EXHIBIT 3
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
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contemplated by the first sentence of this Section 1, a proxy substantially in
the form attached hereto as Annex A (a "Proxy"), which 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,
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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 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
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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.
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.
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(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:
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President and
General Counsel
STOCKHOLDERS:
Signature
Name
Title, if applicable
SCHEDULE I
Name Number of Shares
---- ----------------
Applied Telecommunications Technologies, Inc. 564,133
Xxxxx X. Xxxxxxx, Xx 5,000
Global Undervalued Securities Fund, L.P. 898,273
Xxxxxx X. Xxxx* 0
Xxxx X. Xxxxxxxxxx 727,606
Xxxxxxxxxx Capital Partners, Inc. 103,937
Xxxxxxx Xxxxx Xxxxxx 798,320
Xxxxx X. Xxxxxxxx* 0
Xxxxxx Xxx Thurburn 746,844
Xxxxxxx X. Xxxxxxx 866
* option holder
