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EXHIBIT 10.4
STOCKHOLDERS AGREEMENT
This Stockholders Agreement ("Agreement") is made and entered into
this 4th day of September, 1996 by and among Motorola, Inc., a Delaware
corporation whose principal place of business is located at 0000 X. Xxxxxxxxx
Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000 ("Motorola" or "Buyer"), Cameron Audio
Networks, Inc., a Texas 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, no par value ("Common
Stock"), all securities convertible, directly or indirectly, into Common Stock
and all other equity securities of the Company.
Whereas, Motorola agreed to purchase 12,262 shares of Common Stock
pursuant to a Stock Purchase Agreement between the Company and Motorola dated
September 4, 1996 ("Purchase Agreement").
Whereas, a condition to Motorola's obligation to purchase such Common
Stock pursuant to the Purchase Agreement is that the Company, Stockholders and
Motorola enter into an agreement relating to, among other things, the election
of Directors of the Company.
NOW THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, the parties agree as follows:
1. Board of Directors; Charter Amendments
1.1 Each Stockholder hereby agrees with Motorola, on behalf of
itself and any person to whom it transfer any Shares, to vote all Shares of the
Company (and other Company securities which it directly or indirectly controls)
now or hereafter owned by it and take such other actions (whether in the
capacity as a stockholder, director or officer of the Company) as are
reasonably requested by Motorola to ensure the membership on the Company's
Board of Directors (the "Board of Directors"), at all times, of one person
designated by Motorola (the "Motorola Designee") and so that the Company
complies with, and takes all desirable actions within its control in order to
assure it complies with, its agreements contained in the Stock Purchase
Agreement dated as of the date hereof between Motorola and the Company. Each of
the Stockholders hereby further agrees with Motorola, on behalf of itself and
any person to whom it transfer any Shares, to vote all Shares of the Company
(and other Company securities which it directly or indirectly controls) now or
hereafter owned by it and take such other actions (whether in the capacity as a
stockholder, director or officer of the Company) as are reasonably requested by
Motorola to ensure that at any time that the Company shall have a classified
Board of
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Directors, the Motorola Designee shall be a member of the class of directors
with the longest initial term.
1.2 The removal from the Board (with or without cause) of any
representative of Motorola (the "Motorola Designee") shall be at the written
request of Motorola. but only upon such written request and under no other
circumstances; provided if "cause" (as defined below) exists to remove such
director, Motorola shall make such request if a majority of the Board makes a
request for Motorola to do so. Notwithstanding anything to the contrary herein,
removal from the Board of the Motorola Designee for any reason shall not affect
Motorola's ability to appoint a successor to the board effective immediately
upon the removal of the preceding representative. For purposes of this section,
"cause" shall mean (1) any act or acts of dishonesty by the Motorola Designee
constituting a felony and resulting or intended to result, directly or
indirectly, in an improper gain to or personal enrichment of the Motorola
Designee at the Company's expense, or (2) the willful and continued failure by
the Motorola Designee to substantially perform his duties as a director of the
Company (other than any such failure resulting from the Motorola Designee's
disability), after written demand for substantial performance is delivered by
the Company to the Motorola Designee specifically identifying the manner in
which the Company believes the Motorola Designee to be not substantially
performing his duties. For purposes of this paragraph, no act, or failure to
act, on the Motorola Designee's part, shall be considered "willful" unless
done, or not done, as the case may be, by him in bad faith and without
reasonable belief that his action or omission was in the best interest of the
Company. The parties agree that the provisions of this Section 1.2 shall not be
utilized in any manner by the Company to avoid, negate or frustrate application
of the provisions of Section 1.1 of this Agreement.
1.3 Each Stockholder hereby agrees, on behalf of itself and any
person to whom it transfers Shares, that it will not vote any Shares (or any
other Company securities which it directly or indirectly controls) now or
hereafter owned by it in favor of any amendment to Article Fourteen of the
Company's Articles of Incorporation; provided, however, that each such
Stockholder shall be permitted to vote in favor of the merger agreement in the
form set forth in Schedule 6(b)(i) to the Purchase Agreement with the initial
certificate of incorporation and bylaws of the surviving Delaware corporation
in the forms set forth in Schedules 6(b)(ii) and 6(b)(iii) to the Purchase
Agreement.
2. Conditional Irrevocable Proxy; Conflicting Agreements
2.1 In order to secure each Stockholder's obligations to vote its
Shares in accordance with Section 1, each Stockholder hereby irrevocably
appoints the Chief Financial Officer of Motorola, or his or her designee, as
its true and lawful proxy and attorney-in-fact, with full power of
substitution, to so vote its Shares in the event such Stockholder fails to
comply with Section 1 hereof. The proxy and powers granted by each of the
Stockholders pursuant to this Section 2 are coupled with an interest and are
given to secure the performance of its duties under this Agreement. The proxy
granted herein, if any of the Stockholders is an individual, will survive the
death, incompetency and disability of such stockholder or any other individual
holder
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\of its Shares and, if any of the Stockholders is an entity other than an
individual, will survive the merger and dissolution of such stockholder or any
other entity holding any Shares.
2.2 Each Stockholder represents that he or it has not granted and
is not a party to any proxy, voting trust or other agreement which is
inconsistent with or conflicts with the provisions of this Agreement and no
Stockholder shall grant any proxy or become party to any voting trust or other
agreement which is inconsistent with or conflicts with any provision of the
Agreement.
3. Term. The provisions of Sections 1 and 2 of this Agreement
will terminate and cease to be effective upon the earlier of (i) the third
anniversary of the Initial Public Offering (as defined in Section 7(a) of the
Purchase Agreement) by the Company) or (ii) the date on which Motorola no
longer holds at least 50% of the Shares of the Company purchased pursuant to
the Purchase Agreement (as adjusted for subsequent changes to the Shares,
including stock dividends and stock splits).
4. Expenses. The Company shall reimburse Motorola for the
reasonable out-of-pocket expenses incurred by the Director designated by it in
connection with the attendance at meetings by such Director designee or
carrying out any other duties by such Director designee that may be specified
by the Board of Directors; pay such Director designee the same directors' fees
paid to the other non-employee directors of the Company; and maintain as part
of its Articles of Incorporation or Bylaws provisions for the indemnification
and limitation on liability of Directors to the full extent permitted by law.
5. Meetings. The Company agrees, as a general practice, to hold a
meeting of its Board of Directors at least once every three months, and during
each year to hold its annual meeting of Stockholders on or approximately on the
date provided by its Bylaws.
6. 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 September [ ], 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."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding prior to the date hereof.
7. Transfer.
7.1 Transfer by Stockholder.
(a) Pre-Initial Public Offering.
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(i) Prior to an Initial Public Offering, if a Stockholder desires
to sell, encumber or otherwise dispose of all or any part of
his Shares pursuant to an offer from a bona fide purchaser or
lender, he shall give Motorola written notice of his
intention, which notice shall state the name and address of
the proposed purchaser or lender, the number of shares
proposed to be purchased or encumbered, and the price, terms
of payment and conditions of such proposed purchase,
encumbrance or disposition. Motorola shall have the right to
purchase all, but not less than all of the Shares covered by
such notice relating to a sale or other disposition at such
price or upon such terms and conditions as shall have been
stated in such notice. In the event of a proposed encumbrance
of such Shares, it shall be a condition of such encumbrance
that Stockholder receive a written acknowledgement from the
lender that such lender's disposition of the Shares upon the
occurrence of default is subject to Motorola's right to
purchase pursuant to this Section 7. Motorola must notify the
Stockholder or lender in writing of Motorola's election to
exercise its right to purchase such shares within 20 business
days of receipt of notice from Stockholder or lender. Any
purchase pursuant to this Section 7 must take place within 15
business days of notification to the Stockholder of Motorola's
election to purchase. Any Shares offered for sale pursuant to
this Section 7 which Motorola does not elect to purchase, or
which are not purchased by Motorola within the permitted 15
business day period, may be sold, encumbered or otherwise
disposed of to the third party named in the notice required by
this Section 7 for a period of 60 days after the expiration of
the time allowed for notice or purchase, as the case may be,
but at a price no lower, or on terms no less favorable to the
Stockholder, than those set forth in such notice.
(b) Post-Initial Public Offering.
(i) 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 person 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 offer to Motorola,
the opportunity to sell to the Buyer the Tag-Along Portion (as
hereinafter defined) of Motorola's Shares for the same
consideration per share and otherwise on the same terms and
conditions (except to the extent set forth in Section
7.1(b)(iv)) upon which such Stockholder sells its Shares;
provided, however, that the provisions of this Section
7.1(b)(i) 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"
shall be that number of Shares held by Motorola, as the case
may be, which is equal to (x) the total number of Shares held
by Motorola as of the date that the Tag-Along Notice (as
defined below) is provided in accordance with paragraph (ii)
below multiplied by (y) a fraction the numerator of which is
the aggregate number of Shares that
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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.
(ii) 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 Motorola. The
Tag-Along Notice shall contain written notice of such
Stockholder's offer to Motorola to sell the Tag-Along Portion
of its Shares setting forth the consideration per share to be
paid by the Buyer and the other terms and conditions of the
Purchase Offer. Motorola 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 Motorola elects to
participate in the Sale, Motorola 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 7.1(b)(ii).
(iii) At the closing of the Sale of Shares pursuant to this Section
7.1(b), the consideration with respect to Shares of Motorola
sold pursuant hereto shall be paid directly to Motorola
pursuant to written instructions of Motorola. 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 Motorola.
(iv) No provision in this Section 7.1(b), shall require Motorola
to make any representation (other than as to title, lack of
encumbrances, due authorization, power, no conflicts with
Motorola's instruments, and enforceability and information
relating solely to Motorola) or provide any indemnification in
any such agreement and no right or obligation of Motorola
shall be conditioned upon the making of such representation or
the provision of such indemnification.
7.2 Transfer by Motorola. Any proposed transfer of Shares owned
by Motorola shall be governed by Section 7(b) of the Purchase Agreement.
7.3 Excluded Transfers. The foregoing restrictions contained in
this Section 7 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 7 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 7, "Family Group" means a Stockholder's spouse and descendants (whether
natural or adopted) and any trust solely for the benefit of the
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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 7, the
transferring party shall cause the prospective transferee to execute and
deliver to the Company, Motorola and the other Stockholders a counterpart of
this Agreement.
7.4 Waiver of Previous Buy-Sell Arrangement. Each of the
Stockholders hereby represents and warrants that he has, prior to the date of
this Agreement, received a waiver from Cameron Broadcasting Systems, Inc.
("CBS"), pursuant to which CBS has subordinated its right to purchase the
Stockholders' Shares pursuant to the Buy-Sell Agreement, dated October 25,
1995, among CBS, Xxxx X. Xxxxxx, and Xxxx Xxxxx, to any and all rights which
Motorola has with respect to the Stockholders Shares.
8. Miscellaneous
8.1 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. Motorola may assign
its rights and delegate its obligations and responsibilities hereunder to any
50% (or greater) owned subsidiary, direct or indirect, 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.
8.2 Governing Law; Severability. This Agreement shall be governed
by and construed in accordance with the laws of the State of Texas, excluding
that body of law pertaining to conflict of laws; provided, however, that
immediately upon and subsequent to the effectiveness of the Company's merger
into a Delaware corporation, 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.
8.3 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.
8.4 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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8.5 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.
8.6 Survival of Representations and Warranties. All
representations, warranties, covenants and other agreements contained herein
shall survive the Closing Date.
8.7 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 Motorola:
0000 X. Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Corporate Secretary
cc: New Enterprises
Attn: Xxx Xxxxxx
If to the Stockholders:
c/o Xxxx Xxxxx
Xxxx Xxxxxx
Cameron Audio Networks, Inc.
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
If to the Company:
Cameron Audio Networks, Inc.
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx
With a copy to::
Xxxxxx, Xxxx & Xxxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxxx, Esq.
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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.
8.8 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.
MOTOROLA, INC. CAMERON AUDIO NETWORKS, INC.
By: /s/ XXXXXX X. XXXXXX By: /s/ XXXX XXXXXX
------------------------------ -------------------------------
Title: Vice President and General Title: CEO
--------------------------- ----------------------------
Manager, Motorola New Enterprises
STOCKHOLDERS
/s/ XXXX XXXXX /s/ XXXX X. XXXXXX
--------------------------------- -------------------------------
Xxxx Xxxxx Xxxx X. Xxxxxx
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AMENDMENT NO. 1
TO
STOCKHOLDERS AGREEMENT
This AMENDMENT NO. 1 to that Stockholders Agreement (the
"Agreement"), dated as of September 4, 1996, by and among Motorola, Inc.
("Motorola"), AudioNet Inc. (as successor in interest to Cameron Audio
Networks, Inc.) (the "Company"), and certain stockholders of the Company who
signed the Stockholders Agreement (individually a "Stockholder" and
collectively the "Stockholders") is entered into by and among Motorola, the
Company and the Stockholders as of the 30th day of December, 1996. Capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Agreement.
RECITALS
A. Motorola, the Company and the Stockholders previously
entered into the Stockholders Agreement, which grants Motorola certain rights
with respect to the Company's Board of Directors and certain rights upon a
proposed transfer of the shares of the Company owned by the Stockholders.
B. Motorola, the Company and the Stockholders desire to
amend certain provisions of the Stockholders Agreement pursuant to Section 8.4
thereof.
Accordingly, the parties hereto agree as follows:
I. ACKNOWLEDGMENTS
1.1 December Stockholders Agreement. Motorola hereby
acknowledges that the Stockholders have entered into the December Stockholders
Agreement, dated as of December 31, 1996 by and among HMTF AudioNet Investors
("HMTF"), Premiere Radio Networks, Inc. ("Premiere", collectively with HMTF,
the "Investors"), Motorola, the Company and the Stockholders pursuant to
Section 1.1 of which the Stockholders have agreed to allow certain parties to
participate in any sale of such Stockholders Shares.
1.2 Stockholders Shares. Motorola hereby acknowledges
that the Shares to be purchased by Motorola from the Stockholders pursuant to
Section 7.1 of the Agreement may be reduced in accordance with the provisions
of the December Stockholders Agreement.
II. TITLE
2.1 Amendment of Title. The Stockholders Agreement shall
be renamed the "September Stockholders Agreement"
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III. TRANSFER BY STOCKHOLDER
3.1 Amendment of Section 7.1. The following paragraph
shall be added immediately after Section 7.1 (a)(i) of the Stockholders
Agreement:
"(ii) Prior to an Initial Public Offering, if a Stockholder desires
to sell, encumber or otherwise dispose of all or any part of his
Shares pursuant to an offer from a bona fide purchaser or lender, he
shall give Motorola written notice of his intention, which notice
shall state the name and address of the proposed purchaser or lender,
the number of shares proposed to be purchased or encumbered, and the
price, terms of payment and conditions of such proposed purchase,
encumbrance or disposition. Subject to the immediately following
sentence, Motorola shall have the right to purchase all, but not less
than all of the Shares covered by such notice relating to a sale or
other disposition at such price or upon such terms and conditions as
shall have been stated in such notice. If Motorola elects to exercise
its right to purchase such Shares, the number of Shares to be
purchased by Motorola from the Stockholder shall be reduced by the
number of Shares the Investors may include in such sale pursuant to
the exercise of their "Tag-Along Rights" as set forth in Section 1.1
of the December Stockholders Agreement. If the Investors elect to
exercise such "Tag-Along Rights", Motorola shall purchase from the
Investors that number of Shares, as determined in accordance with
Section 1.1 of the December Stockholders Agreement, that may be
included by the Investors in the sale of the Stockholder Shares.
In the event of a proposed encumbrance of such Shares, it
shall be a condition of such encumbrance that Stockholder receive a
written acknowledgment from the lender that such lender's disposition
of the Shares upon the occurrence of default is subject to Motorola's
right to purchase pursuant to this Section 7. Motorola must notify the
Stockholder or lender in writing of Motorola's election to exercise
its right to purchase such shares within 20 business days of receipt
of notice from Stockholder or lender. Any purchase pursuant to this
Section 7 must take place within 15 business days of notification to
the Stockholder of Motorola's election to purchase. Any Shares offered
for sale pursuant to this Section 7 which Motorola does not elect to
purchase, or which are not purchased by Motorola within the permitted
15 business day period, may be sold, encumbered or otherwise disposed
of to the third party named in the notice required by this Section 7
for a period of 60 days after the expiration of the time allowed for
notice or purchase, as the case may be, but at a price no lower, or on
terms no less favorable to the Stockholder, than those set forth in
such notice."
IV. MISCELLANEOUS
4.1 Effect of this Amendment. All references to the
Stockholders Agreement in the Stockholders Agreement and each of the other
agreements and instruments executed by the parties hereto shall be deemed to
include the Stockholders Agreement and this Amendment No. 1 to Stockholders
Agreement.
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4.2 Agreement. Except as expressly amended, modified or waived
hereby, all terms and provisions of the Stockholders Agreement shall continue in
full force and effect in accordance with the provisions thereof.
IN WITNESS WHEREOF, the parties have caused this Amendment No.
1 to Stockholders Agreement to be executed as of the date first written above.
MOTOROLA, INC.
By: /s/ XXXXXX X. XXXXX
---------------------------
Name: Xxxxxx X. Xxxxx
Title: Director
AUDIONET, INC.
By: /s/ XXXX X. XXXXXX
--------------------------
Name:
Title:
STOCKHOLDERS
/s/ XXXX X. XXXXXX
----------------------------
Xxxx X. Xxxxxx
/s/ XXXX XXXXX
----------------------------
Xxxx Xxxxx
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AMENDMENT NO. 2
TO
SEPTEMBER STOCKHOLDERS AGREEMENT
This AMENDMENT NO. 2 to the September Stockholders Agreement,
dated as of September 4, 1996 by and among Motorola, Inc. ("Motorola"),
AudioNet, Inc. (the "Company") and certain stockholders of the Company
(individually a "Stockholder" and collectively the "Stockholders"), as amended
on December 30, 1996, by Amendment No. 1 to Stockholders Agreement (as so
amended, the "September Stockholders Agreement"), is entered into by and among
Motorola, the Company and the Stockholders as of December 19, 1997. Capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Agreement.
RECITALS
A. Motorola, the Company and the Stockholders previously
entered into the September Stockholders Agreement, which grants Motorola
certain rights with respect to the Company's Board of Directors and certain
rights upon a proposed transfer of the shares of Common Stock owned by the
Stockholders.
B. Motorola, the Company and the Stockholders desire to
amend certain provisions of the September Stockholders Agreement pursuant to
Section 8.4 thereof.
NOW THEREFORE, in consideration of the mutual promises,
covenants and agreements contained herein, the parties hereto agree as follows:
1. Acknowledgement.
(a) Motorola, the Company and the Stockholders hereby
acknowledge that the Stockholders have entered into an Addendum to the December
Stockholders Agreement (the "December Stockholders Agreement"), dated as of
December 31, 1996, by and among HMTF AudioNet Investors, Premiere Radio
Networks, Inc., Motorola (collectively, the "Investors"), the Company and the
Stockholders, with Intel Corporation ("Intel"), dated as of February 24, 1997,
pursuant to which the Stockholders have agreed to allow Intel to participate in
any sale of such Stockholders' Shares.
(b) Motorola hereby acknowledges that the number of
Shares that may be purchased by Motorola from the Stockholders pursuant to
Section 7.1 of the September Stockholders Agreement may be reduced in
accordance with the provisions of the December Stockholders Agreement to the
extent any Investor (as defined therein) elects to participate in such sale;
provided, however, that the total number of Shares being purchased by Motorola
shall not be reduced.
2. Amendment of Section 1.1. Section 1.1 of the
Agreement is deleted in its entirety and replaced with the following:
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" 1.1 Each Stockholder hereby agrees with Motorola,
on behalf of itself and any person to whom it transfers any
Shares, to vote all Shares of the Company (and other Company
securities which it directly or indirectly controls) now or
hereafter owned by it and take such other actions (whether in
the capacity as a stockholder, director or officer of the
Company) as are reasonably requested by Motorola to ensure the
membership on the Company's Board of Directors (the "Board of
Directors"), at all times, of two persons designated by
Motorola (the "Motorola Designees") and so that the Company
complies with, and takes all desirable actions within its
control in order to assure it complies with, its agreements
contained in the Stock Purchase Agreements dated as of
September 4, 1996 and December 19, 1997 between Motorola and
the Company. Each of the Stockholders hereby further agrees
with Motorola, on behalf of itself and any person to whom it
transfers any Shares, to vote all Shares of the Company (and
other Company securities which it directly or indirectly
controls) now or hereafter owned by it and take such other
actions (whether in the capacity as a stockholder, director or
officer of the Company) as are reasonably requested by
Motorola to ensure that at any time that the Company shall
have a classified Board of Directors, that at least one of the
Motorola Designees shall be a member of the class of directors
with the longest initial term."
3. Amendment of Section 1.2. Section 1.2 of the Agreement is
deleted in its entirety and replaced with the following:
" 1.2 The removal from the Board (with or without
cause) of either Motorola Designee shall be at the written
request of Motorola, but only upon such written request and
under no other circumstances; provided if "cause" (as defined
below) exists to remove such director, Motorola shall make
such request if a majority of the Board makes a request for
Motorola to do so. Notwithstanding anything to the contrary
herein, removal from the Board of a Motorola Designee for any
reason shall not affect Motorola's ability to appoint a
successor to the board effective immediately upon the removal
of the preceding representative. For purposes of this section,
"cause" shall mean (1) any act or acts of dishonesty by a
Motorola Designee constituting a felony and resulting or
intended to result, directly or indirectly, in an improper
gain to or personal enrichment of a Motorola Designee at the
Company's expense, or (2) the willful and continued failure by
a Motorola Designee to substantially perform his duties as a
director of the Company (other than any such failure resulting
from such Motorola Designee's disability), after written
demand for substantial performance is delivered by the Company
to such Motorola Designee specifically identifying the manner
in which the Company believes such Motorola Designee to be not
substantially performing his duties. For purposes of this
paragraph, no act, or failure to act, on a Motorola Designee's
part, shall be considered "willful" unless done, or not done,
as the case may be, by him in bad faith and without reasonable
belief that his action or omission was in the best interest of
the Company. The parties agree that the provisions of this
Section 1.2 shall not be utilized in any manner by the Company
2
15
to avoid, negate or frustrate application of the provisions of Section
1.1 of this Agreement."
4. Miscellaneous.
(a) Effect of this Amendment. All references to the
Stockholders Agreement in the Stockholders Agreement and each of the other
agreements and instruments executed by the parties hereto shall be deemed to
include the Stockholders Agreement, the Amendment No. 1 to the Stockholders
Agreement and this Amendment No. 2 to September Stockholders Agreement.
(b) Agreement. Except as expressly amended, modified or
waived hereby, all terms and provisions of the September Stockholders Agreement
shall continue in full force and effect in accordance with the provisions
thereof.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 2
to September Stockholders Agreement to be executed as of the date first written
above.
MOTOROLA, INC.
By: /s/ XXXXXX X. XXXXXX
---------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President and
General Manager
Motorola New
Enterprises
AUDIONET, INC.
By: /s/ XXXX X. XXXXXX
--------------------------
Name:
Title:
STOCKHOLDERS
/s/ XXXX X. XXXXXX
----------------------------
Xxxx X. Xxxxxx
/s/ XXXX XXXXX
----------------------------
Xxxx Xxxxx
