and any Subsidiaries of Orix) provided for under the
laws of the United States, any foreign jurisdiction or any state or locality
with respect to Taxes for any taxable period for which the statute of
limitations has not expired.
(iii) All Taxes which Orix or any of its Subsidiaries is (or was)
required by law to withhold or collect have been duly withheld or collected, and
have been timely paid over to the proper authorities to the extent due and
payable.
(iv) There are no tax sharing, allocation, indemnification or similar
agreements or arrangements in effect as between Orix, any Subsidiary of Orix, or
any predecessor or Affiliate of any of them and any other party under which Orix
or Equalnet (or any of its Subsidiaries) could be liable for any Taxes or other
claims of any party other than Orix or any Subsidiary of Orix.
(v) No indebtedness of Orix or any of its Subsidiaries consists of
"corporate acquisition indebtedness" within the meaning of Section 279 of the
Code.
(vi) Neither Orix nor any of its Subsidiaries has been required to
include in income any adjustment pursuant to Section 481 or any similar
provision of the Code or the corresponding tax laws of any nation, state or
locality by reason of a voluntary change in accounting method initiated by Orix
or any of its Subsidiaries, and the Internal Revenue Service or other taxing
authority has not initiated or proposed any such adjustment or change in
accounting method.
(vii) Neither Orix nor any of its Subsidiaries has, as of the Closing
Date: (A) entered into an agreement or waiver extending any statute of
limitations relating to the payment or collection of Taxes of Orix or any of its
Subsidiaries or (B) is presently contesting the Tax liability of Orix or any of
its Subsidiaries before any court, tribunal or agency.
(viii) No election under Section 341(f) of the Code has been made or
shall be made prior to the Closing Date to treat Orix as a consenting
corporation, as defined in Section 341 of the Code.
Section 5.13 LIABILITIES. Neither Orix nor any of its Subsidiaries has
any claims, liabilities or indebtedness, contingent or otherwise of any kind
whatsoever except as set forth in
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the consolidated balance sheet of Orix contained in the most recent Orix
Financial Statements, or referred to in the footnotes thereto or (iii)
claims, liabilities or indebtedness which could not reasonably be expected to
have a Material Adverse Effect on Orix.
Section 5.14 INTELLECTUAL PROPERTY. (a) Orix owns or is licensed to
use, the rights to all patents, trademarks, trade names, service marks,
copyrights together with any registrations and applications therefor, Internet
domain names, schematics, technology, trade secrets, source codes, know-how,
computer software programs or applications including, without limitation, all
object and source codes and tangible or intangible proprietary information or
material used in and material to the business of Orix and any of its
Subsidiaries as currently conducted (the "ORIX INTELLECTUAL PROPERTY"), except
where the failure to so own or license could not reasonably be expected to have
a Material Adverse Effect on Orix. Neither Orix nor any of its Subsidiaries is,
or as a result of the execution, delivery or performance of Orix's obligations
hereunder will be, in violation of, or lose any rights pursuant to, any license
or agreement, except as could not reasonably be expected to have a Material
Adverse Effect on Orix.
(b) No claims with respect to Orix Intellectual Property have
been asserted or, to the best knowledge of Orix, are threatened by any Person
(i) that the manufacture, sale or use of any product or process as now used or
offered or proposed for use or sale by Orix or any of its Subsidiaries infringes
on any copyright, trade secret, patent or other intellectual property right of
any Person, or (ii) challenging the ownership, validity, enforceability or
effectiveness of any of Orix Intellectual Property. To the best knowledge of
Orix, all issued patents, all registered trademarks and service marks and all
copyrights owned by Orix or any of its Subsidiaries are valid, enforceable and
subsisting. To Orix's best knowledge, there has not been and there is not any
material unauthorized use, infringement or misappropriation of any of Orix
Intellectual Property by any third Person, including, without limitation, any
employee or former employee.
(c) No Orix Intellectual Property owned by Orix is subject to
any outstanding order, judgment, decree, stipulation or agreement restricting in
any material manner the licensing thereof by Orix or any of its Subsidiaries.
Section 5.15 BROKER'S OR FINDER'S FEE. No agent, broker, Person or
firm acting on behalf of Orix is, or will be, entitled to any fee, commission or
broker's or finder's fees from any of the parties hereto, or from any Person
controlling, controlled by, or under common control with any of the parties
hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
Section 5.16 ENVIRONMENTAL LAWS AND REGULATIONS. Except as could not
reasonably be expected to have a Material Adverse Effect on Orix, (i) Hazardous
Materials have not at any time been Released or disposed of, on any Orix
Property, or by Orix on or to the knowledge of Orix no Hazardous Materials
Released by Orix have migrated to or been transmitted to any property adjoining
or adjacent to any Orix Property or any business or operations of Orix or any of
its Subsidiaries, (ii) Orix and each of its Subsidiaries are in compliance with
all Environmental Laws and the requirements of any permits issued under such
Environmental Laws with respect to any Orix Property, (iii) there are no past,
pending or to the knowledge of Orix any threatened Environmental Claims against
Orix or any of its Subsidiaries or any Orix Property and (iv) to the
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knowledge of Orix, there are no facts or circumstances, conditions or
occurrences regarding any Orix Property or any property adjoining or adjacent
to any currently or formerly owned Orix Property that could reasonably be
anticipated (A) to form the basis of an Environmental Claim against Orix or
any of its Subsidiaries or any Orix Property or (B) to cause such Orix
Property to be subject to any restrictions on its ownership, occupancy, use
or transferability under any Environmental Law.
For purposes of this Agreement, the term "ORIX PROPERTY" means any real
property owned, leased or operated by Orix or any of its Subsidiaries.
Section 5.17 INTENTIONALLY OMITTED.
Section 5.18 VOTING REQUIREMENTS. The affirmative vote of the holders
of at least a majority of the Shares is the only vote of the holders of any
class or series of capital stock of Orix necessary to approve this Agreement and
the transactions contemplated herein.
ARTICLE VI
TRANSACTIONS PRIOR TO THE CLOSING DATE
6.1 CONDUCT OF BUSINESS PENDING THE CLOSING DATE. Orix and Equalnet
agree that, except as permitted, required or specifically contemplated by, or
otherwise described in, this Agreement, or otherwise consented to or approved in
writing by the other parties to this Agreement, during the period commencing on
the date hereof until the Effective Time:
(a) Each of Orix, Equalnet and their respective Subsidiaries
shall conduct their respective operations only according to their
ordinary and usual course of business consistent with past practice; and
(b) Neither Orix, Equalnet nor any of their respective
Subsidiaries shall:
(i) amend its Articles or Certificate of Incorporation
or its By-Laws (or comparable governing documents); PROVIDED,
HOWEVER, that Equalnet shall be permitted to effect a reverse
stock split or amend its Articles or Certificate of Incorporation
to increase the number of authorized Equalnet Shares to the
extent required by this Agreement;
(ii) except as set forth in the Orix Disclosure Letter
or the Equalnet Disclosure Letter, as the case may be, or in the
ordinary course of business consistent with past practice, issue
or sell, or authorize to issue or sell, any shares of its capital
stock or any other securities, or issue or sell, or authorize to
issue or sell, any securities convertible into, or options,
warrants or rights to purchase or subscribe to, or enter into any
arrangement or contract with respect to the issuance or sale of,
any shares of its capital stock or any other securities, or make
any other changes in its capital structure; PROVIDED, HOWEVER,
that Equalnet shall be permitted to effect a reverse stock split
or make any other changes to its capital
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structure (and Equalnet agrees to make such changes) necessary
to ensure that the Equalnet Shares shall continue to be quoted
on the NSCM;
(iii) except as set forth in the Orix Disclosure Letter
or the Equalnet Disclosure Letter, as the case may be, or in the
ordinary course of business consistent with past practice, sell
or pledge or agree to sell or pledge any stock or other equity
interest owned by it in any other Person;
(iv) except in the ordinary course of business
consistent with past practice, declare, pay or set aside any
dividend or other distribution or payment with respect to, or
split, combine, redeem or reclassify, or purchase or otherwise
acquire, any shares of its capital stock or its other securities;
PROVIDED, HOWEVER, that the Series A Convertible Preferred Stock
may be amended to permit the payment of dividends in kind;
(v) enter into any material contract or commitment with
respect to capital expenditures;
(vi) except as set forth in the Orix Disclosure Letter
or the Equalnet Disclosure Letter, as the case may be, or in the
ordinary course of business consistent with past practice,
acquire, by merging or consolidating with, by purchasing an
equity interest in or a portion of the assets of, or by any other
manner, any business or any Person, or otherwise acquire any
assets of any Person;
(vii) except to the extent required under benefit plans,
agreements, collective bargaining agreements or their
arrangements as in effect on the date of this Agreement or
applicable law, rule or regulation, increase the compensation or
fringe benefits of any of its directors, officers or employees or
grant any severance or termination pay or enter into any
employment, consulting or severance agreement or arrangement with
any present or former director, officer or other employee, or
establish, adopt, enter into or amend or terminate any collective
bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers or employees;
(viii) except in the ordinary course of business
consistent with past practice, transfer, lease, license,
guarantee, sell, mortgage, pledge, dispose of, encumber or
subject to any lien, any material assets or incur or modify any
indebtedness or other material liability, or issue any debt
securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for the obligations of any
Person or, make any loan or other extension of credit;
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(ix) except in the ordinary course of business
consistent with past practice, make or rescind any material tax
election or settle or compromise any material tax liability;
(x) except as required by applicable law or GAAP, make
any material change in its method of accounting;
(xi) except in the ordinary course of business
consistent with past practice, pay, discharge or satisfy any
material claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction of claims, liabilities or
obligations reflected or reserved against in, or contemplated by,
the consolidated financial statements (or the notes thereto)
contained in the Commission Filings or the Orix Financial
Statements; or
(xii) agree, in writing or otherwise, to take any of the
foregoing actions.
(c) Neither Equalnet nor any of its Subsidiaries shall cancel
or let lapse any policy of insurance for the directors and/or officers
of Equalnet or any of its Subsidiaries.
6.2 INTERIM FINANCIAL INFORMATION AND AUDIT. Equalnet and Orix shall
supply each other with unaudited monthly operating statements within forty-five
(45) days after the end of each month ending between the date hereof and the
Closing Date, certified by the principal financial officer of Equalnet or Orix,
as the case may be, as having been prepared in accordance with procedures
employed by Equalnet or Orix, as the case may be in preparing prior monthly
operating statements and certifying that such financial statements were prepared
in accordance with GAAP applied on a basis consistent with the financial
statements contained in the Commission Filings or the Orix Financial Statements,
as the case may be and include all adjustments (all of which were normal
recurring adjustments) necessary to fairly present, in all material respects,
Equalnet's the financial position, results of operations and changes in
financial position at and for such period for Equalnet or Orix, as the case may
be.
6.3 FULL ACCESS AND DISCLOSURE. During the period commencing on the
date hereof until the Effective Time, each of Orix and Equalnet shall, and each
of Orix and Equalnet shall cause each of their respective Subsidiaries to, upon
reasonable notice, afford the other parties to this Agreement and their
employees, accountants, financing sources, agents and representatives reasonable
access during normal business hours to their books and records and those of
their respective Subsidiaries in order that they may have the opportunity to
make such investigations as they shall desire of the affairs of such other party
and its Subsidiaries; PROVIDED, HOWEVER, that such investigation shall not
affect the representations and warranties made in this Agreement. Equalnet
shall furnish promptly to Orix a copy of each form, report, schedule, statement,
registration statement and other document filed by it during such period
pursuant to the Securities Act or the Exchange Act. Equalnet and Orix agree to
cause their respective officers and employees to furnish such additional
financial and operating data and other information and respond to such
reasonable inquiries as Orix or Equalnet, as the case may be shall from time to
time request. Any information provided pursuant to this Section 6.3 shall be
subject to, and
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treated in accordance with the Confidentiality Agreement previously executed
and delivered by the parties hereto.
6.4 ACTION OF STOCKHOLDERS OF EQUALNET AND ORIX; VOTING AND
DISPOSITION OF THE SHARES. Promptly following the execution and delivery of
this Agreement, Equalnet acting through its Board of Directors and in accordance
with applicable law, shall duly call, convene and hold a meeting of the
stockholders of Equalnet (the "STOCKHOLDERS' MEETING") for the purpose of
approving the issuance of Equalnet Shares in connection with the Merger under
applicable NSCM regulations, and approving the amendment of Equalnet's Articles
of Incorporation to authorize sufficient Equalnet Shares to consummate the
transactions contemplated hereby. Equalnet shall take all action necessary to
solicit from its stockholders proxies, and shall take all other action necessary
and advisable, to secure the vote of stockholders required by applicable law and
Equalnet's Articles of Incorporation and By-Laws to obtain the approval of the
matters described in the immediately preceding sentence. Equalnet agrees that
it shall include in the Proxy Statement the recommendation of its Board of
Directors that the stockholders of Equalnet approve the matters described in the
second preceding sentence; provided, however, that the recommendation of
Equalnet's Board of Directors shall not be required to be included in the Proxy
Statement in the event that the Board of Directors shall have been advised by
outside counsel that the inclusion of such recommendation would breach the
fiduciary duties of the Board of Directors of Equalnet.
(b) As promptly as practicable following the execution and
delivery of this Agreement, Equalnet shall prepare and file a preliminary Proxy
Statement with the Commission and respond to the comments of the Commission, if
any, in connection therewith and to furnish all information regarding Equalnet
required in the definitive Proxy Statement (including, without limitation,
financial statements and supporting schedules and certificates and reports of
independent public accountants). Equalnet and Orix shall cooperate with each
other in the preparation of the Proxy Statement. Equalnet shall mail the
definitive Proxy Statement to the stockholders of Equalnet and, if necessary,
after the definitive Proxy Statement shall have been so mailed, promptly
circulate amended, supplemental or supplemented proxy material and, if required
in connection therewith, resolicit proxies. Equalnet shall not use any proxy
material in connection with the meeting of its stockholders without Orix's prior
approval.
6.5 REASONABLE BEST EFFORTS. Subject to the terms and conditions
provided herein, each of Orix and Equalnet shall, and each of Orix and Equalnet
shall cause each of their Subsidiaries to, cooperate and use their reasonable
best efforts to take, or cause to be taken, all appropriate action, and to make,
or cause to be made, all filings necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement including, without limitation, their reasonable
best efforts to obtain, prior to the Closing Date, all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and parties to contracts as are necessary for consummation of the
transactions contemplated by this Agreement and to fulfill the conditions to the
Merger; PROVIDED, HOWEVER, that no loan agreement or contract for borrowed money
shall be repaid except as currently required by its terms, in whole or in part,
and no contract shall be amended to increase the amount payable thereunder or
otherwise to be more burdensome to Orix and its Subsidiaries or Equalnet and its
Subsidiaries in order to obtain any such consent, approval
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or authorization without the prior written consent of Equalnet or Orix, as
the case may be (which shall not be unreasonably withheld).
6.6 NO SOLICITATION OF OTHER OFFERS. (a) Equalnet shall, and shall
cause its Affiliates, officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants and other agents to,
immediately cease any discussions or negotiations with any other parties that
may be ongoing with respect to any Acquisition Proposal (as defined below).
Equalnet shall not, directly or indirectly, take (and Equalnet shall not permit
its Affiliates, officers, directors, employees, representatives, consultants,
investment bankers, attorneys, accountants or other agents, to so take) any
action to (i) solicit, initiate or encourage the making of any Acquisition
Proposal, (ii) participate in any way in discussions or negotiations with, or
furnish or disclose any information to, any Person (other than Orix or the
agents or representatives of Orix) in connection with, or take any other action
to encourage any inquiries or the making of any proposal that is reasonably
expected to lead to, any Acquisition Proposal, (iii) enter into any agreement,
arrangement or understanding with respect to any Acquisition Proposal, (iv)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Orix the approval and recommendation of this Agreement, the Merger or the Stock
Purchase or (v) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal.
"ACQUISITION PROPOSAL" shall mean a proposal or offer for a merger or
consolidation with Equalnet or any of its Subsidiaries, sale or purchase of
assets (other than in the ordinary course of business) or stock of Equalnet or
any of its Subsidiaries, tender or exchange offer for capital stock of Equalnet
or any of its Subsidiaries, or other business combination or change in control
or similar transaction involving Equalnet or any of its Subsidiaries, other than
the transactions contemplated by this Agreement.
(b) In addition to the obligations of the Company set forth in
Section 6.6(a) hereof, promptly after receipt thereof, Equalnet shall advise
Orix of any request for information or of any Acquisition Proposal, or any
inquiry, proposal, discussions or negotiation with respect to any Acquisition
Proposal, the terms and conditions of such request, Acquisition Proposal,
inquiry, proposal, discussion or negotiation and Equalnet shall promptly provide
to Orix copies of any written materials received by Equalnet in connection with
any of the foregoing, and the identity of the Person making any such Acquisition
Proposal or such request, inquiry or proposal or with whom any discussion or
negotiation are taking place.
(c) Immediately following the Merger, Equalnet shall request each
Person which has heretofore executed a confidentiality agreement in connection
with its consideration of acquiring Equalnet or any portion thereof to return
all confidential information heretofore furnished to such Person by or on behalf
of Equalnet.
6.7 ASSUMPTION OF NOTE. At the Effective Time, Equalnet shall
guaranty $7,650,000 of debt owed by the Surviving Corporation to Infinity and
IEO. Such debt shall be represented by a new note (the "CONVERTIBLE NOTE"), the
form of which shall be satisfactory to Infinity and IEO. The Convertible Note
shall mature and become fully due and payable on the third anniversary of the
Effective Date, shall bear interest at the rate of 8.0% per annum, payable
monthly in arrears in cash or Equalnet Shares at the option of Equalnet and
shall be convertible
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into that number of Equalnet Shares representing five percent (5%) of the
issued and outstanding Equalnet Shares on a fully diluted basis after giving
effect to such conversion, which percentage shall be determined in the same
manner as used to determine the Aggregate Consideration. The Convertible Note
shall be secured by the assets of the Surviving Corporation and all of the
capital stock of the Surviving Corporation and each of its Subsidiaries in a
manner satisfactory to Infinity and IEO.
6.8 COMPOSITION OF THE BOARD OF DIRECTORS; EXECUTIVE OFFICERS. (a)
Immediately prior to the Effective Time, Orix shall be entitled to designate
four directors on the Board of Directors of Equalnet or such greater number as
shall give Orix representation on the Board of Directors of Equalnet equal to a
majority of the number of directors on the Board of Directors of Equalnet
(giving effect to the directors elected pursuant to this sentence). Equalnet
shall take all action requested by Orix to effect any such election. In
furtherance thereof, Equalnet shall increase the size of its Board of Directors
and/or secure the resignation of directors as shall permit Orix's designees to
be elected to the Board of Directors. Upon the request of Orix, Equalnet shall
cause Persons designated by Orix to constitute the same percentage of each
committee of its Board of Directors, each Board of Directors of each Subsidiary
and each committee of each such Board of Directors.
(b) Simultaneously with the execution and delivery of this Agreement,
(i) the Chief Executive Officer of Equalnet has agreed to resign as Chief
Executive Officer upon the satisfaction, or deemed satisfaction, of the
condition set forth in Section 7.1(k); and (ii) Barrett Wissman shall be duly
appointed the Co-Chief Executive Officer of Equalnet until the satisfaction, or
deemed satisfaction, of the condition set forth in Section 7.1(k) at which time
he shall become the Chief Executive Officer of Equalnet.
(c) In the event that this Agreement is terminated, the person
designated by Orix to serve as the Chief Executive Officer of Equalnet shall
resign.
(d) From the date hereof until the Effective Time or the termination
of this Agreement, Orix shall be entitled to nominate an individual who shall be
entitled to receive all notices of, and all materials relating to, any meeting
of the Board of Directors of Equalnet or proposed action by written consent and
who shall be entitled to attend all meetings of the Board of Directors of
Equalnet and participate as if such individual were a member of the Board of
Directors; provided, however, that for greater certainty, such individual shall
not be permitted or required to vote on any matter before the Board of Directors
of Equalnet.
6.9 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect and
until the Closing Date, Equalnet and Orix agree that they will consult each
other prior to issuing any press release and will also consult with each other
before otherwise making any public statement or responding to any press inquiry
with respect to this Agreement or the transactions contemplated hereby, except
as may be required by law or any governmental agency if required by such agency
or the rules of the National Association of Securities Dealers, Inc.
6.10 EXPENSES. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses;
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PROVIDED, HOWEVER, that if this Agreement is terminated (other than pursuant
to Section 9.1(d)), Equalnet shall reimburse Orix for all costs and expenses
incurred by Orix in connection with this Agreement and the transactions
contemplated hereby which payment shall be made on the date of termination.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER BY ORIX
7.1 CONDITIONS TO ORIX'S OBLIGATION TO EFFECT THE MERGER. The
obligations of Orix to effect the transactions contemplated herein shall be
subject to the following conditions:
(a) This Agreement and the transactions contemplated hereby shall
have been approved and adopted by the requisite vote of the stockholders of Orix
and Equalnet in accordance with applicable law.
(b) No action or proceedings shall have been instituted or threatened
before a court or other government body or by any public authority to restrain,
prohibit or make more costly any of the transactions contemplated by this
Agreement or which could reasonably be expected to have a Material Adverse
Effect on the business, assets, liabilities, results of operations, condition
(financial or otherwise) of Equalnet and its Subsidiaries. No statute, rule,
regulation, executive order, stay, decree, or judgment shall have been enacted,
entered, issued, promulgated or enforced by any court or governmental authority
which prohibits, restricts, or makes more costly the consummation of the Merger.
All authorizations, consents, orders or approvals of, or declarations or filings
with, and all expirations of waiting periods imposed by, any governmental entity
(all of the foregoing, "CONSENTS") which are necessary for the consummation of
the Merger, shall have been filed, occurred or been obtained (all such permits,
approvals, filings and consents and the lapse of all such waiting periods being
referred to as the "REQUISITE REGULATORY APPROVALS") and all such Requisite
Regulatory Approvals shall be in full force and effect. All third party
consents necessary to consummate the transactions shall have been obtained.
(c) The Irrevocable Proxy and Voting Agreements shall be in full
force and effect.
(d) The Second Amended Joint Plan Of Reorganization, as modified
through the date hereof, of Equalnet's wholly owned subsidiary, Equalnet
Corporation, as confirmed by the United States Bankruptcy Court for the Southern
District of Texas, Houston Division shall have been consummated on the terms and
conditions contained in the plan of reorganization as proposed on the date
hereof.
(e) The Equalnet Shares shall continue to be registered pursuant to
the Exchange Act and quoted for trading on the NSCM and the closing bid price
for the Equalnet Shares on the NSCM shall have been at least $1.00 per Equalnet
Share for the twenty (20) trading days prior to the Closing Date.
(f) There shall have been no event having a Material Adverse Effect
on Equalnet since the date of this Agreement. Orix shall have received
certificates, dated as the date hereof, of the CEO and President and Chief
Financial Officer of Equalnet, certifying the foregoing.
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(g) The representations and warranties of Equalnet and Merger Sub
shall be true and correct in all material respects when made on the date hereof
and at the Effective Time (unless they specifically relate to an earlier date,
in which case they shall be true and correct as of such earlier date). Equalnet
and Merger Sub shall have performed and complied in all material respects with
all agreements, covenants and conditions required by this Agreement to be
performed and complied in all material respects with by them prior to the
Effective Time. The president of Equalnet shall have delivered to Orix a
certificate dated as of the Effective Time, certifying to the foregoing.
(h) All corporate and other proceedings in connection with the
transactions contemplated hereby and all documents and instruments incident to
such transactions shall be reasonably satisfactory in form and substance to Orix
and Orix's counsel, and Equalnet shall have made available to Orix for
examination the originals or true, complete and correct copies of all records
and documents relating to the business and affairs of Equalnet that Orix may
reasonably request in connection with said transaction.
(i) Equalnet shall not have restated any of its consolidated balance
sheets, consolidated statements of operations, consolidated statements of
shareholders' equity or consolidated statements of cash flows.
(j) The number of Shares voted against the Merger by stockholders who
thereafter exercise their rights as dissenting stockholders under the NGCL shall
not exceed 10 percent of the Shares outstanding on the Closing Date.
(k) Orix shall be satisfied, in its sole discretion, with the results
of the investigations by its employees, accountants, financing sources, agents
and representatives of the books, records, documents, properties and other
information of Equalnet and its Subsidiaries, it being understood that unless
Orix shall have notified Equalnet that this condition is not satisfied within 60
days of the date of this Agreement, this condition shall be deemed satisfied
provided, further, it is understood that in connection with its due diligence
Orix shall have the right to review all Commission Filings and all other
information (including, without limitation, all disclosure schedules) provided
to Orix or any of its Affiliates on or prior to the date hereof and Orix shall
still be entitled to determine that it is not satisfied with its due diligence
notwithstanding that Orix may have already been aware of the facts or
circumstances giving rise to its dissatisfaction.
(l) Equalnet shall have responded to comment letters and other
enquiries from the Staff of the Commission with respect to the Commission
Filings, the 1999 10-Q or any other materials, which responses shall be
satisfactory to Orix, in its sole discretion.
(m) Orix shall be satisfied, in its sole discretion, with the effect
that any response to comment letters and other enquiries from the Commission
with respect to the Commission Filings, the 1999 10-Q or any other materials, or
any action required to be taken by Equalnet and/or any of its Subsidiaries in
connection therewith, shall have on Equalnet's reporting obligations, any
financial statements of Equalnet or any registration statements relating to any
securities of Equalnet or on Equalnet's previously filed Commission Filings.
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ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER BY
EQUALNET AND MERGER SUB
8.1 CONDITIONS TO OBLIGATION OF EACH OF EQUALNET AND MERGER SUB TO
EFFECT THE MERGER. The obligation of each of Equalnet and Merger Sub to effect
the Merger shall be further subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) This Agreement and the transactions contemplated hereby shall
have been approved and adopted by the requisite vote of the stockholders of Orix
and Equalnet in accordance with applicable law.
(b) No preliminary or permanent injunction or other order by any
federal, state or foreign court of competent jurisdiction which prohibits the
consummation of the Merger shall have been issued and remain in effect. No
statute, rule, regulation, executive order, stay, decree, or judgment shall have
been enacted, entered, issued, promulgated or enforced by any court or
governmental authority which prohibits or restricts the consummation of the
Merger. All Consents which are necessary for the consummation of the Merger,
shall have been filed, occurred or been obtained and all Requisite Regulatory
Approvals shall be in full force and effect.
(c) The representations and warranties of Orix shall be true and
correct in all material respects when made on the date hereof and as of the
Effective Time (unless they specifically relate to an earlier date, in which
case they shall be true and correct as of such earlier date). Orix shall have
performed and complied in all material respects with all agreements, covenants
and conditions required by this Agreement to be performed and complied with by
it prior to the Effective Time. The president of Orix shall have delivered to
Equalnet a certificate, dated as of the Effective Time, certifying to the
foregoing.
(d) The monthly average gross revenues of Orix and its Subsidiaries
for the period commencing June 1, 1999 and ending on the last day of the month
immediately preceding the Closing Date shall be equal to, or in excess of,
$1,000,000.
(e) Orix shall have provided appropriate comfort to Equalnet
(including written comfort from the stockholders of Orix) that the issuance of
securities in connection with the Merger shall not cause Equalnet to breach the
Securities Act.
(f) So long as Equalnet has complied with its obligations under the
Stock Subscription Agreement, the second increment of the Option (as defined in
the Stock Subscription Agreement) granted pursuant to Section 4.1 of the Stock
Subscription Agreement shall have been exercised.
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION. This Agreement may be terminated and the Merger
contemplated hereby abandoned at any time prior to the Effective Time, whether
before or after approval by the stockholders of any party:
(a) By mutual written consent of Equalnet and Orix.
(b) By either Equalnet or Orix if the Merger shall not have been
consummated on or before December 31, 1999.
(c) By Orix if there shall have been any material breach of an
obligation of Equalnet hereunder and, if such breach is curable, such breach
shall not have been remedied within ten (10) days after receipt by Equalnet, of
notice in writing from Orix specifying such breach and requesting that it be
remedied.
(d) By Equalnet if there shall have been any material breach of an
obligation of Orix hereunder and, if such breach is curable, such breach shall
not have been remedied within ten (10) days after receipt by Orix, of notice in
writing from Equalnet specifying such breach and requesting that it be remedied.
(e) By either Equalnet or Orix if any court of competent jurisdiction
in the United States or other United States governmental body shall have issued
an order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or any other
action shall have become final and non-appealable.
(f) By Equalnet on or after July 31, 1999 if Orix has not obtained
the requisite approval of its stockholders with respect to the transactions
contemplated hereby by such date unless Equalnet at such time is in material
breach of its obligations hereunder.
(g) By Orix on or after August 31, 1999 if Equalnet shall not have
obtained the requisite approval of its stockholders with respect to the
transactions contemplated hereby unless Orix at such time is in material breach
of its obligations hereunder.
(h) By Orix within sixty (60) days of this Agreement should Orix
determine in its sole discretion that the condition in Section 7.1(k) has not
been satisfied.
(i) By Equalnet if on or prior to the 60th day of this Agreement Orix
has not exercised its option to purchase an additional $750,000 of Equalnet
Shares in accordance with the Stock Subscription Agreement so long as on such
date, Equalnet is in compliance with all of its obligations under the Stock
Subscription Agreement and the Merger Agreement and all conditions required to
be satisfied by Equalnet in connection with the exercise by Orix of the option
shall have been satisfied, including without limitation the delivery of
sufficient proxies pursuant to Section 4.4 (ix) of the Stock Subscription
Agreement; provided however Equalnet
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must exercise its rights under this Section 9.1(i) within three Business Days
of the date on which Orix has notified Equalnet in writing that it does not
intend to exercise such option.
9.2 EFFECT OF TERMINATION. (a) In the event of termination of this
Agreement as provided above, this Agreement shall forthwith become of no further
effect and, except for a termination resulting from a breach by a party of any
of its obligations under this Agreement, there shall be no liability or
obligation on the part of Equalnet or Orix or their respective officers or
directors (except as set forth in Section 6.10 and Section 9.2(b) hereof which
shall survive the termination). Nothing contained in this Section 9.2 shall
relieve any party from liability for breach of this Agreement that results in
termination of this Agreement. Upon request therefor, each party shall
redeliver all documents, work papers and other material of any other party
relating to the transactions contemplated hereby, whether obtained before or
after the execution hereof, to the party furnishing same.
(b) In the event that this Agreement is terminated in accordance with
Section 9.1 (other than in accordance with Section 9.1(d)), then Equalnet agrees
to pay to Orix an amount of cash equal to the amount of cash paid for the
securities purchased by Infinity and IEO pursuant to the Stock Subscription
Agreement. The payment described in the immediately preceding sentence shall be
in addition to any other rights or remedies which Orix may have as a result of
Equalnet's breach of this Agreement.
9.3 AMENDMENT. This Agreement may be amended by action taken at any
time before or after approval hereof by the stockholders of Equalnet and, after
such approval, no amendment shall be made which alters the Exchange Ratio or
which in any way materially adversely affects the rights of such stockholders or
which require stockholder approval by law or pursuant to NSCM rules, without the
further approval of such stockholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.
9.4 WAIVER. At any time prior to the Effective Time, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) except as may be required by law, waive compliance with
any of the agreements or conditions contained herein. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. Such waiver
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
9.5 AGREEMENT TO NEGOTIATE. In the event that the condition set
forth in Section 8.1(d) is not satisfied or waived on or prior to the Closing,
the parties agree to negotiate in good faith for a period of forty-five (45)
days to modify the amount of the Aggregate Consideration in order to effect the
Merger.
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ARTICLE X
GENERAL PROVISIONS
10.1 NOTICES. All notices, claims, demands and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or by telex or telecopy or mailed by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
If to Equalnet, to:
Notice Address:
Equalnet Communications Corp.
1250 Wood Branch Park Drive
Houston, Texas 77079
Attention: Mitchell H. Bodian
Telephone: (281) 529-4602
Telecopier: (281) 529-4650
with a copy to:
Weil, Gotshal & Manges LLP
700 Louisiana, Suite 1600
Houston, Texas 77002
Attention: Charles E. Harrel
Telephone: (713) 546-5000
Telecopier: (713) 224-9511
If to Orix, to:
e.Volve Technology Group, Inc.
1771 East Flamingo Road
Building B, Suite 200
Las Vegas, Nevada 89119
Attention: Steven Loglisci
Telephone: (702) 792-2500
Telecopier: (702) 792-3313
with a copy to:
White & Case LLP
200 S. Biscayne Blvd. Suite 4900
Miami, FL 33131
Attn: Thomas E. Lauria
Fax: (305) 358-5744
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10.2 DESCRIPTIVE HEADINGS. The headings contained in this Agreement
are for reference purposes only the and shall not affect in any way the meaning
or interpretation of this Agreement.
10.3 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (including the
Schedules, Exhibits and other documents and instruments referred to herein) (a)
constitute the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties or any of them, with
respect to the subject matter hereof, (b) are not intended to confer upon any
other person any rights or remedies hereunder, and (c) shall not be assigned by
operation of law or otherwise.
10.4 GOVERNING LAW. Except to the extent that the laws of the State
of Texas or Nevada or any other jurisdiction are mandatorily applicable, this
Agreement shall be governed by and construed in accordance with the laws of the
State of New York without giving effect to the provisions thereof relating to
conflicts of law.
10.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
10.6 VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not effect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
10.7 INVESTIGATION. The representations and warranties contained
herein or in the certificates or other documents delivered prior to the Closing
shall not be deemed waived or otherwise affected by any investigation made by
any party hereto.
10.8 THIRD PARTY BENEFICIARIES. Nothing in this Agreement, express or
implied, is intended or shall be construed to create any third party
beneficiaries.
ARTICLE XI
CERTAIN DEFINITIONS
"Acquisition Proposal" shall have the meaning set forth in Section
6.7(b).
"Affiliate" of any Person shall mean any Person directly or indirectly
controlling, controlled by, or under common control with, such Person; PROVIDED
THAT, for the purposes of this definition, "control" (including with correlative
meanings, the terms "controlled by" and "under common control with""), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and polices of
such Person, whether through the ownership of voting securities or partnership
interests, by contract or otherwise.
"Aggregate Consideration" shall have the meaning set forth in Section
3.1.
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"Agreed Shares" shall mean those Equalnet Shares issued in settlement of
claims or litigation between Equalnet and Greyrock Credit Equalnet and S.A. Tel
and Equalnet and Qwest so long as the terms of settlement of any such litigation
shall, in each case, be reasonably satisfactory to Orix. Agreed Shares shall
also include those Equalnet Shares issuable pursuant to the $20,000,000
"earnout" provisions contained in the merger agreement with Intellesis and the
ACMI Asset Purchase Agreement; PROVIDED, HOWEVER, that such Agreed Shares shall
not include Equalnet Shares already issued or issued prior to the Effective Time
pursuant to such "earnout" provisions or Equalnet Shares not yet issued in
connection with such acquisition solely due to the need for the approval of the
stockholders of Equalnet for such issuance, or any reverse stock split.
"Agreement" shall have the meaning set forth in the preamble hereto.
"Certificates" shall have the meaning set forth in Section 3.2.
"Claims" shall have the meaning set forth in Section 4.16.
"Closing" shall have the meaning set forth in Section 3.7.
"Closing Date" shall have the meaning set forth in Section 3.7.
"Code" shall have the meaning set forth in the third recital hereto.
"Commission" shall mean the Securities and Exchange Commission.
"Commission Filings" shall have the meaning set forth in Section 4.5.
"Consents" shall have the meaning set forth in Section 7.1.
"Convertible Note" shall have the meaning set forth in Section 6.8.
"Dissenting Stockholders" shall have the meaning set forth in Section
3.5.
"Effective Time" shall have the meaning set forth in Section 1.2.
"Environmental Claims" shall have the meaning set forth in Section 4.16.
"Environmental Law" shall have the meaning set forth in Section 4.16.
"Equalnet" shall have the meaning set forth in the first recital hereto.
"Equalnet Disclosure Letter" shall mean the disclosure letter addressed
to Orix executed and delivered contemporaneously with the execution and delivery
of this Agreement.
"Equalnet Employee Benefit Plan" shall have the meaning set forth in
Section 4.10.
"Equalnet Financial Statements" shall have the meaning set forth in
Section 4.5.
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"Equalnet Intellectual Property" shall have the meaning set forth in
Section 4.14.
"Equalnet Permits" shall have the meaning set forth in Section 4.8.
"Equalnet Property" shall have the meaning set forth in Section 4.16.
"Equalnet Returns" shall have the meaning set forth in Section 4.12.
"Equalnet Shares" shall have the meaning set forth in the fourth recital
hereto.
"ERISA" shall have the meaning set forth in Section 4.10.
"Exchange Act" shall mean the Securities and Exchange Act of 1934, as
amended.
"Exchange Ratio" shall have the meaning set forth in Section 3.1.
"GAAP" shall mean generally accepted accounting principles of the United
States of America, as in effect from time to time.
"Hazardous Materials" shall have the meaning set forth in Section 4.16.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"IEO" shall have the meaning set forth in fourth recital hereto.
"Infinity" shall have the meaning set forth in the fourth recital
hereto.
"Irrevocable Proxy Agreements" shall have the meaning set forth in the
fourth recital hereto.
"Material Adverse Effect", with respect to any Person, shall mean a
material adverse effect on the business, assets, liabilities, results of
operations, condition (financial or otherwise) or prospects of such Person and
its Subsidiaries, taken as a whole.
"Merger" shall have the meaning set forth in the second recital hereto.
"Merger Consideration" shall have the meaning set forth in Section 3.1.
"Merger Sub" shall have the meaning set forth in the first recital
hereto.
"Multiemployer Plan" shall have the meaning set forth in Section 4.10.
"NGCL" shall have the meaning set forth in Section 1.1.
"NSCM" shall have the meaning set forth in the third recital thereto.
"Orix" shall have the meaning set forth in the first recital hereto.
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"Orix Disclosure Letter" shall mean the disclosure letter addressed to
Equalnet executed and delivered contemporaneously with the execution and
delivery of this Agreement.
"Orix Employee Benefit Plan" shall have the meaning set forth in Section
5.10.
"Orix Financial Statements" shall have the meaning set forth in Section
5.5.
"Orix Intellectual Property" shall have the meaning set forth in Section
5.14.
"Orix Permits" shall have the meaning set forth in Section 5.8.
"Orix Property" shall have the meaning set forth in Section 5.16.
"Orix Returns" shall have the meaning set forth in Section 5.12.
"Orix Systems" shall have the meaning set forth in Section 5.19.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, a group and a
government or other department or agency thereof.
"Proxy Statement" shall have the meaning set forth in Section 4.4.
"Release" shall have the meaning set forth in Section 4.16.
"Requisite Regulatory Approvals" shall have the meaning set forth in
Section 7.1.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Share" shall have the meaning set forth in Section 3.1.
"Stock Subscription Agreement" shall have the meaning set forth in the
fifth recital clause.
"Stockholders' Meeting" shall have the meaning set forth in Section 6.4.
"Subsidiary" with respect to any Person, shall mean and include (x) any
partnership of which the Person or any Subsidiary is a general partner or (y)
any other entity in which the Person or any of its Subsidiaries owns or has the
power to vote 50% or more of the equity interests in such entity having general
voting power to participate in the election of the governing body of such
entity.
"Surviving Corporation" shall have the meaning set forth in Section 1.1.
"Taxes" shall have the meaning set forth in Section 4.12.
"WARN" shall mean the Federal Workers Adjustment Retraining and
Notification Act.
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"Year 2000 Compliance" shall have the meaning set forth in Section 4.19.
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<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.
e.VOLVE TECHNOLOGY GROUP, INC.
By: /s/ Steven Reno Loglisci
------------------------------------
Name: Steven Reno Loglisci
Title: President
EQUALNET COMMUNICATIONS CORP.
By: /s/ Mitchell H. Bodian
------------------------------------
Name: Mitchell H. Bodian
Title: Chief Executive Officer
EQUALNET ACQUISITION CORPORATION
By: /s/ Mitchell H. Bodian
------------------------------------
Name: Mitchell H. Bodian
Title: Chief Executive Officer
-40-
<PAGE>
Exhibit 99.4
IRREVOCABLE PROXY AGREEMENT
THIS IRREVOCABLE PROXY AGREEMENT (the "AGREEMENT"), dated as of May
21, 1999, made by and between the Willis Group ("TWG") (the "STOCKHOLDER"),
HW Partners L.P., a Texas limited partnership ("HW PARTNERS"), as
representative for Infinity Investors Limited and IEO Holdings Limited, and
Equalnet Communications Corp., a Texas corporation ("EQUALNET");
WHEREAS, an acquisition subsidiary of Equalnet ("MERGER SUB"),
Equalnet and Orix Global Communications Inc., a Nevada corporation ("ORIX")
have entered into an Agreement and Plan of Merger dated as of May 21, 1999
(the "MERGER AGREEMENT"), which will provide, among other things, for the
merger of Merger Sub with and into Orix (the "MERGER");
WHEREAS, the Stockholder is the record and beneficial owner of each
share of its voting stock of Equalnet (including all voting stock in the form
of a convertible security and all voting stock which the Stockholder would
own upon the conversion of any voting or non-voting convertible debt or
equity security or options or warrants) (the "STOCK"), as set forth opposite
the Stockholder's name on EXHIBIT A hereto, and desires to enter into this
Agreement in order to induce Orix to enter into the Merger Agreement; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Orix has requested that the Stockholder agrees, and the
Stockholder hereby agrees, to grant Orix an irrevocably proxy with respect to
the Stockholder's Stock (as defined below) in accordance with the terms
hereof.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. STOCKHOLDER'S STOCK. For all purposes of this Agreement, the
term "STOCKHOLDER'S STOCK" shall include the Stock set forth on EXHIBIT A and
any other Stock which the Stockholder currently has record or beneficial
ownership of or obtains record or beneficial ownership of during the term of
this Agreement and shall further include any securities issued or exchanged
at any time in the future with respect to the Stockholder's Stock.
3. REVOCATION OF PROXIES; GRANT OF PROXY. The Stockholder hereby
revokes any and all previous proxies with respect to the Stockholder's Stock.
Subject to the terms and conditions hereof, the Stockholder hereby appoints HW
Partners, with full power of substitution, as proxy holder to represent and to
vote the Stockholder's Stock in favor of (i) the Merger Agreement and the
transactions contemplated thereby, including the Merger (including with respect
to any procedural matters related thereto), (ii) the amendment of the Articles
of Incorporation of Equalnet to increase the authorized number of shares of
common stock of Equalnet, (iii) the authorization of the issuance of shares of
common stock of Equalnet in
<PAGE>
connection with the transactions contemplated by the Merger Agreement under
all applicable laws, rules and regulations, including, without limitation,
the rules of NASDAQ and (iv) the conversion into common stock of Equalnet of
each convertible security held by such Stockholder prior to the Merger (it
being understood and agreed that TWG shall, and shall cause each of its
affiliates upon two business days' notice from HW Partners to, convert such
of TWG's (and such affiliates') Stock (other than common stock) as specified
by HW Partners in such notice) at any meeting (whether special or annual),
and whether or not adjourned or by written action of the stockholders of
Equalnet, and against any proposal brought before the stockholders of
Equalnet which would conflict with the Merger and the transactions
contemplated by the Merger Agreement, including, without limitation, any
proposal to remove any one or more directors of Equalnet designated by Orix.
THE AUTHORITY GRANTED HEREUNDER (THE "PROXY") SHALL BE IRREVOCABLE UNTIL THE
PROXY TERMINATION DATE (AS DEFINED BELOW) AND DEEMED TO BE COUPLED WITH AN
INTEREST SUFFICIENT IN LAW AS REQUIRED BY SECTION 2.29.C OF THE TEXAS
BUSINESS CORPORATION ACT. The Proxy shall be effective until the earlier of
the consummation of the Merger or the termination of the Merger Agreement in
accordance with its terms (the "PROXY TERMINATION DATE").
4. NO SOLICITATION OF OTHER OFFERS. (a) The Stockholder shall,
and shall cause its Affiliates, officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants and
other agents to, immediately cease any discussions or negotiations with any
other parties that may be ongoing with respect to any Acquisition Proposal in
connection with the transactions contemplated by the Merger Agreement. The
Stockholder agrees that it shall not, directly or indirectly, take (and shall
not permit its Affiliates, officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants or other agents, to
so take) any action to (i) solicit, initiate or encourage the making of any
Acquisition Proposal, (ii) participate in any way in discussions or
negotiations with, or furnish or disclose any information to, any Person
(other than Orix or the agents or representatives of Orix) in connection
with, or take any other action to encourage any inquiries or the making of
any proposal that is reasonably expected to lead to, any Acquisition
Proposal, (iii) enter into any agreement, arrangement or understanding with
respect to any Acquisition Proposal, (iv) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Orix, the approval of the Merger
Agreement, the Merger or the purchase of any Stock under the Stock Purchase
Agreement dated May 21, 1999 or (v) approve or propose to approve, any
Acquisition Proposal.
(b) In addition to the obligations of the Stockholder set forth in
Section 4(a) hereof, promptly after receipt thereof, the Stockholder agrees
that it shall advise Orix of any request for information or of any
Acquisition Proposal, or any inquiry, proposal, discussions or negotiation
with respect to any Acquisition Proposal, the terms and conditions of such
request, Acquisition Proposal, inquiry, proposal, discussion or negotiation
and the Stockholder shall promptly provide to Orix copies of any written
materials received by the Stockholder in connection with any of the
foregoing, and the identity of the Person making any such Acquisition
Proposal or such request, inquiry or proposal or with whom any discussion or
negotiation are taking place.
2
<PAGE>
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to HW Partners as follows:
(a) The Stockholder has all necessary power, capacity and
authority to enter into this Agreement and is the sole record or beneficial
owner of the Stockholder's Stock. The Stockholder has good and valid title
to the Stockholder's Stock, free and clear of any and all claims, liens,
charges, pledges, assessments, options, equities, encumbrances and security
interests whatsoever. Except pursuant to this Agreement, none of the
Stockholder's Stock is subject to any proxy, voting trust or other agreement
or arrangement with respect to the voting of the Stockholder's Stock. The
Stockholder's Stock (other than any Stockholder Stock evidenced by
convertible debt) is validly authorized, issued and outstanding, fully paid
and non-assessable with no personal liability attaching to the ownership
thereof.
(b) This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes the valid and binding agreement
of the Stockholder, enforceable against the Stockholder in accordance with
its terms.
(c) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not,
without the passing of time or the giving of notice or both, violate or
conflict with, constitute a breach of or a default under, result in the loss
of any benefit under, or permit the acceleration of or entitle any person to
accelerate any obligation under or pursuant to, any contract, commitment,
agreement, understanding, mortgage, lien, lease, instrument, order, award,
judgment or decree to which the Stockholder is a party or by which the
Stockholder's assets or Stockholder's Stock is bound or subject.
(d) Neither the execution and delivery of this Agreement, nor
the performance by the Stockholder of the Stockholder's obligations
hereunder, will violate any provision of law applicable to the Stockholder.
(e) No investment banker, broker or finder is entitled to any
commission or fee in respect of this Agreement or the Merger Agreement based
upon any arrangement or agreement made by or on behalf of the Stockholder.
(f) The Proxy granted hereunder is legal, valid and effective
and will confer upon HW Partners or its substitute all of the voting power of
the Stockholder's Stock under law and Equalnet's Articles of Incorporation
and Bylaws with respect to the matters specified in Section 3 hereof until
the Proxy Termination Date.
6. COVENANTS OF THE STOCKHOLDER.
(a) The Stockholder hereby covenants and agrees with HW
Partners that (i) until the Proxy Termination Date, the Stockholder will not
directly or indirectly, grant any proxies or enter into any voting trust or
other agreement or arrangement with respect to the voting of any Stock, or
(ii) until the earlier of the termination of the Merger Agreement and the six
(6) month anniversary of the consummation of the Merger, the Stockholder will
not sell, assign, transfer, pledge, encumber or otherwise dispose of the
Stockholder's Stock, or enter into
3
<PAGE>
any contract, option or other arrangement or understanding with respect to
the direct or indirect sale, assignment, transfer, pledge, encumbrance or
other disposition of the Stockholder's Stock other than, following the
consummation of the Merger, pursuant to, and in compliance with, Rule 144 of
the Securities Act.
(b) The Stockholder has executed this Agreement in its
capacity as a stockholder of Equalnet and not in its capacity as an officer
or director of Equalnet. Without limiting the foregoing, nothing herein
shall limit or affect any actions taken by the Stockholder in his capacity as
an officer or director of Equalnet in exercising Equalnet's rights under the
Merger Agreement.
7. STOP TRANSFER INSTRUCTIONS. Equalnet shall, on the date
hereof, issue stop transfer instructions to its transfer agent in respect of
the Stockholder's Stock and shall cause such stop transfer instructions to
remain in effect through the Proxy Termination Date.
8. WAIVER OF RIGHTS; CONVERSION PRICE. Until the Proxy
Termination Date, the Stockholder hereby waives any and all rights to receive
payment upon the terms and conditions applicable to the Stockholder's Stock
set forth on Exhibit A hereto, including, without limitation, the right to
receive dividends, payment of liquidation preference and any rights to cause
Equalnet to redeem the Stockholder's Stock. The Stockholder agrees that
notwithstanding any provision contained in the Stockholder's Stock or any
documentation relating thereto, Stockholder's Stock which has a conversion
price of less than $.75 or a floating conversion price shall be converted
into common stock of Equalnet at $.75 per share of common stock.
9. REMEDIES. The parties hereto agree that if for any reason any
of the Stockholder has failed to perform its respective obligations under
this Agreement, then HW Partners shall be entitled to specific performance
and injunctive and other equitable relief, and the parties hereto further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that any
party hereto may have against any other party hereto for any failure to
perform its obligations under this Agreement.
10. MISCELLANEOUS.
(a) This Agreement shall not be assignable by the
Stockholders. This Agreement shall be binding upon the Stockholder and the
Stockholder's heirs, successors and assigns by will or by the laws of descent.
(b) This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by each of the parties hereto.
(c) All costs and expenses (including legal fees) incurred in
connection with this Agreement shall be paid by the party incurring such
expense; provided, however, if HW Partners is required to retain counsel to
enforce the terms of this Agreement, the Stockholder
4
<PAGE>
shall pay the costs and expenses of such counsel necessary to enforce the
terms of this Agreement.
(d) From time to time, and without further consideration,
each party will execute and deliver to the other such documents and take such
action as the other may reasonably request in order to consummate more
effectively the terms of this Agreement.
(e) All authority herein conferred or agreed to be conferred
by the Stockholder shall survive the Stockholder's death or incapacity. This
Agreement constitutes the sole understanding of the parties hereto with
respect to the subject matter hereof; provided, however, that this provision
is not intended to abrogate any other written agreement between or among the
parties executed with or after this Agreement or any written agreement
pertaining to another subject matter.
(f) All notices, requests, consents and other communication
hereunder shall be in writing and delivered personally or by telecopy
transmission or sent by registered or certified mail or by any express mail
service, postage or fees prepaid, addressed as follows:
(i) If to HW Partners:
HW Partners, L.P.
1601 Elm Street, Suite 4000
Dallas, Texas 75201
Attention: Stuart Chasanoff
Fax Number: (214) 720-1667
with a copy to White & Case LLP:
White & Case LLP
4900 First Union Financial Center
200 South Biscayne Blvd.
Miami, Florida 33131
Attention: Thomas E. Lauria
Fax Number: (305) 358-5744
(ii) If to Stockholder to:
Willis Group, LLC
5005 Woodway, Suite 350
Houston, Texas 77056
with a copy to:
5
<PAGE>
(g) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF TEXAS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
(h) This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(i) The headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation hereof.
[SIGNATURES ON NEXT PAGE]
6
<PAGE>
IN WITNESS WHEREOF, HW Partners and the Stockholder has caused this
Agreement to be signed as of the date first above written.
THE WILLIS GROUP, LLC
By: /s/ Mark Willis
---------------------------------
Name: Mark Willis
Title: President
Accepted:
HW PARTNERS L.P.
By: /s/ Barrett Wissman
-------------------------------
Name: Barrett Wissman
Title: Manager of the General Partner, HW Finance, LLC
7
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
AMOUNT ISSUABLE UPON
STOCKHOLDER DESCRIPTION OF STOCK OF STOCK CONVERSION
--------------------------- ---------------------------- --------------- -----------------
<S> <C> <C>
The Willis Group, LLC Series D Preferred Stock 1,925 shares 2,566,667
Common Stock Purchase 933,116
Warrants
6% Senior Secured 2,054,021
Convertible Note due 2001
Common Stock 6,722,965
shares
</TABLE>
<PAGE>
EX-99.5
IRREVOCABLE PROXY AGREEMENT
THIS IRREVOCABLE PROXY AGREEMENT (the "AGREEMENT"), dated as of
May 21, 1999, made by and between Advantage Fund Ltd. (the "STOCKHOLDER"), HW
Partners L.P., a Texas limited partnership ("HW PARTNERS"), as representative
for Infinity Investors Limited and IEO Holdings Limited, and Equalnet
Communications Corp., a Texas corporation ("EQUALNET");
WHEREAS, an acquisition subsidiary of Equalnet ("MERGER SUB"),
Equalnet and Orix Global Communications Inc., a Nevada corporation ("ORIX")
have entered into an Agreement and Plan of Merger dated as of May 21, 1999
(the "MERGER AGREEMENT"), which will provide, among other things, for the
merger of Merger Sub with and into Orix (the "MERGER");
WHEREAS, the Stockholder is the record and beneficial owner of each
share of its voting stock of Equalnet (including all voting stock in the form
of a convertible security and all voting stock which the Stockholder would
own upon the conversion of any voting or non-voting convertible debt or
equity security or options or warrants) (the "STOCK"), as set forth opposite
the Stockholder's name on EXHIBIT A hereto, and desires to enter into this
Agreement in order to induce Orix to enter into the Merger Agreement; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Orix has requested that the Stockholder agrees, and the
Stockholder hereby agrees, to grant Orix an irrevocably proxy with respect to
the Stockholder's Stock (as defined below) in accordance with the terms
hereof.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. STOCKHOLDER'S STOCK. For all purposes of this Agreement, the
term "STOCKHOLDER'S STOCK" shall include the Stock set forth on EXHIBIT A and
any other Stock which the Stockholder currently has record or beneficial
ownership of or obtains record or beneficial ownership of during the term of
this Agreement and shall further include any securities issued or exchanged
at any time in the future with respect to the Stockholder's Stock.
3. REVOCATION OF PROXIES; GRANT OF PROXY. The Stockholder hereby
revokes any and all previous proxies with respect to the Stockholder's Stock.
Subject to the terms and conditions hereof, the Stockholder hereby appoints
HW Partners, with full power of substitution, as proxy holder to represent
and to vote the Stockholder's Stock in favor of (i) the Merger Agreement and
the transactions contemplated thereby, including the Merger (including with
respect to any procedural matters related thereto), (ii) the amendment of the
Articles of Incorporation of Equalnet to increase the authorized number of
shares of common stock of Equalnet, and (iii) the authorization of the
issuance of shares of common stock of Equalnet in
<PAGE>
connection with the transactions contemplated by the Merger Agreement under
all applicable laws, rules and regulations, including, without limitation,
the rules of NASDAQ, and against any proposal brought before the stockholders
of Equalnet which would conflict with the Merger and the transactions
contemplated by the Merger Agreement, including, without limitation, any
proposal to remove any one or more directors of Equalnet designated by Orix.
THE AUTHORITY GRANTED HEREUNDER (THE "PROXY") SHALL BE IRREVOCABLE UNTIL THE
PROXY TERMINATION DATE (AS DEFINED BELOW) AND DEEMED TO BE COUPLED WITH AN
INTEREST SUFFICIENT IN LAW AS REQUIRED BY SECTION 2.29.C OF THE TEXAS
BUSINESS CORPORATION ACT. The Proxy shall be effective until the earlier of
the consummation of the Merger or the termination of the Merger Agreement in
accordance with its terms (the "PROXY TERMINATION DATE").
4. NO SOLICITATION OF OTHER OFFERS. (a) The Stockholder shall,
and shall cause its Affiliates, officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants and
other agents to, immediately cease any discussions or negotiations with any
other parties that may be ongoing with respect to any Acquisition Proposal in
connection with the transactions contemplated by the Merger Agreement. The
Stockholder agrees that it shall not, directly or indirectly, take (and shall
not permit its Affiliates, officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants or other agents, to
so take) any action to (i) solicit, initiate or encourage the making of any
Acquisition Proposal, (ii) participate in any way in discussions or
negotiations with, or furnish or disclose any information to, any Person
(other than Orix or the agents or representatives of Orix) in connection
with, or take any other action to encourage any inquiries or the making of
any proposal that is reasonably expected to lead to, any Acquisition
Proposal, (iii) enter into any agreement, arrangement or understanding with
respect to any Acquisition Proposal, (iv) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Orix, the approval of the Merger
Agreement, the Merger or the purchase of any Stock under the Stock Purchase
Agreement dated May 21, 1999 or (v) approve or propose to approve, any
Acquisition Proposal.
(b) In addition to the obligations of the Stockholder set forth in
Section 4(a) hereof, promptly after receipt thereof, the Stockholder agrees
that it shall advise Orix of any request for information or of any
Acquisition Proposal, or any inquiry, proposal, discussions or negotiation
with respect to any Acquisition Proposal, the terms and conditions of such
request, Acquisition Proposal, inquiry, proposal, discussion or negotiation
and the Stockholder shall promptly provide to Orix copies of any written
materials received by the Stockholder in connection with any of the
foregoing, and the identity of the Person making any such Acquisition
Proposal or such request, inquiry or proposal or with whom any discussion or
negotiation are taking place.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to HW Partners as follows:
(a) The Stockholder has all necessary power, capacity and
authority to enter into this Agreement and is the sole record or beneficial
owner of the Stockholder's Stock. The Stockholder has good and valid title
to the Stockholder's Stock, free and clear of any and all
2
<PAGE>
claims, liens, charges, pledges, assessments, options, equities, encumbrances
and security interests whatsoever. Except pursuant to this Agreement, none
of the Stockholder's Stock is subject to any proxy, voting trust or other
agreement or arrangement with respect to the voting of the Stockholder's
Stock. The Stockholder's Stock (other than any Stockholder Stock evidenced
by convertible debt) is validly authorized, issued and outstanding, fully
paid and non-assessable with no personal liability attaching to the ownership
thereof.
(b) This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes the valid and binding agreement
of the Stockholder, enforceable against the Stockholder in accordance with
its terms.
(c) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not,
without the passing of time or the giving of notice or both, violate or
conflict with, constitute a breach of or a default under, result in the loss
of any benefit under, or permit the acceleration of or entitle any person to
accelerate any obligation under or pursuant to, any contract, commitment,
agreement, understanding, mortgage, lien, lease, instrument, order, award,
judgment or decree to which the Stockholder is a party or by which the
Stockholder's assets or Stockholder's Stock is bound or subject.
(d) Neither the execution and delivery of this Agreement, nor
the performance by the Stockholder of the Stockholder's obligations
hereunder, will violate any provision of law applicable to the Stockholder.
(e) No investment banker, broker or finder is entitled to any
commission or fee in respect of this Agreement or the Merger Agreement based
upon any arrangement or agreement made by or on behalf of the Stockholder.
(f) The Proxy granted hereunder is legal, valid and effective
and will confer upon HW Partners or its substitute all of the voting power of
the Stockholder's Stock under law and Equalnet's Articles of Incorporation
and Bylaws with respect to the matters specified in Section 3 hereof until
the Proxy Termination Date.
6. COVENANTS OF THE STOCKHOLDER.
(a) The Stockholder hereby covenants and agrees with HW
Partners that (i) until the Proxy Termination Date, the Stockholder will not
directly or indirectly, grant any proxies or enter into any voting trust or
other agreement or arrangement with respect to the voting of any Stock, or
(ii) until the earlier of the termination of the Merger Agreement and the six
(6) month anniversary of the consummation of the Merger, the Stockholder will
not sell, assign, transfer, pledge, encumber or otherwise dispose of the
Stockholder's Stock, or enter into any contract, option or other arrangement
or understanding with respect to the direct or indirect sale, assignment,
transfer, pledge, encumbrance or other disposition of the Stockholder's Stock
other than pursuant to, and in compliance with, Rule 144 of the Securities
Act.
(b) The Stockholder has executed this Agreement in its
capacity as a stockholder of Equalnet and not in its capacity as an officer
or director of Equalnet. Without
3
<PAGE>
limiting the foregoing, nothing herein shall limit or affect any actions
taken by the Stockholder in his capacity as an officer or director of
Equalnet in exercising Equalnet's rights under the Merger Agreement.
7. STOP TRANSFER INSTRUCTIONS. Equalnet shall, on the date
hereof, issue stop transfer instructions to its transfer agent in respect of
the Stockholder's Stock and shall cause such stop transfer instructions to
remain in effect through the Proxy Termination Date.
8. WAIVER OF RIGHTS; CONVERSION PRICE. Until the Proxy
Termination Date, the Stockholder hereby waives any and all rights to receive
payment upon the terms and conditions applicable to the Stockholder's Stock
set forth on Exhibit A hereto, including, without limitation, the right to
receive dividends, payment of liquidation preference and any rights to cause
Equalnet to redeem the Stockholder's Stock. The Stockholder agrees that
notwithstanding any provision contained in the Stockholder's Stock or any
documentation relating thereto, Stockholder's Stock which has a conversion
price of less than $.75 or a floating conversion price shall be converted
into common stock of Equalnet at $.75 per share of common stock.
9. REMEDIES. The parties hereto agree that if for any reason any
of the Stockholder has failed to perform its respective obligations under
this Agreement, then HW Partners shall be entitled to specific performance
and injunctive and other equitable relief, and the parties hereto further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that any
party hereto may have against any other party hereto for any failure to
perform its obligations under this Agreement.
10. MISCELLANEOUS.
(a) This Agreement shall not be assignable by the
Stockholders. This Agreement shall be binding upon the Stockholder and the
Stockholder's heirs, successors and assigns by will or by the laws of descent.
(b) This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by each of the parties hereto.
(c) All costs and expenses (including legal fees) incurred in
connection with this Agreement shall be paid by the party incurring such
expense; provided, however, if HW Partners is required to retain counsel to
enforce the terms of this Agreement, the Stockholder shall pay the costs and
expenses of such counsel necessary to enforce the terms of this Agreement.
(d) From time to time, and without further consideration,
each party will execute and deliver to the other such documents and take such
action as the other may reasonably request in order to consummate more
effectively the terms of this Agreement.
(e) All authority herein conferred or agreed to be conferred
by the Stockholder shall survive the Stockholder's death or incapacity. This
Agreement constitutes the
4
<PAGE>
sole understanding of the parties hereto with respect to the subject matter
hereof; provided, however, that this provision is not intended to abrogate
any other written agreement between or among the parties executed with or
after this Agreement or any written agreement pertaining to another subject
matter.
(f) All notices, requests, consents and other communication
hereunder shall be in writing and delivered personally or by telecopy
transmission or sent by registered or certified mail or by any express mail
service, postage or fees prepaid, addressed as follows:
(i) If to HW Partners:
HW Partners, L.P.
1601 Elm Street, Suite 4000
Dallas, Texas 75201
Attention: Stuart Chasanoff
Fax Number: (214) 720-1667
with a copy to White & Case LLP:
White & Case LLP
4900 First Union Financial Center
200 South Biscayne Blvd.
Miami, Florida 33131
Attention: Thomas E. Lauria
Fax Number: (305) 358-5744
(ii) If to Stockholder to:
Advantage Fund Limited
10500 NE 8th, Suite 1920
Bellevue, Washington 98004
with a copy to:
(g) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF TEXAS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
(h) This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
5
<PAGE>
(i) The headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation hereof.
[SIGNATURES ON NEXT PAGE]
6
<PAGE>
IN WITNESS WHEREOF, HW Partners and the Stockholder has caused this
Agreement to be signed as of the date first above written.
ADVANTAGE FUND, LTD.
By: /s/ Donald R. Morken
-------------------------------
Name: Donald R. Morken
Title: General Partner
Accepted:
HW PARTNERS L.P.
By: /s/ Barrett Wissman
-------------------------------
Name: Barrett Wissman
Title: Manager of the General Partner, HW Finance, LLC
7
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
AMOUNT ISSUABLE UPON
STOCKHOLDER DESCRIPTION OF STOCK OF STOCK CONVERSION
- ----------------------------- ---------------------------------- -------------------- ----------------
<S> <C> <C> <C>
Advantage Fund, Ltd. Series D Preferred Stock 1,925 shares 2,566,667
Common Stock 22,500 shares
</TABLE>
<PAGE>
Exhibit 99.6
IRREVOCABLE PROXY AGREEMENT
THIS IRREVOCABLE PROXY AGREEMENT (the "AGREEMENT"), dated as of May
21, 1999, made by and between MCM Partners (the "STOCKHOLDER"), HW Partners
L.P., a Texas limited partnership ("HW PARTNERS"), as representative for
Infinity Investors Limited and IEO Holdings Limited, and Equalnet Communications
Corp., a Texas corporation ("EQUALNET");
WHEREAS, an acquisition subsidiary of Equalnet ("MERGER SUB"),
Equalnet and Orix Global Communications Inc., a Nevada corporation ("ORIX") have
entered into an Agreement and Plan of Merger dated as of May 21, 1999 (the
"MERGER AGREEMENT"), which will provide, among other things, for the merger of
Merger Sub with and into Orix (the "MERGER");
WHEREAS, the Stockholder is the record and beneficial owner of each
share of its voting stock of Equalnet (including all voting stock in the form of
a convertible security and all voting stock which the Stockholder would own upon
the conversion of any voting or non-voting convertible debt or equity security
or options or warrants) (the "STOCK"), as set forth opposite the Stockholder's
name on EXHIBIT A hereto, and desires to enter into this Agreement in order to
induce Orix to enter into the Merger Agreement; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Orix has requested that the Stockholder agrees, and the Stockholder
hereby agrees, to grant Orix an irrevocably proxy with respect to the
Stockholder's Stock (as defined below) in accordance with the terms hereof.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. STOCKHOLDER'S STOCK. For all purposes of this Agreement, the
term "STOCKHOLDER'S STOCK" shall include the Stock set forth on EXHIBIT A and
any other Stock which the Stockholder currently has record or beneficial
ownership of or obtains record or beneficial ownership of during the term of
this Agreement and shall further include any securities issued or exchanged at
any time in the future with respect to the Stockholder's Stock.
3. REVOCATION OF PROXIES; GRANT OF PROXY. The Stockholder hereby
revokes any and all previous proxies with respect to the Stockholder's Stock.
Subject to the terms and conditions hereof, the Stockholder hereby appoints HW
Partners, with full power of substitution, as proxy holder to represent and to
vote the Stockholder's Stock in favor of (i) the Merger Agreement and the
transactions contemplated thereby, including the Merger (including with respect
to any procedural matters related thereto), (ii) the amendment of the Articles
of Incorporation of Equalnet to increase the authorized number of shares of
common stock of Equalnet, and (iii) the authorization of the issuance of shares
of common stock of Equalnet in connection with the transactions contemplated by
the Merger Agreement under all applicable
<PAGE>
laws, rules and regulations, including, without limitation, the rules of
NASDAQ and against any proposal brought before the stockholders of Equalnet
which would conflict with the Merger and the transactions contemplated by the
Merger Agreement, including, without limitation, any proposal to remove any
one or more directors of Equalnet designated by Orix.
THE AUTHORITY GRANTED HEREUNDER (THE "PROXY") SHALL BE IRREVOCABLE UNTIL THE
PROXY TERMINATION DATE (AS DEFINED BELOW) AND DEEMED TO BE COUPLED WITH AN
INTEREST SUFFICIENT IN LAW AS REQUIRED BY SECTION 2.29.C OF THE TEXAS BUSINESS
CORPORATION ACT. The Proxy shall be effective until the earlier of the
consummation of the Merger or the termination of the Merger Agreement in
accordance with its terms (the "PROXY TERMINATION DATE").
4. NO SOLICITATION OF OTHER OFFERS. (a) The Stockholder shall, and
shall cause its Affiliates, officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants and other agents to,
immediately cease any discussions or negotiations with any other parties that
may be ongoing with respect to any Acquisition Proposal in connection with the
transactions contemplated by the Merger Agreement. The Stockholder agrees that
it shall not, directly or indirectly, take (and shall not permit its Affiliates,
officers, directors, employees, representatives, consultants, investment
bankers, attorneys, accountants or other agents, to so take) any action to (i)
solicit, initiate or encourage the making of any Acquisition Proposal, (ii)
participate in any way in discussions or negotiations with, or furnish or
disclose any information to, any Person (other than Orix or the agents or
representatives of Orix) in connection with, or take any other action to
encourage any inquiries or the making of any proposal that is reasonably
expected to lead to, any Acquisition Proposal, (iii) enter into any agreement,
arrangement or understanding with respect to any Acquisition Proposal, (iv)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Orix, the approval of the Merger Agreement, the Merger or the purchase of any
Stock under the Stock Purchase Agreement dated May 21, 1999 or (v) approve or
propose to approve, any Acquisition Proposal.
(b) In addition to the obligations of the Stockholder set forth in
Section 4(a) hereof, promptly after receipt thereof, the Stockholder agrees that
it shall advise Orix of any request for information or of any Acquisition
Proposal, or any inquiry, proposal, discussions or negotiation with respect to
any Acquisition Proposal, the terms and conditions of such request, Acquisition
Proposal, inquiry, proposal, discussion or negotiation and the Stockholder shall
promptly provide to Orix copies of any written materials received by the
Stockholder in connection with any of the foregoing, and the identity of the
Person making any such Acquisition Proposal or such request, inquiry or proposal
or with whom any discussion or negotiation are taking place.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to HW Partners as follows:
(a) The Stockholder has all necessary power, capacity and
authority to enter into this Agreement and is the sole record or beneficial
owner of the Stockholder's Stock. The Stockholder has good and valid title to
the Stockholder's Stock, free and clear of any and all claims, liens, charges,
pledges, assessments, options, equities, encumbrances and security interests
2
<PAGE>
whatsoever. Except pursuant to this Agreement, none of the Stockholder's Stock
is subject to any proxy, voting trust or other agreement or arrangement with
respect to the voting of the Stockholder's Stock. The Stockholder's Stock
(other than any Stockholder Stock evidenced by convertible debt) is validly
authorized, issued and outstanding, fully paid and non-assessable with no
personal liability attaching to the ownership thereof.
(b) This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes the valid and binding agreement of
the Stockholder, enforceable against the Stockholder in accordance with its
terms.
(c) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not, without
the passing of time or the giving of notice or both, violate or conflict with,
constitute a breach of or a default under, result in the loss of any benefit
under, or permit the acceleration of or entitle any person to accelerate any
obligation under or pursuant to, any contract, commitment, agreement,
understanding, mortgage, lien, lease, instrument, order, award, judgment or
decree to which the Stockholder is a party or by which the Stockholder's assets
or Stockholder's Stock is bound or subject.
(d) Neither the execution and delivery of this Agreement, nor
the performance by the Stockholder of the Stockholder's obligations hereunder,
will violate any provision of law applicable to the Stockholder.
(e) No investment banker, broker or finder is entitled to any
commission or fee in respect of this Agreement or the Merger Agreement based
upon any arrangement or agreement made by or on behalf of the Stockholder.
(f) The Proxy granted hereunder is legal, valid and effective
and will confer upon HW Partners or its substitute all of the voting power of
the Stockholder's Stock under law and Equalnet's Articles of Incorporation and
Bylaws with respect to the matters specified in Section 3 hereof until the Proxy
Termination Date.
6. COVENANTS OF THE STOCKHOLDER.
(a) The Stockholder hereby covenants and agrees with HW Partners
that (i) until the Proxy Termination Date, the Stockholder will not directly or
indirectly, grant any proxies or enter into any voting trust or other agreement
or arrangement with respect to the voting of any Stock, or (ii) until the
earlier of the termination of the Merger Agreement and the six (6) month
anniversary of the consummation of the Merger, the Stockholder will not sell,
assign, transfer, pledge, encumber or otherwise dispose of the Stockholder's
Stock, or enter into any contract, option or other arrangement or understanding
with respect to the direct or indirect sale, assignment, transfer, pledge,
encumbrance or other disposition of the Stockholder's Stock other than,
following the consummation of the Merger, pursuant to, and in compliance with,
Rule 144 of the Securities Act.
(b) The Stockholder has executed this Agreement in its capacity
as a stockholder of Equalnet and not in its capacity as an officer or director
of Equalnet. Without
3
<PAGE>
limiting the foregoing, nothing herein shall limit or affect any actions
taken by the Stockholder in his capacity as an officer or director of
Equalnet in exercising Equalnet's rights under the Merger Agreement.
7. STOP TRANSFER INSTRUCTIONS. Equalnet shall, on the date hereof,
issue stop transfer instructions to its transfer agent in respect of the
Stockholder's Stock and shall cause such stop transfer instructions to remain in
effect through the Proxy Termination Date.
8. WAIVER OF RIGHTS; CONVERSION PRICE. Until the Proxy Termination
Date, the Stockholder hereby waives any and all rights to receive payment upon
the terms and conditions applicable to the Stockholder's Stock set forth on
Exhibit A hereto, including, without limitation, the right to receive dividends,
payment of liquidation preference and any rights to cause Equalnet to redeem the
Stockholder's Stock. The Stockholder agrees that notwithstanding any provision
contained in the Stockholder's Stock or any documentation relating thereto,
Stockholder's Stock which has a conversion price of less than $.75 or a floating
conversion price shall be converted into common stock of Equalnet at $.75 per
share of common stock.
9. REMEDIES. The parties hereto agree that if for any reason any of
the Stockholder has failed to perform its respective obligations under this
Agreement, then HW Partners shall be entitled to specific performance and
injunctive and other equitable relief, and the parties hereto further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such injunctive or other equitable relief. This provision
is without prejudice to any other rights that any party hereto may have against
any other party hereto for any failure to perform its obligations under this
Agreement.
10. MISCELLANEOUS.
(a) This Agreement shall not be assignable by the Stockholders.
This Agreement shall be binding upon the Stockholder and the Stockholder's
heirs, successors and assigns by will or by the laws of descent.
(b) This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by each of the parties hereto.
(c) All costs and expenses (including legal fees) incurred in
connection with this Agreement shall be paid by the party incurring such
expense; provided, however, if HW Partners is required to retain counsel to
enforce the terms of this Agreement, the Stockholder shall pay the costs and
expenses of such counsel necessary to enforce the terms of this Agreement.
(d) From time to time, and without further consideration, each
party will execute and deliver to the other such documents and take such action
as the other may reasonably request in order to consummate more effectively the
terms of this Agreement.
(e) All authority herein conferred or agreed to be conferred by
the Stockholder shall survive the Stockholder's death or incapacity. This
Agreement constitutes the
4
<PAGE>
sole understanding of the parties hereto with respect to the subject matter
hereof; provided, however, that this provision is not intended to abrogate
any other written agreement between or among the parties executed with or
after this Agreement or any written agreement pertaining to another subject
matter.
(f) All notices, requests, consents and other communication
hereunder shall be in writing and delivered personally or by telecopy
transmission or sent by registered or certified mail or by any express mail
service, postage or fees prepaid, addressed as follows:
(i) If to HW Partners:
HW Partners, L.P.
1601 Elm Street, Suite 4000
Dallas, Texas 75201
Attention: Stuart Chasanoff
Fax Number: (214) 720-1667
with a copy to White & Case LLP:
White & Case LLP
4900 First Union Financial Center
200 South Biscayne Blvd.
Miami, Florida 33131
Attention: Thomas E. Lauria
Fax Number: (305) 358-5744
(ii) If to Stockholder to:
MCM Partners
10500 N.E. 8th, Suite 1920
Bellevue, Washington 98004
with a copy to:
(g) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
TEXAS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
(h) This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
5
<PAGE>
(i) The headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation hereof.
[SIGNATURES ON NEXT PAGE]
6
<PAGE>
IN WITNESS WHEREOF, HW Partners and the Stockholder has caused this
Agreement to be signed as of the date first above written.
MCM PARTNERS
By: /s/ Donald R. Morken
------------------------------------------
Name: Donald R. Morken
Title: General Partner
Accepted:
HW PARTNERS L.P.
By: /s/ Barrett Wissman
------------------------------
Name: Barrett Wissman
Title: Manager of the General Partner, HW Finance, LLC
7
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
AMOUNT ISSUABLE UPON
STOCKHOLDER DESCRIPTION OF STOCK OF STOCK CONVERSION
- ------------------------- ---------------------------------- -------------------- ------------------------
<S> <C> <C> <C>
MCM Partners Series A Preferred Stock 2,000 shares 2,666,667
</TABLE>
<PAGE>
EX-99.7
IRREVOCABLE PROXY AGREEMENT
THIS IRREVOCABLE PROXY AGREEMENT (the "AGREEMENT"), dated as of
May 21, 1999, made by and between Genesee Fund Limited-Portfolio B (the
"STOCKHOLDER"), HW Partners L.P., a Texas limited partnership ("HW
PARTNERS"), as representative for Infinity Investors Limited and IEO Holdings
Limited, and Equalnet Communications Corp., a Texas corporation ("EQUALNET");
WHEREAS, an acquisition subsidiary of Equalnet ("MERGER SUB"),
Equalnet and Orix Global Communications Inc., a Nevada corporation ("ORIX")
have entered into an Agreement and Plan of Merger dated as of May 21, 1999
(the "MERGER AGREEMENT"), which will provide, among other things, for the
merger of Merger Sub with and into Orix (the "MERGER");
WHEREAS, the Stockholder is the record and beneficial owner of each
share of its voting stock of Equalnet (including all voting stock in the form
of a convertible security and all voting stock which the Stockholder would
own upon the conversion of any voting or non-voting convertible debt or
equity security or options or warrants) (the "STOCK"), as set forth opposite
the Stockholder's name on EXHIBIT A hereto, and desires to enter into this
Agreement in order to induce Orix to enter into the Merger Agreement; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Orix has requested that the Stockholder agrees, and the
Stockholder hereby agrees, to grant Orix an irrevocably proxy with respect to
the Stockholder's Stock (as defined below) in accordance with the terms
hereof.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. STOCKHOLDER'S STOCK. For all purposes of this Agreement, the
term "STOCKHOLDER'S STOCK" shall include the Stock set forth on EXHIBIT A and
any other Stock which the Stockholder currently has record or beneficial
ownership of or obtains record or beneficial ownership of during the term of
this Agreement and shall further include any securities issued or exchanged
at any time in the future with respect to the Stockholder's Stock.
3. REVOCATION OF PROXIES; GRANT OF PROXY. The Stockholder hereby
revokes any and all previous proxies with respect to the Stockholder's Stock.
Subject to the terms and conditions hereof, the Stockholder hereby appoints
HW Partners, with full power of substitution, as proxy holder to represent
and to vote the Stockholder's Stock in favor of (i) the Merger Agreement and
the transactions contemplated thereby, including the Merger (including with
respect to any procedural matters related thereto), (ii) the amendment of the
Articles of Incorporation of Equalnet to increase the authorized number of
shares of common stock of Equalnet, and (iii) the authorization of the
issuance of shares of common stock of Equalnet in
<PAGE>
connection with the transactions contemplated by the Merger Agreement under
all applicable laws, rules and regulations, including, without limitation,
the rules of NASDAQ, and against any proposal brought before the stockholders
of Equalnet which would conflict with the Merger and the transactions
contemplated by the Merger Agreement, including, without limitation, any
proposal to remove any one or more directors of Equalnet designated by Orix.
THE AUTHORITY GRANTED HEREUNDER (THE "PROXY") SHALL BE IRREVOCABLE UNTIL THE
PROXY TERMINATION DATE (AS DEFINED BELOW) AND DEEMED TO BE COUPLED WITH AN
INTEREST SUFFICIENT IN LAW AS REQUIRED BY SECTION 2.29.C OF THE TEXAS
BUSINESS CORPORATION ACT. The Proxy shall be effective until the earlier of
the consummation of the Merger or the termination of the Merger Agreement in
accordance with its terms (the "PROXY TERMINATION DATE").
4. NO SOLICITATION OF OTHER OFFERS. (a) The Stockholder shall,
and shall cause its Affiliates, officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants and
other agents to, immediately cease any discussions or negotiations with any
other parties that may be ongoing with respect to any Acquisition Proposal in
connection with the transactions contemplated by the Merger Agreement. The
Stockholder agrees that it shall not, directly or indirectly, take (and shall
not permit its Affiliates, officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants or other agents, to
so take) any action to (i) solicit, initiate or encourage the making of any
Acquisition Proposal, (ii) participate in any way in discussions or
negotiations with, or furnish or disclose any information to, any Person
(other than Orix or the agents or representatives of Orix) in connection
with, or take any other action to encourage any inquiries or the making of
any proposal that is reasonably expected to lead to, any Acquisition
Proposal, (iii) enter into any agreement, arrangement or understanding with
respect to any Acquisition Proposal, (iv) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Orix, the approval of the Merger
Agreement, the Merger or the purchase of any Stock under the Stock Purchase
Agreement dated May 21, 1999 or (v) approve or propose to approve, any
Acquisition Proposal.
(b) In addition to the obligations of the Stockholder set forth in
Section 4(a) hereof, promptly after receipt thereof, the Stockholder agrees
that it shall advise Orix of any request for information or of any
Acquisition Proposal, or any inquiry, proposal, discussions or negotiation
with respect to any Acquisition Proposal, the terms and conditions of such
request, Acquisition Proposal, inquiry, proposal, discussion or negotiation
and the Stockholder shall promptly provide to Orix copies of any written
materials received by the Stockholder in connection with any of the
foregoing, and the identity of the Person making any such Acquisition
Proposal or such request, inquiry or proposal or with whom any discussion or
negotiation are taking place.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to HW Partners as follows:
(a) The Stockholder has all necessary power, capacity and
authority to enter into this Agreement and is the sole record or beneficial
owner of the Stockholder's Stock. The Stockholder has good and valid title
to the Stockholder's Stock, free and clear of any and all
2
<PAGE>
claims, liens, charges, pledges, assessments, options, equities, encumbrances
and security interests whatsoever. Except pursuant to this Agreement, none
of the Stockholder's Stock is subject to any proxy, voting trust or other
agreement or arrangement with respect to the voting of the Stockholder's
Stock. The Stockholder's Stock (other than any Stockholder Stock evidenced
by convertible debt) is validly authorized, issued and outstanding, fully
paid and non-assessable with no personal liability attaching to the ownership
thereof.
(b) This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes the valid and binding agreement
of the Stockholder, enforceable against the Stockholder in accordance with
its terms.
(c) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not,
without the passing of time or the giving of notice or both, violate or
conflict with, constitute a breach of or a default under, result in the loss
of any benefit under, or permit the acceleration of or entitle any person to
accelerate any obligation under or pursuant to, any contract, commitment,
agreement, understanding, mortgage, lien, lease, instrument, order, award,
judgment or decree to which the Stockholder is a party or by which the
Stockholder's assets or Stockholder's Stock is bound or subject.
(d) Neither the execution and delivery of this Agreement, nor
the performance by the Stockholder of the Stockholder's obligations
hereunder, will violate any provision of law applicable to the Stockholder.
(e) No investment banker, broker or finder is entitled to any
commission or fee in respect of this Agreement or the Merger Agreement based
upon any arrangement or agreement made by or on behalf of the Stockholder.
(f) The Proxy granted hereunder is legal, valid and effective
and will confer upon HW Partners or its substitute all of the voting power of
the Stockholder's Stock under law and Equalnet's Articles of Incorporation
and Bylaws with respect to the matters specified in Section 3 hereof until
the Proxy Termination Date.
6. COVENANTS OF THE STOCKHOLDER.
(a) The Stockholder hereby covenants and agrees with HW
Partners that (i) until the Proxy Termination Date, the Stockholder will not
directly or indirectly, grant any proxies or enter into any voting trust or
other agreement or arrangement with respect to the voting of any Stock, or
(ii) until the earlier of the termination of the Merger Agreement and the six
(6) month anniversary of the consummation of the Merger, the Stockholder will
not sell, assign, transfer, pledge, encumber or otherwise dispose of the
Stockholder's Stock, or enter into any contract, option or other arrangement
or understanding with respect to the direct or indirect sale, assignment,
transfer, pledge, encumbrance or other disposition of the Stockholder's Stock
other than, following the earlier of the termination of the Merger Agreement
or the consummation of the Merger, pursuant to, and in compliance with, Rule
144 of the Securities Act.
3
<PAGE>
(b) The Stockholder has executed this Agreement in its
capacity as a stockholder of Equalnet and not in its capacity as an officer
or director of Equalnet. Without limiting the foregoing, nothing herein
shall limit or affect any actions taken by the Stockholder in his capacity as
an officer or director of Equalnet in exercising Equalnet's rights under the
Merger Agreement.
7. STOP TRANSFER INSTRUCTIONS. Equalnet shall, on the date
hereof, issue stop transfer instructions to its transfer agent in respect of
the Stockholder's Stock and shall cause such stop transfer instructions to
remain in effect through the Proxy Termination Date.
8. WAIVER OF RIGHTS; CONVERSION PRICE. Until the Proxy
Termination Date, the Stockholder hereby waives any and all rights to receive
payment upon the terms and conditions applicable to the Stockholder's Stock
set forth on Exhibit A hereto, including, without limitation, the right to
receive dividends, payment of liquidation preference and any rights to cause
Equalnet to redeem the Stockholder's Stock. The Stockholder agrees that
notwithstanding any provision contained in the Stockholder's Stock or any
documentation relating thereto, Stockholder's Stock which has a conversion
price of less than $.75 or a floating conversion price shall be converted
into common stock of Equalnet at $.75 per share of common stock.
9. REMEDIES. The parties hereto agree that if for any reason any
of the Stockholder has failed to perform its respective obligations under
this Agreement, then HW Partners shall be entitled to specific performance
and injunctive and other equitable relief, and the parties hereto further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that any
party hereto may have against any other party hereto for any failure to
perform its obligations under this Agreement.
10. MISCELLANEOUS.
(a) This Agreement shall not be assignable by the
Stockholders. This Agreement shall be binding upon the Stockholder and the
Stockholder's heirs, successors and assigns by will or by the laws of descent.
(b) This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by each of the parties hereto.
(c) All costs and expenses (including legal fees) incurred in
connection with this Agreement shall be paid by the party incurring such
expense; provided, however, if HW Partners is required to retain counsel to
enforce the terms of this Agreement, the Stockholder shall pay the costs and
expenses of such counsel necessary to enforce the terms of this Agreement.
(d) From time to time, and without further consideration,
each party will execute and deliver to the other such documents and take such
action as the other may reasonably request in order to consummate more
effectively the terms of this Agreement.
4
<PAGE>
(e) All authority herein conferred or agreed to be conferred
by the Stockholder shall survive the Stockholder's death or incapacity. This
Agreement constitutes the sole understanding of the parties hereto with
respect to the subject matter hereof; provided, however, that this provision
is not intended to abrogate any other written agreement between or among the
parties executed with or after this Agreement or any written agreement
pertaining to another subject matter.
(f) All notices, requests, consents and other communication
hereunder shall be in writing and delivered personally or by telecopy
transmission or sent by registered or certified mail or by any express mail
service, postage or fees prepaid, addressed as follows:
(i) If to HW Partners:
HW Partners, L.P.
1601 Elm Street, Suite 4000
Dallas, Texas 75201
Attention: Stuart Chasanoff
Fax Number: (214) 720-1667
with a copy to White & Case LLP:
White & Case LLP
4900 First Union Financial Center
200 South Biscayne Blvd.
Miami, Florida 33131
Attention: Thomas E. Lauria
Fax Number: (305) 358-5744
(ii) If to Stockholder to:
Genesee Fund Limited - Portfolio B
10500 N.E., 8th, Suite 1920
Bellevue, Washington 98004
with a copy to:
(g) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF TEXAS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
(h) This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
5
<PAGE>
(i) The headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation hereof.
[SIGNATURES ON NEXT PAGE]
6
<PAGE>
IN WITNESS WHEREOF, HW Partners and the Stockholder has caused this
Agreement to be signed as of the date first above written.
GENESEE FUND LIMITED-PORTFOLIO B
By: /s/ Donald R. Morken
--------------------------------
Name: Donald R. Morken
Title: General Partner
Accepted:
HW PARTNERS L.P.
By: /s/ Barrett Wissman
--------------------------------
Name: Barrett Wissman
Title: Manager of the General Partner, HW Finance, LLC
7
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
AMOUNT ISSUABLE UPON
STOCKHOLDER DESCRIPTION OF STOCK OF STOCK CONVERSION
- ----------------------------- ---------------------------------- -------------------- ----------------
<S> <C> <C> <C>
Genessee Fund Limited- Common Stock Purchase Warrant 333,116
Portfolio B
6% Senior Secured 2,054,021
Convertible Note due 2001
</TABLE>
<PAGE>
EX-99.8
IRREVOCABLE PROXY AGREEMENT
THIS IRREVOCABLE PROXY AGREEMENT (the "AGREEMENT"), dated as of
May 21, 1999, made by and between James R. Crane (the "STOCKHOLDER"), HW
Partners L.P., a Texas limited partnership ("HW PARTNERS"), as representative
for Infinity Investors Limited and IEO Holdings Limited, and Equalnet
Communications Corp., a Texas corporation ("EQUALNET");
WHEREAS, an acquisition subsidiary of Equalnet ("MERGER SUB"),
Equalnet and Orix Global Communications Inc., a Nevada corporation ("ORIX")
have entered into an Agreement and Plan of Merger dated as of May 21, 1999
(the "MERGER AGREEMENT"), which will provide, among other things, for the
merger of Merger Sub with and into Orix (the "MERGER");
WHEREAS, the Stockholder is the record and beneficial owner of each
share of its voting stock of Equalnet (including all voting stock in the form
of a convertible security and all voting stock which the Stockholder would
own upon the conversion of any voting or non-voting convertible debt or
equity security or options or warrants) (the "STOCK"), as set forth opposite
the Stockholder's name on EXHIBIT A hereto, and desires to enter into this
Agreement in order to induce Orix to enter into the Merger Agreement; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Orix has requested that the Stockholder agrees, and the
Stockholder hereby agrees, to grant Orix an irrevocably proxy with respect to
the Stockholder's Stock (as defined below) in accordance with the terms
hereof.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. STOCKHOLDER'S STOCK. For all purposes of this Agreement, the
term "STOCKHOLDER'S STOCK" shall include the Stock set forth on EXHIBIT A and
any other Stock which the Stockholder currently has record or beneficial
ownership of or obtains record or beneficial ownership of during the term of
this Agreement and shall further include any securities issued or exchanged
at any time in the future with respect to the Stockholder's Stock.
3. REVOCATION OF PROXIES; GRANT OF PROXY. The Stockholder hereby
revokes any and all previous proxies with respect to the Stockholder's Stock.
Subject to the terms and conditions hereof, the Stockholder hereby appoints
HW Partners, with full power of substitution, as proxy holder to represent
and to vote the Stockholder's Stock in favor of (i) the Merger Agreement and
the transactions contemplated thereby, including the Merger (including with
respect to any procedural matters related thereto), (ii) the amendment of the
Articles of Incorporation of Equalnet to increase the authorized number of
shares of common stock of Equalnet, (iii) the authorization of the issuance
of shares of common stock of Equalnet in connection with the transactions
contemplated by the Merger Agreement under all applicable
<PAGE>
laws, rules and regulations, including, without limitation, the rules of
NASDAQ and (iv) the conversion into common stock of Equalnet of each
convertible security held by such Stockholder prior to the Merger at any
meeting (whether special or annual), and whether or not adjourned or by
written action of the stockholders of Equalnet, and against any proposal
brought before the stockholders of Equalnet which would conflict with the
Merger and the transactions contemplated by the Merger Agreement, including,
without limitation, any proposal to remove any one or more directors of
Equalnet designated by Orix.
THE AUTHORITY GRANTED HEREUNDER (THE "PROXY") SHALL BE IRREVOCABLE UNTIL THE
PROXY TERMINATION DATE (AS DEFINED BELOW) AND DEEMED TO BE COUPLED WITH AN
INTEREST SUFFICIENT IN LAW AS REQUIRED BY SECTION 2.29.C OF THE TEXAS
BUSINESS CORPORATION ACT. The Proxy shall be effective until the earlier of
the consummation of the Merger or the termination of the Merger Agreement in
accordance with its terms (the "PROXY TERMINATION DATE").
4. NO SOLICITATION OF OTHER OFFERS. (a) The Stockholder shall,
and shall cause its Affiliates, officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants and
other agents to, immediately cease any discussions or negotiations with any
other parties that may be ongoing with respect to any Acquisition Proposal in
connection with the transactions contemplated by the Merger Agreement. The
Stockholder agrees that it shall not, directly or indirectly, take (and shall
not permit its Affiliates, officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants or other agents, to
so take) any action to (i) solicit, initiate or encourage the making of any
Acquisition Proposal, (ii) participate in any way in discussions or
negotiations with, or furnish or disclose any information to, any Person
(other than Orix or the agents or representatives of Orix) in connection
with, or take any other action to encourage any inquiries or the making of
any proposal that is reasonably expected to lead to, any Acquisition
Proposal, (iii) enter into any agreement, arrangement or understanding with
respect to any Acquisition Proposal, (iv) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Orix, the approval of the Merger
Agreement, the Merger or the purchase of any Stock under the Stock Purchase
Agreement dated May 21, 1999 or (v) approve or propose to approve, any
Acquisition Proposal.
(b) In addition to the obligations of the Stockholder set forth in
Section 4(a) hereof, promptly after receipt thereof, the Stockholder agrees
that it shall advise Orix of any request for information or of any
Acquisition Proposal, or any inquiry, proposal, discussions or negotiation
with respect to any Acquisition Proposal, the terms and conditions of such
request, Acquisition Proposal, inquiry, proposal, discussion or negotiation
and the Stockholder shall promptly provide to Orix copies of any written
materials received by the Stockholder in connection with any of the
foregoing, and the identity of the Person making any such Acquisition
Proposal or such request, inquiry or proposal or with whom any discussion or
negotiation are taking place.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to HW Partners as follows:
2
<PAGE>
(a) The Stockholder has all necessary power, capacity and
authority to enter into this Agreement and is the sole record or beneficial
owner of the Stockholder's Stock. The Stockholder has good and valid title
to the Stockholder's Stock, free and clear of any and all claims, liens,
charges, pledges, assessments, options, equities, encumbrances and security
interests whatsoever. Except pursuant to this Agreement, none of the
Stockholder's Stock is subject to any proxy, voting trust or other agreement
or arrangement with respect to the voting of the Stockholder's Stock. The
Stockholder's Stock (other than any Stockholder Stock evidenced by
convertible debt) is validly authorized, issued and outstanding, fully paid
and non-assessable with no personal liability attaching to the ownership
thereof.
(b) This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes the valid and binding agreement
of the Stockholder, enforceable against the Stockholder in accordance with
its terms.
(c) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not,
without the passing of time or the giving of notice or both, violate or
conflict with, constitute a breach of or a default under, result in the loss
of any benefit under, or permit the acceleration of or entitle any person to
accelerate any obligation under or pursuant to, any contract, commitment,
agreement, understanding, mortgage, lien, lease, instrument, order, award,
judgment or decree to which the Stockholder is a party or by which the
Stockholder's assets or Stockholder's Stock is bound or subject.
(d) Neither the execution and delivery of this Agreement, nor
the performance by the Stockholder of the Stockholder's obligations
hereunder, will violate any provision of law applicable to the Stockholder.
(e) No investment banker, broker or finder is entitled to any
commission or fee in respect of this Agreement or the Merger Agreement based
upon any arrangement or agreement made by or on behalf of the Stockholder.
(f) The Proxy granted hereunder is legal, valid and effective
and will confer upon HW Partners or its substitute all of the voting power of
the Stockholder's Stock under law and Equalnet's Articles of Incorporation
and Bylaws with respect to the matters specified in Section 3 hereof until
the Proxy Termination Date.
6. COVENANTS OF THE STOCKHOLDER.
(a) The Stockholder hereby covenants and agrees with HW
Partners that (i) until the Proxy Termination Date, the Stockholder will not
directly or indirectly, grant any proxies or enter into any voting trust or
other agreement or arrangement with respect to the voting of any Stock, or
(ii) until the earlier of the termination of the Merger Agreement and the six
(6) month anniversary of the consummation of the Merger, the Stockholder will
not sell, assign, transfer, pledge, encumber or otherwise dispose of the
Stockholder's Stock, or enter into any contract, option or other arrangement
or understanding with respect to the direct or indirect sale, assignment,
transfer, pledge, encumbrance or other disposition of the Stockholder's Stock
3
<PAGE>
other than, following the consummation of the Merger, pursuant to, and in
compliance with, Rule 144 of the Securities Act.
(b) The Stockholder has executed this Agreement in its
capacity as a stockholder of Equalnet and not in its capacity as an officer
or director of Equalnet. Without limiting the foregoing, nothing herein
shall limit or affect any actions taken by the Stockholder in his capacity as
an officer or director of Equalnet in exercising Equalnet's rights under the
Merger Agreement.
7. STOP TRANSFER INSTRUCTIONS. Equalnet shall, on the date
hereof, issue stop transfer instructions to its transfer agent in respect of
the Stockholder's Stock and shall cause such stop transfer instructions to
remain in effect through the Proxy Termination Date.
8. WAIVER OF RIGHTS; CONVERSION PRICE. Until the Proxy
Termination Date, the Stockholder hereby waives any and all rights to receive
payment upon the terms and conditions applicable to the Stockholder's Stock
set forth on Exhibit A hereto, including, without limitation, the right to
receive dividends, payment of liquidation preference and any rights to cause
Equalnet to redeem the Stockholder's Stock. The Stockholder agrees that
notwithstanding any provision contained in the Stockholder's Stock or any
documentation relating thereto, no Stockholder's Stock which has a conversion
price of less than $.75 or a floating conversion price shall be converted
into common stock of Equalnet at a price less than $.75 per share of common
stock.
9. REMEDIES. The parties hereto agree that if for any reason any
of the Stockholder has failed to perform his respective obligations under
this Agreement, then HW Partners shall be entitled to specific performance
and injunctive and other equitable relief, and the parties hereto further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that any
party hereto may have against any other party hereto for any failure to
perform its obligations under this Agreement.
10. MISCELLANEOUS.
(a) This Agreement shall not be assignable by the
Stockholders. This Agreement shall be binding upon the Stockholder and the
Stockholder's heirs, successors and assigns by will or by the laws of descent.
(b) This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by each of the parties hereto.
(c) All costs and expenses (including legal fees) incurred in
connection with this Agreement shall be paid by the party incurring such
expense; provided, however, if HW Partners is required to retain counsel to
enforce the terms of this Agreement, the Stockholder shall pay the costs and
expenses of such counsel necessary to enforce the terms of this Agreement.
4
<PAGE>
(d) From time to time, and without further consideration,
each party will execute and deliver to the other such documents and take such
action as the other may reasonably request in order to consummate more
effectively the terms of this Agreement.
(e) All authority herein conferred or agreed to be conferred
by the Stockholder shall survive the Stockholder's death or incapacity. This
Agreement constitutes the sole understanding of the parties hereto with
respect to the subject matter hereof; provided, however, that this provision
is not intended to abrogate any other written agreement between or among the
parties executed with or after this Agreement or any written agreement
pertaining to another subject matter.
(f) All notices, requests, consents and other communication
hereunder shall be in writing and delivered personally or by telecopy
transmission or sent by registered or certified mail or by any express mail
service, postage or fees prepaid, addressed as follows:
(i) If to HW Partners:
HW Partners, L.P.
1601 Elm Street, Suite 4000
Dallas, Texas 75201
Attention: Stuart Chasanoff
Fax Number: (214) 720-1667
with a copy to White & Case LLP:
White & Case LLP
4900 First Union Financial Center
200 South Biscayne Blvd.
Miami, Florida 33131
Attention: Thomas E. Lauria
Fax Number: (305) 358-5744
(ii) If to Stockholder to:
James R. Crane
15350 Vickery Drive
Houston, Texas 77056
with a copy to:
(g) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF TEXAS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
5
<PAGE>
(h) This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(i) The headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation hereof.
[SIGNATURES ON NEXT PAGE]
6
<PAGE>
IN WITNESS WHEREOF, HW Partners and the Stockholder has caused this
Agreement to be signed as of the date first above written.
JAMES R. CRANE
By: /s/ James R. Crane
---------------------------------
Accepted:
HW PARTNERS L.P.
By: /s/ Barrett Wissman
---------------------------------
Name: Barrett Wissman
Title: Manager of the General Partner, HW Finance, LLC
7
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
AMOUNT ISSUABLE UPON
STOCKHOLDER DESCRIPTION OF STOCK OF STOCK CONVERSION
- ----------------------------- ---------------------------------- -------------------- ----------------
<S> <C> <C> <C>
James R. Crane Common Stock Purchase Warrant 170,000
Common Stock 3,400,000
shares
</TABLE>
<PAGE>
Exhibit 99.9
IRREVOCABLE PROXY AGREEMENT
THIS IRREVOCABLE PROXY AGREEMENT (the "AGREEMENT"), dated as of May
21, 1999, made by and between C. Keith LaMonda (the "STOCKHOLDER"), HW Partners
L.P., a Texas limited partnership ("HW PARTNERS"), as representative for
Infinity Investors Limited and IEO Holdings Limited, and Equalnet Communications
Corp., a Texas corporation ("EQUALNET");
WHEREAS, an acquisition subsidiary of Equalnet ("MERGER SUB"),
Equalnet and Orix Global Communications Inc., a Nevada corporation ("ORIX") have
entered into an Agreement and Plan of Merger dated as of May 21, 1999 (the
"MERGER AGREEMENT"), which will provide, among other things, for the merger of
Merger Sub with and into Orix (the "MERGER");
WHEREAS, the Stockholder is the record and beneficial owner of each
share of its voting stock of Equalnet (including all voting stock in the form of
a convertible security and all voting stock which the Stockholder would own upon
the conversion of any voting or non-voting convertible debt or equity security
or options or warrants) (the "STOCK"), as set forth opposite the Stockholder's
name on EXHIBIT A hereto, and desires to enter into this Agreement in order to
induce Orix to enter into the Merger Agreement; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Orix has requested that the Stockholder agrees, and the Stockholder
hereby agrees, to grant Orix an irrevocably proxy with respect to the
Stockholder's Stock (as defined below) in accordance with the terms hereof.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. STOCKHOLDER'S STOCK. For all purposes of this Agreement, the
term "STOCKHOLDER'S STOCK" shall include the Stock set forth on EXHIBIT A and
any other Stock which the Stockholder currently has record or beneficial
ownership of or obtains record or beneficial ownership of during the term of
this Agreement and shall further include any securities issued or exchanged at
any time in the future with respect to the Stockholder's Stock.
3. REVOCATION OF PROXIES; GRANT OF PROXY. The Stockholder hereby
revokes any and all previous proxies with respect to the Stockholder's Stock.
Subject to the terms and conditions hereof, the Stockholder hereby appoints HW
Partners, with full power of substitution, as proxy holder to represent and to
vote the Stockholder's Stock in favor of (i) the Merger Agreement and the
transactions contemplated thereby, including the Merger (including with respect
to any procedural matters related thereto), (ii) the amendment of the Articles
of Incorporation of Equalnet to increase the authorized number of shares of
common stock of Equalnet, (iii) the authorization of the issuance of shares of
common stock of Equalnet in connection with the transactions contemplated by the
Merger Agreement under all applicable
<PAGE>
laws, rules and regulations, including, without limitation, the rules of
NASDAQ and (iv) the conversion into common stock of Equalnet of each
convertible security held by such Stockholder prior to the Merger at any
meeting (whether special or annual), and whether or not adjourned or by
written action of the stockholders of Equalnet, and against any proposal
brought before the stockholders of Equalnet which would conflict with the
Merger and the transactions contemplated by the Merger Agreement, including,
without limitation, any proposal to remove any one or more directors of
Equalnet designated by Orix.
THE AUTHORITY GRANTED HEREUNDER (THE "PROXY") SHALL BE IRREVOCABLE UNTIL THE
PROXY TERMINATION DATE (AS DEFINED BELOW) AND DEEMED TO BE COUPLED WITH AN
INTEREST SUFFICIENT IN LAW AS REQUIRED BY SECTION 2.29.C OF THE TEXAS BUSINESS
CORPORATION ACT. The Proxy shall be effective until the earlier of the
consummation of the Merger or the termination of the Merger Agreement in
accordance with its terms (the "PROXY TERMINATION DATE").
4. NO SOLICITATION OF OTHER OFFERS. (a) The Stockholder shall, and
shall cause its Affiliates, officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants and other agents to,
immediately cease any discussions or negotiations with any other parties that
may be ongoing with respect to any Acquisition Proposal in connection with the
transactions contemplated by the Merger Agreement. The Stockholder agrees that
it shall not, directly or indirectly, take (and shall not permit its Affiliates,
officers, directors, employees, representatives, consultants, investment
bankers, attorneys, accountants or other agents, to so take) any action to (i)
solicit, initiate or encourage the making of any Acquisition Proposal, (ii)
participate in any way in discussions or negotiations with, or furnish or
disclose any information to, any Person (other than Orix or the agents or
representatives of Orix) in connection with, or take any other action to
encourage any inquiries or the making of any proposal that is reasonably
expected to lead to, any Acquisition Proposal, (iii) enter into any agreement,
arrangement or understanding with respect to any Acquisition Proposal, (iv)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Orix, the approval of the Merger Agreement, the Merger or the purchase of any
Stock under the Stock Purchase Agreement dated May 21, 1999 or (v) approve or
propose to approve, any Acquisition Proposal.
(b) In addition to the obligations of the Stockholder set forth in
Section 4(a) hereof, promptly after receipt thereof, the Stockholder agrees that
it shall advise Orix of any request for information or of any Acquisition
Proposal, or any inquiry, proposal, discussions or negotiation with respect to
any Acquisition Proposal, the terms and conditions of such request, Acquisition
Proposal, inquiry, proposal, discussion or negotiation and the Stockholder shall
promptly provide to Orix copies of any written materials received by the
Stockholder in connection with any of the foregoing, and the identity of the
Person making any such Acquisition Proposal or such request, inquiry or proposal
or with whom any discussion or negotiation are taking place.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to HW Partners as follows:
2
<PAGE>
(a) The Stockholder has all necessary power, capacity and
authority to enter into this Agreement and is the sole record or beneficial
owner of the Stockholder's Stock. The Stockholder has good and valid title to
the Stockholder's Stock, free and clear of any and all claims, liens, charges,
pledges, assessments, options, equities, encumbrances and security interests
whatsoever. Except pursuant to this Agreement, none of the Stockholder's Stock
is subject to any proxy, voting trust or other agreement or arrangement with
respect to the voting of the Stockholder's Stock. The Stockholder's Stock
(other than any Stockholder Stock evidenced by convertible debt) is validly
authorized, issued and outstanding, fully paid and non-assessable with no
personal liability attaching to the ownership thereof.
(b) This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes the valid and binding agreement of
the Stockholder, enforceable against the Stockholder in accordance with its
terms.
(c) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not, without
the passing of time or the giving of notice or both, violate or conflict with,
constitute a breach of or a default under, result in the loss of any benefit
under, or permit the acceleration of or entitle any person to accelerate any
obligation under or pursuant to, any contract, commitment, agreement,
understanding, mortgage, lien, lease, instrument, order, award, judgment or
decree to which the Stockholder is a party or by which the Stockholder's assets
or Stockholder's Stock is bound or subject.
(d) Neither the execution and delivery of this Agreement, nor
the performance by the Stockholder of the Stockholder's obligations hereunder,
will violate any provision of law applicable to the Stockholder.
(e) No investment banker, broker or finder is entitled to any
commission or fee in respect of this Agreement or the Merger Agreement based
upon any arrangement or agreement made by or on behalf of the Stockholder.
(f) The Proxy granted hereunder is legal, valid and effective
and will confer upon HW Partners or its substitute all of the voting power of
the Stockholder's Stock under law and Equalnet's Articles of Incorporation and
Bylaws with respect to the matters specified in Section 3 hereof until the Proxy
Termination Date.
6. COVENANTS OF THE STOCKHOLDER.
(a) The Stockholder hereby covenants and agrees with HW Partners
that (i) until the Proxy Termination Date, the Stockholder will not directly or
indirectly, grant any proxies or enter into any voting trust or other agreement
or arrangement with respect to the voting of any Stock, or (ii) until the
earlier of the termination of the Merger Agreement and the six (6) month
anniversary of the consummation of the Merger, the Stockholder will not sell,
assign, transfer, pledge, encumber or otherwise dispose of the Stockholder's
Stock, or enter into any contract, option or other arrangement or understanding
with respect to the direct or indirect sale, assignment, transfer, pledge,
encumbrance or other disposition of the Stockholder's Stock
3
<PAGE>
other than, following the consummation of the Merger, pursuant to, and in
compliance with, Rule 144 of the Securities Act.
(b) The Stockholder has executed this Agreement in its capacity
as a stockholder of Equalnet and not in its capacity as an officer or director
of Equalnet. Without limiting the foregoing, nothing herein shall limit or
affect any actions taken by the Stockholder in his capacity as an officer or
director of Equalnet in exercising Equalnet's rights under the Merger Agreement.
7. STOP TRANSFER INSTRUCTIONS. Equalnet shall, on the date hereof,
issue stop transfer instructions to its transfer agent in respect of the
Stockholder's Stock and shall cause such stop transfer instructions to remain in
effect through the Proxy Termination Date.
8. WAIVER OF RIGHTS; CONVERSION PRICE. Until the Proxy Termination
Date, the Stockholder hereby waives any and all rights to receive payment upon
the terms and conditions applicable to the Stockholder's Stock set forth on
Exhibit A hereto, including, without limitation, the right to receive dividends,
payment of liquidation preference and any rights to cause Equalnet to redeem the
Stockholder's Stock. The Stockholder agrees that notwithstanding any provision
contained in the Stockholder's Stock or any documentation relating thereto, no
Stockholder's Stock which has a conversion price of less than $.75 or a floating
conversion price shall be converted into common stock of Equalnet at a price
less than $.75 per share of common stock.
9. REMEDIES. The parties hereto agree that if for any reason any of
the Stockholder has failed to perform his respective obligations under this
Agreement, then HW Partners shall be entitled to specific performance and
injunctive and other equitable relief, and the parties hereto further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such injunctive or other equitable relief. This provision
is without prejudice to any other rights that any party hereto may have against
any other party hereto for any failure to perform its obligations under this
Agreement.
10. MISCELLANEOUS.
(a) This Agreement shall not be assignable by the Stockholders.
This Agreement shall be binding upon the Stockholder and the Stockholder's
heirs, successors and assigns by will or by the laws of descent.
(b) This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by each of the parties hereto.
(c) All costs and expenses (including legal fees) incurred in
connection with this Agreement shall be paid by the party incurring such
expense; provided, however, if HW Partners is required to retain counsel to
enforce the terms of this Agreement, the Stockholder shall pay the costs and
expenses of such counsel necessary to enforce the terms of this Agreement.
4
<PAGE>
(d) From time to time, and without further consideration, each
party will execute and deliver to the other such documents and take such action
as the other may reasonably request in order to consummate more effectively the
terms of this Agreement.
(e) All authority herein conferred or agreed to be conferred by
the Stockholder shall survive the Stockholder's death or incapacity. This
Agreement constitutes the sole understanding of the parties hereto with respect
to the subject matter hereof; provided, however, that this provision is not
intended to abrogate any other written agreement between or among the parties
executed with or after this Agreement or any written agreement pertaining to
another subject matter.
(f) All notices, requests, consents and other communication
hereunder shall be in writing and delivered personally or by telecopy
transmission or sent by registered or certified mail or by any express mail
service, postage or fees prepaid, addressed as follows:
(i) If to HW Partners:
HW Partners, L.P.
1601 Elm Street, Suite 4000
Dallas, Texas 75201
Attention: Stuart Chasanoff
Fax Number: (214) 720-1667
with a copy to White & Case LLP:
White & Case LLP
4900 First Union Financial Center
200 South Biscayne Blvd.
Miami, Florida 33131
Attention: Thomas E. Lauria
Fax Number: (305) 358-5744
(ii) If to Stockholder to:
C. Keith LaMonda
105 East Robinson Street
Second Floor
Orlando, Florida 32801
with a copy to:
5
<PAGE>
(g) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
TEXAS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
(h) This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(i) The headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation hereof.
[SIGNATURES ON NEXT PAGE]
6
<PAGE>
IN WITNESS WHEREOF, HW Partners and the Stockholder has caused this
Agreement to be signed as of the date first above written.
C. KEITH LAMONDA
By: /s/ Keith LaMonda
---------------------------------------------
Accepted:
HW PARTNERS L.P.
By: /s/ Barrett Wissman
--------------------------------
Name: Barrett Wissman
Title: Manager of the General Partner, HW Finance, LLC
7
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
AMOUNT ISSUABLE UPON
STOCKHOLDER DESCRIPTION OF STOCK OF STOCK CONVERSION
- ----------------------- ---------------------------------- ----------------- --------------------
<S> <C> <C> <C>
C. Keith LaMonda Common Stock Purchase Warrant 150,000
Common Stock 1,294,800
shares
</TABLE>
<PAGE>
EX-99.10
IRREVOCABLE PROXY AGREEMENT
THIS IRREVOCABLE PROXY AGREEMENT (the "AGREEMENT"), dated as of
May 21, 1999, made by and between Zane Russell (the "STOCKHOLDER"), HW
Partners L.P., a Texas limited partnership ("HW PARTNERS"), as representative
for Infinity Investors Limited and IEO Holdings Limited, and Equalnet
Communications Corp., a Texas corporation ("EQUALNET");
WHEREAS, an acquisition subsidiary of Equalnet ("MERGER SUB"),
Equalnet and Orix Global Communications Inc., a Nevada corporation ("ORIX")
have entered into an Agreement and Plan of Merger dated as of May 21, 1999
(the "MERGER AGREEMENT"), which will provide, among other things, for the
merger of Merger Sub with and into Orix (the "MERGER");
WHEREAS, the Stockholder is the record and beneficial owner of each
share of its voting stock of Equalnet (including all voting stock in the form
of a convertible security and all voting stock which the Stockholder would
own upon the conversion of any voting or non-voting convertible debt or
equity security or options or warrants) (the "STOCK"), as set forth opposite
the Stockholder's name on EXHIBIT A hereto, and desires to enter into this
Agreement in order to induce Orix to enter into the Merger Agreement; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Orix has requested that the Stockholder agrees, and the
Stockholder hereby agrees, to grant Orix an irrevocably proxy with respect to
the Stockholder's Stock (as defined below) in accordance with the terms
hereof.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. STOCKHOLDER'S STOCK. For all purposes of this Agreement, the
term "STOCKHOLDER'S STOCK" shall include the Stock set forth on EXHIBIT A and
any other Stock which the Stockholder currently has record or beneficial
ownership of or obtains record or beneficial ownership of during the term of
this Agreement and shall further include any securities issued or exchanged
at any time in the future with respect to the Stockholder's Stock.
3. REVOCATION OF PROXIES; GRANT OF PROXY. The Stockholder hereby
revokes any and all previous proxies with respect to the Stockholder's Stock.
Subject to the terms and conditions hereof, the Stockholder hereby appoints
HW Partners, with full power of substitution, as proxy holder to represent
and to vote the Stockholder's Stock in favor of (i) the Merger Agreement and
the transactions contemplated thereby, including the Merger (including with
respect to any procedural matters related thereto), (ii) the amendment of the
Articles of Incorporation of Equalnet to increase the authorized number of
shares of common stock of Equalnet, (iii) the authorization of the issuance
of shares of common stock of Equalnet in connection with the transactions
contemplated by the Merger Agreement under all applicable
<PAGE>
laws, rules and regulations, including, without limitation, the rules of
NASDAQ and (iv) the conversion into common stock of Equalnet of each
convertible security held by such Stockholder prior to the Merger at any
meeting (whether special or annual), and whether or not adjourned or by
written action of the stockholders of Equalnet, and against any proposal
brought before the stockholders of Equalnet which would conflict with the
Merger and the transactions contemplated by the Merger Agreement, including,
without limitation, any proposal to remove any one or more directors of
Equalnet designated by Orix.
THE AUTHORITY GRANTED HEREUNDER (THE "PROXY") SHALL BE IRREVOCABLE UNTIL THE
PROXY TERMINATION DATE (AS DEFINED BELOW) AND DEEMED TO BE COUPLED WITH AN
INTEREST SUFFICIENT IN LAW AS REQUIRED BY SECTION 2.29.C OF THE TEXAS
BUSINESS CORPORATION ACT. The Proxy shall be effective until the earlier of
the consummation of the Merger or the termination of the Merger Agreement in
accordance with its terms (the "PROXY TERMINATION DATE").
4. NO SOLICITATION OF OTHER OFFERS. (a) The Stockholder shall,
and shall cause its Affiliates, officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants and
other agents to, immediately cease any discussions or negotiations with any
other parties that may be ongoing with respect to any Acquisition Proposal in
connection with the transactions contemplated by the Merger Agreement. The
Stockholder agrees that it shall not, directly or indirectly, take (and shall
not permit its Affiliates, officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants or other agents, to
so take) any action to (i) solicit, initiate or encourage the making of any
Acquisition Proposal, (ii) participate in any way in discussions or
negotiations with, or furnish or disclose any information to, any Person
(other than Orix or the agents or representatives of Orix) in connection
with, or take any other action to encourage any inquiries or the making of
any proposal that is reasonably expected to lead to, any Acquisition
Proposal, (iii) enter into any agreement, arrangement or understanding with
respect to any Acquisition Proposal, (iv) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Orix, the approval of the Merger
Agreement, the Merger or the purchase of any Stock under the Stock Purchase
Agreement dated May 21, 1999 or (v) approve or propose to approve, any
Acquisition Proposal.
(b) In addition to the obligations of the Stockholder set forth in
Section 4(a) hereof, promptly after receipt thereof, the Stockholder agrees
that it shall advise Orix of any request for information or of any
Acquisition Proposal, or any inquiry, proposal, discussions or negotiation
with respect to any Acquisition Proposal, the terms and conditions of such
request, Acquisition Proposal, inquiry, proposal, discussion or negotiation
and the Stockholder shall promptly provide to Orix copies of any written
materials received by the Stockholder in connection with any of the
foregoing, and the identity of the Person making any such Acquisition
Proposal or such request, inquiry or proposal or with whom any discussion or
negotiation are taking place.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to HW Partners as follows:
2
<PAGE>
(a) The Stockholder has all necessary power, capacity and
authority to enter into this Agreement and is the sole record or beneficial
owner of the Stockholder's Stock. The Stockholder has good and valid title
to the Stockholder's Stock, free and clear of any and all claims, liens,
charges, pledges, assessments, options, equities, encumbrances and security
interests whatsoever. Except pursuant to this Agreement, none of the
Stockholder's Stock is subject to any proxy, voting trust or other agreement
or arrangement with respect to the voting of the Stockholder's Stock. The
Stockholder's Stock (other than any Stockholder Stock evidenced by
convertible debt) is validly authorized, issued and outstanding, fully paid
and non-assessable with no personal liability attaching to the ownership
thereof.
(b) This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes the valid and binding agreement
of the Stockholder, enforceable against the Stockholder in accordance with
its terms.
(c) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not,
without the passing of time or the giving of notice or both, violate or
conflict with, constitute a breach of or a default under, result in the loss
of any benefit under, or permit the acceleration of or entitle any person to
accelerate any obligation under or pursuant to, any contract, commitment,
agreement, understanding, mortgage, lien, lease, instrument, order, award,
judgment or decree to which the Stockholder is a party or by which the
Stockholder's assets or Stockholder's Stock is bound or subject.
(d) Neither the execution and delivery of this Agreement, nor
the performance by the Stockholder of the Stockholder's obligations
hereunder, will violate any provision of law applicable to the Stockholder.
(e) No investment banker, broker or finder is entitled to any
commission or fee in respect of this Agreement or the Merger Agreement based
upon any arrangement or agreement made by or on behalf of the Stockholder.
(f) The Proxy granted hereunder is legal, valid and effective
and will confer upon HW Partners or its substitute all of the voting power of
the Stockholder's Stock under law and Equalnet's Articles of Incorporation
and Bylaws with respect to the matters specified in Section 3 hereof until
the Proxy Termination Date.
6. COVENANTS OF THE STOCKHOLDER.
(a) The Stockholder hereby covenants and agrees with HW
Partners that (i) until the Proxy Termination Date, the Stockholder will not
directly or indirectly, grant any proxies or enter into any voting trust or
other agreement or arrangement with respect to the voting of any Stock, or
(ii) until the earlier of the termination of the Merger Agreement and the six
(6) month anniversary of the consummation of the Merger.
(b) The Stockholder has executed this Agreement in its
capacity as a stockholder of Equalnet and not in its capacity as an officer
or director of Equalnet. Without limiting the foregoing, nothing herein
shall limit or affect any actions taken by the Stockholder in
3
<PAGE>
his capacity as an officer or director of Equalnet in exercising Equalnet's
rights under the Merger Agreement.
7. STOP TRANSFER INSTRUCTIONS. Equalnet shall, on the date
hereof, issue stop transfer instructions to its transfer agent in respect of
the Stockholder's Stock and shall cause such stop transfer instructions to
remain in effect through the Proxy Termination Date.
8. WAIVER OF RIGHTS; CONVERSION PRICE. Until the Proxy
Termination Date, the Stockholder hereby waives any and all rights to receive
payment upon the terms and conditions applicable to the Stockholder's Stock
set forth on Exhibit A hereto, including, without limitation, the right to
receive dividends, payment of liquidation preference and any rights to cause
Equalnet to redeem the Stockholder's Stock. The Stockholder agrees that
notwithstanding any provision contained in the Stockholder's Stock or any
documentation relating thereto, no Stockholder's Stock which has a conversion
price of less than $.75 or a floating conversion price shall be converted
into common stock of Equalnet at a price less than $.75 per share of common
stock.
9. REMEDIES. The parties hereto agree that if for any reason any
of the Stockholder has failed to perform his respective obligations under
this Agreement, then HW Partners shall be entitled to specific performance
and injunctive and other equitable relief, and the parties hereto further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that any
party hereto may have against any other party hereto for any failure to
perform its obligations under this Agreement.
10. MISCELLANEOUS.
(a) This Agreement shall not be assignable by the
Stockholders. This Agreement shall be binding upon the Stockholder and the
Stockholder's heirs, successors and assigns by will or by the laws of descent.
(b) This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by each of the parties hereto.
(c) All costs and expenses (including legal fees) incurred in
connection with this Agreement shall be paid by the party incurring such
expense; provided, however, if HW Partners is required to retain counsel to
enforce the terms of this Agreement, the Stockholder shall pay the costs and
expenses of such counsel necessary to enforce the terms of this Agreement.
(d) From time to time, and without further consideration,
each party will execute and deliver to the other such documents and take such
action as the other may reasonably request in order to consummate more
effectively the terms of this Agreement.
(e) All authority herein conferred or agreed to be conferred
by the Stockholder shall survive the Stockholder's death or incapacity. This
Agreement constitutes the sole understanding of the parties hereto with
respect to the subject matter hereof; provided,
4
<PAGE>
however, that this provision is not intended to abrogate any other written
agreement between or among the parties executed with or after this Agreement
or any written agreement pertaining to another subject matter.
(f) All notices, requests, consents and other communication
hereunder shall be in writing and delivered personally or by telecopy
transmission or sent by registered or certified mail or by any express mail
service, postage or fees prepaid, addressed as follows:
(i) If to HW Partners:
HW Partners, L.P.
1601 Elm Street, Suite 4000
Dallas, Texas 75201
Attention: Stuart Chasanoff
Fax Number: (214) 720-1667
with a copy to White & Case LLP:
White & Case LLP
4900 First Union Financial Center
200 South Biscayne Blvd.
Miami, Florida 33131
Attention: Thomas E. Lauria
Fax Number: (305) 358-5744
(ii) If to Stockholder to:
Zane Russell
20607 Shadow Mill Court
Houston, Texas 77450
with a copy to:
(g) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF TEXAS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
(h) This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(i) The headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation hereof.
5
<PAGE>
[SIGNATURES ON NEXT PAGE]
6
<PAGE>
IN WITNESS WHEREOF, HW Partners and the Stockholder has caused this
Agreement to be signed as of the date first above written.
ZANE RUSSELL
By: /s/ Zane Russell
---------------------------------
Accepted:
HW PARTNERS L.P.
By: /s/ Barrett Wissman
---------------------------------
Name: Barrett Wissman
Title: Manager of the General Partner, HW Finance, LLC
EQUALNET COMMUNICATIONS CORP.
By: _________________________________
Name:
Title:
7
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
AMOUNT ISSUABLE UPON
STOCKHOLDER DESCRIPTION OF STOCK OF STOCK CONVERSION
- ----------------------------- ---------------------------------- -------------------- ----------------
<S> <C> <C> <C>
Zane Russell Common Stock Purchase Warrant 90,000
Common Stock 1,062,556
shares
</TABLE>
<PAGE>
EX-99.11
IRREVOCABLE PROXY AGREEMENT
THIS IRREVOCABLE PROXY AGREEMENT (the "AGREEMENT"), dated as of May
21, 1999, made by and between Frank J. Hevrdejs (the "STOCKHOLDER"), HW Partners
L.P., a Texas limited partnership ("HW PARTNERS"), as representative for
Infinity Investors Limited and IEO Holdings Limited, and Equalnet Communications
Corp., a Texas corporation ("EQUALNET");
WHEREAS, an acquisition subsidiary of Equalnet ("MERGER SUB"),
Equalnet and Orix Global Communications Inc., a Nevada corporation ("ORIX") have
entered into an Agreement and Plan of Merger dated as of May 21, 1999 (the
"MERGER AGREEMENT"), which will provide, among other things, for the merger of
Merger Sub with and into Orix (the "MERGER");
WHEREAS, the Stockholder is the record and beneficial owner of each
share of its voting stock of Equalnet (including all voting stock in the form of
a convertible security and all voting stock which the Stockholder would own upon
the conversion of any voting or non-voting convertible debt or equity security
or options or warrants) (the "STOCK"), as set forth opposite the Stockholder's
name on EXHIBIT A hereto, and desires to enter into this Agreement in order to
induce Orix to enter into the Merger Agreement; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Orix has requested that the Stockholder agrees, and the Stockholder
hereby agrees, to grant Orix an irrevocably proxy with respect to the
Stockholder's Stock (as defined below) in accordance with the terms hereof.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. STOCKHOLDER'S STOCK. For all purposes of this Agreement, the
term "STOCKHOLDER'S STOCK" shall include the Stock set forth on EXHIBIT A and
any other Stock which the Stockholder currently has record or beneficial
ownership of or obtains record or beneficial ownership of during the term of
this Agreement and shall further include any securities issued or exchanged at
any time in the future with respect to the Stockholder's Stock.
3. REVOCATION OF PROXIES; GRANT OF PROXY. The Stockholder hereby
revokes any and all previous proxies with respect to the Stockholder's Stock.
Subject to the terms and conditions hereof, the Stockholder hereby appoints HW
Partners, with full power of substitution, as proxy holder to represent and to
vote the Stockholder's Stock in favor of (i) the Merger Agreement and the
transactions contemplated thereby, including the Merger (including with respect
to any procedural matters related thereto), (ii) the amendment of the Articles
of Incorporation of Equalnet to increase the authorized number of shares of
common stock of Equalnet, (iii) the authorization of the issuance of shares of
common stock of Equalnet in connection with the transactions contemplated by the
Merger Agreement under all applicable
<PAGE>
laws, rules and regulations, including, without limitation, the rules of
NASDAQ and (iv) the conversion into common stock of Equalnet of each
convertible security held by such Stockholder prior to the Merger at any
meeting (whether special or annual), and whether or not adjourned or by
written action of the stockholders of Equalnet, and against any proposal
brought before the stockholders of Equalnet which would conflict with the
Merger and the transactions contemplated by the Merger Agreement, including,
without limitation, any proposal to remove any one or more directors of
Equalnet designated by Orix.
THE AUTHORITY GRANTED HEREUNDER (THE "PROXY") SHALL BE IRREVOCABLE UNTIL THE
PROXY TERMINATION DATE (AS DEFINED BELOW) AND DEEMED TO BE COUPLED WITH AN
INTEREST SUFFICIENT IN LAW AS REQUIRED BY SECTION 2.29.C OF THE TEXAS BUSINESS
CORPORATION ACT. The Proxy shall be effective until the earlier of the
consummation of the Merger or the termination of the Merger Agreement in
accordance with its terms (the "PROXY TERMINATION DATE").
4. NO SOLICITATION OF OTHER OFFERS. (a) The Stockholder shall, and
shall cause its Affiliates, officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants and other agents to,
immediately cease any discussions or negotiations with any other parties that
may be ongoing with respect to any Acquisition Proposal in connection with the
transactions contemplated by the Merger Agreement. The Stockholder agrees that
it shall not, directly or indirectly, take (and shall not permit its Affiliates,
officers, directors, employees, representatives, consultants, investment
bankers, attorneys, accountants or other agents, to so take) any action to (i)
solicit, initiate or encourage the making of any Acquisition Proposal, (ii)
participate in any way in discussions or negotiations with, or furnish or
disclose any information to, any Person (other than Orix or the agents or
representatives of Orix) in connection with, or take any other action to
encourage any inquiries or the making of any proposal that is reasonably
expected to lead to, any Acquisition Proposal, (iii) enter into any agreement,
arrangement or understanding with respect to any Acquisition Proposal, (iv)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Orix, the approval of the Merger Agreement, the Merger or the purchase of any
Stock under the Stock Purchase Agreement dated May 21, 1999 or (v) approve or
propose to approve, any Acquisition Proposal.
(b) In addition to the obligations of the Stockholder set forth in
Section 4(a) hereof, promptly after receipt thereof, the Stockholder agrees that
it shall advise Orix of any request for information or of any Acquisition
Proposal, or any inquiry, proposal, discussions or negotiation with respect to
any Acquisition Proposal, the terms and conditions of such request, Acquisition
Proposal, inquiry, proposal, discussion or negotiation and the Stockholder shall
promptly provide to Orix copies of any written materials received by the
Stockholder in connection with any of the foregoing, and the identity of the
Person making any such Acquisition Proposal or such request, inquiry or proposal
or with whom any discussion or negotiation are taking place.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to HW Partners as follows:
2
<PAGE>
(a) The Stockholder has all necessary power, capacity and
authority to enter into this Agreement and is the sole record or beneficial
owner of the Stockholder's Stock. The Stockholder has good and valid title to
the Stockholder's Stock, free and clear of any and all claims, liens, charges,
pledges, assessments, options, equities, encumbrances and security interests
whatsoever. Except pursuant to this Agreement, none of the Stockholder's Stock
is subject to any proxy, voting trust or other agreement or arrangement with
respect to the voting of the Stockholder's Stock. The Stockholder's Stock
(other than any Stockholder Stock evidenced by convertible debt) is validly
authorized, issued and outstanding, fully paid and non-assessable with no
personal liability attaching to the ownership thereof.
(b) This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes the valid and binding agreement of
the Stockholder, enforceable against the Stockholder in accordance with its
terms.
(c) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not, without
the passing of time or the giving of notice or both, violate or conflict with,
constitute a breach of or a default under, result in the loss of any benefit
under, or permit the acceleration of or entitle any person to accelerate any
obligation under or pursuant to, any contract, commitment, agreement,
understanding, mortgage, lien, lease, instrument, order, award, judgment or
decree to which the Stockholder is a party or by which the Stockholder's assets
or Stockholder's Stock is bound or subject.
(d) Neither the execution and delivery of this Agreement, nor
the performance by the Stockholder of the Stockholder's obligations hereunder,
will violate any provision of law applicable to the Stockholder.
(e) No investment banker, broker or finder is entitled to any
commission or fee in respect of this Agreement or the Merger Agreement based
upon any arrangement or agreement made by or on behalf of the Stockholder.
(f) The Proxy granted hereunder is legal, valid and effective
and will confer upon HW Partners or its substitute all of the voting power of
the Stockholder's Stock under law and Equalnet's Articles of Incorporation and
Bylaws with respect to the matters specified in Section 3 hereof until the Proxy
Termination Date.
6. COVENANTS OF THE STOCKHOLDER.
(a) The Stockholder hereby covenants and agrees with HW Partners
that (i) until the Proxy Termination Date, the Stockholder will not directly or
indirectly, grant any proxies or enter into any voting trust or other agreement
or arrangement with respect to the voting of any Stock, or (ii) until the
earlier of the termination of the Merger Agreement and the six (6) month
anniversary of the consummation of the Merger, the Stockholder will not sell,
assign, transfer, pledge, encumber or otherwise dispose of the Stockholder's
Stock, or enter into any contract, option or other arrangement or understanding
with respect to the direct or indirect sale, assignment, transfer, pledge,
encumbrance or other disposition of the Stockholder's Stock
3
<PAGE>
other than, following the consummation of the Merger, pursuant to, and in
compliance with, Rule 144 of the Securities Act.
(b) The Stockholder has executed this Agreement in its capacity
as a stockholder of Equalnet and not in its capacity as an officer or director
of Equalnet. Without limiting the foregoing, nothing herein shall limit or
affect any actions taken by the Stockholder in his capacity as an officer or
director of Equalnet in exercising Equalnet's rights under the Merger Agreement.
7. STOP TRANSFER INSTRUCTIONS. Equalnet shall, on the date hereof,
issue stop transfer instructions to its transfer agent in respect of the
Stockholder's Stock and shall cause such stop transfer instructions to remain in
effect through the Proxy Termination Date.
8. WAIVER OF RIGHTS; CONVERSION PRICE. Until the Proxy Termination
Date, the Stockholder hereby waives any and all rights to receive payment upon
the terms and conditions applicable to the Stockholder's Stock set forth on
Exhibit A hereto, including, without limitation, the right to receive dividends,
payment of liquidation preference and any rights to cause Equalnet to redeem the
Stockholder's Stock. The Stockholder agrees that notwithstanding any provision
contained in the Stockholder's Stock or any documentation relating thereto, no
Stockholder's Stock which has a conversion price of less than $.75 or a floating
conversion price shall be converted into common stock of Equalnet at a price
less than $.75 per share of common stock.
9. REMEDIES. The parties hereto agree that if for any reason any of
the Stockholder has failed to perform his respective obligations under this
Agreement, then HW Partners shall be entitled to specific performance and
injunctive and other equitable relief, and the parties hereto further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such injunctive or other equitable relief. This provision
is without prejudice to any other rights that any party hereto may have against
any other party hereto for any failure to perform its obligations under this
Agreement.
10. MISCELLANEOUS.
(a) This Agreement shall not be assignable by the Stockholders.
This Agreement shall be binding upon the Stockholder and the Stockholder's
heirs, successors and assigns by will or by the laws of descent.
(b) This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by each of the parties hereto.
(c) All costs and expenses (including legal fees) incurred in
connection with this Agreement shall be paid by the party incurring such
expense; provided, however, if HW Partners is required to retain counsel to
enforce the terms of this Agreement, the Stockholder shall pay the costs and
expenses of such counsel necessary to enforce the terms of this Agreement.
4
<PAGE>
(d) From time to time, and without further consideration, each
party will execute and deliver to the other such documents and take such action
as the other may reasonably request in order to consummate more effectively the
terms of this Agreement.
(e) All authority herein conferred or agreed to be conferred by
the Stockholder shall survive the Stockholder's death or incapacity. This
Agreement constitutes the sole understanding of the parties hereto with respect
to the subject matter hereof; provided, however, that this provision is not
intended to abrogate any other written agreement between or among the parties
executed with or after this Agreement or any written agreement pertaining to
another subject matter.
(f) All notices, requests, consents and other communication
hereunder shall be in writing and delivered personally or by telecopy
transmission or sent by registered or certified mail or by any express mail
service, postage or fees prepaid, addressed as follows:
(i) If to HW Partners:
HW Partners, L.P.
1601 Elm Street, Suite 4000
Dallas, Texas 75201
Attention: Stuart Chasanoff
Fax Number: (214) 720-1667
with a copy to White & Case LLP:
White & Case LLP
4900 First Union Financial Center
200 South Biscayne Blvd.
Miami, Florida 33131
Attention: Thomas E. Lauria
Fax Number: (305) 358-5744
(ii) If to Stockholder to:
Frank J. Hevrdejs
8 Greenway Plaza
Houston, Texas 77046
with a copy to:
(g) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
TEXAS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
5
<PAGE>
(h) This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(i) The headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation hereof.
[SIGNATURES ON NEXT PAGE]
6
<PAGE>
IN WITNESS WHEREOF, HW Partners and the Stockholder has caused this
Agreement to be signed as of the date first above written.
FRANK J. HEVRDEJS
By: /s/ Frank J. Hevrdejs
--------------------------------
Accepted:
HW PARTNERS L.P.
By: /s/ Barrett Wissman
--------------------------
Name: Barrett Wissman
Title: Manager of the General Partner, HW Finance, LLC
7
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
AMOUNT ISSUABLE UPON
STOCKHOLDER DESCRIPTION OF STOCK OF STOCK CONVERSION
- ----------------- ----------------------------- ----------- -------------
<S> <C> <C> <C>
Frank J. Hevrdejs Common Stock Purchase Warrant 33,333
Common Stock 66,667
shares
</TABLE>
<PAGE>
EX-99.12
IRREVOCABLE PROXY AGREEMENT
THIS IRREVOCABLE PROXY AGREEMENT (the "AGREEMENT"), dated as of
May 21, 1999, made by and between First Sterling Ventures Corp. (the
"STOCKHOLDER"), HW Partners L.P., a Texas limited partnership ("HW
PARTNERS"), as representative for Infinity Investors Limited and IEO Holdings
Limited, and Equalnet Communications Corp., a Texas corporation ("EQUALNET");
WHEREAS, an acquisition subsidiary of Equalnet ("MERGER SUB"),
Equalnet and Orix Global Communications Inc., a Nevada corporation ("ORIX")
have entered into an Agreement and Plan of Merger dated as of May 21, 1999
(the "MERGER AGREEMENT"), which will provide, among other things, for the
merger of Merger Sub with and into Orix (the "MERGER");
WHEREAS, the Stockholder is the record and beneficial owner of each
share of its voting stock of Equalnet (including all voting stock in the form
of a convertible security and all voting stock which the Stockholder would
own upon the conversion of any voting or non-voting convertible debt or
equity security or options or warrants) (the "STOCK"), as set forth opposite
the Stockholder's name on EXHIBIT A hereto, and desires to enter into this
Agreement in order to induce Orix to enter into the Merger Agreement; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Orix has requested that the Stockholder agrees, and the
Stockholder hereby agrees, to grant Orix an irrevocably proxy with respect to
the Stockholder's Stock (as defined below) in accordance with the terms
hereof.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. STOCKHOLDER'S STOCK. For all purposes of this Agreement, the
term "STOCKHOLDER'S STOCK" shall include the Stock set forth on EXHIBIT A and
any other Stock which the Stockholder currently has record or beneficial
ownership of or obtains record or beneficial ownership of during the term of
this Agreement and shall further include any securities issued or exchanged
at any time in the future with respect to the Stockholder's Stock.
3. REVOCATION OF PROXIES; GRANT OF PROXY. The Stockholder hereby
revokes any and all previous proxies with respect to the Stockholder's Stock.
Subject to the terms and conditions hereof, the Stockholder hereby appoints
HW Partners, with full power of substitution, as proxy holder to represent
and to vote the Stockholder's Stock in favor of (i) the Merger Agreement and
the transactions contemplated thereby, including the Merger (including with
respect to any procedural matters related thereto), (ii) the amendment of the
Articles of Incorporation of Equalnet to increase the authorized number of
shares of common stock of Equalnet, (iii) the authorization of the issuance
of shares of common stock of Equalnet in
<PAGE>
connection with the transactions contemplated by the Merger Agreement under
all applicable laws, rules and regulations, including, without limitation,
the rules of NASDAQ and (iv) the conversion into common stock of Equalnet of
each convertible security held by such Stockholder prior to the Merger at any
meeting (whether special or annual), and whether or not adjourned or by
written action of the stockholders of Equalnet, and against any proposal
brought before the stockholders of Equalnet which would conflict with the
Merger and the transactions contemplated by the Merger Agreement, including,
without limitation, any proposal to remove any one or more directors of
Equalnet designated by Orix.
THE AUTHORITY GRANTED HEREUNDER (THE "PROXY") SHALL BE IRREVOCABLE UNTIL THE
PROXY TERMINATION DATE (AS DEFINED BELOW) AND DEEMED TO BE COUPLED WITH AN
INTEREST SUFFICIENT IN LAW AS REQUIRED BY SECTION 2.29.C OF THE TEXAS
BUSINESS CORPORATION ACT. The Proxy shall be effective until the earlier of
the consummation of the Merger or the termination of the Merger Agreement in
accordance with its terms (the "PROXY TERMINATION DATE").
4. NO SOLICITATION OF OTHER OFFERS. (a) The Stockholder shall,
and shall cause its Affiliates, officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants and
other agents to, immediately cease any discussions or negotiations with any
other parties that may be ongoing with respect to any Acquisition Proposal in
connection with the transactions contemplated by the Merger Agreement. The
Stockholder agrees that it shall not, directly or indirectly, take (and shall
not permit its Affiliates, officers, directors, employees, representatives,
consultants, investment bankers, attorneys, accountants or other agents, to
so take) any action to (i) solicit, initiate or encourage the making of any
Acquisition Proposal, (ii) participate in any way in discussions or
negotiations with, or furnish or disclose any information to, any Person
(other than Orix or the agents or representatives of Orix) in connection
with, or take any other action to encourage any inquiries or the making of
any proposal that is reasonably expected to lead to, any Acquisition
Proposal, (iii) enter into any agreement, arrangement or understanding with
respect to any Acquisition Proposal, (iv) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Orix, the approval of the Merger
Agreement, the Merger or the purchase of any Stock under the Stock Purchase
Agreement dated May 21, 1999 or (v) approve or propose to approve, any
Acquisition Proposal.
(b) In addition to the obligations of the Stockholder set forth in
Section 4(a) hereof, promptly after receipt thereof, the Stockholder agrees
that it shall advise Orix of any request for information or of any
Acquisition Proposal, or any inquiry, proposal, discussions or negotiation
with respect to any Acquisition Proposal, the terms and conditions of such
request, Acquisition Proposal, inquiry, proposal, discussion or negotiation
and the Stockholder shall promptly provide to Orix copies of any written
materials received by the Stockholder in connection with any of the
foregoing, and the identity of the Person making any such Acquisition
Proposal or such request, inquiry or proposal or with whom any discussion or
negotiation are taking place.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to HW Partners as follows:
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(a) The Stockholder has all necessary power, capacity and
authority to enter into this Agreement and is the sole record or beneficial
owner of the Stockholder's Stock. The Stockholder has good and valid title
to the Stockholder's Stock, free and clear of any and all claims, liens,
charges, pledges, assessments, options, equities, encumbrances and security
interests whatsoever. Except pursuant to this Agreement, none of the
Stockholder's Stock is subject to any proxy, voting trust or other agreement
or arrangement with respect to the voting of the Stockholder's Stock. The
Stockholder's Stock (other than any Stockholder Stock evidenced by
convertible debt) is validly authorized, issued and outstanding, fully paid
and non-assessable with no personal liability attaching to the ownership
thereof.
(b) This Agreement has been duly authorized, executed and
delivered by the Stockholder and constitutes the valid and binding agreement
of the Stockholder, enforceable against the Stockholder in accordance with
its terms.
(c) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not,
without the passing of time or the giving of notice or both, violate or
conflict with, constitute a breach of or a default under, result in the loss
of any benefit under, or permit the acceleration of or entitle any person to
accelerate any obligation under or pursuant to, any contract, commitment,
agreement, understanding, mortgage, lien, lease, instrument, order, award,
judgment or decree to which the Stockholder is a party or by which the
Stockholder's assets or Stockholder's Stock is bound or subject.
(d) Neither the execution and delivery of this Agreement, nor
the performance by the Stockholder of the Stockholder's obligations
hereunder, will violate any provision of law applicable to the Stockholder.
(e) No investment banker, broker or finder is entitled to any
commission or fee in respect of this Agreement or the Merger Agreement based
upon any arrangement or agreement made by or on behalf of the Stockholder.
(f) The Proxy granted hereunder is legal, valid and effective
and will confer upon HW Partners or its substitute all of the voting power of
the Stockholder's Stock under law and Equalnet's Articles of Incorporation
and Bylaws with respect to the matters specified in Section 3 hereof until
the Proxy Termination Date.
6. COVENANTS OF THE STOCKHOLDER.
(a) The Stockholder hereby covenants and agrees with HW
Partners that (i) until the Proxy Termination Date, the Stockholder will not
directly or indirectly, grant any proxies or enter into any voting trust or
other agreement or arrangement with respect to the voting of any Stock, or
(ii) until the earlier of the termination of the Merger Agreement and the six
(6) month anniversary of the consummation of the Merger, the Stockholder will
not sell, assign, transfer, pledge, encumber or otherwise dispose of the
Stockholder's Stock, or enter into any contract, option or other arrangement
or understanding with respect to the direct or indirect sale, assignment,
transfer, pledge, encumbrance or other disposition of the Stockholder's Stock
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other than, following the consummation of the Merger, pursuant to, and in
compliance with, Rule 144 of the Securities Act.
(b) The Stockholder has executed this Agreement in its
capacity as a stockholder of Equalnet and not in its capacity as an officer
or director of Equalnet. Without limiting the foregoing, nothing herein
shall limit or affect any actions taken by the Stockholder in his capacity as
an officer or director of Equalnet in exercising Equalnet's rights under the
Merger Agreement.
7. STOP TRANSFER INSTRUCTIONS. Equalnet shall, on the date
hereof, issue stop transfer instructions to its transfer agent in respect of
the Stockholder's Stock and shall cause such stop transfer instructions to
remain in effect through the Proxy Termination Date.
8. WAIVER OF RIGHTS; CONVERSION PRICE. Until the Proxy
Termination Date, the Stockholder hereby waives any and all rights to receive
payment upon the terms and conditions applicable to the Stockholder's Stock
set forth on Exhibit A hereto, including, without limitation, the right to
receive dividends, payment of liquidation preference and any rights to cause
Equalnet to redeem the Stockholder's Stock. The Stockholder agrees that
notwithstanding any provision contained in the Stockholder's Stock or any
documentation relating thereto, no Stockholder's Stock which has a conversion
price of less than $.75 or a floating conversion price shall be converted
into common stock of Equalnet at a price less than $.75 per share of common
stock.
9. REMEDIES. The parties hereto agree that if for any reason any
of the Stockholder has failed to perform its respective obligations under
this Agreement, then HW Partners shall be entitled to specific performance
and injunctive and other equitable relief, and the parties hereto further
agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that any
party hereto may have against any other party hereto for any failure to
perform its obligations under this Agreement.
10. MISCELLANEOUS.
(a) This Agreement shall not be assignable by the
Stockholders. This Agreement shall be binding upon the Stockholder and the
Stockholder's heirs, successors and assigns by will or by the laws of descent.
(b) This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by each of the parties hereto.
(c) All costs and expenses (including legal fees) incurred in
connection with this Agreement shall be paid by the party incurring such
expense; provided, however, if HW Partners is required to retain counsel to
enforce the terms of this Agreement, the Stockholder shall pay the costs and
expenses of such counsel necessary to enforce the terms of this Agreement.
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(d) From time to time, and without further consideration,
each party will execute and deliver to the other such documents and take such
action as the other may reasonably request in order to consummate more
effectively the terms of this Agreement.
(e) All authority herein conferred or agreed to be conferred
by the Stockholder shall survive the Stockholder's death or incapacity. This
Agreement constitutes the sole understanding of the parties hereto with
respect to the subject matter hereof; provided, however, that this provision
is not intended to abrogate any other written agreement between or among the
parties executed with or after this Agreement or any written agreement
pertaining to another subject matter.
(f) All notices, requests, consents and other communication
hereunder shall be in writing and delivered personally or by telecopy
transmission or sent by registered or certified mail or by any express mail
service, postage or fees prepaid, addressed as follows:
(i) If to HW Partners:
HW Partners, L.P.
1601 Elm Street, Suite 4000
Dallas, Texas 75201
Attention: Stuart Chasanoff
Fax Number: (214) 720-1667
with a copy to White & Case LLP:
White & Case LLP
4900 First Union Financial Center
200 South Biscayne Blvd.
Miami, Florida 33131
Attention: Thomas E. Lauria
Fax Number: (305) 358-5744
(ii) If to Stockholder to:
with a copy to:
(g) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF TEXAS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
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(h) This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(i) The headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation hereof.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, HW Partners and the Stockholder has caused this
Agreement to be signed as of the date first above written.
FIRST STERLING VENTURES CORP.
By: /s/ Frank Hevrdejs
---------------------------------
Name: Frank Hevrdejs
Title: President
Accepted:
HW PARTNERS L.P.
By: /s/ Barrett Wissman
---------------------------------
Name: Barrett Wissman
Title: Manager of the General Partner, HW Finance, LLC
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EXHIBIT A
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
AMOUNT ISSUABLE UPON
STOCKHOLDER DESCRIPTION OF STOCK OF STOCK CONVERSION
- ----------------------------- ---------------------------------- -------------------- ----------------
<S> <C> <C> <C>
First Sterling Ventures Corp. Common Stock Purchase Warrant 33,334
Common Stock 66,666
shares
</TABLE>
