Exhibit 10.51
EXHIBIT C
AMENDMENT TO SHAREHOLDERS' AGREEMENT
THIS AMENDMENT TO SHAREHOLDERS' AGREEMENT (this "Amendment"), dated as of
March 10, 1995, by and among ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), residing at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("Rebetti"),
residing at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, INCOM (UK)
LTD. ("Incom"), a corporation organized under the laws of the United Kingdom
with offices at ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, Great
Britain (individually a "Shareholder" and collectively the "Shareholders") RSL
COMMUNICATIONS, INC. ("RSL"), a Delaware corporation with offices at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and INTERNATIONAL
TELECOMMUNICATIONS GROUP, LTD. ("ITG"), a Delaware corporation with offices at
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (individually a "Party" and
collectively the "Parties").
W I T N E S S E T H:
WHEREAS, the Shareholders entered into a shareholders' agreement, dated
the first day of September, 1994 (the "Shareholders' Agreement"), attached
hereto as Exhibit A, with respect to, among other things, the transfer or other
disposition of the authorized and outstanding stock of ITG owned by the
Shareholders;
WHEREAS, the Shareholders desire that ITG issue and sell to RSL, 66,667
shares of its Series A Convertible Preferred Stock having the rights, privileges
and preferences as stated and qualified in the Amended and Restated Certificate
of Incorporation ("Restated Certificate") of ITG, dated as of March 9, 1995,
plus such additional number of shares of convertible preferred stock as may be
required to be purchased (the "Additional Shares") pursuant to Section 9.11 of
that certain Stock Purchase Agreement, dated as of March 10, 1995, by and
between ITG, International Telecommunications Corporation ("ITC") and RSL (the
"Purchase Agreement") for a minimum purchase price of $3,000,000 as may be
increased, pursuant to said Section 9.11 of the Purchase Agreement, to a maximum
of $4,750,000, all in accordance with the terms and provisions of the Purchase
Agreement; and
WHEREAS, the Shareholders desire to amend certain provisions of the
Shareholders' Agreement in the manner hereinafter set forth, and to have RSL
become a party thereto, to be effective upon the closing of the transactions
contemplated by the Purchase Agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in the Shareholders' Agreement, the Purchase Agreement and this
Amendment, the parties hereto, intending to be legally bound, do hereby agree as
follows:
Defined Terms. Terms used herein and not otherwise defined shall have
the meanings ascribed to them in the Shareholders' Agreement.
1. Sale and Purchase ITG Preferred Stock. Each of the Parties hereto
acknowledge and agree that ITG will authorize, issue and sell to RSL 66,667
shares of Series A Convertible Preferred Stock, having the rights, powers and
privileges as stated in the Restated Certificate, plus Additional Shares, if
any, for an aggregate purchase price to be paid by RSL of a minimum of
$3,000,000 as may be increased pursuant to Section 9.11 of the Purchase
Agreement to a maximum of $4,750,000 in accordance with the terms and provisions
of the Purchase Agreement. Each party hereto waives any preemptive rights to
purchase any shares pursuant to Section IX "Preemptive Rights" of the
Shareholders' Agreement with respect to such sale. Exhibit A to the
Shareholder's Agreement is hereby amended and restated in the form of Exhibit B
attached hereto, reflecting the authorized shares of Preferred Stock issued to
RSL.
2. No Restriction on RSL to Transfer Shares. RSL shall not be considered a
"Transferring Shareholder", as defined in the Shareholders' Agreement, and any
restrictions on RSL's ability to transfer any of its shares of Preferred Stock
or, upon conversion its common stock otherwise contained in the Shareholders'
Agreement shall be of no force and effect as to RSL and its transferees, and RSL
and its transferees shall have the ability to freely transfer its shares subject
to the terms of this Amendment; provided, however, that RSL shall not sell its
shares of Preferred Stock to a Competitor unless, having presented the
Competitor's offer to the Board of Directors of ITG for consideration, the Board
has, within 10 business days thereafter, rejected the purchase of all such
shares on the terms of such offer. However, if such offer was not rejected, the
Company shall purchase such shares on the terms of such offer within 30 days of
the Board's action. Sections I, II.B. and III of the Shareholders' Agreement
entitled "Restrictions on Disposition of Authorized and Outstanding Shares;
"Restrictions on Purchaser or Transferee" and "Purchase Price", respectively,
shall not be applicable to any transfer by RSL or any transferees from RSL. RSL
shall, however, be considered an "Other Shareholder" for purposes of such
Sections. The second and third sentences of redesignated Section XIII.B.
(current Section XII) and Section XIII.L. shall not apply to any transfer by RSL
or its transferees.
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3. Composition of the Board of Directors. Section X of the Shareholders'
Agreement entitled "Directors" is amended by deleting the Section in its
entirety and inserting in lieu thereof the following:
"X. DIRECTORS AND COMMITTEES
A. Board of Directors: The Board of Directors of ITG shall consist
of eleven members, six elected by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇")
("Class A Directors"), two elected by Incom (UK) Ltd. ("Incom")
("Class B Directors") and three elected by the holders of Series A
Convertible Preferred Stock ("Class C Directors"). In the event of
(i) a material breach by ITG of any of the covenants or restrictions
in the Purchase Agreement, (ii) a material violation of the terms of
the Series A Convertible Preferred Stock or (iii) the termination of
employment of ▇▇▇▇▇▇ by ITG for Cause or by ▇▇▇▇▇▇ without Good
Reason as defined in the employment agreement made as of October 25,
1994 and as amended and restated as of March 10, 1995, attached
hereto as Exhibit C (the "Employment Agreement"), the holders of the
Series A Convertible Preferred Stock shall be entitled to elect six
of the members of the Board of Directors and ▇▇▇▇▇▇ shall be
entitled to elect three directors. Upon receipt of written notice
given by RSL to ▇▇▇▇▇▇ of the occurrence of events (i), (ii) or
(iii) above, ▇▇▇▇▇▇ shall, after failure to cure (i) and (ii) within
five business days after receipt of the aforesaid notice, cause the
immediate resignation of three directors elected by him in order to
give effect to the provisions of this paragraph. ITG shall not
compensate in such capacities members of the Board of Directors who
are employees or investors, but other members may be compensated.
B. Executive Finance Committee: The Board of Directors of ITG shall
form an Executive Finance Committee. The Executive Finance Committee
shall consist of five members, two elected by the holders of the
Series A Convertible Preferred Stock, two elected by ▇▇▇▇▇▇ and one
elected by Incom. The Executive Finance Committee shall decide all
matters by affirmative vote of at least four of its five members.
This committee's approval shall be required for all contracts or
agreements, other than employment agreements of ITG, having a total
contract price or requiring aggregate payments by ITG in excess of
$50,000 above the budget figure approved by the holders of Preferred
Stock, unless such expenditures have been previously approved by the
Board of Directors.
3
C. Executive Selection Committee: Upon approval by the FCC of the
application of ITC for a transfer of control of ITC to the
shareholders of ITG, the Board of Directors of ITG shall form an
Executive Selection Committee. The Executive Selection Committee
shall consist of three members, one elected by the holders of the
Series A Convertible Preferred Stock, one elected by ▇▇▇▇▇▇ and one
elected by Incom. The Executive Selection Committee shall select a
chief operating officer of International Telecommunications
Corporation ("ITC") a 94% owned subsidiary of ITG, and a chief
financial officer for either ITG or ITC, and the chief executive
officer of ITG when the term of ▇▇▇▇▇▇'▇ current employment contract
has run or ▇▇▇▇▇▇'▇ employment has otherwise been terminated. This
selection requires the consensus of all three committee members,
except that if ▇▇▇▇▇▇ was terminated for Cause or if ▇▇▇▇▇▇ resigns
for other than Good Reason (as defined in the Employment Agreement),
then decisions of the Executive Selection Committee shall be made
solely by the representatives of the holders of the Series A
Convertible Preferred Stock and Incom, acting together.
D. Voting by the Board of Directors: None of the following matters
shall be decided without the affirmative vote of at least one of the
Class C Directors: (i) compensation of ▇▇▇▇▇▇, including any
amendments to the Employment Agreement and any options or other
"perks" for ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or "perks" in excess of
$10,000 per year or options for other ITG officers, (ii) any
amendment to ITG's Restated Certificate or its By-Laws or the
adoption of any Certificate of Designation of any series of
preferred stock and (iii) any action by the Board of Directors
required in connection with (a) the matters requiring the consent of
33-1/3% of the shares of the Series A Convertible Preferred Stock of
ITG, pursuant to the Restated Certificate or (b) the voting of ITG
owned stock in ITC in any ITC matters analogous to (A) the matters
requiring the consent of 33 1/3% of the holders of the shares of the
Series A Convertible Preferred Stock of ITG pursuant to ITG's
Restated Certificate or (B) the matters requiring the affirmative
vote of at least one Class C Director of ITG.
E. Termination: The provisions of subsections A, B, C and D of this
Section X, as they relate to the holders of the Preferred Stock,
shall terminate automatically when such holders of the Preferred
Stock hold less than 10% of ITG's fully diluted equity."
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4. Transfer Restriction. Notwithstanding any provision in the
Shareholders' Agreement to the contrary, ▇▇▇▇▇▇ may not sell, assign, transfer
or otherwise dispose of any shares of common stock other than (i) by will, (ii)
by disposition to members of his immediate family or to trusts of which he or
his counsel, ▇▇▇▇ ▇▇▇▇▇▇▇, is a trustee, provided in each case that (x) such
disposition is made without consideration and (y) the recipient of any such
disposition agrees to be bound by all the terms of this Amended Shareholders'
Agreement or (iii) dispositions to third parties after ▇▇▇▇▇▇ has first offered
in writing such shares for purchase to ITG on the same terms and conditions as
offered to the third party; provided, however, that if ITG rejects such offer,
then ▇▇▇▇▇▇ has offered in writing such shares for purchase to RSL on such terms
and conditions. Such written offers shall provide 30 days for a response. The
provisions of this Section 4 shall terminate automatically when RSL holds less
than 10% of ITG's fully diluted equity.
5. Tag-Along Rights. In the event that ▇▇▇▇▇▇ shall desire to sell any of
his interests in ITG to a third party, RSL shall have the right, at its sole
option, to require the third party to purchase proportionately the same number
of shares of RSL's interest in ITG on the terms substantially identical to those
received by ▇▇▇▇▇▇. In the event that RSL shall sell 25% or more of its equity
ownership of ITG to a third party, ▇▇▇▇▇▇, Incom and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall have
the right, at their sole option, to require the third party to purchase from
them, in the aggregate, a number of shares of ITG's common stock equal to 20% of
the number of shares to be sold by RSL.
6. The following shall be inserted as Section XII to the Shareholders'
Agreement (with the existing Section XII to be redesignated Section XIII):
"XII Noncompetition
For so long as RSL remains a record or beneficial owner of ten
percent (10%) or more of the capital stock of ITG, RSL and any company, a
majority of the equity of which is owned by RSL, will not make a direct
equity investment in a U.S.-headquartered company (i) that owns
international fiber optic communications links (such as indefeasible
rights of user in undersea cables) and switching facilities, (ii) that has
entered into operating agreements with foreign carriers and (iii) the
primary business of which is in direct competition with ITC's
facilities-based carriage of international telecommunications traffic
outbound from the United States (for purposes of this Amendment, a
"Competitor"), unless having presented such investment to the Board of
Directors of ITG for its consideration, the Board of Directors has
rejected such direct equity investment. RSL's obligation under this
Section shall
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terminate when RSL holds less than 10% of ITG's fully diluted equity.
7. Employment Agreement. Section I.G. of the Shareholders' Agreement
entitled "Termination of Employment," shall not apply to ▇▇▇▇▇▇. The conditions
upon which ▇▇▇▇▇▇ may be required to sell his Shares and the terms of such sale
are governed by the Employment Agreement. As to any contradiction in terms or
provisions relating to this subject between the Shareholders' Agreement and the
Employment Agreement, the Employment Agreement shall be controlling.
8. Disputes by Individual Shareholders. Section V.D. of the Shareholders'
Agreement entitled "Disputes By Individual Shareholders," shall not apply to
▇▇▇▇▇▇. Section VII.B. of the Employment Agreement shall govern with regard to
▇▇▇▇▇▇'▇ ability to perform his substantial or material duties. As to any
contradiction in terms or provisions relating to this subject between the
Shareholders' Agreement and the Employment Agreement, the Employment Agreement
shall be controlling.
9. Effective Date. Each of the provisions of this Amendment shall be
effective upon the Closing of the transactions contemplated by the Purchase
Agreement.
10. Effect on the Shareholders Agreement. Except as specifically, amended
or modified herein, all of the terms of the Shareholders Agreement shall remain
unchanged and in full force and effect.
11. Severability. Wherever possible, each provision of this Amendment
shall be interpreted in a manner so as to be effective and valid under
applicable law. If any provision of this Amendment 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 Amendment shall remain unaffected and in full force and effect.
12. Successors and Assigns. This Amendment shall be binding upon and for
the benefit of the parties hereto and their respective legal representatives,
successors and assigns.
13. Governing Law. The validity, interpretation and effect of this
Amendment 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 without
regard to its conflicts of laws principles.
14. Articles and Section Titles. The titles of articles and sections
contained in this Amendment are merely for convenience and shall be without
substantive meaning or content.
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15. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be considered an original but all of which
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
March 10, 1995.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
INCOM (UK) LTD.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
INTERNATIONAL TELECOMMUNICATIONS GROUP,
LTD.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name:
Title:
RSL COMMUNICATIONS, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name:
Title:
7
EXHIBIT A
SHAREHOLDERS' AGREEMENT
8
EXHIBIT A
AGREEMENT
BY AND BETWEEN
---------------------
INTERNATIONAL TELECOMMUNICATIONS
GROUP, LTD.
AND
THE SHAREHOLDERS OF
INTERNATIONAL TELECOMMUNICATIONS
GROUP, LTD.
---------------------
TABLE OF CONTENTS
I. RESTRICTIONS ON DISPOSITION OF AUTHORIZED AND
OUTSTANDING SHARES ............................................... -1-
A. Transfers Subject to Agreement ................................ -1-
B. Legend On Shares .............................................. -2-
C. ITG's First Option ............................................ -2-
D. Shareholder's Second Option ................................... -3-
E. Third Party Offers ............................................ -4-
F. Death or Disqualifying Event .................................. -5-
G. Termination of Employment ..................................... -5-
H. Employee Stock Option Plans ................................. -6-
I. Purchase of Shares by ITG ..................................... -6-
II. RESTRICTIONS ON OPTIONS AND DISPOSITION OF UNAUTHORIZED
SHARES ........................................................... -6-
A. No Restrictions on ITG ........................................ -6-
B. Restrictions on Purchaser or Transferee ....................... -7-
C. Option Agreements ............................................. -7-
III. PURCHASE PRICE -7-
A. General ....................................................... -7-
B. Certificate of Agreed Value ................................... -7-
IV. CLOSINGS ......................................................... -▇-
▇ ▇▇▇▇▇ and Time ................................................ -7-
B. Delivery by Seller ............................................ -8-
C. Resignations By Transferring Shareholder ...................... -8-
D. Deliver by Purchaser .......................................... -9-
V. DEFINITION OF DISQUALIFYING EVENT ................................ -9-
A Individual Shareholder ........................................ -9-
B. Shareholder Other Than an Individual Shareholder .............. -9-
C. Failure to Dispute Notice of Disqualifying Event .............. -10-
D. Disputes By Individual Shareholders ........................... -10-
E. Disputes By Shareholders Other Than Individual Shareholders ... -10-
VI. SPECIFIC PERFORMANCE ............................................. -10-
VII. LIFE INSURANCE ................................................... -10-
VIII. TERMINATION OF AGREEMENT ......................................... -11-
IX. PRE-EMPTIVE RIGHTS ............................................... -11-
X. DIRECTORS ........................................................ -12-
XI. OFFICERS ......................................................... -12-
XII. MISCELLANEOUS .................................................... -12-
A. Notices ....................................................... -12-
B. Binding Effect ................................................ -12-
C. Waiver ........................................................ -13-
D. Enforceability ................................................ -13-
E. Entire Agreement .............................................. -13-
F. Applicable Law ................................................ -13-
G. Attorney's Fees ............................................... -14-
H. Arbitration ................................................... -14-
I. Captions ...................................................... -14-
J. By-Laws to Enforce This Agreement ............................. -14-
K. Certificate of Incorporation to Set Forth Restrictions ........ -14-
L. Surrender of Shares ........................................... -14-
M. Execution of Agreement ........................................ -14-
ii
INTERNATIONAL TELECOMMUNICATIONS GROUP, LTD.
SHAREHOLDER'S AGREEMENT
Agreement made this first day of September, 1994, by and between ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, residing at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, residing at ▇▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; Incom (UK)
Ltd., a United Kingdom corporation with a place of business at ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, Great Britain (individually a
"Shareholder" and collectively the "Shareholders"), and International
Telecommunications Group, Ltd. ("ITG"), a Delaware corporation, having a place
of business at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
WITNESSETH:
WHEREAS, ITG is authorized to issue one million shares of common stock;
and
WHEREAS, the Shareholders own the number of shares of the Common Stock of
ITG set forth opposite their names on Exhibit A annexed hereto, representing in
aggregate 100% of the authorized and outstanding stock of ITG as of the above
date ("Authorized Shares"); and
WHEREAS, the parties desire to enter into a mutual written agreement with
respect to the transfer or other disposition of all the Authorized Shares of ITG
owned by the Shareholders and, except as otherwise provided in this Agreement,
any shares heretofore issued (referred to collectively as "Shares"); and
WHEREAS, the Shareholders and the Board of Directors (the "Board") of ITG
have determined that this Agreement is in the best interest of ITG and the
Shareholders;
NOW THEREFORE, in consideration of the premises and mutual covenants and
obligations hereinafter set forth, the parties hereto agree as follows:
I. RESTRICTIONS ON DISPOSITION OF AUTHORIZED AND OUTSTANDING SHARES
A. Transfers subject to Agreement: No Shareholder may, directly or
indirectly, transfer (as hereinafter defined) all or any of the
Shares, or the certificate or certificates representing same, or any
interest therein, held by such Shareholder or which Shareholder or
Shareholder's legal or personal representatives, successors or
assigns thereof, may at any time hereafter own or be entitled to,
except as hereafter expressly permitted by this Agreement. ITG shall
not transfer on their books any of the Shares, or issue any
certificate on account or in lieu thereof, unless all terms and
conditions of this Agreement have been complied with. The term
"transfer", as herein used, shall not include any bequest to a
relative or assignment to a trust but shall include any other sale,
assignment, gift, mortgage, pledge, hypothecation,
bequest, encumbrance or disposition, or any transfer as a result of
any voluntary or involuntary legal proceeding, execution, sale,
bankruptcy, insolvency, or otherwise, of any of the Shares. Any sale
or transfer of all or any portion of the Shares of a Shareholder
shall be null and void, unless and until all terms and conditions of
this Agreement are first complied with. In case of any violation of
this Agreement by the attempted transfer of Shares without
compliance with the terms hereof, the person or persons for whose
benefit these options are provided shall have the right to compel
the holder or transferee to deliver such Shares in accordance with
the options and at the price hereinafter provided.
B. Legend On Shares: So long as this Agreement shall remain in
effect, the following statement shall be noted conspicuously on
each certificate representing any of the Shares:
"This certificate and the shares represented hereby are subject to terms
and conditions contained in a certain agreement dated September 1, 1994, the
Certificate of Incorporation, the By-laws, and any amendment thereto, copies of
which documents and are on file at the principal office of the corporation, and
any sale, assignment, gift, mortgage, pledge, hypothecation, bequest,
encumbrance or disposition, or any transfer as a result of any voluntary or
involuntary legal proceeding, execution, sale, bankruptcy, insolvency, or
otherwise, of this certificate in violation of said agreement, Certificate of
Incorporation, or By-laws shall be invalid."
C. ITG's First Option: If any Shareholder ("Transferring
Shareholder") intends to transfer all or any portion of said
Shareholder's Shares to ITG or another Shareholder, such
Transferring Shareholder shall give notice (the "Transfer
Notice") to ITG and to the remaining Shareholders setting forth
such intention. If the Transferring Shareholder intends to
transfer all or any portion of said Shareholder's Shares to any
other party, the terms and conditions of subsection E of this
paragraph shall apply and such Transferring Shareholder shall
give notice (the "Third Party Offer Notice") as specified in
subsection E to ITG and to the remaining Shareholders.
ITG shall have the non-assignable first option to purchase all, but not
less than all, of the Shares offered in said Transfer Notice or Third Party
Notice by the Transferring Shareholder as of the date the applicable notice was
given, at the purchase price provided in Paragraph III hereof. Said option shall
be exercisable by giving notice (the "Notice to Purchase") to the Transferring
Shareholder and to the remaining Shareholders, within thirty (30) calendar days
after receipt of the Transfer Notice or Third Party Offer Notice by ITG. In the
event a Notice to Purchase is given, the Transferring Shareholder shall be
obligated to sell all, but not less than all, of the Shares offered in said
Transfer Notice or Third Party Offer Notice as of the date the applicable notice
was given.
The Transferring Shareholder shall take such action as is necessary and
lawful to permit ITG's decision with respect to its exercise of any option
granted to it hereunder to be decided in
-2-
accordance with the wishes of the remaining Shareholders. The Board shall
convene a meeting of the Shareholders in accordance with all procedures set
forth in Article III of the By-laws pertaining to special meetings of the
Shareholders. All Shareholders, other than the Transferring Shareholder, shall
be entitled to vote on any decision by ITG as to whether it desires to exercise
its option to purchase the Shares. Each Shareholder shall be entitled to one (1)
vote per Share.
D. Shareholders' Second Option: If ITG fails to exercise its option
under Paragraph I.C hereof within the thirty (30) calendar day
period set forth therein, or if ITG notifies the Transferring
Shareholder and the remaining Shareholders in writing prior to the
expiration of said thirty (30) calendar day period of its decision
not to exercise such option, then the Shareholders other than the
Transferring Shareholder (individually, the "Other Shareholder" and
collectively, the "Other Shareholders") shall have a non-assignable
option to purchase all, but not less than all, of the Shares offered
in the Transfer Notice or Third Party Offer Notice by the
Transferring Shareholder as of the date the applicable notice was
given, at the purchase price provided in Paragraph III hereof. If
all of the Other Shareholders accept the offer of the Transferring
Shareholder as aforesaid, the Shares offered for Transfer shall be
purchased by the Other Shareholders in pro rata proportion to such
Shareholders' then ownership in ITG, excluding the percentage owned
by the Transferring Shareholder, or in such other proportions as may
be agreed upon by them in writing. If less than all of the Other
Shareholders accept the offer, the Shares offered for transfer shall
be purchased by the accepting Shareholders in pro rata proportion to
each accepting Shareholder's then ownership in ITG, excluding the
percentages owned by the Transferring Shareholder and the
non-accepting Shareholders, or in such other proportions as may be
agreed upon in writing by the accepting shareholders.
The aforesaid option granted to the Other Shareholders shall be
exercisable by each Other Shareholder giving notice (the "Option Notice") to the
Transferring Shareholder and ITG within sixty (60) calendar days after the
earlier of the Shareholder's receipt of the Transfer Notice or Third Party Offer
Notice, or receipt of notice of ITG's intent not to exercise its option. In the
event an Option Notice is given, then the Transferring Shareholder shall be
obligated to sell and the Other Shareholders who served an Option Notice shall
be obligated to purchase all, but not less than all, of the Shares offered by
the Transferring Shareholder as of the date the Transfer Notice or Third Party
Offer Notice was given.
In the event that a Third Party Offer Notice was given by a Transferring
Shareholder and no Option Notice is given by any of the Other Shareholders, then
the terms and conditions of subsection E of this paragraph shall apply to the
purchase of the Transferring Shareholder's Shares by the third party.
E. Third Party Offers: Subject to the terms of this Agreement, the
Transferring Shareholder shall have the right to sell all or any
portion of said Shareholder's Shares to an unaffiliated third party
(the "Third Party"). The Transferring
-3-
Shareholder, who receives and is willing to accept an arms-length,
bona fide, written offer from a Third Party to purchase all or any
portion of the Shares offered (the "Third Party Offer") shall grant
successive irrevocable non-assignable rights of first refusal to buy
his or her Shares to ITG and then to the Other Shareholders on the
same monetary and other substantially economic terms and conditions
as the Third Party Offer by giving notice to ITG and the Other
Shareholders (the "Third Party Offer Notice"). The Third Party Offer
Notice shall contain the name and address of the third party, the
Transferring Shareholder's relationship, if any, to the third party,
and any other information as reasonably requested by the Board. A
copy of the Third Party Offer shall be attached to the Third Party
Notice.
Upon request by the Board or any Shareholder, the Transferring Shareholder
shall deliver appropriate documents to satisfy the Board or the Shareholder that
no violation of Securities Exchange Commission, Federal Commissions Commission,
or other applicable federal, state, or local laws, rules, or ordinances will
occur as a result of the Transferring Shareholder's transfer of the Shares to
the Third Party.
The Terms of the Third Party Offer required to be met by ITG or the Other
Shareholders shall not include any non-monetary terms not reasonably and readily
performable by either ITG or the Other Shareholders. Such rights shall be
exercisable, if at all, by ITG giving notice to the Transferring Shareholder, or
the Other Shareholders giving notice to the Transferring Shareholder and ITG
pursuant to the terms and conditions of Paragraphs I.C and I.D, respectively.
In the event that neither ITG nor the Other Shareholders exercise their
respective rights of first refusal hereunder, the Third Party Offer shall be
accepted by the Transferring Shareholder, if at all, only on the exact terms of
the Third Party Offer and no later than thirty (30) calendar days after the
earlier of the expiration of the Other Shareholders' right of first refusal, or
receipt of notices of intention not to exercise the option from all Other
Shareholders. In the event that the original terms of the Third Party Offer are
modified in any manner, the Transferring Shareholder shall grant new successive
irrevocable non-assignable rights of first refusal to buy his Shares to ITG and
then to the Other Shareholders on the same terms and conditions as the modified
Third Party Offer. Any such options or obligations arising from a modified Third
Party Offer shall be governed by the terms and provisions as set forth above in
this subsection and subsections C and D of this paragraph, as if the offer were
a new Third Party Offer.
Upon ITG's and all other Shareholder's refusal to exercise the right of
first refusal, the Third Party shall execute and promptly deliver to each party
hereto, at the closing of a sale of Shares to the Third Party 1) a signed and
notarized agreement substantially in the form of Exhibit C, attached hereto; and
2) a signed and notarized agreement from the Third Party's spouse substantially
in the form of Exhibit D, attached hereto. Upon such closing the Third Party
shall succeed the Transferring Shareholder as a Shareholder under this
Agreement. In the event the Third Party Offer is not accepted by the
Transferring Shareholder within thirty (30) calendar days of the earlier of the
expiration of the Other Shareholders' right of first refusal, or receipt of
notices
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of intention not to exercise the option from all Other Shareholders, and on the
exact terms of the Third Party Offer or modified Third Party Offer, or if for
any reason the Third Party does not succeed the Transferring Shareholder as a
party to this Agreement, then such transfer shall be of no force and effect.
F. Death or Disqualifying Event: In the event of the death of an
"Individual Shareholder" (as defined in accordance with this
subsection), the beneficiaries of such shareholder's estate shall
acquire such Shareholder's shares subject to all the terms and
conditions hereof. Within thirty (30) days after the Shareholder's
death, the beneficiaries may require the Company and/or other
Shareholders to purchase all, but not less than all, of the Shares
hered by the deceased Shareholder at the purchase price set forth in
Paragraph III hereof. In the event of a "Disqualifying Event" (as
defined in accordance with Paragraph V hereof) concerning any
Shareholder, successive irrevocable non-assignable rights of first
refusal to purchase all, but not less than all, of the Shares owned
by the deceased or disqualified Shareholder shall be granted to ITG
and then the Shareholders, as of the date of death or Disqualifying
Event, at the purchase price set forth in Paragraph III hereof. Any
such options shall be governed by the terms and provisions of
Paragraphs I.C and I.D hereof.
For the purposes of this Agreement: 1) an "Individual Shareholder" is any
Shareholder who is a natural being; and 2) a corporation, partnership, trust, or
any other entity other than a natural being, is a "Shareholder other than an
Individual Shareholder".
G. Termination of Employment: In the event that any Individual
Shareholder, or an agent, employee, officer, or director of a
Shareholder other than an Individual Shareholder is now or may
hereafter be an employee of ITG, and said employment ceases, for any
reason, the terms and conditions of subsections C, D and E of this
Paragraph I may, in the discretion of the Board, apply to said
individual, and all shares of ITG acquired by the individual as a
result of or during the employment relationship, including, but not
limited to, shares acquired from any rights, obligations or the
exercise of options granted to the individual.
The above provision may be applied by the Board provided that 1) a written
agreement by and between the individual and ITG does not provide otherwise; and
2) the Board adopts a resolution at a special meeting called for that express
purpose on not less than fourteen (14) calendar days notice, in accordance with
all procedures contained in Article IV of the By-laws pertaining to Special
Meetings of the Board. If the Board so adopts said resolution, then the
individual 1) shall be considered a Transferring Shareholder for purposes of
this Agreement; and 2) shall grant successive irrevocable non-assignable rights
of first refusal to buy his Shares to ITG and then to the Other Shareholders in
accordance with the terms and conditions contained in subsections C and D of
this Paragraph at the price to be determined in accordance with Paragraph III
hereof; and 3) shall not be entitled to the benefits of any of the options
herein contained, but the Shares of such person shall nevertheless be subject to
the options herein contained.
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H. Employee Stock Option Plans: Within ninety (90) days after the
execution of this Agreement, the Board shall institute an employee
stock option plan, or other method or procedure whereby persons who
are employees of ITG may obtain shares or options to acquire shares
of ITG. Said plan, method, or procedure shall provide that upon
termination of said employment, for whatever reason, shares so
acquired are to be redeemed by ITG or transferred to the
Shareholders in accordance with the terms and conditions of
subsections C and D of this Paragraph I. Upon the issuance of
options or stock in accordance with said plan, method, or procedure,
the employee shall deliver signed and notarized statements
substantially in the form of Exhibits C and D, attached hereto.
Employees who acquire shares pursuant to said employee stock option
plan, method, or procedure shall not be entitled to the benefits of
any of the options herein contained by virtue of said acquisition of
shares.
I. Purchase of Shares by ITG: To the extent required by law, any
purchase of ITG Shares elected to be made by ITG hereunder shall be
made only out of legally available surplus of the Corporation. To
the extent possible and lawful under this Agreement, ITG, the
Shareholders, or any of the personal or legal representatives
thereof, shall take whatever legal steps may be required to create
surplus, to revalue the assets of ITG and to enable ITG to pay debts
as they become due in the usual course of business, so that ITG may
lawfully make any such purchase. However, nothing herein shall be
deemed to obligate ITG to exercise any option or to obligate the
Shareholders to provide funds to ITG for such a purpose.
II. RESTRICTIONS ON OPTIONS AND DISPOSITION OF UNAUTHORIZED SHARES
A. No Restrictions on ITG: Except as otherwise provided in subsection B
of this Paragraph II, no provision of this Agreement shall be
interpreted as restricting, in any manner, the transfer by ITG of
any shares not authorized for issuance by the State of Delaware as
of the date first set forth above ("Unauthorized Shares"), or
options pertaining to any shares not authorized for issuance by the
State of Delaware as of the date first set forth above ("Options for
Unauthorized Shares"), it being the intention of the parties hereto
that ITG retains all rights to transfer said shares and options as
if this Agreement were not in existence.
B. Restrictions on Purchaser or Transferee: Upon the issuance of
Unauthorized Shares, other than upon a public offering and sale of
ITG shares in accordance with the rules and regulations of the
Securities Exchange Commission, the purchaser or transferee of said
shares, pursuant to Paragraph I.E hereof, shall deliver signed and
notarized agreements substantially in the forms of Exhibits C and D
annexed hereto. The shares so acquired shall be subject to this
Agreement,
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and the purchaser or transferee shall be considered a Shareholder
and subject to all terms and conditions of this Agreement
C. Option Agreements: All options hereinafter issued by ITG or a
Shareholder shall be non-transferrable. The terms and conditions of
subsection B of this Paragraph II shall apply upon the exercise of
any option granted by a Shareholder or any Option for Unauthorized
Shares granted by ITG, other than employee stock options, issued
before the termination date of this Agreement.
III. PURCHASE PRICE
A. General: The purchase price at which Shares of ITG shall be sold and
purchased hereunder shall be at the price stated in the most recent
Certificate of Agreed Value ("Certificate") in accordance with
Paragraph III.B hereof. The price specified in the latest such
Certificate shall be binding upon ITG and each Shareholder, or the
legal or personal representatives of the Shareholders for all
purchases under this Agreement.
B. Certificate of Agreed Value: A Certificate stating the agreed price
for each Share purchased pursuant to Paragraph I hereof, except as
otherwise noted, shall be executed on at least an annual basis by
the Shareholder and ITG. The first such Certificate, substantially
in the form of Exhibit B, annexed hereto, shall be executed by the
Shareholders and ITG on the date hereof. Succeeding Certificates,
substantially in the form of Exhibit B, shall be executed at Special
Meetings of the Shareholders held 1) on the anniversary date, or the
nearest business date thereto, of this Agreement; and 2) at any
other times deemed appropriate. Special Meetings of the Shareholders
to determine the value of the Shares and to execute a Certificate
shall be convened in accordance with all procedures set forth in
Article III of the By-laws pertaining to Special Meetings of the
Shareholders. Each Shareholder shall be entitled to one vote (1) per
Share.
IV. CLOSINGS
A. Place and Time: Any purchase of Shares made hereunder shall take
place at a closing (the "Closing") to be held at the New York
offices of ITG at a time and date agreed upon in writing by the
parties thereto, or in the absence of such an agreement, thirty
(30) calendar days following: 1) the date of a timely Notice of
Purchase submitted hereunder by ITG, in the event of a purchase by
ITG; or 2) the date of the last timely Option Notice submitted by a
Shareholder hereunder, in the event of a purchase by the Other
Shareholders; or 3) the earlier of the date of the expiration of
the Other Shareholder's right of first refusal, or receipt of all
notices of intention not to exercise options from the Shareholders,
in the event of a purchase by a Third party.
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B. Delivery by Seller: At the Closing, the Transferring Shareholder
shall deliver or cause to be delivered to the purchaser, free and
clear of all liens, claims, charges and restrictions, a certificate
or certificates representing the Shares being sold, in proper form
for transfer and with evidence of payment of all applicable transfer
taxes and costs.
In the case of a sale due to death or Disqualifying Event concerning an
Individual Shareholder pursuant to Paragraph I.F hereof, the personal or legal
representatives of the deceased or disqualified Individual Shareholder shall
deliver appropriate estate tax waivers and evidence of authority to act on
behalf of a deceased. In the case of a sale due to a Disqualifying Event of a
Shareholder other than an Individual Shareholder pursuant to Paragraph I.F
hereof, the legal or personal representative of the Shareholder, trustee, or
receiver, or other person with legal authority to act on behalf, or instead of
the disqualified Shareholder, shall deliver all documents as reasonably
requested by the Board or a Shareholder.
C. Resignations By Transferring Shareholder: If an Individual
Shareholder transfers all of the Shares he or she owns, the Board
may require the Shareholder to also deliver to ITG a written
resignation from all positions, if any, held by the Shareholder at
ITG, including that of director, employee, or officer. The Board may
require that the Shareholder resign from all positions only if 1) a
written agreement by and between the Shareholder and ITG does not
provide otherwise; and 2) the Board adopts a resolution at a special
meeting called for that express purpose on not less than fourteen
(14) calendar days notice, in accordance with all procedures
contained in Article IV of the By-laws pertaining to Special
Meetings of the Board.
If the Shareholder is a Shareholder other than an Individual Shareholder
and it transfers all of the shares it owns, the Board may require any employee,
officer, director, or agent of the shareholder who holds any positions,
including that of director, employee, or officer of ITG, to deliver to ITG a
written resignation from all positions, if any. The Board may require that an
employee, officer, director, or agent of the Shareholder resign from all
positions only if 1) a written agreement by and between ITG and the Shareholder,
or the Shareholder's employee, officer, director, or agent does not provide
otherwise; and 2) the Board adopts a resolution at a special meeting called for
that express purpose on not less than fourteen (14) calendar days notice, in
accordance with all procedures contained in Article IV of the By-laws pertaining
to Special Meetings of the Board.
The Board may establish procedures sufficient to effectuate the purposes
of this subsection in the event of a transfer of less than all of the Shares
owned by a Shareholder.
D. Delivery by Purchaser: The purchaser shall deliver or cause to be
delivered to the Transferring Shareholder the purchase price for the
Shares being purchased in cash consideration (certified or official
bank check) unless otherwise agreed.
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A Third Party who purchases Shares under this Agreement shall, pursuant to
Paragraph I.E hereof, deliver signed and notarized agreements substantially in
the forms of Exhibits C and D, annexed hereto.
V. DEFINITION OF DISQUALIFYING EVENT
A. Individual Shareholder: For purposes of this Agreement, a
Disqualifying Event concerning an Individual Shareholder, as such
term is defined in Paragraph I.F, shall be deemed to occur, if as a
result of a mental or physical disability, such Shareholder is
unable to perform the substantial and material duties as a director,
officer, employee, and/or Shareholder of ITG and it is likely that
such disability will continue for a period of at least six
consecutive months. At the onset of said six-month period, the Board
on behalf of ITG, shall give written notice to such Shareholder
("Notice of Disqualifying Event") which (a) states that it believes
that a Disqualifying Event has occurred or commenced concerning the
Shareholder; and (b) specifies the date such Disqualifying Event
occurred or commenced.
B. Shareholder Other Than an Individual Shareholder: For the purposes
of this Agreement, a Disqualifying Event shall be deemed to have
occurred concerning a Shareholder other than an Individual
Shareholder in the event that reasonable grounds exist for the
belief that the Shareholder has or will be dissolved, cease its
business operations, sell a majority of its assets or stock, or that
the Shareholder will be a debtor in a voluntary or involuntary
bankruptcy proceeding. The Board shall given written notice to such
Shareholder ("Notice of Disqualifying Event") which (a) states that
it believes that a Disqualifying Event occurred or commenced, or
will occur or commence; and (b) requests adequate assurances that
the Disqualifying Event has not or will not occur or commence.
C. Failure to Dispute Notice of Disqualifying Event: If any Individual
Shareholder fails to dispute in writing a Notice of Disqualifying
Event within (30) thirty calendar days from the mailing thereof, or
a Shareholder other than an Individual Shareholder fails to dispute
in writing a Notice of Disqualifying Event and provide adequate
assurances that the Disqualifying Event has not or will not occur
within thirty (30) calendar days of the mailing thereof, then a
Disqualifying Event regarding such Shareholder shall be deemed to
have occurred as of the date specified in the Notice of
Disqualifying Event.
D. Disputes By Individual Shareholders: If an Individual Shareholder
disputes in writing a Notice of Disqualifying Event, then the matter
shall be referred to a duly licensed physician who shall immediately
perform a physical or other examination on the Shareholder, such
physician shall determine whether the Shareholder is so
disqualified. Such physician shall be selected by ITG. The decision
of such
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physician shall be conclusive and binding upon the Shareholder. A
disqualified Shareholder shall be deemed to have become disqualified
as of the date specified in the Notice of Disqualifying Event.
E. Disputes By Shareholders Other Than Individual Shareholders: If a
Shareholder other than an Individual Shareholder disputes in writing
a Notice of Disqualifying Event, then the Board shall review all
appropriate documentation offered by the Shareholder and determine
within a reasonable time period whether or not the Shareholder has
provide adequate assurances that a Disqualifying Event has not or
will not occur concerning the Shareholder. The decision of the Board
shall be binding and conclusive upon the Shareholder. A disqualified
Shareholder shall deemed to have become disqualified as of the date
specified in the Notice of Disqualifying Event.
VI. SPECIFIC PERFORMANCE
Shares of Company Stock cannot be readily purchased or sold in the open
market, and for that reason, among others, the parties to this Agreement will be
irreparably damaged if this Agreement is not specifically enforced. Therefore,
any party shall be entitled to an injunction restraining any other party from
transferring Shares in violation of this Agreement, without any bond or other
security being required. If any dispute arises concerning any right or
obligation under this Agreement to purchase or sell any of the Shares, the right
or obligation shall be enforceable in a court of equity by a decree of specific
performance. Such remedy shall, however, be cumulative and not exclusive, and
shall be in addition to any other remedy which the parties may have.
VII. LIFE INSURANCE
ITG may at its option carry life insurance policies on the life of any
Individual Shareholder to provide ITG with sufficient funds to enable it to
purchase such Shareholder's Shares pursuant to the provisions of Paragraph I
hereof. ITG shall own all such policies and each Shareholder waives any rights
such Shareholder may have under such policies. With respect to the purchase by
ITG of insurance policies acquired pursuant to this Paragraph, each Shareholder
specifically agrees to cooperate fully with ITG, and the insurer in obtaining
and maintaining such insurance on such Shareholder's file and shall timely
submit to any requested medical or other examinations therewith. ITG shall pay
all premiums on any such insurance policies. If any Shareholder sells all of the
Shares owned by the Shareholder during the Shareholder's life, or if this
Agreement is terminated for any reason set forth in Paragraph VIII of this
Agreement, the selling Shareholder (in the event of a sale during a
Shareholder's life) and each Shareholder (in the event of termination of this
Agreement pursuant to Paragraph VIII) shall have the right to purchase any such
policy or policies upon such Shareholder' life owned by ITG. The purchase price
for the policy or policies shall be the interpolated terminal reserve value of
such policy or policies as of the date of sale, less any existing indebtedness
against such policy or policies, plus that portion of the premium or premiums on
such policy or policies paid prior to the date of sale which covers
-10-
the period beyond the date of sale. If such policy is term life insurance, said
policy shall be transferred to the insured upon adjustment between the parties
of premium paid beyond the date of sale. Such right of purchase must be
exercised by the insured within sixty (60) calendar days after the sale of such
Shareholder's shares or the termination of this Agreement. If not so exercised,
such right shall terminate. Upon the exercise of such right, the Shareholder
shall deliver the purchase price of the policy or policies on such Shareholder's
life to ITG, and ITG shall simultaneously execute and deliver to such
Shareholder all the documents which are required to transfer ownership of the
policy or policies. If such right of purchase is not exercised within the time
prescribed by this Paragraph, ITG may make whatever disposition of the policy of
policies ITG shall deem proper.
VIII. TERMINATION OF AGREEMENT
This Agreement shall terminate upon the occurrence of any of the following
events: (a) such time as the shares of Stock subject to this Agreement are
either listed on a national securities exchange or are quoted in the daily
over-the-counter list published by NASDAQ; or (b) the Stock is registered
pursuant to the provisions of Section 12(g) of the Securities Exchange Act of
1934, as amended, and is held of record by not less than five hundred (500)
persons at the time such determination is made; (c) cessation of ITG's business
operations; or (d) bankruptcy or receivership or dissolution of ITG; or (e)
death of two or more of the Shareholders, leaving either one or no surviving
Shareholder, provided that notwithstanding such an event a surviving Shareholder
may elect to fulfill the obligations of this Agreement, in which event it shall
remain vital and effective for all purposes; or (f) mutual agreement of
termination between the Shareholders and ITG; or (g) upon the effectiveness of a
merger, consolidation, reorganization, or other acquisition of substantially all
of ITG's assets if ITG is not the surviving corporation, except that a merger or
consolidation with a subsidiary which effects a mere change in the form or
domicile of ITG without changing the respective holdings of the Shareholders
shall not terminate this Agreement event if ITG is not the surviving
corporation.
IX. PRE-EMPTIVE RIGHTS
The Company agrees that prior to the date of registration of Equity
Securities of the Company after the date hereof the Company will not issue for
cash any equity securities or any securities having rights or options to acquire
equity securities (whether through conversion or exercise or otherwise)
(hereinafter "Equity Securities") without first offering such Equity Securities,
on the same terms and at the same price, to each Shareholder, pro rata on the
basis of the Ownership Interest of such Shareholder as of the date of the notice
given pursuant to this Article. Any such offer of Equity Securities to a
Shareholder will be made in writing to the notice address of the Shareholder and
will remain open for a period of not less than twenty (20) days after the date
of the offer unless the pre-emptive rights with respect to such Equity
Securities are waived as provided herein. If at the end of such twenty (20) day
period there remain unpurchased any of the Equity Securities so offered (the
"Remaining Securities"), the Company will so advise each Shareholder who
purchased Equity Securities in such offering (the "Purchasing Shareholders") and
the Purchasing Shareholders shall have the right for ten (10) days from the
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date of the Company's notice to purchase that portion of the Remaining
Securities which is pro rata to such Purchasing Shareholder's Ownership Interest
in the Company as of the date of the Company notice with respect to the
Remaining Securities.
The rights of the Shareholders under this Article may be waived by a vote
or consent of a majority in Ownership Interest of all non-employee Shareholders.
X. DIRECTORS
So long as Incom (UK) Ltd. ("Incom-UK"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ are Shareholders, each Shareholder shall vote his shares of Stock so as
to assure in so far as possible that designees of Incom UK, ▇▇▇▇▇▇ and Rebetti
(the "Founders") will have seats on the Company's Board of Directors at least
proportionate to the Founder's percentage level of ownership in the Company. If
a vacancy on the Board of Directors results from the removal, resignation or
death of a designee of a Founder, each Shareholder shall vote his shares of
Stock so as to assure the election of a successor nominated by such Founder. No
Shareholder shall propose to the shareholders of the Company that the nominee of
the other Shareholder be removed from the Board of Directors of the Company.
XI. OFFICERS
Incom UK shall cause its designee directors to vote for the election of
the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as President and Secretary and of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as Vice
President and Treasurer of the Company.
XII. MISCELLANEOUS
A. Notices: Notices in connection with this Agreement shall be in
writing and shall be mailed, by certified or registered mail, return
receipt requested, with postage paid, to each party who executed
this Agreement on the date first set forth above, at the address set
forth at the beginning of this Agreement, and all other parties who
are subsequently bound by this Agreement at the address provided by
such party in the "Acknowledgement of Restrictions of Shares." The
above addresses shall be changed by like notice.
B. Binding Effect: All the conditions, covenants and options herein
contained shall bind each of the parties hereto, their heirs,
executors, administrators, successors, and assigns, and also any
receiver or trustee in bankruptcy or insolvency, except as the
rejection of the same may be authorized or directed by order of
court. All Shares of ITG in the hands of any person shall at all
times be subject to the provisions hereof, and in the event of any
transfer of Shares each and all of the conditions, agreements, and
options herein contained shall immediately attach to and bind said
shares in the hands of the transferee. However, any person who may
hereafter become a Shareholder who is not one of the original
parties to this agreement and fails to execute this Agreement with
prior acknowledgements as required in Paragraph I.E hereof shall not
be entitled to the benefits of any of the
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options herein contained, but the Shares of such person shall
nevertheless be subject to the options herein contained.
C. Waiver: No waiver of any provision of this Agreement shall be
effective unless made in a writing signed by the party against which
enforcement of the waiver is sought. No such waiver shall be deemed
to be a waiver of any subsequent breach of such provision, or of any
breach of any other provision of this Agreement.
The failure to exercise any of the options herein contained shall not
relieve said Shares or any part thereof permanently from the conditions hereof,
and all said options and agreements shall again attach to the Shares and bind
each successive holder thereof as soon as the same are acquired.
D. Enforceability: In the event any provision of this Agreement shall
be held invalid or unenforceable, such invalidity or
unenforceability shall attach only to such provision and shall not
affect or render invalid or unenforceable any other provisions of
the Agreement, and this Agreement shall be construed as if such
provision had been more narrowly drawn so as not to be invalid or
unenforceable.
If ITG or the Shareholders are unable to make any purchase desired
hereunder because of the provisions of any applicable statute, ITG's Certificate
of Incorporation or By-laws, each party agrees to take action as may be
necessary to allow the other party or parties to make such purchases.
E. Entire Agreement: This document constitutes the entire agreement
between the parties hereto and supersedes any previous
understandings, commitments, representations and agreements
heretofore made between the parties with respect to the subject
matter hereof. No alteration, amendment, explanation or
interpretation may be introduced to modify the terms hereof unless
it is in writing and signed by the parties hereto affected.
F. Applicable Law: This Agreement shall be governed by, construed and
enforced in accordance with the internal laws of the State of New
York, applicable to contracts made and/or to be performed in New
York, without reference to principles of conflict of laws where
legally permissible.
G. Attorney's Fees: In the event any party hereto institutes legal
action or an arbitration proceeding, or cross-motion for breach or
enforcement of the terms of this Agreement against any other party
hereto, the prevailing party in any such action or proceeding shall,
in addition to all other damages, be entitled to recover such
party's reasonable attorney's fees, together with court or
arbitration costs.
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H. Arbitration: Except as otherwise set forth herein, it is the intent
of the parties that any and all disputes hereunder shall be subject
to arbitration as provided in Article 75 of the Civil Procedure Law
and Rules of the State of New York. Notwithstanding any provisions
of the aforesaid rules or statutes to the contrary, the refusal or
failure of any party to appear or participate in any hearing or
other portions of any arbitration proceeding pursuant to this
Paragraph shall not prohibit such arbitration hearing from
proceeding, and the arbitrator is empowered to make a decision
and/or fully render an award ex parte which shall be binding on such
party as though such party had participated fully in such hearing or
proceeding. The prevailing party in any arbitration proceeding or
legal proceeding to enforce arbitration shall be entitled to
recover, in addition to all damages the prevailing party's
reasonable attorneys' fees.
I. Captions: The paragraph headings and underscoring of cross
references in this Agreement are for convenience only and shall not
be considered for any purpose in interpreting or construing this
Agreement.
J. By-Laws to Enforce This Agreement: Suitable By-laws shall be adopted
which reference the restriction upon the transfer of shares
contained in this Agreement. This Agreement and said Bylaws shall be
kept in force by ITG and the Shareholders to make this Agreement
effective.
K. Certificate of Incorporation to Set Forth Restrictions: The
Certificate of Incorporation of ITG shall be amended to reference
the restriction upon the transfer of shares contained in this
Agreement. The parties agree to execute any and all documents
necessary to effectuate said amendment.
L. Surrender of Shares: Upon execution of this Agreement, each
Shareholder shall surrender all Shares or certificates representing
ownership of all said Shares to ITG, if any, and in exchange, each
Shareholder shall be issued new Shares or new certificates
representing ownership of all said Shares, which new Shares or
certificates shall contain in the legend specified in Paragraph I.B
herein.
M. Execution of Agreement: This Agreement may be executed
simultaneously in several counterparts, each of which shall be
deemed to be an original and it shall not be necessary in making
proof of this Agreement to produce or account for more than one
counterpart.
IN WITNESS WHEREOF, this Agreement has been duly executed the day and year
first set forth above.
-14-
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_____________________ -----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
INCOM (UK) LTD. ITG
BY:__________________ BY: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
President --------------------------
President
-15-
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------- ________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
INCOM (UK) LTD. ITG
BY: /s/ [illegible] BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------- ----------------------
President President
-15-
SPOUSE'S CONSENT
I acknowledge that I have read the foregoing Shareholders Agreement (the
"Agreement") by and between International Telecommunications Group, Ltd. ("ITG")
and the Shareholders of ITG and know its contents. I am aware that under the
Agreement my spouse agrees to sell all of my spouse's interest in ITG, including
any community interest I may have therein, upon my spouse's death, or mental or
physical disability.
I further understand that by the terms of the Agreement, my spouse agrees
to limitations upon my spouse's right to transfer my spouse's interest in ITG
during my spouse's life. I further understand the term "transfer" as used in the
Agreement includes any assignment, gift, mortgage, pledge, hypothecation,
bequest, encumbrance or disposition, or any transfer as a result of any
voluntary or involuntary legal proceeding, execution, sale, bankruptcy,
insolvency, or otherwise, of any of the Shares.
I hereby consent to such sale and such limitations, approve the provisions
of said Agreement, and agree that I shall not bequeath said interest in ITG or
any part thereof or any interest herein by my Will, if I predecease my spouse. I
direct that the residuary clause in my Will shall not be deemed to apply to any
community interest I may have in ITG.
Name of Shareholders:__________________ No. of Shares________
Name of Spouse:______________________
___________________________ Dated:______________ 1994
Spouse's Signature
Sworn to before me on this
day of , 1994
_______________________________
NOTARY PUBLIC
`
EXHIBIT A
SHAREHOLDERS NUMBER OF SHARES
------------ ----------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 153,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 17,000
Incom (UK) Ltd. 30,000
EXHIBIT B
CERTIFICATE OF AGREED VALUE
The undersigned agree that for the purposes of an Agreement dated
September 1, 1994 among the undersigned, each share of Common Stock of
International Telecommunications Group, Ltd. has a value of $_____________
determined as of the date set forth below.
Date:______________________, 1994
____________________ ____________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
INCOM (UK) LTD. ITG
BY:_________________ BY:_________________
President President
EXHIBIT C
ACKNOWLEDGEMENT OF RESTRICTIONS
ON SHARES
I, ______________________, residing at ____________________________ have
received a copy of a certain Agreement entitled "Agreement By and Between
International Telecommunications Group, Ltd. and the Shareholders of
International Telecommunications Group, Ltd.", dated September 1, 1994. I am
familiar with the terms and conditions of said Agreement and acknowledge that
the shares transferred to me by _______________________ on _________________,
19__ are subject to the Agreement, as of said transfer date. Further, I agree to
be personally bound by the aforesaid Agreement.
________________________________
New Shareholder
STATE OF )
)
COUNTY OF )
On the day of , 19 , before me personally came, to me known
to be the individual described in and who executed the foregoing instrument, and
acknowledged that she executed said instrument.
______________________________
NOTARY PUBLIC
My commission expires on
EXHIBIT D
SPOUSE'S CONSENT
I acknowledge that I have received a copy of a certain Agreement (the
"Agreement") entitled "Agreement By and Between International Telecommunications
Group, Ltd. and the Shareholders of International Telecommunications Group,
Ltd.", and that I have read the Agreement and know its contents. I am aware that
under the Agreement my spouse agrees to sell all of my spouse's interest in
International Telecommunications Group, Ltd. ("ITG"), including any community
interest I may have therein, upon my spouse's death, or mental or physical
disability.
I further understand that by the terms of the Agreement, my spouse agrees
to limitations upon my spouse's right to transfer my spouse's interest in ITG
during my spouse's life. I further understand that the term "transfer" as used
in the Agreement includes any assignment, gift, mortgage, pledge, hypothecation,
bequest, encumbrance or disposition, or any transfer as a result of any
voluntary or involuntary legal proceeding, execution, sale bankruptcy,
insolvency, or otherwise, of any of the Shares.
I hereby consent to such sale and such limitations, approve the provisions
of said Agreement, and agree that I shall not bequeath said interest in ITG or
any part thereof or any interest herein by my Will, if I predecease my spouse. I
direct that the residuary clause in my Will shall not be deemed to apply to any
community interest I may have in ITG.
Name of Shareholder:________________________ No. of Share________
Name of Spouse:______________________
_______________________ Dated:_________________, 19
Spouse's Signature
Sworn to before me this
day of , 199 .
_______________________
NOTARY PUBLIC
EXHIBIT B
COMMON STOCK
------------
Shareholders Number of Shares
------------ ----------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 153,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 17,000
Incom (UK) Ltd. 30,000
SERIES A CONVERTIBLE PREFERRED STOCK
------------------------------------
Shareholders Number of Shares
------------ ----------------
RSL Communications, Inc. 66,667
(subject to change
for possible
issuance of
Additional Shares)
9
EXHIBIT C
EMPLOYMENT AGREEMENT
(SEE TAB NO. 10)
10
