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EXHIBIT 10.8
VOTING AGREEMENT
This Voting Agreement (this "Agreement") is entered into as of
September 18, 1997, by and among Paradigm Music Entertainment Company, a
Delaware corporation (the "Company"), TCI Music, Inc., a Delaware corporation
("TCI Music"), and the Company Stockholders (as defined below).
Recitals
TCI Music and the Company are entering into a letter agreement
(the "Letter Agreement") dated as of the date of this Agreement, providing,
among other things, for the merger (the "Merger") of a wholly owned subsidiary
of TCI Music ("Merger Sub") with and into the Company and conversion of the
shares of capital stock of the Company outstanding at the time of the Merger, on
a fully diluted basis, into shares of Series A Common Stock of TCI Music ("TCI
Music Shares"). As an inducement to TCI Music and the Company to enter into the
Letter Agreement, the Company Stockholders have agreed to enter into this
Agreement.
Agreement
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Certain Definitions. For the purposes of this
Agreement, the following terms will have the meanings set forth below:
"Affiliate" and "Associate" when used with reference
to any Person will have the meanings assigned to such terms in Rule 12b-2 of the
Exchange Act as in effect on the date hereof. A Person will be deemed the
"Beneficial Owner", and to have "Beneficial Ownership" of, and to "Beneficially
Own," any securities as to which such Person is or may be deemed to be the
beneficial owner pursuant to Rule 13d-3 and 13d-5 under the Exchange Act, as
such rules are in effect on the date of this Agreement, as well as any
securities as to which such Person has the right to become a Beneficial Owner
(whether such right is exercisable immediately or only after the passage of time
or the occurrence of conditions) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants, options or other acquisition rights or otherwise.
"Bankruptcy and Equity Exception" means an exception
to enforceability of an obligation because of the application of (i) bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and (ii)
general equity principles.
"Company Stockholders" means the Persons named on
Schedule 1 to this Agreement.
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"Merger Agreement" means the Letter Agreement and, if
applicable, the definitive Agreement of Merger contemplated thereby.
"Person" means any human being or any partnership,
limited liability company, corporation, business trust, joint stock company,
trust, unincorporated association, joint venture, government (including any
authority or agency thereof), or other entity.
"Shares" means shares of Class A Common Stock, Class
B Common Stock and Class E Common Stock of the Company, and any other shares of
capital stock or other voting securities of the Company.
2. Representations and Warranties of the Company. The
Company represents and warrants to TCI Music and to each of the Company
Stockholders that:
(a) The Company has all requisite corporate power and
authority and, subject to approval by its stockholders, has taken all corporate
action necessary in order to execute and deliver, and to perform its obligations
under, the Merger Agreement and this Agreement.
(b) Each of the Merger Agreement and this Agreement
has been (or, when executed, will be) duly executed and delivered by the Company
and is (or will be) a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, subject to the Bankruptcy and
Equity Exception.
(c) As of the date of this Agreement, the authorized
capital stock of the Company consists of (i) 31,999,900 shares of Class A Common
Stock, of which 1,596,704 shares are outstanding (6,000 of which currently are
held in escrow), (ii) 1,000,100 shares of Class B Common Stock, of which
1,000,005 shares are outstanding (566,670 of which currently are held in
escrow), (iii) 2,000,000 shares of Class E Common Stock, of which 1,226,715
shares are outstanding (none of which currently is held in escrow) and (iv)
5,000,000 shares of Preferred Stock, none of which are outstanding. All issued
and outstanding shares of capital stock of the Company were validly issued and
are fully paid and nonassessable. Except as described on Schedule 2(c), there
are no (and at no time prior to the Merger will there be any) options, warrants,
calls, subscriptions, rights or other commitments of any kind obligating the
Company to issue (or reserve for issue), transfer or sell any capital stock of
the Company.
3. Representations and Warranties of TCI Music. TCI
Music represents and warrants to the Company and to each of the Company
Stockholders that:
(a) TCI Music has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute and
deliver, and to perform its obligations under, this Agreement.
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(b) Each of the Merger Agreement and this Agreement
has been (or, when executed, will be) duly executed and delivered by TCI Music
and is (or will be) a valid and binding agreement of TCI Music enforceable
against TCI Music in accordance with its terms, subject to the Bankruptcy and
Equity Exception.
4. Representations and Warranties of the Company
Stockholders. Each of the Company Stockholders severally represents and warrants
to TCI Music and to the Company that:
(a) Such Company Stockholder Beneficially Owns the
number of Shares set forth on Schedule 4, free and clear of any lien,
encumbrance or other adverse claim.
(b) Each record holder of any Shares Beneficially
Owned by such Company Stockholder is identified on Schedule 4.
(c) Such Company Stockholder, either alone or with
one or more other Company Stockholders, has (i) the right to vote, or to direct
the voting of, the Shares Beneficially Owned by such Company Stockholder and
(ii) the right to dispose, or to direct the disposition of, the Shares
Beneficially Owned by such Company Stockholder.
(d) Such Company Stockholder has all requisite power
and authority (corporate or otherwise) and has taken all action (corporate or
otherwise) necessary in order to execute and deliver, and to perform its
obligations under, this Agreement.
(e) This Agreement has been duly executed and
delivered by such Company Stockholder and is a valid and binding agreement of
such Company Stockholder enforceable against such Company Stockholder in
accordance with its terms, subject to the Bankruptcy and Equity Exception.
(f) No notices, reports or other filings are required
to be made by such Company Stockholder with, and no consents, registrations,
approvals, permits or authorizations are required to be obtained by such Company
Stockholder from, any Person, in connection with the execution and delivery of
this Agreement by such Company Stockholder, except those that the failure to
make or obtain is not, individually or in the aggregate, reasonably likely to
prevent, delay or impair the ability of such Company Stockholder to perform such
Company Stockholder's obligations under this Agreement.
(g) The execution, delivery and performance of this
Agreement by such Company Stockholder do not, and the consummation by such
Company Stockholder of the transactions contemplated hereby will not, constitute
or result in (i) a breach or violation of, or a default under (in the case of
any Company Stockholder that is not a human being), the articles or certificate
of incorporation or bylaws, or any comparable governing instruments, of such
Company Stockholder, or (ii) a breach or violation of, a default under, the
acceleration of any obligations of or the creation of a Lien on the assets of
such Company Stockholder (with or without notice, lapse
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of time or both) pursuant to, any instrument, agreement or Legal Requirement
binding on such Company Stockholder or to which such Company Stockholder is
subject, except, in the case of clause (ii) above, for any breach, violation,
default, acceleration, creation or change that, individually or in the
aggregate, is not reasonably likely to prevent, delay or impair the ability of
such Company Stockholder to perform such Company Stockholder's obligations under
this Agreement.
(h) Such Company Stockholder acknowledges that the
execution and delivery of this Agreement by such Company Stockholder may be
deemed to be a purchase by such Company Stockholder of TCI Music Shares within
the meaning of the Securities Act of 1933, as amended (the "Securities Act")
and, in that regard, the Company Stockholder represents and warrants to TCI
Music that: (i) the Company Stockholder is an "accredited investor" as defined
in Rule 501(a) of Regulation D under the Securities Act; (ii) such Company
Stockholder is acquiring the TCI Music Shares pursuant to the Merger Agreement
for such Company Stockholder's own account for investment only and without a
view to the distribution thereof except in a transaction permitted under the
following clause (iii); and (iii) such Company Stockholder will not sell or
otherwise dispose of such TCI Music Shares except in a transaction registered or
qualified under the Securities Act and applicable state securities laws or
unless an exemption from those requirements is available.
5. Agreement to Vote Shares. Each of the Company
Stockholders severally covenants and agrees with TCI Music and the Company: (a)
to vote or to cause to be voted all Shares that are Beneficially Owned by such
Company Stockholder in favor of (or to grant or to cause to be granted consents
with respect to such Shares for), and to cause any holder of record of Shares to
vote such Shares in favor of (or to grant consents with respect to such Shares
for), the adoption and approval of the Merger Agreement and the Merger at every
meeting of the Stockholders of the Company (or any solicitation of consents in
lieu thereof) at which such matters are considered and at every adjournment or
postponement thereof; (b) to vote or to cause to be voted such Shares against
(or to withhold or to cause to be withheld consents with respect to such Shares
for), and to cause any holder of record of Shares to vote such Shares against
(or to withhold or to cause to be withheld consents with respect to such Shares
for), any proposal that would compete or interfere with, or that would in any
way delay or otherwise inhibit the timely consummation of, the Merger and the
other transactions contemplated by the Merger Agreement; and (c) to vote or to
cause to be voted such Shares in favor of (or to grant or to cause to be granted
consents with respect to such Shares for), and to cause any holder of record of
Shares to vote such Shares in favor of (or to grant consents with respect to
such Shares for), the release of all shares of Class A, Class B and Class E
Common Stock of the Company held in escrow pursuant to the Company's Second
Restated Certificate of Incorporation, the Stock Escrow Agreement dated as of
November 21, 1995 among the Company, certain of its stockholders and American
Stock Transfer & Trust Company or otherwise from such escrow immediately prior
to the effective time of the merger contemplated by the Merger Agreement, all to
the extent such Shares are not disqualified by law or any contract existing
prior to the date of this Agreement from voting or from giving or withholding
consent with respect to such release.
6. No Voting Trusts or Transfers. Each Company
Stockholder will not, and will not permit any record holder of Shares to, (i)
deposit any Shares Beneficially Owned by such
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Company Stockholder in a voting trust or subject any Shares to any arrangement
with respect to the voting of such Shares other than this Agreement or any other
agreement entered into in furtherance of the Merger or (ii) sell, assign,
pledge, xxxxx x xxxx on, or security interest in, or otherwise transfer any of
its interest in, any Shares to any Person unless such transferee agrees in
writing to be bound by this Agreement to the same extent as such Company
Stockholder.
7. Proxy. At the written request of TCI Music, each
Company Stockholder will appoint or will cause to be appointed TCI Music as its
true and lawful attorney and proxy, in the name, place and stead of such Company
Stockholder, to vote (consistent with this Agreement) as the proxy of the
Company Stockholders all of the Shares Beneficially Owned by such Company
Stockholder at any and all meetings of the stockholders of the Company, or any
adjournments thereof, at which votes of the Company's stockholders will be taken
in connection with the Merger or in connection with any proposal that would
compete or interfere with, or that would in any way delay or otherwise inhibit
the timely consummation of, the Merger and the other transactions contemplated
by the Merger Agreement, giving and granting to TCI Music all the powers such
Company Stockholder would possess if personally present. Such appointment also
will authorize TCI Music to execute (or to withhold) one or more written
consents solicited in lieu of any such meeting of stockholders of the Company.
Such proxy is coupled with an interest and will be irrevocable until the date on
which this Agreement terminates.
8. Miscellaneous.
(a) Governing Law. This agreement and the rights and
obligations of the parties under this agreement will be governed by and
construed in accordance with and subject to the laws of the State of Delaware,
without reference to conflicts of laws principles.
(b) Venue; Waiver of Jury Trial. The parties hereby
irrevocably submit to the jurisdiction of the courts of the State of Delaware
and the federal court of the United States of America located in the State of
Delaware solely in respect of the interpretation and enforcement of the
provisions of this Agreement and of the documents referred to in this Agreement
and in respect of the transactions contemplated hereby, and hereby waive, and
agree not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in such courts or that the venue thereof may not be appropriate
or that this Agreement or any such document may not be enforced in or by such
courts, and the parties irrevocably agree that all claims with respect to such
action or proceeding will be heard and determined in such a Delaware state or
federal court. Each party consents to and grants any such court jurisdiction
over the person of such party and over the subject matter of such dispute and
agrees that mailing of process or other papers in connection with any such
action or proceeding in the manner provided in paragraph (c) of this Section or
in such other manner as may be permitted by law will be valid and sufficient
service thereof.
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EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS PARAGRAPH (b).
(c) Notices. All notices, requests, claims, demands
and other communications required or permitted to be given or made pursuant to
this Agreement will be in writing and will be deemed given (i) on the first
business day following the date received, if delivered personally or by telecopy
(with telephonic confirmation of receipt by the addressee), (ii) on the business
day following timely deposit with an overnight courier service, if sent by
overnight courier specifying next day delivery and (iii) on the first business
day that is at least five days following deposit in the mails, if sent by first
class mail, to the parties at the following addresses (or at such other address
for a party as will be specified by like notice):
if to the Company: Paradigm Music Entertainment Company
00 Xxxxxx Xxxxx Xxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: President
Fax No.: (000) 000-0000
with a copy to: Xxxx & Priest L.L.P.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxx, Esq.
Fax No.: (000) 000-0000
if to the Company
Stockholders: As set forth on Schedule 1
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if to TCI Music: c/o Liberty Media Corporation
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxx, President
Fax No.: (000) 000-0000
with a copy to: Xxxxxxx & Xxxxxx L.L.C.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
or to such other Persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
(d) Severability. The provisions of this Agreement
will be deemed severable and the invalidity or unenforceability of any provision
will not affect the validity or enforceability of the other provisions hereof.
If any provision of this Agreement, or its application to any Person or any
circumstance, is invalid or unenforceable, (i) a suitable and equitable
provision will be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (ii) the remainder of this Agreement and the application of such
provision to other Persons or circumstances will not be affected by such
invalidity or unenforceability, nor will such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
(e) Counterparts. This Agreement may be executed in
any number of counterparts, each of which will be deemed to be an original and
all of which will together constitute the same agreement.
(f) Termination; Survival. This Agreement will
terminate upon (i) the mutual written consent of all parties, (ii) the time the
Merger becomes effective or (iii) the termination of the Merger Agreement in
accordance with its terms, and all the provisions of this Agreement will
terminate at such time.
(g) Captions. All captions in this Agreement are for
convenience of reference only and are not part of this Agreement, and no
construction or reference will be derived therefrom.
(h) Specific Performance. Each party acknowledges
that it will be impossible to measure in money the damage to the other party if
such party fails to comply with any of the obligations imposed by this
Agreement, that each such obligation is material and that, in the
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event of any such failure, the other party will not have an adequate remedy at
law or damages. Accordingly, each party agrees that injunctive relief or any
other equitable remedy, in addition to remedies at law or damages, is the
appropriate remedy for any such failure and will not oppose the granting of such
relief on the basis that the other party has an adequate remedy at law or in the
form of damages. Each party agrees that it will not seek, and agrees to waive
any requirement for, the securing or posting of a bond in connection with any
other party's seeking or obtaining such equitable relief.
(i) Successors and Assigns. This Agreement will be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns and will not be assignable without the written
consent of all other parties hereto.
(j) Entire Agreement; Amendment; Waiver. This
Agreement (including any schedules hereto) and the Merger Agreement (including
any exhibits and schedules thereto) supersede all prior agreements, written or
oral, among the parties with respect to the subject matter hereof and contain
the entire agreement among the parties with respect to the subject matter
hereof. This Agreement may not be amended, supplemented or modified, and no
provision hereof may be modified or waived, except by an instrument in writing
signed by all the parties or, in the case of a waiver, each party granting such
waiver. No waiver of any provision hereof by any party will be deemed a waiver
of any other provision hereof by any such party, nor will any such waiver be
deemed a continuing waiver of any provision hereof by such party.
(k) Further Assurances. The parties will execute and
deliver such additional instruments and other documents and will take such
further actions as may be necessary or appropriate to effectuate, carry out and
comply with all of the terms of this Agreement and the transactions contemplated
hereby.
(l) Third Party Beneficiaries. Nothing in this
Agreement, express or implied, is intended to confer upon any third party any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
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In witness whereof, the parties have executed and delivered
this Agreement as of the date first written above.
PARADIGM MUSIC ENTERTAINMENT COMPANY
By: /s/ Xxxxxx XxXxxxxxxx
---------------------------------
Name: Xxxxxx XxXxxxxxxx
Title: President
TCI MUSIC, INC.
By: /s/ Xxxxx X. Xxxx
---------------------------------
Name: Xxxxx X. Xxxx
Title: President
THE COMPANY STOCKHOLDERS:
/s/ Xxxxxx XxXxxxxxxx
----------------------------------------
Name: Xxxxxx XxXxxxxxxx
/s/ Xxxxxx X. Xxxxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
/s/ Xxx Xxxxxxxx
----------------------------------------
Name: Xxx Xxxxxxxx
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SCHEDULE 1
COMPANY STOCKHOLDERS
Xxxxxx XxXxxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxx Xxxxxxxx
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SCHEDULE 2(C)
OUTSTANDING OPTIONS, ETC.
EXERCISE OR
EXPIRATION CONVERSION NUMBER OF
DESCRIPTION DATE PRICE SHARES CLASS OF SHARES
----------- ---------- ----------- --------- ---------------
1. All shares of Class E Not Applicable Not 2,000,000 Convertible into
Common Stock applicable authorized Class A
Common Stock
2. Shares held by Xxxx Xxxxxxx Not applicable Not 6,000 Class A
deposited in escrow pursuant applicable Common Stock
to the Escrow Agreement
3. Warrants held by investors January 2000 $3 per share 1,650,000 Class A
in the bridge financing Common Stock
4. Warrants held by Xxxxx and 5th anniversary $3 per share 350,004 Class A
Affiliates of Xxxxx of initial public Common Stock
offering
175,006 Class E
Common Stock
5. Warrants held by Xxxxx and January 2000 $3 per share 165,000 Class A
Affiliates of Xxxxx Common Stock
6. Shares reserved for issuance Not applicable Not 333,333, of which Class A
to directors, consultants and applicable 94,000 would be Common Stock
employees deposited in
escrow
7. Shares issuable in Not applicable Not 66,667 Class A
connection with Purple applicable Common Stock
Demon acquisition
8. Warrants issued to SonicNet January 13, $3 per share 100,000 Class A
in connection with SonicNet 2000 Common Stock
acquisition
9. Shares issuable in Not applicable Not Up to 75,000 Class A
connection with Addicted to applicable Common Stock
Noise acquisition
10. Shares of Class B Common Not applicable Not 566,670 Class B
Stock owned by the applicable Common Stock
individuals named in
Schedule 1, held in escrow
pursuant to the Escrow
Agreement
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SCHEDULE 4
OWNERSHIP OF SHARES
Company Shares
Stockholder Beneficially Owned Record Holder
----------- ------------------ -------------
Xxxxxx XxXxxxxxxx 500,001 Class B Xxxxxx XxXxxxxxxx
250,002 Class E
Xxxxxx X. Xxxxxxxxx 250,002 Class B Xxxxxx Xxxxxxxxx
125,001 Class E
Xxx Xxxxxxxx 250,002 Class B Xxx X. Xxxxxxxx
125,001 Class E
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