STOCKHOLDERS' AGREEMENT
by and among
Great River Enterprises, LP#1
J. Xxxxx Xxxxx
J. Xxx Xxxxxxxx
Xxxxxxx X. Xxxxx
Xxxxx Xxxxx
And
REZCONNECT TECHNOLOGIES, INC.
(a New York corporation, to be
reincorporated in Delaware and named
YTB International, Inc.)
Dated: December 8, 2004
STOCKHOLDERS' AGREEMENT
TABLE OF CONTENTS
STOCKHOLDERS' AGREEMENT
TABLE OF CONTENTS
Page
----
1. Corporate Governance 2
1.1. Board of Directors. 2
1.2. Initial Officers of the Company. 6
1.3. Certain Actions Requiring Majority Stockholder Approval. 6
2. Transfers of Shares 8
2.1. Certain Restrictions. 8
2.2. Right of First Refusal on Xxxxx Group Shares. 9
2.3. Right of First Offer on the Tomer Group Shares. 10
2.4. "Tag Along" Rights. 12
2.5. Legends; Shares Subject to this Agreement. 12
3. 2005 Stock Option and Restricted Stock Plan 12
3.1. Adoption of New Stock Option Plan. 12
3.2. Administration by the Compensation Committee. 12
3.3. Issuance of Options to Purchase Common Stock. 12
4. Miscellaneous 12
4.1. Legends on Stock Certificates. 12
4.2. Term. 13
4.3. Injunctive Relief. 13
4.4. Notices. 14
4.5. Successors and Assigns. 14
4.6. Company Information. 15
4.7. Governing Law. 15
4.8. Headings. 16
4.9. Entire Agreement; Amendment. 16
4.10. No Waiver. 16
4.11. Arbitration. 16
4.12. Counterparts. 17
4.13. Special Stockholder Meeting. 17
Exhibit X. Xxxxx Group and Xxxxx Group Ownership Table
STOCKHOLDERS' AGREEMENT
AGREEMENT dated as of December 8, 2004 by and among Great River
Enterprises, LP#1, an Illinois limited partnership, with an office at 000 Xxxx
Xxxxx Xxxxxx - Xxxxx 000, Xxxxx, Xxxxxxxx 00000 ("Great River"), J. Xxxxx Xxxxx,
an individual with an office at 000 Xxxx Xxxxx Xxxxxx - Xxxxx 000, Xxxxx,
Xxxxxxxx 00000 ("Xxxxx"), J. Xxx Xxxxxxxx, an individual with an office at 000
Xxxx Xxxxx Xxxxxx - Xxxxx 000, Xxxxx, Xxxxxxxx 00000 ("Xxx"), Xxxxxxx Xxxxx, an
individual with an office at 000 Xxxxxx Xxxxxx, Xxxxxxxxx Xxxxxx, Xxx Xxxxxx
00000 ("Xxxxxxx"); Xxxxx Xxxxx, an individual with an office at 000 Xxxxxx
Xxxxxx, Xxxxxxxxx Xxxxxx, Xxx Xxxxxx 00000 ("Xxxxx"), and REZconnect
Technologies, Inc., a New York corporation with offices at 000 Xxxxxx Xxxxxx,
Xxxxxxxxx Xxxxxx, Xxx Xxxxxx 00000 (the "Company"). Great River, Xxxxx and Xxx
are sometimes collectively referred to herein as (the "Tomer Group"), and
Xxxxxxx and Xxxxx are sometimes collectively referred to herein as (the "Xxxxx
Group"). Each of the parties hereto (other than the Company) and any other
person who shall hereafter become a party to or agree to be bound by the terms
of this agreement (the "Agreement") is sometimes referred to as a "Stockholder"
and all of such parties are sometimes referred to as the "Stockholders."
W I T N E S S E T H:
WHEREAS, the Company and Xxxxxxxxxxxxx.xxx, Inc. ("YTB"), an Illinois
corporation primarily owned by the Tomer Group, are parties to a merger
agreement as amended as of November 19, 2004 (the "Merger Agreement"); and
WHEREAS, immediately prior to the closing of the Merger Agreement, and
giving effect to all issuances of Company common stock other than issuance of
the Exchange Consideration (as defined in the Merger Agreement) there were
11,522,375 shares of the Company's common stock, $.001 par value per share,
("Common Stock"), outstanding;
WHEREAS, the execution and delivery of this Agreement is a condition to
the closing of the Merger Agreement;
WHEREAS, pursuant to the Merger Agreement, the stockholders of YTB will
be issued the following consideration: (i) 7,430,000 shares of Common Stock, and
(ii) 4,092,376 shares of the Company's Series B Convertible Preferred Stock
("Preferred Stock");
WHEREAS, as of the closing of the Merger Agreement, the holdings of
Common Stock (assuming the conversion of the Preferred Stock by the Tomer Group)
and the Xxxxx Group (collectively, the "Shares") will be as follows (as set
forth in more detail on Exhibit A):
1
---------------------------- ---------------------------------------
Stockholder Name Number of Shares
---------------------------- ---------------------------------------
Common Series B Preferred
---------------------------- ----------------- ---------------------
Tomer Group 6,733,809 3,708,921
---------------------------- ----------------- ---------------------
Xxxxx Group 6,223,266 0
---------------------------- ----------------- ---------------------
All other stockholders 6,369,206 383,455(1)
---------------------------- ---------------------------------------
(1)
This number is comprised solely of the shares of Preferred Stock issued
to the TYB stockholders who are not included in the Tomer Group.
WHEREAS, the parties hereto deem it in their best interests and in the
best interests of the Company to provide consistent and uniform management for
the Company and to regulate certain of their rights in connection with their
interests in the Company, and desire to enter into this Agreement in order to
effectuate those purposes; and
WHEREAS, the parties hereto also desire to restrict under certain
circumstances the sale, assignment, transfer, encumbrance or other disposition
of the Shares, including issued and outstanding Shares as well as Common Stock
which may be issued hereafter, or which may become issuable pursuant to the
exercise of options or warrants hereafter granted and to provide for certain
rights and obligations with respect thereto as hereinafter provided.
NOW, THEREFORE, in consideration of the premises and of the covenants,
terms and conditions herein contained, the parties hereto mutually agree as
follows:
1. CORPORATE GOVERNANCE
1.1. Board of Directors.
(a) Number of Directors. The Company shall be
governed by a Board of Directors initially consisting of six (6) members. Within
ninety (90) days after the execution of this Agreement (unless such date is
mutually extended by the parties to this Agreement), the Board of Directors
shall be increased to nine (9) members in order to add the Tomer Group
Independent Director, the Xxxxx Group Independent Director, and the Outside
Independent Director, as each term is defined in Section 1.1(b). The number of
members may not be increased or decreased except as provided in Section 1.3.
(b) Nomination and Election of Directors. The
following procedures shall govern the nomination and election of directors of
the Company:
(i) For so long as the Tomer Group shall
beneficially own at least 20% of the Shares held by them on the
date hereof, they shall be entitled to nominate and have elected
three (3) directors acceptable to them in their sole discretion
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(the "Tomer Group Directors"); and one (1) director (the "Tomer
Group Independent Director") who shall satisfy the standards of
independence established by the American Stock Exchange or such
other national securities exchange or interdealer quotation
system on which the Company's Common Stock is listed or traded
(the "Exchange").
(ii) For so long as the Xxxxx Group shall
beneficially own at least 20% of the Shares held by them on the
date hereof, they shall be entitled to nominate and have elected
three (3) directors acceptable to them in their sole discretion
(the "Xxxxx Group Directors"); and one (1) director (the "Xxxxx
Group Independent Director") who shall satisfy the standards of
independence established by the Exchange.
(iii) The Tomer Group Independent Director and
the Xxxxx Group Independent Director shall select one (1)
additional director (the "Outside Independent Director") who
shall satisfy the standards of independence established by the
Exchange. These three directors shall be referred individually
as an "Independent Director" and collectively as the
"Independent Directors".
(c) Initial Board of Directors. The initial Board of
Directors of the Company shall consist of the following members:
------------------------ ---------------------------------
Name of Director Type of Director
------------------------ ---------------------------------
X. Xxxxx Xxxxx Xxxxx Group Director
------------------------ ---------------------------------
X. Xxxxx Xxxxx Xxxxx Group Director
------------------------ ---------------------------------
J. Xxx Xxxxxxxx Tomer Group Director
------------------------ ---------------------------------
* Tomer Group Independent Director
------------------------ ---------------------------------
Xxxxxxx X. Xxxxx Xxxxx Group Director
------------------------ ---------------------------------
Xxxxx Xxxxx Xxxxx Group Director
------------------------ ---------------------------------
Xxxxxx Xxxxxxxxxx Xxxxx Group Director
------------------------ ---------------------------------
* Xxxxx Group Independent Director
------------------------ ---------------------------------
* Outside Independent Director
------------------------ ---------------------------------
*The Independent Directors shall be elected within ninety (90) days
after the execution of this Agreement unless the parties agree to mutually
extend such period.
(d) Removal of Directors. Except as otherwise
provided in this Section 1.1(d), each holder of Shares agrees not to take any
action or to cause the Company to take any action to remove, with or without
cause, any director of the Company. Notwithstanding the foregoing, The Xxxxx
Group and/or the Xxxxx Group Directors shall at all times have the right to
recommend the removal, with or without cause, of the Xxxxx Group Directors and
the Xxxxx Group Independent Director; and the Tomer Group and the Tomer Group
Directors shall have the right to recommend the removal, with or without cause,
of any Tomer Group Director and the Tomer Group Independent Director. If the
removal of any director is recommended as provided in the immediately preceding
sentence, then the Stockholders shall immediately cause a special meeting of
stockholders to be
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held, or shall act by written consent without a meeting, for the purpose of
removing such director, and each Stockholder agrees to vote all its Shares, or
to execute a written consent in respect of all such Shares, for the removal of
such director.
(e) Vacancies. At any time a vacancy exists on the
Board of Directors, the remaining directors (if any) representing the
Stockholder whose Board seat is vacant shall have the right to designate and
elect the person to fill such vacancy. If no directors representing the
Stockholder remain as a result of such vacancy, the Stockholder shall have the
right to designate and elect the person to fill such vacancy. To the extent
required by law, (i) all directors on the Board and (ii) all holders of Shares,
shall vote in favor of electing such designated director to fill the vacancy and
all such persons shall take the necessary actions to amend the By-Laws to
reflect the provisions of this Agreement.
(f) Covenant to Vote. Each of the Stockholders agrees
to vote, in person or by proxy, all of the Shares beneficially owned by such
Stockholder, at any annual or special meeting of stockholders of the Company
called for the purpose of voting on the election of directors or by consensual
action of stockholders without a meeting with respect to the election of
directors, in favor of the election of the director(s) nominated by the Xxxxx
Group and the Tomer Group, respectively, as the case may be, in accordance with
Section 1.1(b) hereof. Each Stockholder shall vote the Shares owned by such
Stockholder and shall take all other actions necessary to ensure that the
Company's Articles of Incorporation and By-Laws do not at any time conflict with
the provisions of this Agreement.
(g) Quorum. No action shall be taken at any meeting
of the Board of Directors of the Company, except for the adjournment of such
meeting, unless at least two Tomer Group Directors; two Xxxxx Group Directors
and once the Independent Directors have been identified and elected, at least
one (1) Independent Director shall be present. For purposes of a quorum, any
director may be present at any meeting in person, by means of telephone or
similar communications equipment by means of which each person participating in
the meeting can hear and speak to each other or, to the extent permitted under
applicable law, by proxy or by nominee director. No action shall be taken at any
meeting of stockholders of the Company unless a majority of the Shares
beneficially owned by the Tomer Group and the Xxxxx Group are represented at the
meeting, in person or by proxy.
(h) Committees of the Board. The Board shall appoint
such committees, including an audit committee and a compensation committee, as
shall be permissible under Section 712 of the Business Corporation Law of the
State of New York (or such successor provisions of the Delaware General
Corporation Law) and the rules of the Exchange and as the Board shall deem
reasonable and necessary and as shall be required by the Exchange. Unless
Exchange rules shall otherwise require and subject to the formation and
composition of the Subsidiary Committees (as defined in Section 3.1(k) below),
at least half of the members of any such committee shall be comprised of Tomer
4
Group Directors, provided, that if the Board creates an executive committee, one
member of such committee must be a Xxxxx Group Director.
(i) Special Meetings of Directors. Special meetings
of the Board may be called by the President of the Company and shall be called
by the President of the Company or the Secretary of the Company upon the written
request of any six (6) directors.
(j) Special Meetings of Stockholders. Special
meetings of stockholders may be called by the Board and shall be called by the
President of the Company or the Secretary of the Company upon the written
request of any six (6) directors.
(k) Amendment of the By-Laws. Upon execution of this
Agreement, the Board of Directors shall amend the By-Laws of the Company to
create the following committees of the Board ("Subsidiary Committees") which
shall have the authority to vote all of the shares of common stock of the
respective Subsidiaries held by the Company:
---------------------------------------------- ---------------------------------
Name of Operating Subsidiary Type of Director
---------------------------- ----------------
---------------------------------------------- ---------------------------------
XxxxXxxxxxXxx.xxx, Inc. ("Marketing") Tomer Group Director
---------------------------------------------- ---------------------------------
Tomer Group Director
---------------------------------------------- ---------------------------------
Tomer Group Director
---------------------------------------------- ---------------------------------
Xxxxx Group Director
---------------------------------------------- ---------------------------------
Xxxxx Group Director
---------------------------------------------- ---------------------------------
---------------------------------------------- ---------------------------------
RezConnect Technology, Inc. ("Technology") Xxxxx Group Director
---------------------------------------------- ---------------------------------
Xxxxx Group Director
---------------------------------------------- ---------------------------------
Xxxxx Group Director
---------------------------------------------- ---------------------------------
Tomer Group Director
---------------------------------------------- ---------------------------------
Tomer Group Director
---------------------------------------------- ---------------------------------
---------------------------------------------- ---------------------------------
YTB Travel Network, Inc. ("Booking")(1) Xxxxx Group Director
---------------------------------------------- ---------------------------------
Xxxxx Group Director
---------------------------------------------- ---------------------------------
Tomer Group Director
---------------------------------------------- ---------------------------------
Tomer Group Director
---------------------------------------------- ---------------------------------
Outside Independent Director
---------------------------------------------- ---------------------------------
(1) Upon the Company's Board of Directors being increased to nine (9)
members including the appointment of the Outside Independent Director,
the Board of Directors of the Booking Subsidiary will be increased to
five (5) members and the Outside Independent Director shall be
appointed to serve on such Board.
5
The By-Laws shall also be amended to provide that, for so long as this Agreement
is in effect, the By-Laws cannot be amended without the unanimous written
consent of the Board of Directors of the Company.
1.2. Initial Officers of the Company. Each of the Stockholders
agrees to cause the Board of Directors of the Company initially to appoint the
following persons as officers of the Company in the following positions:
---------------------------------- ------------------------------
Office Name
---------------------------------- ------------------------------
Chairman of the Board J. Xxxxx Xxxxx
---------------------------------- ------------------------------
President J. Xxxxx Xxxxx(1)
---------------------------------- ------------------------------
Chief Executive Officer Xxxxxxx X. Xxxxx(2)
---------------------------------- ------------------------------
Chief Operating Officer TBD by Board of Directors
---------------------------------- ------------------------------
Chief Financial Officer to be agreed to by the Directo
---------------------------------- ------------------------------
Treasurer J. Xxx Xxxxxxxx(3)
---------------------------------- ------------------------------
Secretary Xxxxx X. Xxxxx
---------------------------------- ------------------------------
(1) J. Xxxxx Xxxxx shall also be President and CEO of the Marketing Subsidiary.
(2) Xxxxx Xxxxx shall also be President and Xxxxxxx Xxxxx shall also be CEO of
the Technology Subsidiary.
(3) J. Xxx Xxxxxxxx shall also be President and CEO of the Booking Subsidiary.
If any of such officers are unable to serve, or cease for any reason to be an
officer of the Company, their successors shall be appointed by the Board of
Directors of the Company. The parties hereto agree that the Company should enter
into employment agreements with each officer mentioned above to assure the
Company of such officer's services for a fixed period of time.
1.3. Certain Actions Requiring Majority Stockholder Approval.
For so long as the Xxxxx Group and the Tomer Group shall collectively own shares
constituting at least 20% of the Common Stock then outstanding, without either:
(A) the prior unanimous vote of the Xxxxx Group Directors and
the Tomer Group Directors, or
(B) the prior affirmative vote of at least 75% of the Shares
then beneficially owned by the Tomer Group and the Xxxxx Group taken
collectively (either of (A) or (B) being referred to as a "Majority Vote"), the
Company shall not, and the Xxxxx Group Directors and the Tomer Group Directors
shall use their respective best efforts to preclude the Company and each
Subsidiary, whether directly or indirectly, from taking the following actions:
(a) issue or sell any shares of, or cause or permit
any of its Subsidiaries to issue or sell any shares of, any class or series of
capital stock of the Company or such Subsidiary, or any securities convertible
into, or exercisable or exchangeable for, any shares of any class or series of
6
capital stock of the Company or such Subsidiary, other than (i) employee stock
options issued pursuant to the Company's Management Stock Option Plan (as
hereinafter defined in Section 3.1 hereof) or a plan approved by a Majority Vote
(an "Approved Plan"), (ii) shares issued upon exercise of stock options granted
pursuant to the Company's existing Stock Option Plan or an Approved Plan, and
(iii) other issuances expressly contemplated by the Merger Agreement. As used
herein, "Subsidiary" means any corporation, partnership or other entity of which
a majority of the equity securities are at the relevant time directly or
indirectly owned by the Company;
(b) except as provided in or contemplated by the
Merger Agreement, purchase, redeem, retire or otherwise acquire, or set aside
any assets or deposit any funds for the purchase, redemption, retirement or
other acquisition of, any shares of any class or series of capital stock of the
Company, any Subsidiary or any securities convertible into, or exercisable or
exchangeable for, any shares of any class or series of capital stock of the
Company or any Subsidiary;
(c) purchase or otherwise acquire, or cause or permit
any Subsidiary to purchase or otherwise acquire in one transaction or a series
of related transactions (other than purchases of inventory or services in the
ordinary course of business), any significant business or assets (including a
partial interest) from a third party, whether through stock or asset purchase or
otherwise;
(d) sell, lease, assign or otherwise transfer or
dispose of, or cause or permit any Subsidiary to sell, lease, assign or
otherwise transfer or dispose of, in one transaction or a series of related
transactions (other than sales of inventory or services in the ordinary course
of business), all or substantially all of the Company's assets to a third party,
whether through stock or asset sale or otherwise;
(e) enter into any agreement, or adopt any
resolution, or cause or permit any Subsidiary to enter into any agreement or
adopt any resolution, in respect of (i) any merger of the Company or such
Subsidiary with or into any other corporation, partnership or other entity, (ii)
any consolidation of the Company or such Subsidiary with any other corporation,
partnership or other entity, (iii) any transaction or series of related
transactions in which the Company shall sell or otherwise transfer all or
substantially all of the Company's business, property or assets or (iv) any
dissolution, liquidation or reorganization of the Company or any Subsidiary;
(f) amend, modify, alter or repeal the Company's or
any Subsidiary's Articles of Incorporation or By-Laws in any respect in
contravention of this Agreement;
(g) effect any initial public offering of the
securities of the Company or any Subsidiary pursuant to the Securities Act of
1933, as amended (the "Securities Act");
7
(h) amend or modify on behalf of the Company the
terms, provisions or conditions of this Agreement or extend the term of this
Agreement;
(i) alter the size or composition of the Board of
Directors of the Company or any Subsidiary; or
(j) incur debt in an amount above $50,000; or
guarantee any third party obligation or any debt of any person in an amount
above $50,000.
2. TRANSFERS OF SHARES
2.1. Certain Restrictions.
(a) Notwithstanding anything to the contrary set
forth herein, no Stockholder or Transferee (as hereinafter defined in Section
2.5) shall directly or indirectly sell, assign, pledge, encumber, hypothecate or
otherwise dispose of including any disposition by way of a statutory merger or
consolidation involving a Stockholder that is not a natural person (collectively
a "Transfer") any Shares at any time, unless any such Transfer shall have been
effected in accordance with the terms of this Agreement.
(b) No Stockholder shall Transfer any Shares at any
time if such action would constitute a violation of any federal or state
securities or blue sky laws or a breach of the conditions to any exemption from
registration of Shares under any such laws or a breach of any undertaking or
agreement of such Stockholder entered into pursuant to such laws or in
connection with obtaining an exemption thereunder. Each Stockholder agrees that
any Shares to be received by such Stockholder pursuant to the Merger Agreement
shall bear appropriate legends restricting the sale or other transfer of such
stock in accordance with applicable federal or state securities or blue sky
laws, as set forth in Section 4.1 hereof.
(c) Except as otherwise provided in this Agreement,
no Stockholder shall grant any proxy or enter into or agree to be bound by any
voting trust with respect to any Shares nor shall any Stockholder enter into any
stockholder agreements or arrangements of any kind with any person with respect
to any Shares inconsistent with the provisions of this Agreement (whether or not
such agreements and arrangements are with other Stockholders or holders of
Shares who are not parties to this Agreement), including agreements or
arrangements with respect to the acquisition, disposition or voting (if
applicable) of any Shares, nor shall any Stockholder act, for any reason, as a
member of a group or in concert with any other persons in connection with the
acquisition, disposition or voting (if applicable) of any Shares in any manner
which is inconsistent with this Agreement.
(d) None of the restrictions contained in this
Agreement with respect to Transfers of Shares shall apply to Transfers of Shares
to (i) any affiliate of a Stockholder (as such term is defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
thereof (an "Affiliate Transferee"); or (ii) to members of a Stockholder's
8
immediate family or his lineal descendants (a "Family Transferee"). Any such
Affiliate Transferee or Family Transferee shall be considered a "Permitted
Transferee" for purposes of this Agreement. Only in the event such Affiliate
Transferee or Family Transferee shall become an Affiliate of the Company as a
result of any permitted transfer hereunder, such Affiliate Transferee or Family
Transferee shall agree in writing to be bound by the terms of this Agreement.
2.2. Right of First Refusal on Xxxxx Group Shares.
(a) If any member of the Xxxxx Group desires to
Transfer any Shares now or hereafter beneficially owned by it to any other
person (other than (i) pursuant to a registered public offering under the
Securities Act; (ii) a public resale under Securities Act Rule 144 effected in
accordance with Section 2.2(d) hereof; or (iii) a Transfer of Shares to an
Affiliate Transferee or a Family Transferee) such Xxxxx Group member shall
before effecting such Transfer first give written notice (a "Seller's Notice")
to the Tomer Group stating their desire to make such Transfer, the identity of
the party to whom such Shares are proposed to be transferred (the "ROFR
Transferee"), the number of Shares proposed to be transferred (the "Offered
Shares"), the cash price (the "First Offer Price") agreed upon between the Xxxxx
Group member and the ROFR Transferee at which the Stockholder proposes to sell
the Offered Shares (it being understood and agreed that the Xxxxx Group may not
Transfer, sell or otherwise dispose of Shares except for cash) and any other
material terms proposed for the sale of such Offered Shares.
(b) Upon receipt of the Seller's Notice (the "First
Offer"), the Tomer Group or any Affiliate of the Tomer Group chosen by the Tomer
Group, shall have the irrevocable and exclusive option (the "Option") to buy all
of the Offered Shares at the First Offer Price. The Tomer Group' Option shall be
exercisable by a written notice to the holder of the Offered Shares (the
"Buyer's Notice"), given within 10 days from the date of the Seller's Notice.
(c) If the applicable Seller's Notice shall be duly
given, and if the Tomer Group shall not have exercised their Option to purchase
(or for their designee to purchase) the Offered Shares at the First Offer Price
within 45 days of the date the applicable member of the Xxxxx Group gave the
Seller's Notice, then, subject to the other provisions of this Agreement, the
applicable member of the Xxxxx Group shall be free for a period of 90 days from
the earlier of (i) the 10th day following the date of the last Seller's Notice
or (ii) the date the applicable member of the Xxxxx Group shall have received
written notice from the Tomer Group stating their intention not to exercise the
Option, to sell the Offered Shares not to be purchased by the Tomer Group to the
ROFR Transferee at a price not more than 10% below the First Offer Price and on
the terms and conditions not materially less favorable, taken as a whole, than
those set forth in the Seller's Notice. In any such sale the ROFR Transferee
must agree to become a party to and be bound by the terms of this Agreement.
(d) All other provisions of this Section 2.2
notwithstanding, any member of the Xxxxx Group intending to make a public resale
9
of Shares pursuant to Securities Act Rule 144, following satisfaction of the
holding period and other requirements thereof, may do so provided
(i) an informational notice (containing the
same information as set forth in the
Seller's Notice) is provided to the Tomer
Group concurrent with the filing of a Form
144 or the execution of a sale; and
(ii) the number of Shares sold may not
exceed the quarterly volume limitation
provided by Rule 144(e).
(e) If the Offered Shares are not sold by the member
of the Xxxxx Group pursuant to Section 2.2(c) or 2.2(d) above, upon the
expiration of the 90 day period contemplated by Section 2.2(c) or the 10 day
period contemplated by Section 2.2(d), as applicable, the Offered Shares shall
again become subject to the right of first refusal provisions of this Section
2.2.
2.3. Right of First Refusal on the Tomer Group Shares.
(a) If a member of the Tomer Group desires to
Transfer any Shares now or hereafter beneficially owned by it to any other
person (other than (i) pursuant to a registered public offering under the
Securities Act; (ii) a public resale under Securities Act Rule 144 effected in
accordance with Section 2.3(d) hereof; or (iii) a Transfer to an Affiliate
Transferee or a Family Transferee) such Tomer Group member shall before
effecting such Transfer first give written notice (a "Seller's Notice") to the
Xxxxx Group stating their desire to make such Transfer, the identity of the
party to whom such Shares are proposed to be transferred (the "ROFR Transferee")
the number of Shares proposed to be transferred (the "Offered Shares"), the cash
price (the "First Offer Price") agreed upon between such Tomer Group member and
the ROFR Transferee at which the Tomer Group member proposes to sell the Offered
Shares (it being understood and agreed that the Tomer Group may not Transfer,
sell or otherwise dispose of Shares except for cash) and any other material
terms proposed for the sale of such Offered Shares.
(b) Upon receipt of the Seller's Notice (the "First
Offer"), the Xxxxx Group shall have the option (the "Option") to buy all of the
Offered Shares at the First Offer Price. The Xxxxx Group's Option shall be
exercisable by a written notice to the holder of the Offered Shares (the
"Buyer's Notice"), given within 10 days from the date of the Seller's Notice.
(c) If the applicable Seller's Notice shall be duly
given, and if the Xxxxx Group shall not have exercised their Option to purchase
the Offered Shares at the First Offer Price within 45 days of the date the
applicable member of the Tomer Group gave the Seller's Notice, then the Tomer
Group shall be free for a period of 90 days from the earlier of (i) the 10th day
following the date of the last Seller's Notice or (ii) the date the Tomer Group
shall have received written notice from the Xxxxx Group stating their intention
10
not to exercise their Option, to sell the Offered Shares to the ROFR Transferee
at a price not more than 10% below the First Offer Price and on terms and
conditions not materially less favorable, taken as a whole, than those set forth
in the Seller's Notice. In any such sale, the ROFR Transferee must agree to
become a party to and be bound by the terms of this Agreement and the Tomer
Group shall have the right to require the Xxxxx Group to sell or otherwise
transfer to such ROFR Transferee Shares beneficially owned by the Xxxxx Group,
at the same price per Share and in the same proportion as such ROFR Transferee
has offered to purchase the Offered Shares.
(d) All other provisions of this Section 2.3
notwithstanding, any Tomer Group member intending to make a public resale of
Shares pursuant to Securities Act Rule 144, following satisfaction of the
holding period and other requirements thereof, may do so provided:
(i) an informational notice (containing the same
information as set forth in the Seller's Notice)
is provided to the Xxxxx Group concurrent with
the filing of a Form 144 or the execution of a
sale; and
(ii) the number of Shares sold may not exceed
the quarterly volume limitation provided by Rule
144(e).
(e) If the Offered Shares are not sold by the Tomer
Group pursuant to Section 2.3(c) or 2.3(d) above, upon the expiration of the 90
day period contemplated by Section 2.3(c) or the 10 day period contemplated by
Section 2.3(d), as applicable, the Offered Shares shall again become subject to
the right of first refusal provisions of this Section 2.3.
2.4. "Tag Along" Rights.
(a) If the Tomer Group intends to seek to sell or
otherwise transfer a Control Portion (as hereinafter defined) of their Shares to
any other person (other than a Permitted Transferee) the Tomer Group shall first
deliver to the Xxxxx Group a written notice (the "the Tomer Group Tag Along
Notice") advising the Xxxxx Group of the Tomer Group' intention to sell a
Control Portion of its Shares and specifying the price at which the Tomer Group
proposes to sell such Shares and any other material terms proposed for the sale.
Within ten days after the date of the Tomer Group Tag Along Notice, the Xxxxx
Group must deliver to the Tomer Group a written notice (the "the Xxxxx Group Tag
Along Notice") indicating whether the Xxxxx Group shall require the Tomer Group
to have any of the Xxxxx Group's Shares included in the proposed sale in the
same proportion as the Tomer Group propose to sell or transfer. The Xxxxx
Group's determination to participate in such sale, as evidenced by the Xxxxx
Group Tag Along Notice, shall be final and irrevocable, provided such sale is
made on terms not materially less favorable, taken as a whole, to the Tomer
Group and the Xxxxx Group from the terms specified in the Tomer Group Tag Along
Notice. The Xxxxx Group's determination not to participate in such sale, as
evidenced by the Xxxxx Group Tag Along Notice, or the Xxxxx Group's failure to
11
timely deliver the Xxxxx Group Tag Along Notice, shall be final and irrevocable
and the Xxxxx Group shall be deemed to have waived its right to participate in
any such sale.
(b) For purposes of this Section 2.4, a "Control
Portion" of the Tomer Group' Shares shall mean that number of Shares which, when
effectively transferred to another person (other than an Affiliate of the Tomer
Group) shall result in such person beneficially owning on a fully diluted basis
a greater number of Shares than any other Stockholder and its Affiliates.
2.5. Legends; Shares Subject to this Agreement. Unless
otherwise expressly provided herein or in the Management Stock Option Plan, no
Stockholder shall Transfer any Shares to any person (regardless of the manner in
which such Stockholder initially acquired such Shares) nor shall the Company
issue, sell or otherwise transfer any Shares to any person (all persons
acquiring Shares from a Stockholder or from the Company, regardless of the
method of transfer, shall be referred to collectively as "Transferees" and
individually as a "Transferee") unless (i) such Shares bear legends as provided
in Section 4.1 and (ii) such Transferee shall have executed and delivered to the
Company, as a condition precedent to any acquisition of such Shares, an
instrument in form and substance reasonably satisfactory to the Company
confirming that such Transferee agrees to become a party to this Agreement and
takes such Shares subject to all the terms and conditions of this Agreement;
provided that the provisions of this Section 2.5 shall not apply in respect of a
sale of Shares (i) included in a registered public offering under the Securities
Act and the rules and regulations promulgated thereunder; or (ii) made pursuant
to Sections 2.2(d) or 2.3(d) hereof. The Company shall not transfer upon their
books any Shares to any person except in accordance with this Agreement.
3. 2005 STOCK OPTION AND RESTRICTED STOCK PLAN
3.1. Adoption of New Stock Option Plan. The Board shall adopt
a Stock Option and Restricted Stock Plan (the "2005 Plan") at such future date
and containing such terms and conditions as a majority of the Board of Directors
shall determine.
3.2. Administration by the Compensation Committee. The 2005
Plan shall be administered by the Compensation Committee of the Board of
Directors.
3.3. Issuance of Options to Purchase Common Stock. The 2005
Plan shall be authorized and entitled to issue to consultants, employees,
officers and directors of the Company (as identified by the Compensation
Committee) options to purchase up to 5,000,000 shares of Common Stock.
4. MISCELLANEOUS
4.1. Legends on Stock Certificates A copy of this Agreement
shall be filed with the Secretary of the Company and kept with
12
the records of the Company. Each of the Stockholders hereby agrees that each
outstanding certificate representing Shares subject to this Agreement shall bear
legends reading substantially as follows:
(a) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES OR BLUE SKY LAWS, AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION, UNDER THE SECURITIES ACT AND SUCH
STATE SECURITIES OR BLUE SKY LAWS.
(b) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER, AND CERTAIN VOTING RESTRICTIONS, ON
THE TERMS AND CONDITIONS SET FORTH IN A STOCKHOLDERS'
AGREEMENT DATED AS OF DECEMBER 8, 2004, A COPY OF WHICH MAY BE
OBTAINED FROM THE COMPANY OR FROM THE HOLDER OF THIS
CERTIFICATE. NO TRANSFER OF SUCH SHARES WILL BE MADE ON THE
BOOKS OF THE COMPANY UNLESS ACCOMPANIED BY EVIDENCE OF
COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT.
Such certificate shall bear any additional legend required by the Merger
Agreement or required for compliance with state securities or blue sky laws.
4.2. Term. This Agreement shall terminate on the date of the
first to occur of the following events: (i) the closing of the sale by one or
more members of the Tomer Group pursuant to one or more offerings registered
under the Securities Act to any person or group of persons who are not, and who
do not become, at the time of sale, parties to this Agreement of a number of
Shares equal to 20% of the number of Shares issued to the Tomer Group at the
closing of the Merger Agreement; (ii) Bankruptcy, receivership, or dissolution
of the Company; (iii) the voluntary agreement of all the parties who are then
bound by the terms hereof; or (iv) the acquisition of all the Shares by one of
the Stockholders.
4.3. Injunctive Relief. It is hereby agreed and acknowledged
that it will be impossible to measure in money the damages that would be
suffered if the parties fail to comply with any of the obligations herein
imposed on them and that in the event of any such failure, an aggrieved person
will be irreparably damaged and will not have an adequate remedy at law. Any
such person shall, therefore, be entitled to injunctive relief, including
specific performance, to enforce such obligations, and if any action should be
brought in equity to enforce any of the provisions of this Agreement, none of
the parties hereto shall raise the defense that there is an adequate remedy at
law.
13
4.4. Notices. All notices, statements, instructions or other
documents required to be given hereunder, shall be in writing and shall be given
either by hand delivery, by overnight delivery service, by facsimile
transmission or by mailing the same in a sealed envelope, first-class mail,
postage prepaid and either certified or registered, return receipt requested,
addressed as follows:
----------------------------------------- --------------------------------------
Rezconnect Technologies, Inc.
if to the Xxxxx Group, to: 000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx
----------------------------------------- --------------------------------------
----------------------------------------- --------------------------------------
Xxxx X. Xxxxxx, Esq.
with a copy to their counsel: 0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
----------------------------------------- --------------------------------------
----------------------------------------- --------------------------------------
if to the Tomer Group, send notices to 000 Xxxx Xxxxx Xxxxxx - Xxxxx 000
them at the notice address given on the Xxxxx, XX 00000
signature page hereof, or Company, to:
----------------------------------------- --------------------------------------
----------------------------------------- --------------------------------------
with a copy to their counsel: Xxxxxx X. XxXxxxx, Esq.
----------------------------------------- --------------------------------------
Xxxx Xxxxx LLP
----------------------------------------- --------------------------------------
One Riverfront Plaza, First Floor
----------------------------------------- --------------------------------------
Xxxxxx, XX 00000
----------------------------------------- --------------------------------------
and to the other parties at their addresses reflected in the stock records of
the Company. Each Stockholder, by written notice given to the Company in
accordance with this Section 4.4 may change the address to which notices,
statements, instruction or other documents are to be sent to such Stockholder.
All notices, statements, instructions and other documents hereunder that are (i)
mailed shall be deemed to have been given on the date of mailing, (ii) sent by
hand delivery or by facsimile transmission shall be deemed to have been given
when received, or (iii) sent by overnight delivery service shall be deemed to
have been given one business day after sent. Whenever pursuant to this Agreement
any notice is required to be given by any Stockholder to any other Stockholder
or Stockholders, such Stockholder may request from the Company a list of
addresses of all Stockholders of the Company, which list shall be promptly
furnished to such Stockholder.
4.5. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties, and their respective
successors and permitted assigns. If any Transferee of any Stockholder shall
acquire any Shares, or any right to acquire Shares, in any manner, whether by
operation of law or otherwise, such Shares shall be held subject to all of the
14
terms of this Agreement, and by taking and holding such Shares such person shall
be conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement.
4.6. Company Information. The Company agrees to deliver to
each Stockholder, without charge, so long as such Stockholder owns any Shares:
(a) Within 45 days after the end of each quarterly
fiscal period (except the last) in each fiscal year of the Company, a
consolidated balance sheet of the Company and their consolidated Subsidiaries as
of the end of such quarter, and consolidated statements of income and cash flow
of the Company and their consolidated Subsidiaries for such quarter and the
portion of the fiscal year ending with such quarter, setting forth in each case
in comparative form the figures for the corresponding periods a year earlier and
the figures set forth in the Company's budget for such periods and accompanied
by a narrative description of such financial statements in reasonable detail
prepared by the chief accounting or financial officer of the Company.
(b) Within 90 days after the end of each fiscal year
of the Company, a consolidated balance sheet of the Company and their
consolidated Subsidiaries as of the end of such fiscal year, and consolidated
statements of income, and cash flows for such fiscal year, in each case prepared
in accordance with generally accepted accounting principles, setting forth in
each case in comparative form the figures for the previous fiscal year and the
figures set forth in the Company's budget for such fiscal year.
(c) Promptly after receipt of a request therefor, any
information required by or necessary for a Stockholder to comply with local,
state or federal regulatory or tax filing requirements.
(d) Permit representatives of the Tomer Group and the
Xxxxx Group at reasonable times upon prior reasonable notice to visit and
inspect such financial records and the premises of the Company at reasonable
times on reasonable notice and to make copies of such records as such
representatives deem necessary, other than documents subject to the
attorney-client privilege or the attorney work product privilege, and to discuss
the business, operations, assets, properties and financial and other conditions
of the Company with officers and employees of the Company and with their
independent accountants.
(e) With reasonable promptness, such other data and
information as from time to time may be reasonably requested.
4.7. Governing Law. Regardless of the place of execution, this
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, applicable to contracts made and to be performed entirely
within such state.
15
4.8. Headings. All headings are inserted herein for
convenience only and do not form a part of this Agreement.
4.9. Entire Agreement; Amendment. This Agreement and the other
agreements referenced herein contain the entire agreement among the parties
hereto with respect to the transactions contemplated herein and supersede all
prior written agreements and negotiations and oral understandings, if any, and
this Agreement may not be amended, supplemented or discharged except by an
instrument in writing signed by all the Stockholders. Concurrently with such
amendment or modification of this Agreement or as soon thereafter as is
practicable the Certificate of Incorporation and By-Laws of the Company shall be
amended by necessary corporate action. In the event that any Stockholder, or the
Company shall be required, as a result of the enactment, amendment or
modification, subsequent to the date hereof, of any applicable law or
regulations, or by the order of any governmental authority, to take any action
which is inconsistent with or which would constitute a violation or breach of
any terms of this Agreement, then the Stockholders, and the Company shall use
their best efforts to negotiate an appropriate amendment or modification of, or
waiver of compliance with, such terms.
4.10. No Waiver. No failure to exercise and no delay in
exercising any right, power or privilege of a party hereunder shall operate as a
waiver nor a consent to the modification of the terms hereof unless given by
that party in writing.
4.11. Arbitration. Any controversy, claim, or dispute between
the parties, directly or indirectly, concerning this Agreement or the breach
hereof, or the subject matter hereof, including questions concerning the scope
and applicability of this arbitration clause, shall be finally settled by
arbitration in New York City, New York pursuant to the rules then applying of
the American Arbitration Association. The arbitrators shall consist of one
representative selected by the Tomer Group, one representative selected by the
Xxxxx Group and one representative selected by the first two arbitrators. The
parties agree to expedite the arbitration proceeding in every way, so that the
arbitration proceeding shall be commenced within thirty (30) days after request
therefore is made, and shall continue thereafter, without interruption, and that
the decision of the arbitrators shall be handed down within thirty (30) days
after the hearings in the arbitration proceedings are closed. The arbitrators
shall have the right and authority to assess the cost of the arbitration
proceedings and to determine how their decision or determination as to each
issue or matter in dispute may be implemented or enforced. The decision in
writing of any two of the arbitrators shall be binding and conclusive on all of
the parties to this Agreement. Should either the Tomer Group or the Xxxxx Group
fail to appoint an arbitrator as required by this Section 4.11 within thirty
(30) days after receiving written notice from the other party to do so, the
arbitrator appointed by the other party shall act for all of the parties and his
decision in writing shall be binding and conclusive on all of the parties to
this Agreement. Any decision or award of the arbitrators shall be final and
conclusive on the parties to this Agreement; judgment upon such decision or
award may be entered in any competent Federal or state court located in the
United States of America; and the application may be made to such court for
16
confirmation of such decision or award for any order of enforcement and for any
other legal remedies that may be necessary to effectuate such decision or award.
4.12. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Fax copy signatures shall
be given the same effect as original signatures.
4.13 Special Stockholder Meeting. The Stockholders acknowledge
that the Merger Agreement requires that no later than 30 days after the closing
of the Merger Agreement, the Company shall file with the Securities and Exchange
Commission an Information Statement for a meeting of the Company's stockholders.
The Information Statement shall propose:
(i) increasing the Company's authorized common stock to
50 million shares;
(ii) reincorporating the Company from New York into Delaware;
(iii) changing the name of the Company to YTB International,
Inc.; and
(iv) adopting the 2005 Plan.
The Stockholders each covenant to vote all Shares held by them in favor
of the foregoing actions and such other actions that may be reasonably necessary
to effect the intent of the foregoing.
[rest of page left blank intentionally - next page is signature page]
17
IN WITNESS WHEREOF, the parties here have caused this
Stockholders' Agreement to be duly executed on the date first written above.
ATTEST : REZCONNECT TECHNOLOGIES, INC.
By: By:
----------------------------- ---------------------------------
Xxxxxxx X. Xxxxx, CEO
GREAT RIVER ENTERPRISES, LP#1
By:
----------------------------- ---------------------------------
J. Xxxxx Xxxxx, Individually J. Xxxxx Xxxxx, General Partner
----------------------------- ---------------------------------
J. Xxx Xxxxxxxx, Individually Xxxxx Xxxxx, Individually
Xxxxxxx X. Xxxxx, Individually
---------------------------------
18
EXHIBIT A
DETAIL OF TOMER GROUP AND XXXXX GROUP
STOCK OWNERSHIP TABLE
------------------------------ -------------------------------------------
Name of Holder Number of Shares
------------------------------ -------------------------------------------
Common Stock Series B Preferred
------------------------------ -------------------- ----------------------
------------------------------ -------------------- ----------------------
Great River Enterprises, LP#1 3,947,559 2,174,279
(J.Xxxxx Xxxxx)
------------------------------ -------------------- ----------------------
J. Xxxxx Xxxxx 1,393,125 767,321
------------------------------ -------------------- ----------------------
J. Xxx Xxxxxxxx 1,393,125 767,321
------------------------------ -------------------- ----------------------
------------------------------ -------------------- ----------------------
Subtotal 6,733,809 3,708,921
------------------------------ -------------------- ----------------------
TOTAL 10,442,730
------------------------------ -------------------------------------------
DETAIL OF XXXXX GROUP STOCK HOLDINGS
------------------------------ -------------------------------------------
Name of Holder Number of Shares
------------------------------ -------------------------------------------
Common Stock Series B Preferred
------------------------------ -------------------- ----------------------
Xxxxxxx X. Xxxxx 5,103,032 0
------------------------------ -------------------- ----------------------
Xxxxx Xxxxx 1,120,234 0
------------------------------ -------------------- ----------------------
------------------------------ -------------------- ----------------------
TOTAL 6,223,266
------------------------------ -------------------------------------------
19
