Exhibit 10.4
STOCKHOLDER SUPPORT AGREEMENT (N2K)
STOCKHOLDER SUPPORT AGREEMENT dated as of October 22, 1998 (this
"Agreement"), by Xxxxxxxx X. Xxxxx, Xxxxxxxx X. Xxxxxxx, R. Xxxxx Xxxxxx, Xxxxx
Xxxxxxx and Xxxxx X. Xxxxx (each a "Stockholder" and collectively the
"Stockholders"), to and for the benefit of CDnow, Inc., a Pennsylvania
corporation ("CDnow"). 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, each Stockholder owns of record and
beneficially such number of shares of common stock, par value $.001 per share
("N2K Common Stock"), of N2K Inc., a Delaware corporation ("N2K"), set forth
opposite such Stockholder's name on Schedule A hereto (such shares, together
with any other voting or equity securities of N2K hereafter acquired by such
Stockholder prior to the termination of this Agreement, being referred to herein
collectively as the "Shares");
WHEREAS, concurrently with the execution of this Xxxxxxxxx, X0X, CDnow
and Exit 8 Holding Company, a Pennsylvania corporation ("NewCo"), 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, (i) a newly formed subsidiary of NewCo will be merged with and into N2K
(the "N2K Merger"), and (ii) a second newly formed subsidiary of Parent will be
merged with and into CDnow (the "CDnow Merger") such that N2K and CDnow will
become wholly-owned subsidiaries of NewCo and the stockholders of N2K and CDnow
will become stockholders of NewCo; and
WHEREAS, as a condition to the willingness of CDnow and N2K to enter
into the Merger Agreement and the Stock Option Agreements (as defined in the
Merger Agreement), CDnow has requested the Stockholders agree, and in order to
induce CDnow to enter into the Merger Agreement and the Stock Option Agreements,
the Stockholders are willing to agree, severally but not jointly, to vote in
favor of adopting the Merger Agreement and approving the N2K 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. Until the termination of this Agreement
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in accordance with the terms hereof, each Stockholder hereby agrees that, at the
N2K Stockholders' Meeting or any other meeting of the stockholders of N2K,
however called, and in any action by written consent of the stockholders of N2K,
such Stockholder will vote all of its respective Shares (a) in favor of adoption
of the Merger Agreement and approval of the N2K Merger and the other
transactions contemplated by the Merger Agreement, and (b) in favor of any other
matter necessary to the consummation of the transactions contemplated by the
Merger Agreement
and considered and voted upon by the stockholders of N2K (or any class thereof).
In addition, each Stockholder agrees that it will, upon request by CDnow,
furnish written confirmation, in form and substance reasonably satisfactory to
CDnow, of such Stockholder's support for the Merger Agreement and the N2K
Merger. Each Stockholder acknowledges receipt and review of a copy of the Merger
Agreement.
SECTION 2. TRANSFER OF SHARES. Each Stockholder represents and
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warrants that it will not, prior to the termination of this Agreement in
accordance with the terms hereof, to, 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 its
respective Shares, (b) deposit any of its respective Shares into a voting trust
or enter into a voting agreement or arrangement with respect to any such 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.
SECTION 3. NO SOLICITATION. Prior to the termination of this Agreement
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in accordance with its terms, each Stockholder agrees (a) that it will not, nor
will it authorize or permit any of its officers, directors, employees, agents
and representatives to, directly or indirectly, initiate or solicit any
inquiries or the making of any Acquisition Proposal and (b) that it will notify
CDnow as soon as possible (and in any event within 48 hours) 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.
SECTION 4. TERMINATION. This Agreement shall terminate upon the
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earliest to occur of (i) the Effective Time, (ii) any termination of the Merger
Agreement in accordance with the terms thereof, or (iii) in the case of Messrs.
Xxxxxxx and Xxxxx, upon the termination of their employment with N2K and the
termination of their membership on N2K's board of directors; provided that the
provisions of Section 6 shall survive any termination of this Agreement; and
provided, further, that no such termination shall relieve any party of liability
for a breach hereof prior to termination.
SECTION 5. SPECIFIC PERFORMANCE. The parties hereto agree that
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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 6. MISCELLANEOUS.
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(a) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements
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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 Delaware without regard to the
principles of conflicts of law thereof.
(d) Notwithstanding anything herein to the contrary, the
covenants and agreements set forth herein shall not prevent any of the
Stockholders' designees, partners or affiliates serving on the Board of
Directors of N2K from taking any action, subject to the applicable provisions of
the Merger Agreement, while acting in such capacity as a director of N2K.
(e) Notwithstanding any provisions hereof, none of the
obligations of any Stockholder under or contemplated by this Agreement shall be
an obligation of (i) any officer, director, stockholder, limited partner,
general partner or owner of such Stockholder, or any of their respective
officers, directors, stockholders, limited partners, general partners or owners,
or successors or assigns or (ii) any other Stockholder. Each Stockholder shall
be the only person or entity liable with respect to its obligations. Any
monetary liability of a Stockholder under this Agreement shall be satisfied
solely out of the assets of such Stockholder. Each Stockholder hereby
irrevocably waives any right it may have against any such officer, director,
stockholder, limited partner, general partner, owner, successor or assign
identified above as a result of the performance of the provisions under or
contemplated by this Agreement. Nothing in this Section 6(e) shall prevent CDnow
from obtaining specific enforcement of the obligations of any Stockholder under
this Agreement.
(f) 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.
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IN WITNESS WHEREOF, each of the parties hereto has
caused this Agreement to be signed by their respective duly authorized officers
as of the date first written above.
/s/ Xxxxxxxx X. Xxxxx
_________________________
XXXXXXXX X. XXXXX
/s/ Xxxxxxxx X. Xxxxxxx
_________________________
XXXXXXXX X. XXXXXXX
/s/ R. Xxxxx Xxxxxx
_________________________
R. XXXXX XXXXXX
Accepted and Agreed:
CDNOW, INC.
By:/s/ Xxxxx Xxxx
_______________________
Name:
Title:
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IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be signed by their respective duly authorized officers as of
the date first written above.
/s/ Xxxxx Xxxxxxx
__________________________
XXXXX XXXXXXX
/s/ Xxxxx X. Xxxxx
__________________________
XXXXX X. XXXXX
Accepted and Agreed:
CDNOW, INC.
By:/s/ Xxxxx Xxxx
_______________________
Name:
Title:
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SCHEDULE A
TO
STOCKHOLDER SUPPORT AGREEMENT (N2K)
XXXXXXXXXXX XXXXXX XXXXX XX X0X OWNED BY
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STOCKHOLDER
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Xxxxx X. Xxxxx 100,000
Xxxxxxxx X. Xxxxxxx 799,526
R. Xxxxx Xxxxxx 704,420
Xxxxx Xxxxxxx 34,275
Xxxxxxxx X. Xxxxx 723,650
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TOTAL: 2,361,871
PERCENTAGE OF COMMON STOCK OUTSTANDING
AS OF OCTOBER 22, 1998: 16.62%
