EXECUTION VERSION
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of November 5,1999 (this
"Agreement"), by the stockholders listed on the signature page(s) hereto
(collectively, "Stockholders" and each individually, a "Stockholder") to and
for the benefit of Prodigy Communications Corporation, a Delaware corporation
("Acquiror"). Capitalized terms used and not otherwise defined herein shall
have the respective meanings assigned to them in the Merger Agreement
referred to below.
WHEREAS, as of the date hereof, the Stockholders collectively own of
record and beneficially shares of capital stock of FlashNet Communications,
Inc., a Texas corporation (the "Company"), as set forth on Schedule I hereto
(such shares or any other voting or equity of securities of the Company,
hereafter acquired by any Stockholder prior to the termination of this
Agreement, being referred to herein collectively as the "Shares");
WHEREAS, concurrently with the execution of this Agreement, Acquiror
and the Company are entering into an Agreement and Plan of Merger, dated as
of the date hereof (the "Merger Agreement"), pursuant to which, upon the
terms and subject to the conditions thereof, a subsidiary of Buyer will be
merged with and into the Company, and the Company will be the surviving
corporation (the "Merger"); and
WHEREAS, as a condition to the willingness of the Company and
Acquiror to enter into the Merger Agreement, Acquiror has requested that the
Stockholders agree, and in order to induce Acquiror to enter into the Merger
Agreement, the Stockholders are willing to agree to vote in favor of adopting
the Merger Agreement and approving the Merger, upon the terms and subject to
the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereby agree, severally and not jointly, as follows:
Section 1. VOTING OF SHARES. Each Stockholder covenants and agrees
that until the termination of this Agreement in accordance with the terms
hereof, at the Company Meeting or any other meeting of the stockholders of
the Company, however called, and in any action by written consent of the
stockholders of the Company, such Stockholder will vote, or cause to be
voted, all of his, her or its respective Shares (a) in favor of adoption of
the Merger Agreement and approval of the Merger contemplated by the Merger
Agreement, as the Merger Agreement may be modified or amended from time to
time in a manner not adverse to the Stockholders, and (b) against any other
Alternative Transaction. In addition, such Stockholder agrees that it will,
upon request by Acquiror furnish written confirmation, in form and substance
reasonably acceptable to Acquiror, of such Stockholder's vote in favor of the
Merger Agreement and the Merger. Each Stockholder covenants and agrees to
deliver to Acquiror upon request prior to any vote contemplated by the first
sentence of this Section 1, a proxy substantially in the form attached hereto
as ANNEX A (a "Proxy"), which
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Proxy shall be irrevocable during the term of this Agreement to the extent
permitted under Texas law, and Acquiror agrees to vote the Shares subject to
such Proxy in favor of the approval and adoption of the Merger Agreement and
the Merger. Each Stockholder acknowledges receipt and review of a copy of the
Merger Agreement. Each Stockholder acknowledges and agrees that this proxy,
if and when given, shall be coupled with an interest, shall constitute, among
other things, an inducement for Acquiror to enter into the Merger Agreement,
shall be irrevocable and shall not be terminated by operation of law or
otherwise upon the occurrence of any event and that no subsequent proxies
with respect to such Shares shall be given (and if given shall not be
effective); provided however that any such proxy shall terminate
automatically and without further action on behalf of the Stockholders upon
the termination of this Agreement. In the event that a Stockholder does not
provide the Proxy upon request of Acquiror, such Stockholder hereby grants
Buyer a power of attorney to execute and deliver such Proxy for and behalf of
such Stockholder, which power of attorney is coupled with an interest and
shall survive any death, disability, bankruptcy or any other such impediment
of such Stockholder. Upon the execution of this Agreement by each
Stockholder, such Stockholder hereby revokes any and all prior proxies or
powers of attorney given by such Stockholder with respect to the Shares.
Section 2. TRANSFER OF SHARES. Each Stockholder covenants and agrees
that such Stockholder will not directly or indirectly, (a) sell, assign,
transfer (including by merger, testamentary disposition, interspousal
disposition pursuant to a domestic relations proceeding or otherwise by
operation of law), pledge, encumber or otherwise dispose of any of the
Shares, (b) deposit any of the Shares into a voting trust or enter into a
voting agreement or arrangement with respect to the Shares or grant any proxy
or power of attorney with respect thereto which is inconsistent with this
Agreement or (c) enter into any contract, option or other arrangement or
undertaking with respect to the direct or indirect sale, assignment, transfer
(including by merger, testamentary disposition, interspousal disposition
pursuant to a domestic relations proceeding or otherwise by operation of law)
or other disposition of any Shares; provided, however, that a Stockholder may
transfer Shares to an entity controlled by the Stockholder, and Applied
Telecommunications Technologies, Inc. may transfer Shares to its
stockholders, in each case on the condition that each such transferee enter
into this agreement and agree unconditionally to bound by the terms hereof.
Section 3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each
Stockholder on its own behalf hereby severally represents and warrants to
Acquiror with respect to itself and its or her ownership of the Shares as
follows:
(a) Ownership of Shares. On the date hereof, the Shares are owned
beneficially by Stockholder or its nominee. Stockholder has sole voting
power, without restrictions, with respect to all of the Shares.
(b) Power, Binding Agreement. Stockholder has the legal capacity,
power and authority to enter into and perform all of its obligations, under
this Agreement. The execution, delivery and performance of this Agreement by
Stockholder will not violate any material agreement to which Stockholder is a
party, including, without limitation, any voting agreement, stockholders'
agreement, partnership agreement or voting trust. This Agreement has been
duly and validly executed and delivered by Stockholder and constitutes a
valid and binding obligation of Stockholder, enforceable
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against Stockholder in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(c) No Conflicts. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated hereby will not,
conflict with or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, any provision of any loan or credit agreement, note,
bond, mortgage, indenture, lease, or other agreement, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Stockholder or any of its
properties or assets, other than such conflicts, violations or defaults or
terminations, cancellations or accelerations which individually or in the
aggregate do not materially impair the ability of Stockholder to perform its
obligations hereunder.
Section 4. NO SOLICITATION. Prior to the termination of this
Agreement in accordance with its terms, each Stockholder agrees, in its
individual capacity as a stockholder of the Company that (i) it will not, nor
will it authorize or permit any of its employees, agents and representatives
to, directly or indirectly, (a) initiate, solicit or encourage any inquiries
or the making of any Acquisition Proposal (as defined in the Merger
Agreement), (b) enter into any agreement with respect to any Acquisition
Proposal, or (c) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal, and (ii) it will notify Acquiror as soon as possible if any such
inquiries or proposals are received by, any information or documents is
requested from, or any negotiations or discussions are sought to be initiated
or continued with, it or any of its affiliates in its individual capacity;
provided, that, notwithstanding the foregoing, each Stockholder shall not be
prohibited from taking any such actions to the extent that the Company or its
Board of Directors is permitted to take such actions under the Merger
Agreement.
Section 5. TERMINATION. This Agreement shall terminate upon the
earliest to occur of (i) the Effective Time (as such term is defined in the
Merger Agreement) or (ii) any termination of the Merger Agreement in
accordance with the terms thereof; PROVIDED that no such termination shall
relieve any party of liability for a willful breach hereof prior to
termination.
Section 6. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or in equity.
Section 7. FIDUCIARY DUTIES. Each Stockholder is signing this
Agreement solely in such Stockholder's capacity as an owner of his, her or
its respective Shares, and nothing herein shall prohibit, prevent or preclude
such Stockholder from taking or not taking any action in his or her capacity
as an officer or director of the Company, to the extent permitted by the
Merger Agreement.
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Section 8. LEGEND ON CERTIFICATE. Each Stockholder agrees to present
the certificates representing the Shares presently owned or hereafter
acquired by such Stockholder to the Secretary of the Company and to cause the
Secretary to stamp on the certificate in a prominent manner the following
legend:
"The shares represented by this certificate are
subject to transfer restrictions and an irrevocable
proxy pursuant to a Stockholder Agreement and
Irrevocable Proxy, each dated as of November 5, 1999
(the "Agreements"). Copies of the Agreements are
available for inspection during normal business hours
at the principal executive office of this
corporation."
Section 9. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, both written and oral, between the
parties with respect thereto. This Agreement may not be amended, modified or
rescinded except by an instrument in writing signed by each of the parties
hereto.
(b) If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law, or public policy,
all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in a mutually acceptable manner in
order that the terms of this Agreement remain as originally contemplated to
the fullest extent possible.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to the principles of
conflicts of law thereof.
(d) This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which together shall constitute one
and the same instrument.
[Signature Page to follow]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed individually or by its respective duly authorized officer
as of the date first written above.
PRODIGY COMMUNICATIONS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
and General Counsel
STOCKHOLDERS:
GLOBAL UNDERVALUED SECURITIES FUND, L.P.
By: XXXXXXXXXX CAPITAL PARTNERS
LDC, its general partner
By: /s/ Xxxx X. Xxxxxxxxxx
----------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Director
