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
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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, xxxxx XX 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,
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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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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(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 Xxxxxxxx Xxxxxx 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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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,
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, 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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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
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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
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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 Xxxx'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 Xxxxxxxx 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) Xxxxxxx Xxxxxxx 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 Xxxx.
(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 Xxxx, 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.
0000 Xxxx Xxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxx, Gotshal & Xxxxxx LLP
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to Orix, to:
e.Volve Technology Group, Inc.
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxxxx X, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
White & Case LLP
000 X. Xxxxxxxx Xxxx. Suite 4900
Miami, FL 33131
Attn: Xxxxxx X. Xxxxxx
Xxx: (000) 000-0000
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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 Xxxx-Xxxxx-Xxxxxx 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
Xxxxxxxx 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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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/ Xxxxxx Xxxx Xxxxxxxx
------------------------------------
Name: Xxxxxx Xxxx Xxxxxxxx
Title: President
EQUALNET COMMUNICATIONS CORP.
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Chief Executive Officer
EQUALNET ACQUISITION CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Chief Executive Officer
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