EXHIBIT 10.1
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT (this "Agreement"), dated as of October
[__], 1998, by and between Zitel Corporation, a California corporation
("Parent") and [___________] ("Shareholder").
WITNESSETH:
WHEREAS, concurrently with the execution of this Agreement, Parent,
Millennium Holding Corp. ("Holdco"), Millennium Acquisition I Corp., a
Delaware corporation and a wholly-owned subsidiary of Holdco ("Millennium
Acquisition"), Zenith Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Holdco, and MatriDigm Corporation, a California
corporation (the "Company") have entered into an Agreement and Plan of
Reorganization and Merger, dated of even date herewith (the "Merger
Agreement"), pursuant to which the parties thereto have agreed, among other
things, to merge Millennium Acquisition with and into the Company upon the
terms and subject to the conditions set forth therein (the "Millennium
Merger"); and
WHEREAS, as of the date hereof, Shareholder is the record and
Beneficial Owner (as defined hereinafter) of (i) [_________] shares of the
Common Stock, no par value, of the Company (the "Common Stock"), and (ii)
[_________] shares of the Preferred Stock, no par value, of the Company
(the "Preferred Stock"); and
WHEREAS, as inducement and a condition to entering into the Merger
Agreement, Parent has required Shareholder to agree, and Shareholder has
agreed, to enter into this Agreement; and
WHEREAS, upon the terms and subject to the conditions set forth
herein, Shareholder desires to (i) vote all such Shareholder's shares of
Common Stock and Preferred Stock in favor of the Millennium Merger and the
approval and adoption of the Merger Agreement and to execute a written
consent in furtherance thereof, and (ii) as promptly as practicable
hereafter, convert any shares of Preferred Stock held by such Shareholder
into shares of Common Stock.
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound hereby, agree as
follows:
Section 1. CERTAIN DEFINITIONS. In addition to the terms
defined elsewhere herein, capitalized terms used and not defined herein
have the respective meanings ascribed to them in the Merger Agreement. For
purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with
respect to any securities means having or sharing, directly or indirectly,
through any contract, arrangement, understanding, relationship or
otherwise, voting power, including the power to vote, or to direct the
voting of, such securities, and/or investment power, including the power to
dispose, or to direct the disposition, of such securities. Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a person include securities Beneficially Owned by all
other persons with whom such person acts in a partnership, limited
partnership, syndicate or other group for the purpose of acquiring,
holding, or disposing of securities of the same issuer.
(b) "Existing Shares" means shares of Common Stock and
Preferred Stock Beneficially Owned by Shareholder as of the date hereof.
(c) "Securities" means the Existing Shares together with
any shares of Common Stock, Preferred Stock or other securities of the
Company acquired by Shareholder in any capacity after the date hereof and
prior to the termination of this Agreement, whether upon the exercise of
options, warrants or rights, the conversion or exchange of convertible or
exchangeable securities, or by means of purchase, dividend, distribution,
split-up, recapitalization, combination, exchange of shares or the like,
gift, bequest, inheritance or as a successor in interest in any capacity or
otherwise.
Section 2. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER.
Shareholder represents and warrants to Parent as follows:
(a) Ownership of Shares. Except as set forth in Schedule
2(a), Shareholder is the sole record and Beneficial Owner of the number of
shares of Common Stock and Preferred Stock set forth opposite such
Shareholder's name on Schedule A hereto. Shareholder has sole voting power
and sole power to issue instructions with respect to the matters set forth
in Sections 5, 7 and 8 hereof, sole power of disposition, sole power of
conversion, sole power to demand appraisal rights and sole power to agree
to all of the matters set forth in this Agreement, in each case with
respect to all of the Existing Shares with no limitations, qualifications
or restrictions on such rights, subject to the terms of this Agreement.
Shareholder does not own any securities of the Company on the date hereof
other than the shares of Common Stock and Preferred Stock set forth on
Schedule A and the options to purchase share of Common Stock, if any,
specified in Schedule 2(a).
(b) Power; Binding Agreement. Shareholder has the legal
capacity, power and authority to enter into and perform all of
Shareholder's obligations under this Agreement. This Agreement has been
duly and validly executed and delivered by Shareholder and constitutes a
valid and binding agreement of Shareholder, enforceable against Shareholder
in accordance with its terms except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
(c) No Conflicts. Except as disclosed in the Merger
Agreement, no filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority ("Governmental
Entity") is necessary for the execution of this Agreement by Shareholder
and the consummation by Shareholder of the transactions contemplated
hereby, none of the execution and delivery of this Agreement by
Shareholder, the consummation by Shareholder of the transactions
contemplated hereby or compliance by Shareholder with any of the provisions
hereof shall (i) conflict with or result in any breach of any
organizational documents applicable to Shareholder, (ii) result in a
violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any
of the terms, conditions or provisions of any note, loan agreement, bond,
mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to
which Shareholder is a party or by which Shareholder or any of its
properties or assets may be bound, or (iii) violate any order, writ,
injunction, decree, judgment, order, statute, rule or regulation applicable
to Shareholder or any of Shareholder's properties or assets.
(d) No Encumbrance. Except as permitted by this Agreement,
the Existing Shares are now and, at all times during the term hereof, and
the Securities will be, held by Shareholder or by a nominee or custodian
for the benefit of Shareholder, free and clear of all mortgages, claims,
charges, liens, security interests, pledges or options, proxies, voting
trusts or agreements, understandings or arrangements or any other rights
whatsoever (collectively, "Encumbrances"), except for any such Encumbrances
arising hereunder.
(e) No Finder's Fees. No broker, investment banker,
financial advisor or other person is entitled to any broker's, finder's,
financial adviser's or other similar fee or commission in connection with
the transactions contemplated hereby based upon arrangements made by or on
behalf of Shareholder.
(f) Reliance by Parent. Shareholder understands and
acknowledges that Parent is entering into the Merger Agreement in reliance
upon Shareholder's execution and delivery of this Agreement.
Section 3. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent
hereby represents and warrants to Shareholder as follows:
(a) Power; Binding Agreement. Parent has the corporate
power and authority to enter into and perform all of its obligations under
this Agreement. This Agreement has been duly and validly executed and
delivered by Parent and constitutes a valid and binding agreement of
Parent, enforceable against Parent in accordance with its terms, except
that (i) such enforcement may be subject to applicable bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (ii) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(b) No Conflicts. Except as disclosed in the Merger
Agreement, no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the execution of this
Agreement by Parent and the consummation by Parent of the transactions
contemplated hereby, and none of the execution and delivery of this
Agreement by each of Parent, the consummation by each of Parent of the
transactions contemplated hereby or compliance by each of Parent with any
of the provisions hereof shall (i) conflict with or result in any breach of
any organizational documents applicable to Parent, (ii) result in a
violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any
of the terms, conditions or provisions of any note, loan agreement, bond,
mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to
which Parent is a party or by which Parent or any of its properties or
assets may be bound, or (iii) violate any order, writ, injunction, decree,
judgment, order, statute, rule or regulation applicable to Parent or any of
its properties or assets.
Section 4. DISCLOSURE. Shareholder hereby agrees to permit
Parent to publish and disclose in the Proxy Statement/Prospectus and any
press release or other disclosure document which Parent, in its sole
discretion, determines to be necessary or desirable in connection with the
Millennium Merger and any transactions related thereto, Shareholder's
identity and ownership of Common Stock and Preferred Stock, and the nature
of Shareholder's commitments, arrangements and understandings under this
Agreement.
Section 5. CERTAIN PROHIBITED TRANSFERS. Prior to the
termination of this Agreement, Shareholder agrees not to, directly or
indirectly:
(a) except pursuant to the terms of the Merger Agreement or
for distributions to the partners or members, as applicable, of
Shareholder, offer for sale, sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer for
sale, sale, transfer, tender, pledge, encumbrance, assignment or other
disposition of any or all of the Securities or any interest therein
[including, without limitation, any sale, transfer or other disposition
pursuant to the Founders Agreement (as defined in Section 8 hereof)];(1)
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(1) Include in the Shareholder Agreement of each of the
Founders only.
(b) grant any proxy, power of attorney, deposit any of the
Securities into a voting trust or enter into a voting agreement or
arrangement with respect to the Securities except as provided in this
Agreement; or
(c) take any other action that would make any
representation or warranty of Shareholder contained herein untrue or
incorrect or have the effect of preventing or disabling Shareholder from
performing its obligations under this Agreement.
Section 6. CONVERSION OF PREFERRED SHARES. As promptly as
practicable on or following the date hereof, Shareholder shall deliver or
cause to be delivered to the Company all shares of Preferred Stock
Beneficially Owned by such Shareholder, together with written instructions
directing the Company to cause such shares to be converted into shares of
Common Stock in accordance with the applicable provisions of the Company's
Articles of Incorporation and in full satisfaction of all rights pertaining
to such shares of Preferred Stock, such conversion to be effective no later
than the business day immediately preceding the Effective Time of the
Millennium Merger.
Section 7. VOTING OF SECURITIES. Shareholder hereby agrees
that, during the period commencing on the date hereof and continuing until
the first to occur of (a) the Effective Time, or (b) termination of this
Agreement in accordance with its terms, in connection with the Consent
Solicitation, Shareholder will vote or consent (or cause to be voted or
consented) the Securities:
(A) in favor of the adoption of the Merger
Agreement and the approval of the Millennium Merger and the other
transactions contemplated by the Merger Agreement and this
Agreement and any actions required in furtherance thereof and
hereof;
(B) against any action or agreement that
would result in a breach in any respect of any covenant,
representation or warranty or any other obligation or agreement
of the Company under the Merger Agreement or this Agreement; and
(C) except as otherwise agreed to in writing
in advance by Parent in its sole discretion, against the
following actions (other than the Millennium Merger and the
transactions contemplated by this Agreement and the Merger
Agreement): (1) any change in a majority of the persons who
constitute the board of directors of the Company; (2) any
material change in the present capitalization of the Company,
including without limitation any proposal to sell a substantial
equity interest in the Company; (3) any amendment of the
Company's Articles of Incorporation or By-laws; (4) any other
change in the Company's corporate structure or business; or (5)
any other action which, in the case of each of the matters
referred to in clauses (1), (2), (3) or (4), is intended, or
could reasonably be expected, to impede, interfere with, delay,
postpone or materially adversely affect the Millennium Merger and
the transactions contemplated by this Agreement and the Merger
Agreement. Shareholder may not enter into any agreement or
understanding with any person the effect of which would be
inconsistent with or violative of any provision contained in this
Section 7.
Section 8. CONSENT SOLICITATION; FILING WITH SECRETARY.
Promptly following receipt thereof, Shareholder shall promptly execute and
file such Shareholder's written consent to the Millennium Merger with the
Secretary of the Company in accordance with the terms of the Consent
Solicitation.
Section 9. AFFILIATES AGREEMENT. Promptly following the
execution of this Agreement and no later than 10 days from the date hereof,
Shareholder agrees to execute and deliver to Parent an Affiliates
Agreement, substantially in the form attached as Exhibit E to the Merger
Agreement.
[Section [ ] WARRANT TO PURCHASE SERIES C COMPANY PREFERRED
STOCK. Shareholder agrees to execute all documents and to take all actions
necessary to convert the Warrant to Purchase Series C Preferred Stock,
dated as of May 17, 1996, held by Shareholder into that number of shares of
Company Common Stock equal to the net number of shares of Company Common
Stock into which such warrant would have been convertible pursuant to a
cashless exercise procedure immediately prior to the Effective Time of the
[Millennium Merger] (2)
[Section [ ] WARRANT TO PURCHASE COMPANY COMMON STOCK.
Shareholder agrees to execute all documents and to take all actions
necessary to convert the warrants granted in accordance with the Agreement
to Guarantee, dated April 6, 1998, by and among the Company, Parent,
Shareholder, BRC Holdings, Inc. and JBJ Partners, Inc., held by Shareholder
into that number of shares of Company Common Stock equal to the net number
of shares of Company Common Stock into which such warrant would have been
convertible pursuant to a cashless exercise procedure immediately prior to
the Effective Time of the Millennium Merger] (3)
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(2) Include in JBJ Shareholder Agreement only.
(3) Include in BRC Shareholder Agreement and JBJ Partners
Shareholder Agreement.
Section 10. PROXY.
(a) Shareholder hereby irrevocably grants to, and appoints,
Parent and Jack H. King and Henry C. Harris or any of them in their
respective capacities as officers of Parent and any individual who shall
hereafter succeed to any such office of Parent and each of them
individually, such Shareholder's proxy and attorney-in-fact (with full
power of substitution), for and in the name, place and stead of
Shareholder, to grant a consent or approval in respect of the Securities in
connection with the Consent Solicitation.
(b) Shareholder understands and acknowledges that Parent is
entering into the Merger Agreement in reliance upon such Shareholder's
execution and delivery of this Agreement. Shareholder hereby affirms that
the irrevocable proxy set forth in this Section 10 is given in connection
with the execution of the Merger Agreement, and that such irrevocable proxy
is given to secure the performance of the duties of Shareholder under this
Agreement. Shareholder hereby further affirms that the irrevocable proxy
is coupled with an interest and may under no circumstances be revoked.
Shareholder hereby ratifies and confirms all that such irrevocable proxy
may lawfully do or cause to be done by virtue hereof. Such irrevocable
proxy is executed and intended to be irrevocable in accordance with the
provisions of Section 705 of the General Corporation Law of the State of
California.
Section 11. STOP TRANSFER; LEGEND.
(a) Shareholder agrees with, and covenants to, Parent that
Shareholder will not request that the Company register the transfer of any
certificate or uncertificated interest representing any of the Securities,
unless such transfer is made in compliance with this Agreement.
(b) In the event of a stock dividend or distribution, or
any change in the Common Stock or Preferred Stock by reason of any stock
dividend, split-up, recapitalization, combination, exchange of share or the
like other than pursuant to the Millennium Merger, the term "Existing
Shares" will be deemed to refer to and include the shares of Common Stock
and Preferred Stock as well as all such stock dividends and distributions
and any shares into which or for which any or all of the Securities may be
changed or exchanged and appropriate adjustments shall be made to the terms
and provisions of this Agreement.
(c) Shareholder will promptly after the date hereof
surrender to the Company all certificates representing the Securities, and
the Company will place the following legend on such certificates in
addition to any other legend required to be placed thereon:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFER SET FORTH IN THE SHAREHOLDER AGREEMENT, DATED AS OF OCTOBER
[__], 1998, BY AND AMONG ZITEL CORPORATION AND [____________]."
Section 12. BEST REASONABLE EFFORTS. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use its
best reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement and the Merger Agreement. Each
party shall promptly consult with the other and provide any necessary
information and material with respect to all filings made by such party
with any Governmental Entity in connection with this Agreement and the
Merger Agreement and the transactions contemplated hereby and thereby.
Section 13. TERMINATION. This Agreement shall terminate on the
earliest of (a) termination of the Merger Agreement pursuant to its terms,
(b) the agreement of the parties hereto to terminate this Agreement, or (c)
the consummation of the Millennium Merger.
Section 14. MISCELLANEOUS.
(a) Entire Agreement. This Agreement (including the
documents and instruments referred to herein) constitutes the entire
agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to
the subject matter hereof.
(b) Successors and Assigns. This Agreement shall not be
assigned by operation of law or otherwise without the prior written consent
of the other parties hereto. This Agreement and the obligations set forth
herein shall be binding upon each party's respective heirs, beneficiaries,
executors, representatives and permitted assigns.
(c) Amendment and Modification. This Agreement may not be
amended, altered, supplemented or otherwise modified or terminated except
upon the execution and delivery of a written agreement executed by the
parties hereto.
(d) Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon (i)
transmitter's confirmation of a receipt of a facsimile transmission, (ii)
confirmed delivery by a standard overnight carrier or when delivered by
hand or (iii) the expiration of five business days after the day when
mailed by certified or registered mail, postage prepaid, addressed at the
following addresses (or at such other address for a party as shall be
specified by like notice):
If to Parent, to:
Zitel Corporation
47211 Bayside Parkway
Fremont, California 94538
Attention: Jack H. King
Facsimile: (510) 440-8526
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
525 University Avenue, Suite 220
Palo Alto, California 94301
Attention: Kenton J. King, Esq.
Facsimile: 650-470-4570
If to Shareholder, to:
________________________
________________________
________________________
________________________
with a copy to:
________________________
________________________
________________________
________________________
(e) Severability. Any term or provision of this Agreement
which is held to be invalid, illegal or unenforceable in any respect in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions
of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
(f) Specific Performance. Each of the parties hereto
recognizes and acknowledges a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages
for which it would not have an adequate remedy at law for money, damages,
and therefore in the event of any such breach the aggrieved party shall be
entitled to the remedy of specified performance of such covenants and
agreements and injunctive and other equitable relief in addition to any
other remedy to which it may be entitled, at law or in equity.
(g) No Waiver. The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or otherwise
available in respect hereof at law or in equity, or to insist upon
compliance by any other party hereto with its obligations hereunder, and
any custom or practice of the parties at variance with the terms hereof,
will not constitute a waiver by such party of its right to exercise any
such or other right, power or remedy or to demand such compliance.
(h) No Third Party Beneficiaries. This Agreement is not
intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
(i) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of California, without
giving effect to the principles of conflict of law thereof.
(j) Descriptive Heading. The descriptive headings used
herein are for reference purposes only and will not affect in any way the
meaning or interpretation of this Agreement.
(k) Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such expenses.
(l) Further Assurances. From time to time, at any other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further
lawful action as may be necessary or desirable to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement.
(m) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Parent and Shareholder have caused this
Agreement to be duly executed as of the day and year first written above.
ZITEL CORPORATION
By: ____________________________
Name:
Title:
By: ____________________________
[Shareholder] (4)
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(4) In the event this Agreement covers shares held
jointly or held individually by related parties who will
sign this together, each joint or related party shall
sign.