Exhibit E
STOCKHOLDERS AGREEMENT,
dated as of May 16, 2002
by and among
MONEYLINE NETWORKS, LLC,
Video Network Communications, Inc.
and
THE MANAGEMENT STOCKHOLDERS
Table of Contents
Page
----
ARTICLE I CERTAIN DEFINITIONS............................................................................2
1.1 Defined Terms................................................................2
ARTICLE II TRANSFERS OF RESTRICTED SECURITIES............................................................5
2.1 Restrictions Generally; Securities Act.......................................5
2.2 Legend.......................................................................6
2.3 Sale of the Company..........................................................6
ARTICLE III PREEMPTIVE RIGHTS............................................................................7
3.1 Preemptive Rights............................................................7
3.2 Notice.......................................................................7
3.3 Exercise.....................................................................7
3.4 Limitations..................................................................7
ARTICLE IV CORPORATE GOVERNANCE..........................................................................8
4.1 Significant Transactions.....................................................8
4.2 Board of Directors...........................................................8
4.3 Removal......................................................................9
4.4 Vacancies...................................................................10
4.5 By-Laws.....................................................................10
ARTICLE V CERTAIN COVENANTS OF THE PARTIES..............................................................11
5.1 Holdback Obligations........................................................11
ARTICLE VI MISCELLANEOUS 11
6.1 Governing Law...............................................................11
6.2 Entire Agreement; Amendments................................................11
6.3 Term........................................................................11
6.4 Certain Actions.............................................................11
6.5 Inspection..................................................................12
6.6 Recapitalization, Exchanges, Etc., Affecting Restricted Securities..........13
6.7 Waiver......................................................................13
6.8 Successors and Assigns......................................................13
6.9 Remedies....................................................................13
6.10 Invalid Provisions..........................................................13
6.11 Headings....................................................................14
6.12 Further Assurances..........................................................14
6.13 Gender......................................................................14
6.14 Counterparts................................................................14
6.15 Notices.....................................................................14
i
EXHIBITS
Exhibit A - Form of Joinder Agreement
Exhibit B - Form of Amended and Restated By-Laws
ii
AGREEMENT, dated as of May 16, 2002 (the "Effective Date"), by and
among MONEYLINE NETWORKS, LLC, a Delaware limited liability company
("Moneyline"), and Video Network Communications, Inc., a Delaware corporation
(the "Company"). Capitalized terms used and not otherwise defined herein have
the respective meanings ascribed thereto in Article I.
RECITALS
WHEREAS, Moneyline, B2BVideo Network Corp. ("B2B") and the Company
are parties to a Stock Purchase Agreement dated May 16, 2002 (the "Stock
Purchase Agreement"), and the Company and B2B are parties to an Agreement and
Plan of Merger dated May 16, 2002 (the "Merger Agreement") and, concurrently
with this Agreement, have consummated the transactions contemplated therein (the
"Transactions"), whereby (i) B2B Merger Sub Inc., a Delaware corporation and a
wholly-owned subsidiary of the Company, has merged with and into B2B with B2B
surviving; and (ii) Moneyline beneficially owns 36,250,000 shares of Common
Stock (as defined below);
WHEREAS, OEP has provided the funding to Moneyline in connection
with the Transactions;
WHEREAS, pursuant to the Stock Purchase Agreement, the Board (as
defined below), as of the date hereof, consists of six (6) individuals, 3 of
whom are Affiliates (as defined below) of Moneyline or OEP;
WHEREAS, the Company will file within one day of the date of this
Agreement all filings required by Rule 14f-1 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), with the Commission (as defined below),
and upon the expiration of the ten day period from such filing, will appoint
Xxxxxxx Xxxxxx to the Board;
WHEREAS, the parties hereto wish to further establish the nature of
their relationship and set forth their agreement concerning the governance of
the Company following consummation of the Transactions as well as certain
matters relating to the ownership of Common Stock by Moneyline.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Defined Terms
(a) The following capitalized terms, when
used in this Agreement, have the respective meanings set forth below:
"Affiliate" means, with respect to any Person, any other
Person that controls, is controlled by or is under common control
with such Person. For the purposes of this definition, "control"
(including, with its correlative meanings, the terms "controlled by"
and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of
securities, by contract or otherwise.
"Agreement" means this Stockholders Agreement and the
exhibits hereto, as the same may be amended, modified, supplemented
or restated from time to time in accordance with the terms hereof.
"Board" means the Board of Directors of the Company.
"Closing Date" means the date of the closing of the
purchase and sale of shares of Common Stock pursuant to the Stock
Purchase Agreement.
"Commission" means the Securities and Exchange
Commission.
"Common Stock" means the Common Stock, par value $.01
per share, of the Company, any securities into which such Common
Stock shall have been changed or any securities resulting from any
reclassification or recapitalization of such Common Stock, and all
other securities of any class or classes (however designated), other
than any participating preferred stock, of the Company the holders
of which have the right, without limitation as to amount, after
payment on any securities entitled to a preference on dividends or
other distributions upon any dissolution, liquidation or winding-up,
either to all or to a share of the balance of payments upon such
dissolution, liquidation or winding-up.
"Diluted Basis" means, with respect to the calculation
of the number of shares of Common Stock, all shares of Common Stock
outstanding at the time of determination and all shares issuable
upon the exercise, conversion or exchange, as applicable, of all
outstanding securities exercisable, convertible or exchangeable for
or into shares of Common Stock.
"Independent Director" means a director of the Company
who is not a Moneyline Nominee and who (i) is not an officer,
employee or director of any of Moneyline or its Affiliates, and (ii)
has no affiliation or compensation, consulting or contractual
relationship with Moneyline or its Affiliates such that a reasonable
person would regard such director as likely to be unduly influenced
by any of such Persons.
"Joinder Agreement" means a Joinder Agreement
substantially in the form attached hereto as Exhibit A.
"Management Stockholders" means any director, officer,
employee, consultant or agent of the Company or any of its
subsidiaries which has executed a Stock Option Purchase Agreement
and a Joinder Agreement, so long as any such Person shall hold
Restricted Securities.
"Moneyline Stockholders" means Moneyline and each Person
to whom Moneyline Transfers any Restricted Securities, so long as
any such Person shall hold Restricted Securities.
"OEP" means One Equity Partners LLC, a Delaware limited
liability company.
"Person" means an individual, partnership, corporation,
limited liability company or partnership, trust, unincorporated
organization, joint venture, government (or agency or political
subdivision thereof) or any other entity of any kind.
"Pro Rata" means, with respect to one or more
Stockholders, in proportion to the number of shares of Common Stock
on a Diluted Basis owned by such Stockholder or Stockholders.
"Restricted Securities" means (i) with respect to
Moneyline and OEP, the Common Stock, any other securities
exercisable, exchangeable or convertible for or into Common Stock
and any securities issued with respect to any of the foregoing as a
result of any stock dividend, stock split, reclassification,
recapitalization, reorganization, merger, consolidation or similar
event or upon the conversion, exchange or exercise thereof and any
other securities designated as such by the Board; and (ii) with
respect to the Management Group, any shares of Common Stock issued
pursuant to a Stock Option Purchase Agreement.
"Sale of the Company" means the sale of the Company
(whether by merger, consolidation, recapitalization, reorganization,
sale of securities, sale of assets or otherwise) in one transaction
or series of related transactions to a Person or Persons not an
Affiliate, directly or indirectly, of any Moneyline Stockholder
pursuant to which such Person or Persons (together with its
Affiliates) acquires (i) securities representing at least a majority
of the voting power of all securities of the Company, assuming the
conversion, exchange or exercise of all securities convertible,
exchangeable or exercisable for or into voting securities, or (ii)
all or substantially all of the Company's assets on a consolidated
basis.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder.
"Significant Transaction" means:
(i) the authorization, issuance or sale of
any capital stock or debt securities or securities exercisable, convertible or
exchangeable for or into capital stock or debt securities or any option, warrant
or other right to acquire the same, of, or any other interest in, the Company or
any subsidiary of the Company, other than securities issued pursuant to existing
option plans, securities issued upon exercise of convertible securities existing
as of the date hereof, or any amendment or modification of any security of the
Company or any subsidiary of the Company, whether or not outstanding as of the
date hereof;
(ii) the redemption, purchase or other
acquisition of any securities of the Company or any subsidiary of the Company;
(iii) any amendment to, or modification,
repeal or waiver of any provision of, the Certificate of Incorporation or
By-laws of the Company or any subsidiary of the Company;
(iv) the declaration or payment of any
dividend or other distribution by the Company with respect to the capital stock
of the Company;
(v) the entering into, or the adoption of
any amendment to or modification, repeal or waiver of, any provision of any
compensation plan, arrangement, contract or agreement relating to the
compensation of, or other benefits arrangements for, any employee of the Company
or any subsidiary of the Company, in each case, other than ordinary course
salary arrangements for non-executive officers;
(vi) the dissolution, liquidation or
winding-up of the Company or any subsidiary of the Company;
(vii) the commencement, initiation,
continuation or settlement of any suit, action or proceeding before any court,
governmental or regulatory agency or arbitral body, relating to the Company or
any subsidiary of the Company and involving amounts in excess of $250,000;
(viii) the appointment or removal of the
independent auditors of the Company or any subsidiary of the Company or
modification of significant accounting methods or policies of the Company or any
subsidiary of the Company;
(ix) the adoption of any significant change
to the business plan and budget of the Company;
(x) the filing of a voluntary petition in
bankruptcy or commencement of a voluntary legal procedure for reorganization,
arrangement, adjustment, relief or composition of indebtedness or other similar
law now or hereafter in effect, the consent to the entry of an order for relief
in an involuntary case under such law or the application for or consent to the
appointment of a receiver, liquidator, assignee, custodian or trustee (or
similar official) of the Company or any subsidiary of the Company;
(xi) any merger, consolidation,
recapitalization or other business combination to which the Company or any
subsidiary of the Company is a party or any sale of all or substantially all of
the assets of the Company or any subsidiary of the Company;
(xii) the appointment or removal of any
executive officer of the Company or any subsidiary of the Company;
(xiii) the establishment of any committee of
the Board;
(xiv) the acquisition by the Company or any
subsidiary of the Company of any equity securities of any Person or securities
convertible into or exercisable or exchangeable for an equity interest in any
Person, including, without limitation, any other instrument of Indebtedness
issued by any Person, where the aggregate purchase price of such securities,
whether in one or a series of related transactions, is greater than $250,000;
(xv) the acquisition of any assets by the
Company or any subsidiary of the Company in a single transaction or series of
related transactions having a value in excess of $250,000 in the aggregate; and
(xvi) taking any action, directly or
indirectly, in contemplation of any of the foregoing.
"Stockholders" means each of the Moneyline Stockholders
and the Management Stockholders.
"Stock Option Purchase Agreements" means the Stock
Option Purchase Agreements entered into, at any time or from time to
time on or after the date hereof, by the Company and any Management
Stockholder, as any such agreement may be amended, restated or
modified from time to time, and any other agreement designated as
such by the Company.
"Transfer" means, directly or indirectly, any sale,
transfer, assignment, hypothecation, pledge or other disposition of
any Restricted Securities or any interests therein.
(b) Unless otherwise provided herein, all
accounting terms used in this Agreement shall be interpreted in accordance with
United States generally accepted accounting principles as in effect from time to
time, applied on a consistent basis.
ARTICLE II
TRANSFERS OF RESTRICTED SECURITIES
2.1 Restrictions Generally; Securities Act
(a) Each Management Stockholder agrees that it
will not, directly or indirectly, Transfer any Restricted Securities in
violation of this Agreement. Any attempt by any Management Stockholder to
Transfer any Restricted Securities in violation of this Agreement shall be
null and void and neither the issuer of such securities nor any transfer
agent of such securities shall give any effect to such attempted Transfer
in its stock records.
(b) Each Management Stockholder agrees that it
will not Transfer any Restricted Securities except pursuant to an effective
registration statement under the Securities Act, or, unless waived by the
Board, upon receipt by the Company of an opinion of counsel to the
Stockholder reasonably satisfactory to the Company or, if agreed by the
Board, counsel to the Company, or a no-action letter from the Commission
addressed to the Company, to the effect that no registration statement is
required because of the availability of an exemption from registration
under the Securities Act.
2.2 Legend
(a) Each certificate representing Restricted
Securities shall be endorsed with the following legends and such other
legends as may be required by applicable state securities laws:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
A STOCKHOLDERS AGREEMENT, DATED AS OF MAY 16, 2002, AS SUCH
AGREEMENT MAY BE AMENDED, RESTATED OR MODIFIED FROM TIME TO
TIME, AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE
WITH THE PROVISIONS THEREOF AND ANY TRANSFEREE OF THESE
SECURITIES SHALL BE SUBJECT TO THE TERMS OF SUCH AGREEMENT.
COPIES OF THE FOREGOING AGREEMENT ARE MAINTAINED WITH THE
CORPORATE RECORDS OF THE ISSUER AND ARE AVAILABLE FOR
INSPECTION AT THE PRINCIPAL OFFICES OF THE ISSUER."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR
TRANSFERRED EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR (II) AN
APPLICABLE EXEMPTION FROM REGISTRATION THEREUNDER OR UNDER
APPLICABLE STATE SECURITIES LAWS."
(b) Any certificate issued at any time in exchange
or substitution for any certificate bearing such legends (except a new
certificate issued upon the completion of a Transfer pursuant to a
registered public offering under the Securities Act and made in accordance
with the Securities Act) shall also bear such legends, unless in the
opinion of counsel for the Company, the Restricted Securities represented
thereby are no longer subject to the provisions of this Agreement or the
restrictions imposed under the Securities Act or state securities laws, in
which case the applicable legend (or legends) may be removed.
2.3 Sale of the Company
If the Moneyline Stockholders desire to effect a
Sale of the Company, such Moneyline Stockholders shall notify each the
Management Stockholders, in writing, of such desire and the terms and
conditions of such proposed sale. Notwithstanding any other provision of
this Agreement, each such Management Stockholder shall take all necessary
and desirable actions reasonably requested by such Moneyline Stockholders
in connection with the consummation of such Sale of the Company, and if
such transaction is structured as a sale of Restricted Securities, within
ten (10) business days of the receipt of such notice (or such longer period
of time as such Moneyline Stockholders shall designate in such notice) such
other Stockholders shall cause all of their respective Restricted
Securities to be sold to the designated purchaser on the same terms and
conditions, for the same per share consideration and at the same time as
the Restricted Securities being sold by such Moneyline Stockholders. In
furtherance of, and not in limitation of the foregoing, in connection with
a Sale of the Company, each Management Stockholder will, (a) consent to and
raise no objections against the Sale of the Company or the process pursuant
to which it was arranged, (b) waive any dissenter's rights and other
similar rights and (c) execute all documents containing such terms and
conditions as those executed by such Moneyline Stockholders as directed by
such Moneyline Stockholders. All Management Stockholders will bear their
Pro Rata share of the costs and expenses incurred for the benefit of all
Stockholders and not otherwise paid by the Company or the purchaser in
connection with a Sale of the Company. Costs incurred by any Management
Stockholder on its own behalf will not be shared by the Moneyline
Stockholders.
ARTICLE III
PREEMPTIVE RIGHTS
3.1 Preemptive Rights
If, at any time after the Closing Date for so long
as the Moneyline Stockholders shall be entitled to designate at least one
Moneyline Nominee (as defined below) for election to the Board, the Company
proposes to issue and sell shares of Common Stock or any other voting
securities of the Company to any Person, the Moneyline Stockholders shall
have the right to purchase from the Company a number of shares of Common
Stock or any other voting securities of the Company sufficient to maintain
following such transaction the same Pro Rata interest in the shares of
Common Stock or any other voting securities of the Company as immediately
prior to such transaction. Such purchase by the Moneyline Stockholders
shall be on the same terms and conditions as such purchase by such Person.
Each such issuance and sale to any Person shall be subject to the rights
set forth in this Article III.
3.2 Notice
If the Company proposes to issue shares of Common
Stock or any other voting securities of the Company in accordance with this
Article III, it shall give the Moneyline Stockholders written notice of
such issuance, describing the price and terms upon which the Company
intends to issue the same and the amount eligible to be purchased by the
Moneyline Stockholders.
3.3 Exercise
Upon receipt by the Moneyline Stockholders of the
written notice of the Company pursuant to Section 3.2 above, the Moneyline
Stockholders shall have ten (10) business days during which to exercise the
right pursuant to Section 3.1 above to purchase the proportionate share of
Common Stock or any other voting securities of the Company proposed to be
issued and sold for the price and upon the terms specified in such notice.
If the Money Stockholders fail to notify the Company of its exercise of
such rights within such twenty (20) business day period, the Money
Stockholders shall have no further rights with regard to such purchase by
such Person at the price and upon the terms specified in the notice,
subject to Section 3.4 below.
3.4 Limitations
If the Company has not sold the shares of Common
Stock or any other voting securities of the Company identified in the
notice given pursuant to Section 3.2 within ninety (90) days following the
expiration of the twenty (20) business day period referred to in Section
3.3 above, the Company shall not thereafter issue or sell any such shares
to such Person without also offering the same to the Money Stockholders in
the manner provided above.
ARTICLE IV
CORPORATE GOVERNANCE
4.1 Significant Transactions
For so long as the Moneyline Stockholders own 25%
or more of the shares of Common Stock of the Company, the consent of
Moneyline shall be required prior to entering into any Significant
Transaction.
4.2 Board of Directors
(a) Number of Directors. From and after the date
hereof, each Stockholder shall vote or cause to be voted all shares of
Common Stock and any other voting securities of the Company over which such
Stockholder has voting control, or execute a written consent in lieu of
such a meeting of stockholders, and shall take all actions necessary, to
ensure the election to the Board of at least seven (7) individuals. For so
long as the Moneyline Stockholders own 25% or more of the shares of Common
Stock of the Company, if the Moneyline Stockholders request that the number
of individuals constituting the Board be changed, by written notice
delivered to the Company, the size of the Board shall be changed to such
number and each Stockholder hereby agrees to vote all shares of Common
Stock owned by such Stockholder and other securities over which such
Stockholder has voting control to effect such change in the size of the
Board or to consent in writing to effect such change in the size of the
Board upon such request.
(b) Election of Moneyline Directors.
(i) For so long as the Moneyline
Stockholders own 50% or more of the shares of Common Stock or any other voting
securities of the Company owned by Moneyline on the date hereof, each
Stockholder shall vote or cause to be voted all shares of Common Stock and any
other voting securities of the Company over which such Stockholder has voting
control, at any regular or special meeting of stockholders called for the
purpose of filling positions on the Board, or execute a written consent in lieu
of such a meeting of stockholders for the purpose of filling positions on the
Board, and shall take all actions necessary, to ensure the election to the Board
of four (4) individuals to be designated by Moneyline (each, a "Moneyline
Nominee", and collectively, the "Moneyline Nominees"), the Chief Executive
Officer of the Company (the "CEO") and two (2) Independent Directors.
(ii) For so long as the Moneyline
Stockholders own less than 50% but at least 25% of the shares of Common Stock or
any other voting securities of the Company owned by Moneyline on the date
hereof, each Stockholder shall vote or cause to be voted all shares of Common
Stock and any other voting securities of the Company over which such Stockholder
has voting control, at any regular or special meeting of stockholders called for
the purpose of filling positions on the Board, or execute a written consent in
lieu of such a meeting of stockholders for the purpose of filling positions on
the Board, and shall take all actions necessary, to ensure the election to the
Board of three (3) Moneyline Nominees, the CEO and three (3) Independent
Directors.
(iii) For so long as the Moneyline
Stockholders own less than 25% of the shares of Common Stock or any other voting
securities of the Company owned by Moneyline on the date hereof, each
Stockholder shall vote or cause to be voted all shares of Common Stock and any
other voting securities of the Company over which such Stockholder has voting
control, at any regular or special meeting of stockholders called for the
purpose of filling positions on the Board, or execute a written consent in lieu
of such a meeting of stockholders for the purpose of filling positions on the
Board, and shall take all actions necessary, to ensure the election to the Board
of a number of Moneyline Nominees that is proportionate to the number of shares
of Common Stock or any other voting securities of the Company held by the
Moneyline Stockholder, the CEO and such number of Independent Directors as is
necessary to fill any remaining position on the Board.
(c) Replacements. If prior to his or her election
to the Board pursuant to Section 3.2(b), any Moneyline Nominee shall be unable
or unwilling to serve as a director of the Company, the Moneyline Stockholders
that nominated such Moneyline Nominee shall nominate a replacement who shall
then be a Moneyline Nominee for purposes of Section 3.2(b).
(d) Committees.
(i) For so long as a Moneyline Nominee shall
be a member of the Board, each committee of the Board, including the executive,
audit, nominating and compensation committees, shall include at least one
Moneyline Nominee at all times.
(ii) From and after the date hereof and
until the appointment of Xxxxxxx Xxxxxx to the Board in accordance with Section
4.2(e), no committee of the Board shall take any action and the consent of the
majority of the Board (other than Xxxxxxx Xxxxxx) shall be required to approve
and adopt any action for or on behalf of the Company.
(e) Composition of Board as of the Date Hereof.
Pursuant to the Stock Purchase Agreement and contemporaneously with the date
hereof, the Board consists of the following six (6) individuals (i) Xxxxx Xxxxx,
(ii) Xxxxxxxxx Xxxxx, (iii) Xxxxxxxx Xxxxxx, (iv) Xxxx Xxxxxxx, (v) Xxxxxxx X.
Xxxxxxxxx, and (vi) Xxxxxx X. Xxxxxxxxxx. Upon the expiration of the ten day
period following the date of filing of all forms required by Rule 14f-1 of the
Exchange Act with the Commission, the Company, the Board and each Stockholder
shall take all action necessary to appoint Xxxxxxx Xxxxxx to the Board.
4.3 Removal
(a) If the Moneyline Stockholders that designated a
Moneyline Nominee pursuant to Section 4.2(b) request, by written notice to
the other Stockholders, that such Moneyline Nominee elected as a director
be removed (with or without cause), such director shall be removed and each
Stockholder hereby agrees to vote all shares of Common Stock owned by such
Stockholder and other securities over which such Stockholder has voting
control to effect such removal or to consent in writing to effect such
removal upon such request. No director that is a Moneyline Nominee shall be
removed without cause except as provided in this Section 4.3.
(b) If at any time a member of the Board resigns or
is removed (in accordance with this Section 4.3 or otherwise), a new member
of the Board shall be designated to replace such member until the next
election of directors. If consistent with Section 4.2(b), the replacement
director is to be a Moneyline Nominee, the Moneyline Stockholders shall
designate the replacement Moneyline Nominee. If the former member was the
CEO, the replacement CEO shall be the replacement. Except as set forth in
Section 4.3(d) below, if consistent with Section 4.2(b), the replacement
director is to be an Independent Director, the remaining members of the
Board shall designate the replacement Independent Director.
(c) Subject to Section 4.3(d) below, if at any time
the number of Moneyline Nominees entitled to be nominated to the Board in
accordance with this Agreement in an election of directors presented to
stockholders would decrease, within 10 days thereafter the Moneyline
Stockholders shall cause a sufficient number of Moneyline Nominees to
resign from the Board so that the number of Moneyline Nominees on the Board
after such resignation(s) equals the number of Moneyline Nominees that the
Moneyline Stockholders would have been entitled to designate had an
election of directors taken place at such time. The Moneyline Stockholders
shall also cause a sufficient number of Moneyline Nominees to resign from
any relevant committees of the Board so that such committees are comprised
in the manner contemplated by Section 4.02(d) after giving effect to such
resignations. Any vacancies created by the resignations required by this
Section 4.3(c) shall be filled by Independent Directors.
(d) If at any time the percentage of Common Stock
or other voting securities of the Company held by the Moneyline
Stockholders decreases as a result of an issuance of Common Stock or other
voting securities of the Company, the Moneyline Stockholders may notify the
Company that the Moneyline Stockholders intend to acquire a sufficient
amount of additional shares of Common Stock or other voting securities of
the Company necessary to maintain the Moneyline Stockholders then current
level of Board representation within twenty (20) business days. In such
event, until the end of such period (and thereafter if the Moneyline
Stockholders in fact restore their percentage of Common Stock or other
voting securities of the Company during such period to maintain the
requisite level of ownership of Common Stock or other voting securities in
accordance with Section 4.2(b)), the Board shall continue to have the
number of Moneyline Nominees as prior to such issuance of Common Stock or
other voting securities of the Company.
4.4 Vacancies
In the event that a vacancy is created on the Board
at any time by the death, disability, retirement, resignation or removal
(with or without cause) of a director who is a Moneyline Nominee, the
Moneyline Stockholders may designate a new Moneyline Nominee to fill the
vacancy.
4.5 By-Laws
The Company shall cause the amendment of its
by-laws (the "By-Laws") to reflect the provisions of Article IV of this
Agreement (other than Section 4.2(d)(ii)) and such other matters as the
parties hereto may reasonably agree. The form of such amended By-Laws is
attached hereto as Exhibit B. Those provisions of the By-Laws reflecting
the terms of Article IV of this Agreement shall not be amended during the
term of this Agreement without the express written consent of the Moneyline
Stockholders. The Company and the Moneyline Stockholders shall each take or
cause to be taken all lawful action necessary to ensure at all times that
the Company's certificate of incorporation and the By-Laws are not at ant
times inconsistent with the provisions of this Agreement.
ARTICLE V
CERTAIN COVENANTS OF THE PARTIES
5.1 Holdback Obligations
Unless otherwise agreed to by the Moneyline
Stockholders, each Management Stockholder agrees (a) not to effect any sale
or distribution of equity securities of the Company, or any securities
convertible, exchangeable or exercisable for or into such securities,
during the seven (7) days prior to, and the 180-day period beginning on,
the effective date of any underwritten public offering of Common Stock
registered under the Securities Act (except as part of such underwritten
registration), unless the managing underwriters of the registered public
offering otherwise agree and (b) to enter into such standstill agreements
and related agreements as such managing underwriters may request.
ARTICLE VI
MISCELLANEOUS
6.1 Governing Law
The corporate laws of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
stockholders hereunder. All other questions concerning the construction,
validity and interpretation of this Agreement shall be governed and
construed in accordance with the domestic laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the
State of New York.
6.2 Entire Agreement; Amendments
This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and may be amended,
modified or supplemented only by a written instrument duly executed by the
Company and the Moneyline Stockholders, except that any amendment,
modification or supplement that materially, adversely and
disproportionately affects, as a group, the Management Stockholders shall
require the consent of the holders representing more than fifty percent
(50%) of the total number of shares of Restricted Securities on a Diluted
Basis then held by the Management Stockholders. In the event of an
amendment, modification or supplement of this Agreement in accordance with
its terms, the Stockholders hereby agree to vote their shares of Common
Stock to approve any necessary amendments to the Certificate of
Incorporation and By-Laws of the Company resulting therefrom.
6.3 Term
This Agreement shall terminate upon the earliest to
occur of (a) the tenth anniversary of the Closing Date and (b) a Sale of
the Company.
6.4 Certain Actions
Unless otherwise expressly provided herein,
whenever any action is required under this Agreement by: the Moneyline
Stockholders, it shall be by the affirmative vote of the holders
representing more than fifty percent (50%) of the total number of shares of
Restricted Securities on a Diluted Basis then held by the Moneyline
Stockholders as a group, or as otherwise agreed in writing by the Moneyline
Stockholders as a group.
6.5 Inspection
For so long as this Agreement shall remain in
effect, this Agreement shall be made available for inspection by any
Stockholder at the principal executive offices of the Company.
6.6 Recapitalization, Exchanges, Etc., Affecting Restricted
Securities
The provisions of this Agreement shall apply, to
the full extent set forth herein with respect to the Restricted Securities,
to any and all shares of the Company capital stock or any successor or
assign of the Company (whether by merger, consolidation, sale of assets, or
otherwise, including shares issued by a parent corporation in connection
with a triangular merger) which may be issued in respect of, in exchange
for, or in substitution of, Restricted Securities and shall be
appropriately adjusted for any stock dividends, splits, reverse splits,
combinations, reclassifications and the like occurring after the date
hereof.
6.7 Waiver
No waiver by any party of any term or condition of
this Agreement, in one or more instances, shall be valid unless in writing,
and no such waiver shall be deemed to be construed as a waiver of any
subsequent breach or default of the same or similar nature.
6.8 Successors and Assigns
Except as otherwise expressly provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, personal representatives, successors and
assigns (including, without limitation, transferees of Restricted
Securities); provided, however, that (a) nothing contained herein shall be
construed as granting any Management Stockholder the right to Transfer any
Restricted Securities except in accordance with this Agreement, and (b)
unless otherwise provided in the terms of the Transfer, none of the
provisions of this Agreement, other than those set forth in Sections 2.1
and 2.2 to the extent those Sections require compliance with the Securities
Act, delivery of opinions of counsel and placement of Securities Act (or
state securities laws) legends or other legends, shall apply to any
Transfer of Restricted Securities (or to the transferee thereof) subsequent
to a Transfer of those securities pursuant to a registered public offering
under the Securities Act made in accordance with the Securities Act.
6.9 Remedies
In the event of a breach by any party to this
Agreement of its obligations under this Agreement, any party injured by
such breach, in addition to being entitled to exercise all rights granted
by law, including recovery of damages and costs (including reasonable
attorneys' fees), will be entitled to specific performance of its rights
under this Agreement. The parties agree that the provisions of this
Agreement shall be specifically enforceable, it being agreed by the parties
that the remedy at law, including monetary damages, for breach of any such
provision will be inadequate compensation for any loss and that any defense
in any action for specific performance that a remedy at law would be
adequate is waived.
6.10 Invalid Provisions
If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if
the rights or obligations of any party hereto under this Agreement will not
be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
hereof, (c) the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom and (d) in lieu of
such illegal, invalid or unenforceable provision, there will be added
automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
6.11 Headings
The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
6.12 Further Assurances
Each party hereto shall cooperate and shall take
such further action and shall execute and deliver such further documents as
may be reasonably requested by any other party in order to carry out the
provisions and purposes of this Agreement.
6.13 Gender
Whenever the pronouns "he" or "his" are used herein
they shall also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in
the plural and words in the plural shall be construed as though in the
singular in all cases where they would so apply.
6.14 Counterparts
This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
6.15 Notices
All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given
only if delivered personally against written receipt or by facsimile
transmission or mailed by prepaid first class mail, return receipt
requested, or mailed by overnight courier prepaid to the parties at the
following addresses or facsimile numbers:
(a) If to Moneyline:
Moneyline Networks, LLC
000 Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: 000-000-0000
Attn: Xxxxxxxxx Xxxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: 000-000-0000
Attn: Xxxxxx X. Coco, Esq.
(b) If to OEP, to:
One Equity Partners LLC
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Xx.
(c) If to the Company, to:
Video Network Communications, Inc.
00 Xxxxxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx Xxxxx, Chief Financial Officer
with a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 000000
Facsimile No.: 212-983-3115
Attn: Xxxxxxx Xxxx, Esq.
(d) If to a Stockholder other than a Moneyline
Stockholder, to the address of such Person set forth in the stock records
of the Company.
All such notices, requests and other communications will (w) if delivered
personally to the address as provided in this Section 6.15 be deemed given upon
delivery, (x) if delivered by facsimile transmission to the facsimile number as
provided in this Section 6.15 be deemed given upon facsimile confirmation, and
(y) if delivered by mail in the manner described above to the address as
provided in this Section 6.15 upon the earlier of the third business day
following mailing or upon receipt and (z) if delivered by overnight courier to
the address as provided in this Section 6.15, be deemed given on the earlier of
the first business day following the date sent by such overnight courier or upon
receipt (in each case regardless of whether such notice, request or other
communication is received by any other Person to whom a copy of such notice is
to be delivered pursuant to this Section 6.15). Any party from time to time may
change its address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the other
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
COMPANY:
--------
VIDEO NETWORK COMMUNICATIONS, INC.
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
MONEYLINE STOCKHOLDERS:
-----------------------
MONEYLINE NETWORKS, LLC
By: /s/ Xxxxxxxxx Xxxxx
-------------------------------------
Name: Xxxxxxxxx Xxxxx
Title: Executive Vice President,
Business Development and
General Counsel
