<PAGE>
As filed with the Securities and Exchange Commission on February 26, 1998
Registration No. 333-_________
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VDI MEDIA
(Exact name of Registrant as Specified in Its Charter)
CALIFORNIA 95-4272619
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
6920 Sunset Boulevard, Hollywood, California 90028 (213) 957-5500
(Address, including zip code, and telephone number,
including area code, of Principal Executive Offices)
VDI MEDIA
1996 STOCK INCENTIVE PLAN
(Full Title of the Plan)
R. LUKE STEFANKO
6920 Sunset Boulevard, Hollywood, California 90028 (213) 957-5500
(name and address, including zip code, and telephone number,
including area code, of agent for service)
with copy to:
BRIAN HOYE, ESQ.
Kaye, Scholer, Fierman, Hays & Handler, LLP
1999 Avenue of the Stars, Suite 1600
(310) 788-1000
CALCULATION OF REGISTRATION FEE
<TABLE>
- -------------------------------------------------------------------------------
Title of Proposed Maximum Amount of
Securities Amount To Proposed Maximum Aggregate Registration
to be Be Offering Price Per Offering Fee (1)
Registered Registered Share (1) Price (1)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 333,386 (2) $7.00 $2,333,702.00 $3,258.39
no par value 566,614 (2) $15.375 $8,711,690.25
- -------------------------------------------------------------------------------
</TABLE>
(1) This estimate is made pursuant to Rule 457(h) solely for the purpose of
calculating the registration fee, and is determined according to the
following offering price information: (i) under the 1996 Stock Incentive
Plan 333,386 shares of common stock are subject to outstanding options
with an exercise price of $7.00 per share. Pursuant to Rule 457(h), for
all shares of common stock being registered hereunder with an exercise
price which cannot be determined (566,614 shares), the Proposed Maximum
Offering Price Per Share is $15.375, which is the average of the bid and
ask prices of the common stock reported on the Nasdaq National Market on
February 19, 1998, and the Proposed Maximum Aggregate Offering Price for
all shares registered hereunder is $11,045,392.25.
(2) Pursuant to Rule 416 promulgated pursuant to the Securities Act, this
registration statement also covers such indeterminable number of additional
shares of Common Stock as may be issuable pursuant to the antidilution
provisions of the Company's 1996 Stock Incentive Plan (the "Plan").
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS AND EXPLANATORY NOTE
Pursuant to the requirements of the Note to Part I of Form S-8 and Rule
428(b)(1) of the Rules promulgated under the Securities Act of 1933, the
information required by Part I of Form S-8 is incorporated by reference in the
reoffer prospectus which follows (the "Prospectus"). The Prospectus, together
with the documents incorporated by reference pursuant to Item 3 of Part II of
this registration statement (the "Registration Statement"), constitutes the
Section 10(a) Prospectus.
In addition, the material contained in the Prospectus which follows, up to
but not including the beginning of Part II of this Registration Statement,
constitutes a prospectus prepared in accordance with the applicable requirements
of Part I of Form S-3 and General Instruction C to Form S-8, to be used in
connection with resales of securities acquired under the 1996 Stock Incentive
Plan (the "Plan") by persons who may be considered affiliates of the Company,
as defined in Rule 405 under the Securities Act.
ITEM 1. PLAN INFORMATION
Not required to be filed with this Registration Statement.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
Not required to be filed with this Registration Statement.
2
<PAGE>
REOFFER PROSPECTUS
900,000 SHARES
VDI MEDIA
COMMON STOCK
This Reoffer Prospectus (the "Prospectus") relates to 900,000 shares of the
common stock, no par value per share (the "Common Stock"), of VDI Media (the
"Company") which may in the future be issued pursuant to awards granted to date
and to be granted under the Company's 1996 Stock Incentive Plan (the "Plan") to,
and which may be offered for resale from time to time by, certain employees and
non-employee directors of the Company and its subsidiaries named herein (the
"Selling Shareholders").
The Company will not receive any of the proceeds from the sale of the
Common Stock offered hereby (the "Shares"). The Company will pay all of the
expenses associated with the registration of the Shares and this Prospectus.
The Selling Shareholders will pay the other costs, if any, associated with any
sale of the Shares. See "Plan of Distribution."
The Common Stock is quoted on the NASDAQ National Market System under the
symbol "VDIM." On February 24, 1998, the last reported sale price per share of
the Common Stock, as quoted on the NASDAQ National Market System, was $15.3125.
------------------
FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS THAT SHOULD BE CONSIDERED
IN CONNECTION WITH AN INVESTMENT IN THE SHARES, SEE "RISK FACTORS"
COMMENCING ON PAGE 3 HEREOF.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR
ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------
The date of this Prospectus is February 26, 1998
<PAGE>
AVAILABLE INFORMATION
The Company has filed a registration statement on Form S-8 (the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), covering the securities covered by this Prospectus. This Prospectus
omits certain information and exhibits included in the Registration Statement,
copies of which may be obtained upon payment of a fee prescribed by the
Commission or may be examined free of charge at the principal office of the
Commission in Washington, D.C.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission, Commission File No. 0-21917. Such reports, proxy statements and
other information filed with the Commission by the Company can be inspected and
copied at the public reference facilitates maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at 500 West Madison Street, Room 1400, Chicago, Illinois
60606 and at 7 World Trade Center, Suite 1300, New York, New York 10048. Copies
of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, Washington, D.C. 20549, at prescribed rates.
The Commission also maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission, including the Company, and the address is
http://www.sec.gov.
The Common Stock is quoted on the NASDAQ National Market System under the
symbol "VDIM."
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents previously filed by the Company with the
Commission are by this reference incorporated in and made a part of this
Prospectus: (i) the Registration Statement on Form S-1 filed by the Company
with respect to the initial public offering of its Common Stock, including
all amendments and supplements thereto (the "IPO Registration Statement"),
Commission File No. 333-4047; (ii) the Company's Annual Report on Form 10-K
for the year ended December 31, 1996; (iii) the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997; (iv) the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997; (v) the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997; (vi)
the Company's Current Report on Form 8-K dated August 14, 1997 and an
amendment thereto filed on October 14, 1997; and (vii) all documents filed by
the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Prospectus and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold
or which deregisters all securities then remaining unsold. Any statement
contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents or into this Prospectus) will be
provided without charge to each person, including any beneficial owner, to whom
this Prospectus is delivered, upon a written or oral request to VDI Media,
Attention: Secretary, 6920 Sunset Boulevard, Hollywood, California 90028,
telephone number (213) 957-5500.
THE COMPANY
The Company provides broadcast quality video duplication, distribution and
related value-added services, including distribution of national television spot
advertising, trailers and electronic press kits. The primary users of the
Company's videotape duplication and distribution services are those motion
picture companies and advertising agencies which generally outsource such
services. The Company has an active client list including the Columbia/Tri Star
Motion Picture Companies, Twentieth Century Fox, Universal Studios, Inc., The
Walt Disney Motion Picture
2
<PAGE>
Group, Warner Bros., Paramount Pictures Corporation, Metro-Goldwyn-Mayer Film
Group, TBWA/Chiat Day, Young & Rubicam and Saatchi & Saatchi.
The Company's services include (i) the physical and electronic delivery of
broadcast quality advertising, including spots, trailers, electronic press kits
and infomercials, and syndicated television programming to television stations,
cable companies and other end-users nationwide and (ii) a broad range of video
services including the duplication of video in all formats, video and audio
editing, element storage, standards conversion, closed captioning and
transcription services, and video encoding for air play verification purposes.
The value-added services provided by the Company further strengthen customer
relationships and create opportunities for increased duplication and
distribution business.
The primary method of distribution by the Company, and by others in the
industry, continues to be the physical delivery of video to end-users. In
1994, to enhance its competitive position, the Company created Broadcast
One-Registered Trademark-, a national distribution network which currently
employs fiber optic, ISDN and satellite technologies in combination with
physical distribution methods to deliver broadcast quality material
throughout the United States. The Company's use of electronic technologies
provides rapid and reliable transmission of video spots and other content
with a high level of quality, accountability and flexibility to both
advertisers and broadcasters. Through the Company's distribution hubs in
Tulsa and Chicago, Broadcast One-Registered Trademark- has enabled the
Company to expand its presence in the national advertising market, allowing
for greater diversification of its customer base. The Company currently
derives a small percentage of its revenue from electronic distributions and
anticipates that this percentage will increase as such technologies become
more widely accepted. The Company intends to add new methods of distribution
as technologies become both standardized and cost-effective.
The Company currently operates facilities in five locations in Los
Angeles, two locations in San Francisco and one location in Chicago, Tulsa
and New York. By capitalizing on Broadcast One's ability through electronic
technologies to link instantaneously all of the Company's facilities and by
leveraging the proximity of the Tulsa and Chicago hubs to the center of the
country, the Company is able to utilize the optimal delivery method to extend
its deadline for same or next-day delivery of time-sensitive material. As
the Company continues to develop and acquire facilities in new markets, the
Broadcast One-Registered Trademark- network enables it to maximize the usage
of its network-wide duplication capacity by instantaneously transmitting
video content to facilities with available capacity. The Company's Broadcast
One-Registered Trademark- network and facilities are designed to serve
cost-effectively the time-sensitive distribution needs of its clients.
Management believes that the Company's success is based on its strong
customer relationships which are maintained through the reliability, quality
and cost-effectiveness of its services, and its extended deadline for
processing customer orders.
The Company's strategy is to increase its market share within the video
duplication and distribution industry by (i) further penetrating the
marketplace by providing a broad array of high quality, reliable value-added
services, (ii) acquiring companies with strong customer relationships in
businesses complementary to the Company's operations, (iii) continuing to
develop or acquire value-added services such as audio encryption, electronic
air play verification, digital video disc authoring and high definition
television duplication and (iv) increasing the timeliness and efficiency of
its operations by exploiting new technologies as they become both
standardized and cost-effective.
The Company's principal offices are located at 6920 Sunset Boulevard,
Hollywood, California 90028, and its telephone number is (213) 957-5500.
RISK FACTORS
An investment in the Shares offered hereby involves a high degree of
risk. Prospective investors should carefully consider the following risk
factors, in addition to the other information set forth in this Prospectus,
in connection with an investment in the Shares.
3
<PAGE>
When used in this Prospectus, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend" and similar
expressions are intended to identify forward-looking statements within the
meaning of Section 27A of the Securities Act, and Section 21E of the Exchange
Act, regarding events, conditions and financial trends that may affect the
Company's future plans of operations, business strategy, results of
operations and financial position. Prospective investors are cautioned that
any forward-looking statements are not guarantees of future performance and
are subject to risks and uncertainties and that actual results may differ
materially from those included within the forward-looking statements as a
result of various factors. Factors that could cause or contribute to such
differences include, but are not limited to, those described elsewhere in
this Prospectus as well as in the IPO Registration Statement.
COMPETITION. The broadcast video duplication and distribution industry
is a highly competitive, service-oriented business. In general, the Company
does not have long-term or exclusive service agreements with its customers.
Business is acquired on a purchase order basis and is based primarily on
customer satisfaction with reliability, timeliness, quality and price.
The Company competes with a variety of duplication and distribution
firms, some of which have a national presence, certain post-production
companies and, to a lesser extent, the in-house duplication and distribution
operations of major motion picture studios and ad agencies. Some of these
firms, and all of the studios, have greater financial, distribution and
marketing resources and have achieved a higher level of brand recognition
than the Company. There is no assurance that the Company will be able to
compete effectively against these competitors merely on the basis of
reliability, timeliness, quality and price or otherwise.
The Company may face competition from companies in related markets which
could offer similar or superior services to those offered by the Company.
For example, telecommunications providers could enter the market as
competitors with materially lower electronic delivery transportation costs.
The Company believes that an increasingly competitive environment could lead
to a loss of market share or price reductions, which could have a material
adverse effect on the Company's financial condition, results of operations
and prospects.
CUSTOMER AND INDUSTRY CONCENTRATION. Although the Company has an active
client list of over 2,000 customers, seven motion picture studios accounted
for approximately 29.1% of the Company's revenues during the nine months
ended September 30, 1997. Viacom Inc. (which includes Paramount Pictures
Corporation and Worldvision Enterprises), accounted for approximately 12.8%
of the Company's revenues in such period. If one or more of these companies
were to stop using the Company's services, the business of the Company could
be adversely affected. Because the Company derives substantially all of its
revenues from clients in the entertainment and advertising industries, the
financial condition, results of operations and prospects of the Company could
also be adversely affected by an adverse change in conditions which impact
those industries.
EXPANSION STRATEGY. The Company's growth strategy involves both
internal development and expansion through acquisitions. The Company
currently has no agreement or commitment to acquire any company or business.
There is no assurance that the Company will be able to continue to grow, or
to identify and reach mutually agreeable terms to purchase acquisition
targets, or that the Company will be able to profitably manage additional
businesses or successfully integrate such additional businesses into the
Company without substantial costs, delays or other problems. Certain of the
businesses recently acquired by the Company reported net losses for their
most recent fiscal years prior to being acquired, and the Company's future
financial performance will in part depend on its ability to implement
operational improvements in, or exploit potential synergies with, these
acquired businesses. Acquisitions may involve a number of special risks
including: adverse effects on the Company's reported operating results
(including the amortization of acquired assets); diversion of management's
attention and unanticipated problems or legal liabilities. In addition, the
Company may require additional funding to finance its future acquisitions.
There is no assurance that the Company will be able to secure acquisition
financing on acceptable terms or at all. The Company may use working capital
or equity, or raise financing through equity offerings or the incurrence of
debt, in connection with the funding of any acquisition. Some or all of these
risks could have a material adverse effect on the Company's financial
condition, results of operations and prospects or could result in dilution to
the Company's shareholders. In addition, to the extent that consolidation
becomes more prevalent in the industry, the prices for attractive acquisition
candidates could increase substantially. There is no
4
<PAGE>
assurance that the Company will be able to effect any such transactions or
that any such transactions, if consummated, will prove to be profitable.
The geographic expansion of the Company's customer base may result in
increased demand for the Company's services in certain regions where it
currently does not have duplication and distribution facilities. To meet this
demand, the Company may subcontract an increased amount of work, which may
lead to a decrease in the Company's gross margins. The Company may develop
or acquire complementary businesses in these markets in order to decrease the
amount of work it subcontracts. However, the Company has not entered into
any formal negotiations or definitive agreements for this purpose.
Furthermore, there is no assurance that the Company will be able to effect
such transactions or that any such transactions will prove to be profitable.
MANAGEMENT OF GROWTH. Since its inception, the Company has experienced
rapid growth that has resulted in new and increased responsibilities for
management personnel and has placed and continues to place increased demands
on the Company's management, operational and financial systems and resources.
To accommodate this growth, compete effectively and manage future growth, the
Company will be required to continue to implement and improve its
operational, financial and management information systems, and to expand,
train, motivate and manage its work force. There is no assurance that the
Company's personnel, systems, procedures and controls will be adequate to
support the Company's future operations. Any failure to do so could have a
material adverse effect on the Company's financial condition, results of
operations and prospects. The Company is in the process of selecting a new
information system which will be year 2000 compliant.
DEPENDENCE ON TECHNOLOGICAL DEVELOPMENTS. Although the Company intends
to utilize the most efficient and cost-effective technologies available for
the delivery of video content, including digital satellite transmission, as
they develop, there is no assurance that the Company will be able to adapt to
such standards in a timely fashion, or at all. The Company believes that its
future growth will depend, in part, on its ability to add these services and
to add customers in a timely and cost-effective manner. There is no assurance
that the Company will be successful in offering such services to existing
customers or in obtaining new customers for these services. The Company
intends to rely on third party vendors for the development of these
technologies and there is no assurance that such vendors will be able to
develop such technologies in a manner that meets the needs of the Company and
its customers. Any material interruption in the supply of such services
could have a material adverse effect on the Company's financial condition,
results of operations and prospects.
DEPENDENCE ON KEY PERSONNEL. The Company is dependent on the efforts
and abilities of certain of its senior management, particularly those of R.
Luke Stefanko, Chairman of the Board of Directors and Chief Executive
Officer. The loss or interruption of the services of key members of
management could have a material adverse effect on the Company's financial
condition, results of operations and prospects if a suitable replacement is
not promptly obtained. The Company has obtained a $5.0 million "key man" life
insurance policy on Mr. Stefanko. Although the Company has employment
agreements with Mr. Stefanko and certain of the Company's other key
executives, there is no assurance that such executives will remain with the
Company during or after the term of their employment agreement. In addition,
the Company's success depends to a significant degree upon the continuing
contributions of, and on its ability to attract and retain, qualified
management, sales, operations, marketing and technical personnel. The
competition for qualified personnel is intense and the loss of any of such
persons, as well as the failure to recruit additional key personnel in a
timely manner, could have a material adverse effect on the Company's
financial condition, results of operations and prospects. There is no
assurance that the Company will be able to continue to attract and retain
qualified management and other personnel for the development of its business.
ABILITY TO MAINTAIN AND IMPROVE SERVICE QUALITY. The Company's business
is dependent on its ability to meet the current and future demands of its
customers, which demands include reliability, timeliness, quality and price.
Any failure to do so, whether or not caused by factors within the control of
the Company, could result in losses to such clients. Although the Company
disclaims any liability for such losses, there is no assurance that claims
would not be asserted or that dissatisfied customers would refuse to make
further deliveries through the Company in the event of a significant
occurrence of lost deliveries, either of which could have a material adverse
effect on the Company's financial condition, results of operations and
prospects. Although the Company maintains insurance against business
interruption, there is no assurance that such insurance will be adequate to
protect the
5
<PAGE>
Company from significant loss in these circumstances or that a major
catastrophe (such as an earthquake or other natural disaster) would not
result in a prolonged interruption of the Company's business. In addition,
the Company's ability to make deliveries within the time periods requested by
customers depends on a number of factors, some of which are outside of its
control, including equipment failure, work stoppages by package delivery
vendors or interruption in services by telephone or satellite service
providers.
FLUCTUATING RESULTS; SEASONALITY. The Company's operating results have
varied in the past, and may vary in the future, depending on factors such as
the volume of advertising in response to seasonal buying patterns, the timing
of new product and service introductions, increased competition, the timing
of acquisitions, general economic factors, and other factors. As a result,
the Company believes that period to period comparisons of its results of
operations are not necessarily meaningful and should not be relied upon as an
indication of future performance. For example, the Company's operating
results have historically been significantly influenced by the volume of
business from the motion picture industry, which is an industry that is
subject to seasonal and cyclical downturns. In addition, as the Company's
business from advertising agencies tends to be seasonal, the Company's
operating results may be subject to increased seasonality as the percentage
of its business from advertising agencies increases. In any period, the
Company's revenues and delivery costs are subject to variation based on
changes in the volume and mix of deliveries performed during the period. It
is possible that in some future quarter the Company's operating results will
be below the expectations of equity research analysts and investors. In such
event, the price of the Common Stock would likely be materially adversely
affected. Fluctuations in sales due to seasonality may become more pronounced
if the growth rate of the Company's sales slows.
CONTROL BY PRINCIPAL SHAREHOLDER; POTENTIAL ISSUANCE OF PREFERRED STOCK;
ANTI-TAKEOVER PROVISIONS. Upon completion of this Offering, R. Luke Stefanko
will beneficially own approximately 57.9% of the outstanding Common Stock.
By virtue of this stock ownership, Mr. Stefanko will be able to effectively
control the outcome of substantially all matters required to be submitted to
a vote of shareholders, including (i) the election of the board of directors,
(ii) amendments to the Company's Restated Articles of Incorporation and (iii)
approval of mergers and other significant corporate transactions. The
foregoing may have the effect of discouraging, delaying or preventing certain
types of transactions involving an actual or potential change of control of
the Company, including transactions in which the holders of Common Stock
might otherwise receive a premium for their shares over current market
prices. The Company's Board of Directors has the authority to issue up to
5,000,000 shares of preferred stock without par value (the "Preferred Stock")
and to determine the price, rights, preferences, privileges and restrictions
thereof, including voting rights, without any further vote or action by the
Company's shareholders. Although the Company has no current plans to issue
any shares of Preferred Stock, the rights of the holders of Common Stock
would be subject to, and may be adversely affected by, the rights of the
holders of any Preferred Stock that may be issued in the future. Issuance of
Preferred Stock could have the effect of discouraging, delaying or preventing
a change in control of the Company. Furthermore, certain provisions of the
Company's Restated Articles of Incorporation and By-laws and of California
law also could have the effect of discouraging, delaying or preventing a
change in control of the Company.
ABSENCE OF DIVIDENDS. The Company intends to retain its earnings, if
any, for use in its business and does not anticipate declaring or paying any
cash dividends in the foreseeable future.
LIMITED PUBLIC MARKET FOR COMMON STOCK; DETERMINATION OF OFFERING PRICE;
PRICE VOLATILITY. Prior to February 19, 1997, there was no public market for
the Common Stock, and there can be no assurance that an active trading market
will be sustained at any specific level. The trading price of the Company's
Common Stock may be subject to wide fluctuations in response to a number of
factors, including variations in operating results, changes in earnings
estimates by equity research analysts, announcements of extraordinary events
such as litigation or acquisitions, announcements of technological
innovations or new products or services by the Company or its competitors, as
well as general trends in the Company's industry and general economic,
political and market conditions.
SHARES ELIGIBLE FOR FUTURE SALE. At February 25, 1998, the Company had
a total of 9,610,769 shares of Common Stock outstanding, of which 3,155,000
shares are freely tradeable without restriction or registration under the
Securities Act, by persons other than "affiliates" (as defined under the
Securities Act) of the Company. The remaining 6,455,769 shares of Common
Stock are "restricted securities," as that term is defined under Rule 144
("Rule 144") promulgated under the Securities Act, and must be sold pursuant
to Rule 144 or another exemption from registration under the Securities Act.
Sales of a substantial number of the restricted securities, either in the
public market or elsewhere, or the perception that such sales could occur,
could adversely affect prevailing market prices for the Common Stock.
6
<PAGE>
SELLING SHAREHOLDERS
The Shares covered by this Prospectus are being registered for reoffers
and resales by Selling Shareholders of the Company who may acquire such
Shares pursuant to the exercise of options that may be granted under the
Plan. The Selling Shareholders named below may resell all, a portion, or
none of the Shares that they may acquire.
The names of officers, key employees and affiliates who may offer Shares
for resale in the future, along with the number of Shares which may be sold
by each such person from time to time, will be updated in supplements to this
Prospectus, which will be filed with the Commission in accordance with Rule
424(b) under the Securities Act.
The following table sets forth the name and relationship to the Company
of each Selling Shareholder, the number of shares of Common Stock known by
the Company to be beneficially owned by him as of February 25, 1998, the
number of Shares covered by this Prospectus, and the number of shares of
Common Stock to be owned by, and the percentage beneficial ownership of, each
Selling Shareholder if such Selling Shareholder were to sell all of his
Shares covered by this Prospectus.
<TABLE>
<CAPTION>
Number of Number of Percentage
Shares Shares Covered Beneficially
Name and Relationship Beneficially by this Ownership After Owned After
to the Company Owned Prospectus (1) Offering(2) Offering(2)
- --------------------------------- ------------ -------------- --------------- ------------
<S> <C> <C> <C> <C>
R. Luke Stefanko
Chairman of the Board, Chief
Executive Officer, President
and Director. . . . . . . . . . . . . 5,559,400 (1) 5,559,400 57.9%
Donald R. Stine
Chief Financial Officer, Secretary
and Director. . . . . . . . . . . . . 666,000 (1) 666,000 6.9%
Thomas J. Ennis
Vice President of Sales and
Marketing and Director. . . . . . . . -- (1) -- (3)
Edward M. Philip
Director. . . . . . . . . . . . . . . -- (1) -- (3)
Steven J. Schoch
Director. . . . . . . . . . . . . . . -- (1) -- (3)
Steven W. Terry
Vice President and General
Manager of Operations . . . . . . . . -- (1) -- (3)
Russell R. Ruggieri
Vice President of Engineering . . . . -- (1) -- (3)
Eric H. Bershon
Vice President and General
Manager of Broadcast One. . . . . . . -- (1) -- (3)
</TABLE>
(1) Includes an indeterminate number of Shares which may be issued under the
Plan, up to an aggregate number of Shares equal to the Shares covered by
this Prospectus.
(2) Assumes all Shares offered have been sold without regard to the limitations
imposed by Rule 144 of the Securities Act and that no additional shares of
Common Stock are purchased or sold by any Selling Shareholder.
(3) Less than one percent of the outstanding shares of Common Stock.
7
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale by the
Selling Shareholders of the Shares offered hereby. Upon exercise of the
options granted to the Selling Shareholders pursuant to the Plan, the Company
will receive proceeds which will be used for general corporate and working
capital purposes.
PLAN OF DISTRIBUTION
Sale of the Common Stock offered hereby may be made on the NASDAQ
National Market System or the over-the-counter market or otherwise at prices
and on terms then prevailing or at prices related to the then current market
price, or in negotiated transactions. In addition, any Shares covered by
this Prospectus which qualify for sale pursuant to Rule 144 may be sold under
Rule 144 rather than pursuant to this Prospectus. All expenses of
registration incurred in connection with this offering are being borne by the
Company, but all selling and other expenses incurred by the Selling
Shareholders will be borne by such shareholder.
The Shares may be sold in (a) a block trade in which the broker or
dealer so engaged will attempt to sell the Shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction,
(b) transactions in which a broker or dealer acts as principal and resells
the Shares for its account pursuant to this Prospectus, (c) an exchange
distribution in accordance with the rules of such exchange, and (d) ordinary
brokerage transactions and transactions in which the broker solicits
purchases. In effecting sales, brokers or dealers engaged by the Selling
Shareholders may arrange for other brokers or dealers to participate.
Brokers or dealers will receive commissions or discounts from Selling
Shareholders in amounts to be negotiated immediately prior to sale. Such
brokers or dealers and any other participating brokers or dealers may be
deemed to be "underwriters" within the meaning of the Securities Act in
connection with such sales and any discounts and commissions received by them
and any profit realized by them on the resale of the Shares may be deemed to
be underwriting discounts and commissions under the Securities Act.
The Company has informed the Selling Shareholders of the need for
delivery of a copy of this Prospectus. There is no assurance that any of the
Selling Shareholders will offer for sale or sell any or all of the Shares
covered by this Prospectus.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the
Company by Kaye, Scholer, Fierman, Hays & Handler, LLP Los Angeles,
California.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K of VDI Media for the year ended December 31,
1996 have been so incorporated in reliance on the reports of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts
in accounting and auditing.
8
<PAGE>
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE
SELLING STOCKHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF ANY OFFER TO BUY, COMMON STOCK BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSONS MAKING SUCH OFFER OR SOLICITATION ARE NOT QUALIFIED TO DO
SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION, NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
STATEMENT ON INDEMNIFICATION
The Company's Restated Articles of Incorporation limit the liability of
directors for monetary damages to the maximum extent permitted by California
law. Such limitation of liability has no effect on the availability of
equitable remedies, such as injunctive relief or rescission.
The Company's Bylaws provide that the Company will indemnify its
directors and officers and may indemnify its employees and agents (other than
officers and directors) against certain liabilities to the fullest extent
permitted by California law. The Company is also empowered under its Bylaws
to enter into indemnification agreements with its directors and officers and
to purchase insurance on behalf of any person whom it is required or
permitted to indemnify. The Company has entered into indemnification
agreements with each of its current directors and officers, which provide for
indemnification of, and advancement of expenses to, such persons to the
greatest extent permitted by California law, including by reason of action or
inaction occurring in the past and circumstances in which indemnification and
advances of expenses are discretionary under California law. The Company has
also purchased a directors' and officers' liability policy insuring directors
and officers of the Company.
At the present time, there is no pending litigation or proceeding
involving a director, officer, employee or other agent of the Company in
which indemnification would be required or permitted. The Company is not
aware of any threatened litigation or proceeding which may result in a claim
for such indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is therefore unenforceable.
9
<PAGE>
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange
Commission (the "Commission") are incorporated herein by reference:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(b) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997;
(d) the Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1997;
(e) the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997;
(e) the Company's Current Report on form 8-K dated August 14, 1997;
(f) the Company's Amendment to its Current Report on form 8-K/A dated
October 14, 1997; and
(g) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form S-1 filed on May 17, 1996
(Registration No. 333-4047), as amended on December 31, 1996.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment that indicates that all securities offered have been
sold or that deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to
be part hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 317(b) of the California Corporations Code (the "Corporations
Code") provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any "proceeding" (as defined in
Section 317(a) of the Corporations Code), other than an action by or in the
right of the corporation to procure a judgment in its favor, by reason of the
fact that such person is or was a director, officer, employee or other agent
of the corporation (collectively, an "Agent"), against expenses, judgments,
fines, settlements and other amounts actually and reasonably incurred in
connection with such proceeding if the Agent acted in good faith and in a
manner the Agent reasonably believed to be in the best interest of the
corporation and, in the case of a criminal proceeding, had no reasonable
cause to believe the conduct was unlawful.
Section 317(c) of the Corporations Code provides that a corporation
shall have power to indemnify any agent who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person is or was an Agent, against expenses
actually and reasonably incurred by the Agent in connection with the defense
or
II-1
<PAGE>
settlement of such action if the Agent acted in good faith and in a manner
such Agent believed to be in the best interest of the corporation and its
shareholders.
Section 317(c) further provides that no indemnification may be made
thereunder for any of the following: (i) in respect of any matter as to
which an Agent shall have been adjudged to be liable to the corporation,
unless the court in which such proceeding is or was pending shall determine
that such Agent is fairly and reasonably entitled to indemnity for expenses;
(ii) of amounts paid in settling or otherwise disposing of a pending action
without court approval; and (iii) of expenses incurred in defending a pending
action which is settled or otherwise disposed of without court approval.
Section 317(d) of the Corporations Code requires that an Agent be
indemnified against expenses actually and reasonably incurred to the extent
the Agent has been successful on the merits in the defense of proceedings
referred to in subdivisions (b) or (c) of Section 317.
Except as provided in Section 317(d), and pursuant to Section 317(e),
indemnification under Section 317 shall be made by the corporation only if
specifically authorized and upon a determination that indemnification is
proper in the circumstances because the Agent has met the applicable standard
of conduct, by any of the following: (i) a majority vote of a quorum
consisting of directors who are not parties to the proceeding; (ii) if such a
quorum of directors is not obtainable, by independent legal counsel in a
written opinion; (iii) approval of the shareholders, provided that any shares
owned by the Agent may not vote thereon; or (iv) the court in which such
proceeding is or was pending.
Pursuant to Section 317(f) of the Corporations Code, the corporation may
advance expenses incurred in defending any proceeding upon receipt of an
undertaking by the Agent to repay such amount if it is ultimately determined
that the Agent is not entitled to be indemnified.
Section 317(h) provides, with certain exceptions, that no
indemnification shall be made under Section 317 in such case where it appears
that it would be inconsistent with a provision of the corporation's articles,
bylaws, a shareholder resolution or any agreement which prohibits or
otherwise limits indemnification, or in such case where it would be
inconsistent with any condition expressly imposed by a court in approving a
settlement.
Section 317(i) authorizes a corporation to purchase and maintain
insurance on behalf of an Agent for liabilities arising by reason of the
Agent's status, whether or not the corporation would have the power to
indemnify the Agent against such liability under the provisions of Section
317.
Article III of the Restated Articles of Incorporation of the Registrant
provides for the indemnification of the agents of the Registrant to the
fullest extent permissible under California law.
In addition, Article IV of the Bylaws of the Registrant authorizes the
Registrant to enter into agreements with agents of the Registrant providing
for or permitting indemnification in excess of that permitted under Section
317 of the Corporations Code, to the extent permissible under California law,
and to purchase and maintain insurance to the extent provided by Section
3.17(i).
The Company has entered into indemnification agreements with each of its
current directors and officers, which provide for indemnification of, and
advancement of expenses to, such persons to the greatest extent permitted by
California law, including by reason of action or inaction occurring in the
past and circumstances in which indemnification and advances of expenses are
discretionary under California law. The Company has also purchased a
directors' and officers' liability policy insuring directors and officers of
the Company.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
II-2
<PAGE>
ITEM 8. EXHIBITS.
4.2 1996 Stock Incentive Plan (incorporated by reference to the same numbered
Exhibit to the Company's Amendment No. 3 to the Registration Statement on
Form S-1, filed February 13, 1997).
5.1 Opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Kaye, Scholer, Fierman, Hays & Handler, LLP (filed as part of
Exhibit 5.1 hereto).
24.1 Power of Attorney (included in the signature page hereto).
ITEM 9. UNDERTAKINGS
The Company hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
i. to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
ii. to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
iii. to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Company pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof;
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering;
(4) that, for purposes of determining any liability under the
Securities Act, each filing of the Company's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d)
of the Exchange Act) that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to the
securities
II-3
<PAGE>
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is therefore unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the shares being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Los Angeles, State of California,
on this 25th day of February, 1998.
VDI MEDIA
By: /s/ DONALD R. STINE
----------------------------------
Donald R. Stine
Chief Financial Officer
II-5
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints R.
Luke Stefanko and Donald R. Stine, and each of them, his or her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or his or
her substitute or their substitutes may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<S> <C> <C>
/s/ R. LUKE STEFANKO Chairman of the Board, Chief Executive February 25, 1998
- ---------------------- Officer, President and Director
R. Luke Stefanko
/s/ DONALD R. STINE Chief Financial Officer, Treasurer February 25, 1998
- ---------------------- (principal financial officer) and Director
Donald R. Stine
/s/ PAUL RUBEL Principal Accounting Officer February 25, 1998
- ----------------------
Paul Rubel
/s/ TOM ENNIS Director February 25, 1998
- ----------------------
Tom Ennis
/s/ STEVEN SCHOCH Director February 25, 1998
- ----------------------
Steven Schoch
Director
- ----------------------
Edward Philip
</TABLE>
II-6
<PAGE>
[LETTERHEAD OF KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP]
February 25, 1998
VDI Media
6920 Hollywood Boulevard
Hollywood, California 90028
Re: SHARES OF COMMON STOCK OF VDI MEDIA
Gentlemen:
We are special counsel to VDI Media, a California corporation (the
"Company"), in connection with its Registration Statement on Form S-8, filed
on or about February 25, 1998 (the "Registration Statement"), filed pursuant
to the Securities Act of 1933, as amended, relating to the proposed offering
of an aggregate of up to 900,000 shares (the "Shares") of the Company's
Common Stock, no par value.
In that connection, we have reviewed the Restated Articles of Incorporation
of the Company, as amended, its By-Laws, as amended, resolutions of its Board
of Directors and such other documents and records as we deemed appropriate.
On the basis of such review and having regard to legal considerations that we
deemed relevant, it is our opinion that the Shares have been duly authorized,
and upon issuance, delivery and payment therefore in the manner contemplated
by the Registration Statement, will be validly issued, fully paid and
nonassessable.
We hereby consent to the use of this opinion as an Exhibit to the
Registration Statement.
Very truly yours,
/s/ KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP
----------------------------------------------
Kaye, Scholer, Fierman, Hays & Handler, LLP
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-8 of our report
dated March 24, 1997, which appears on page F-1 and our report on the
financial statements of Woodholly Productions dated March 24, 1997, which
appears on page F-12 of VDI Media's Annual Report on Form 10-K for the year
ended December 31, 1996. We also consent to the incorporation by reference of
our report dated September 17, 1997, which appears in item 7(a) of the
Current Report on Form 8-KA dated October 14, 1997. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
Costa Mesa, California
March 25, 1998
