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
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
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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
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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
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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.
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
Fax Number: (000) 000-0000
with a copy to White & Case LLP:
White & Case LLP
4900 First Union Financial Center
000 Xxxxx Xxxxxxxx Xxxx.
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax Number: (000) 000-0000
(ii) If to Stockholder to:
Advantage Fund Limited
00000 XX 0xx, Xxxxx 0000
Xxxxxxxx, Xxxxxxxxxx 00000
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.
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(i) The headings contained herein are for convenience of
reference only and shall not affect the meaning or interpretation hereof.
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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.
ADVANTAGE FUND, LTD.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: General Partner
Accepted:
HW PARTNERS L.P.
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Manager of the General Partner, HW Finance, LLC
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EXHIBIT A
SHARES OF
COMMON STOCK
AMOUNT ISSUABLE UPON
STOCKHOLDER DESCRIPTION OF STOCK OF STOCK CONVERSION
----------------------------- ---------------------------------- -------------------- ----------------
Advantage Fund, Ltd. Series D Preferred Stock 1,925 shares 2,566,667
Common Stock 22,500 shares
