EXHIBIT 3.1
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
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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 contemplated by the first sentence of this Section 1,
a proxy substantially in the form attached hereto as Annex A (a "Proxy"), which
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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 on 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
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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
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Stockholder on its own behalf hereby severally represents and warrants to
Acquiror with respect to itself and its, his or her ownership of the Shares as
follows:
(a) Ownership of Shares. On the date hereof, the Shares are owned
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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
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and authority to enter into and perform all of its obligations, under this
Agreement. The execution, 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
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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,
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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
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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
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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
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party of liability for a willful breach hereof prior to termination.
Section 6. 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 7. Fiduciary Duties. Each Stockholder is signing this Agreement
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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.
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Section 8. Legend on Certificate. Each Stockholder agrees to present
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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.
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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 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.
(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: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President and
General Counsel
STOCKHOLDERS:
APPLIED TELECOMMUNICATIONS
TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
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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:
By: /s/ Xxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxx X. Xxxxxxx, Xx.
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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:
GLOBAL UNDERVALUED SECURITIES FUND, L.P
By: /s/ XXXXXXXXXX CAPITAL PARTNERS
LDC, its general partner
By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: President
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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:
/s/ Xxxxxx X. Xxxx
--------------------------------
Xxxxxx X. Xxxx
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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:
/s/ Xxxx X. Xxxxxxxxxx
--------------------------------
Xxxx X. Xxxxxxxxxx
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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:
XXXXXXXXXX CAPITAL PARTNERS LDC
By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: President
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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:
/s/ Xxxxxxx Xxxxx Xxxxxx
--------------------------------
Xxxxxxx Xxxxx Xxxxxx
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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:
/s/ Xxxxx X. Xxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxx
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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:
/s/ Xxxxxx Xxx Thurburn
--------------------------------
Xxxxxx Xxx Thurburn
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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:
/s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx
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SCHEDULE I
Name Number of Shares
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Applied Telecommunications Technologies, Inc. 560,133
Xxxxx X. Xxxxxxx, Xx. 5,000
Global Undervalued Securities Fund, L.P. 1,041,973
Xxxxxx X. Xxxx* 0
Xxxx X. Xxxxxxxxxx 814,879
Xxxxxxxxxx Capital Partners LDC 16,664
Xxxxxxx Xxxxx Xxxxxx 798,320
Xxxxx X. Xxxxxxxx* 0
Xxxxxx Xxx Thurburn 746,844
Xxxxxxx X. Xxxxxxx 866
* option holder only
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