EXECUTION 10.11
EXECUTION COPY
SECURITYHOLDERS AGREEMENT
-------------------------
This SECURITYHOLDERS AGREEMENT is dated as of March 18, 1999, by and
among Muzak Holdings LLC (f/k/a ACN Holdings, LLC), a Delaware limited liability
company (the "Company"); MEM Holdings, LLC ("MEM Holdings"); and Capstar
------- ------------
Broadcasting Corporation ("Capstar").
-------
As of the date hereof, (i) MEM Holdings and Capstar each owns a number
of the Company's Class A Common Units and (ii) MEM Holdings is an indirect
Subsidiary of ABRY (as defined below).
The Company and the Equityholders (as defined below) desire to enter
into this Agreement for the purposes, among others, of (i) establishing the
composition of the Board (as defined below), (ii) assuring continuity in the
management and ownership of the Company and (iii) limiting the manner and terms
by which the Equityholder Units (as defined below) may be transferred.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. Definitions. As used herein, the following terms shall have the
-----------
following meanings:
"ABRY" means ABRY Broadcast Partners III, L.P., a Delaware limited
----
partnership.
"ABRY Investor" means any of MEM Holdings or any of its Permitted
-------------
Transferees.
"ABRY Management Services Agreement" means the Amended and Restated
----------------------------------
Management and Consulting Services Agreement, dated as of the date hereof
between ABRY and Muzak, as amended pursuant to the First Amendment to the
Management and Consulting Services Agreement dated as of January 11, 1999.
"ABRY Units" means all Equityholder Units owned by any ABRY Investor.
----------
"Affiliate" means, when used with reference to a specified Person, any
---------
Person that directly or indirectly controls or is controlled by or is under
common control with the specified Person. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise). With respect to any Person who
is an individual, "Affiliates" shall also include, without limitation, any
member of such individual's Family Group.
"Board" means the Company's board of directors.
-----
"Capstar Contribution Agreement" means the Contribution Agreement
------------------------------
dated as of February 19, 1999 between Capstar and the Company.
"Capstar Credit and Pledge Agreement" means the Credit Agreement dated
-----------------------------------
as of May 29, 1998, as amended, among Capstar Radio Broadcasting Partners, Inc.
as the borrower, Capstar, Capstar Broadcasting Partners, Inc. and the financial
institutions party thereto, as well as any pledge agreement executed in
connection therewith.
"Capstar Investor" means any of Capstar, a Section 10 Assignee (as
----------------
herein defined) or any of their respective Permitted Transferees.
"Capstar Units" means all Equityholder Units owned by any Capstar
-------------
Investor.
"Class A Units" means the Company's Class A Units (as such term is
-------------
defined in the LLC Agreement).
"Class A Director" shall have the meaning ascribed to such term in
----------------
the LLC Agreement.
"Class B Units" means the Company's Class B Units (as such term is
-------------
defined in the LLC Agreement).
"Class B Director" shall have the meaning ascribed to such term in
----------------
the LLC Agreement.
"Common Units" means collectively the Class A Units, Class B Units and
------------
any other equity securities of the Company which is not limited to a fixed sum
or percentage of par value or stated value in respect of the rights of the
holders thereof to participate in dividends and in the distribution of assets
upon the voluntary or involuntary liquidation, dissolution or winding up of the
issuer of such securities (including, by way of example and without limitation,
the common stock of any Successor Corporation (as herein defined)).
"Distributions" has the meaning which the LLC Agreement assigns to
-------------
that term.
"Equityholder Units" means (i) all Common Units held, directly or
------------------
indirectly, by the Equityholders, and (ii) all equity securities issued directly
or indirectly with respect to any Common Units referred to in clause (i) above
by way of a unit or stock dividend or other distribution, or unit or stock
split, or in connection with a combination of units or shares, recapitalization,
merger, consolidation or other reorganization. As to any particular units or
shares constituting Equityholder
-2-
Units, such units or shares will cease to be Equityholder Units when they have
been Transferred in a Public Sale.
"Equityholders" means collectively the ABRY Investors and the Capstar
-------------
Investors.
"Family Group" means, with respect to any Person who is an individual,
------------
(i) such Person's spouse, former spouse, ancestors and descendants (whether
natural or adopted), parents and their descendants and any spouse of the
foregoing persons (collectively, "relatives") or (ii) the trustee, fiduciary or
personal representative of such Person and any trust solely for the benefit of
such Person and/or such Person's relatives.
"Independent Third Party" means any Person who, immediately prior to
-----------------------
the contemplated transaction, does not own in excess of 5% of the number of
Common Units on a fully diluted basis (a "5% Owner"), who is not an Affiliate of
--------
any such 5% Owner and who is not the spouse or descendent (by birth or adoption)
of any such 5% Owner or a trust for the benefit of any such 5% Owner and/or such
other Persons.
"LLC Agreement" means the Amended and Restated Limited Liability
-------------
Company Agreement of the Company, dated as of the date hereof, as amended from
time to time.
"Majority in Voting Interest" has the meaning which the LLC Agreement
---------------------------
assigns to that term.
"Members Agreement" means the Amended and Restated Members Agreement,
-----------------
dated as of the date hereof, among the Company, MEM Holdings and the other
equityholders of the Company named therein as such exists on the date hereof.
"Muzak" means Muzak LLC, a Delaware limited liability company, the
-----
successor entity to the merger of Muzak Limited Partnership with and into Audio
Communications Network, LLC (f/k/a ACN Operating, LLC) and a wholly-owned
subsidiary of the Company.
"Permitted Transferee" has the meaning set forth in Section 5(d)(iii)
--------------------
hereof.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity or
organization.
"Public Offering" means an underwritten public offering and sale of
---------------
Common Units pursuant to an effective registration statement under the
Securities Act; provided that a Public Offering shall not include an offering
made in connection with a business acquisition or combination pursuant to a
registration statement on Form S-4 or any similar form, or an employee benefit
plan pursuant to a registration statement on Form S-8 or any similar form.
-3-
"Public Sale" means any sale of Equityholder Units to the public
-----------
pursuant to an offering registered under the Securities Act or, after the
consummation of an initial Public Offering, to the public pursuant to the
provisions of Rule 144 (or any similar rule or rules then in effect) under the
Securities Act.
"Qualified Public Offering" means the sale in a public offering
-------------------------
registered under the Securities Act of Common Units of the Company or any of its
successors (A)(i) providing net proceeds to the Company or any of its successors
and the selling equity holders of at least $25,000,000 or (ii) where at least
25% (determined after such offering) of the outstanding Common Units of the
Company or any of its successors have been sold in such sale.
"Registration Agreement" means the Amended and Restated Registration
----------------------
Agreement dated as of the date hereof by and among the Company and the
securityholders named therein, as in effect from time to time.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, limited liability company, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors thereof is at the time owned or controlled, directly
or indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, limited liability
company, association or other business entity, a majority of the partnership or
other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof. For purposes hereof, a Person or Persons shall
be deemed to have a majority ownership interest in a partnership, limited
liability company, association or other business entity if such Person or
Persons shall be allocated a majority of partnership, limited liability company,
association or other business entity gains or losses or shall be or control the
managing director, managing member, manager or a general partner of such
partnership, limited liability company, association or other business entity.
"Transfer" means any direct or indirect sale, transfer, assignment,
--------
pledge or other disposition; provided that, notwithstanding anything contained
--------
herein to the contrary, the pledge by Capstar of Capstar Units pursuant to the
terms of the Capstar Credit and Pledge Agreement shall not be a "Transfer" for
purposes of this Agreement, but any actual transfer of title pursuant to such
pledge shall be a "Transfer" for purposes of this Agreement.
"Unpaid Yield" has the meaning which the LLC Agreement assigns to that
------------
term.
"Unreturned Capital Value" has the meaning which the LLC Agreement
------------------------
assigns to that term.
-4-
2. Board of Directors.
------------------
(a) To the extent permitted by law, each Equityholder shall vote all
voting securi ties of the Company over which such Equityholder has voting
control, and shall take all other reasonably necessary or desirable actions
within such Equityholder's control (whether in such Equityholder's capacity as a
equityholder, director, member of a board committee or officer of the Company or
otherwise, and including, without limitation, attendance at meetings in person
or by proxy for purposes of obtaining a quorum and execution of written consents
in lieu of meetings), and the Company shall take all necessary and desirable
actions within its control (including, without limitation, calling special board
and equityholder or member meetings), so that:
(i) holders of record of a majority of the ABRY Units will designate
a number of directors of the Board (whether Class A Directors and/or Class
B Directors or otherwise) which possess a majority of the votes of the
Board (each an "ABRY Director");
-------------
(ii) so long as the Capstar Investors own a majority of the number of
Equityholder Units issued to Capstar pursuant to the Capstar Contribution
Agreement (such number to be appropriately adjusted for any stock split,
reverse stock split, stock dividend or other subdivision, combination or
restructuring of Common Units after the date hereof), holders of record of
a majority of the Capstar Units shall have the right to designate two Class
B Directors of the Board (each, a "Capstar Director") or, if applicable, at
----------------
any time, upon the written request of the holders of record of a majority
of the Capstar Units to the ABRY Investors, such greater number of Class B
Directors of the Board (any such additional Class B Director, also a
"Capstar Director") as is necessary so that all of the then Capstar
-----------------
Directors possess a percentage of the votes of the then Board approximately
equal to the percentage of then outstanding voting Common Units then owned
by the Capstar Investors; provided that any individual designated as a
--------
Capstar Director must be approved by the holder(s) of record of a majority
of the ABRY Units, which approval shall not be unreasonably withheld;
provided, further, that ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall be deemed
-------- -------
approved by the holders of the ABRY Units (the provisions of this clause
(ii) shall terminate on the date the Capstar Investors cease to own a
majority of the number of Equityholder Units issued to Capstar pursuant to
the Capstar Contribution Agreement (such number to be appropriately
adjusted for any stock split, reverse stock split, stock dividend or other
subdivision, combination or restructuring of Common Units after the date
hereof));
(iii) so long as the Capstar Investors own at least twenty percent
(20%) of the number of Equityholder Units issued to Capstar pursuant to the
Capstar Contribution Agreement (such number to be appropriately adjusted
for any stock split, reverse stock split, stock dividend or other
subdivision, combination or restructuring of Common Units after the date
hereof), holders of record of a majority of the Capstar Units shall have
the right to designate one Class B Director of the Board (also, a "Capstar
-------
Director") or, if applicable, at any time, upon the written request of the
--------
holders of record of a majority of the Capstar Units to the ABRY Investors,
such greater number of Class B Directors of the Board (any such additional
Class B Director, also a "Capstar Director") as is necessary so that all of
----------------
the then Capstar Directors possess a percentage of the votes of the then
Board approximately equal
-5-
to the percentage of then outstanding voting Common Units then owned by the
Capstar Investors; provided that any individual designated as a Capstar
--------
Director must be approved by the holder(s) of record of a majority of the
ABRY Units, which approval shall not be unreasonably withheld; provided,
--------
further, that ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall be deemed approved
-------
by the holders of the ABRY Units (the provisions of this clause (iii) shall
terminate on the date the Capstar Investors cease to own at least twenty
percent (20%) of the number of Equityholder Units issued to Capstar
pursuant to the Capstar Contribution Agreement (such number to be
appropriately adjusted for any stock split, reverse stock split, stock
dividend or other subdivision, combination or restructuring of Common Units
after the date hereof));
(iv) so long as ▇▇▇▇▇▇ ▇▇▇▇▇ is a Capstar Director, he shall be the
Chairman (as such term is defined in the LLC Agreement);
(v) any director designated pursuant to clause (i), (ii) or (iii)
above shall be removed from the Board (with or without cause) at the
written request of the Equityholder or Equityholders which have the right
to designate such director hereunder, but only upon such written request
and under no other circumstances (in each case, determined on the basis
specified in clause (i), (ii) or (iii) above, as the case may be);
(vi) in the event that any director designated hereunder for any
reason ceases to serve as a member of the Board during such director's term
of office, the resulting vacancy on the Board shall be filled by a director
designated by the Equityholders referred to in clause (i), (ii) or (iii)
above, as the case may be; and
(vii) if, within a reasonable period of time, any Equityholder(s) fail
to designate in writing a representative to fill a director position
pursuant to the terms of this Section 2, and such failure shall continue
for more than 30 days after notice from the Company to such Equityholder(s)
with respect to such failure, the election of an individual to such
director position shall be accomplished in accordance with the LLC
Agreement and applicable law; provided that such individual shall be
--------
removed from such director position if such Equityholder(s) so direct.
(b) In the event that, at any time, any provision of the LLC Agreement
is inconsistent with the requirements of any provision of this Section 2, the
Equityholders shall take such action as may be necessary and is within their
legal rights to amend any such provision in the LLC Agreement to conform with
such requirements.
3. Conflicting Agreements. Each Equityholder represents that such
----------------------
Equityholder 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 holder of Equityholder Units shall grant any proxy or
become party to any voting trust or other agreement which is inconsistent with
or conflicts with the provisions of this Agreement.
-6-
4. Restrictions on Transactions with Affiliates. Except for
--------------------------------------------
transactions contemplated by the ABRY Management Services Agreement and except
in connection with the issuance of equity securities of the Company, after the
date hereof, the Company will not, and will not permit any of its Subsidiaries
to, enter into any material transactions with any Equityholder or any employee,
officer, director or Affiliate (other than ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, the Company
or any of the Company's Subsidiaries) of any Equityholder on any basis less
favorable, in all material respects, to the Company or its Subsidiary, as the
case may be, then would be the case in an arms-length transaction with an
unrelated third party, unless such transaction has been approved by a majority
of the votes of the directors of the Board without a conflict of interest in
such transaction.
5. Restrictions on Transfer of Equityholder Units.
----------------------------------------------
(a) General Restrictions. Subject to Article XI of the LLC
--------------------
Agreement, an Equityholder may Transfer Equityholder Units only (i) in Public
Sales, (ii) if such Equityholder has complied with the terms and requirements of
Sections 5(b) and 5(c), to the extent applicable, or if such Equityholder is
exercising a participation right granted to such Equityholder pursuant to
Section 5(c), then to any Person, provided, that such Person shall have complied
--------
with the requirements of Section 5(d)(iii), or (iii) pursuant to an Approved
Company Sale (as herein defined).
(b) Right of First Offer granted to the ABRY Investors and the
----------------------------------------------------------
Capstar Investors. Subject to Section 5(d)(i):
-----------------
(i) If at any time any ABRY Investor or any Capstar Investor (a
"Selling Holder") proposes to Transfer any Equityholder Units (other than
---------------
pursuant to a Public Sale, pursuant to an Approved Company Sale, if such
Selling Holder is exercising a participation right granted to such Selling
Holder pursuant to Section 5(c), or if any ABRY Investor is assigning
rights to any Capstar Investor pursuant to Section 12 hereof), then such
Selling Holder will, not fewer than fifteen (15) business days prior to
making such Transfer, give notice (the "Proposed Transfer Notice") if the
------------------------
Selling Holder is an ABRY Investor, then to each of the Capstar Investors
or if the Selling Holder is a Capstar Investor, then to each of the ABRY
Investors specifying the Equityholder Units proposed to be Transferred (the
"Offered Units").
-------------
(ii) At any time within ten (10) business days after delivery of the
Proposed Transfer Notice (the "Exercise Period") if the Selling Holder is
---------------
an ABRY Investor, then holders of a majority of the then outstanding number
of Capstar Units or if the Selling Holder is a Capstar Investor, then
holders of a majority of the then outstanding number of ABRY Units (in
either case, "Offering Holder") may notify the Selling Holder in writing of
---------------
their offer (the "Offer") to purchase all of the Offered Units and the
-----
price (the "Offered Price") and the other terms and conditions upon which
-------------
such Offering Holder proposes to purchase such Offered Units (such offer
must be solely for cash) (the "Offer Notice"). The Offer Notice will
------------
constitute an irrevocable offer by the Offering Holder to acquire the
Offered Units from the Selling Holder at the Offered Price and on the terms
specified in the Offer Notice.
-7-
(iii) At any time during the 60 day period commencing upon the
expiration of the Exercise Period, the Selling Holder may
(A) if an Offer Notice has been delivered to the Selling Holder
during the applicable Exercise Period, then (x) deliver notice to the
Offering Holder accepting the applicable Offer (the "Acceptance
----------
Notice") or (y) provided the Selling Holder has also complied with any
------
applicable provisions of Section 5(c), Transfer all (unless reduced
pursuant to the exercise of rights granted to other Equityholders in
Section 5(c) and/or to other equityholders of the Company in the
Members Agreement) of the Offered Units, at a price which is greater
than the price specified in the Offer Notice and on other terms and
conditions which are not in the aggregate more favorable to the
transferee thereof than those specified in the Offer Notice, to any
Person(s), or
(B) if an Offer Notice has not been delivered to the Selling
Holder during the applicable Exercise Period, then, provided the
Selling Holder has also complied with any applicable provisions of
Section 5(c), Transfer all (unless reduced pursuant to the exercise of
rights granted to other Equityholders in Section 5(c) and/or to other
equityholders of the Company in the Members Agreement) of the Offered
Shares to any Person(s).
(iv) Subject to Section 5(b)(viii) hereof, upon the proper delivery
of an Acceptance Notice, the Offering Holder and the Selling Holder shall
be firmly bound to consummate the purchase and sale of all of the Offered
Units (subject to adjustment as provided in Section 5(b)(viii)) in
accordance with the terms hereof and the applicable Proposed Transfer
Notice, Offer Notice and Acceptance Notice. Subject to the provisions
hereof (including Section 5(b)(viii)), within sixty (60) days after the
Offering Holder's receipt of the applicable Acceptance Notice, the Offering
Holder shall purchase and the Selling Holder shall sell all of the Offered
Units (subject to adjustment as provided in Section 5(b)(viii)) at a
mutually agreeable time and place (the "Offered Units Closing").
---------------------
(v) At the Offered Units Closing, the Selling Holder shall deliver
to the Offering Holder certificates representing the Offered Units (if
certificated) to be purchased by the Offering Holder, duly endorsed with
signature guaranteed, and the Offering Holder shall deliver to the Selling
Holder the Offered Price by wire transfer of immediately available funds to
an account designated by such Selling Holder.
(vi) Any Offered Units not Transferred within the applicable time
periods specified above will again be subject to the provisions of this
Section 5(b) upon any subsequent proposed Transfer.
(vii) The Capstar Investors hereby acknowledge and agree that in
connection with any Transfer of Equityholder Units from any ABRY
Investor(s) to any Capstar Investor (including pursuant to this Section
5(b)), such ABRY Investor(s) must offer the Non-ABRY Members (as such term
is defined in the Members Agreement) the right to participate in such
Transfer pursuant to the terms of Sections 1(b), 1(c) and 1(d) of the
Members Agreement and
-8-
the applicable Capstar Investors will include in any such Transfer any
Securities (as such term is defined in the Members Agreement) that such
Non-ABRY Members elect to include in such Transfer pursuant to Sections
1(b), 1(c) and 1(d) of the Members Agreement.
(viii) The provisions of this Section 5(b) shall terminate upon the
consummation of a Qualified Public Offering.
(c) Participation Rights. Subject to Section 5(d)(i):
--------------------
(i) Participation Rights Granted to the Capstar Investors. In the
-----------------------------------------------------
event of a Transfer of Equityholder Units by any ABRY Investor (a "Selling
-------
ABRY Investor") (other than pursuant to a Public Sale, pursuant to an
-------------
Approved Company Sale, or Transfer to any Capstar Investor), at least 10
business days prior to such Transfer, such Selling ABRY Investor will
deliver a written notice (the "ABRY Sale Notice") to the Capstar Investors
----------------
specifying in reasonable detail the Equityholder Units to be sold, the
terms and conditions of the Transfer and the identity of the proposed
transferee(s). Subject to Section 5(c)(iii), such Capstar Investors may
elect to participate in the contemplated Transfer by delivering written
notice to such Selling ABRY Investor within 10 business days after delivery
of the applicable ABRY Sale Notice. If any Capstar Investor has elected to
participate in such Transfer, each such Capstar Investor will be entitled
to include in the contemplated Transfer, at the same price and on the same
terms (subject to Sections 5(c)(iii) and 5(c)(iv)), a number of
Equityholder Units (regardless of the class thereof) equal to the product
of (x) the quotient determined by dividing the percentage of the number of
such Equityholder Units (regardless of the class thereof) on a fully
diluted basis, held by such Capstar Investor by the aggregate percentage of
the number of Equityholder Units, on a fully diluted basis, owned by the
Capstar Investors participating in such Transfer and all of the ABRY
Investors and (y) the number of Equityholder Units (regardless of the class
thereof) to be sold in the contemplated Transfer.
For example, if the ABRY Sale Notice contemplated a sale of 100
-----------
Class A Units in the aggregate by certain of the ABRY
Investors, and if all of the ABRY Investors at such time own
80% of all Class A Units (on a fully diluted basis) and if one
Capstar Investor elects to participate and owns 5% of all Class
A Units and if no Class B Units are then outstanding, such
Capstar Investor would be entitled to sell 6 Class A Units
(5% / 85% x 100 Common Units).
Any ABRY Investor Transferring Equityholder Units pursuant to this Section
5(c)(i) shall use its best efforts to obtain the agreement of the
prospective Transferee(s) to the participation of the Capstar Investors in
any contemplated Transfer, and such ABRY Investor shall not Transfer any of
its Equityholder Units to the prospective Transferee(s) if the prospective
Transferee(s) declines to allow the participation of the Capstar Investors
as contemplated by this Section 5(c)(i).
(ii) Participation Rights Granted to the ABRY Investors. In the
--------------------------------------------------
event of a Transfer of Equityholder Units by any Capstar Investor
(a "Selling Capstar Investor") (other
------------------------
-9-
than pursuant to a Public Sale, pursuant to an Approved Company Sale, or a
Transfer to any ABRY Investor), at least 10 business days prior to such
Transfer, such Selling Capstar Investor will deliver a written notice (the
"Capstar Sale Notice") to the ABRY Investors specifying in reasonable
-------------------
detail the Equityholder Units to be sold, the terms and conditions of the
Transfer and the identity of the proposed transferee(s). Subject to Section
5(c)(iii), such ABRY Investors may elect to participate in the contemplated
Transfer by delivering written notice to such Selling Capstar Investor
within 10 business days after delivery of the applicable Capstar Sale
Notice. If any ABRY Investor has elected to participate in such Transfer,
each such ABRY Investor will be entitled to include in the contemplated
Transfer, at the same price and on the same terms (subject to Sections
5(c)(iii) and 5(c)(iv)), a number of Equityholder Units (regardless of the
class thereof) equal to the product of (x) the quotient determined by
dividing the percentage of the number of such Equityholder Units
(regardless of the class thereof) on a fully diluted basis, held by such
ABRY Investor by the aggregate percentage of the number of Equityholder
Units, on a fully diluted basis, owned by the ABRY Investors participating
in such Transfer and all of the Capstar Investors and (y) the number of
Equityholder Units (regardless of the class thereof) to be sold in the
contemplated Transfer. Any Capstar Investor Transferring Equityholder Units
pursuant to this Section 5(c)(ii) shall use its best efforts to obtain the
agreement of the prospective Transferee(s) to the participation of the ABRY
Investors in any contemplated Transfer, and such Capstar Investor shall not
Transfer any of its Equityholder Units to the prospective Transferee(s) if
the prospective Transferee(s) declines to allow the participation of the
ABRY Investors as contemplated by this Section 5(c)(ii) .
(iii) Limitations on Participation Rights. An Equityholder may
-----------------------------------
exercise its participation rights in accordance with Section 5(c)(i) or
Section 5(c)(ii), as the case may be, subject to the following limitations:
(i) no Class B Unit may be included by any Capstar Investor in any Transfer
pursuant to Section 5(c)(i) unless the aggregate purchase price to be paid
for all Class A Units to be included by the applicable ABRY Investors in
such Transfer is equal to or greater than the aggregate Unpaid Yield and
Unreturned Capital Value for such Class A Units to be included by such ABRY
Investor(s) and (ii) no Class B Unit may be included by any ABRY Investor
in any Transfer pursuant to Section 5(c)(ii) unless the aggregate purchase
price to be paid for all Class A Units to be included by the applicable
Capstar Investors in such Transfer is equal to or greater than the
aggregate Unpaid Yield and Unreturned Capital Value for such Class A Units
to be included by such Capstar Investor(s).
(iv) Allocation of Transfer Price. In any event, each Person
----------------------------
Transferring Equityholder Units pursuant to Section 5(c)(i) or Section
5(c)(ii) shall receive, in exchange for the Equityholder Units to be
Transferred by such Person, the same portion of the aggregate consideration
from the aggregate Transfer that such Person would have received if such
aggregate consideration had been distributed by the Company in complete
liquidation pursuant to the LLC Agreement as in effect immediately prior to
the Transfer and the Equityholder Units included in such Transfer
constituted all of the outstanding Equityholder Units of the Company at
such time.
-10-
(v) Termination of Participation Rights. The provisions of this
-----------------------------------
Section 5(c) shall terminate upon the consummation of an initial Public
Offering.
(d) Permitted Transfers.
-------------------
(i) The restrictions contained in Sections 5(a), 5(b) and 5(c)
shall not apply with respect to any Transfer of Equityholder Units by any
Equityholder (A) in the case of an individual Equityholder, pursuant to
applicable laws of descent and distribution or to any member of such
Equityholder's Family Group, (B) in the case of a non-individual
Equityholder, to its employees, consultants and Affiliates, (C) in the case
of ABRY (if it becomes a Permitted Transferee), in a pro rata distribution
to its partners, or (D) in the case of Capstar, to any financial
institution who is a party to the Capstar Credit and Pledge Agreement but
only if such Transfer occurs as a result of such financial institution
exercising its rights pursuant to Capstar's pledge of Capstar Units to such
financial institution pursuant to the terms of the Capstar Credit and
Pledge Agreement; provided, in each case, that any such transferee shall
--------
have complied with the requirements of Section 5(d)(iii).
(ii) In addition, the restrictions contained in Sections 5(a), 5(b)
and 5(c) shall not apply with respect to the Transfer of up to 3,000 Class
A Units (such number to be appropriately adjusted for any unit or stock
split, reverse unit or stock split, stock or unit dividend or other
distribution or other subdivision or combination of Common Units after the
date hereof) by MEM Holdings to CMS Co-Investment Subpartnership, CMS
Diversified Partners, L.P. and/or any of their respective Affiliates (a
"CMS Transferee"), but only if such Transfer occurs on or prior to the date
---------------
six months after the date hereof; provided that, notwithstanding anything
--------
contained herein to the contrary, any such CMS Transferee shall not have to
comply with the requirements of Section 5(d)(iii) and shall not obtain any
rights under this Agreement and upon such Transfer such Class A Units shall
no longer be deemed "ABRY Units" or "Equityholder Units" for purposes of
this Agreement.
(iii) Prior to any proposed transferee's acquisition of Equityholder
Units pursuant to a Transfer permitted by Section 5(a)(ii) or Section
5(d)(i), such proposed transferee must agree to take such Equityholder
Units subject to and to be fully bound by the terms of this Agreement
applicable to such Equityholder Units by executing a joinder to this
Agreement substantially in the form attached hereto as Exhibit A and
---------
delivering such executed joinder to the Secretary of the Company prior to
the effectiveness of such Transfer (unless such Transfer is pursuant to
applicable laws of descent and distribution, in which case, such executed
joinder shall be delivered to the Secretary of the Company as soon as
reasonably possible after such Transfer). All transferees acquiring
Equityholder Units and executing a joinder in compliance with this Section
5(d)(iii) are collectively referred to herein as "Permitted Transferees".
---------------------
(e) If (i) any Transfer of a majority interest in the common equity
securities of a Equityholder owning Equityholder Units to a transferee(s) that
is not an Affiliate of such Equityholder as of the date hereof occurs, or (ii)
any Equityholder Transfers Equityholder Units to an Affiliate and an event
occurs which causes such Affiliate to cease to be an Affiliate of such
-11-
Equityholder, such event or Transfer shall be deemed a Transfer of Equityholder
Units subject to all of the restrictions on Transfers of Equityholder Units set
forth in this Agreement, including without limitation, this Section 5; provided
that no transfer of Equityholder Units shall be deemed to occur hereunder by
virtue of (x) any merger, consolidation, combination, exchange or sale of assets
between Capstar (or any Subsidiary thereof) and Chancellor Media Corporation (or
any Subsidiary thereof) or (y) the issuance and distribution of additional
common equity securities of an Equityholder pursuant to an underwritten public
offering.
6. Approved Company Sale.
---------------------
(a) If the Board and a Majority in Voting Interest approve a sale
of all or substantially all of the Company's assets determined on a consolidated
basis or a sale of all (or a lesser percentage, if the acquiring Person(s)
reasonably requests for accounting or tax reasons) of the Company's outstanding
Common Units (in either case, whether by merger, recapitalization,
consolidation, reorganization, combination or otherwise) or any other
transaction which has the same effect as any of the foregoing to an Independent
Third Party or group of Independent Third Parties (each such sale or
transaction, an "Approved Company Sale"), then each holder of Equityholder Units
---------------------
will consent to and raise no objections against the Approved Company Sale. If
the Approved Company Sale is structured as a merger or consolidation, then each
holder of Equityholder Units shall waive any dissenters rights, appraisal rights
or similar rights in connection with such merger or consolidation. If the
Approved Company Sale is structured as a Transfer of Equityholder Units, then
subject to the following sentence each holder of Equityholder Units shall agree
to sell all of his or its Equityholder Units and rights to acquire Equityholder
Units on the terms and conditions approved by the Board and a Majority in Voting
Interest. Each holder of Equityholder Units shall take all necessary or
desirable actions in connection with the consummation of an Approved Company
Sale as requested by the Board, including, without limitation, executing a sale
contract pursuant to which each holder of Equityholder Units will severally (but
not jointly) make the same representations, warranties and indemnities regarding
the Company and its assets, liabilities and business (collectively, the "Company
-------
Reps") and such representations and warranties concerning such holder and the
----
Equityholder Units to be sold by it or him as may be set forth in any agreement
approved by the Board; provided, that if any holder of Equityholder Units pays
--------
any amount in connection with any claim under the Company Reps by the purchaser
or purchasers in such Approved Company Sale (a "Company Loss"), then each other
------------
holder of Equityholder Units will simultaneously contribute to such holder of
Equityholder Units an amount equal to such contributing holder's pro rata share
(based upon the amount of consideration received in such Approved Company Sale)
of such Company Loss; provided further, that a holder of Equityholder Units
----------------
shall be required to make the Company Reps only if the sale contract which such
holder is required to sign provides that such holder's maximum liability for any
breach of the Company Reps shall be the purchase price received by such holder
for the sale of its Equityholder Units.
(b) The obligations of the holders of Equityholder Units pursuant
to Section 6(a) are subject to the satisfaction of the following conditions: (i)
upon the consummation of the Approved Company Sale, each holder of Equityholder
Units shall receive the same form of consideration and the same portion of the
aggregate consideration such holder would have received if such aggregate
consideration had been distributed by the Company in complete liquidation
-12-
pursuant to the rights and preferences set forth in the LLC Agreement as in
effect immediatel y prior to the consummation of the Approved Company Sale (and,
if less than all of the outstanding Common Units are being sold in the Approved
Company Sale, then the form and portions of aggregate consideration shall be
determined as if the Equityholder Units included in the Approved Company Sale
were all of the outstanding Common Units then outstanding); (ii) if any holders
of Equityholder Units are given an option as to the form and amount of
consideration to be received, each holder of Equityholder Units shall be given
the same option; and (iii) each holder of then currently exercisable rights to
acquire Equityholder Units shall be given an opportunity to exercise such rights
prior to the consummation of the Approved Company Sale and participate in such
sale as a holder of such Equityholder Units.
(c) If the Board, the Company or any of the holders of Equityholder
Units enter into any negotiation or transaction for which Rule 506 under the
Securities Act (or any similar rule then in effect) promulgated by the
Securities Exchange Commission may be available with respect to such negotiation
or transaction (including a merger, consolidation or other reorganization), each
holder of Equityholder Units who is not an "accredited investor," as that term
is defined in Regulation D as promulgated under the Securities Act, will, at the
request of the Company, appoint either a purchaser representative (as such term
is defined in Rule 501 under the Securities Act) designated by the Company, in
which event the Company will pay the fees of such purchaser representative, or
another purchaser representative (reasonably acceptable to the Company), in
which event such holder will be responsible for the fees of the purchaser
representative so appointed.
(d) All holders of Equityholder Units will bear their pro rata
share (based upon the amount of consideration received or proposed to be
received in the applicable actual or proposed Approved Company Sale) of the
costs of any actual or proposed Approved Company Sale to the extent such costs
are incurred for the benefit of all such holders of Equityholder Units and are
not otherwise paid by the Company or the acquiring party. Costs incurred by the
holders of Equityholder Units on their own behalf will not be considered costs
of the Approved Company Sale; provided, that in any event the Company shall pay
--------
the reasonable attorney's fees and expenses of one counsel chosen by a Majority
in Voting Interest in connection with the Approved Company Sale.
(e) Termination of Restrictions and Requirements. The restrictions
--------------------------------------------
and requirements set forth in this Section 6 will continue with respect to the
Equityholders and their Equityholder Units until the consummation of a Qualified
Public Offering.
7. Financial Statements and Information.
------------------------------------
(a) Prior to the consummation of an initial Public Offering, the
Company shall deliver to each Capstar Investor who holds more than 5% of the
then outstanding number of Common Units:
(i) within 60 days after the end of each monthly accounting period
in each fiscal year of the Company (other than any monthly accounting
period ending on the last day of a fiscal quarter of the Company) (or such
earlier date as such financial statements are delivered to the providers of
any of the Company's debt financing), unaudited consolidated
-13-
statements of income and cash flo ws of the Company and its Subsidiaries
for such monthly period (and, if otherwise available, unaudited
consolidated statements of income of the Company and its Subsidiaries for
the period from the beginning of the fiscal year to the end of such month)
and unaudited consolidated balance sheets of the Company and its
Subsidiaries as of the end of such monthly period (and, if otherwise
available, such financial statements shall set forth in each case
comparisons to the Company's and its Subsidiaries' corresponding period in
the preceding fiscal year). Such financial statements shall be prepared, in
all material respects, in accordance with generally accepted accounting
principles, consistently applied, subject to the absence of footnote
disclosures and to normal year-end adjustments;
(ii) within 60 days after the end of each quarterly accounting
period in each fiscal year of the Company (other than any quarterly
accounting period ending on the last day of a fiscal year of the Company)
(or such earlier date as such financial statements are delivered to the
providers of any of the Company's debt financing), unaudited consolidated
statements of income and cash flows of the Company and its Subsidiaries for
such quarterly period (and, if otherwise available, unaudited consolidated
statements of income of the Company and its Subsidiaries for the period
from the beginning of the fiscal year to the end of such quarter) and
unaudited consolidated balance sheets of the Company and its Subsidiaries
as of the end of such quarterly period (and, if otherwise available, such
financial statements shall set forth in each case comparisons to the
Company's and its Subsidiaries' corresponding period in the preceding
fiscal year). Such financial statements shall be prepared, in all material
respects, in accordance with generally accepted accounting principles,
consistently applied, subject to the absence of footnote disclosures and to
normal year-end adjustments; and
(iii) within 120 days after the end of each fiscal year of the
Company (or such earlier date as such financial statements are delivered to
the providers of any of the Company's debt financing), audited consolidated
statements of income and cash flows of the Company and its Subsidiaries for
such fiscal year, and audited consolidated balance sheets of the Company
and its Subsidiaries as of the end of such fiscal year (and, if otherwise
available, such financial statements shall set forth in each case
comparisons to the Company's and its Subsidiaries' corresponding period in
the preceding fiscal year). Such financial statement shall be prepared, in
all material respects, in accordance with generally accepted accounting
principles, consistently applied.
(b) Prior to the consummation of an initial Public Offering, as may
be reasonably requested from time to time, the Company shall cooperate with and
provide financial information to each Capstar Investor who holds more than 5% of
the then outstanding number of Common Units for purposes of such Capstar
Investor's reporting obligations under the Securities Exchange Act of 1934, as
amended, or as may otherwise be required by such Capstar Investor for disclosure
to the securities analysts who follow such Capstar Investor's publicly traded
securities.
-14-
8. Legend. Each certificate or instrument evidencing Equityholder
------
Units and each certificate or instrument issued in exchange for or upon the
Transfer of any Equityholder Units (if such securities remain Equityholder Units
(as defined herein) after such Transfer) shall be stamped or otherwise imprinted
with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
SECURITYHOLDERS AGREEMENT DATED AS OF MARCH 18, 1999, AS MAY BE
AMENDED FROM TIME TO TIME, BY AND AMONG THE ISSUER AND CERTAIN OF THE
ISSUER'S EQUITYHOLDERS. A COPY OF SUCH SECURITYHOLDERS AGREEMENT WILL
BE FURNISHED WITHOUT CHARGE BY THE ISSUER TO THE HOLDER HEREOF UPON
WRITTEN REQUEST."
The legend set forth above shall be removed from the certificates evidencing any
securities which cease to be Equityholder Units.
9. Transfers in Violation of Agreement. Any Transfer or attempted
-----------------------------------
Transfer of any Equityholder Units in violation of any provision of this
Agreement or the LLC Agreement shall be null and void, and the Company shall not
record such Transfer on its books or treat any purported transferee of such
Equityholder Units as the owner of such securities for any purpose.
10. Preemptive Rights granted to the Capstar Investors.
--------------------------------------------------
(a) If at any time after the date hereof and prior to the
consummation of a Qualified Public Offering the Company wishes to issue any
Common Units or any options, warrants or other rights to acquire Common Units or
any notes or other securities convertible or exchangeable into Common Units (all
such Common Units and other rights and securities, collectively, the "Equity
------
Equivalents") to any Person or Persons, the Company shall promptly deliver a
-----------
notice of intention to sell or otherwise issue (the "Company's Notice of
-------------------
Intention to Sell") to each Capstar Investor setting forth a description and the
-----------------
number of the Equity Equivalents and any other securities proposed to be issued
and the proposed purchase price and terms of sale. Upon receipt of the Company's
Notice of Intention to Sell, each Capstar Investor shall have the right to elect
to purchase, at the price and on the terms stated in the Company's Notice of
Intention to Sell, a number of the Equity Equivalents equal to the product of
(i) such Capstar Investor's proportionate ownership of the then outstanding
number of Common Units (calculated on a fully-diluted basis assuming all holders
of then outstanding warrants, options and convertible securities of the Company
which are convertible or exercisable on such date and which have pre-emptive
rights with respect to the applicable issuance of Equity Equivalents have
converted such convertible securities or exercised such warrants or options)
held by all Persons multiplied by (ii) the number of Equity Equivalents proposed
to be issued (as described in the applicable Company's Notice of Intention to
Sell). Notwithstanding anything contained herein to the contrary, if the Company
is issuing Equity Equivalents together as a unit with the issuance of any debt
or other equity securities of the Company or any of its Subsidiaries, then any
Capstar Investor who elects to purchase such Equity Equivalents pursuant to this
Section 10 must also purchase a corresponding proportion of such other
-15-
debt or equity securities, all at the proposed purchase price and on terms of
sale as specified in the applicable Company's Notice of Intention to Sell. Such
election shall be made by the electing Capstar Investor by written notice to the
Company within ten (10) business days after receipt by such Capstar Investor of
the Company's Notice of Intention to Sell (the "Acceptance Period"). With
-----------------
respect to any Company's Notice of Intention to Sell delivered to any Capstar
Investor which is Capstar or an Affiliate of Capstar, such Capstar Investor may
assign in whole or in part its preemptive rights pursuant to this Section 10
with respect to the sale or issuance of the Equity Equivalents which are the
subject of such Company's Notice of Intention to Sell to any Affiliate of
Capstar (a "Section 10 Assignee") provided that, as a condition to the sale or
-------------------
issuance of the applicable Equity Equivalents to such Section 10 Assignee, such
Section 10 Assignee must execute and deliver to the Company a joinder to this
Agreement substantially in the form of Exhibit A hereto pursuant to which such
---------
Section 10 Assignee shall be deemed to be a "Capstar Investor" and an
"Equityholder" for purposes of this Agreement.
(b) To the extent an effective election to purchase has not been
received from a Capstar Investor pursuant to subsection (a) above in respect of
the Equity Equivalents proposed to be issued pursuant to the applicable
Company's Notice of Intention to Sell, the Company may, at its election, during
a period of one hundred and eighty (180) days following the expiration of the
applicable Acceptance Period, issue and sell the remaining Equity Equivalents to
be issued and sold to any Person at a price and upon terms not more favorable to
such Person than those stated in the applicable Company's Notice of Intention to
Sell; provided, however, that failure by a Capstar Investor to exercise its
-------- -------
option to purchase with respect to one issuance and sale of Equity Equivalents
shall not affect its option to purchase Equity Equivalents in any subsequent
offering, sale and purchase. In the event the Company has not sold any Equity
Equivalents covered by a Company's Notice of Intention to Sell within such one
hundred and eighty (180) day period, the Company shall not thereafter issue or
sell such Equity Equivalents, without first offering such Equity Equivalents to
each Capstar Investor in the manner provided in this Section 10.
(c) If a Capstar Investor gives the Company notice, pursuant to the
provisions of this Section 10, that such Capstar Investor desires to purchase
any Equity Equivalents, payment therefor shall be by check or wire transfer of
immediately available funds, against delivery of the securities (which
securities shall be issued free and clear of any liens or encumbrances) at the
executive offices of the Company no later than the last closing date fixed by
the Company for the sale of the applicable Equity Equivalents, which last
closing date shall be no earlier than 20 business days after the date the
Company delivers the applicable Company's Notice of Intention to Sell. In the
event that any proposed sale is for a consideration other than cash, such
Capstar Investor may pay cash in lieu of all (but not part) of such other
consideration, in the amount determined reasonably and in good faith by the
Board to represent the fair value of such consideration other than cash.
(d) The preemptive rights contained in this Section 10 shall not
apply to (i) the issuance of shares or units of Equity Equivalents as a stock or
unit dividend or other distribution or upon any subdivision, split or
combination of the outstanding Common Units; (ii) the issuance of Equity
Equivalents upon conversion, exchange or redemption of any outstanding
convertible or exchangeable securities; (iii) the issuance of Equity Equivalents
upon exercise of any outstanding options or warrants; (iv) the issuance of
Equity Equivalents to any employee or director of the
-16-
Company or any of its Subsidiaries (unless such employee or director is also an
officer or employee of ABRY or any of ABRY's Affiliates (other than ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, the Company or any of the Company's Subsidiaries)); (v) the
issuance of Equity Equivalents to any Independent Third Party or group of
Independent Third Parties as consideration (whether partial or otherwise) for
the purchase by the Company or any of its Subsidiaries from such Independent
Third Party or group of Independent Third Parties, as the case may be, of assets
constituting a business unit or of the stock or other equity securities of any
Person or Persons; (vi) the issuance of Equity Equivalents pursuant to the
Capstar Contribution Agreement; (vii) the issuance of Class B-4 Units pursuant
to Section 5.6 of the LLC Agreement; or (viii) the issuance of Equity
Equivalents pursuant to a Qualified Public Offering.
(e) The provisions of this Section 10 shall terminate upon the
consummation of a Qualified Public Offering.
11. Further Assurances. In the event that the Board approves a
------------------
recapitalization of, or a transaction requiring the recapitalization of, the
Company or its Subsidiaries, including, without limitation, an initial Public
Offering, including pursuant to the Registration Agreement, then the Company and
all holders of Equityholder Units shall take all necessary or desirable actions
in connection with the consummation of such recapitalization or transaction as
the Board or a Majority in Voting Interest so request subject to the following
limitation: immediately after any such recapitalization or transaction, each
Equityholder shall hold securities of the applicable surviving entity with
rights, preferences and privileges substantially equivalent to the Equityholder
Units held by such Equityholder immediately prior to such recapitalization or
transaction. Without limiting the generality of the foregoing, if requested as
provided in the immediately preceding sentence, then (i) the Company and each
Equityholder shall take such actions as may be necessary or desirable for the
Company to convert to a corporate form, including without limitation the
approval of a merger of the Company with and into a corporation, with the result
that each Equityholder shall hold capital stock of such surviving corporation
(the "Successor Corporation") with rights, preferences and privileges
---------------------
substantially equivalent to the Equityholder Units held by such Equityholder,
and (ii) the Company and each Equityholder shall take such actions as may be
necessary or desirable to cause the Successor Corporation to assume all of the
obligations of the Company under this Agreement.
12. Participation Rights Granted to the Capstar Investors. If at
-----------------------------------------------------
any time any ABRY Investor(s) (collectively, a "Purchasing ABRY Investor")
------------------------
exercises its right of first refusal pursuant to Section 3 of the Members
Agreement with respect to the transfer by any MHC Member (as such term is
defined in the Members Agreement) of any Securities (as such term is defined in
the Members Agreement) by delivering an Acceptance Notice (as such term is
defined in the Members Agreement) to such MHC Member, then, no later than five
(5) business days after delivering such Acceptance Notice to such MHC Member,
such Purchasing ABRY Investor shall give notice (a "Participation Notice") to
--------------------
the Capstar Investors specifying (x) the Securities to be purchased by such
Purchasing ABRY Investor from such MHC Member and (y) the price and the other
terms and conditions upon which such Purchasing ABRY Investor shall purchase
such Securities. Each Capstar Investor will have five (5) business days after
its receipt of a Participation Notice during which to notify the applicable
Purchasing ABRY Investor in writing of its election to participate with such
Purchasing ABRY Investor's purchase of the applicable Securities (an "Election
--------
to
--
-▇▇-
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇"). If any Capstar Investor elects to participate with a
------------------
Purchasing ABRY Investor in the purchase of Securities from an MHC Member
pursuant to the terms of this Section 12, then such Purchasing ABRY Investor
shall assign to such Capstar Investor the right to purchase from such MHC Member
a number of Securities equal to the product of (x) the quotient determined by
dividing the percentage of the number of Equityholder Units on a fully diluted
basis owned by such Capstar Investor by the aggregate percentage of the number
of Equityholder Units on a fully-diluted basis owned by all Capstar Investors
participating in such purchase of Securities from such MHC Member and all of the
ABRY Investors and (y) the number of Securities which the applicable Purchasing
ABRY Investor originally elected to purchase from such MHC Member pursuant to
the applicable Acceptance Notice. Upon delivery of an Election to Participate
Notice, the Capstar Investor which delivered such Election to Participate Notice
shall be firmly bound to consummate the purchase of the applicable Securities in
accordance with the terms of this Section 12 and Section 3 of the Members
Agreement and such purchase shall occur at the applicable Offered Securities
Closing (as such term is defined in the Members Agreement).
13. Amendment and Waiver. No modification or amendment of any
--------------------
provision of this Agreement shall be effective against the Equityholders or the
Company unless such modifi cation or amendment is approved in writing by (i)
the Company, (ii) the holder(s) of a majority of the number of then outstanding
ABRY Units and (iii) the holder(s) of a majority of the number of the then
outstanding Capstar Units. No waiver of any provision of this Agreement shall
be effective against any Equityholder unless such waiver is approved in writing
by such Equityholder. No waiver of any provision of this Agreement shall be
effective against the Company unless such waiver is approved in writing by the
Company. The failure of any party to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms. Each Equityholder
shall remain a party to this Agreement only so long as such person is the holder
of record of Equityholder Units.
14. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
15. Entire Agreement. Except as otherwise expressly set forth
----------------
herein, this document embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
16. Termination. This Agreement will automatically terminate and be
-----------
of no further force or effect immediately after the consummation of an Approved
Company Sale.
-18-
17. Successors and Assigns. Except as otherwise provided herein,
----------------------
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Equityholders and any subsequent
holders of Equityholder Units and the respective successors, heirs and assigns
of each of them, so long as they hold Equityholder Units.
18. Counterparts. This Agreement may be executed in separate
------------
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
19. Remedies. The parties hereto shall be entitled to enforce their
--------
rights under this Agreement specifically to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that the Company and any Equityholder may in his, hers, or its
sole discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunc tive relief (without posting a bond or
other security) in order to enforce or prevent any violation of the provisions
of this Agreement.
20. Notices. All notices, demands or other communications to be
-------
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when delivered if delivered
personally, sent via a nationally recognized overnight courier, or sent via
facsimile to the recipient, or if sent by certified or registered mail, return
receipt requested, will be deemed to have been given two business days
thereafter. Such notices, demands and other communications will be sent to the
address indicated below:
To the Company:
--------------
Muzak Holdings LLC
c/o ABRY Partners, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
-19-
With a copy, which shall not constitute notice, to:
--------------------------------------------------
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
To MEM Holdings:
---------------
MEM Holdings, LLC
c/o ABRY Partners, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy, which shall not constitute notice, to:
--------------------------------------------------
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
To Capstar:
----------
Capstar Broadcasting Corporation
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy, which shall not constitute notice, to:
--------------------------------------------------
▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
or such other address, telecopy number or to the attention of such other person
as the recipient party shall have specified by prior written notice to the
sending party.
-20-
21. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the state of Delaware, without giving effect to
any rules, principles or provisions of choice of law or conflict of laws.
22. Descriptive Headings. The descriptive headings of this Agreement
--------------------
are inserted for convenience only and do not constitute a part of this
Agreement.
23. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY
--------------------
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF
THIS AGREEMENT OR ANY ANCILLARY AGREEMENT OR THE VALIDITY, PROTECTION,
INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF.
* * * * *
-21-
IN WITNESS WHEREOF, the parties hereto have executed this Securityholders
Agreement as of the date first above written.
MUZAK HOLDINGS LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
MEM HOLDINGS, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
CAPSTAR BROADCASTING CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
-22-
EXHIBIT A
---------
FORM OF JOINDER TO
SECURITYHOLDERS AGREEMENT
-------------------------
THIS JOINDER to the Securityholders Agreement dated as of March 18,
1999 by and among Muzak Holdings LLC, a Delaware limited liability company (the
"Company"), and certain equityholders of the Company (the "Agreement"), is made
------- ---------
and entered into as of _________ by and between the Company and
________("Holder"). Capitalized terms used herein but not otherwise defined
------
shall have the meanings set forth in the Agreement.
WHEREAS, Holder has acquired certain Equityholder Units and the
Agreement and the Company require Holder, as a holder of such Equityholder
Units, to become a party to the Agreement, and Holder agrees to do so in
accordance with the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Joinder hereby agree as
follows:
1. Agreement to be Bound. Holder hereby agrees that upon execution
---------------------
of this Joinder, it shall become a party to the Agreement and shall be fully
bound by, and subject to, all of the covenants, terms and conditions of the
Agreement as though an original party thereto and shall be deemed [an ABRY
Investor/a Capstar Investor] and an Equityholder for all purposes thereof. In
addition, Holder hereby agrees that all Common Units held by Holder shall be
deemed [ABRY/Capstar] Units and Equityholder Units for all purposes of the
Agreement.
2. Successors and Assigns. Except as otherwise provided herein,
----------------------
this Joinder shall bind and inure to the benefit of and be enforceable by the
Company and its successors, heirs and assigns and Holder and any subsequent
holders of Equityholder Units and the respective successors, heirs and assigns
of each of them, so long as they hold any Equityholder Units.
3. Counterparts. This Joinder may be executed in separate
------------
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
4. Notices. For purposes of Section 20 of the Agreement, all
-------
notices, demands or other communications to the Holder shall be directed to:
[Name]
[Address]
[Facsimile Number]
5. Governing Law. This Joinder shall be governed by and construed in
-------------
accordance with the laws of the state of Delaware, without giving effect to any
rules, principles or provisions of choice of law or conflict of laws.
6. Descriptive Headings. The descriptive headings of this Joinder
--------------------
are inserted for convenience only and do not constitute a part of this Joinder.
* * * * *
-23-
IN WITNESS WHEREOF, the parties hereto have executed this Joinder as of the
date first above written.
MUZAK HOLDINGS LLC
By:
------------------------------------------
Name:
Title:
[HOLDER]
By:
-------------------------------------------
Name:
Title:
-2-
