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EXHIBIT 10.5
DECEMBER STOCKHOLDERS AGREEMENT
This Stockholders Agreement ("Agreement") is made and entered into
this 31st day of December, 1996 by and among HMTF AudioNet Investors, a Texas
general partnership whose principal place of business is located at 000
Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx Xxxxx, 00000-0000 ("HMTF"), Motorola, Inc.,
a Delaware corporation maintaining its principal place of business at 0000 X.
Xxxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxx 00000 ("Motorola"), Premiere Radio
Networks, Inc., a Delaware corporation maintaining its principal office at
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx Xxxx, Xxxxxxxxxx 00000 ("Premiere"
and collectively with HMTF and Motorola, the "Investors"), AudioNet, Inc., a
Delaware corporation whose principal place of business is located at 0000 Xxx
Xxxxxx, Xxxxxx, Xxxxx 00000 (the "Company"), and certain Stockholders of the
Company who have signed this Agreement (individually a "Stockholder" and
collectively the "Stockholders").
Whereas, the Stockholders currently own, beneficially and of record,
in the aggregate 129,694 shares of the outstanding Shares of the Company (on a
fully diluted basis). Schedule A hereto sets forth a true and correct list of
the number of Shares of the Company owned by each Stockholder. The term
"Shares" used herein shall mean shares of Common Stock, $0.01 par value
("Common Stock"), all securities convertible, directly or indirectly, into
Common Stock and all other equity securities of the Company.
Whereas, HMTF agreed to purchase 2,306 shares of Common Stock pursuant
to a Stock Purchase Agreement between the Company and HMTF dated as of the date
hereof ("Purchase Agreement").
Whereas, Motorola and Premiere have purchased 12,262 and 9,810 shares,
respectively, of Common Stock pursuant to stock purchase agreements with the
Company.
Whereas, a condition to HMTF's obligation to purchase such Common
Stock pursuant to the Purchase Agreement is that the Company, Stockholders and
Investors enter into this Agreement relating to the transfer of Shares by the
Stockholders.
Whereas, the Company desires that Premiere shall be a party to any
such agreement.
NOW THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, the parties agree as follows:
1. Transfer by Stockholder.
1.1 Pre-Initial Public Offering.
(a) Prior to an Initial Public Offering, if a Stockholder
proposes to effect a sale, transfer or other
disposition in any one transaction or series of
transactions (a "Sale") to any one or more persons or
group of persons (the "Buyer") of any amount of the
Shares (including, for this purpose, Shares issuable
upon exercise or conversion of options, convertible
securities, or
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warrants proposed to be sold, transferred or disposed
of) representing 10% or more of the outstanding
Shares (the "Purchase Offer"), such Stockholder shall
(i) offer to the Investors the opportunity to sell to
the Buyer the Tag-Along Portion (as hereinafter
defined) of such Investor's Shares for the same
consideration per share and otherwise on the same
terms and conditions (except to the extent set forth
in Section 1.1(d)) upon which such Stockholder sells
its Shares; provided, however, that the provisions of
this Section 1.1(a) shall not apply to a Sale to any
affiliate of any Stockholder, but it shall be a
condition to any such Sale that such affiliate assume
all of the obligations of the transferring
Stockholder hereunder. The "Tag-Along Portion" with
respect to any Investor shall be that number of
Shares held by such Investor, as the case may be,
which is equal to the product of (x) the total number
of Shares held by such Investor as of the date that
the Tag-Along Notice (as defined below) is provided
in accordance with paragraph (b) below multiplied by
(y) a fraction the numerator of which is the
aggregate number of Shares that the Stockholders
propose to sell as set forth in such Tag- Along
Notice and the denominator of which is the total
number of Shares held by the Stockholders as of such
date.
(b) The applicable Stockholder shall cause the Purchase
Offer to be reduced to writing and shall provide a
written notice (the "Tag-Along Notice") of the
Purchase Offer to the Investors. The Tag-Along
Notice shall contain written notice of such
Stockholder's offer to the Investors to sell the
Tag-Along Portion of their respective Shares setting
forth the consideration per share to be paid by the
Buyer and the other terms and conditions of the
Purchase Offer. Each Investor shall have fifteen
(15) business days to elect to participate in the
Sale, which election shall be made by giving notice
to such Stockholder at its address specified in the
Tag-Along Notice, and if an Investor elects to
participate in the Sale, such Investor shall use all
reasonable efforts in a timely manner, to take, or
cause to be taken, all action and to do, or cause to
be done, all things necessary, proper or advisable,
under applicable laws and regulations (including,
without limitation, to ensure that all appropriate
legal and other requirements are met and all consents
of third persons are obtained), to consummate the
sale of its Shares pursuant to the proposed
transactions contemplated by this Section 1.1.
(c) At the closing of the Sale of Shares pursuant to this
Section 1.1, the consideration with respect to Shares
of any Investor sold pursuant hereto shall be paid
directly to such Investor pursuant to such Investor's
written instructions. The applicable Stockholder
shall furnish such other evidence of the completion
and time of completion of such Sale and the terms
thereof as shall be reasonably requested by any
selling Investor.
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(d) No provision in this Section 1.1 shall require any
Investor to make any representation (other than as to
title, lack of encumbrances, due authorization,
power, no conflicts with such Investors instruments,
and enforceability and information relating solely to
such Investor) or provide any indemnification in any
such agreement and no right or obligation of any of
the Investors shall be conditioned upon the making of
such representation or the provision of such
indemnification.
1.2 Post Initial Public Offering.
(a) Subsequent to an Initial Public Offering, if a
Stockholder proposes to effect a sale, transfer or
other disposition in any one transaction or series of
transactions (a "Sale") to any one or more persons or
group of persons (the "Buyer") of any amount of the
Shares (including, for this purpose, Shares issuable
upon exercise or conversion of options, convertible
securities, or warrants proposed to be sold,
transferred or disposed of) representing 10% or more
of the outstanding Shares (the "Purchase Offer"),
such Stockholder shall (i) offer to the Investors the
opportunity to sell to the Buyer the Tag-Along
Portion (as hereinafter defined) of such Investor's
Shares for the same consideration per share and
otherwise on the same terms and conditions (except to
the extent set forth in Section 1.2(d)) upon which
such Stockholder sells its Shares; provided, however,
that the provisions of this Section 1.2(a) shall not
apply to a Sale to any affiliate of any Stockholder,
but it shall be a condition to any such Sale that
such affiliate assume all of the obligations of the
transferring Stockholder hereunder. The "Tag-Along
Portion" with respect to any Investor shall be that
number of Shares held by such Investor, as the case
may be, which is equal to the product of (x) the
total number of Shares held by such Investor as of
the date that the Tag-Along Notice (as defined below)
is provided in accordance with paragraph (b) below
multiplied by (y) a fraction the numerator of which
is the aggregate number of Shares that the
Stockholders propose to sell as set forth in such
Tag- Along Notice and the denominator of which is the
total number of Shares held by the Stockholders as of
such date.
(b) The applicable Stockholder shall cause the Purchase
Offer to be reduced to writing and shall provide a
written notice (the "Tag-Along Notice") of the
Purchase Offer to the Investors. The Tag-Along
Notice shall contain written notice of such
Stockholder's offer to the Investors to sell the
Tag-Along Portion of their respective Shares setting
forth the consideration per share to be paid by the
Buyer and the other terms and conditions of the
Purchase Offer. Each Investor shall have twenty (20)
business days to elect to participate in the Sale,
which election shall be made by giving notice to such
Stockholder at its address specified in the Tag-Along
Notice, and if an Investor elects to participate in
the Sale, such Investor shall use all reasonable
efforts in a timely manner, to take, or cause to be
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taken, all action and to do, or cause to be done, all
things necessary, proper or advisable, under
applicable laws and regulations (including, without
limitation, to ensure that all appropriate legal and
other requirements are met and all consents of third
persons are obtained), to consummate the sale of its
Shares pursuant to the proposed transactions
contemplated by this Section 1.2.
(c) At the closing of the Sale of Shares pursuant to this
Section 1.2, the consideration with respect to Shares
of any Investor sold pursuant hereto shall be paid
directly to such Investor pursuant to such Investor's
written instructions. The applicable Stockholder
shall furnish such other evidence of the completion
and time of completion of such Sale and the terms
thereof as shall be reasonably requested by any
selling Investor.
(d) No provision in this Section 1.2 shall require any
Investor to make any representation (other than as to
title, lack of encumbrances, due authorization,
power, no conflicts with such Investors instruments,
and enforceability and information relating solely to
such Investor) or provide any indemnification in any
such agreement and no right or obligation of any of
the Investors shall be conditioned upon the making of
such representation or the provision of such
indemnification.
1.3 Transfer by the Investors. Any proposed transfer of
Shares owned by the Investors shall be governed by Section 7(b) of their
respective stock purchase agreements.
1.4 Excluded Transfers. The foregoing restrictions
contained in this Section 1 shall not apply with respect to any transfer of
Stockholder Shares by any Stockholder pursuant to applicable laws of descent
and distribution or among such Stockholder's Family Group. Any attempted
transfer or other act in violation of this Section 1 shall be of no effect and
the attempted transferee or other party shall receive no rights in the
Stockholder Shares, and the Company agrees that it will not transfer any such
Stockholder Share on the stock transfer records of the Company. For purposes
of this Section 1, "Family Group" means a Stockholder's spouse and descendants
(whether natural or adopted) and any trust solely for the benefit of the
Stockholder and/or the Stockholder's spouse and/or descendants. In the event
of, and prior to, any sale or disposition permitted under this Section 1, the
transferring party shall cause the prospective transferee to execute and
deliver to the Company, HMTF, Premiere, Motorola and the other Stockholders a
counterpart of this Agreement.
2. Legend. Each certificate evidencing Shares of each
Stockholder ("Stockholder Shares") and each certificate issued in exchange for
or upon the transfer of any Stockholder Shares shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The securities represented by this certificate are subject to
a Stockholders Agreement dated December 31, 1996 among the issuer of
such securities (the "Company") and certain of the Company's
stockholders. A copy of such Stockholders Agreement will be furnished
without charge by the Company to the holder hereof upon written
request made to the Secretary of the Company."
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The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding prior to the date hereof.
3. Term. Section 1.1 of this Agreement shall terminate and cease
to be effective on the earlier of (i) the later of (x) the third anniversary
date of this Agreement or (y) when the Stockholders no longer own more than 50%
of the shares entitled to vote for the election of the board of directors of
the Company or (ii) immediately prior to the consummation of the Initial Public
Offering (as defined in Section 7(a) of the Purchase Agreement). This
Agreement (except as provided above) shall terminate and cease to be effective
upon the third anniversary of the Initial Public Offering (as defined in
Section 7(a) of the Purchase Agreement).
4. Miscellaneous.
4.1 Successors and Assigns. This Agreement and the terms
and conditions contained herein are binding upon, and will inure to the benefit
of, the parties hereto and their respective representatives, executors,
administrators, heirs, successors and permitted assigns. The Investors may
assign their rights and delegate their obligations and responsibilities
hereunder to any 50% (or greater) owned subsidiary, direct or indirect or any
general partner of HMTF or any 50% (or greater) owned subsidiary, direct or
indirect of Premiere or Motorola, without the Company's consent, but neither
this Agreement nor any rights or obligations hereunder may be assigned,
directly, indirectly, voluntarily or involuntarily, by the Company or any
Stockholders.
4.2 Governing Law; Severability. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
excluding that body of law pertaining to conflict of laws. If any provision of
this Agreement is found to be invalid, illegal or unenforceable in any respect,
such provision will be enforced to the maximum extent possible and the
remaining provisions of this Agreement will continue unaffected.
4.3 Waivers. No waiver by any party hereto of any term
or condition of this Agreement will be effective unless set forth in a writing
signed by such party. No waiver of any provision of this Agreement will be
deemed a waiver of any other provision. No failure or delay on the part of any
party in exercising any right, remedy, power or privilege under this Agreement
will operate as a waiver thereof, nor will a single or partial exercise thereof
preclude any other or further exercise of any rights, remedies, powers or
privileges.
4.4 Entire Agreement; Modifications. This Agreement,
including the Schedule attached hereto, which is incorporated herein by
reference, constitutes the full Agreement among the parties hereto pertaining
to the subject matter hereof and supersedes in its entirety all prior and
contemporaneous agreements, understandings, negotiations and discussions of the
parties, whether oral or written, with respect to the subject matter hereof.
No supplement, modification or amendment to this Agreement will be binding
unless executed in writing by the party or parties against whom enforcement is
sought.
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4.5 Counterparts and Expenses. This Agreement may be
executed in any number of counterparts. Each party shall be responsible for
its own expenses and fees incurred in connection with the negotiation,
execution and performance of the Agreement, and related documents, including
counsel fees, except as otherwise stated. The Company shall not pay or
reimburse the Stockholders for the expenses and fees of the Stockholders
incurred in connection with this Agreement.
4.6 Survival of Representations and Warranties. All
representations, warranties, covenants and other agreements contained herein
shall survive the Closing Date.
4.7 Notices. All notices which are permitted or required
under this Agreement shall be in writing and delivered personally or sent by
registered, certified, overnight or regular mail, postage prepaid, addressed as
follows, or to such other person or address as may be designated by notice to
the other party:
If to HMTF AudioNet Investors:
c/o Xxxxxx X. Xxxxx
Xxxxxxx X. XxXxx
HMTF AudioNet Investors
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx Xxxxx 00000-0000
with a copy to
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxx
Telefax Number: 214/746-7777
If to Motorola
Motorola, Inc.
0000 X. Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: New Enterprises
Telefax Number: 214/746-7777
If to Premiere:
Premiere Radio Networks, Inc.
00000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxx, President
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If to the Stockholders:
c/o Xxxx Xxxxx
Xxxx Xxxxxx
AudioNet, Inc.
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
If to the Company:
AudioNet, Inc.
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx
With a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxxx, Esq.
Notices shall be deemed delivered when delivered personally or
received by telecopy or after being mailed by prepaid certified or registered
mail with return receipt requested or by such other method (including air
courier) which provides for a signed receipt upon delivery. The addresses and
numbers set forth above shall be conclusive for all purposes unless and until
written notice of a change of address shall be sent to the parties herein.
4.8 Further Action. Each party hereto shall take such further
action and shall execute and deliver such further documents as reasonably may
be requested by any other party in order to carry out the provisions and
purposes of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HMTF AudioNet Investors
By: /s/ XXXXXXX XxXXX
-------------------------
Name: Xxxxxxx XxXxx
Title: General Partner
AudioNet, Inc.
By: /s/ XXXX XXXXXX
----------------------------
Name: Xxxx Xxxxxx
Title: CEO
Motorola, Inc.
By: /s/ XXXXXX X. XXXXX 12/30/96
----------------------------
Name: Xxxxxx X. Xxxxx
Title: Dir. & GM ICS
Premiere Radio Networks, Inc.
By: /s/ XXXXXX XXXXXX
-------------------------
Name: Xxxxxx Xxxxxx
Title: Sr. Vice President
STOCKHOLDERS
/s/ XXXX XXXXX
-----------------------------------
Xxxx Xxxxx
/s/ XXXX X. XXXXXX
-----------------------------------
Xxxx X. Xxxxxx
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ADDENDUM TO DECEMBER STOCKHOLDERS AGREEMENT
This Addendum (the "Addendum") to December Stockholders Agreement
(attached hereto as Exhibit A) (the "December Agreement") is made and entered
into as of the 24th day of February 1997 by and among AudioNet Inc., a Delaware
corporation maintaining its principal office at 0000 Xxx Xxxxxx, Xxxxxx, Xxxxx
(the "Company"), Intel Corporation, a Delaware corporation maintaining its
principal office at 0000 Xxxxxxx Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx
00000-0000 ("Intel"), and the Stockholders of the Company who have signed this
Addendum (individually a "Stockholder" and collectively the "Stockholders").
Capitalized terms used herein and not otherwise defined shall have the
meanings given to them in the December Agreement.
WHEREAS, the Stockholders currently own, beneficially and of record,
in the aggregate 129,694 shares of the outstanding Shares of the Company (on a
fully diluted basis).
WHEREAS, pursuant to the terms of a Stock Purchase and Warrant
Agreement, dated as of the date hereof, between the Company and Intel (the
"Stock and Warrant Purchase Agreement") Intel desires to purchase 4,905 shares
of common stock of the Company and a warrant to purchase shares of common stock
of the Company.
WHEREAS, a condition to Intel's obligation to purchase the shares of
common stock and warrant pursuant to the Stock and Warrant Purchase Agreement
is that Intel shall be entitled to all of the rights and bound by all of the
obligations of an "Investor" under the December Agreement.
WHEREAS, the Stockholders, in order to induce Intel to enter into the
Stock and Warrant Purchase Agreement, desire to grant rights to Intel as an
Investor under the December Agreement.
NOW, THEREFORE in consideration of the agreements set forth herein,
the parties hereto agree as follows:
1. Upon execution of this Addendum, Intel shall be entitled to all of
the rights of an Investor under the December Agreement, subject to and bound by
all of the terms, conditions, and covenants contained within the December
Agreement effective as of the date hereof
2. Each Stockholder hereby acknowledges that Intel is an Investor for
purposes of the December Agreement effective as of the date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
effective as of the date first written above.
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AudioNet, Inc.
By: /s/ XXXX XXXXXX
------------------------------------
Name: XXXX XXXXXX
Title: CEO
Intel Corporation ------------
LEGAL OK
------------
PJT 2/22/97
------------
By: /s/ XXXXXX XXXXXXX
------------------------------------
Name: XXXXXX XXXXXXX
Title: Vice President and Treasurer
STOCKHOLDERS
/s/ XXXX XXXXX
----------------------------------------
Xxxx Xxxxx
/s/ XXXX X. XXXXXX
----------------------------------------
Xxxx X. Xxxxxx
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ADDENDUM TO DECEMBER STOCKHOLDERS AGREEMENT
This Addendum (the "Addendum") to December Stockholders Agreement
(attached hereto as Exhibit A) (the "December Agreement") is made and entered
into as of the 30th day of December 1997 by and among AudioNet Inc., a Delaware
corporation maintaining its principal office at 0000 Xxx Xxxxxx, Xxxxxx, Xxxxx
(the "Company"), Yahoo! Inc., a California corporation maintaining its
principal office at 0000 Xxxxxxx Xxxxxxxxxx, Xxxxx 000, Xxxxx Xxxxx, XX, 00000
("Yahoo"), and the Stockholders of the Company who have signed this Addendum
(individually a "Stockholder" and collectively the "Stockholders").
Capitalized terms used herein and not otherwise defined shall have the
meanings given to them in the December Agreement.
WHEREAS, the Stockholders currently own, beneficially and of record,
in the aggregate 7,257,840 shares of the outstanding Shares of the Company (on
a fully diluted basis).
WHEREAS, pursuant to the terms of a Stock Purchase Agreement, dated as
of the date hereof, among the Company, Yahoo, Motorola, Inc. and Intel
Corporation (the "Stock Purchase Agreement") Yahoo desires to purchase 79,618
shares of common stock of the Company.
WHEREAS, a condition to Yahoo's obligation to purchase the shares of
common stock pursuant to the Stock Purchase Agreement is that Yahoo shall be
entitled to all of the rights and bound by all of the obligations of an
"Investor" under the December Agreement.
WHEREAS, the Stockholders, in order to induce Yahoo to enter into the
Stock Purchase Agreement, desire to grant rights to Yahoo as an Investor under
the December Agreement.
NOW, THEREFORE in consideration of the agreements set forth herein,
the parties hereto agree as follows:
1. Upon execution of this Addendum, Yahoo shall be entitled to all of
the rights of an Investor under the December Agreement, subject to and bound by
all of the terms, conditions, and covenants contained within the December
Agreement effective as of the date hereof
2. Each Stockholder hereby acknowledges that Yahoo is an Investor for
purposes of the December Agreement effective as of the date hereof
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IN WITNESS WHEREOF, the parties hereto have executed this Addendum to
December Stockholders Agreement effective as of the date first written above.
AudioNet, Inc.
By: /s/ XXXX XXXXXX
------------------------------------
Name: Xxxx Xxxxxx
Title: CEO
Yahoo! Inc.
By: /s/ XXX XXXXXX
------------------------------------
Name: Xxx Xxxxxx
Title: President and CEO
STOCKHOLDERS
/s/ XXXX XXXXX
---------------------------------------
Xxxx Xxxxx
/s/ XXXX XXXXXX
---------------------------------------
Xxxx X. Xxxxxx
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