ADDITIONAL SHAREHOLDERS AGREEMENT
AGREEMENT made as of the 1st day of October, 1997, by and among ACTV
Net, Inc, a corporation whose principal address is 1270 Avenue of the Americas,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Corporation"), ACTV Holdings, Inc., a corporation
whose principal address is 1270 Avenue of the Americas, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(AHoldings@), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual residing ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ 10023("▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual residing at ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (ACrowley@), ▇▇▇▇▇ ▇▇▇▇▇▇, an
individual residing at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (AUllman@),
▇▇▇▇▇ ▇▇▇▇▇, an individual residing at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ (ACrook@), ▇▇▇▇▇ ▇▇▇▇▇, an individual residing at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (ABaker@). Holdings, Samuels, Crowley, ▇▇▇▇▇▇, ▇▇▇▇▇ and
▇▇▇▇▇ are sometimes hereinafter collectively referred to as the "Shareholders,@
and Samuels, Crowley, ▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇ are sometimes hereinafter
collectively referred to as the AEmployees."
R E C I T A L S
WHEREAS, the authorized capital stock of the Corporation consists of
4,000,000 shares of Class A Common Stock, $.01 par value (the "Class A Stock")
and 1,000,000 shares of Class B Stock (non-voting), $.01 par value (the "Class B
Stock" and with the Class A Stock sometimes referred to herein as the "Common
Stock"); and
WHEREAS, Samuels, Crowley, ▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇ pursuant to
separate option agreements dated October 1, 1997 each have the right to purchase
60,000, 60,000, 100,000, 60,000 and 20,000 of Class B Stock, respectively.
WHEREAS, the Shareholders desire to promote their joint interests
and the interests of the Corporation by imposing certain restrictions and
obligations on themselves and on the Corporation and on the Common Stock held,
or hereafter acquired by each of them;
WHEREAS, the Shareholders believe it to be in their best interests
and in the best interests of the Corporation that the Common Stock owned by the
Shareholders be transferable only upon compliance with the provisions of this
Agreement;
NOW, THEREFORE, in consideration of the mutual obligations between and among the
Shareholders and the Corporation contained herein and other good and valuable
consideration, the Shareholders and the
Corporation hereby agree as follows:
1. Definitions.
a. The word "Affiliate" shall mean any person controlling, or controlled by,
another person and for purposes hereof shall include all relatives by blood,
marriage or adoption.
b. The word "Agreement" shall mean this Shareholders Agreement, as it may be
amended from time to time pursuant to the terms hereof.
c. The term "Bona Fide Offer" shall mean any offer made by a Person not a
party to this Agreement to any Employee to purchase Class B Stock; provided,
however, that (i) said offer must be accompanied by a bank cashier's or
certified check in an amount equal to not less than ten percent (10%) of the
purchase price specified in such offer, such amount to serve as liquidated
damages forfeitable to the Corporation in connection therewith, and (ii) the
identity of the purchaser and all material terms of the offer must be disclosed.
In the event a Bona Fide Offer shall provide for the exchange of assets other
than cash or cash equivalents, either the Bona Fide Offer shall include the fair
market value of said assets if such fair market value is publicly available and
readily ascertainable or the Transferor shall submit with the Bona Fide Offer an
appraisal prepared by a qualified independent third party evidencing the fair
market value of the assets to be exchanged as of the date of the Bona Fide
Offer.
d. The term AEligible Shareholder@ shall be those persons permitted to hold
the Class B Stock by the Corporation's Articles of Incorporation. Eligible
Shareholders are executive officers, directors and employees of the Corporation
or affiliated corporations, which shall include parents, subsidiaries or
corporations under common control.
e. The word "Person" shall mean (and include) an individual, trust,
fiduciary, partnership, corporation, association or any other legal entity.
f. The term "Offered Shares" shall mean the shares of Common Stock of the
Corporation included in an Bona Fide Offer.
g. The word "Employee" shall include any original Employee and any Transferee
of Class B Stock, as permitted by Section 2(e)(2).
h. The word "transfer" shall include the sale, assignment, gift, pledge,
encumbrance or other disposition of any Shares, whether absolute or conditional,
temporary or permanent, outright or in trust, voluntary or involuntary.
i. The word "Transferee" shall refer to any holder of Shares transferred to
him by a Shareholder.
j. The words "Transferor" or "Selling Shareholder" shall refer to any
Shareholder desiring to make a transfer of his Shares.
k. The word "Shares" shall mean shares of the Common Stock owned at any time
by a Shareholder.
2. Restrictions on Transferability of Shares Held by the Shareholders
a. General Restrictions. Each of the Employees hereby agrees not to transfer
his Class B Stock, now owned or hereafter acquired, except in accordance with
Section 2 or Section 3 of this Agreement. Under the terms of the Corporation's
articles of incorporation, each share of Class B Stock transferred in any other
manner shall convert immediately into one share of Class A Stock.
b. Transfer. Any sale of shares made under this agreement must be made
pursuant to a Bona Fide Offer, regardless of which party initiated the
transaction.
c. Right of First Refusal. If any of the Employees desires to transfer his or
her Class B Stock (a "Selling Shareholder"), during his lifetime, he must first
give to the Corporation and to the other Employees the opportunity to purchase
such Class B Stock in accordance with the following procedures:
(1) The Selling Shareholder must give to the Corporation and the other
Employees thirty (30) days written notice of his intent to sell (the "Notice"),
along with a copy of the Bona Fide Offer, at the addresses as set forth on the
books of the Corporation. The other Employees will thereupon have the option
within such thirty (30) day period to purchase all or any portion of the Offered
Shares. Should more than one Employee desire to purchase the Offered Shares, the
Employees will divide the shares pro rata, based on the amount of Class B Common
Stock that they own at the time of receipt of the Notice.
(2) If the Employees decline to exercise the option or otherwise fail to
exercise such option within such thirty (30) day period, the Offered Shares not
purchased by the other Employees will thereupon be deemed to be offered for sale
to the Corporation for a period of ten days. The Corporation
will have an option, during the ten day period to purchase all or any portion of
the Offered Shares.
(3) The Selling Shareholder shall not be obligated to sell any of the
Offered Shares to the Corporation and/or to the non-selling Employees unless all
of the Offered Shares are purchased.
d. Determination of Purchase Price Per Share. The Corporation and each
Shareholder agree that the purchase price per Share of Class B Stock transferred
pursuant to Subsection (c) of this Section 2 shall be equal to the purchase
price per share in the Bona Fide Offer. The terms of payment shall be
substantially the same as those in the Bona Fide Offer.
e. Release from Restrictions.
(1) If the Right of First Refusal is not exercised by the non-selling
Employees or the Corporation, or in the event that the aggregate acceptances by
the purchasing parties are for less than the number of the Shares offered, the
Transferor may transfer the Shares not purchased by the other Shareholders or
the Corporation to the prospective Transferee named in the Offer to Sell in
strict accordance with the terms therein stated or, in the case of a Bona Fide
Offer, may reject all of said offers by the other Shareholders or the
Corporation, and offer and sell all of the Offered Shares to the purchaser named
in the Bona Fide Offer, in either case, at a price not less than, and on terms
and conditions not more favorable to such Transferee than, are set forth in the
Offer to Sell to Shareholders pursuant to Section 2(c); provided that, except as
provided in subsection (e)(2) of this Section 2, such Transferee shall receive
one share of Class A Common Stock for each share of Class B Stock sold to him by
the Selling Shareholder.
(2) Should the proposed Transferee be an Eligible Shareholder, than said
Transferee may purchase and receive Class B Stock provided (i) the sale
transaction is made in accordance with the terms of this agreement, (ii) holders
of 2/3 of the outstanding Class B Stock (excluding those shares which are the
subject of the Bona Fide Offer) approve the proposed Transferee's right to hold
Class B Stock, and (iii) the proposed Transferee agrees to be bound by the terms
of this agreement.
(3) A transfer effected pursuant to this Section 2(g) shall be consummated
and the Shares transferred to the Transferee within thirty (30) days after the
expiration of the period of acceptance by the non-selling Shareholders
prescribed by Section 2(c). If the Transferor shall fail to make such transfer
within such thirty (30) day period, or if he shall propose to sell the Offered
Shares at a lower price
or on more favorable terms to the purchaser, the Offered Shares shall again
become subject to all the restrictions contained in this Agreement, and the
Selling Shareholder shall again make the Offered Shares available to the
Corporation and the remaining Shareholders for purchase in the manner set forth
in Section 2(c).
f. Invalid Dispositions. Any purported sale, assignment, mortgage,
hypothecation, transfer or pledge of, creation of a security interest in, lien
or encumbrance on, or gift, non-voting trust or any other disposition of any
Shares by any Shareholder or any successor to any Shareholder which violates any
provision of this Agreement will result in the conversion of the Class B Stock
into Class A Stock. The Corporation and its officers, directors and employees
shall not be liable to any person for any action or refusal to act taken under
the provisions of this Section 2.
3. Voting Rights, Death, Change in Eligibility Status. So long as ▇▇▇▇▇▇▇ is
the Chairman of ACTV, Inc. or an officer or director of the Corporation, each
person who is now or may subsequently become a party hereto grants ▇▇▇▇▇▇▇ the
right to vote all shares of said person's Class B Stock and hereby grants
▇▇▇▇▇▇▇ an irrevocable proxy, coupled with an interest, to vote said shares.
Should ▇▇▇▇▇▇▇ die, become disabled or resign his employment with the ACTV Group
(as hereinafter defined), said voting rights and proxy shall vest in ▇▇▇▇▇▇▇ so
long as he is an officer or director of the Corporation or of ACTV, Inc. Upon
the death or disability of an Employee, or resignation of an employment with the
ACTV Group, which shall include the Corporation, ACTV, Inc., or any affiliate or
subsidiary of ACTV, Inc., each share of Class B Stock held by him or her shall
convert into one share of Class A stock on the second anniversary of said event.
4. Termination of Employment. Should an Employee be terminated from
employment, than his Class B Stock shall not convert into Class A Stock except
upon transfer as set forth in section 2.
5. Conversion. With the approval of holders of 70% of the Class B Stock, each
share of Class B Stock may be treated in all respects, for the purpose of a
transaction, or series of transactions, as one share of Class A Stock.
6. Undertaking. The Corporation warrants that should it be necessary to issue
additional Class A Stock under any provision of this agreement, it will use its
best efforts to amend its certificate of incorporation to increase the
authorized number of shares of Class A Stock.
7. Endorsement on Certificates. Upon execution of this Agreement, the
certificates of stock subject thereto shall be surrendered to the Corporation
and the stock certificates representing the Shares shall have the following
legend printing on them:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, or under state securities laws and
may not be sold or transferred unless registered under said act and
applicable state securities laws or unless, in the opinion of counsel
satisfactory to the Corporation, the transfer qualifies for an exemption
from the registration provisions thereof. In addition, this certificate of
stock and the shares represented hereby are held subject to the terms and
conditions contained in an agreement by and among the Shareholders of the
Corporation and the Corporation dated as of March 14, 1997, and all
amendments thereto, and may not be transferred except in accordance with
the terms and provisions thereof. A copy of such agreement will be
furnished by the Corporation upon request."
Upon endorsement, the certificates shall be delivered to the
Shareholders, who shall be entitled to exercise all rights of ownership of such
stock, subject to the terms of this Agreement. All capital stock of the
Corporation hereinafter issued to the Shareholders shall bear the same
endorsement.
8. Termination of Agreement. This Agreement shall terminate upon the
occurrence of any of the following events:
a. The cessation of the Corporation's business;
b. Adjudication of the Corporation as a bankrupt, the execution by it of an
assignment for the benefit of creditors, or the appointment of a receiver for
the Corporation; or
c. Voluntary, involuntary or judicial dissolution of the Corporation.
Upon the termination of this Agreement, each Shareholder shall
surrender to the Corporation the certificates for his stock, and the Corporation
shall issue to him in lieu thereof new certificates for an equal number of
shares without the last two sentences of the endorsement set forth in Section 7.
9. Equitable Remedy. The parties hereby declare that it is impossible to
measure in monetary terms the damages which shall accrue to a party hereto by
reason of another party's failure to perform any of the obligations under this
Agreement. Therefore, if any party hereto shall institute any action or
proceeding to enforce the provisions hereof, any person (including the
Corporation) against whom such action or proceeding is brought hereby waives the
claim or defense therein that there is an adequate remedy at law, and such
person shall not urge in any such action or proceeding the claim or defense that
such remedy at law exists.
10. Miscellaneous.
a. Any notice or other communication required or permitted to be given to any
party hereunder shall be deemed given when delivered personally or by Federal
Express or other delivery service providing documentary evidence of delivery, or
five (5) days after mailing by certified mail, return receipt requested, to the
parties at the addresses as set forth above, or to such other address as the
respective parties may designate by notice given pursuant to this Section 10(a).
b. This Agreement shall be binding upon the parties hereto and their heirs,
executors, administrators, successors and assigns. Each Shareholder in
furtherance thereof shall execute a will directing his executor to perform this
Agreement and to execute all documents necessary to effectuate its purposes, but
the failure to execute such will shall not affect the rights of any Shareholders
or the obligations of any estate, as provided in this Agreement.
c. This Agreement contains the entire agreement of the parties and supersedes
all prior agreements, written or oral. No change in or modification of this
Agreement shall be binding unless the same shall be in writing and signed by the
parties hereto.
d. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
e. Any controversy or claim arising out of or relating to this Agreement shall
be determined by arbitration in accordance with the International Arbitration
Rules of the American Arbitration Association. The place of arbitration shall be
New York City.
f. Whenever from the context it appears appropriate, each item stated in
either the singular or the plural shall include the singular and the plural, and
pronouns stated in either the
masculine, feminine or neuter genders shall include the masculine, feminine and
neuter genders.
g. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which together constitute one and the
same instrument.
11. Severability. It is agreed that in the event any provision of this
Agreement or the application thereof to any person or circumstance shall be
adjudged to be invalid or unenforceable according to any applicable laws, the
remaining provisions of this Agreement and the application thereof to any person
or circumstances shall not be affected thereby and shall be enforced to the
fullest extent permitted by law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
ACTV HOLDING, INC.
By:__________________________
ACTV NET, INC.
By:__________________________
_____________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_____________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇
_____________________________
▇▇▇▇▇ ▇▇▇▇▇▇
_____________________________
▇▇▇▇▇ ▇▇▇▇▇
_____________________________
▇▇▇▇▇ ▇▇▇▇▇
