Exhibit 10.42
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of the
9th day of September, l996 (the "Effective Date"), by and between XXXXXXX X.
XXXXXXX, XX. (Xxxxxxx) having an address at 00 Xxxxxxx Xxxx, Xxxxxx, Xxx Xxxx
00000, RSL COMMUNICATIONS, PLC, a United Kingdom Corporation (the "Investor"),
with offices at 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000 and
INTERNATIONAL TELECOMMUNICATIONS GROUP, LTD., a Delaware corporation (the
"Company") with offices at EAB Plaza, Xxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxxxxx, Xxx
Xxxx x0000.
W I T N E S S E T H:
WHEREAS, Rebetti owns l4,634 shares of Common Stock, par value $.0l
per share (the "Common Stock") of the Company; and
WHEREAS, Rebetti desires to sell and the Investor desires to
purchase 11,510 shares of the Common Stock owned by Rebetti (the "Shares") at a
Purchase Price as set forth in Section 1.1 of this Agreement.
NOW, THEREFORE, in consideration for the agreements contained
herein, intending to be legally bound, Rebetti, the Company and the Investor
hereby agree as follows:
ARTICLE I
Purchase and Sale of Common Stock
Section 1.1 Sale of Shares and Purchase Price. Subject to the terms
and conditions set forth in this Agreement, the Investor agrees to purchase from
Rebetti at the Closing Date (as defined below) (hereinafter, the "Closing"),
and Rebetti agrees to sell to the Investor at the Closing, the Shares at an
aggregate price to the Investor of One Million One Hundred Four Thousand Nine
Hundred Sixty U.S. Dollars ($1,104,960) in cash, payable $276,240 at the Closing
Date, and $828,720 by issuance by Investor of its 6% secured promissory note in
the form set forth as Exhibit A hereto (the "RSL Note") providing for three
principal payments aggregating $276,240 on each of the first, second and third
anniversary dates of the Closing Date (the "Purchase Price"). In addition,
Investor, the Company, Xxxxxxx X. Xxxxxx ("Xxxxxx"), Xxxxxxxx Xxxxxx,
Xxxxxxxxxx Xxxxxx (Xxxxxxxx Xxxxxx and Xxxxxxxxxx Xxxxxx hereinafter referred to
together as the "Xxxxxx Daughters") and Rebetti shall also, at the Closing Date,
enter into a New Shareholders Agreement terminating all prior Company
shareholders agreements as they relate to Xxxxxx, the Xxxxxx Daughters, Investor
and Rebetti, in the form as set forth in Exhibit B attached hereto.
ARTICLE II
Closing; Delivery
Section 2.1 The Closing. The Closing Date shall be the third
business day following notice to the Company and Investor of approval by the
Federal Communications Commission ("FCC") of a Transfer of Control Application
or at such other time and place or date as Rebetti, the Company and the Investor
shall agree upon. The Closing shall take place at 10:00 a.m. at the offices of
Rosenman & Colin LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Section 2.2 Deliveries. At the Closing, Rebetti shall deliver to the
Investor a certificate or certificates representing the Shares being purchased
by the Investor, free and clear of all liens, charges and encumbrances,
registered in Investor's name or duly endorsed or accompanied by executed stock
powers, in exchange for delivery to Rebetti by the Investor of the Purchase
Price, and the documents referred to in Articles VI and VII shall be delivered
by the appropriate parties. All cash payments shall be made by certified or bank
check payable to the order of Rebetti or by wire transfer to an account
previously designated in writing by Rebetti at least two days prior to the
Closing.
ARTICLE III
(Intentionally omitted)
ARTICLE IV
Representations and Warranties of Rebetti
Rebetti hereby represents and warrants to Investor as follows:
Section 4.1 Authority. Rebetti has adequate power and authority to
enter into and to perform his obligations under this Agreement and the New
Shareholders Agreement and to consummate the transaction contemplated hereby and
thereby.
Section 4.2 Binding Obligation. This Agreement and the New
Shareholders Agreement constitute the valid, binding and enforceable obligations
of Rebetti, except to the extent that such enforcement may be limited by
bankruptcy, insolvency and other laws now or hereafter in effect relating to the
enforcement of creditors' rights generally, and except to the extent that
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equitable principles may limit the right to obtain specific performance or other
equitable remedies.
Section 4.3. No Conflicts. To the best of Rebetti's knowledge, the
entry into and performance by Rebetti of this Agreement and the New Shareholders
Agreement will not: (i) violate any judgment, order, law or regulation
applicable to Rebetti, or (ii) result in any breach of, constitute a default
under or result in the creation of any lien, charge, security interest, pledge,
or other encumbrance on the Shares pursuant to any indenture, mortgage, deed of
trust, bank loan or credit agreement or other instrument to which Rebetti is a
party or to which his assets are bound.
Section 4.4 Consents. Except for Xxxxxx'x waiver (see Section 6.3
below) all consents and/or waivers to the transaction contemplated herein as
required by that certain Shareholders Agreement, dated September 1, 1994, as
amended, between Investor, the Company, Incom, Xxxxxx and Rebetti (the "Company
Stockholders Agreement") have been obtained.
Section 4.5 Ownership of Shares. The Shares are owned of record and
beneficially by Rebetti, free and clear of any liens, charges, encumbrances,
pledges, claims, security interests or other rights of third parties. Rebetti,
has good and marketable title to the Shares and has the absolute right, power
and capacity to sell, assign and transfer the Shares to Investor free and clear
of any liens, encumbrances, security interests or other restrictions (other than
restrictions imposed generally by state and federal securities laws with respect
to unregistered securities).
ARTICLE V
Representations and Warranties of the Investor
The Investor hereby represents and warrants to the Company that:
Section 5.1 Investment Intent. The Shares are being acquired by the
Investor solely for its own account, for investment purposes only, and with no
present intention of distributing, selling or otherwise disposing of such
Shares. The Investor understands that the Shares have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), by reason of a
specific exemption from the registration provisions of the Securities Act, the
availability of which depends upon, among other things, the bona fide nature of
the Investor's investment intent and accuracy of the Investor's representations,
as expressed herein.
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Section 5.2 Restricted Securities. The Investor understands that the
Shares it is purchasing are "restricted securities" under the federal securities
laws inasmuch as they are being acquired from an affiliate of the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act only in certain limited circumstances. The Investor
understands that there is no public market for the Shares and that there may
never be a public market for such securities, and that even if a market develops
for such securities the Investor may never be able to sell or dispose of the
Shares and may thus have to bear the risk of its investment in such stock for a
substantial period of time, or forever.
Section 5.3 Authorization. All corporate action on the part of the
Investor and its officers, directors and shareholders necessary for the
authorization, execution, delivery and performance by the Investor of this
Agreement, the RSL Note and the New Shareholders Agreement, the purchase of the
Shares and the performance of all of the Investor's obligations hereunder has
been taken or will be taken prior to the Closing.
Section 5.4 Organization and Standing. The Investor is a corporation
which is duly organized, validly existing and in good standing under the laws of
the United Kingdom. The Investor has all requisite legal and corporate power to
execute and deliver this Agreement, the RSL Note and the New Shareholders
Agreement, to purchase the Shares hereunder and to carry out and perform its
obligations under the terms of this Agreement, the RSL Note and the New
Shareholders Agreement.
Section 5.5 Legend. It is understood that the certificates
evidencing the Shares shall bear the following legend:
These securities have not been registered under the Securities Act of
1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with
respect to the securities under such Act or an opinion of counsel
satisfactory to International Telecommunications Group, Ltd. that such
registration is not required or unless sold pursuant to Rule 144 of such
Act.
Section 5.6 Line of Credit. Investor, through its parent, RSL
Communications, Ltd. (the "Parent"), has in place a line of credit with a
commercial bank for U.S. $40,000,000.
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Section 5.7 Senior Notes. Investor is currently negotiating the
terms of issuance of at least U.S. $50,000,000 principal amount of debt or
equity and will use reasonable efforts to consummate such a transaction.
Investor currently intends to utilize the proceeds of the issuance of such notes
to pay down its line of credit and generally for purposes relating to the
furtherance of its global telecommunications network.
ARTICLE VI
Conditions to Investor Obligations at Closing
The obligations of the Investor to purchase and pay for the Shares
which it has agreed to purchase at the Closing and the other obligations of the
Investor under this Agreement are subject to the fulfillment at or prior to the
Closing of the following conditions, any of which may be waived in writing in
whole in part by the Investor:
Section 6.l Representations and Warranties. On the date of the
Closing, the representations and warranties of Rebetti contained in this
Agreement shall be true and correct in all material respects with the same force
and effect as though such representations and warranties had been made at and as
of the time of such Closing, except to the extent that any changes therein are
specifically contemplated by this Agreement. Rebetti shall deliver to the
Investor at the Closing a certificate to such effect.
Section 6.2 New Shareholders Agreement. The New Shareholders
Agreement as set forth in Exhibit B attached hereto shall have been entered into
at the Closing Date.
Section 6.3 First Refusal Rights. Xxxxxx shall have waived his first
refusal rights under the Company Stockholders Agreement.
Section 6.4 FCC Approval. The FCC shall have approved the Transfer
of Control Application.
Section 6.5 Company Stockholders Meeting. There shall have been a
stockholders meeting of the Company or the execution of a written consent in
lieu thereof at which meeting or by such written consent the holders of the
requisite number of shares in the Company shall have approved the waiver by the
Company of its first refusal rights in connection with the sale of the Shares to
Investor.
Section 6.6 Performance. The Company and Rebetti shall have
performed and complied in all material respects with all agreements,
obligations and conditions contained in this
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Agreement that are required to be performed or complied with by them on or
before the Closing. The Company and Rebetti shall deliver to the Investor at the
Closing certificates to such effect.
ARTICLE VII
Conditions of Rebetti's Obligations at Closing
The obligations of Rebetti under this Agreement are subject to the
fulfillment at or prior to the Closing of the following conditions, any of which
may be waived in writing in whole or in part by Rebetti:
Section 7.1 Representations and Warranties. On the date of the
Closing, the representations and warranties of the Investor contained in Article
V shall be true and correct in all material respects with the same force and
effect as though such representations and warranties had been made at and as of
the time of such Closing, except to the extent that any changes herein are
specifically contemplated by this Agreement. The Investor shall deliver to
Rebetti at the Closing a certificate of its President or Vice President to such
effect.
Section 7.2 Performance. The Investor shall have performed and
complied with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied in all material respects
with by such Investor on or before the Closing, including payment to Rebetti of
the Purchase Price. The Investor shall deliver to Rebetti at the Closing a
certificate of its President or Vice President to such effect.
Section 7.3 New Shareholders Agreement. The New Shareholders
Agreement as set forth in Exhibit B attached hereto shall have been entered into
at the Closing Date.
ARTICLE VIII
Closing and Post-Closing Covenants
Section 8.1 Indemnification.
(a) Indemnification Obligation of Rebetti. Rebetti agrees to
indemnify and hold harmless Investor, its directors, officers and employees from
and against any and all losses, claims, damages, liabilities, costs, expenses
(including reasonable attorney's fees and all costs and expenses of enforcing
such right of indemnification against Rebetti) and penalties, if any, arising
out of or based on or with respect to
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to the breach of any representation or warranty made by Rebetti herein.
(b) Indemnification Obligation of Investor. Investor agrees to
indemnify and hold harmless Rebetti from and against any and all losses, claims,
damages, liabilities, costs, expenses (including reasonable attorney's fees and
all costs and expenses of enforcing such right of indemnification against
Investor) and penalties, if any, arising out of or based on or with respect to
the breach of any representation or warranty made by Investor herein.
(c) Survival of Indemnity Obligations. The indemnities contained in
this Section 8.1 shall survive until December 31, l996.
ARTICLE IX
Miscellaneous
Section 9.1 Survival of Representations, Warranties and Covenants.
The representations, warranties, covenants and agreements of the Company,
Rebetti and the Investor contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing until
December 31, 1996.
Section 9.2 Successors and Assigns. Except as otherwise expressly
provided herein, this Agreement may not be assigned by any party hereto without
the consent of the other party hereto. Except as otherwise expressly provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective heirs, successors and permitted assigns of
the parties. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective heirs,
successors and permitted assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
Section 9.3 Governing Law. The validity, interpretation and effect
of this Agreement shall be governed by the laws of the State of New York
applicable to contracts entered into and to be performed entirely within such
state. All parties hereto hereby consent to the nonexclusive jurisdiction of all
courts in said State.
Section 9.4 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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Section 9.5 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
Section 9.6 Notices. (i) Any notice required or permitted to be
given under the terms and provisions of this Agreement, or by any law or
governmental regulation, shall be in writing and, deemed duly given if mailed by
registered mail, postage prepaid, addressed as follows:
(a) Any notice to the Investor shall be addressed to such
party at its address hereinabove set forth,
with a copy to:
Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxx X. Xxxx, Esq.
(b) Any Notice to the Company shall be addressed to such
party at its address hereinabove set forth,
with a copy to:
Xxxxxxxx, Xxxxx & Xxxxxxxx, P.L.C.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
(c) Any Notice to Rebetti shall be addressed to such
party at his address hereinabove set forth,
with a copy to:
Galland, Kharasch, Xxxxx & Xxxxxxxxx, P.C.
Canal Square
0000 Xxxxxx-Xxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
(ii) By giving the other party at least ten (10) days' prior
written notice, any party may, by notice given as
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above provided, designate a different address or addresses for notices.
Section 9.7 Amendments and Waivers. Any term of this Agreement may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the parties hereto.
Section 9.8 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision or
provisions shall be excluded from this Agreement and the balance of the
Agreement shall be interpreted as if such provision or provisions were so
excluded and shall be enforceable in accordance with its terms.
Section 9.9 Entire Agreement. This Agreement, the Exhibits hereto,
the New Shareholders Agreement and the other documents required to be delivered
pursuant hereto, constitute the entire understanding and agreement between the
parties with regard to the specific subject matter hereof and no party shall be
liable or bound by any representation, warranty, covenant or agreement except as
specifically set forth herein. Any previous agreement (whether written, oral or
implied) among the parties relative to the specific subject matter hereof is
superseded by this Agreement.
Section 9.10 Expenses. The Company shall pay all reasonable costs
and expenses, including reasonable attorneys' fees, incurred by Xxxxxx, Xxxxxxx
and the Investor in connection with entering into this Agreement.
Section 9.11 Arbitration. Any dispute between the parties with
respect to this Agreement or any of the terms included herein and including the
validity, interpretation, breach, and remedies for breach, and the enforcement
of this Agreement, shall be resolved by an arbitrator in accordance with the
following provisions. The arbitration shall be before a single arbitrator (the
"Arbitrator") appointed upon the mutual agreement of the parties; provided,
however, that in the event the parties cannot reach such agreement, each of the
parties shall appoint an arbitrator and such arbitrators shall select the
Arbitrator. The Arbitrator will be bound by the substantive law of the State of
New York but will not be bound by the laws of evidence and procedure customary
in courts of law. The arbitration shall take place in New York. The execution of
this Agreement shall constitute an execution of an arbitration agreement as
well.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
INTERNATIONAL TELECOMMUNICATIONS GROUP,
LTD.
By /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
RSL COMMUNICATIONS PLC
By: /s/ Xxxxxx Xxxxxx
----------------------------------
Name: Xxxxxx Xxxxxx
Title: President
/s/ Xxxxxxx X. Xxxxxxx, Xx.
-------------------------------------
Xxxxxxx X. Xxxxxxx, Xx.
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EXHIBIT A
SECURED PROMISSORY NOTE
$828,720 September 9, 1996
FOR VALUE RECEIVED, the undersigned RSL COMMUNICATIONS PLC, a United
Kingdom corporation (the "Payor"), promises to pay to the order of XXXXXXX X.
XXXXXXX,XX. (the "Payee") the principal sum of Eight Hundred Twenty-Eight
Thousand Seven Hundred Twenty U.S. DOLLARS ($828,720) together with interest
thereon at the rate set forth below in Section 2, at the offices of
International Telecommunications Group, Ltd., EAB Xxxxx Xxxx Xxxxx, 0xx Xxxxx,
Xxxxxxxxx, Xxx Xxxx 00000, or at such other place as the Payee may from time to
time designate.
The following terms shall apply to this Note:
1. Payments. The principal amount on this promissory note (the "Note")
shall be payable in 3 annual installments of $276,240 each, payable on September
9, 1997, September 9, 1998 and September 9, 1999 (collectively, the "Installment
Dates").
2. Interest. The Payor shall pay interest from the date of this Note,
quarterly in arrears, at the rate equal to the higher of 6% per annum or the
lowest applicable Federal rate on the date of this Note, on the unpaid principal
balance hereof which shall be due and payable on the first day of each of
January, April, July and October, (each a "Quarterly Payment Date"), commencing
on the first Quarterly Payment Date following the date of this Note.
3. Payment not on a Business day. If any payment of principal of or
interest on this Note shall become due on a Saturday, Sunday or a public holiday
under the laws of the State of New York or the United States of America, such
payment shall be made on the next succeeding business day and such extension of
time shall in such case be included in computing interest in connection with
such payment.
4. Prepayment. The Payor may at any time prepay this Note, in whole or in
part, without premium or penalty. All amounts paid by the Payor shall first be
applied to principal due hereunder and then to accrued interest.
5. Security Interest. In order to secure the full and punctual payment of
all obligations of the Payor under this Note, the Payor hereby grants to the
Payee a security interest in all rights and interest of the Payor in 8,632.50
shares (the "Shares") of the common stock, par value $0.01 per share, of
International Telecommunications Group, Ltd. owned by the Payor, provided, that
at each Installment Date at which principal and interest is timely paid to the
Payee pursuant to the terms of this Note, one-third of the Shares shall be
released from the pledge hereunder and shall then be released from any
restrictions on transfer contained herein, all pursuant to the terms of a stock
pledge and security agreement (the "Security Agreement"), dated September 9,
1996, by and between the Payor and the Payee, in the form attached hereto as
Exhibit A. The Payor represents and warrants to the Payee that the fair market
value of such Shares is currently at least equal to the principal amount of the
aggregate of the loan hereto and that all such Shares are owned by the Payor
free and clear of any existing liens, charges or encumbrances. The Payor shall,
in such manner and form as the Payee may at any time and from time to time
reasonably require, execute, deliver, file and record all security agreements,
pledge agreements, security assignments, or other documents or instruments and
take all other actions that may be necessary or desirable, or that Payee may
request, in order to create, preserve or perfect the foregoing security
interest.
6. Restrictions on Transfer of Shares. So long as this Note is
outstanding, the Payor shall not assign, transfer or grant any security interest
in any of the Shares which continue to be subject to the lien created in the
Security Agreement without the prior written consent of the Payee.
7. Costs and Expenses. The Payor shall pay all reasonable costs and
expenses, including reasonable attorneys' fees, incurred by the Payee in
collecting or enforcing this Note.
8. Defaults. (a) The occurrence of any of the following shall constitute
an "Event of Default":
(i) the Payor shall fail to pay when due within five days of the
Installment Date or Quarterly Payment Date, as applicable, any amounts required
to be paid hereunder;
(ii) a case or proceeding shall have been commenced against the
Payor in a court having competent jurisdiction seeking a decree or order in
respect of the Payor (A) under any applicable bankruptcy or other similar law,
which is not dismissed within 60 days with respect to an involuntary case, (B)
appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator
(or similar official) of the Payor or of any of its properties, or (C) ordering
the winding-up or liquidation of the affairs of the Payor;
(iii) the Payor shall (A) file a petition seeking relief under any
applicable bankruptcy or other similar law, (B) consent to the institution of
proceedings thereunder or to the
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filing of any such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of the Payor or of any of its properties, (C) fail generally to pay
its debts as such debts become due, or (D) take any corporate or other action in
furtherance of any such action; or
(iv) the Payer shall default on its obligations under the Security
Agreement, or the Stock Purchase Agreement among Payor, Payee and International
Telecommunications Group, Ltd. dated as of September 9, 1996, or any guaranty
thereof.
(b) The Payor shall notify the Payee of the occurrence of any Event of
Default promptly after the Payor obtains knowledge thereof.
(c) Upon the occurrence of any Event of Default, all amounts payable
hereunder, including all accrued interest, shall automatically and immediately
become due and payable.
9. Late Payment Charge. In the event that the Payor fails to make any
payment of principal and/or interest under this Note within 5 days after it
becomes due and payable hereunder, then the Payor shall promptly pay to the
Payee, in addition to other amounts owing hereunder, a late payment charge of 5%
of that portion of the principal and/or interest which was due and payable
hereunder and has not been paid in such 5-day period.
10. Modification. No modification, alteration or change of any of the
provisions hereof shall be effective unless in writing and signed by the Payor
and the Payee and only to the extent set forth therein.
11. Waivers. (a) The Payor and all endorsers, sureties and guarantors of
this Note hereby jointly and severally waive presentment, demand for payment,
notice of dishonor, notice of protest, and protest in connection with the
delivery, acceptance, performance, default, endorsement or guaranty of this
Note.
(b) No delay by the Payee in exercising any power or right hereunder
shall operate as a waiver of any power or right, nor shall any single or partial
exercise of any power or right preclude other or further exercise thereof, or
the exercise of any other power or right hereunder or otherwise. No waiver or
modification of the terms hereof shall be valid unless set forth in writing by
the Payee.
12. Binding Nature. This Note shall inure to the benefit of and be
enforceable by the Payee and its successors and assigns
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and shall be binding and enforceable against the Payor and its successors and
assigns. In the event that the Payor assigns its obligations hereunder, the
Payor shall immediately notify the Payee of such assignment, and shall remain
liable for the fulfillment of its obligations hereunder.
13. Severability. It is the desire and intent of the parties that the
provisions of this Note be enforced to the fullest extent permissible under the
law and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any provision of this Note would be held to be invalid,
prohibited or unenforceable in any jurisdiction for any reason, such provision,
as to such jurisdiction, shall be ineffective, without invalidating the
remaining provisions of this Note or affecting the validity or enforceability of
such provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Note or
affecting the validity or enforceability of such provision in any other
jurisdiction.
14. Governing Law; Jurisdiction. This Note shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to principles of conflicts of law. Any action or proceedings to enforce
or arising out of this Note may be commenced in any court of the State of New
York or in the United States District Court for the Southern District of New
York. The Payor agrees that venue will be proper in such courts in any such
matters, and agrees that New York is the most convenient forum for litigation in
any suit, action or legal proceeding. The Payor agrees that a final judgment in
any such action or proceeding may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.
15. Governing Law; Consent to Jurisdiction; Venue Waiver; Waiver of Jury
Trial. The validity, interpretation and effect of this Agreement shall be
governed by the laws of the State of New York applicable to contracts entered
into and to be performed entirely within such state. The Payor hereby consents
to the nonexclusive jurisdiction of all courts in said State and hereby waives
all right to trial by jury in any action, suit or proceeding brought to enforce
or defend any rights or remedies under this Agreement.
16. Confessed Judgment. Upon the occurrence of an Event of Default
hereunder, the Payor hereby authorizes any attorney designated by the Payee or
any clerk of any court of record to appear for the Payor in any court of record
and confess judgment
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against the Payor, without prior hearing, in favor of the Payee for, and in an
amount equal to, the full amount then due and payable by the Payor hereunder,
all other amounts then due and payable by the Payor to the Payee under the
provisions of this Note, costs of suit and attorneys' fees of 15% of the amount
of such obligations. In connection therewith, the Payor hereby releases, to the
extent permitted by applicable laws, all errors and all rights of exemption,
appeal, stay of execution, inquisition, and other rights to which the Payor may
otherwise be entitled under the applicable laws now in force and which may
hereafter be enacted, including, without limitation, those of the United States
of America. The authority and power to appear for and enter judgment against the
Payor shall not be exhausted by one or more exercises thereof or by any
imperfect exercise thereof and shall not be extinguished by any judgment entered
pursuant thereto. Such authority may be exercised on one or more occasions or
from time to time in the same or different jurisdictions as often as the Payee
shall deem necessary and desirable, for all of which this Note shall be
sufficient warrant.
17. Guaranty. RSL Communications, Ltd., a Bermuda corporation, irrevocably
and unconditionally guarantees the timely and complete fulfillment of the
Payor's obligations hereunder.
IN WITNESS WHEREOF, the Payor has executed this Note on the date first
above written.
RSL COMMUNICATIONS PLC
By: _______________________________
Name:
Title:
RSL COMMUNICATIONS, LTD.
By: _______________________________
Name:
Title:
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EXHIBIT A
TO SECURED
PROMISSORY NOTE
STOCK PLEDGE AND SECURITY AGREEMENT
STOCK PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated as of
September 9, 1996, by and between RSL COMMUNICATIONS PLC, a United Kingdom
corporation (the "Debtor") with offices at 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxx, Xxx Xxxx 00000, XXXXXXX X. XXXXXXX, XX. (the "Secured Party") having an
address at 00 Xxxxxxx Xxxx, Xxxxxx, Xxx Xxxx 00000, and XXXXXXXX, XXXXX &
XXXXXXXX, P.L.C. ("Security Agent") with offices at 0000 Xxxxx 00xx Xxxxxx, 00xx
Xxxxx, Xxxxxxx, Xxxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, the Secured Party and the Debtor have entered into a stock
purchase agreement (the "Purchase Agreement"), dated as of September 9, 1996,
pursuant to which the Secured Party agreed to sell to the Debtor and the Debtor
agreed to purchase from the Secured Party 11,510 shares of the common stock of
International Telecommunications Group, Ltd. ("ITG") owned by the Secured Party;
WHEREAS, as provided in the Purchase Agreement, the Debtor will issue a
Secured Promissory Note or Notes (collectively, the "Note") in the amount of
$828,720 to the Secured Party;
WHEREAS, the Debtor has agreed to execute this instrument as security for
its performance and payment under the Note.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto, intending to be legally bound, do hereby
agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
"Event of Default" shall mean the occurrence or existence of any
Event of Default under the Note.
"Obligations" shall mean all now existing and hereafter arising
indebtedness, obligations and/or liabilities of the Debtor to the Secured Party
under the Note, including all
principal amount thereof and interest thereon, this Agreement or the Purchase
Agreement.
"Shares" shall mean 8,632.50 shares of the common stock of
International Telecommunications Group, Ltd., par value $0.01 per share
constituting the portion of shares deemed to be purchased by Debtor from Secured
Party by Notes pursuant to the Purchase Agreement, together with all
certificates, options, rights, dividends, cash or other distributions issued as
an addition to, in substitution or exchange for, or on account of, any such
Shares and any and all documents and agreements pertaining thereto, and all
proceeds of any of the foregoing.
ARTICLE 2
SECURITY AND PLEDGE
2.1 As security for the prompt and full satisfaction of all terms,
conditions, covenants, recitals, stipulations and agreements contained in the
Obligations, Debtor hereby pledges and assigns the Shares to Secured Party and
grants Secured Party a security interest therein. Upon an Event of Default,
Secured Party is entitled to the use and possession of the Shares to the full
extent necessary to protect its lien hereunder.
2.2 Debtor shall deliver, upon the execution of this Agreement,
certificate(s) representing 8,632.50 Shares endorsed in blank or with
appropriate stock powers duly executed in blank, to be held by Xxxxxxxx, Xxxxx &
Xxxxxxxx, P.L.C., 0000 Xxxxx 00xx Xxxxxx, 00xx Xxxxx, Xxxxxxx, XX 00000,
Attention: Xxxx Xxxxxxx, Esq., as Security Agent, subject to the terms hereof.
2.3 Simultaneously with the delivery of the Shares pursuant to this
Agreement, Debtor shall record the pledge of the Shares to Secured Party on
ITG's corporate records and provide Secured Party with evidence of the same.
2.4 Upon any Event of Default, Secured Party shall receive in
connection with any of the Shares, any:
(a) stock certificate, including, but without limitation, any
certificate representing a stock dividend or in connection with any increase or
reduction of capital, reclassification, merger, consolidation, or sale of
assets, combination of shares or stock splits;
(b) option, warrant, or right, whether as an addition to or in
substitution or in exchange for any of the Shares, or otherwise; and
2
(c) dividend or distribution payable in property (i.e., other
than cash), including securities issued by any party other than ITG and received
by the Debtor prior to an Event of Default; then, and in such event, the Debtor
shall accept the same as the Secured Party's agent, in trust for the Secured
Party, and shall deliver them forthwith to the Security Agent in the exact form
received with, as applicable, its endorsements when necessary, or appropriate
stock powers duly executed in blank, to be held by the Security Agent, subject
to the terms hereof, as part of the Shares.
2.5 Unless an Event of Default shall have occurred, the Debtor shall
be entitled to vote the Shares.
2.6 Any and all cash dividends and other distributions by ITG to the
Debtor on the Shares shall be delivered to the Secured Party as additional
security hereunder, or applied toward the satisfaction of the Obligations, at
the Secured Party's sole option.
2.7 At each Installment Date (as defined in the Note) at which
principal and interest is timely paid to the Secured Party pursuant to the terms
of the Note and as to which Debtor has notified the Security Agent and the
Secured Party, one-third of the Shares shall be released from the pledge
hereunder and shall then be released from any restrictions on transfer contained
in the Note and shall be promptly delivered to Debtor by the Security Agent.
ARTICLE 3
PROXY AND EVENTS OF DEFAULT
3.1 Proxy. The Debtor shall, concurrently with the execution hereof
(and upon its subsequent acquisition of any additional Shares), execute and
deliver to Secured Party a proxy in the form of Exhibit A hereto designating the
Secured Party as its proxy and attorney-in-fact with full authority to vote all
of the Shares of the Debtor at any annual or special meeting of the Stockholders
of ITG in accordance with the terms of said Proxy upon occurrence of an Event of
Default.
3.2 The term "Event of Default", as used in this Agreement, shall
mean the occurrence or happening, at any time and from time to time, of any one
or more of the following:
(a) An Event of Default shall occur and be continuing under
the Note or this Agreement; or
3
(b) Nonperformance by the Debtor of any of the terms or
conditions of the Purchase Agreement, Note or this Agreement.
ARTICLE 4
RIGHTS AND REMEDIES
4.1 Acceleration of Obligations. Upon the occurrence of an Event of
Default, all or any portion of the Obligations shall, at the option of the
Secured Party and without notice, demand or legal process, become immediately
due and payable.
4.2 Rights Under Uniform Commercial Code. In addition to all of its
other rights and remedies under this Agreement, the Note and any other agreement
with the Debtor, the Secured Party shall have all of the rights and remedies of
a secured party under the U.C.C. of the State of New York and of any state in
which Shares are located from time to time and shall comply with all procedures
thereunder for disposition and sale of the Shares.
4.3 Disposition of Shares. (a) Upon the occurrence of an Event of
Default, the Secured Party shall have the right to require the Security Agent to
sell or otherwise dispose of all or any of the Shares. Such sales may be
adjourned and continued from time to time, with or without notice. The Security
Agent shall have the right to conduct such sales. To enable the Security Agent
to effect any such sale, assignment and/or transfer and to take any action and
to execute any instrument which Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, the Debtor hereby makes, constitutes
and appoints the Security Agent as its true and lawful attorney, in its name,
place and stead, and for its account and risk, to make, execute and deliver any
and all assignments or other instruments which the Security Agent may deem
necessary or proper to effectuate the authority hereby conferred by signing the
Debtor's name only or by signing the same as its attorney-in-fact, as may be
deemed by the Security Agent to be necessary or proper in connection with any
sale, assignment or transfer of all or any part of the Shares. The foregoing
power of attorney is coupled with an interest and shall be a continuing one and
irrevocable so long as any portion of the Obligations remains unpaid in whole or
in part.
(b) The Secured Party may purchase all or any part of the Shares at
public sale or, if permitted by law, private sale, subject to appropriate U.C.C.
rules, and in lieu of actual payment of such purchase price, may set off the
amount of such price against the Obligations. Except as otherwise provided by
law, the proceeds realized from the sale of any of the Shares may
4
be applied by the Secured Party first to the reasonable costs, expenses and
attorneys' fees and expenses incurred by the Secured Party for collection and
for sale and delivery of the Shares, and then to any of the Obligations in such
order and manner as the Secured Party, in its sole discretion, deems advisable.
If any deficiency shall arise, the Debtor shall remain liable to the Secured
Party therefor.
4.4 The proceeds of any such disposition or other action by the
Secured Party shall be applied as follows:
(a) first, to the costs and expenses incurred in connection
therewith or incidental thereto or to the care or safekeeping of any of the
Shares or in any way relating to the rights of the Secured Party hereunder,
including reasonable attorneys' fees and legal expenses;
(b) second, to the satisfaction of the Obligations;
(c) third, to the payment of any other amounts required by
applicable law; and
(d) fourth, to the Debtor to the extent of any surplus
proceeds.
4.5 Remedies Cumulative. All rights and remedies of the Secured
Party arising under this Agreement, the Note or any other agreement with the
Debtor or by operation of law shall be cumulative and non-exclusive, to the
fullest extent permitted by law.
4.6 No Forfeiture. The Secured Party may at its sole option incur
reasonable expenses including attorneys' fees to protect his interest in the
Shares and the Debtor shall immediately reimburse the Secured Party for any such
fees and expenses.
4.7 Share Owner Rights. Upon the occurrence of an Event of Default,
immediately and without further notice, the Secured Party or its nominee shall
have, with respect to the Shares, all corporate rights, privileges, options or
other rights pertaining thereto as if it were the absolute owner thereof,
including, without limitation, the right to vote the Shares at any annual or
special meeting of the Stockholders of ITG and to give consents, waivers and
ratifications with respect thereto, to sell, redeem or exchange any or all of
the Shares upon the merger, consolidation, reorganization, recapitalization or
other readjustment of the issuer thereof, or upon the exercise by such issuer of
any right, pledge, or option pertaining to any of the
5
Shares, and, in connection therewith, to deliver any of the Shares to any
committee, depository, transfer agent, registrar or other designated agency upon
such terms and conditions as it may determine, all without liability except to
account for property actually received by it. The Secured Party shall have no
duty to exercise any of the aforesaid rights, privileges or options and shall
not be responsible for any failure to do so or delay in so doing.
ARTICLE 5
Representations and Warranties of Debtor
5.1 Power and Authority. Debtor has, and has duly exercised, all
requisite corporate power and authority to enter into this Agreement, to pledge
the Shares for the purposes described in Article 2 hereof, to grant the proxy
for the voting of the Shares as provided in Article 3 hereof and otherwise to
carry out the transactions contemplated by this Agreement.
5.2 Owner of Shares. Debtor is the legal and beneficial owner of the
Shares.
5.3 Valid and Perfected Security Interest. The pledge of the Shares
pursuant to this Agreement creates a valid security interest in the Shares as
security for the prompt and full satisfaction of all terms, conditions,
covenants, recitals, stipulations and agreements contained in the Obligations
and the Secured Party shall, upon delivery of the Shares to the Security Agent,
as agent for the Secured Party, have a perfected first priority security
interest in the Shares.
5.4 No Authorization, Consent. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required either: (i) for the pledge by the Debtor of the
Shares pursuant to this Agreement or for the execution, delivery or performance
of this Agreement by the Debtor; or (ii) for the exercise by the Secured Party
of the voting or other rights provided for in this Agreement or the remedies in
respect of the Shares pursuant to this Agreement (except as may be required in
connection with such disposition by laws affecting the offering and sale of
securities generally).
5.5 Valid and Binding Agreement. This Agreement constitutes a valid
and binding obligation of the Debtor and is enforceable in accordance with its
terms.
5.6 The Shares. The Shares, except for the lien granted hereunder to
the Secured Party, are owned by the Debtor
6
free of any pledge, mortgage, hypothecation, lien, charge, encumbrance or
security interest in such shares or the proceeds thereof.
ARTICLE 6
THE SECURED PARTY'S EXPENSES AND ATTORNEYS' FEES
6.1 The Debtor's Liability for the Secured Party's Expenses. The
Debtor shall be liable to the Secured Party for any and all reasonable sums,
costs and expenses which the Secured Party may pay or incur pursuant to the
provisions of this Agreement or the Note or in defending, protecting or
enforcing the security interest granted herein or in enforcing payment of the
Obligations or otherwise in connection with the provisions hereof.
ARTICLE 7
SECURITY AGENT
7.1 Duties, Reliance. The Security Agent shall have no duties or
obligations other than those expressly imposed on it herein. In the event that
any of the terms and provisions of any other agreement (excluding any amendment
to this Agreement) between or among any of the parties hereto conflict, or are
inconsistent, with any of the terms or provisions of this Agreement, the terms
and provisions of this Agreement shall govern and control in all respects. The
Security Agent may rely upon any paper or other document which may be submitted
to it in connection with its duties hereunder and which it believes to be
genuine and to have been signed or presented by the proper party or parties and
shall have no liability or responsibility with respect to the form, execution or
validity thereof. The Security Agent shall not be liable for any act which it
may do or omit to do, except in the case of its own bad faith or gross
negligence.
7.2 Resignation. The Security Agent may resign as security agent at
any time upon ten days' notice to the other parties hereto. In the case of the
Security Agent's resignation, its only duty shall be to hold the Shares for a
period of 15 days after the effective date of such resignation, at which time
(a) if a successor security agent shall have been appointed and written notice
thereof (including the name and address of such successor security agent) shall
have been given to the resigning Security Agent by the other parties hereto and
such successor security agent, then the resigning Security Agent shall deliver
to the successor security agent the Shares or (b) if the resigning Security
Agent shall not have received written notice signed by the other parties hereto
and a successor security
7
agent, then the resigning Security Agent shall promptly deliver the Shares to a
successor security agent selected by the Security Agent in its reasonable
discretion exercised in good faith; whereupon, in either case, the Security
Agent shall be relieved of all further obligations and released from all
liability under this Agreement. Without limiting the provisions of this Section
7.2, the resigning Security Agent shall be entitled to be reimbursed by the
other parties hereto for any expenses incurred in connection with its
resignation or transfer of the Shares to a successor security agent.
7.3 Indemnification. The Debtor and the Secured Party agree, jointly
and severally, to defend, indemnify and hold harmless the Security Agent from
and against any and all taxes, expenses (including without limitation,
reasonable attorneys' fees) , assessments, liabilities, claims, damages,
actions, suits, proceedings or other charges incurred by or assessed against the
Security Agent in the performance of the Security Agent's duties hereunder,
except as a result of the Security Agent's own bad faith or gross negligence.
The Security Agent will send notice to each of the Secured Party and the Debtor
within a reasonable time after any issue of indemnification arises. The
agreement in this paragraph shall survive any termination of the Security
Agent's duties hereunder.
7.4 Arbitration. Any dispute between the parties with respect to
this Agreement or any of the terms included therein and including the validity,
interpretation, breach, and remedies for breach, and the enforcement of this
Agreement, shall be resolved by an arbitrator in accordance with the following
provisions. The arbitration shall be before a single arbitrator (the
"Arbitrator") appointed upon the mutual agreement of the parties; provided,
however, that in the event the parties cannot reach such agreement, each of the
parties shall appoint an arbitrator and such arbitrators shall select the
Arbitrator. The Arbitrator will be bound by the substantive law of the State of
New York but will not be bound by the laws of evidence and procedure customary
in courts of law. The arbitration shall take place in New York. The execution of
this Agreement shall constitute an execution of an arbitration agreement as
well.
ARTICLE 8
MISCELLANEOUS
8.1 Waivers. Any failure or delay by the Secured Party to require
strict performance by the Debtor of any of the provisions, warranties, terms or
conditions contained herein or in the Note shall not affect the Secured Party's
right to demand strict compliance therewith and performance thereof, and any
8
waiver of any default shall not waive or affect any other default, whether prior
or subsequent thereto, and whether of the same or of a different type. None of
the warranties, conditions, provisions and terms contained herein or in any
other agreement, document or instrument shall be deemed to have been waived by
any act or knowledge of the Secured Party, its agents, officers, stockholders or
employees, but only by an instrument in writing, signed by an officer of the
Secured Party and directed to the Debtor, specifying such waiver.
8.2 Notices.
(i) Any and all notices or other communications provided for
herein shall be in writing and hand delivered against receipted copy; mailed by
registered or certified mail, postage prepaid, return receipt requested;
telecopied (with hard copy sent by United States mail within one (1) business
day after the facsimile notice is transmitted) ; or delivered by Fed Ex or other
similar overnight courier, to the following addresses:
(a) Any Notice to the Debtor shall be addressed to
such party at its address hereinabove set forth,
with a copy to:
Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxx X. Xxxx, Esq.
(b) Any Notice to the Secured Party shall be
addressed to such party at its address
hereinabove set forth,
with a copy to:
Galland, Kharasch, Xxxxx & Xxxxxxxxx,
P.C.
Canal Square
0000 Xxxxxx-Xxxxx Xxxxxx, X. X.
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
(c) Any Notice to the Security Agent shall be
addressed to such party at its address hereinabove
set forth.
9
(ii) or to such other place as the parties may designate in
writing. If mailed as aforesaid, notice shall be deemed given three (3) business
days after being deposited in the United States mail; if hand delivered or
telecopied, notice shall be deemed given when delivered or telecopied on a
business day and such hand delivery or telecopy is received before 5:00 p.m. by
the addressee thereof; otherwise, such notice by hand delivery or telecopy shall
be deemed given on the next succeeding business day; and if sent by overnight
courier, notice shall be deemed given on the next business day after being
deposited with the overnight courier service.
8.3 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in a manner so as to be effective and valid under
applicable law. If any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such provision and the remaining provisions of
this Agreement shall remain unaffected and in full force and effect.
8.4 Successors and Assigns. This Agreement shall be binding upon and
for the benefit of the parties hereto and their respective legal
representatives, successors and assigns.
8.5 Further Assurance. The Debtor shall provide the Secured Party
with all such documentation and do any such act in order to perfect the Secured
Party's security interest in the Shares.
8.6 Modifications. Any provision of this Agreement may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by
the Debtor and the Secured Party.
8.7 Governing Law. The validity, interpretation and effect of this
Agreement shall be governed by the laws of the State of New York applicable to
contracts entered into and to be performed entirely within such state.
8.8 Articles and Section Titles. The titles of articles and sections
contained in this Agreement are merely for convenience and shall be without
substantive meaning or content.
8.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original but all of which
shall constitute one and the same Agreement.
10
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
September 9, 1996.
RSL COMMUNICATIONS PLC
By: _______________________________
Name:
Title:
___________________________________
XXXXXXX X. XXXXXXX, XX.
XXXXXXXX, XXXXX & XXXXXXXX, P.L.C.
By: _______________________________
As Security Agent
11
EXHIBIT A
INTERNATIONAL TELECOMMUNICATIONS GROUP, LTD.
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby
constitute and appoint XXXXXXX X. XXXXXXX, XX. ("Rebetti"), with full power of
substitution, as the undersigned's attorney-in-fact and proxy and in the
undersigned's name, place and stead, to vote at any regular, annual, or special
meeting of the stockholders of INTERNATIONAL TELECOMMUNICATIONS GROUP, LTD., a
Delaware corporation (the "Company"), held during the term of that certain Stock
Pledge and Security Agreement (the "Agreement") dated the 9th day of September,
1996, between the undersigned and Rebetti, that number of shares of common stock
of the Company as set forth opposite the undersigned's name below, with all the
powers the undersigned would possess if personally present at such meeting.
This Proxy shall be effective only upon the occurrence of an Event of
Default as defined in the Agreement.
The undersigned hereby states and acknowledges that this Proxy is coupled
with an interest, and was granted for the consideration stated in the Agreement
and cannot be lawfully revoked or limited in any respect whatsoever (including
the death, bankruptcy or adjudication of incompetency or insanity of either of
the undersigned), except as provided in the Agreement. This Proxy shall be
binding upon any transferee or assignee of any stock of the Company standing in
the name of the undersigned at any time prior to the expiration date of this
Proxy and constituting "Shares" as defined in the Agreement; and the sale,
assignment, pledge, transfer or other disposition of such stock standing in the
name of the undersigned shall not revoke or in any way limit the authority
herein granted to said attorney and proxy, except as otherwise expressly
provided in the Agreement.
The undersigned hereby revokes all proxies heretofore granted by it with
respect to any and all Shares (as defined in the Agreement) owned by it.
The undersigned hereby ratifies and confirms all that said attorney and
proxy or its substitute or substitutes may lawfully do or cause to be done by
virtue hereof and in accordance with the provisions of the Agreement.
By accepting and acting under this Proxy, the said proxy agrees to be
bound by and to perform all the provisions of the
Agreement with respect to the performance of his functions and duties as proxy
hereunder.
Dated: 9th day of September, 1996
No. of Shares: 8,632.50 or such lesser amount as
is provided in accordance with Section
2.7 of the Agreement.
RSL COMMUNICATIONS PLC
By:_____________________________________
Name:
Title:
EXHIBIT B
NEW SHAREHOLDERS AGREEMENT
THIS NEW SHAREHOLDERS AGREEMENT (this "Agreement"), dated September 9,
1996, is made by and among XXXXXXX X. XXXXXX ("Xxxxxx"), residing at 000
Xxxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxx Xxxx 00000, XXXXXXXXXX and XXXXXXXX XXXXXX,
both residing at 000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "Xxxxxx
Daughters"), XXXXXXX X. XXXXXXX, XX. ("Xxxxxxx"), residing at 00 Xxxxxxx Xxxx,
Xxxxxx, XX 00000, RSL COMMUNICATIONS, LTD., a Bermuda corporation, as successor
in interest to RSL Communications Inc. ("Parent"), and RSL Communications PLC, a
United Kingdom corporation ("PLC") (Parent and PLC are collectively referred to
herein as "RSL"), with offices at 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx
Xxxx 00000 (individually a "Shareholder" and collectively the "Shareholders")
and INTERNATIONAL TELECOMMUNICATIONS GROUP, LTD. ("ITG"), a Delaware corporation
with offices at 000 XXX Xxxxx, Xxxx Xxxxx, 0xx Xxxxx, Xxxxxxxxx, Xxx Xxxx
00000-0000.
W I T N E S S E T H
WHEREAS, ITG, the Shareholders (other than RSL and the Xxxxxx Daughters)
and Incom (UK) Ltd. ("Incom") entered into a shareholders' agreement, dated the
first day of September, 1994 (the "Shareholders' Agreement"), as amended by the
Amendment to Shareholders' Agreement dated as of March 10, 1995 (the "First
Amendment"), and the Shareholders (other than the Xxxxxx Daughters) and ITG
entered into an Ancillary Shareholders' Agreement dated September 22, 1995 (the
"Ancillary Agreement"), with respect to, among other things, the transfer or
other disposition of the authorized and outstanding stock of ITG owned by the
Shareholders and Incom;
WHEREAS, Xxxxxx has, subject to Incom's exercise of its right of first
refusal pursuant to the Shareholders' Agreement, agreed to sell 106,985 shares
of ITG's common stock owned by him to RSL; and
WHEREAS, the parties hereto wish, as between and among them, to terminate
the Shareholders' Agreement, First Amendment and Ancillary Agreement and enter
into this Agreement, providing, among other things, for the granting of certain
exchange and other rights to Xxxxxx.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
1. Termination of Shareholders' Agreement, First Amendment and Ancillary
Agreement. Except with respect to any rights Incom may have pursuant to (i) the
rights of first refusal under Section I of the Shareholders' Agreement in the
event of future sales by the Shareholders (other than shares of ITG capital
stock held by RSL, which are not subject to restrictions or transfer) of ITG
capital stock, (ii) its "tag along rights" pursuant to Section 5 of the First
Amendment, and except only as to the extent to which RSL's agreements contained
in Sections 2 and 5 of the First Amendment may benefit Incom, as between and
among themselves, the Shareholders hereby repeal, terminate and replace with
this Agreement, the Shareholders' Agreement, the First Amendment and the
Ancillary Agreement and the same shall have no force and effect as between and
among ITG and the Shareholders. In addition, the Shareholders hereby waive any
and all future preemptive rights which may otherwise be granted to any
Shareholders pursuant to Section IX of the Shareholders' Agreement. The
Shareholders hereby agree and confirm that that certain New Shareholders
Agreement, dated July 1, l996, attached as Exhibit B to that certain Promissory
Note in the principal amount of $5,000,000 made by ITG in favor of RSL
Communications PLC (as successor in interest to RSL Communications Limited)
dated July 1, 1996, is ab initio, of no force and effect.
2. Composition of the Board of Directors and Abolishment of Committees.
Pursuant to a letter to Xxxxxx sent by Xxx Lior, the Managing Director of Incom,
dated June 16, 1995 (the "Incom Letter") , Incom relinquished its rights to
elect two (2) members to the Board of Directors of ITG and provided that such
positions on the Board of Directors be eliminated unless the majority of the
Board of Directors decided otherwise. The Board of Directors has not decided
otherwise and, therefore, the two (2) Board member positions entitled to be
elected by Incom were eliminated. With such elimination of Board member
positions, and pursuant to the Shareholders' Agreement as amended by the First
Amendment, the Board of Directors is presently to be comprised of nine (9)
members, six entitled to be elected by Xxxxxx ("Xxxxxx Directors") and three (3)
entitled to be elected by RSL (the "RSL Directors") . The parties hereto agree
that of the Xxxxxx Directors, Xxxxxx shall nominate and elect five (5) nominees
designated by RSL and Xxxxxx shall nominate and elect the sixth Board member
that Xxxxxx is entitled to appoint pursuant to the Shareholders' Agreement as
amended by the First Amendment. The parties hereto, therefore, agree to vote all
their shares of capital stock of ITG for the election of a Board of Directors
consisting of nine (9) persons, of whom one person shall be nominated or
designated by Piluso and eight (8) persons shall be nominated or designated by
RSL. Furthermore, the parties acknowledge that pursuant to the Incom Letter,
Incom relinquished its rights to elect one (1) member to each of the committees
described in Paragraph 3 of the First Amendment and provided that such positions
be eliminated unless the majority of the Board of Directors decided otherwise.
The Board of Directors has not
2
decided otherwise, and the Shareholders agree that they shall not form, or cause
to be formed, either of the committees discussed in such paragraph.
3. Xxxxxx, Piluso Daughters and Rebetti Anti-Dilution Rights. (a) In the
event (i) RSL or its Affiliates purchase additional shares of capital stock of
ITG directly from ITG or are issued additional shares of capital stock of ITG
directly by ITG and/or (ii) Incom or its Affiliates are issued additional shares
of capital stock as a result of Incom's anti-dilution rights triggered by such
purchase by or issuance to RSL or its Affiliates, then the Shareholders hereby
agree to amend the Certificate of Incorporation of ITG to provide for a class of
convertible common stock and to cause ITG to issue to the Xxxxxx Daughters and
Xxxxxx, in the aggregate, on a one-for-one exchange basis, convertible common
stock of ITG, convertible at the option of the holder into such number of shares
of common stock of ITG as shall, at all times until an initial public offering
of RSL (the "RSL IPO") shall occur, be equal to the following: 0.0532 times the
sum of the additional number of shares of capital stock of ITG so purchased by
or issued to RSL or its Affiliates and any additional shares of such capital
stock issued to Incom or its Affiliates as a result of such purchase or
issuance, such that the Xxxxxx Daughters and Xxxxxx, in the aggregate, together
maintain a five percent (5%) interest in ITG (not taking into account the
15,619 shares of ITG (the "Other Xxxxxx Shares") to be transferred by Xxxxxx to
RSL pursuant to that certain Agreement and Plan of Reorganization, dated as of
September 9, 1996 among PLC, Xxxxxx and Parent) after giving effect to any
shares so purchased or issued as provided in clauses (i) and (ii) above and
paragraph (b) below. Notwithstanding that the Incom Issuance (as defined below)
would not give rise to the rights set forth in the preceding sentence, the
Shareholders further agree that, immediately following the issuance of 3,954
non-voting shares of ITG to Incom (the "Incom Issuance") pursuant to that
certain Asset Purchase Agreement, dated as of August 12, 1996, between RSL COM
UK Limited and Incom, the Shareholders will cause ITG to issue to the Xxxxxx
Daughters and Xxxxxx, in the aggregate, such number of shares of common stock of
ITG as shall cause Xxxxxx and the Piluso Daughters together to own an aggregate
five percent of the capital stock of ITG at such time (not taking into account
the Other Xxxxxx Shares).
(b) In the event (i) RSL or its Affiliates purchase additional
shares of capital stock of ITG directly from ITG or are issued additional shares
of capital stock of ITG directly by ITG and/or (ii) Incom or its Affiliates are
issued additional shares of capital stock as a result of Incom's anti-dilution
rights triggered by such purchase by or issuance to RSL or its Affiliates, then
the Shareholders hereby agree to amend the Certificate of Incorporation of ITG
to provide for a class of convertible common stock and to cause ITG to issue to
Rebetti, on a one-for-one exchange basis, convertible common stock of ITG,
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convertible at the option of the holder into such number of shares of common
stock of ITG as shall, at all times until an RSL IPO shall occur, be equal to
the following: 0.01063 times the sum of the additional number of shares of
capital stock of ITG so purchased by or issued to RSL or its Affiliates and any
additional shares of such capital stock issued to Incom or its Affiliates as a
result of such issuance or purchase, such that Rebetti maintains a one percent
(l%) interest in ITG after giving effect to any shares so purchased or issued as
provided in clauses (i) and (ii) above and paragraph (a) above. Notwithstanding
that the Incom Issuance would not give rise to the rights set forth in the
preceding sentence, the Shareholders further agree that, immediately following
the Incom Issuance, the Shareholders will cause ITG to issue to Rebetti such
number of shares of common stock of ITG as shall cause Rebetti to own an
aggregate one percent of the capital stock of ITG at such time.
(c) For purposes of this Section 3, "Affiliate" shall mean with
respect to any person, any other person, directly or indirectly controlling, or
controlled by, or under common control with, such person.
4. Xxxxxx and Xxxxxxx Exchange Rights. On the closing date of the RSL IPO,
RSL will grant to each of Xxxxxx, the Xxxxxx Daughters and Rebetti the right to
exchange all shares of common stock of ITG which Xxxxxx, the Xxxxxx Daughters or
Rebetti, as the case may be, then own for shares of RSL common stock equal to
the fair market value of Xxxxxx'x, the Xxxxxx Daughters' and/or Rebetti's ITG
common stock on that date. For purposes of this Section 4, shares of RSL common
stock shall be valued at the RSL IPO price to public per share and shares of ITG
common stock owned by Xxxxxx, the Xxxxxx Daughters and/or Rebetti shall be
valued in writing by the Managing Underwriter of the RSL IPO using its best
professional judgment as to the fair market value of such shares. The parties
agree to cooperate in good faith to take such actions as may be reasonable to
effect any exchange under this Section 4 on a tax-free basis to Xxxxxx, the
Xxxxxx Daughters and/or Rebetti as may be permitted by applicable law.
5. [intentionally omitted]
6. Tag-Along and Drag-Along Rights. (a) RSL agrees that it will not sell
or transfer its shares of ITG or any other securities of ITG that may now or
hereafter be held or owned by it to a third party other than an Affiliate who
agrees in writing to be bound by the terms hereof unless RSL first notifies
Xxxxxx, the Xxxxxx Daughters and Rebetti in writing (the "Notice") of its
intention to sell its ITG shares, as well as the proposed sale price per share.
Xxxxxx, the Xxxxxx Daughters and Rebetti shall each have the right, within ten
(10) days of the receipt of the Notice, to elect to require the third party to
purchase from them at such sale price per share specified in the Notice the same
proportion of ITG shares held by each of them as the proportion of ITG shares
owned by RSL that are proposed to be sold to the third party. The closing of
such sale shall occur at the same time as the closing of RSL's sale of shares of
ITG.
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(b) RSL further agrees that in the event substantially all of its
assets are purchased by a third party and such assets purchased include RSL's
shares of ITG, or in the event all of RSL's stock is purchased by a third party,
RSL will ensure that such third party offers to purchase shares of ITG then held
by Xxxxxx, the Xxxxxx Daughters and/or Rebetti at the "Purchase Price per Share"
defined in (c) below). Such Purchase Price per Share shall be payable by the
third party in the same form of consideration as is paid to RSL. The closing of
such sale shall occur at the same time as the closing of the purchase of
substantially all the assets of RSL.
(c) The purchase price per share of ITG stock shall be based on an
appraisal, made by a qualified independent appraiser mutually selected by
holders of the Series A Convertible Preferred Stock and Xxxxxx, of all of the
assets or stock sold by RSL to determine the relative value of the ITG shares
included in such sale, it being understood that such value will constitute a
fraction of the total purchase price paid to RSL. In the event such parties are
unable to mutually agree on an appraiser, each such party shall select one (1)
appraiser, and the two (2) appraisers so selected shall appoint a third
appraiser whose appraisal shall govern the determination of the Purchase Price
per Share. The appraised value of ITG shall be divided by the total number of
shares of ITG stock then outstanding to determine the per share purchase price
of the shares of ITG stock to be purchased by the third party (the "Purchase
Price per Share").
(d) Xxxxxx, the Xxxxxx Daughters and Rebetti agree that in the event
RSL receives an offer to purchase any of its shares of capital stock of ITG from
a third party other than an Affiliate of RSL (the "Third Party Offer"), which
Third Party Offer is accepted by RSL, they will, if requested by such third
party, sell to such third party the same proportion of the shares of capital
stock of ITG owned by each of them and so offered to be purchased as the
proportion of shares of capital stock of ITG owned by RSL that are proposed to
be purchased, at the same time and on the same terms and conditions as are
contained in the Third Party Offer.
(e) For the purposes of this Section 6, "Affiliate" shall mean with
respect to any person, any other person, directly or indirectly controlling, or
controlled by, or under common control with, such person.
7. Entire Agreement; Conflict. This Agreement embodies the entire
agreement of the Stockholders with respect to their capital stock of ITG and the
subject matter hereof, and supersedes, as between and among the Stockholders,
and as between the Stockholders and ITG, any and all other or prior agreements
or arrangements, whether written or oral, which the Stockholders may have had
with respect to the subject matter hereof including,
5
without limitation, the Shareholders' Agreement, the First Amendment and the
Ancillary Agreement, which agreements shall be null and void and of no further
force and effect as of the date hereof as between and among the Stockholders and
as between the Stockholders and ITG. In furtherance of the foregoing and not in
limitation thereof, whenever there shall exist an inconsistency between the
terms of this Agreement and the terms of the Shareholders' Agreement, the First
Amendment or the Ancillary Agreement, the terms of this Agreement shall prevail
and any right given to Xxxxxx in any of the Shareholders' Agreement, the First
Amendment or the Ancillary Agreement and not expressly set forth herein shall be
deemed terminated upon the execution of this Agreement.
8. Captions. The sections and other headings contained in this Agreement
are for reference purposes only and shall not affect the meaning, interpretation
or construction of this Agreement.
9. Counterparts; Severability. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. To the extent any
provision or part of a provision of this Agreement is held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision or part thereof.
10. Successors and Assigns. This Agreement shall be binding on and inure
to the benefit of the parties hereto and their respective legal representatives,
heirs, successors and assigns.
11. Applicable Law. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the laws of
the State of New York without regard to whether New York would be the governing
law under that state's principles regarding choice of law.
12. Arbitration. Any dispute between the parties with respect to this
Agreement or any of the terms included herein and including the validity,
interpretation, breach, and remedies for breach, and the enforcement of this
Agreement, shall be resolved by an arbitrator in accordance with the following
provisions. The arbitration shall be before a single arbitrator (the
"Arbitrator") appointed upon the mutual agreement of the parties; provided,
however, that in the event the parties cannot reach such agreement, each of the
parties shall appoint an arbitrator and such arbitrators shall select the
Arbitrator. The Arbitrator will be bound by the substantive law of the State of
New York but will not be bound by the laws of evidence and procedure customary
in courts of law. The arbitration shall take place in New York. The execution of
this Agreement shall constitute an execution of an arbitration agreement as
well.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
________________________________________
Xxxxxxx X. Xxxxxx
________________________________________
Xxxxxxx X. Xxxxxxx, Xx.
RSL COMMUNICATIONS, LTD.
By:_____________________________________
Name:
Title:
INTERNATIONAL TELECOMMUNICATIONS GROUP,
LTD.
By:_____________________________________
Name:
Title:
RSL COMMUNICATIONS PLC
By:_____________________________________
Name:
Title:
________________________________________
Xxxxxxx X. Xxxxxx as custodian for
Xxxxxxxxxx Xxxxxx
________________________________________
Xxxxxxx X. Xxxxxx as custodian for
Xxxxxxxx Xxxxxx
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