EXHIBIT D(2)
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT (this "Agreement"), dated as of December 24, 1999,
between VMM Merger Corp., a Delaware corporation (the "Merger Sub") and the
Shareholders named on Exhibit A hereto (each a "Shareholder").
WHEREAS, each Shareholder is, as of the date hereof, the record and
beneficial owner of the number of shares of common stock, no par value (the
"Common Stock"), of VDI MultiMedia, a California corporation (the "Company"),
set forth next to such Shareholder's name on Exhibit A attached hereto; and
WHEREAS, Merger Sub, the Company and VDI MultiMedia, Inc., a Delaware
corporation ("Company Sub"), concurrently herewith are entering into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"; capitalized terms used herein without definition shall have the
respective meanings set forth in the Merger Agreement), which provides, among
other things, for the acquisition of the Company by Xxxx and certain other
investors by means of a merger of the Company with and into Company Sub followed
by the merger of Merger Sub with and into Company Sub, each upon the terms and
subject to the conditions set forth in the Merger Agreement (the "Mergers"); and
WHEREAS, as a condition to the willingness of Merger Sub to enter into the
Merger Agreement, and in order to induce Merger Sub to enter into the Merger
Agreement, each Shareholder has agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by Merger
Sub of the Merger Agreement and the foregoing and the mutual representations,
warranties, covenants and agreements set forth herein and therein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Representations and Warranties of the Shareholders. Each
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Shareholder hereby severally represents and warrants, as to such Shareholder, to
Merger Sub as follows:
a. Except as described on Schedule I hereto, such Shareholder is the
record and beneficial owner of the shares of Common Stock ("Shares") set forth
next to such Shareholder's name on Exhibit A attached hereto and such Shares
constitute all of the shares of capital stock of the Company owned by such
Shareholder as of the date hereof.
b. This Agreement has been duly authorized, executed and delivered by
such Shareholder and constitutes the legal, valid and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to creditors' rights generally and to
general principles of equity.
c. Neither the execution and delivery of this Agreement nor the
consummation by such Shareholder of the transactions contemplated hereby will
result in a violation of, or a default (or an event that with notice or lapse of
time or both would become a default) under, or conflict with, any contract,
trust, commitment, agreement, understanding or arrangement of any kind to which
the Shareholder is a party or bound or to which such Shareholder's Shares are
subject or result in the creation of any Lien (as defined below) on any of such
Shareholder's Shares. Consummation by such Shareholder of the transactions
contemplated hereby will not violate, or require any consent, approval, or
notice under any provision of any judgment, order, decree, writ, injunction,
statute, law, rule or regulation applicable to such Shareholder or such
Shareholder's Shares, except for any necessary filing under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act").
d. Except as described on Schedule I attached hereto, such Shareholder's
Shares and the certificates representing such Shareholder's Shares are now and
at all times during the term hereof will be held by such Shareholder, or by a
nominee or custodian for the benefit of such Shareholder, free and clear of all
liens, claims, security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances whatsoever
(collectively, "Liens"), except for any such encumbrances or proxies arising
hereunder or otherwise disclosed to Merger Sub; provided, however, that such
Shareholder may transfer all or a portion of the Shares in accordance with
Section 3 of this Agreement.
SECTION 2. Representations and Warranties of Merger Sub. Merger Sub
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hereby represents and warrants to each Shareholder as follows:
a. Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement.
b. This Agreement has been duly authorized, executed and delivered by
Merger Sub and constitutes the legal, valid and binding obligation of it,
enforceable against Merger Sub in accordance with its terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to creditors' rights generally and to general principles
of equity.
c. Neither the execution and delivery of this Agreement nor the
consummation by Merger Sub of the transactions contemplated hereby will result
in a violation of, or a default (or an event that with notice or lapse of time
or both would became a default) under, or conflict with, any contract, trust,
commitment, agreement, understanding or arrangement of any kind to which Merger
Sub is a party or bound. The consummation by Merger Sub of the transactions
contemplated hereby will not violate, or require any consent, approval, or
notice under any provision of any judgment, order, decree, writ, injunction,
statute, law, rule or regulation applicable to Merger Sub, except for any
necessary filing under the HSR Act.
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SECTION 3. Transfer of the Shares.
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a. Prior to the termination of this Agreement, except as otherwise
provided herein or as described on Schedule I attached hereto, each Shareholder
agrees that it shall not: (i) sell, transfer, assign, gift, pledge,
hypothecate, encumber or dispose of any or all of such Shareholder's Shares and
any shares subsequently acquired after the date hereof (the "Subject Shares");
(ii) grant any proxies or enter into any voting trust or other agreement or
arrangement with respect to the voting of the Subject Shares except as
contemplated hereby or as not otherwise inconsistent herewith; or (iii) enter
into any contract, option or other agreement or understanding with respect to,
or consent to, the sale, transfer, assignment, gift, pledge, hypothecation,
encumbrance or other disposition of any or all of such Shareholder's Subject
Shares or any interest therein; provided, however, that a Shareholder may sell,
transfer, assign, gift, pledge, hypothecate, encumber or otherwise dispose of
all or a portion of such Shareholder's Subject Shares to a person or entity who
(x) is either another Shareholder, a member of the Family Group of such
Shareholder or who is otherwise approved by Merger Sub (such approval not to be
unreasonably withheld or delayed) and (y) agrees to be bound, by a written
instrument reasonably acceptable in form and substance to Merger Sub (whose
approval shall not be unreasonably withheld or delayed), by each of the terms of
this Agreement.
b. As used herein, "Family Group" means, with respect to any Shareholder,
(A) such Shareholder, (B) the spouse and issue (whether natural or adopted) of
such Shareholder, (C) the parents or step-parents of such Shareholder (whether
natural or adopted), (D) the siblings of such Shareholder (whether natural or
adopted), (E) in the event such Shareholder is deceased, the heirs or
descendants of such Shareholder and (F) any one or more trusts or other entities
for the benefit of any one or more of the persons described in clause (A)
through clause (E) above.
c. In addition, notwithstanding anything to the contrary contained
herein, if any term or provision of this Agreement triggers, or is deemed to
trigger, the application of the last paragraph of Section 1101 of the California
Corporations Code, (x) "Subject Shares" shall mean that number of shares of
Common Stock, together with all shares of Common Stock covered by agreements
similar hereto, which aggregate 49% of the then issued and outstanding Shares of
Common Stock and (y) each Shareholder's "Subject Shares" shall mean that number
of shares of Common Stock equal to the aggregate number of Subject Shares as
determined by item (x) above multiplied by a fraction, the numerator of which is
equal to such Shareholder's Subject Shares and the denominator of which is equal
to the aggregate Subject Shares of all Shareholders party hereto.
SECTION 4. Voting of Shares.
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a. Each Shareholder hereby agrees that, during the term of this
Agreement, at any meeting (whether annual or special and whether or not an
adjourned or postponed meeting) of the holders of Common Stock, however called,
or in connection with any written consent of the holders of Common Stock
solicited by the Board of Directors, such Shareholder will appear at the meeting
or otherwise cause its Subject Shares to be counted as present thereat for
purposes of
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establishing a quorum and vote or consent (or cause to be voted or consented)
such Shareholder's Subject Shares (i) in favor of the Mergers, the Merger
Agreement and all other Transactions, (ii) against any action or agreement that
such Shareholder is advised by the Board of Directors of the Company in the
applicable proxy materials would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement, and (iii) against any Competing Transaction and any
action in furtherance of a Competing Transaction, in each case during the term
of this Agreement.
b. Merger Sub agrees that each Shareholder shall retain the right to vote
such Shareholder's Subject Shares for the election of directors of the Company
and for or against any other matter other than as to those specified in clause
(a) of this Section 4.
SECTION 5. Irrevocable Proxy. Each Shareholder hereby grants an
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irrevocable proxy during the term of this Agreement to, and hereby constitutes
and appoints, Merger Sub as such Shareholder's attorney-in-fact and proxy, with
full power of substitution, for and in such Shareholder's name, to vote (by
written consent or otherwise) the Subject Shares, which such holder is entitled
to vote at any meeting of Shareholders of the Company (whether annual or special
and whether or not an adjourned or postponed meeting) on the matters and in the
manner specified in Section 4 above. THIS PROXY IS IRREVOCABLE AND COUPLED WITH
AN INTEREST. Each Shareholder hereby revokes all previous proxies granted with
respect to the Subject Shares that such Shareholder may have heretofore
appointed or granted that are inconsistent herewith, and no subsequent proxy
shall be given (and if given or executed, shall not be effective) by such
Shareholder with respect thereto. All authority herein conferred or agreed to
be conferred shall survive the death or incapacity of such Shareholder.
SECTION 6. Competing Transactions. Each Shareholder will not, and will
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instruct its officers, directors, employees, investment banker, attorney,
financial advisor or other representatives or agents (the "Representatives")
during the term of the Agreement not to, initiate, solicit or encourage
(including by way of furnishing information or assistance) any Competing
Transaction, or enter into or maintain discussions or negotiate with any person
or entity in furtherance of or relating to or to obtain a Competing Transaction,
or agree to or endorse any Competing Transaction, or authorize or permit any
Representative to take any such action, and such Shareholder shall use its
reasonable best efforts to cause its Representatives not to take any such
action.
SECTION 7. Appraisal Rights. Each Shareholder agrees not to exercise
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any rights (including without limitation, under Chapter 13 of the California
General Corporation Law) to demand appraisal of any Subject Shares which may
arise with respect to the Mergers.
SECTION 8. Stock Legend. At the request of Merger Sub, each
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Shareholder agrees to allow to be stamped, printed or typed on the face of his
or her certificates evidencing the Subject Shares, the following legend:
"THE VOTING, SALE, ASSIGNMENT, TRANSFER, GIFT, PLEDGE, HYPOTHECATION,
ENCUMBRANCE OR
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DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO A SHAREHOLDERS AGREEMENT DATED AS OF DECEMBER 24, 1999 BY AND
BETWEEN VMM MERGER CORP. AND THE RECORD OWNER HEREOF, COPIES OF WHICH
ARE ON FILE AT THE OFFICES OF VDI MULTIMEDIA."
SECTION 9. Further Assurances; Shareholder Capacity.
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a. Each Shareholder shall, upon request of Merger Sub, execute and
deliver any additional documents and take such further actions as may reasonably
be deemed by Merger Sub to be necessary or desirable to carry out the provisions
hereof and to vest the power to vote the Shares as contemplated by Section 5
hereof in Merger Sub.
b. Nothing in this Agreement shall be construed to prohibit any
Shareholder or any affiliate of any Shareholder who is or becomes or has
designated a member of the Board of Directors of the Company from taking any
action solely in his or her capacity as a member of the Board of Directors of
the Company or from exercising his or her fiduciary duties as a member of such
Board of Directors.
c. Each Shareholder hereby consents to the entry into this Agreement by
any other Shareholder with respect to all interests of such Shareholders.
SECTION 10. Termination. This Agreement and all rights and obligations
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of the parties hereunder shall terminate immediately upon the earlier of (the
"Termination Date"): (a) the date upon which the Merger Agreement is terminated
in accordance with its terms or (b) the Effective Time. The provisions set
forth in Section 10 shall survive any termination of this Agreement.
SECTION 11. Expenses. Except as provided in Section 11.1 of the Merger
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Agreement, all fees and expenses incurred by any one party hereto shall be borne
by the party incurring such fees and expenses.
SECTION 12. Public Announcements. Merger Sub and each Shareholder
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agrees that it will not issue any press release or otherwise make any public
statement with respect to this Agreement or the transactions contemplated hereby
without the prior consent of the other party, which consent shall not be
unreasonably withheld or delayed; provided, however, that such disclosure can be
made without obtaining such prior consent if (i) the disclosure is required by
law or regulation or by obligations imposed pursuant to any listing agreement
with the NASDAQ National Market and (ii) the party making such disclosure has
first used its reasonable best efforts to consult with the other party about the
form and substance of such disclosure.
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SECTION 13. Miscellaneous.
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a. Capitalized terms used and not otherwise defined in this Agreement
shall have the respective meanings assigned to such terms in the Merger
Agreement.
b. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed given (and shall be deemed to
have been duly received if so given) by delivery in person, by facsimile
transmission , by registered or certified mail (postage prepaid, return receipt
requested) or courier service providing proof of delivery to the respective
parties, addressed at the following addresses (or at such other address for a
party as shall be specified in a notice in accordance with this Section 13(b)):
i. If to the Merger Sub, to the address set forth on Exhibit B:
ii. If to any Shareholder, to the address set forth next to such
Shareholder's name on Exhibit A hereto.
c. The Section captions herein are for convenience of reference only and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
d. This Agreement may be executed in any number of counterparts, each
such counterpart being deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement.
e. This Agreement (including the Merger Agreement and any other documents
and instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties, with respect to the subject matter hereof.
f. This Agreement shall be governed by, and construed in accordance with
the laws of the State of California without giving effect to the principles of
conflicts of laws thereof.
g. Except as provided in Section 3 hereof, neither this Agreement nor any
of the rights, interests, or obligations hereunder shall be assignable by
operation of law or otherwise without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by, the parties and their
respective successors and assigns. This Agreement is not intended to be for the
benefit of, and shall not be enforceable by, any person or entity not a party
hereto.
h. If any term, provision, covenant or restriction herein is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable or against its regulatory policy, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
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i. Each of the parties hereto acknowledges and agrees that in the event
of any breach or failure of performance of this Agreement, each non-breaching
party would be irreparably and immediately harmed and could not be made whole by
monetary damages. It is accordingly agreed that the parties hereto shall be
entitled to injunctive relief and to compel specific performance of this
Agreement in addition to any other remedy to which they are entitled to at law
or in equity.
j. No amendment, modification or waiver in respect of this Agreement
shall be effective against any party unless it shall be in writing and signed by
such party.
IN WITNESS WHEREOF, Merger Sub and each Shareholder has executed and
delivered or caused this Agreement to be duly executed and delivered as of the
date first written above.
VMM MERGER CORP.
By: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
Title: Vice President
/s/ R. Xxxx Xxxxxxxx
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R. Xxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx
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EXHIBIT A
Ownership of Outstanding
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Shares of Common Stock
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Name Record Ownership Beneficial Ownership
R. Xxxx Xxxxxxxx 5,321,400 3,104,505
Address for Notice:
c/o Xxxxxx Xxxxx, Esq.
Xxxxx & Xxxxxxx
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Xxxxx Xxxxxxxx -- 2,216,895
Address for Notice:
x/x Xxxxxx Xxxxxx, Xxx.
Law Offices of Xxxxxx Xxxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
A-2
EXHIBIT B
To the Merger Sub:
c/o Bain Capital, Inc.
Two Xxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, P.C.
Xxxx X. Xxxxxxx
B-1
SCHEDULE I
All or a substantial portion of Xxxx Xxxxxxxx'x Shares are pledged as
security for a margin account (and subject to customary rights of the broker-
dealers with respect thereto) maintained at one or more broker-dealers. The
aggregate amount borrowed against such Shares as of December 3, 1999 was
approximately $8,000,000. Xx. Xxxxxxxx may borrow up to an additional $2.0
million against such Shares prior to the Effective Time.
