Exhibit 10.38
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of the 3rd
day of July, 1996 (the "Effective Date"), by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
("▇▇▇▇▇▇") having an address at EAB Plaza, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, RSL COMMUNICATIONS LIMITED, a United Kingdom corporation (the
"Investor") , with offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ and INTERNATIONAL TELECOMMUNICATIONS GROUP, LTD., a Delaware corporation
(the "Company") with offices at EAB Plaza, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, ▇▇▇▇▇▇ owns 132,223 shares of Common Stock, par value $.01
per share (the "Common Stock") of the Company; and
WHEREAS, ▇▇▇▇▇▇ desires to sell and the Investor desires to purchase
up to 106,985 shares of the Common Stock owned by ▇▇▇▇▇▇ (the "Shares") at a
Purchase Price as set forth in Section 1.1 of this Agreement.
NOW, THEREPORE, in consideration for the agreements contained herein,
intending to be legally bound, ▇▇▇▇▇▇, the Company and the Investor hereby agree
as follows:
ARTICLE I
Purchase and Sale of Comon Stock
Section 1.1 Sale of Shares and Purchase Price. Subject to the terms
and conditions set forth in this Agreement, the Investor agrees to purchase from
▇▇▇▇▇▇ at the Initial Closing Date and the Second Closing Date (as defined
below, each of which is herein referred to as a "Closing" and which together are
referred to as the "Closings"), and ▇▇▇▇▇▇ agrees to sell to the Investor at the
Closings the Shares at an aggregate price to the Investor of Ten Million Dollars
($10,000,000) in cash, payable $2.5 million at the Initial Closing Date, and
$7.5 million by issuance by Investor of its 6% secured promissory note or notes
in the form set forth as Exhibit A hereto (the "RSL Note") providing for three
principal payments aggregating $2.5 million on each of the first, second and
third anniversary dates of the Initial Closing Date (the "Purchase Price"),
provided, that the full Purchase Price may not be paid, as more fully set forth
in Section 1.2, below. In addition, (i) Investor, the Company, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ hereinafter
referred to together as the "▇▇▇▇▇▇ Daughters") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
("▇▇▇▇▇▇▇") shall also, at the Initial Closing Date, enter into a New
Shareholders Agreement providing certain exchange rights for
▇▇▇▇▇▇'▇ and the ▇▇▇▇▇▇ Daughters' remaining Common Stock of the Company and
terminating all prior Company shareholders agreements as they relate to ▇▇▇▇▇▇,
the ▇▇▇▇▇▇ Daughters, Investor and Rebetti, in the form as set forth in Exhibit
B hereto, and (ii) the Company and ▇▇▇▇▇▇ shall have executed, at the Initial
Closing Date, an amendment to the ▇▇▇▇▇▇ Employment Agreement (as defined below)
in the form of Exhibit C attached hereto. The New Shareholders Agreement and the
Amendment to the ▇▇▇▇▇▇ Employment Agreement are herein referred to as the
"Other Agreements."
Section 1.2 Right of First Refusal Shares. ▇▇▇▇▇▇'▇ obligation to sell
the Shares to Investor is subject to the right of first refusal of Incom (UK)
Ltd. ("Incom") to purchase 2,235 of such Shares (the "Right of First Refusal
Shares") pursuant to a Shareholders Agreement dated September 1, 1994, as
amended, between Investor, the Company, Incom, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ (the "Company
Stockholders Agreement"). The Closings, therefore, shall consist of (A) an
Initial Closing Date on the third business day following notice to the Company
and Investor of approval by the Federal Communications Commission ("FCC") of a
Transfer of Control Application or at such other time and place or date as
▇▇▇▇▇▇, the Company and the Investor shall agree upon, at which Initial Closing
Date 104,750 Shares shall be sold to Investor by ▇▇▇▇▇▇ for $2,447,773.05 in
cash and an RSL Note for $7,343,319.16, and (B) provided that Incom declines to
exercise its rights of first refusal under the Company Stockholders Agreement, a
Second Closing Date which shall occur on the second business day following the
date on which Incom's rights of first refusal expire under Section I.D. (in the
case of no exercise) and Section IV.A (in the case of an exercise but no
payment) of the Company Stockholders Agreement, at which Second Closing Date
2,235 Shares shall be sold to Investor by ▇▇▇▇▇▇ for $52,226.95 in cash and an
RSL Note for $l56,680.84. All cash payments shall be made by certified or bank
check payable to the order of ▇▇▇▇▇▇ or by wire transfer to an account
previously designated in writing by ▇▇▇▇▇▇ at least two days prior to the
applicable Closing. If Incom exercises its rights of first refusal under the
Company Stockholders Agreement and fully performs its payment obligations in
connection therewith, the Second Closing Date shall not occur, ▇▇▇▇▇▇ shall not
be required to deliver to Investor the Right of First Refusal Shares, and
Investor shall not be required to deliver the Purchase Price therefor as set out
in (B), above.
ARTICLE II
Closing; Delivery
Section 2.1 The Closings. The Closings shall take place at 10:00 a.m.
at the offices of Rosenman & Colin LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇.
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Section 2.2 Deliveries. At each of the Closings, ▇▇▇▇▇▇ shall deliver
to the investor a certificate or certificates representing the Shares being
purchased by the Investor at such Closing, free and clear of all liens, charges
and encumbrances, registered in Investor's name or duly endorsed or accompanied
by executed stock powers, in exchange for delivery to ▇▇▇▇▇▇ by the Investor of
the Purchase Price payable at such Closing as provided in Section 1.2, above,
and the documents referred to in Articles VI and VII shall be delivered by the
appropriate parties.
ARTICLE III
Representations, Warranties and Covenants of ▇▇▇▇▇▇
Except as set forth in the Schedules attached hereto, which describe
the nature of the exception in reasonable detail and which specifically refer to
the Section of this Agreement to which such exception applies (the "Schedules"),
and except as to those matters as to which Investor has actual knowledge, ▇▇▇▇▇▇
hereby represents, warrants and/or covenants to the Investor as follows:
Section 3.1 Governmental and Other Consents. To the best of their
knowledge, no consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority or any other third party is required on the part of
the Company or ▇▇▇▇▇▇ in connection with the Company's and ▇▇▇▇▇▇'▇ valid
execution, delivery and performance of this Agreement or the Other Agreements,
or the assignment of the Shares by ▇▇▇▇▇▇ to the Investor; provided, however,
that prior approval by the FCC will be required prior to the sale of the Shares.
The Company and ▇▇▇▇▇▇ hereby agree to promptly file with the FCC and all
relevant state Public Service Commissions ("PSC") and will diligently pursue,
support to completion and not oppose, a Transfer of Control Application, any
special temporary authorization deemed appropriate by Investor's counsel to that
effect as well as corresponding applications and authorization from all relevant
PSC's.
Section 3.2 Litigation; Compliance with Law. Except as provided on
Schedule 3.2 attached hereto, to the best of their knowledge there are no
actions, suits, proceedings or investigations pending (a) against the Company or
any of its subsidiaries (other than against Cyberlink, Inc.) (excluding
Cyberlink, Inc., the "Entities") or against the assets, properties or business
of any of the Entities which could have a material adverse effect on the
business, properties, assets. or financial condition of any such Entity,
including, without limitation, any action, suit, proceeding or investigation
pending
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or, to the knowledge of the Company or ▇▇▇▇▇▇, threatened, in which it is sought
to restrain, prohibit, invalidate or put aside, in whole or in part, the
transactions contemplated hereby, (b) which questions the validity of this
Agreement or of any action taken or to be taken by any of the Entities pursuant
to or in connection with the provisions of this Agreement and the transactions
contemplated hereby or (c) which would otherwise prevent or materially hinder
the consummation or performance of this Agreement. To the best of their
knowledge, none of the Entities is a party or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality that would reasonably be expected to have a material adverse
effect on the respective Entities' business, assets, properties or financial
condition. To the best of their knowledge, there is no action, suit, proceeding
or investigation by any of the Entities currently pending or, to the knowledge
of the Company or ▇▇▇▇▇▇, threatened, or that such Entity currently intends to
initiate, which, if determined adversely to such Entity, could reasonably be
expected to have a material adverse effect on the business, assets, properties
or financial condition of any such Entity. "Pending" for this purpose shall mean
an action, suit, proceeding or investigation as to which ▇▇▇▇▇▇ or the Entity
shall have knowledge or received notice, whether in proper form or not. To the
best of their knowledge, except as set forth on Schedule 3.2, none of the
Entities is in material violation of any applicable statute, law or regulation
relating to its or their business operations the result of which violation would
have a material adverse effect upon the Company, and no material expenditures
will be required in order to comply with any such existing statute, law or
regulation.
Section 3.3 Transactions with Affiliates. Except for regular salary
payments, bonuses and fringe benefits under an individual's compensation package
with the Company or International Telecommunications Corporation, and except as
set forth on Schedule 3.3 hereof, none of the officers, employees, directors or
other affiliates of the Entities, or members of their families, has to the best
of the knowledge of ▇▇▇▇▇▇, received payments, whether in cash or in kind, from
the Company, or is a party to any material agreements, understandings,
indebtedness or proposed transactions with the Entities. Neither the Company nor
the Subsidiary has guaranteed or assumed any material obligations of the
Company's officers, directors or employees.
Section 3.4 Voting. ▇▇▇▇▇▇ covenants that, as Custodian for his
daughters, Victoria and ▇▇▇▇▇▇▇▇▇▇, he will vote their shares of stock of the
Company, and vote them in accordance with any agreements he has made relating to
voting of shares of the Company.
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ARTICLE IV
Representations and Warranties of ▇▇▇▇▇▇
▇▇▇▇▇▇ hereby represents and warrants to Investor as follows:
Section 4.1 Authority. ▇▇▇▇▇▇ has adequate power and authority to
enter into and to perform his obligations under this Agreement and the Other
Agreements and to consummate the transaction contemplated hereby and thereby.
Section 4.2 Binding Obligation. This Agreement and the Other
Agreements constitute the valid, binding and enforceable obligations of ▇▇▇▇▇▇,
except to the extent that such enforcement may be limited by bankruptcy,
insolvency and other laws now or hereafter in effect relating to the enforcement
of creditors' rights generally, and except to the extent that equitable
principles may limit the right to obtain specific performance or other equitable
remedies.
Section 4.3 No Conflicts. To the best of ▇▇▇▇▇▇'▇ knowledge, the entry
into and performance by ▇▇▇▇▇▇ of this Agreement and the Other Agreements will
not: (i) violate any judgment, order, law or regulation applicable to ▇▇▇▇▇▇; or
(ii) result in any breach of, constitute a default under or result in the
creation of any lien, charge, security interest, pledge, or other encumbrance on
the Shares pursuant to any indenture, mortgage, deed of trust, bank loan or
credit agreement or other instrument to which ▇▇▇▇▇▇ is a party or to which his
assets are bound.
Section 4.4 Consents. Except for Rebetti's waiver (see Section 6.4
below) all consents and/or waivers to the transaction contemplated herein as
required by the Company Stockholders Agreement have been obtained except for
Incom's waiver of its rights of first refusal, for which the Right of First
Refusal Shares have been reserved in the event that Incom elects to purchase its
proportionate share of the Shares.
Section 4.5 Ownership of Shares. The Shares are owned of record and
beneficially by ▇▇▇▇▇▇, free and clear of any liens, charges, encumbrances,
pledges, claims, security interests or other rights of third parties. ▇▇▇▇▇▇ has
good and marketable title to the Shares and has the absolute right, power and
capacity to sell, assign and transfer the Shares to Investor free and clear of
any liens, encumbrances, security interests or other restrictions (other than
restrictions imposed generally by state and federal securities laws with respect
to unregistered securities).
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ARTICLE V
Representations and Warranties of the Investor
The Investor hereby represents and warrants to the company that:
Section 5.1 Investment Intent. The Shares are being acquired by the
Investor solely for its own account, for investment purposes only, and with no
present intention of distributing, selling or otherwise disposing of such
Shares. The Investor understands that the Shares have not been registered under
the Securities Act of 1933, as amended "the "Securities Act"), by reason of a
specific exemption from the registration provisions of the Securities Act, the
availability of which depends upon, among other things, the bona fide nature of
the Investor's investment intent and accuracy of the Investor's representations,
as expressed herein.
Section 5.2 Restricted Securities. The Investor understands that the
Shares it is purchasing are "restricted securities" under the federal securities
laws inasmuch as they are being acquired from an affiliate of the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act only in certain limited circumstances. The Investor
understands that there is no public market for the Shares and that there may
never be a public market for such securities, and that even if a market develops
for such securities the Investor may never be able to sell or dispose of the
Shares and may thus have to bear the risk of its investment in such stock for a
substantial period of time, or forever.
Section 5.3 Authorization. All corporate action on the part of the
Investor and its officers, directors and shareholders necessary for the
authorization, execution, delivery and performance by the Investor of this
Agreement, the RSL Note(s) and the Other Agreements, the purchase of the Shares
and the performance of all of the Investor's obligations hereunder has been
taken or will be taken prior to the Closings.
Section 5.4 Organization and Standing. The Investor is a corporation
which is duly organized, validly existing and in good standing under the laws of
the United Kingdom. The Investor has all requisite legal and corporate power to
execute and deliver this Agreement, the RSL Note(s) and the Other Agreements, to
purchase the Shares hereunder and to carry out and perform its obligations under
the terms of this Agreement, the RSL Note(s) and the Other Agreements.
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Section 5.5 Legend. It is understood that the certificates evidencing
the Shares shall bear the following legend:
"These securities have not been registered under the Securities Act of
1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with
respect to the securities under such Act or an opinion of counsel
satisfactory to International Telecommunications Group, Ltd. that such
registration is not required or unless sold pursuant to Rule 144 of
such Act."
Section 5.6 Line of Credit. Investor, through its parent, RSL
Communications Inc. (the "Parent"), has in place a line of credit with a
commercial bank for U.S.$40,OOO,COO.
Section 5.7 Senior Notes. Investor is currently negotiating the terms
of issuance of U.S.$200,000,000 principal amount of senior notes and will use
reasonable efforts to consummate such a transaction. Investor currently intends
to utilize the proceeds of the issuance of such notes to pay down its line of
credit and generally for purposes relating to the furtherance of its global
telecommunications network. If (i) any of the principal shareholders of Investor
engage in a business involving the creation of a global telecommunications
network, which business would not benefit the current shareholders of Investor
and (ii) Investor's President, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), participates in such
business, then the Investor will assure that ▇▇▇▇▇▇ is provided the opportunity
to participate in such business with ▇▇▇▇▇▇ in the same proportion as ▇▇▇▇▇▇ and
▇▇▇▇▇▇ own equity securities of Investor, and on the same terms.
ARTICLE VI
Conditions to Investor Obligations at Closings
The obligations of the Investor to purchase and pay for the Shares
which it has agreed to purchase at each Closing and the other obligations of the
Investor under this Agreement are subject to the fulfillment at or prior to the
relevant Closing of the following conditions, any of which may be waived in
writing in whole or in part by the Investor:
Section 6.1 Representations and Warranties. On the date of each
Closing, the representations and warranties of ▇▇▇▇▇▇ contained in this
Agreement shall be true and correct in all material respects with the same force
and effect as though
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such representations and warranties had been made at and as of the time of each
such Closing, except to the extent that any changes therein are specifically
contemplated by this Agreement. ▇▇▇▇▇▇ shall deliver to the Investor at each
Closing, a certificate to such effect.
Section 6.2 New Shareholders Agreement. The New Shareholders Agreement
as set forth in Exhibit B attached hereto shall have been entered into at the
Initial Closing Date.
Section 6.3 Amendment to Employment Agreement. There has been
executed, effective as of the Initial Closing Date, an amendment to the Amended
and Restated Employment Agreement dated March 10, 1995, as amended by the First
Amendment to Employment Agreement dated as of September 22, 1995, between the
Company and ▇▇▇▇▇▇ (the "▇▇▇▇▇▇ Employment Agreement") as set forth on Exhibit C
attached hereto.
Section 6.4 First Refusal Rights. Rebetti shall have waived his first
refusal rights under the Company Stockholders Agreement. Investor shall have
been furnished evidence of the waiver by Incom of its first refusal rights or
such rights shall have expired as described in Section 1.2, above, prior to any
Second Closing Date.
Section 6.5 FCC Approval. The FCC shall have approved the Transfer of
Control Application.
Section 6.6 Company Stockholders Meeting. There shall have been a
stockholders meeting of the Company or the execution of a written consent in
lieu thereof at which meeting or by such written consent the holders of the
requisite number of shares in the Company shall have approved the waiver by the
Company of its first refusal rights in connection with the sale of the Shares to
Investor and shall have set an appropriate price (substantially equal to the
Purchase Price per Share) for Incom's first refusal rights under the Company
Stockholders Agreement.
Section 6.7 Performance. The Company and ▇▇▇▇▇▇ shall have performed
and complied in all material respects with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or
complied with by them on or before the Closing. The Company and ▇▇▇▇▇▇ shall
deliver to the Investor at the Closing certificates to such effect.
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ARTICLE VII
Conditions of ▇▇▇▇▇▇'▇ Obligations at Closing
The obligations of ▇▇▇▇▇▇ under this Agreement are subject to the
fulfillment at or prior to the relevant Closing of the following conditions, any
of which may be waived in writing in whole or in part by ▇▇▇▇▇▇:
Section 7.1 Representations and Warranties. On the date of each
Closing, the representations and warranties of the Investor contained in Article
V shall be true and correct in all material respects with the same force and
effect as though such representations and warranties had been made at and as of
the time of such Closing, except to the extent that any changes therein are
specifically contemplated by this Agreement. The Investor shall deliver to
▇▇▇▇▇▇ at each Closing a certificate of its President or Vice President to such
effect.
Section 7.2 Performance. The Investor shall have performed and
complied with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied in all material respects
with by such Investor on or before such Closing, including payment to ▇▇▇▇▇▇ of
the applicable portion of the Purchase Price set forth in Section 1.2 of this
Agreement. The Investor shall deliver to ▇▇▇▇▇▇ at each Closing a certificate of
its President or Vice President to such effect.
Section 7.3 New Shareholders Agreement. The New Shareholders Agreement
as set forth in Exhibit B attached hereto shall have been entered into at the
Initial Closing Date.
Section 7.4 Amendment to Employment Agreement. There has been
executed, effective as of the Initial Closing Date, an amendment to the ▇▇▇▇▇▇
Employment Agreement as set forth on Exhibit C attached hereto.
Section 7.5 Agreements with Rebetti. Investor shall have made
available to Rebetti for signing, effective as of the Initial Closing Date, (i)
an agreement between Rebetti and the Investor similar in form and substance to
this Agreement (without any representations and warranties concerning the
Company) providing for the purchase of up to 11,510 shares of the Company's
common stock ("Rebetti Shares") at a purchase price of $96 per share, 25% of
such purchase price to be payable at the closing, and the remaining 75% of such
purchase price to be payable in three annual payments of 25% of the purchase
price each, payable on the first, second and third anniversaries of the closing,
with interest at a rate of 6% annually, pursuant to a secured promissory note or
notes and further secured by a Stock Pledge and Security Agreement pledging the
Rebetti Shares, and in
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each case subject to the right of first refusal of Incom granted pursuant to the
Company Stockholders Agreement and (ii) a registration rights agreement between
Rebetti and the Investor, in connection with shares of the Investor obtained
pursuant to the New Shareholders Agreement, mutually acceptable to the parties'
counsel, providing for Form S-3 piggy-back registration rights beginning twelve
months after Investor's initial public offering.
Section 7.6 Agreement with the ▇▇▇▇▇▇ Daughters. Investor shall have
made available to ▇▇▇▇▇▇, for signing as custodian for the ▇▇▇▇▇▇ Daughters,
effective as of the Initial Closing, a registration rights agreement between the
▇▇▇▇▇▇ Daughters and the Investor, mutually acceptable to the parties' counsel,
in connection with shares of the Investor obtained pursuant to the New
Shareholders Agreement, providing for Form S-3 piggy-back registration rights
beginning twelve months after the Investor's initial public offering.
ARTICLE VIII
Closing and Post-Closing Covenants
Section 8.1 Indemnification.
(a) Indemnification Obligation of ▇▇▇▇▇▇. ▇▇▇▇▇▇ agrees to indemnify
and hold harmless Investor, its directors, officers and employees from and
against any and all losses, claims, damages, liabilities, costs, expenses
(including reasonable attorney's fees and all costs and expenses of enforcing
such right of indemnification against ▇▇▇▇▇▇) and penalties, if any, arising out
of or based on or with respect to the breach of any representation or warranty
made by ▇▇▇▇▇▇ herein.
(b) Indemnification Obligation of Investor. Investor agrees to
indemnify and hold harmless ▇▇▇▇▇▇ from and against any and all losses, claims,
damages, liabilities, costs, expenses (including reasonable attorney's fees and
all costs and expenses of enforcing such right of indemnification against
Investor) and penalties, if any, arising out of or based on or with respect to
the breach of any representation or warranty made by Investor herein.
(c) Survival of Indemnity Obligations. The indemnities contained in
this Section 8.1 shall survive until December 31, 1996.
Section 8.2 Amendment to Certificate of Incorporation of the Company.
The Investor agrees to cause the Company to amend its Certificate of
Incorporation to update the reference to
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▇▇▇▇▇▇'▇ Employment Agreement in paragraph 8 of Article Four thereof so that
such reference shall include amendments to the Employment Agreement as of even
date herewith.
ARTICLE IX
Miscellaneous
Section 9.1 Survival of Representations, Warranties and Covenants. The
representations, warranties, covenants and agreements of the Company, ▇▇▇▇▇▇ and
the Investor contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing until December 3l,
1996.
Section 9.2 Successors and Assigns. Except as otherwise expressly
provided herein, this Agreement may not be assigned by any party hereto without
the consent of the other party hereto. Except as otherwise expressly provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective heirs, successors and permitted assigns of
the parties. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective heirs,
successors and permitted assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
Section 9.3 Governing Law. The validity, interpretation and effect of
this Agreement shall be governed by the laws of the State of New York applicable
to contracts entered into and to be performed entirely within such state. All
parties hereto hereby consent to the nonexclusive jurisdiction of all courts in
said State.
Section 9.4 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 9.5 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
Section 9.6 Notices. (i) Any notice required or permitted to be given
under the terms and provisions of this Agreement, or by any law or governmental
regulation, shall be in writing and, deemed duly given if mailed by registered
mail, postage prepaid, addressed as follows:
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(a) Any notice to the Investor shall be addressed to such
party at its address hereinabove set forth,
with a copy to:
Rosenman & Colin LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
(b) Any Notice to the Company shall be addressed to such
party at its address hereinabove set forth,
with a copy to:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
(ii) By giving the other party at least ten (10) days' prior
written notice, any party may, by notice given as above provided, designate a
different address or addresses for notices.
Section 9.7 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the parties hereto.
Section 9.8 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision or provisions
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision or provisions were so excluded and shall be
enforceable in accordance with its terms.
Section 9.9 Entire Agreement. This Agreement, the Exhibits hereto, the
Other Agreements and the other documents required to be delivered pursuant
hereto, constitute the entire understanding and agreement between the parties
with regard to the specific subject matter hereof and no party shall be liable
or bound by any representation, warranty, covenant or agreement except as
specifically set forth herein. Any previous agreement (whether written, oral or
implied) among the parties relative to
12
the specific subject matter hereof is superseded by this Agreement.
Section 9.10 Expenses. The Company shall pay all reasonable costs and
expenses, including reasonable attorneys' fees, incurred by ▇▇▇▇▇▇, Rebetti and
the Investor in connection with entering into this Agreement.
Section 9.11 Arbitration. Any dispute between the parties with respect
to this Agreement or any of the terms included herein and including the
validity, interpretation, breach, and remedies for breach, and the enforcement
of this Agreement, shall be resolved by an arbitrator in accordance with the
following provisions. The arbitration shall be before a single arbitrator (the
"Arbitrator") appointed upon the mutual agreement of the parties; provided,
however, that in the event the parties cannot reach such agreement, each of the
parties shall appoint an arbitrator and such arbitrators shall select the
Arbitrator. The Arbitrator will be bound by the substantive law of the State of
New York but will not be bound by the laws of evidence and procedure customary
in courts of law. The arbitration shall take place in New York. The execution of
this Agreement shall constitute an execution of an arbitration agreement as
well.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
INTERNATIONAL TELECOMMUNICATIONS GROUP, LTD.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
RSL COMMUNICATIONS LIMITED
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
13
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as custodian for
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as custodian for
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
14
SCHEDULE 3.2
LITIGATION
1. IDB/World Com
2. LDDS (Cyberlink)
3. Newbridge Networks (Cyberlink)
4. DCC: counterclaim
SCHEDULE 3.3
TRANSACTIONS WITH AFFILIATES
None except as reflected in the entities financial statements.
COPY
EXHIBIT A
SECURED PROMISSORY NOTE
$7,500,000.00 September 9, 1996
FOR VALUE RECEIVED, the undersigned RSL COMMUNICATIONS PLC, a United
Kingdom corporation (the "Payor") , promises to pay to the order of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ (the "Payee") the principal sum of Seven Million, Five Hundred Thousand
U.S. DOLLARS ($7,500,000.00) together with interest thereon at the rate set
forth below in Section 2, at the offices of International Telecommunications
Group, Ltd., EAB ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at
such other place as the Payee may from time to time designate.
The following terms shall apply to this Note:
1. Payments. The principal amount on this promissory note (the "Note")
shall be payable in 3 annual installments of $2,500,000 each, payable on
September 9, 1997, September 9, 1998 and September 9, 1999 (collectively, the
"Installment Dates").
2. Interest. The Payor shall pay interest from the date of this Note,
quarterly in arrears, at the rate equal to the higher of 6% per annum or the
lowest applicable Federal rate on the date of this Note, on the unpaid principal
balance hereof which shall be due and payable on the first day of each of
January, April, July and October, (each a "Quarterly Payment Date"), commencing
on the first Quarterly Payment Date following the date of this Note.
3. Payment not on a Business day. If any payment of principal of or
interest on this Note shall become due on a Saturday, Sunday or a public holiday
under the laws of the State of New York or the United States of America, such
payment shall be made on the next succeeding business day and such extension of
time shall in such case be included in computing interest in connection with
such payment.
4. Prepayment. The Payor may at any time prepay this Note, in whole or in
part, without premium or penalty. All amounts paid by the Payor shall first be
applied to principal due hereunder and then to accrued interest.
5. Security Interest. In order to secure the full and punctual payment of
all obligations of the Payor under this Note, the Payor hereby grants to the
Payee a security interest in all
rights and interests of the Payor in 80,238.75 shares (the "Shares") of the
common stock, par value $0.01 per share, of International Telecommunications
Group, Ltd. owned by the Payor, provided, that at each Installment Date at which
principal and interest is timely paid to the Payee pursuant to the terms of this
Note, one-third of the Shares shall be released from the pledge hereunder and
shall then be released from any restrictions on transfer contained herein, all
pursuant to the terms of a stock pledge and security agreement (the "Security
Agreement"), dated September 9, 1996, by and between the Payor and the Payee, in
the form attached hereto as Exhibit A. The Payor represents and warrants to the
Payee that the fair market value of such Shares is currently at least equal to
the principal amount of the aggregate of the loan hereto and that all such
Shares are owned by the Payor free and clear of any existing liens, charges or
encumbrances. The Payor shall, in such manner and form as the Payee may at any
time and from time to time reasonably require, execute, deliver, file and record
all security agreements, pledge agreements, security assignments, or other
documents or instruments and take all other actions that may be necessary or
desirable, or that Payee may request, in order to create, preserve or perfect
the foregoing security interest.
6. Restrictions on Transfer of Shares. So long as this Note is outstanding,
the Payor shall not assign, transfer or grant any security interest in any of
the Shares which continue to be subject to the lien created in the Security
Agreement without the prior written consent of the Payee.
7. Costs and Expenses. The Payor shall pay all reasonable costs and
expenses, including reasonable attorneys' fees, incurred by the Payee in
collecting or enforcing this Note.
8. Defaults. (a) The occurrence of any of the following shall constitute an
"Event of Default":
(i) the Payor shall fail to pay when due within five days of the
Installment Date or Quarterly Payment Date, as applicable, any amounts required
to be paid hereunder;
(ii) a case or proceeding shall have been commenced against the Payor
in a court having competent jurisdiction seeking a decree or order in respect of
the Payor (A) under any applicable bankruptcy or other similar law, which is not
dismissed within 60 days with respect to an involuntary case, (B) appointing a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of the Payor or of any of its properties, or (C) ordering the
winding-up or liquidation of the affairs of the Payor;
(iii) the Payor shall (A) file a petition seeking relief under any
applicable bankruptcy or other similar law, (B)
2
consent to the institution of proceedings thereunder or to the filing of any
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) of
the Payor or of any of its properties, (C) fail generally to pay its debts as
such debts become due, or (D) take any corporate or other action in furtherance
of any such action; or
(iv) the Payor shall default on its obligations under the Security
Agreement, the Stock Purchase Agreement among Payor, Payee and International
Telecommunications Group, Ltd., dated July 3, 1996, or any guaranty thereof.
(b) The Payor shall notify the Payee of the occurrence of any Event of
Default promptly after the Payor obtains knowledge thereof.
(c) Upon the occurrence of any Event of Default, all amounts payable
hereunder, including all accrued interest, shall automatically and immediately
become due and payable.
(d) Without limiting any other right of the Payor, in the event that
the Payee defaults on its obligations under any instrument pursuant to which the
Payee owes monies to the Payor (or the Payor's affiliates) in any capacity
(hereinafter a "Default Instrument"), the Payor, at its election, may setoff,
against any and all such monies owed to the Payor (or its affiliates) by the
Payee pursuant to a Default Instrument any and all principal and/or interest due
and payable under this Note.
9. Late Payment Charge. In the event that the Payor fails to make any
payment of principal and/or interest under this Note within 5 days after it
becomes due and payable hereunder, then the Payor shall promptly pay to the
Payee, in addition to other amounts owing hereunder, a late payment charge of 5%
of that portion of the principal and/or interest which was due and payable
hereunder and has not been paid in such 5-day period.
10. Modification. No modification, alteration or change of any of the
provisions hereof shall be effective unless in writing and signed by the Payor
and the Payee and only to the extent set forth therein.
11. Waivers. (a) The Payor and all endorsers, sureties and guarantors
of this Note hereby jointly and severally waive presentment, demand for payment,
notice of dishonor, notice of protest, and protest in connection with the
delivery, acceptance, performance, default, endorsement or guaranty of this
Note.
(b) No delay by the Payee in exercising any power or right
hereunder shall operate as a waiver of any power or right, nor shall any single
or partial exercise of any power or right
3
preclude other or further exercise thereof, or the exercise of any other power
or right hereunder or otherwise. No waiver or modification of the terms hereof
shall be valid unless set forth in writing by the Payee.
12. Binding Nature. This Note shall inure to the benefit of and be
enforceable by the Payee and its successors and assigns and shall be binding and
enforceable against the Payor and its successors and assigns. In the event that
the Payor assigns its obligations hereunder, the Payor shall immediately notify
the Payee of such assignment, and shall remain liable for the fulfillment of its
obligations hereunder.
13. Severability. It is the desire and intent of the parties that the
provisions of this Note be enforced to the fullest extent permissible under the
law and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any provision of this Note would be held to be invalid,
prohibited or unenforceable in any jurisdiction for any reason, such provision,
as to such jurisdiction, shall be ineffective, without invalidating the
remaining provisions of this Note or affecting the validity or enforceability of
such provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Note or
affecting the validity or enforceability of such provision in any other
jurisdiction.
14. Governing Law: Jurisdiction. This Note shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to principles of conflicts of law. Any action or proceedings to enforce
or arising out of this Note may be commenced in any court of the State of New
York or in the United States District Court for the Southern District of New
York. The Payor agrees that venue will be proper in such courts in any such
matters, and agrees that New York is the most convenient forum for litigation in
any suit, action or legal proceeding. The Payor agrees that a final judgment in
any such action or proceeding may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.
15. Governing Law; Consent to Jurisdiction; Venue Waiver; Waiver of
Jury Trial. The validity, interpretation and effect of this Agreement shall be
governed by the laws of the State of New York applicable to contracts entered
into and to be performed entirely within such state. The Payor hereby consents
to the nonexclusive jurisdiction of all courts in said State and hereby waives
all right to trial by jury in any action, suit or
4
proceeding brought to enforce or defend any rights or remedies under this
Agreement.
16. Confessed Judgment. Upon the occurrence of an Event of Default
hereunder, the Payor hereby authorizes any attorney designated by the Payee or
any clerk of any court of record to appear for the Payor in any court of record
and confess judgment against the Payor, without prior hearing, in favor of the
Payee for, and in an amount equal to, the full amount then due and payable by
the Payor hereunder, all other amounts then due and payable by the Payor to the
Payee under the provisions of this Note, costs of suit and attorneys' fees of
15% of the amount of such obligations. In connection therewith, the Payor hereby
releases, to the extent permitted by applicable laws, all errors and all rights
of exemption, appeal, stay of execution, inquisition, and other rights to which
the Payor may otherwise be entitled under the applicable laws now in force and
which may hereafter be enacted, including, without limitation, those of the
United States of America. The authority and power to appear for and enter
judgment against the Payor shall not be exhausted by one or more exercises
thereof or by any imperfect exercise thereof and shall not be extinguished by
any judgment entered pursuant thereto. Such authority may be exercised on one or
more occasions or from time to time in the same or different jurisdictions as
often as the Payee shall deem necessary and desirable, for all of which this
Note shall be sufficient warrant.
17. Guaranty. RSL Communications, Ltd., a Bermuda corporation,
successor in interest to RSL Communications Inc., a British Virgin Islands
corporation, irrevocably and unconditionally guarantees the timely and complete
fulfillment of the Payor's obligations hereunder.
IN WITNESS WHEREOF, the Payor has executed this Note on the date first
above written.
RSL COMMUNICATIONS PLC
By:_____________________________
Name:
Title:
RSL COMMUNICATIONS, LTD.
By:______________________________
Name:
Title:
5
EXHIBIT A
STOCK PLEDGE AND SECURITY AGREEMENT
STOCK PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated as of
September 9, 1996, by and between RSL COMMUNICATIONS PLC, a United Kingdom
corporation (the "Debtor") with offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ the ("Secured Party") having an address
at ▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.L.C. ("Security Agent") with offices at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, the Secured Party and the Debtor have entered into a stock
purchase agreement (the "Purchase Agreement"), dated July 3, 1996, pursuant to
which the Secured Party agreed to sell to the Debtor and the Debtor agreed to
purchase from the Secured Party up to 106,985 shares of the common stock of
International Telecommunications Group, Ltd. ("ITG") owned by the Secured Party;
WHEREAS, as provided in the Purchase Agreement, the Debtor will issue
a Secured Promissory Note (the "Note") in the amount of $7,500,000 to the
Secured Party;
WHEREAS, the Debtor has agreed to execute this instrument as security
for its performance and payment under the Note.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto, intending to be legally bound, do hereby
agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
"Event of Default" shall mean the occurrence or existence of any Event
of Default under the Note.
"Obligations" shall mean all now existing and hereafter arising
indebtedness, obligations and/or liabilities of the Debtor to the Secured Party
under the Note, including all principal amount thereof and interest thereon,
this Agreement or the Purchase Agreement.
"Shares" shall mean 80,238.75 shares of the common stock of
International Telecommunications Group, Ltd., par value $0.01 per share
constituting the portion of shares deemed to be purchased by Debtor from Secured
Party by Notes pursuant to the Purchase Agreement, together with all
certificates, options, rights, dividends, cash or other distributions issued as
an addition to, in substitution or exchange for, or on account of, any such
Shares and any and all documents and agreements pertaining thereto, and all
proceeds of any of the foregoing.
ARTICLE 2
SECURITY AND PLEDGE
2.1 As security for the prompt and full satisfaction of all terms,
conditions, covenants, recitals, stipulations and agreements contained in the
Obligations, Debtor hereby pledges and assigns the Shares to Secured Party and
grants Secured Party a security interest therein. Upon an Event of Default,
Secured Party is entitled to the use and possession of the Shares to the full
extent necessary to protect its lien hereunder.
2.2 Debtor shall deliver, upon the execution of this Agreement,
certificate(s) representing 80,238.75 Shares, endorsed in blank or with
appropriate stock powers duly executed in blank, to be held by ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, P.L.C., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq., as Security Agent, subject to the terms hereof.
2.3 Simultaneously with the delivery of the Shares pursuant to this
Agreement, Debtor shall record the pledge of the Shares to Secured Party on
ITG's corporate records and provide Secured Party with evidence of the same.
2.4 Upon any Event of Default, Secured Party shall receive in
connection with any of the Shares, any:
(a) stock certificate, including, but without limitation, any
certificate representing a stock dividend or in connection with any increase or
reduction of capital, reclassification, merger, consolidation, or sale of
assets, combination of shares or stock splits;
(b) option, warrant, or right, whether as an addition to or in
substitution or in exchange for any of the Shares, or otherwise; and
(c) dividend or distribution payable in property (i.e., other
than cash), including securities issued by any party other than ITG and received
by the Debtor prior to an Event of
2
Default; then, and in such event, the Debtor shall accept the same as the
Secured Party's agent, in trust for the Secured Party, and shall deliver them
forthwith to the Security Agent in the exact form received with, as applicable,
its endorsements when necessary, or appropriate stock powers duly executed in
blank, to be held by the Security Agent, subject to the terms hereof, as part of
the Shares.
2.5 Unless an Event of Default shall have occurred, the Debtor shall
be entitled to vote the Shares.
2.6 Any and all cash dividends and other distributions by ITG to the
Debtor on the Shares shall be delivered to the Secured Party as additional
security hereunder, or applied toward the satisfaction of the Obligations, at
the Secured Party's sole option.
2.7 At each Installment Date (as defined in the Note) at which
principal and interest is timely paid to the Secured Party pursuant to the terms
of the Note and as to which Debtor has notified the Security Agent and the
Secured Party, one-third of the Shares shall be released from the pledge
hereunder and shall then be released from any restrictions on transfer contained
in the Note and shall be promptly delivered to Debtor by the Security Agent.
ARTICLE 3
PROXY AND EVENTS OF DEFAULT
3.1 Proxy. The Debtor shall, concurrently with the execution hereof
(and upon its subsequent acquisition of any additional Shares), execute and
deliver to Secured Party a proxy in the form of Exhibit A hereto designating the
Secured Party as its proxy and attorney-in-fact with full authority to vote all
of the Shares of the Debtor at any annual or special meeting of the Stockholders
of ITG in accordance with the terms of said Proxy upon occurrence of an Event of
Default.
3.2 The term "Event of Default", as used in this Agreement, shall mean
the occurrence or happening, at any time and from time to time, of any one or
more of the following:
(a) An Event of Default shall occur and be continuing under the
Note or this Agreement; or
(b) Nonperformance by the Debtor of any of the terms or
conditions of the Purchase Agreement, Note or this Agreement.
3
ARTICLE 4
RIGHTS AND REMEDIES
4.1 Acceleration of Obligations. Upon the occurrence of an Event of
Default, all or any portion of the Obligations shall, at the option of the
Secured Party and without notice, demand or legal process, become immediately
due and payable.
4.2 Rights Under Uniform Commercial Code. In addition to all of its
other rights and remedies under this Agreement, the Note and any other agreement
with the Debtor, the Secured Party shall have all of the rights and remedies of
a secured party under the U.C.C. of the State of New York and of any state in
which Shares are located from time to time and shall comply with all procedures
thereunder for disposition and sale of the Shares.
4.3 Disposition of Shares. (a) Upon the occurrence of an Event of
Default, the Secured Party shall have the right to require the Security Agent to
sell or otherwise dispose of all or any of the Shares. Such sales may be
adjourned and continued from time to time, with or without notice. The Security
Agent shall have the right to conduct such sales. To enable the Security Agent
to effect any such sale, assignment and/or transfer and to take any action and
to execute any instrument which Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, the Debtor hereby makes, constitutes
and appoints the Security Agent as its true and lawful attorney, in its name,
place and stead, and for its account and risk, to make, execute and deliver any
and all assignments or other instruments which the Security Agent may deem
necessary or proper to effectuate the authority hereby conferred by signing the
Debtor's name only or by signing the same as its attorney-in-fact, as may be
deemed by the Security Agent to be necessary or proper in connection with any
sale, assignment or transfer of all or any part of the Shares. The foregoing
power of attorney is coupled with an interest and shall be a continuing one and
irrevocable so long as any portion of the Obligations remains unpaid in whole or
in part.
(b) The Secured Party may purchase all or any part of the Shares
at public sale or, if permitted by law, private sale, subject to appropriate
U.C.C. rules, and in lieu of actual payment of such purchase price, may set off
the amount of such price against the Obligations. Except as otherwise provided
by law, the proceeds realized from the sale of any of the Shares may be applied
by the Secured Party first to the reasonable costs, expenses and attorneys' fees
and expenses incurred by the Secured Party for collection and for sale and
delivery of the Shares, and then to any of the Obligations in such order and
manner as the Secured Party, in its sole discretion, deems advisable. If any
4
deficiency shall arise, the Debtor shall remain liable to the Secured Party
therefor.
4.4 The proceeds of any such disposition or other action by the
Secured Party shall be applied as follows:
(a) first, to the costs and expenses incurred in connection
therewith or incidental thereto or to the care or safekeeping of any of the
Shares or in any way relating to the rights of the Secured Party hereunder,
including reasonable attorneys' fees and legal expenses;
(b) second, to the satisfaction of the Obligations;
(c) third, to the payment of any other amounts required by
applicable law; and
(d) fourth, to the Debtor to the extent of any surplus proceeds.
4.5 Remedies Cumulative. All rights and remedies of the Secured Party
arising under this Agreement, the Note or any other agreement with the Debtor or
by operation of law shall be cumulative and non-exclusive, to the fullest extent
permitted by law.
4.6 No Forfeiture. The Secured Party may at its sole option incur
reasonable expenses including attorneys' fees to protect his interest in the
Shares and the Debtor shall immediately reimburse the Secured Party for any such
fees and expenses.
4.7 Share Owner Rights. Upon the occurrence of an Event of Default,
immediately and without further notice, the Secured Party or its nominee shall
have, with respect to the Shares, all corporate rights, privileges, options or
other rights pertaining thereto as if it were the absolute owner thereof,
including, without limitation, the right to vote the Shares at any annual or
special meeting of the Stockholders of ITG and to give consents, waivers and
ratifications with respect thereto, to sell, redeem or exchange any or all of
the Shares upon the merger, consolidation, reorganization, recapitalization or
other readjustment of the issuer thereof, or upon the exercise by such issuer of
any right, pledge, or option pertaining to any of the Shares, and, in connection
therewith, to deliver any of the Shares to any committee, depository, transfer
agent, registrar or other designated agency upon such terms and conditions as it
may determine, all without liability except to account for property actually
received by it. The Secured Party shall have no duty to
5
exercise any of the aforesaid rights, privileges or options and shall not be
responsible for any failure to do so or delay in so doing.
ARTICLE 5
Representations and Warranties of Debtor
5.1 Power and Authority. Debtor has, and has duly exercised, all
requisite corporate power and authority to enter into this Agreement, to pledge
the Shares for the purposes described in Article 2 hereof, to grant the proxy
for the voting of the Shares as provided in Article 3 hereof and otherwise to
carry out the transactions contemplated by this Agreement.
5.2 Owner of Shares. Debtor is the legal and beneficial owner of the
Shares.
5.3 Valid and Perfected Security Interest. The pledge of the Shares
pursuant to this Agreement creates a valid security interest in the Shares as
security for the prompt and full satisfaction of all terms, conditions,
covenants, recitals, stipulations and agreements contained in the Obligations
and the Secured Party shall, upon delivery of the Shares to the Security Agent,
as agent for the Secured Party, have a perfected first priority security
interest in the Shares.
5.4 No Authorization, Consent. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required either: (i) for the pledge by the Debtor of the
Shares pursuant to this Agreement or for the execution, delivery or performance
of this Agreement by the Debtor; or (ii) for the exercise by the Secured Party
of the voting or other rights provided for in this Agreement or the remedies in
respect of the Shares pursuant to this Agreement (except as may be required in
connection with such disposition by laws affecting the offering and sale of
securities generally).
5.5 Valid and Binding Agreement. This Agreement constitutes a valid
and binding obligation of the Debtor and is enforceable in accordance with its
terms.
5.6 The Shares. The Shares, except for the lien granted hereunder to
the Secured Party, are owned by the Debtor free of any pledge, mortgage,
hypothecation, lien, charge, encumbrance or security interest in such shares or
the proceeds thereof.
6
ARTICLE 6
THE SECURED PARTY'S EXPENSES AND ATTORNEYS' FEES
6.1 The Debtor's Liability for the Secured Party's Expenses. The
Debtor shall be liable to the Secured Party for any and all reasonable sums,
costs and expenses which the Secured Party may pay or incur pursuant to the
provisions of this Agreement or the Note or in defending, protecting or
enforcing the security interest granted herein or in enforcing payment of the
Ob1igations or otherwise in connection with the provisions hereof.
ARTICLE 7
SECURITY AGENT
7.1 Duties, Reliance. The Security Agent shall have no duties or
obligations other than those expressly imposed on it herein. In the event that
any of the terms and provisions of any other agreement (excluding any amendment
to this Agreement) between or among any of the parties hereto conflict, or are
inconsistent, with any of the terms or provisions of this Agreement, the terms
and provisions of this Agreement shall govern and control in all respects. The
Security Agent may rely upon any paper or other document which may be submitted
to it in connection with its duties hereunder and which it believes to be
genuine and to have been signed or presented by the proper party or parties and
shall have no liability or responsibility with respect to the form, execution or
validity thereof. The Security Agent shall not be liable for any act which it
may do or omit to do, except in the case of its own bad faith or gross
negligence.
7.2 Resignation. The Security Agent may resign as security agent at
any time upon ten days' notice to the other parties hereto. In the case of the
Security Agent's resignation, its only duty shall be to hold the Shares for a
period of 15 days after the effective date of such resignation, at which time
(a) if a successor security agent shall have been appointed and written notice
thereof (including the name and address of such successor security agent) shall
have been given to the resigning Security Agent by the other parties hereto and
such successor security agent, then the resigning Security Agent shall deliver
to the successor security agent the Shares or (b) if the resigning Security
Agent shall not have received written notice signed by the other parties hereto
and a successor security agent, then the resigning Security Agent shall promptly
deliver the Shares to a successor security agent selected by the Security Agent
in its reasonable discretion exercised in good faith; whereupon, in either case,
the Security Agent shall be relieved of all further obligations and released
from all liability under
7
this Agreement. Without limiting the provisions of this Section 7.2, the
resigning Security Agent shall be entitled to be reimbursed by the other parties
hereto for any expenses incurred in connection with its resignation or transfer
of the Shares to a successor security agent.
7.3 Indemnification. The Debtor and the Secured Part agree, jointly
and severally, to defend, indemnify and hold harmless the Security Agent from
and against any and all taxes, expenses (including without limitation,
reasonable attorney's fees), assessments, liabilities, claims, damages, actions,
suits, proceedings or other charges incurred by or assessed against the Security
Agent in the performance of the Security Agent's duties hereunder, except as a
result of the Security Agent's own bad faith or gross negligence. The Security
Agent will send notice to each of the Secured Party and the Debtor within a
reasonable time after any issue of indemnification arises. The agreement in this
paragraph shall survive any termination of the Security Agent's duties
hereunder.
7.4 Arbitration. Any dispute between the parties with respect to this
Agreement or any of the terms included therein and including the validity,
interpretation, breach, and remedies for breach, and the enforcement of this
Agreement, shall be resolved by an arbitrator in accordance with the following
provisions. The arbitration shall be before a single arbitrator (the
"Arbitrator") appointed upon the mutual agreement of the parties; provided,
however, that in the event the parties cannot reach such agreement, each of the
parties shall appoint an arbitrator and such arbitrators shall select the
Arbitrator. The Arbitrator will be bound by the substantive law of the State of
New York but will not be bound by the laws of evidence and procedure customary
in courts of law. The arbitration shall take place in New York. The execution of
this Agreement shall constitute an execution of an arbitration agreement as
well.
ARTICLE 8
MISCELLANEOUS
8.1 Waivers. Any failure or delay by the Secured Party to require
strict performance by the Debtor of any of the provisions, warranties, terms or
conditions contained herein or in the Note shall not affect the Secured Party's
right to demand strict compliance therewith and performance thereof, and any
waiver of any default shall not waive or affect any other default, whether prior
or subsequent thereto, and whether of the same or of a different type. None of
the warranties, conditions, provisions and terms contained herein or in any
other agreement, document or instrument shall be deemed to have been waived by
any
8
act or knowledge of the Secured Party, its agents, officers, stockholders or
employees, but only by an instrument in writing, signed by an officer of the
Secured Party and directed to the Debtor, specifying such waiver.
8.2 Notices.
(i) Any and all notices or other communications provided for
herein shall be in writing and hand delivered against receipted copy; mailed by
registered or certified mail, postage prepaid, return receipt requested;
telecopied (with hard copy sent by United States mail within one (1) business
day after the facsimile notice is transmitted) ; or delivered by Fed Ex or other
similar overnight courier, to the following addresses:
(a) Any Notice to the Debtor shall be addressed to such
party at its address hereinabove set forth,
with a copy to:
Rosenman & Colin LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
(b) Any Notice to the Secured Party shall be addressed to
such party at its address hereinabove set forth,
with a copy to:
Galland, Kharasch, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
P.C.
Canal Square
▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(c) Any Notice to the Security Agent shall be addressed to
such party at its address hereinabove set forth.
(ii) or to such other place as the parties may designate in
writing. If mailed as aforesaid, notice shall be deemed given three (3) business
days after being deposited in the United States mail; if hand delivered or
telecopied, notice shall
9
be deemed given when delivered or telecopied on a business day and such hand
delivery or telecopy is received before 5:00 p.m. by the addressee thereof;
otherwise, such notice by hand deliver or telecopy shall be deemed given on the
next succeeding business day; and if sent by overnight courier, notice shall be
deemed given on the next business day after being deposited with he overnight
courier service.
8.3 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in a manner so as to be effective and valid under
applicable law. If any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such provision and the remaining provisions of
this Agreement shall remain unaffected and in full force and effect.
8.4 Successors and Assigns. This Agreement shall be binding upon and
for the benefit of the parties hereto and their respective legal
representatives, successors and assigns.
8.5 Further Assurance. The Debtor shall provide the Secured Party with
all such documentation and do any such act in order to perfect the Secured
Party's security interest in the Shares.
8.6 Modifications. Any provision of this Agreement may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by
the Debtor and the Secured Party.
8.7 Governing Law. The validity, interpretation and effect of this
Agreement shall be governed by the laws of the State of New York applicable to
contracts entered into and to be performed entirely within such state.
8.8 Articles and Section Titles. The titles of articles and sections
contained in this Agreement are merely for convenience and shall be without
substantive meaning or content.
8.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered an
10
original but all of which shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
RSL COMMUNICATIONS PLC
By_________________________________
Name:
Title:
___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.L.C.
By:________________________________
As Security Agent
11
EXHIBIT A
INTERNATIONAL TELECOMMUNICATIONS GROUP, LTD.
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby
constitute and appoint ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), with full power of
substitution, as the undersigned's attorney-in-fact and proxy and in the
undersigned's name, place and stead, to vote at any regular, annual, or special
meeting of the stockholders INTERNATIONAL TELECOMMUNICATIONS GROUP, LTD., a
Delaware corporation (the "Company"), held during the term of that certain Stock
Pledge and Security Agreement (the "Agreement") dated the 9th day of September,
1996, between the undersigned and ▇▇▇▇▇▇, that number of shares of common stock
of the Company as set forth opposite the undersigned's name below, with all the
powers the undersigned would possess if personally present at such meeting.
This Proxy shall be effective only upon the occurrence of an Event of
Default as defined in the Agreement.
The undersigned hereby states and acknowledges that this Proxy is
coupled with an interest, and was granted for the consideration stated in the
Agreement and cannot be lawfully revoked or limited in any respect whatsoever
(including the death, bankruptcy or adjudication of incompetency or insanity of
either of the undersigned), except as provided in the Agreement. This Proxy
shall be binding upon any transferee or assignee of any stock of the Company
standing in the name of the undersigned at any time prior to the expiration date
of this Proxy and constituting "Shares" as defined in the Agreement; and the
sale, assignment, pledge, transfer or other disposition of such stock standing
in the name of the undersigned shall not revoke or in any way limit the
authority herein granted to said attorney and proxy, except as otherwise
expressly provided in the Agreement.
The undersigned hereby revokes all proxies heretofore granted by it
with respect to any and all Shares (as defined in the Agreement) owned by it.
The undersigned hereby ratifies and confirms all that said attorney
and proxy or its substitute or substitutes may lawfully do or cause to be done
by virtue hereof and in accordance with the provisions of the Agreement.
By accepting and acting under this Proxy, the said proxy agrees to be
bound by and to perform all the provisions of the
12
Agreement with respect to the performance of his functions and duties as proxy
hereunder.
Dated: 9th day of September, 1996
No. of Shares: 80,238.75 or such lesser amount as is provided in accordance with
Section 2.7 of the Agreement.
RSL COMMUNICATIONS PLC
By:_______________________________
Name:
Title:
13
EXHIBIT B
NEW SHAREHOLDERS AGREEMENT
THIS NEW SHAREHOLDERS AGREEMENT (this "Agreement"), dated September 9,
1996, is made by and among ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), residing at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
both residing at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "▇▇▇▇▇▇
Daughters"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. ("▇▇▇▇▇▇▇"), residing at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, RSL COMMUNICATIONS, LTD., a Bermuda corporation, as successor
in interest to RSL Communications Inc. ("Parent") , and RSL Communications PLC,
a United Kingdom corporation ("PLC") (Parent and PLC are collectively referred
to herein as "RSL"), with offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ (individually a "Shareholder" and collectively the "Shareholders")
and INTERNATIONAL TELECOMMUNICATIONS GROUP, LTD. ("ITG"), a Delaware corporation
with offices at ▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇.
W I T N E S S E T H:
WHEREAS, ITG, the Shareholders (other than RSL and the ▇▇▇▇▇▇
Daughters) and Incom (UK) Ltd. ("Incom") entered into a shareholders' agreement,
dated the first day of September, 1994 (the "Shareholders' Agreement") , as
amended by the Amendment to Shareholders' Agreement dated as of March 10, 1995
(the "First Amendment"), and the Shareholders (other than the ▇▇▇▇▇▇ Daughters)
and ITG entered into an Ancillary Shareholders' Agreement dated September 22,
1995 (the "Ancillary Agreement"), with respect to, among other things, the
transfer or other disposition of the authorized and outstanding stock of ITG
owned by the Shareholders and Incom;
WHEREAS, ▇▇▇▇▇▇ has, subject to Incom's exercise of its right of first
refusal pursuant to the Shareholders' Agreement, agreed to sell 106,985 shares
of ITG's common stock owned by him to RSL; and
WHEREAS, the parties hereto wish, as between and among them, to
terminate the Shareholders' Agreement, First Amendment and Ancillary Agreement
and enter into this Agreement, providing, among other things, for the granting
of certain exchange and other rights to ▇▇▇▇▇▇.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
1. Termination of Shareholders' Agreement. First Amendment and
Ancillary Agreement. Except with respect to any rights Incom may have pursuant
to (i) the rights of first refusal under Section I of the Shareholders'
Agreement in the event of future sales by the Shareholders (other than shares of
ITG capital stock held by RSL, which are not subject to restrictions on
transfer) of ITG capital stock, (ii) its "tag along rights" pursuant to Section
5 of the First Amendment, and except only as to the extent to which RSL's
agreements contained in Sections 2 and 5 of the First Amendment may benefit
Incom, as between and among themselves, the Shareholders hereby repeal,
terminate and replace with this Agreement, the Shareholders' Agreement, the
First Amendment and the Ancillary Agreement and the same shall have no force and
effect as between and among ITG and the Shareholders. In addition, the
Shareholders hereby waive any and all future preemptive rights which may
otherwise be granted to any Shareholders pursuant to Section IX of the
Shareholders' Agreement. The Shareholders hereby agree and confirm that that
certain New Shareholders Agreement, dated July 1, 1996, attached as Exhibit B to
that certain Promissory Note in the principal amount of $5,000,000 made by ITG
in favor of RSL Communications PLC (as successor in interest to RSL
Communications Limited), dated July 1, 1996, is ab initio, of no force and
effect.
2. Composition of the Board of Directors and Abolishment of
Committees. Pursuant to a letter to ▇▇▇▇▇▇ sent by ▇▇▇ Lior, the Managing
Director of Incom, dated June 16, 1995 (the "Incom Letter"), Incom relinquished
its rights to elect two (2) members to the Board of Directors of ITG and
provided that such positions on the Board of Directors be eliminated unless the
majority of the Board of Directors decided otherwise. The Board of Directors has
not decided otherwise and, therefore, the two (2) Board member positions
entitled to be elected by Incom were eliminated. With such elimination of Board
member positions, and pursuant to the Shareholders' Agreement as amended by the
First Amendment, the Board of Directors is presently to be comprised of nine (9)
members, six entitled to be elected by ▇▇▇▇▇▇ ("▇▇▇▇▇▇ Directors") and three (3)
entitled to be elected by RSL (the "RSL Directors"). The parties hereto agree
that of the ▇▇▇▇▇▇ Directors, ▇▇▇▇▇▇ shall nominate and elect five (5) nominees
designated by RSL and ▇▇▇▇▇▇ shall nominate and elect the sixth Board member
that ▇▇▇▇▇▇ is entitled to appoint pursuant to the Shareholders' Agreement as
amended by the First Amendment. The parties hereto, therefore, agree to vote all
their shares of capital stock of ITG for the election of a Board of Directors
consisting of nine (9) persons, of whom one person shall be nominated or
designated by Piluso and eight (8) persons shall be nominated or designated by
RSL. Furthermore, the parties acknowledge that pursuant to the Incom Letter,
Incom relinquished its rights to elect one (1) member to each of the committees
described in Paragraph 3 of the First Amendment and provided that such positions
be eliminated unless the majority of the Board of Directors decided otherwise.
The Board of Directors has not
2
decided otherwise, and the Shareholders agree that they shall not form, or cause
to be formed, either of the committees discussed in such paragraph.
3. ▇▇▇▇▇▇, Piluso Daughters and Rebetti Anti-Dilution Rights. (a) In
the event (i) RSL or its Affiliates purchase additional shares of capital stock
of ITG directly from ITG or are issued additional shares of capital stock of ITG
directly by ITG and/or (ii) Incom or its Affiliates are issued additional shares
of capital stock as a result of Incom's anti-dilution rights triggered by such
purchase by or issuance to RSL or its Affiliates, then the Shareholders hereby
agree to amend the Certificate of Incorporation of ITG to provide for a class of
convertible common stock and to cause ITG to issue to the ▇▇▇▇▇▇ Daughters and
▇▇▇▇▇▇, in the aggregate, on a one-for-one exchange basis, convertible common
stock of ITG, convertible at the option of the holder into such number of shares
of common stock of ITG as shall, at all times until an initial public offering
of RSL (the "RSL IPO") shall occur, be equal to the following: 0.0532 times the
sum of the additional number of shares of capital stock of ITG so purchased by
or issued to RSL or its Affiliates and any additional shares of such capital
stock issued to Incom or its Affiliates as a result of such purchase or
issuance, such that the ▇▇▇▇▇▇ Daughters and ▇▇▇▇▇▇, in the aggregate, together
maintain a five percent (5%) interest in ITG (not taking into account the 15,619
shares of ITG (the "Other ▇▇▇▇▇▇ Shares") to be transferred by ▇▇▇▇▇▇ to RSL
pursuant to that certain Agreement and Plan of Reorganization, dated as of
September 9, 1996 among PLC, ▇▇▇▇▇▇ and Parent) after giving effect to any
shares so purchased or issued as provided in clauses (i) and (ii) above and
paragraph (b) below. Notwithstanding that the Incom Issuance (as defined below)
would not give rise to the rights set forth in the preceding sentence, the
Shareholders further agree that, immediately following the issuance of 3,954
non-voting shares of ITG to Incom (the "Incom Issuance") pursuant to that
certain Asset Purchase Agreement, dated as of August 12, 1996, between RSL COM
UK Limited and Incom, the Shareholders will cause ITG to issue to the ▇▇▇▇▇▇
Daughters and ▇▇▇▇▇▇, in the aggregate, such number of shares of common stock of
ITG as shall cause ▇▇▇▇▇▇ and the Piluso Daughters together to own an aggregate
five percent of the capital stock of ITG at such time (not taking into account
the Other ▇▇▇▇▇▇ Shares).
(b) In the event (i) RSL or its Affiliates purchase additional
shares of capital stock of ITG directly from ITG or are issued additional shares
of capital stock of ITG directly by ITG and/or (ii) Incom or its Affiliates are
issued additional shares of capital stock as a result of Incom's anti-dilution
rights triggered by such purchase by or issuance to RSL or its Affiliates, then
the Shareholders hereby agree to amend the Certificate of Incorporation of ITG
to provide for a class of convertible common stock and to cause ITG to issue to
Rebetti, on a one-for-one exchange basis, convertible common stock of ITG,
3
convertible at the option of the holder into such number of shares of common
stock of ITG as shall, at all times until an RSL IPO shall occur, be equal to
the following: 0.01063 times the sum of the additional number of shares of
capital stock of ITG so purchased by or issued to RSL or its Affiliates and any
additional shares of such capital stock issued to Incom or its Affiliates as a
result of such issuance or purchase, such that Rebetti maintains a one percent
(1%) interest in ITG after giving effect to any shares so purchased or issued as
provided in clauses (i) and (ii) above and paragraph (a) above. Notwithstanding
that the Incom Issuance would not give rise to the rights set forth in the
preceding sentence, the Shareholders further agree that, immediately following
the Incom Issuance, the Shareholders will cause ITG to issue to Rebetti such
number of shares of common stock of ITG as shall cause Rebetti to own an
aggregate one percent of the capital stock of ITG at such time.
(c) For purposes of this Section 3, "Affiliate" shall mean with
respect to any person, any other person, directly or indirectly controlling, or
controlled by, or under common control with, such person.
4. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Exchange Rights. On the closing date of the RSL
IPO, RSL will grant to each of ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Daughters and Rebetti the
right to exchange all shares of common stock of ITG which ▇▇▇▇▇▇, the ▇▇▇▇▇▇
Daughters or Rebetti, as the case may be, then own for shares of RSL common
stock equal to the fair market value of ▇▇▇▇▇▇'▇, the ▇▇▇▇▇▇ Daughters' and/or
Rebetti's ITG common stock on that date. For purposes of this Section 4, shares
of RSL common stock shall be valued at the RSL IPO price to public per share and
shares of ITG common stock owned by ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Daughters and/or Rebetti
shall be valued in writing by the Managing Underwriter of the RSL IPO using its
best professional judgment as to the fair market value of such shares. The
parties agree to cooperate in good faith to take such actions as may be
reasonable to effect any exchange under this Section 4 on a tax-free basis to
▇▇▇▇▇▇, the ▇▇▇▇▇▇ Daughters and/or Rebetti as may be permitted by applicable
law.
5. [intentionally omitted]
6. Tap-Along and Drag-Along Rights. (a) RSL agrees that it will not
sell or transfer its shares of ITG or any other securities of ITG that may now
or hereafter be held or owned by it to a third party other than an Affiliate who
agrees in writing to be bound by the terms hereof unless RSL first notifies
▇▇▇▇▇▇, the ▇▇▇▇▇▇ Daughters and Rebetti in writing (the "Notice") of its
intention to sell its ITG shares, as well as the proposed sale price per share.
▇▇▇▇▇▇, the ▇▇▇▇▇▇ Daughters and Rebetti shall each have the right, within ten
(10) days of the receipt of the Notice, to elect to require the third party to
purchase from them at such sale price per share specified in the Notice the same
proportion of ITG shares held by each of them as the proportion of ITG shares
owned by RSL that are proposed to be sold to the third party. The closing of
such sale shall occur at the same time as the closing of RSL's sale of shares of
ITG.
4
(b) RSL further agrees that in the event substantially all of its
assets are purchased by a third party and such assets purchased include RSL's
shares of ITG, or in the event all of RSL's stock is purchased by a third party,
RSL will ensure that such third party offers to purchase shares of ITG then held
by ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Daughters and/or Rebetti at the "Purchase Price per Share"
(defined in (c) below). Such Purchase Price per Share shall be payable by the
third party in the same form of consideration as is paid to RSL. The closing of
such sale shall occur at the same time as the closing of the purchase of
substantially all the assets of RSL.
(c) The purchase price per share of ITG stock shall be based on
an appraisal, made by a qualified independent appraiser mutually selected by
holders of the Series A Convertible Preferred Stock and ▇▇▇▇▇▇, of all of the
assets or stock sold by RSL to determine the relative value of the ITG shares
included in such sale, it being understood that such value will constitute a
fraction of the total purchase price paid to RSL. In the event such parties are
unable to mutually agree on an appraiser, each such party shall select one (1)
appraiser, and the two (2) appraisers so selected shall appoint a third
appraiser whose appraisal shall govern the determination of the Purchase Price
per Share. The appraised value of ITG shall be divided by the total number of
shares of ITG stock then outstanding to determine the per share purchase price
of the shares of ITG stock to be purchased by the third party (the "Purchase
Price per Share").
(d) ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Daughters and Rebetti agree that in the
event RSL receives an offer to purchase any of its shares of capital stock of
ITG from a third party other than an Affiliate of RSL (the "Third Party Offer"),
which Third Party Offer is accepted by RSL, they will, if requested by such
third party, sell to such third party the same proportion of the shares of
capital stock of ITG owned by each of them and so offered to be purchased as the
proportion of shares of capital stock of ITG owned by RSL that are proposed to
be purchased, at the same time and on the same terms and conditions as are
contained in the Third Party Offer.
(e) For the purposes of this Section 6, "Affiliate" shall mean
with respect to any person, any other person, directly or indirectly
controlling, or controlled by, or under common control with, such person.
7. Entire Agreement; Conflict. This Agreement embodies the entire
agreement of the Stockholders with respect to their capital stock of ITG and the
subject matter hereof, and supersedes, as between and among the Stockholders,
and as between the Stockholders and ITG, any and all other or prior agreements
or arrangements, whether written or oral, which the Stockholders may have had
with respect to the subject matter hereof including,
5
without limitation, the Shareholders' Agreement, the First Amendment and the
Ancillary Agreement, which agreements shall be null and void and of no further
force and effect as of the date hereof as between and among the Stockholders and
as between the Stockholders and ITG. In furtherance of the foregoing and not in
limitation thereof, whenever there shall exist an inconsistency between the
terms of this Agreement and the terms of the Shareholders' Agreement, the First
Amendment or the Ancillary Agreement, the terms of this Agreement shall prevail
and any right given to ▇▇▇▇▇▇ in any of the Shareholders' Agreement, the First
Amendment or the Ancillary Agreement and not expressly set forth herein shall be
deemed terminated upon the execution of this Agreement.
8. Captions. The sections and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning,
interpretation or construction of this Agreement.
9. Counterparts; Severability. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. To the extent any
provision or part of a provision of this Agreement is held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision or part thereof.
10. Successors and Assigns. This Agreement shall be binding on and
inure to the benefit of the parties hereto and their respective legal
representatives, heirs, successors and assigns.
11. Applicable Law. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the laws of
the State of New York without regard to whether New York would be the governing
law under that state's principles regarding choice of law.
12. Arbitration. Any dispute between the parties with respect to this
Agreement or any of the terms included herein and including the validity,
interpretation, breach, and remedies for breach, and the enforcement of this
Agreement, shall be resolved by an arbitrator in accordance with the following
provisions. The arbitration shall be before a single arbitrator (the
"Arbitrator") appointed upon the mutual agreement of the parties; provided,
however, that in the event the parties cannot reach such agreement, each of the
parties shall appoint an arbitrator and such arbitrators shall select the
Arbitrator. The Arbitrator will be bound by the substantive law of the State of
New York but will not be bound by the laws of evidence and procedure customary
in courts of law. The arbitration shall take place in New York. The execution of
this Agreement shall constitute an execution of an arbitration agreement as
well.
6
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
RSL COMMUNICATIONS, LTD.
By:_________________________________
Name:
Title:
INTERNATIONAL TELECOMMUNICATIONS GROUP, LTD.
By:_________________________________
Name:
Title:
RSL COMMUNICATIONS PLC
By:_________________________________
Name:
Title:
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as custodian for
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as custodian for
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
7
EXHIBIT C
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
(As Amended and Restated as of March 10, 1995)
This Second Amendment to Employment Agreement (this "Amendment") is
made this _____ day of ________ , 1996 by and between INTERNATIONAL
TELECOMMUNICATIONS GROUP, LTD., a Delaware corporation (the "Company") with
offices at ▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual residing at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company and the Employee entered into an Employment
Agreement made as of October 25, 1994 and amended and restated as of March 10,
1995 and further amended on September 22, 1995 (the "Employment Agreement") ;
and
WHEREAS, the parties wish to amend certain provisions of the
Employment Agreement as set forth below.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in the Employment Agreement and this Amendment, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Sections I and III of the Employment Agreement are amended by, in
each case, deleting the term "Chief Executive Officer" therein and substituting
therefor the word "President". In addition, there shall be added to the end of
Section I the following phrase (moving the period to the end of such phrase) and
sentence:
", provided that it is understood that Employee shall resign as
President, but shall remain Chairman of the Board, at such time as the
Board of Directors shall appoint a successor President.
Notwithstanding anything else in the Employment Agreement to the
contrary, the duties of the Chairman of the Board shall only be those
specified in detail from time to time by the Board of Directors of the
Company (provided that such responsibilities shall be at least such
that ▇▇▇▇▇▇ shall have opportunities to earn the bonus provided for in
Section 7(ii) of this Second Amendment to Employment Agreement), and
Employee's change in status from Chief Executive Officer to President
to Chairman of the Board (no matter what the duties assigned to him by
the Board of Directors of the Company, consistent with the above
parenthetical phrase) shall not be deemed a diminution in
1
status or responsibilities such as may give rise to a claim for "Good Reason"
under Section VII D. of the Employment Agreement."
2. The first multiple-word parenthetical phrase of subsection E. (7)
of Section VII of the Employment Agreement is amended to read as follows:
"(for so long as ▇▇▇▇▇▇ remains associated with the holders of
Preferred Stock, and the common stock of RSL Communications Inc., or
its successor, RSL Communications Ltd., is not publicly traded)."
3. Section VII E.(l) shall be amended to add a new sentence following
the first sentence thereof as follows:
"If, pursuant to the provisions of Section VII A., Employee shall be
terminated due to the conviction of a felony as finally determined
after all appeals have been exhausted, then, effective as of such
termination, the Company shall have the right to repurchase all of the
Common Stock of the Company owned by Employee and all vested options
owned by Employee at the Fair Market Value (as defined above) for such
Common Stock and/or options in accordance with the provisions of
Section VII.E.6 below, and all unvested options to purchase any
securities of the Company owned by Employee at such time shall
terminate."
4. The fourth and fifth sentences of Section VII E.(2) shall be
deleted and the following shall be substituted in lieu thereof:
"Effective as of such termination, Employee shall have the right to
require the Company to repurchase all stock and vested options owned by
Employee (and all unvested options shall terminate if such unvested
options have not been exercised within 60 days following Employee's
termination) at Fair Market Value (as defined above) in accordance with
the provisions of Section VII.E.6 below.
5. The third and fourth sentences of Section VII E.(3) shall be
deleted and the following shall be substituted in lieu thereof:
"Effective as of such termination, Employee shall have the right to
require the Company to repurchase all stock and vested options owned
by Employee (and all unvested options shall terminate if such unvested
options have not been exercised within 60 days following Employee's
termination) at Fair Market Value (as defined above) in accordance
with the provisions of Section VII.E.6 below.
2
6. The first sentence of Section VII.E.6 shall be amended by adding
the following phrase after the word "repurchase":
", or is required to repurchase pursuant to the terms hereof,"
7. Notwithstanding the provisions of Exhibit A to the Employment
Agreement, on January 15, 1997 and on each January 15 during the term of the
Agreement thereafter, the Company shall pay to Employee the greater of (i) the
amount determined as set forth above on Exhibit A to the Employment Agreement,
or (ii) an amount equal to one percent of the purchase price of any business
entity acquired by the Company in the United States (or outside the United
States if the contact with such business entity was initiated solely by Employee
or if the Board of Directors of the Company had requested that Employee devote
business time thereto) as to which Employee has devoted any business time. The
purchase price for purposes of the prior sentence shall be cash invested and
committed by the Company (e.g., deferred purchase price, earn out, etc.) at the
Closing.
8. Except as specifically amended or modified herein, all of the terms
and conditions of the Employment Agreement shall remain in full force and
effect.
9. The sections and other headings contained in this Amendment are for
reference purposes only and shall not affect the meaning, interpretation or
construction of this Amendment.
10. This Amendment may be executed in multiple counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument. To the extent any provision or part of a provision of
this Amendment is held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision or part thereof.
11. This Amendment shall be binding on and inure to the benefit of the
parties hereto and their respective legal representatives, successors and
assigns and no other person shall have any right, benefit or obligation
hereunder.
12. This Amendment and the legal relations between the parties hereto
shall be governed by and construed in accordance with the laws of the State of
New York without regard to whether New York would be the governing law under
that state's principles regarding choice of law; provided, however, that in the
event of a termination of the Employment Agreement, the parties shall address
any claim that such termination was not valid or permitted by the terms of the
Employment Agreement in accordance with the provisions set forth in Section XIX
of the Employment Agreement entitled "Arbitration".
3
IN WITNESS WHEREOF, the parties have executed and delivered this
Amendment as of the date first above written.
COMPANY:
INTERNATIONAL TELECOMMUNICATIONS GROUP, LTD.
By: ________________________________________
Name:
Title:
EMPLOYEE:
____________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
4
CONSENT
The undersigned, an authorized officer of RSL Communications, Ltd.
("RSL"), as successor in interest to RSL Communications Inc., hereby consents on
behalf of RSL, as holder of all the Series A Convertible Preferred Stock of the
Company, pursuant to the requirements set forth in paragraph 8 of Article FOURTH
of the Company's Certificate of Incorporation, as amended, to the execution of
this Agreement.
RSL COMMUNICATIONS, LTD.
____________________________________________
Name:
Title: