1
Exhibit 10.11
SECURITYHOLDERS AGREEMENT
dated as of
November 23, 1994
among
DLJ MERCHANT BANKING PARTNERS, L.P.,
DLJ INTERNATIONAL PARTNERS, C.V.,
DLJ OFFSHORE PARTNERS, C.V.,
DLJ MERCHANT BANKING FUNDING, INC.,
DLJ CAPITAL CORPORATION,
SPROUT GROWTH II, L.P.,
SPROUT CAPITAL VI, L.P.,
PM FUNDING, INC.,
XXXXXX X. XXXXXXX,
XXXX X. XXXXXXXX
and
PHASE METRICS, INC.
2
TABLE OF CONTENTS
PAGE
----
ARTICLE 1
DEFINITIONS
1.1 Definitions.......................................................... 1
ARTICLE 2
CORPORATE GOVERNANCE
2.1 Composition of the Board............................................. 7
2.2 Removal.............................................................. 7
2.3 Vacancies............................................................ 7
2.4 Termination of Rights and Obligations................................ 8
2.5 Action by the Board.................................................. 8
2.6 Articles of Incorporation and Bylaws................................. 8
ARTICLE 3
RESTRICTIONS ON TRANSFER
3.1 General.............................................................. 8
3.2 Legend on Securities................................................ 10
3.3 Permitted Transferees................................................ 10
ARTICLE 4
RIGHTS OF FIRST REFUSAL; TAG ALONG RIGHTS;
PREEMPTIVE RIGHTS; DRAG ALONG RIGHTS; TERMINATION
AND INAPPLICABILITY OF PROVISIONS
4.1 Right of First Refusal; Tag along Rights............................. 10
4.2 Preemptive Rights.................................................... 14
4.3 Right to Compel Participation in Certain Transfers................... 15
4.4 Improper Transfer.................................................... 16
4.5 Termination of Agreement............................................. 16
4.6 Inapplicability of Transfer Restrictions and Corporate Governance
Provisions to PM Funding, Inc........................................ 16
i
3
ARTICLE 5
REGISTRATION RIGHTS
PAGE
----
5.1 Demand Registration.................................................. 16
5.2 Incidental Registration.............................................. 19
5.3 Holdback Agreements.................................................. 20
5.4 Registration Procedures.............................................. 20
5.5 Indemnification by the Issuer........................................ 23
5.6 Indemnification by Participating Securityholders..................... 23
5.7 Conduct of Indemnification Proceedings............................... 24
5.8 Contribution......................................................... 25
5.9 Participation in Public Offering..................................... 26
ARTICLE 6
CERTAIN COVENANTS AND AGREEMENTS
6.1 Confidentiality...................................................... 26
6.2 No Inconsistent Agreements........................................... 27
6.3 Agreement as Between PM Funding, Inc. and the Other DLJ Entities
Regarding Conversion of the Notes.................................... 27
ARTICLE 7
MISCELLANEOUS
7.1 Entire Agreement..................................................... 27
7.2 Binding Effect; Benefit.............................................. 28
7.3 Assignability........................................................ 28
7.4 Amendment; Waiver; Termination....................................... 28
7.5 Exclusive Financial Advisor and Investment Banking Advisor........... 28
7.6 Certain Requirements In Connection with Conversion of Shares of
Series B Preferred Stock............................................. 29
7.7 Notices.............................................................. 29
7.8 Headings............................................................. 31
7.9 Counterparts......................................................... 31
7.10 Applicable Law....................................................... 31
7.11 Specific Enforcement................................................. 31
7.12 Consent to Jurisdiction.............................................. 31
ii
4
SECURITYHOLDERS AGREEMENT
AGREEMENT dated as of November 23, 1994 among DLJ Merchant
Banking Partners, L.P., DLJ International Partners, C.V., DLJ Offshore Partners,
C.V., DLJ Merchant Banking Funding, Inc., DLJ Capital Corporation, Sprout Growth
II, L.P., Sprout Capital VI, L.P., PM Funding, Inc., a Delaware corporation
(each of the foregoing, a "DLJ Entity", and collectively, the "DLJ Entities"),
Xxxxxx X. Xxxxxxx ("Xxxxxxx"), Xxxx X. Xxxxxxxx ("Xxxxxxxx") and Phase Metrics,
Inc. (the "Issuer").
W I T N E S S E T H:
WHEREAS, pursuant to the Securities Purchase Agreement dated as
of November 23, 1994 (the "Securities Purchase Agreement") among the DLJ
Entities (other than PM Funding, Inc.), Xxxxxxx, Xxxxxxxx and the Issuer,
certain of the parties hereto, concurrently with the execution of this
Agreement, are acquiring securities of the Issuer; and
WHEREAS, the parties hereto desire to enter into this Agreement
to govern certain of their rights, duties and obligations after consummation of
the transactions contemplated by the Securities Purchase Agreement and the
Bridge Securities Purchase Agreement;
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1. Definitions. (a) The following terms, as used herein, have the
following meanings:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person, provided that no securityholder of the Issuer shall be deemed an
Affiliate of any other serurityholder solely by reason of any investment in the
Issuer. For the purpose of this definition, the term "control" (including with
correlative meanings, the terms "controlling", "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 voting
securities or by contract or otherwise.
"Affiliated Employee Benefit Trust" means any trust that is a
successor to the assets held by a trust established under an employee benefit
plan subject to ERISA or any other trust established directly or indirectly
under such plan or any other such plan having the same sponsor.
5
"Allowable Transfer Amount" shall mean, as to Xxxxxxxx or
Xxxxxxx, as the case may be, at any time in any given calendar year, that number
of shares of Common Stock that equals the excess, if any, of (i) 25% of the
shares of Fully Diluted Common Stock owned by such individual on the date hereof
over (ii) the aggregate number of shares of Fully Diluted Common Stock
theretofore transferred (other than to permitted Transferees) by such individual
up to such time in such calendar year, provided that the Allowable Transfer
Amount of either such individual shall equal zero at such point as such
individual shall have transferred in aggregate after the date hereof (other than
to permitted Transferees) 50% of the shares of Fully Diluted Common Stock owned
by him on the date hereof (it being understood that all such determinations
shall be made taking into account any adjustments in accordance with the terms
of the applicable securities).
"Benchmark Shares" means shares of Common Stock sold or proposed
to be sold by the DLJ Entities (other than to their permitted Transferees)
subsequent to the Closing Date until the aggregate number of shares of Common
Stock so sold or proposed to be sold by the DLJ Entities (other than as
aforesaid) equals 225,000 (taking into account any stock dividend, stock split
or reverse stock split subsequent to the Closing Date).
"Board" means the board of directors of the Issuer.
"Bridge Securities Purchase Agreement" means the Bridge
Securities Purchase Agreement dated as of the date hereof between the Issuer and
PM Funding, Inc.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City are authorized by law to close.
"Common Stock" shall have the meaning set forth in the Securities
Purchase Agreement.
"Equity Securities" means Common Stock, securities convertible
into or exchangeable for Common Stock and options, warrants or other rights to
acquire Common Stock.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act, as amended.
"Fully Diluted" means, with respect to Common Stock and without
duplication, all outstanding shares and all shares issuable in respect of
securities convertible into or exchangeable for Common Stock, stock appreciation
rights or options, warrants and other irrevocable rights to purchase or
subscribe for Common Stock or securities convertible into or exchangeable for
Common Stock and any Person shall be deemed to own such number of Fully Diluted
shares of Common Stock as such Person has the right to acquire from any other
Person (including the Issuer).
2
6
"Initial Public Offering" means the initial sale after the date
hereof of Common Stock pursuant to an effective registration statement under the
Securities Act (other than a registration statement on Form S-8 or any successor
form).
"Notes" shall have the meaning set forth in the Securities
Purchase Agreement.
"Other Securityholders" means all Securityholders other than any
DLJ Entity, and their respective permitted Transferees.
"Percentage Ownership" means, with respect to any Securityholder
or any group of Securityholders at any time, (i) the number of shares of Fully
Diluted Common Stock that such Securityholder or group of Securityholders owns
at such time, divided by (ii) the total number of shares of Fully Diluted Common
Stock at such time.
"Permitted Transferee" means:
(i) in the case of any DLJ Entity, (A) any other DLJ Entity, (B)
any general or limited partner of any such entity (a "DLJ Partner"), and
any corporation, partnership, Affiliated Employee Benefit Trust or other
entity which is an Affiliate of any DLJ Partner (collectively, the "DLJ
Affiliates"), (C) any managing director, general partner, director,
limited partner, officer or employee of such DLJ Entity or a DLJ
Affiliate, or the heirs, executors, administrators, testamentary
trustees, legatees or beneficiaries of any of the foregoing Persons
referred to in this clause (C) (collectively, "DLJ Associates"), (D) any
trust, the beneficiaries of which, or any corporation, limited liability
company or partnership, the stockholders, members or general or limited
partners of which, include only such XXX Xxxxxx, XXX Xxxxxxxxxx, XXX
Associates, their spouses or their lineal descendants and (E) a voting
trustee for one or more DLJ Entities, DLJ Affiliates or DLJ Associates
under the terms of a voting trust desired to conform with the
requirements of the Insurance Law of the State of New York; and
(ii) in the case of any Other Securityholder, (A) the Issuer, (B)
(x) such Securityholder's spouse or (y) such Securityholder's siblings
or lineal descendants, so long as such Securityholder retains the right
to vote such Securities, (C) a Person who acquires Securities from any
such Securityholder pursuant to a will or the laws of descent and
distribution, and (D) any trust the beneficiaries of which consist only
of such Securityholders and/or such Securityholder's spouse, siblings
and lineal descendants and (E) any Securityholder other than any DLJ
Entity or its Permitted Transferees.
"Person" means an individual, corporation, partnership,
association, trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
3
7
"Registrable Stock" means any shares of Common Stock until (i) a
registration statement covering such shares of Common Stock has been declared
effective by the SEC and such shares have been disposed of pursuant to such
effective registration statement, (ii) such shares are sold under circumstances
in which all of the applicable conditions of Rule 144 (or any similar provisions
then in force) under the Securities Act are met or such shares may be sold
pursuant to Rule 144(k) or (iii) such shares are otherwise transferred, the
Issuer has delivered a new certificate or other evidence of ownership for such
shares not bearing the legend required pursuant to this Agreement and such
shares may be resold without subsequent registration under the Securities Act.
"Registration Expenses" means (i) all registration and filing
fees, (ii) fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Securities), (iii) printing expenses, (iv) internal
expenses of the Issuer (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties), (v)
reasonable fees and disbursements of counsel for the Issuer and customary fees
and expenses for independent certified public accountants retained by the Issuer
(including expenses relating to any comfort letters or costs associated with the
delivery by independent certified public accountants of a comfort letter or
comfort letters requested pursuant to Section 5.4(h) hereof), (vi) the
reasonable fees and expenses of any special experts retained by the Issuer in
connection with such registration, (vii) reasonable fees and expenses of one
counsel for the Securityholders participating in the offering, selected by the
DLJ Entities, in the case of an offering in which any of the DLJ Entities
participate, or selected by Xxxxxxx and Xxxxxxxx in any other case involving
exercise of registration rights under Sections 5.1 or 5.2, (viii) fees and
expenses in connection with any review of underwriting arrangements by the
National Association of Securities Dealers, Inc. (the "NASD") including fees and
expenses of any "qualified independent underwriter" and (ix) fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but shall not include any underwriting fees, discounts or
commissions attributable to the sale of Registrable Stock, or any out-of-pocket
expenses (except as set forth in clause (vii) above) of the Securityholders or
any fees and expenses of underwriter's counsel.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities" means Notes, shares of Common Stock, Series A
Preferred Stock, Series B Preferred Stock, the Warrants, and other voting
securities of the Issuer held by the Securityholders.
"Securityholder" means each Person (other than the Issuer) who
shall be a party to this Agreement, whether in connection with the execution and
delivery hereof as of the date hereof, pursuant to Section 7.3 or otherwise, so
long as such Person shall "beneficially own" (as such term is defined in Rule
13d-3 under the Exchange Act) any Securities.
4
8
"Series A Preferred Stock" shall have the meaning set forth in
the Securities Purchase Agreement.
"Series B Preferred Stock" shall have the meaning set forth in
the Securities Purchase Agreement.
"Sprout Entities" means DLJ Capital Corporation, Sprout Growth
II, L.P. and Sprout Capital VI, L.P.
"Subsidiary" means, with respect to any Person, any entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Third Party" means a prospective purchaser of shares in an
arm's-length transaction from a Securityholder where such purchaser is not a
permitted Transferee of such Securityholder.
"Underwritten Public Offering" means an underwritten public
offering of Registrable Stock of the Issuer pursuant to an effective
registration statement under the Securities Act.
"Warrants" means the warrants exercisable to purchase Common
Stock issued to PM Funding, Inc. pursuant to the Bridge Securities Purchase
Agreement.
(b) The term "DLJ Entities", to the extent such entities shall
have transferred any of their Securities to "Permitted Transferees", shall mean
the DLJ Entities and the Permitted Transferees of the DLJ Entities, taken
together, and any right or action that may be taken at the election of the DLJ
Entities may be taken at the election of the DLJ Entities, and such Permitted
Transferees.
(c) The term "other Securityholders", to the extent such
shareholders shall have transferred any of their Securities to "Permitted
Transferees", shall mean the other Securityholders and the Permitted Transferees
of the other Securityholders, as the case may be, and any right or action that
may be taken at the election of the other Securityholders may be taken at the
election of the other Securityholders and the Permitted Transferees of the other
Securityholders, as the case may be.
(d) Each of the following terms is defined in the Section set
forth opposite such term:
Term Section
---- -------
Aggregate Tag Amount 4.1(g)(i)
Associate 2.1(a)
5
9
Term Section
---- -------
beneficially own 1.1(a)
Cause 2.2
Confidential Information 6.1(b)
control 1.1(a)
Demand Registration 5.1(a)
DLJ Affiliate 1.1(a)
DLJ Associates 1.1(a)
DLJ Entity 1.1(b)
DLJ Non-Election 4.1(g)(v)
DLJ Partner 1.1(a)
DLJSC 7.5
Electing Individual 4.1(g)(v)
Fifth Director 2.1
First Request Date 5.1(a)
Holders 5.1(a)(ii)
Incidental Registration 5.2(a)
Indemnified Party 5.7
Indemnifying Party 5.7
Inspectors 5.4(g)
Maximum Offering Size 5.1(d)
NASD 1.1(a)
Nominee 2.3(a)
other Securityholder 1.1(c)
Private Transaction 3.1(b)
qualified independent underwriter 1.1(a)
Records 5.4(g)
Representatives 6.1(b)
Restriction Termination Date 3.1(a)
Section 3.1(c) Termination Date 3.1(c)
Section 4.1 Offer 4.1(a)
Section 4.1 Offer Notice 4.1(a)
Section 4.1 Offer Price 4.1(a)
Section 4.2 Notice 4.2
Section 4.3 Agreement 4.3(a)
Section 4.3 Notice 4.3(a)
Section 4.3 Notice Period 4.3(a)
Section 4.3 Sale 4.3(a)
Section 4.3 Sale Price 4.3(a)
Selling Party 4.1(a)
Selling Securityholder 5.1(a)
Tag along Notice Period 4.1(g)(i)
Tag along Right 4.1(g)(i)
Tag along Sale 4.1(g)(i)
6
10
Term Section
---- -------
Tag along Seller 4.1(g)(i)
Tagging Person 4.1(g)(i)
transfer 3.1(a)
(e) Capitalized terms used herein and not otherwise defined
herein shall have the meanings herein that are assigned to such terms in the
Securities Purchase Agreement.
ARTICLE 2
CORPORATE GOVERNANCE
2.1 Composition of the Board. The Board shall consist of five
members, of whom one shall be designated by DLJ Merchant Banking Partners, L.P.,
one shall be designated by Sprout Growth II, L.P., one shall be designated by
Xxxxxxxx, one shall be designated by Xxxxxxx, and one shall be an individual
(the "Fifth Director") designated by Xxxxxxx and Xxxxxxxx and acceptable to the
DLJ Entities, which individual is neither an "Affiliate" nor an "Associate" (as
those terms are used within the meaning of Rule 12b-2 of the General Rules and
Regulations under the Exchange Act) of the DLJ Entities, Xxxxxxxx or Xxxxxxx.
Each Securityholder entitled to vote for the election of directors to the Board
agrees that it will vote its Securities or execute consents, as the case may be,
and take all other necessary action (including causing the Issuer to call a
special meeting of shareholders) in order to ensure that the composition of the
Board is as set forth in this Section 2.1.
2.2 Removal. Each Securityholder agrees that if, at any time, it
is then entitled to vote for the removal of directors of the Issuer, it will not
vote any of its Securities in favor of the removal of any director who shall
have been designated or nominated pursuant to Section 2.1 unless such removal
shall be for Cause or the person entitled to designate or nominate such director
shall have consented to such removal in writing; that any of the DLJ Entities,
Xxxxxxx or Xxxxxxxx may remove, or vote its Securities in favor of the removal
of, the Fifth Director. Removal for "Cause" shall mean removal of a director
because of such director's (a) willful and continued failure to substantially
perform his duties with the Issuer in his established position, (b) willful
conduct which is significantly injurious to the Issuer, monetarily or otherwise,
or (c) conviction for, or guilty plea to, a felony. Subject to Section 2.3,
nothing contained in this Section 2.2 shall affect the right of any
Securityholder to designate members of the Board pursuant to Section 2.1.
2.3 Vacancies. If, as a result of death, disability, retirement,
resignation, removal (with or without Cause) or otherwise, there shall exist or
occur any vacancy on the Board:
(a) the Person entitled under Section 2.1 to designate or
nominate such director whose death, disability, retirement, resignation or
removal resulted in such vacancy, or its Permitted Transferees, may, subject to
the provisions of Sections 2.1 and 2.4, designate another individual (the
"Nominee") to fill such capacity and serve as a director of the Issuer; and
7
11
(b) each Securityholder then entitled to vote for the election of
the Nominee as a director of the Issuer agrees that it will vote its Securities,
or execute a written consent, as the case may be, in order to ensure that the
Nominee be elected to the Board.
2.4 Termination of Rights and Obligations. The right to designate
one or more members of the Board pursuant to this Article 2 shall terminate (i)
as to Xxxxxxx, at such time as Xxxxxxx and his Permitted Transferees in the
aggregate own and have the right to acquire less than 5% of the Fully Diluted
Common Stock then outstanding, (ii) as to Xxxxxxxx, at such time as Xxxxxxxx and
his Permitted Transferees in the aggregate own and have the right to acquire
less than 5% of the Fully Diluted Common Stock then outstanding, (iii) as to
Sprout Growth II, L.P., at such time as the DLJ Entities in the aggregate own
and have the right to acquire less than 5% of the Fully Diluted Common Stock
then outstanding, and (iv) as to DLJ Merchant Banking Partners, L.P., at such
time as the DLJ Entities (other than PM Funding, Inc.) in the aggregate own and
have the right to acquire less than 5% of the Fully Diluted Common Stock then
outstanding. The obligations imposed on Securityholders to give effect to the
rights to designate directors set forth in Section 2.1 shall terminate as to any
Person when such Person's right to designate a director is terminated.
2.5 Action by the Board. A quorum of the Board shall consist
initially of four directors. All actions of the Board shall require the
affirmative vote of at least a majority of the directors at a duly convened
meeting of the Board at which a quorum is present or the unanimous written
consent of the Board; provided that, in the event there is a vacancy on the
Board and an individual has been nominated to fill such vacancy, the first order
of business shall be to fill such vacancy.
2.6 Articles of Incorporation and Bylaws. (a) The Articles of
Incorporation and Bylaws of the Issuer, as in effect on the date hereof, are
attached as Exhibits B and A, respectively, to the Securities Purchase
Agreement.
(b) Each Securityholder shall vote its Securities, and shall take
all other actions necessary, to ensure that the Issuer's Articles of
Incorporation and Bylaws facilitate and do not at any time conflict with any
provision of this Agreement.
ARTICLE 3
RESTRICTIONS ON TRANSFER
3.1 General. (a) Until the earlier of (i) the third anniversary of the
Closing Date and (ii) the consummation of an Initial Public Offering (the
earlier of such dates, the "Restriction Termination Date"), no Securityholder
may, directly or indirectly, sell, assign, transfer, grant a participation in,
pledge or otherwise dispose of ("transfer") any Securities (or solicit any
offers to buy or otherwise acquire, or to take a pledge of, any of its
Securities) except transfers permitted by Section 3.3; provided that (x)
Xxxxxxxx may pledge his Securities pursuant to the terms of the Xxxxxxx-Xxxxxxxx
Agreement as in effect on the date hereof or as amended, supplemented or
modified with the prior consent of the DLJ
8
12
Entities and (y) subject to Section 4.1, transfers shall be permitted to a Third
Party in a Private Transaction (as defined below) as part of a foreclosure
proceeding pursuant to the Xxxxxxx-Xxxxxxxx Agreements (but only to the extent
that such transfer to a Third Party is required by California law or is effected
in order to maintain a claim for deficiency).
(b) From and after the Restriction Termination Date, no
Securityholder may transfer any Securities (or solicit any offers to buy or
otherwise acquire, or to take a pledge of, any Securities) except, subject to
Section 3.1(c), (i) transfers permitted by Section 3.3, (ii) transfers in a bona
fide Underwritten Public Offering upon exercise of registration rights pursuant
to Article 5, (iii) transfers pursuant to Rule 144 (or any successor provisions
under the Securities Act), (iv) pledges by Xxxxxxxx pursuant to the terms of the
Xxxxxxx-Xxxxxxxx Agreement as in effect on the date hereof or as amended,
supplemented or modified with the prior consent of the DLJ Entities, (v) in the
case of any DLJ Entity and subject to Section 4.1, transfers to any other Person
in any Private Transaction (as defined below); provided that no Securities may
be transferred pursuant to clause (v) to any Person unless such Person shall
have agreed in writing to be bound by the terms of this Agreement applicable to
such Securityholder; and provided further that no DLJ Entity may transfer any of
its Notes or shares of Series B Preferred Stock to a Person other than a
Permitted Transferee without the consent of Xxxxxxx and Xxxxxxxx, (vi) in the
case of Xxxxxxxx and Xxxxxxx, subject to Section 4.1, transfers of shares of
Common Stock to any other Person in any Private Transaction (excluding any
transaction covered by clause (iv) above), provided that no Securities may be
transferred to any Person pursuant to this clause (vi) unless such Person shall
have agreed in writing to be bound by the terms of this Agreement applicable to
such Securityholder, and (vii) in the case of any Other Securityholder,
transfers pursuant to Section 4.3 hereof. As used herein, "Private Transaction"
means any transfer not covered by clause (i), (ii), (iii) or (vii) above.
(c) Notwithstanding anything else contained herein, except
pursuant to Section 3.1(x) or (y), 3.3 or 4.3, no transfer of any shares of
Common Stock may be made by Xxxxxxx or Xxxxxxxx at any time to the extent that
the number of shares then sought to be transferred by Xxxxxxx or Xxxxxxxx, as
the case may be, would exceed the Allowable Transfer Amount applicable to such
individual at such time. From and after the Section 3.1(c) Termination Date (as
defined below), (x) the restriction contained in the preceding sentence shall
terminate as to transfers pursuant to Section 3.1(b)(ii) and 3.1(b)(iii), and
(y) transfers of shares of Common Stock may be made by Xxxxxxx or Xxxxxxxx
pursuant to Section 3.1(b)(ii) or 3.1(b)(iii) without regard to the Allowable
Transfer Amount but only to the extent such transfers are otherwise in
accordance with the provisions of Articles 3 and 4. The earlier of (i) the sixth
anniversary of the date hereof and (ii) such time as the aggregate number of
shares of Fully Diluted Common Stock held by the DLJ Entities is less than 25%
of the aggregate number of shares of Fully Diluted Common Stock held by the DLJ
Entities on the date hereof (determined taking into account any adjustments in
accordance with the terms of the applicable securities) is referred to as the
"Section 3.1(c) Termination Date."
9
13
(d) No Securityholder may transfer any Securities at any time
except in compliance with applicable federal or state securities laws.
3.2 Legend on Securities. (a) In addition to any other legend
that may be required, each certificate for Securities that is issued to any
Securityholder shall bear a legend in substantially the following form:
"THE ISSUER OF THIS SECURITY IS A STATUTORY CLOSE CORPORATION AS
DESCRIBED UNDER SECTION 158 CALIFORNIA CORPORATIONS CODE. THIS SECURITY
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN
COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE SECURITYHOLDERS AGREEMENT
DATED AS OF NOVEMBER 23, 1994, COPIES OF WHICH MAY BE OBTAINED UPON
REQUEST FROM PHASE METRICS, INC. AND ANY SUCCESSOR THERETO."
(b) If any shares of Common Stock shall cease to be Registrable
Stock, the Issuer shall, upon the written request of the holder thereof, issue
to such holder a new certificate evidencing such shares without the first
sentence of the legend required by Section 3.2(a) endorsed thereon. If any
Securities cease to be subject to any and all restrictions on transfer set forth
in this Agreement, the Issuer shall, upon the written request of the holder
thereof, issue to such holder a new certificate evidencing such Securities
without the second sentence of the legend required by Section 3.2(a) endorsed
thereon.
3.3 Permitted Transferees. Notwithstanding anything in this
Agreement to the contrary, any Securityholder may at any time transfer any or
all of its Securities to one or more of its Permitted Transferees without the
consent of the Board or any other Securityholder or group of Securityholders and
without compliance with Section 4.1 so long as (a) such Permitted Transferee
shall have agreed in writing to be bound by the terms of this Agreement and (b)
the transfer to such Permitted Transferee is not in violation of applicable
federal or state securities laws.
ARTICLE 4
RIGHTS OF FIRST REFUSAL; TAG ALONG RIGHTS;
PREEMPTIVE RIGHTS; DRAG ALONG RIGHTS; TERMINATION
AND INAPPLICABILITY OF PROVISIONS
4.1 Right of First Refusal; Tag along Rights. (a) Subject to the
provisions of Section 4.1(g), if any Securityholder receives from or otherwise
negotiates with a Third Party in a Private Transaction an offer to purchase for
cash (or, subject to clause (f), non-cash consideration) any or all of the
Securities owned or held by such Securityholder that
10
14
is otherwise permitted under this Agreement (including, without limitation,
Section 3.1 hereof) (a "Section 4.1 Offer") and such Securityholder (a "Selling
Party") intends to pursue such sale of such Securities to such Third Party in
such Private Transaction, such Selling Party shall provide the Issuer and each
other Securityholder written notice of such Section 4.1 Offer (a "Section 4.1
Offer Notice"). The Section 4.1 Offer Notice shall identify the number and type
of Securities subject to the Section 4.1 Offer, the cash price at which a sale
is proposed to be made (the "Section 4.1 Offer Price") and all other material
terms and conditions of the Section 4.1 Offer.
(b) Subject to the provisions of Section 4.1(g), the receipt of a
Section 4.1 Offer Notice by the Issuer and each other Securityholder from any
Selling Party shall constitute an offer by such Selling Party to sell, to the
Issuer and each other Securityholder, for cash (or, subject to clause (f),
non-cash consideration) in whole and not in part, with the Issuer having
priority with respect to the acceptance of the Section 4.1 Offer. If the Issuer
does not accept the offer, in whole and not in part, in accordance herewith,
then such offer may be accepted, in whole and not in part, at the Section 4.1
Offer Price by the other Securityholders on a pro rata basis based on each other
Securityholder's Percentage Ownership (unless the other Securityholders shall
agree to another allocation resulting in acceptance of the Section 4.1 Offer
with respect to all Securities subject to the Section 4.1 Offer); provided that
in the event there is an undersubscription by the other Securityholders at the
end of the 45-day period referred to below, the unsubscribed Securities shall be
apportioned among those other Securityholders whose written notice of acceptance
referred to below specified a number of additional shares such Securityholder
would like to purchase pursuant to this Section 4.1, which apportionment shall
be on a pro rata basis among such Securityholders in accordance with such other
Securityholders' Percentage Ownership. Such offer shall be irrevocable for 45
days after receipt of such Section 4.1 Offer Notice by the Issuer and each other
Securityholder. During such 45-day period, subject to the Issuer's priority
right of exercise as set forth above, each other Securityholder shall have the
right to accept such offer (as provided above) within such 45-day period. The
Section 4.1 Offer may be accepted by giving a written irrevocable notice of
acceptance to such Selling Party prior to the expiration of such 45-day period.
(c) The Issuer or the Securityholders, as the case may be, shall
purchase for cash (or, subject to clause (f), non-cash consideration) at the
Section 4.1 Offer Price and pay for all Securities set forth in the Section 4.1
Offer Notice within a 20-day period following acceptance of the Section 4.1
Offer; provided that if the purchase and sale of such Securities is subject to
expiration of any applicable statutory waiting period, the time period during
which such purchase and sale may be consummated shall be extended until the
expiration of five Business Days after such waiting period shall have expired;
provided further that such time period shall not exceed 60 days without the
written consent of the Selling Party. If such purchase and sale are not
consummated by the Issuer and the Securityholders within such time period, such
Section 4.1 Offer shall be deemed to be rejected.
11
15
(d) Upon the rejection or deemed rejection of the Section 4.1
Offer by the Issuer and the Securityholders or the failure to obtain any
required consent for the purchase of the Securities subject thereto within 60
days, there shall commence a 90-day period during which the Selling Party shall
have the right, subject to Section 4.1(g), to consummate the sale to the Third
Party making the Section 4.1 Offer of all but not less than all of the
Securities subject to the Section 4.1 Offer at a price not less than the Section
4.1 Offer Price; provided that (i) such Third Party shall have agreed in writing
to be bound by the terms of this Agreement and (ii) the transfer to such Third
Party is not in violation of applicable federal or state or foreign securities
laws. Notwithstanding the foregoing, if the purchase and sale of such Securities
is subject to any prior regulatory approval, the time period during which such
purchase and sale may be consummated shall be extended until the expiration of
five Business Days after all such approvals shall have been received but in no
event shall such time period exceed 120 days without the consent of the Issuer.
If such Selling Party does not consummate the sale of any Securities subject to
the Section 4.1 Offer in accordance with the time limitations set forth above
and in Section 4.1(g), such Selling Party may not sell any Securities without
repeating the foregoing procedures.
(e) Notwithstanding anything in this Agreement to the contrary,
the provisions of this Section 4.1 will not be applicable to transfers made
pursuant to and in compliance with Section 3.3, Section 4.3 or Article 5.
(f) A Securityholder may transfer Securities in accordance with
the foregoing provisions of this Section 4.1 for consideration other than cash
only if such Securityholder has first obtained and delivered to each other
Securityholder and the Issuer an opinion of an investment banking firm of
national standing indicating that the fair market value of the non-cash
consideration that such Securityholder proposes to accept as consideration for
such Securities, together with any cash consideration, is at least equal to the
Section 4.1 Sale Price.
(g) (i) If any Section 4.1 Offer constitutes a proposed transfer
by Xxxxxxx or Xxxxxxxx (each a "Tag along Seller") in a private Transaction
permitted by Section 3.1(b)(vi) and 3.1(c) (a "Tag along Sale"), the DLJ
Entities may, at their option, elect to exercise their rights under this Section
4.1(g) in lieu of their rights under Section 4.1(b) (or, in the event of a DLJ
Non-Election (as defined below), the Electing Individual (as defined below) may
elect to exercise his rights under this Section 4.1(g) in lieu of his rights
under Section 4.1(b)). In the event that the DLJ Entities so elect to exercise
their rights under this Section 4.1(g) in lieu of their rights under Section
4.1(b) (or, in the case of a DLJ Non-Election, the Electing Individual elects to
exercise his rights under this Section 4.1(g) in lieu of his rights under
Section 4.1(b)), the DLJ Entities and such of Xxxxxxx and Xxxxxxxx as is not a
Tag along Seller in such Private Transaction (each of the DLJ Entities and such
individual, a "Tagging Person") shall have the right (a "Tag along Right"),
exercisable by written notice given to the Tag along Seller within 45 days after
receipt of the Section 4.1 Offer Notice (the "Tag along Notice Period"), to
request the Tag along Seller to include in the proposed transfer to the Third
Party the number of shares of Common Stock or Securities convertible into shares
of Common Stock held by such Tagging Person as is specified in such notice;
provided that
12
16
(x) the Tag along Seller shall be required only to include in the proposed
transfer a number (the "Aggregate Tag Amount") of shares of Common Stock or
Securities that are convertible into Common Stock held by such Tagging Persons
equal to not more than the number of shares of Common Stock proposed to be sold
by the Tag along Seller to such Third Party in such transaction multiplied by a
fraction, the numerator of which is the number of shares of Fully Diluted Common
Stock owned by all such Tagging Persons immediately prior to the Tag along Sale,
and the denominator of which is the total number of shares of Fully Diluted
Common Stock immediately prior to the Tag along Sale and (y) if the aggregate
number of shares of Common Stock proposed to be sold by all Tagging Persons in
such transaction exceeds the Aggregate Tag Amount, the Aggregate Tag Amount of
shares permitted to be sold shall be allocated among all Tagging Persons pro
rata based on Percentage Ownership. If the DLJ Entities exercise their Tag along
Right hereunder (or, in the case of a DLJ Non- Election, if the Electing
Individual exercises his Tag along Right hereunder), each Tagging Person shall
deliver to the Tag along Seller the certificate or certificates representing the
Securities of such Tagging Person to be included in the transfer, together with
a limited power-of-attorney authorizing the Tag along Seller to transfer such
Securities on the terms set forth in the Section 4.1 Offer Notice. Delivery of
such certificate or certificates representing the Securities to be transferred
and the limited power-of-attorney authorizing the Tag along Seller to transfer
such Securities shall constitute an irrevocable acceptance of the Tag along Sale
by such Tagging Persons. If, at the end of a 120-day period after such delivery,
the Tag along Seller has not completed the transfer of all such Securities, the
Tag along Seller shall return to each Tagging Person the limited
power-of-attorney (and all copies thereof) together with all certificates
representing the Securities which such Tagging Person delivered for transfer
pursuant to this Section 4.1(g), and Xxxxxxxx and Xxxxxxx may not effect another
Tag along Sale without repeating the foregoing procedures.
(ii) The per share consideration to be paid to the Tag along
Seller and the Tagging Persons in any Tag along Sale shall be the Section 4.1
Offer Price in the case of sales of Common Stock and in the case of Securities
convertible into Common Stock shall be the Section 4.1 Offer Price multiplied by
the number of shares of Common Stock into which the Securities in question are
convertible.
(iii) Concurrently with the consummation of the Tag along Sale,
the Tag along Seller shall notify the Tagging Persons thereof, shall remit to
the Tagging Persons the total consideration for the Securities of the Tagging
Persons transferred pursuant thereto (computed pursuant to Section 4.1(g)(ii)),
and shall, promptly after the consummation of such Tag along Sale furnish such
other evidence of the completion and time of completion of such transfer and the
terms thereof as may be reasonably requested by the Tagging Persons.
(iv) If at the termination of the Tag along Notice Period any
Tagging Person shall not have elected to participate in the Tag along Sale, such
Tagging Person will be deemed to have waived its rights under this Section
4.1(g) with respect to the transfer of its Securities pursuant to such Tag along
Sale.
13
17
(v) In any Tag along Sale in which the DLJ Entities have
exercised their Tag along Right, the right of any party pursuant to Section
4.1(b) to accept the offer referred to therein shall be deemed to have
terminated. If the DLJ Entities elect not to exercise their Tag along Right in
any Tag along Sale and elect to accept the offer referred to in Section 4.1(b),
no other Person may exercise any Tag along Right under this Section 4.1(g). In
the event that the DLJ Entities elect neither to exercise their Tag along Right
in any Tag along Sale pursuant to Section 4.1(g) nor to accept the offer
referred to in Section 4.1(b) (a "DLJ Non-Election"), such of Xxxxxxx or
Xxxxxxxx as is not a Selling Party under Section 4.1(a) or a Tag along Seller
under Section 4.1(g) (the "Electing Individual") may elect, subject to the
provisions of this Section 4.1, either (i) to accept the offer referred to in
Section 4.1(b) or (ii) to exercise his Tag along Right in any Tag along Sale
pursuant to Section 4.1(g).
4.2 Preemptive Rights. For so long as any Notes or shares of
Series B Preferred Stock remain outstanding, the Issuer shall provide each
Securityholder with a written notice (a "Section 4.2 Notice") of any proposed
issuance by the Issuer of Equity Securities at least 60 days prior to the
proposed issuance date. Such notice shall specify the price at which the Equity
Securities are to be issued and the other material terms of the issuance. Each
Securityholder shall be entitled to purchase, at the price and on the terms
specified in such Section 4.2 Notice, the Equity Securities proposed to be
issued on a pro rata basis based upon such Securityholder's Percentage
Ownership. A Securityholder may exercise its rights under this Section 4.2 by
delivering written notice of its election to purchase Equity Securities to the
Issuer within 30 days of receipt of the Section 4.2 Notice. Each Securityholder
shall deliver a copy of any such written notice to the Issuer and each other
Securityholder at least five Business Days prior to the expiration of such
30-day period. A delivery of such a written notice (which notice shall specify
the number of shares (or amount) of Equity Securities to be purchased by the
Securityholder submitting such notice) by a Securityholder shall constitute a
binding agreement of such Securityholder to purchase, at the price and on the
terms specified in the Section 4.2 Notice, the number of shares (or amount) of
Equity Securities specified in such Securityholder's written notice. In the case
of any issuance of Equity Securities, the Issuer shall have 90 days from the
date of the Section 4.2 Notice to consummate the proposed issuance of any or all
of such Equity Securities which the Securityholders have not elected to purchase
at the price and upon terms that are not materially less favorable to the Issuer
than those specified in the Section 4.2 Notice. At the consummation of such
issuance, the Issuer shall issue certificates representing the Equity Securities
to be purchased by each Securityholder exercising preemptive rights pursuant to
this Section 4.2 registered in the name of such Securityholder, against payment
by such Securityholder of the purchase price for such Equity Securities. If the
Issuer proposes to issue Equity Securities after such 90-day period, it shall
again comply with the procedures set forth in this Section. Notwithstanding the
foregoing, no Securityholder shall be entitled to purchase Equity Securities as
contemplated by this Section 4.2 in connection with issuances of Equity
Securities (i) to employees of the Issuer or any Subsidiary of the Issuer
pursuant to employee benefit plans or arrangements approved by the Board
(including upon the exercise of employee stock options), (ii) in connection with
an Initial Public Offering, (iii) in connection with any bona fide, arm's-length
restructuring of outstanding
14
18
debt of the Issuer or any Subsidiary of the Issuer, (iv) in connection with any
bona fide, arm's-length direct or indirect merger, acquisition or similar
transaction, or (v) upon the conversion of any shares of Series A Preferred
Stock or Series B Preferred Stock or Notes into Common Stock. The Issuer shall
not be under any obligation to consummate any proposed issuance of Equity
Securities, regardless of whether it shall have delivered a Section 4.2 Notice
in respect of such proposed issuance. Unless earlier terminated pursuant to the
terms of this Section 4.2, the provisions of this Section 4.2 shall terminate
upon the consummation of an Initial Public Offering.
4.3 Right to Compel Participation in Certain Transfers. (a) If
the DLJ Entities should, after November 23, 1998, propose to transfer for cash
consideration of no less than $124.44 per share (as adjusted to take into
account any subdivisions, combinations or reclassifications of the Common Stock
after the date hereof) of Common Stock all shares of Common Stock that they own
or have the right to acquire to any Third Party (a "Section 4.3 Sale"), the DLJ
Entities may, at their option, require all but not less than all the Other
Securityholders to participate in such transfer. The DLJ Entities shall provide
written notice of such Section 4.3 Sale to the Other Securityholders (a "Section
4.3 Notice") and a copy of the agreement pursuant to which such shares are
proposed to be transferred (the "Section 4.3 Agreement"). The Section 4.3 Notice
shall identify the transferee, the number of shares of Common Stock subject to
the Section 4.3 Sale, the consideration per share of Common Stock for which a
transfer is proposed to be made (the "Section 4.3 Sale Price") and all other
material terms and conditions of the Section 4.3 Sale. Each Other Securityholder
shall be required to participate in the Section 4.3 Sale on the terms and
conditions set forth in the Section 4.3 Notice and to tender all its shares of
Common Stock, and Securities convertible into Common Stock as set forth below.
The price of such transfer shall be the Section 4.3 Sale Price in the case of
shares of Common Stock, and in the case of Securities convertible into Common
Stock shall be the Section 4.3 Sale Price multiplied by the number of shares of
Common Stock into which such Securities are convertible. Within ten Business
Days following the date of the Section 4.3 Notice (the "Section 4.3 Notice
Period"), each of the Other Securityholders shall deliver to a representative of
the DLJ Entities designated in the Section 4.3 Notice certificates representing
all shares of Common Stock held by such Other Securityholder and all Securities
convertible into Common Stock held by such Other Shareholder, duly endorsed,
together with all other documents required to be executed in connection with
such Section 4.3 Sale or, if such delivery is not permitted by applicable law,
an unconditional agreement to deliver such Securities pursuant to this Section
4.3(a) at the closing for such Section 4.3 Sale against delivery to such Other
Securityholder of the consideration therefor. If an Other Securityholder should
fail to deliver such certificates to the DLJ Entities, the Issuer shall cause
the books and records of the Issuer to show that such Securities are bound by
the provisions of this Section 4.3(a) and that such Securities shall be
transferred to the Third Party immediately upon surrender for transfer by the
Other Securityholder thereof.
(b) If, within 120 days after the DLJ Entities give the Section
4.3 Notice, they have not completed the transfer of all the Securities subject
to the Section 4.3 Sale, the DLJ Entities shall return to each of the Other
Securityholders all certificates representing
15
19
Securities that such Other Securityholder delivered for transfer pursuant
hereto, together with any documents in the possession of the DLJ Entities
executed by the Other Securityholder in connection with such proposed transfer,
and all the restrictions on transfer contained in this Agreement or otherwise
applicable at such time with respect to Securities owned by the Other
Securityholders shall again be in effect.
(c) Promptly after the consummation of the transfer of Securities
of the DLJ Entities and the Other Securityholders pursuant to this Section 4.3,
the DLJ Entities shall give notice thereof to the Other Securityholders, shall
remit to each of the Other Securityholders who have surrendered their
certificates the total consideration for the shares of Common Stock and
Securities convertible into Common Stock transferred pursuant hereto and shall
furnish such other evidence of the completion and time of completion of such
transfer and the terms thereof as may be reasonably requested by such Other
Securityholders.
4.4 Improper Transfer. Any attempt to transfer any Securities not
in compliance with this Agreement shall be null and void and neither the Issuer
nor any transfer agent shall give any effect in the Issuer's records to such
attempted transfer.
4.5 Termination of Agreement. This Agreement shall terminate upon
the earliest of
(i) the tenth anniversary of the date hereof;
(ii) such time as at least 50% of the shares of Fully Diluted
Common Stock are held by Persons (other than any Securityholder) who
acquired their shares in a sale pursuant to (x) Rule 144 under the
Securities Act or (y) a public offering registered under the Securities
Act; and
(iii) such time as the DLJ Entities own less than 5% of the
aggregate number of shares of Fully Diluted Common Stock.
4.6 Inapplicability of Transfer Restrictions and Corporate
Governance Provisions to PM Funding, Inc. Notwithstanding anything else
contained herein, PM Funding, Inc. shall not be bound by or subject to any of
(i) the restrictions on or obligations with respect to transfers of Securities
set forth in Article 3 or in Section 4.1(a) through (f) or (ii) the corporate
governance provisions set forth in Article 2.
ARTICLE 5
REGISTRATION RIGHTS
5.1 Demand Registration. (a) Commencing on the date which is six
months after the Initial Public Offering (the "First Request Date") Xxxxxxxx and
Xxxxxxx may make a written request, and commencing on the date which is the
earlier of (x) the First Request Date and (y) November 23, 1997, the DLJ
Entities may make a written request (any
16
20
such requesting Person, a "Selling Securityholder") that the Issuer effect the
registration under the Securities Act of all or a portion of such Selling
Securityholder's Registrable Stock, and specifying the intended method of
disposition thereof. The Issuer will promptly give written notice of such
requested registration (a "Demand Registration") at least 30 days prior to the
anticipated filing date of the registration statement relating to such Demand
Registration to the other Securityholders and thereupon will use its best
efforts to effect, as expeditiously as possible, the registration under the
Securities Act of:
(i) the Registrable Stock which the Issuer has been so requested
to register by the Selling Securityholders, then held by the Selling
Securityholders; and
(ii) subject to Section 5.2, all other Registrable Stock which
any other Securityholder entitled to request the Issuer to effect an
Incidental Registration (as such term is defined in Section 5.2)
pursuant to Section 5.2 (all such Securityholders, together with the
Selling Securityholders, the "Holders") has requested the Issuer to
register by written request received by the Issuer within 15 days after
the receipt by such Holders of such written notice given by the Issuer,
all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Stock so to be
registered; provided that, subject to Section 5.1(c) hereof, the Issuer shall
not be obligated to effect more than one Demand Registration for Xxxxxxxx and
Xxxxxxx collectively, on the one hand, and two Demand Registrations for the DLJ
Entities collectively, on the other hand, pursuant to this Section 5.1 other
than any such Demand Registrations effected on Form S-3; and provided further
that the Issuer shall not be obligated to effect a Demand Registration unless
the Registrable Stock requested to be included in such Demand Registration
constitutes at least 25% of the Common Stock then outstanding or to be issued
upon conversion of the Notes and/or Series B Preferred Stock. In no event will
the Issuer be required to effect more than two Demand Registrations on Form S-3
within any 12 month period.
Promptly after the expiration of the 15-day period referred to in
Section 5.1(a)(ii) hereof, the Issuer will notify all the Holders to be included
in the Demand Registration of the other Holders and the number of shares of
Registrable Stock requested to be included therein. The Selling Securityholders
requesting a registration under this Section 5.1(a) may, at any time prior to
the effective date of the registration statement relating to such registration,
revoke such request, without liability to any of the other Holders, by providing
a written notice to the Issuer revoking such request, in which case such
request, so revoked, shall be considered a Demand Registration unless such
revocation arose out of the fault of the Issuer, in which case such request
shall not be considered a Demand Registration. Notwithstanding anything
contained in this Agreement to the contrary, nothing herein shall be construed
as requiring the Issuer to register any of its securities other than Common
Stock.
(b) The Issuer will pay all Registration Expenses in connection
with any Demand Registration.
17
21
(c) A registration requested pursuant to this Section 5.1 shall
not be deemed to have been effected unless the registration statement relating
thereto (i) has become effective under the Securities Act and (ii) has remained
effective for a period of at least 90 days (or such shorter period in which all
Registrable Stock of the Holders included in such registration has actually been
sold thereunder); provided that if after any registration statement requested
pursuant to this Section 5.1 becomes effective (i) such registration statement
is interfered with by any stop order, injunction or other order or requirement
of the SEC or other governmental agency or court and (ii) less than 75% of the
Registrable Stock included in such registration statement has been sold
thereunder, such registration statement shall be at the sole expense of the
Issuer and shall not be considered a Demand Registration, unless any such
interference referred to in clause (i) of this proviso arose out of the fault of
the Selling Securityholders, in which case such registration statement shall be
considered a Demand Registration.
(d) If a Demand Registration involves an Underwritten Public
Offering and the managing underwriter shall advise the Issuer and the Selling
Securityholders that, in its view, (i) the number of shares of Common Stock
requested to be included in such registration (including Common Stock which the
Issuer proposes to be included which is not Registrable Stock) or (ii) the
inclusion of some or all of the Securities owned by the Holders, in either case,
exceeds the largest number of Securities which can be sold without having an
adverse effect on such offering, including the price at which such Securities
can be sold (the "Maximum Offering Size"), the Issuer will include in such
registration, in the priority listed below, up to the Maximum Offering Size:
(A) first, all Benchmark Shares requested to be registered
by the DLJ Entities (allocated, if necessary for the offering not
to exceed the Maximum Offering Size, pro rata among the DLJ
Entities on the basis of the relative number of shares of
Registrable Stock requested to be included in such registration);
(B) second, all Registrable Stock requested to be
registered by any Selling Securityholders (allocated, if
necessary for the offering not to exceed the Maximum Offering
Size, pro rata among such Selling Securityholders on the basis of
the relative number of shares of Registrable Stock (excluding any
Benchmark Shares) so requested to be included in such
registration);
(C) third, all Registrable Stock requested to be included
in such registration by any other Holder (allocated, if necessary
for the offering not to exceed the Maximum Offering Size, pro
rata among such other Holders on the basis of the relative number
of shares of Registrable Stock (excluding any Benchmark Shares)
so requested to be included in such registration); and
(D) fourth, any Common Stock proposed to be registered by
the issuer.
18
22
5.2 Incidental Registration. (a) If the Issuer proposes to
register any of its Common Stock under the Securities Act (other than a
registration (A) in connection with an Initial Public Offering, (B) on Form S-8
or S-4 or any successor or similar forms, (C) relating to Common Stock issuable
upon exercise of employee stock options or in connection with any employee
benefit or similar plan of the Issuer or (D) in connection with a direct or
indirect merger, acquisition or other similar transaction) whether or not for
sale for its own account, it will each such time, subject to the provisions of
Section 5.2(b) hereof, give prompt written notice at least 30 days prior to the
anticipated filing date of the registration statement relating to such
registration to each Securityholder, which notice shall set forth such
Securityholders' rights under this Section 5.2 and shall offer all
Securityholders the opportunity to include in such registration statement such
number of shares of Registrable Stock as each such Securityholder may request
(an "Incidental Registration"). Upon the written request of any such
Securityholder made within 15 days after the receipt of notice from the Issuer
(which request shall specify the number of shares of Registrable Stock intended
to be disposed of by such Securityholder), the Issuer will use its best efforts
to effect the registration under the Securities Act of all Registrable Stock
which the Issuer has been so requested to register by such Securityholders, to
the extent requisite to permit the disposition of the Registrable Stock so to be
registered; provided that (i) if such registration involves an Underwritten
Public Offering, all such Securityholders requesting to be included in the
Issuer's registration must sell their Registrable Stock to the underwriters
selected as provided in Section 5.4(f) on the same terms and conditions as apply
to the Issuer and the Selling Securityholders and (ii) if, at any time after
giving written notice of its intention to register any stock pursuant to this
Section 5.2(a) and prior to the effective date of the registration statement
filed in connection with such registration, the Issuer shall determine for any
reason not to register such stock, the Issuer shall give written notice to all
such Securityholders and, thereupon, shall be relieved of its obligation to
register any Registrable Stock in connection with such registration. No
registration effected under this Section 5.2 shall relieve the Issuer of its
obligations to effect a Demand Registration to the extent required by Section
5.1 hereof. The Issuer will pay all Registration Expenses in connection with
each registration of Registrable Stock requested pursuant to this Section 5.2.
(b) If a registration pursuant to this Section 5.2 involves an
Underwritten Public Offering (other than in the case of an Underwritten Public
Offering requested by any Securityholder in a Demand Registration, in which case
the provisions with respect to priority of inclusion in such offering set forth
in Section 5.1(d) shall apply) and the managing underwriter advises the Issuer
that, in its view, the number of shares of Common Stock which the Issuer and the
selling Securityholders intend to include in such registration exceeds the
Maximum Offering Size, the Issuer will include in such registration, in the
following priority, up to the Maximum Offering Size:
(i) first, so much of the Common Stock proposed to be registered
by the Issuer as would not cause the offering to exceed the Maximum
Offering Size;
(ii) second, all Benchmark Shares requested to be included in
such registration statement by any DLJ Entity pursuant to this Section
5.2 (allocated, if
19
23
necessary for the offering not to exceed the Maximum Offering Size, pro
rata among such DLJ Entities on the basis of the relative number of
shares of Registrable Stock requested to be so included); and
(iii) third, all Registrable Stock other than Benchmark Shares
requested to be included in such registration by any Shareholder
pursuant to Section 5.2 (allocated, if necessary for the offering not to
exceed the Maximum Offering Size, pro rata among such Shareholders on
the basis of the relative number of shares of Registrable Stock
(excluding any Benchmark Shares) so requested to be included in such
registration).
5.3 Holdback Agreements. If any registration of Registrable Stock
shall be in connection with an Underwritten Public Offering, each Securityholder
agrees not to effect any public sale or distribution, including any sale
pursuant to Rule 144, or any successor provision, under the Securities Act, of
any Registrable Stock, and not to effect any such public sale or distribution of
any other Common Stock of the Issuer or of any stock convertible into or
exchangeable or exercisable for any Common Stock of the Issuer (in each case,
other than as part of such Underwritten Public Offering) during the 14 days
prior to the effective date of such registration statement (except as part of
such registration) or during the period after such effective date that such
managing underwriter and the Issuer shall agree (but not to exceed 90 days). Any
waiver of any restriction on sales or distributions referred to in this Section
5.3 shall be effective as to each of Cormier, Schaefer, and the DLJ Entities,
regardless whether the waiver has in fact requested by, or granted only certain
of such persons.
5.4 Registration Procedures. Whenever Securityholders request
that any Registrable Stock be registered pursuant to Section 5.1 or 5.2 hereof,
the Issuer will, subject to the provisions of such Sections, use its best
efforts to effect the registration and the sale of such Registrable Stock in
accordance with the intended method of disposition thereof as quickly as
practicable, and in connection with any such request:
(a) The Issuer will as expeditiously as possible prepare and file
with the SEC a registration statement on any form for which the Issuer then
qualifies or which counsel for the Issuer shall deem appropriate and which form
shall be available for the sale of the Registrable Stock to be registered
thereunder in accordance with the intended method of distribution thereof, and
use its best efforts to cause such filed registration statement to become and
remain effective for a period of not less than 90 days (or such shorter period
in which all of the Registrable Stock of the Holders included in such
registration statement shall have actually been sold thereunder).
(b) The Issuer will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to each
Securityholder and each underwriter, if any, of the Registrable Stock covered by
such registration statement copies of such registration statement as proposed to
be filed, and thereafter the Issuer will furnish to such Securityholder and
underwriter, if any, such number of copies of such registration statement, each
amendment and supplement thereto (in each case including all exhibits
20
24
thereto and documents incorporated by reference therein), the prospectus
included in such registration statement (including each preliminary prospectus)
and such other documents as such Securityholder or underwriter may reasonably
request in order to facilitate the disposition of the Registrable Stock owned by
such Securityholder.
(c) After the filing of the registration statement, the Issuer
will promptly notify each Securityholder holding Registrable Stock covered. by
such registration statement of any stop order issued or threatened by the SEC
and take all reasonable actions required to prevent the entry of such stop order
or to remove it if entered.
(d) The Issuer will use its best efforts to (i) register or
qualify the Registrable Stock covered by such registration statement under such
other securities or blue sky laws of such jurisdictions in the United States as
any Securityholder holding such Registrable Stock reasonably (in light of such
Securityholder's intended plan of distribution) requests and (ii) cause such
Registrable Stock to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business and
operations of the Issuer and do any and all other acts and things that may be
reasonably necessary or advisable to enable such Securityholder to consummate
the disposition of the Registrable Stock owned by such Securityholder; provided
that the Issuer will not be required to (A) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this paragraph (d), (B) subject itself to taxation in any such jurisdiction or
(C) consent to general service of process in any such jurisdiction.
(e) The Issuer will immediately notify each Securityholder
holding such Registrable Stock covered by such registration statement, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the occurrence of an event requiring the preparation of a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Stock, such prospectus will not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and promptly prepare and make available to each such Securityholder and file
with the SEC any such supplement or amendment.
(f) Subject to Section 7.5, the Issuer may select, in its sole
discretion, the underwriter or underwriters in connection with any Underwritten
Public Offering as it may deem appropriate. Notwithstanding the foregoing, (i)
the DLJ Entities will have the right, in their sole discretion, to select the
underwriter or underwriters in connection with any underwritten Demand
Registration initiated by any of the DLJ Entities pursuant to Section 5.1, and
(ii) Xxxxxxx and Xxxxxxxx will have the right, in their sole discretion, to
select the underwriter or underwriters in connection with any underwritten
Demand Registration initiated by them only (and not also by any DLJ Entity)
pursuant to Section 5.1. Any Affiliate of any of the DLJ Entities may be
selected as underwriter for an Underwritten Public Offering. The Issuer will
enter into customary agreements (including an underwriting agreement in
customary form) and take such other actions as are reasonably required in order
to expedite or facilitate the disposition of such Registrable Stock, including
the engagement
21
25
of a "qualified independent underwriter" in connection with the qualification of
the underwriting arrangements with the NASD.
(g) The Issuer will make available for inspection by any
Securityholder and any underwriter participating in any disposition pursuant to
a registration statement being filed by the Issuer pursuant to this Section 5.4
and any attorney, accountant or other professional retained by any such
Securityholder or underwriter (collectively, the "Inspectors"), all financial
and other records, pertinent corporate documents and properties of the Issuer
(collectively, the "Records") as shall be reasonably requested by any such
Person, and cause the Issuer's officers, directors and employees to supply all
information reasonably requested by any Inspectors in connection with such
registration statement.
(h) The Issuer will furnish to each such Securityholder and to
each such underwriter, if any, a signed counterpart, addressed to such
underwriter, of (i) an opinion or opinions of counsel to the Issuer and (ii) a
comfort letter or comfort letters from the Issuer's independent public
accountants, each in customary form and covering opinions majority therefor such
matters of the type customarily covered by or comfort letters, as the case may
be, as a majority of such Securityholders or the managing underwriter reasonably
requests.
(i) The Issuer will otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC, and make available to its
securityholders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act.
The Issuer may require each such Securityholder to promptly
furnish in writing to the Issuer such information regarding the distribution of
the Registrable Stock as the Issuer may from time to time reasonably request and
such other information as may be legally required in connection with such
registration.
Each such Securityholder agrees that, upon receipt of any notice
from the Issuer of the happening of any event of the kind described in Section
5.4(e) hereof, such Securityholder will forthwith discontinue disposition of
Registrable Stock pursuant to the registration statement covering such
Registrable Stock until such Securityholder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 5.4(e) hereof, and,
if so directed by the Issuer, such Securityholder will deliver to the Issuer all
copies, other than any permanent file copies then in such Securityholder's
possession, of the most recent prospectus covering such Registrable Stock at the
time of receipt of such notice. In the event that the Issuer shall give such
notice, the Issuer shall extend the period during which such registration
statement shall be maintained effective (including the period referred to in
Section 5.4(a) hereof) by the number of days during the period from and
including the date of the giving of notice pursuant to Section 5.4(e) hereof to
the date when the Issuer shall make available to such Securityholder a
prospectus supplemented or amended to conform with the requirements of Section
5.4(e) hereof.
22
26
5.5 Indemnification by the Issuer. The Issuer agrees to indemnify
and hold harmless each Securityholder holding Registrable Stock covered by a
registration statement, its officers, directors and agents, and each Person, if
any, who controls such Securityholder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Stock (as amended or
supplemented if the Issuer shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission so made in strict conformity
with information furnished in writing to the Issuer by such Securityholder or on
such Securityholder's behalf expressly for use therein; provided that with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus, or in any prospectus, as the case
may be, the indemnity agreement contained in this paragraph shall not apply to
the extent that any such loss, claim, damage, liability or expense results from
the fact that a current copy of the prospectus (or, in the case of a prospectus,
the prospectus as amended or supplemented) was not sent or given to the Person
asserting any such loss, claim, damage, liability or expense at or prior to the
written confirmation of the sale of the Registrable Stock concerned to such
Person if it is determined that the Issuer has provided such prospectus and it
was the responsibility of such Securityholder to provide such Person with a
current copy of the prospectus (or such amended or supplemented prospectus, as
the case may be) and such current copy of the prospectus (or such amended or
supplemented prospectus, as the case may be) would have cured the defect giving
rise to such loss, claim, damage, liability or expense. The Issuer also agrees
to indemnify any underwriters of the Registrable Stock, their officers and
directors and each person who controls such underwriters on substantially the
same basis as that of the indemnification of the Securityholders provided in
this Section 5.5.
5.6 Indemnification by Participating Securityholders. (a) Subject
to Section 5.6(b), each Securityholder holding Registrable Stock included in any
registration statement agrees, severally but not jointly, to indemnify and hold
harmless the Issuer, its officers, directors and agents and each Person, if any,
who controls the Issuer within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuer to such Securityholder, but only (i) with
respect to information furnished In writing by such Securityholder or on such
Securityholder's behalf expressly for use in any registration statement or
prospectus relating to the Registrable Stock, or any amendment or supplement
thereto, or any preliminary prospectus or (ii) to the extent that any loss,
claim, damage, liability or expense described in Section 5.5 results from the
fact that a current copy of the prospectus (or, in the case of a prospectus, the
prospectus as amended or supplemented) was not sent or given to the Person
asserting any such loss, claim, damage, liability or expense at or prior to the
written confirmation of the sale of the Registrable Stock concerned to such
Person if it is determined that it was the responsibility of such Securityholder
to provide such Person with a current
23
27
copy of the prospectus (or such amended or supplemented prospectus, as the case
may be) and such current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) would have cured the defect giving rise to such
loss, claim, damage, liability or expense. Subject to Section 5.6(b), each such
Securityholder also agrees to indemnify and hold harmless underwriters of the
Registrable Stock, their officers and directors and each person who controls
such underwriters on substantially the same basis as that of the indemnification
of the Issuer provided in this Section 5.6. As a condition to including
Registrable Stock in any registration statement filed in accordance with Article
5 hereof, the Issuer may require that it shall have received an undertaking
reasonably satisfactory to it from any underwriter to indemnify and hold it
harmless to the extent customarily provided by underwriters with respect to
similar securities.
(b) No Securityholder shall be liable under Section 5.6(a) for
any damage thereunder in excess of the net proceeds realized by such
Securityholder in the sale of the Registrable Stock of such Securityholder.
5.7 Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted
involving any Person-in respect of which indemnity may be sought pursuant to
this Article 5, such Person (an "Indemnified Party") shall promptly notify the
Person against whom such indemnity may be sought (the "Indemnifying Party") in
writing and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Party, and
shall assume the payment of all fees and expenses; provided that the failure of
any Indemnified Party so to notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent that the
Indemnifying Party is materially prejudiced by such failure to notify. In any
such proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of such Indemnified Party representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by the Indemnified
Parties. The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent, or if there be a final judgment for the plaintiff, the Indemnifying
Party shall indemnify and hold harmless such Indemnified Parties from and
against any and all losses, claims, damages, liabilities and expenses or
liability (to the extent stated above) by reason of such settlement or judgment.
No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened proceeding
in respect of which any Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such
24
28
settlement includes an unconditional release of such Indemnified Party from all
liability arising out of such proceeding.
5.8 Contribution. If the indemnification provided for in this
Article 5 is held by a court of competent jurisdiction to be unavailable to the
Indemnified Parties in respect of any losses, claims, damages or liabilities
referred to herein, then each such Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (i)
as between the Issuer and the Securityholders holding Registrable Stock covered
by a registration statement on the one hand and the underwriters on the other,
in such proportion as is appropriate to reflect the relative benefits received
by the Issuer and such Securityholders on the one hand and the underwriters on
the other, from the offering of the Registrable Stock, or if such allocation is
not permitted by applicable law, in such proportion as s appropriate to reflect
not only the relative benefits but also the relative fault of the Issuer and
such Securityholders on the one hand and of such underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations and (ii) as between the Issuer on the one hand and each such
Securityholder on the other, in such proportion as is appropriate to reflect the
relative fault of the Issuer and of each such Securityholder in connection with
such statements or omissions, as well as any other relevant equitable
considerations. The relative benefits received by the Issuer and such
Securityholders on the one hand and such underwriters on the other shall be
deemed to be in the same proportion as the total proceeds from the offering (net
of underwriting discounts and commissions but before deducting expenses)
received by the Issuer and such Securityholders bear to the total underwriting
discounts and commissions received by such underwriters, in each case as set
forth in the table on the cover page of the prospectus. The relative fault of
the Issuer and such Securityholders on the one hand and of such underwriters on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Issuer
and such Securityholders or by such underwriters. The relative fault of the
Issuer on the one hand and of each such Securityholder on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Issuer and the Securityholders agree that it would not be
just and equitable if contribution pursuant to this Section 5.8 were determined
by pro rata allocation (even if the underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with
25
29
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5.8, no underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Stock underwritten by it and distributed to the public were offered
to the public exceeds the amount of any damages which such underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, and no Securityholder shall be
required to contribute any amount in excess of the amount by which the net
proceeds realized on the sale of the Registrable Stock of such Securityholder
exceeds the amount of any damages which such Securityholder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Each Securityholder's obligation to contribute pursuant to
this Section 5.8 is several in the proportion that the proceeds of the offering
received by such Securityholder bears to the total proceeds of the offering
received by all such Securityholders and not joint.
5.9 Participation in Public Offering. No Person may participate
in any Underwritten Public Offering hereunder unless such Person (a) agrees to
sell such Person's securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and the provisions of
this Agreement in respect of registration rights.
ARTICLE 6
CERTAIN COVENANTS AND AGREEMENTS
6.1 Confidentiality. (a) Each Securityholder hereby agrees that
Confidential Information (as defined below) furnished and to be furnished to it
was and will be made available in connection with such Securityholder's
investment in the Issuer. Each Securityholder agrees that it will not use the
Confidential Information in any way to the competitive disadvantage of the
Issuer. Each Securityholder further acknowledges and agrees that it will not
disclose any Confidential Information to any Person; provided that Confidential
Information may be disclosed (i) to such Securityholder's Representatives (as
defined below) in the normal course of the performance of their duties, (ii) to
the extent required by applicable law, rule or regulation (including complying
with any oral or written questions, interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process to which a
Securityholder is subject), (iii) to any Person to whom such Securityholder is
contemplating a transfer of its Securities (provided that such transfer would
not be in violation of the provisions of this Agreement and as long as such
potential transferee is advised of the confidential nature of such information
and agrees to be bound by a confidentiality agreement in form and substance
satisfactory to the Issuer and consistent with the provisions hereof) or (iv) if
the prior written consent of the Board shall have been obtained. Nothing
contained herein shall prevent the use of
26
30
Confidential Information in connection with the assertion or defense of any
claim by or against the Issuer or any Securityholder.
(b) "Confidential Information" means any information concerning
the Issuer, its financial condition, business, operations or prospects in the
possession of or to be furnished to any Securityholder in its capacity as a
shareholder of the Issuer or by virtue of its present or former right to
designate a director of the Issuer; provided that the term "Confidential
Information" does not include information which (i) becomes generally available
to the public other than as a result of a disclosure by a Securityholder or its
partners, directors, officers, employees, agents, counsel, investment advisers
or representatives (all such persons being collectively referred to as
"Representatives") in violation of any of the Transaction Documents (as such
term is defined in the Securities Purchase Agreement), (ii) is or was available
to such Securityholder on a nonconfidential basis prior to its disclosure to
such Securityholder or its Representatives by the Issuer or (iii) was or becomes
available to such Securityholder on a non-confidential basis from a source other
than the Issuer, provided that such source is or was (at the time of receipt of
the relevant information) not, to the best of such Securityholder's knowledge,
bound by a confidentiality agreement with (or other confidentiality obligation
to) the Issuer or another Person.
6.2 No Inconsistent Agreements. Neither the Issuer nor any
Securityholder is presently a party to or will hereafter enter into any
agreement with respect to any Securities which is inconsistent with the rights
granted to any Securityholder by this Agreement or any other agreements relating
to the Securities to which the Securityholders are parties or which otherwise
conflicts with the provisions hereof or thereof, or will in the future grant or
cause to be granted to any holder or prospective holder of any Securities, any
rights relating thereto, including, for example, registration rights, which are,
in the aggregate, made available on more favorable terms (including, without
limitation, terms which are more favorable than those set forth in Article 5) to
such holder than those granted to the Securityholders hereunder and thereunder,
unless the Securityholders are given all of the benefits of such favorable terms
and consent thereto.
6.3 Agreement as Between PM Funding, Inc. and the Other DLJ
Entities Regarding Conversion of the Notes. Each DLJ Entity (other than PM
Funding, Inc.) agrees that, immediately upon the request of PM Funding, Inc.
delivered by notice to such DLJ Entity, such DLJ Entity shall exercise its right
to convert (in whole and not in part) the Note (or Notes) held by such DLJ
Entity into Common Stock in accordance with the provisions of Sections 5.1 and
5.2 of the Note.
ARTICLE 7
MISCELLANEOUS
7.1 Entire Agreement. The Transaction Documents constitute the
entire agreement between the parties with respect to the subject matter of the
Transaction
27
31
Documents and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement and the other Transaction Documents.
7.2 Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
successors, legal representatives and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than
the parties hereto, and their respective heirs, successors, legal
representatives and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
7.3 Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Issuer or any Securityholder, except in connection with a
transfer of securities of the Issuer pursuant to the terms hereof; provided that
any Person acquiring Securities who is required by the terms of this Agreement
to become a party hereto shall execute and deliver to the Issuer an agreement to
be bound by this Agreement and shall thenceforth be a "Securityholder". Any
Securityholder who ceases to beneficially own any Securities shall cease to be
bound by the terms hereof (other than Sections 5.6, 5.7, 5.8 and 6.1).
7.4 Amendment; Waiver; Termination. (a) No provision of this
Agreement may be waived except by an instrument in writing executed by the party
against whom the waiver is to be effective. No provision of this Agreement may
be amended or otherwise modified except by an instrument in writing executed by
the Issuer with the approval of the Board and Securityholders holding or having
the right to acquire at least 85% of the Fully Diluted Common Stock held by
parties to this Agreement.
(b) In addition, any amendment, modification or termination of
any provision of this Agreement that would adversely affect a DLJ Entity may be
effected only with the consent of such DLJ Entity.
(c) In addition, any amendment, modification or termination of
any provision of this Agreement that would adversely affect Xxxxxxx or Xxxxxxxx
may be effected only with the consent of Xxxxxxx or Xxxxxxxx, respectively.
7.5 Exclusive Financial Advisor and Investment Banking Advisor.
During the period from and including the date hereof through and including the
fourth anniversary hereof, Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
("DLJSC"), or any Affiliate of DLJSC that the DLJ Entities may choose in their
sole discretion, shall be engaged as the exclusive financial advisor and
investment banker for the Issuer for an annual retainer fee (i) which shall be
$200,000 effective for each of the first four one-year periods ending on an
anniversary of the date hereof and (ii) which thereafter shall be on
commercially reasonable terms to be agreed between the Issuer and DLJSC.
28
32
7.6 Certain Requirements In Connection with Conversion of Shares
of Series B Preferred Stock. Notwithstanding anything herein to the contrary, no
shares of Common Stock shall be issued upon conversion of any shares of Series B
Preferred Stock to (i) DLJ Merchant Banking Funding, Inc. or (ii) any other
affiliate of Xxxxxxxxx, Lufkin & Xxxxxxxx, Inc. ("DLJ") designated in writing to
the Issuer from time to time by DLJ Merchant Banking Funding, Inc., unless in
connection with such conversion the Issuer shall have received a certificate
from DLJ Merchant Banking Funding, Inc. to the effect that (A) immediately upon
such conversion, DLJ will not directly or indirectly own, control or hold 5% or
more of the voting securities of the Issuer, within the meaning of the New York
insurance law or (B) it and The Equitable Life Assurance Society of the United
States ("The Equitable") have been advised by counsel satisfactory to The
Equitable that immediately upon such conversion DLJ will not be in control of
the Issuer, within the meaning of the New York insurance law. The Issuer and the
holders of shares of Series B Preferred Stock will use reasonable efforts to
enter into mutually agreed upon arrangements to facilitate conversion of the
shares of Series B Preferred Stock into Common Stock in accordance with the
provisions of the first sentence of this Section 7.6.
7.7 Notices. All notices and other communications given or made
pursuant hereto or pursuant to any other agreement among the parties, unless
otherwise specified, shall be in writing and shall be deemed to have been duly
given or made if sent by fax (with confirmation in writing), delivered
personally or sent by registered or certified mail (postage prepaid, return
receipt requested) to the parties at the fax number or address set forth below
or at such other addresses as shall be furnished by the parties by like notice,
and such notice or communication shall be deemed to have been given or made upon
receipt:
if to the DLJ Entities, to:
DLJ Merchant Banking Funding, Inc.
DLJ Merchant Banking partners, L.P.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxx Xxxx
Fax: (000) 000-0000
and to:
DLJ International Partners, X.X.
XXX Xxxxxxxx Xxxxxxxx, X.X.
x/x XXX Offshore Management N.V.
Xxxx X. Xxxxxxxxxx
0 Xxxxxxxxxx, Xxxxxxx
Xxxxxxxxxxx Antilles
Attention: Xxxxxxxx Xxxxxx
MeesPierson Trust (Curacao) N.V.
29
33
DLJ Capital Corporation
Sprout Growth II, L.P.
Sprout Capital VI, L.P.
0000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Fax: (000) 000-0000
DLJ Bridge Finance, Inc.
000 Xxxxxxxx
Xxx Xxxx, XX
Attention: Xxxxxx Xxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Xx.
Fax: (000) 000-0000
if to Xxxxxxx or the Issuer, to:
Phase Metrics, Inc.
0000 Xxxxxxxx Xxxxxx Xxxx.
Xxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
with a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Fax: (000) 000-0000
30
34
if to Xxxxxxxx, to:
Phase Metrics, Inc.
0000 Xxxxxxxx Xxxxxx Xxxx.
Xxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx
0000 XxxXxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Fax: (000) 000-0000
Any Person who becomes a Securityholder shall provide its address and fax number
to the Issuer, which shall promptly provide such information to each other
Securityholder.
7.8 Headings. The headings contained in this Agreement are for
convenience only and shall not affect the meaning or interpretation of this
Agreement.
7.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
7.10 Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California, without
regard to the conflicts of law rules of such state.
7.11 Specific Enforcement. Each party hereto acknowledges that
the remedies at law of the other parties for a breach or threatened breach of
this Agreement would be inadequate and, in recognition of this fact, any party
to this Agreement, without posting any bond, and in addition to all other
remedies which may be available, shall be entitled to obtain equitable relief in
the form of specific performance, a temporary restraining order, a temporary or
permanent injunction or any other equitable remedy which may then be available.
7.12 Consent to Jurisdiction. Any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby be
brought in the United States District Court for the Southern District of New
York or any other New York State court sitting in New York City, and each of the
parties hereby consents to the non-exclusive jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection
31
35
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient form. Process in any such suit, action or proceeding may be served
any party anywhere in the world, whether within or without the jurisdiction of
any such court. Without limiting the foregoing, each party agrees that service
of process on such party as provided in Section 7.6 shall be deemed effective
service of process on such party.
[Remainder of this page intentionally left blank.]
32
36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
DLJ MERCHANT BANKING PARTNERS, L.P.
BY DLJ MERCHANT BANKING, INC.
Managing General Partner
By: /s/ DLJ MERCHANT BANKING PARTNERS, L.P.
-------------------------------------------------
Title: Managing Director
DLJ INTERNATIONAL PARTNERS, C.V.
BY DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/ DLJ INTERNATIONAL PARTNERS, C.V.
-------------------------------------------------
Title: Managing Director
DLJ OFFSHORE PARTNERS, C.V.
BY DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/ DLJ OFFSHORE PARTNERS, C.V.
-------------------------------------------------
Title: Managing Director
DLJ MERCHANT BANKING FUNDING, INC.
By: /s/ DLJ MERCHANT BANKING FUNDING, INC.
-------------------------------------------------
Title:
33
37
DLJ CAPITAL CORPORATION
By: /s/ Xxxxxx Xxxxx
-------------------------------------------------
Xxxxxx Xxxxx
Attorney-In-Fact
SPROUT GROWTH II, L.P.
By: DLJ Capital Corporation
Managing General Partner
By: /s/ Xxxxxx Xxxxx
-------------------------------------------------
Xxxxxx Xxxxx
Attorney-In-Fact
SPROUT CAPITAL VI, L.P.
By: DLJ Capital Corporation
Managing General Partner
By: /s/ Xxxxxx Xxxxx
-------------------------------------------------
Xxxxxx Xxxxx
Attorney-In-Fact
PM FUNDING, INC.
By: /s/
-------------------------------------------------
Name:
Title: Vice President
/s/ Xxxxxx Xxxxxxx
-------------------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxx Xxxxxxxx
-------------------------------------------------
Xxxx X. Xxxxxxxx
34
38
PHASE METRICS, INC.
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
35
39
FIRST AMENDMENT TO
SECURITYHOLDERS AGREEMENT
THIS FIRST AMENDMENT TO SECURITYHOLDERS AGREEMENT dated as of June 30,
1995 (the "Amendment") amends that certain Securityholders' Agreement (as
hereinafter defined) and is made among DLJ Merchant Banking Partners, L.P., a
Delaware limited partnership, DLJ International Partners, C.V., a Netherlands
Antilles limited partnership, DLJ Offshore Partners, C.V., a Netherlands
Antilles limited partnership, DLJ Merchant Banking Funding, Inc., a Delaware
corporation, DLJ Capital Corporation, a Delaware corporation, Sprout Growth II,
L.P., a Delaware limited partnership, Sprout Capital VI, L.P., a Delaware
limited partnership, DLJ First ESC L.L.C., a Delaware limited liability company,
PM Funding, Inc., a Delaware corporation (each of the foregoing, a "DLJ Entity",
and collectively, the "DLJ Entities"), Phase Metrics, Inc., a California
corporation (the "Issuer"), Xxxxxx X. Xxxxxxx, an individual ("Xxxxxxx"), Xxxx
X. Xxxxxxxx, an individual ("Xxxxxxxx"), Xxxxxxx X. Xxxxxxxxx and Xxxxxxx X.
Xxxxxxxxx as Trustees of the Freedland 1994 Unitrust, Xxxx Xxxxxx and Xxxxxxx
Xxxxxx as Trustees of the Xxxxxx 1994 Unitrust, Hung Ba Le and Xxx Xx as
Trustees of the Le 1994 Unitrust, and Xxxx Xxxxxx and Xxxxxx Xxxxxx as Trustees
of the Xxxxxx 1994 Unitrust (the "Shareholder Trusts").
WHEREAS, the Issuer desires to enter into that certain Stock Purchase
and Exchange Agreement dated as of June 30, 1995 among the Issuer, Helios
Incorporated ("Helios"), the Shareholder Trusts and each of the other parties
thereto, pursuant to which the Issuer will acquire all of the issued and
outstanding capital stock of Helios (the "Stock Purchase Agreement");
WHEREAS, in connection with the Stock Purchase Agreement, the Issuer
will issue shares of its Common Stock (the "PM Shares") to the current
shareholders of Helios (each a "Helios Shareholder" and, collectively, the
"Helios Shareholders");
WHEREAS, in connection with the issuance of the PM Shares, each Helios
Shareholder will become a party to the Securityholders Agreement dated as of
November 23, 1994 (the "Securityholders Agreement") among the DLJ Entities, the
Issuer, Xxxxxxxx and Xxxxxxx;
WHEREAS, in order for the Helios Shareholders to become parties to the
Security- holders Agreement, certain terms of the Securityholders Agreement must
be amended.
NOW, THEREFORE, for good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto
covenant and agree as follows:
1. Defined Terms. Capitalized terms not otherwise defined herein
have the respective meanings assigned to them in the Securityholders Agreement.
1
40
2. References to the Securityholders Agreement. All references in
the Securityholders Agreement to "this Agreement", and to all other words
referring to the Securityholders Agreement (such as "herein", "hereto",
"herewith" and "hereunder"), shall be deemed to mean and refer to the
Securityholders Agreement, as amended by this Amendment (the "Securityholders
Agreement"). All references in the Securityholders Agreement to "Securityholder"
shall be deemed to include the Helios Shareholders.
3. Addition of Helios Shareholders to Securityholders Agreement.
The parties hereto acknowledge and agree that each Helios Shareholder shall be
deemed a "Securityholder" under the Securityholders Agreement and the PM Shares
held by each Helios Shareholder shall be treated as "Securities" and "Common
Stock" under the Securityholders Agreement.
4. Amendments to Securityholders Agreement.
a. In Section 1.1 of the Securityholders Agreement, the
following definition is hereby added:
"`Helios Shareholders' means each Person who
received shares of Common Stock of the Issuer pursuant to that
certain Stock Purchase and Exchange Agreement dated as of June
30, 1995, among the Issuer, Helios Incorporated and each of the
other parties signatory thereto."
b. In Section 1.1 of the Securityholders Agreement, the
following clause is hereby added to the definition of "Permitted Transferee":
(iii) in the case of the Helios Shareholders, in
addition to the Permitted Transferees enumerated in paragraph
(ii) above, any beneficiary and/or trustee of any Helios
Shareholder that is a trust; provided, that such transferee shall
have agreed in writing to be bound by the terms of this
Agreement;
c. Section 3.1(b) of the Securityholders Agreement is
hereby amended by inserting the words "the Helios Shareholders," before the word
"Xxxxxxxx" in clause (vi).
d. Section 4.1(g) is hereby amended as follows:
(1) In the first sentence of clause (i), the word
"or" between the words "Xxxxxxx" and "Xxxxxxxx" is deleted and
replaced with a comma, and the words "or the Helios Shareholders"
are inserted after the word "Xxxxxxxx";
(2) In the second sentence of clause (i), the word
"and" between the words "Xxxxxxx" and "Xxxxxxxx" is deleted and
replaced with a comma, and the words "and the Helios
Shareholders" are inserted after the word "Xxxxxxxx";
2
41
(3) In the last sentence of clause (i), the words
"and Xxxxxxxx and Xxxxxxx may not effect another Tag along Sale
without repeating the foregoing procedures" are deleted and
replaced by "then Xxxxxxxx, Xxxxxxx and the Helios Shareholders
may not effect another Tag along Sale without repeating the
foregoing procedures"; and
(4) In the third sentence of clause (v), the word
"or" between the words "Xxxxxxx" and "Xxxxxxxx" is deleted and
replaced with a comma, and the words "or the Helios Shareholders"
are inserted after the word "Xxxxxxxx".
e. Section 4.3(a) is hereby amended by deleting the words
"Other Shareholder" in the sixth sentence and replacing them with the words
"Other Securityholder".
f. Section 5.2(b)(iii) of the Securityholders Agreement is
hereby amended and restated in its entirety as follows:
"(iii) third, all Registrable Stock other than
Benchmark Shares requested to be included in such registration by
any Securityholder pursuant to this Section 5.2 (allocated, if
necessary for the offering not to exceed the Maximum Offering
Size, pro rata among such Securityholders on the basis of the
relative number of shares of Registrable Stock (excluding any
Benchmark Shares) so requested to be included in such
registration)."
g. Section 5.3 of the Securityholders Agreement is hereby
amended by inserting the words "the Helios Shareholders," after the word
"Xxxxxxxx," in the last sentence.
h. Section 7.7 of the Securityholders Agreement is hereby
amended by inserting the following new paragraph immediately prior to the last
sentence of Sec- tion 7.7:
"if to the Helios Shareholders to:
Xxxxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxxxxxx as
Trustees of the Freedland 1994 Unitrust
0000 Xxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
Hung Ba Le and Xxx Xx as Trustees of the Le 1994
Unitrust
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
3
42
Xxxx Xxxxxx and Xxxxxxx Xxxxxx as Trustees of the
Xxxxxx 1994 Unitrust
4349 Nicolet
Xxxxxxx, XX 00000
Xxxx Xxxxxx and Xxxxxx Xxxxxx as Trustees of
the Xxxxxx 1994 Unitrust
X.X. Xxx 0000
Xxxxx Xxxxx, XX 00000
with a copy to:
Fenwick & Xxxx
Xxx Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
Fax: (000) 000-0000"
5. Effect of Amendment. The Securityholders Agreement, as amended
hereby, shall remain in full force and effect.
6. Effectiveness. This Amendment shall be effective only upon the
Closing of the Stock Purchase Agreement.
7. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California without regard
to the conflicts of law provisions thereof.
[Signature Pages to Follow]
4
43
COUNTERPART SIGNATURE PAGE TO
FIRST AMENDMENT TO SECURITYHOLDERS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to Securityholders Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
DLJ MERCHANT BANKING PARTNERS, L.P.
By DLJ MERCHANT BANKING, INC.
Managing General Partner
By: /s/DLJ Merchant Banking, Inc.
-------------------------------
Name:
Title:
DLJ INTERNATIONAL PARTNERS, C.V.
By DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/DLJ Merchant Banking, Inc.
-------------------------------
Name:
Title:
DLJ OFFSHORE PARTNERS, C.V.
By DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/DLJ Merchant Banking, Inc.
-------------------------------
Name:
Title:
5
44
DLJ MERCHANT BANKING FUNDING, INC.
By: /s/DLJ Merchant Banking Funding, Inc.
-------------------------------
Name:
Title:
DLJ CAPITAL CORPORATION
By: /s/DLJ Capital Corporation
-------------------------------
Name:
Title:
DLJ FIRST ESC L.L.C.
By: /s/DLJ First ESC L.L.C.
-------------------------------
Name:
Title:
SPROUT GROWTH II, L.P.
By DLJ Capital Corporation
Managing General Partner
By: /s/Xxxxxx Xxxxx
-------------------------------
Xxxxxx Xxxxx
Attorney-In-Fact
SPROUT CAPITAL VI, L.P.
By DLJ Capital Corporation
Managing General Partner
By: /s/Xxxxxx Xxxxx
-------------------------------
Xxxxxx Xxxxx
Attorney-In-Fact
6
45
/s/Xxxxxx X. Xxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxx
/s/Xxxx X. Xxxxxxxx
-------------------------------
Xxxx X. Xxxxxxxx
[Signatures Continued on Next Page]
7
46
COUNTERPART SIGNATURE PAGE TO
FIRST AMENDMENT TO SECURITYHOLDERS AGREEMENT
PHASE METRICS, INC.
By: /s/Xxxx X. Xxxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
ACKNOWLEDGED AND AGREED TO:
The undersigned parties hereby agree to be bound by the terms and conditions of
this Amendment and the Securityholders Agreement dated as of November 23, 1994
among the DLJ Merchant Banking Partners, L.P., DLJ International Partners, C.V.,
DLJ Offshore Partners, C.V., DLJ Merchant Banking Funding, Inc., DLJ Capital
Corporation, Sprout Xxxxxx XX, X.X., Xxxxxx Xxxxxxx XX, X.X., XXX First ESC
L.L.C., PM Funding, Inc., Xxxxxx X. Xxxxxxx, Xxxx X. Xxxxxxxx and Phase Metrics,
Inc., as amended hereby.
/s/Xxxxxxx X. Xxxxxxxxx
------------------------------------------------
Xxxxxxx X. Xxxxxxxxx as Trustee of the
Freedland 1994 Unitrust
/s/Xxxxxxx X. Xxxxxxxxx
------------------------------------------------
Xxxxxxx X. Xxxxxxxxx as Trustee of the
Freedland 1994 Unitrust
/s/Xxxx Xxxxxx
------------------------------------------------
Xxxx Xxxxxx as Trustee of the
Xxxxxx 1994 Unitrust
/s/Xxxxxxx Xxxxxx
------------------------------------------------
Xxxxxxx Xxxxxx as Trustee of the
Xxxxxx 1994 Unitrust
/s/Hung Ba Le
------------------------------------------------
Hung Ba Le as Trustee of the
Le 1994 Xxxxxxxx
0
00
/x/Xxx Xx
------------------------------------------------
Xxx Xx as Trustee of the
Le 1994 Unitrust
/s/Xxxx Xxxxxx
------------------------------------------------
Xxxx Xxxxxx as Trustee of the
Xxxxxx 1994 Unitrust
/s/Xxxxxx Xxxxxx
------------------------------------------------
Xxxxxx Xxxxxx as Trustee of the
Xxxxxx 1994 Unitrust
9
48
SECOND AMENDMENT TO
SECURITYHOLDERS AGREEMENT
THIS SECOND AMENDMENT TO SECURITYHOLDERS AGREEMENT dated
as of July 18, 1995 (the "Amendment") amends that certain Securityholders'
Agreement (as hereinafter defined) and is made among DLJ Merchant Banking
Partners, L.P., a Delaware limited partnership, DLJ International Partners,
C.V., a Netherlands Antilles limited partnership, DLJ Offshore Partners, C.V., a
Netherlands Antilles limited partnership, DLJ Merchant Banking Funding, Inc., a
Delaware corporation, DLJ Capital Corporation, a Delaware corporation, Sprout
Growth II, L.P., a Delaware limited partnership, Sprout Capital VI, L.P., a
Delaware limited partnership, DLJ First ESC L.L.C., a Delaware limited liability
company, PM Funding, Inc., a Delaware corporation (each of the foregoing, a "DLJ
Entity", and collectively, the "DLJ Entities"), Phase Metrics, Inc., a
California corporation (the "Issuer"), Xxxxxx X. Xxxxxxx, an individual
("Xxxxxxx"), Xxxx X. Xxxxxxxx, an individual ("Xxxxxxxx"), Xxxxxxx X. Xxxxxxxxx
and Xxxxxxx X. Xxxxxxxxx as Trustees of the Freedland 1994 Unitrust, Xxxx Xxxxxx
and Xxxxxxx Xxxxxx as Trustees of the Xxxxxx 1994 Unitrust, Hung Ba Le and Xxx
Xx as Trustees of the Le 1994 Unitrust, and Xxxx Xxxxxx and Xxxxxx Xxxxxx as
Trustees of the Xxxxxx 1994 Unitrust (the "Shareholder Trusts").
WHEREAS, the Issuer desires to enter into that certain Stock Purchase
and Exchange Agreement dated as of July 18, 1995 among the Issuer, Applied
Robotic Technologies, Inc. ("ART"), Xxxx X. Xxxxxxxxxx and Xxxx X. Xxxxxxxxxx
(collectively, "Brumberger") , pursuant to which the Issuer will acquire all of
the issued and outstanding capital stock of ART (the "Stock Purchase
Agreement");
WHEREAS, in connection with the Stock Purchase Agreement, the Issuer
will issue shares of its Common Stock (the "PM Shares") to Brumberger;
WHEREAS, in connection with the issuance of the PM Shares, Brumberger
will become a party to the Securityholders Agreement dated as of November 23,
1994, as amended by the First Amendment to Securityholders Agreement dated June
30, 1995 (the "Securityholders Agreement") among the DLJ Entities, the Issuer,
Xxxxxxxx and Xxxxxxx;
WHEREAS, in order for Brumberger to become parties to the
Securityholders Agreement, certain terms of the Securityholders Agreement must
be amended.
NOW, THEREFORE, for good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto
covenant and agree as follows:
1. Defined Terms. Capitalized terms not otherwise defined herein
have the respective meanings assigned to them in the Securityholders Agreement.
1
49
2. References to the Securityholders Agreement. All references in
the Securityholders Agreement to "this Agreement", and to all other words
referring to the Securityholders Agreement (such as "herein", "hereto",
"herewith" and "hereunder"), shall be deemed to mean and refer to the
Securityholders Agreement, as amended by this Amendment. All references in the
Securityholders Agreement to "Securityholder" shall be deemed to include
Brumberger.
3. Addition of Brumberger to Securityholders Agreement. The
parties hereto acknowledge and agree that Brumberger shall be deemed a
"Securityholder" under the Securityholders Agreement and the PM Shares held by
Brumberger shall be treated as "Securities" and "Common Stock" under the
Securityholders Agreement.
4. Amendments to Securityholders Agreement.
(a) In Section 1.1 of the Securityholders Agreement, the
following definition is hereby added:
"`Brumberger' shall mean Xxxx X. Xxxxxxxxxx and
Xxxx X. Xxxxxxxxxx."
(b) Section 3.1(b) of the Securityholders Agreement is
hereby amended by inserting the words ", Brumberger" after the word "Xxxxxxxx"
in clause (vi).
(c) Section 4.1(g) is hereby amended as follows:
(i) In the first sentence of clause (i), the word
"Brumberger," is inserted before the word "Xxxxxxx";
(ii) In the second sentence of clause (i), the word
"Brumberger," is inserted before the word "Xxxxxxx";
(iii) In the last sentence of clause (i), the word
"Brumberger," is inserted before the word "Xxxxxxxx"; and
(iv) In the third sentence of clause (v), the word
"Brumberger," is inserted before the word "Xxxxxxx."
(d) Section 5.3 of the Securityholders Agreement is hereby
amended by inserting the word "Brumberger," before the word "Xxxxxxx" in the
last sentence.
(e) Section 7.7 of the Securityholders Agreement is hereby
amended by inserting the following new paragraph immediately prior to the last
sentence of Section 7.7:
2
50
"if to Brumberger to:
Xxxx X. Xxxxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000"
5. Effect of Amendment. The Securityholders Agreement, as amended
hereby, shall remain in full force and effect.
6. Effectiveness. This Amendment shall be effective only upon the
Closing of the Stock Purchase Agreement.
7. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California without regard
to the conflicts of law provisions thereof.
[Signature Page to Follow]
3
51
COUNTERPART SIGNATURE PAGE TO
AMENDMENT TO SECURITYHOLDERS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment
to Securityholders Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
DLJ MERCHANT BANKING PARTNERS, L.P.
By DLJ MERCHANT BANKING, INC.
Managing General Partner
By: /s/DLJ Merchant Banking, Inc.
-------------------------------------------
Name:
Title:
DLJ INTERNATIONAL PARTNERS, C.V.
By DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/DLJ Merchant Banking, Inc.
-------------------------------------------
Name:
Title:
DLJ OFFSHORE PARTNERS, C.V.
By DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/DLJ Merchant Banking, Inc.
-------------------------------------------
Name:
Title:
4
52
DLJ MERCHANT BANKING FUNDING, INC.
By: /s/DLJ Merchant Banking Funding, Inc.
-------------------------------------------
Name:
Title:
DLJ CAPITAL CORPORATION
By: /s/DLJ Capital Corporation
-------------------------------------------
Name:
Title:
DLJ FIRST ESC L.L.C.
By: /s/DLJ First ESC L.L.C.
-------------------------------------------
Name:
Title:
SPROUT GROWTH II, L.P.
By DLJ Capital Corporation
Managing General Partner
By: /s/Xxxxxx Xxxxx
-------------------------------------------
Xxxxxx Xxxxx
Attorney-In-Fact
SPROUT CAPITAL VI, L.P.
By DLJ Capital Corporation
Managing General Partner
By: /s/Xxxxxx Xxxxx
-------------------------------------------
Xxxxxx Xxxxx
Attorney-In-Fact
5
53
/s/Xxxxxx X. Xxxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxxx
/s/Xxxx X. Xxxxxxxx
-------------------------------------------
Xxxx X. Xxxxxxxx
[Signatures Continued on Next Page]
6
54
COUNTERPART SIGNATURE PAGE TO
AMENDMENT TO SECURITYHOLDERS AGREEMENT
PHASE METRICS, INC.
By: /s/Xxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
ACKNOWLEDGED AND AGREED TO:
The undersigned party hereby agrees to be bound by the terms and conditions of
this Amendment and the Securityholders Agreement.
/s/Xxxx X. Xxxxxxxxxx
-------------------------------------------
Xxxx X. Xxxxxxxxxx
/s/Xxxx X. Xxxxxxxxxx
-------------------------------------------
Xxxx X. Xxxxxxxxxx
7
55
THIRD AMENDMENT TO
SECURITYHOLDERS AGREEMENT
THIS THIRD AMENDMENT TO SECURITYHOLDERS AGREEMENT dated as
of January 18, 1996 (the "Amendment") amends that certain Securityholders'
Agreement (as hereinafter defined) and is made among DLJ Merchant Banking
Partners, L.P., a Delaware limited partnership; DLJ International Partners,
C.V., a Netherlands Antilles limited partnership; DLJ Offshore Partners, C.V., a
Netherlands Antilles limited partnership; DLJ Merchant Banking Funding, Inc., a
Delaware corporation; DLJ Capital Corporation, a Delaware corporation; Sprout
Growth II, L.P., a Delaware limited partnership; Sprout Capital VI, L.P., a
Delaware limited partnership; DLJ First ESC L.L.C., a Delaware limited liability
company; PM Funding, Inc., a Delaware corporation (each of the foregoing, a "DLJ
Entity", and collectively, the "DLJ Entities"); Phase Metrics, Inc., a
California corporation (the "Issuer"); Xxxxxx X. Xxxxxxx, an individual
("Xxxxxxx"); Xxxx X. Xxxxxxxx, an individual ("Xxxxxxxx"); Xxxxxxx X. Xxxxxxxxx
and Xxxxxxx X. Xxxxxxxxx as Trustees of the Freedland 1994 Unitrust, Xxxx Xxxxxx
and Xxxxxxx Xxxxxx as Trustees of the Xxxxxx 1994 Unitrust, Hung Ba Le and Xxx
Xx as Trustees of the Le 1994 Unitrust, and Xxxx Xxxxxx and Xxxxxx Xxxxxx as
Trustees of the Xxxxxx 1994 Unitrust (collectively, the "Shareholder Trusts");
and Xxxx X. Xxxxxxxxxx and Xxxx X. Xxxxxxxxxx (collectively, "Brumberger")
WHEREAS, the Issuer desires to enter into that certain Stock Purchase
and Exchange Agreement dated as of even date herewith by and among the Issuer,
Air Bearings, Incorporated ("ABI"), Xxxxx X. and Xxxx Xxxx Xxxxxxxxx Xxxxxx and
Xxxxx X. Xxxxxx and Xxxx Xxxx Xxxxxxxxx Xxxxxx, as trustees for the Xxxxx X.
Xxxxxx and Xxxx Xxxx Xxxxxxxxx Xxxxxx Living Trust (collectively, "Xxxxxx"); and
Xxxxxxx X. and Xxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx, as
trustees for the Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx Living Trust
(collectively, "Rhotons"), pursuant to which the Issuer will acquire all of the
issued and outstanding capital stock of ABI (the "Stock Purchase Agreement");
WHEREAS, in connection with the Stock Purchase Agreement, the Issuer
will issue shares of its Common Stock (the "PM Shares") to Xxxxxx and to
Rhotons.
WHEREAS, in connection with the issuance of the PM Shares, each of the
Xxxxxx and each of the Rhotons will become a party to the Securityholders
Agreement dated as of November 23, 1994, as amended by the First Amendment to
Securityholders Agreement dated as of June 30, 1995 and the Second Amendment to
the Securityholders Agreement dated as of July 18, 1995 (the "Securityholders
Agreement"), by and among the DLJ Entities, Issuer, Schaefer, Cormier, the
Shareholder Trusts, and Brumberger;
WHEREAS, in order for the Xxxxxx and the Rhotons to each become a party
to the Securityholders Agreement, certain terms of the Securityholders Agreement
must be amended.
1
56
NOW, THEREFORE, for good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto
covenant and agree as follows:
1. Defined Terms. Capitalized terms not otherwise defined herein
shall have the respective meanings assigned to them in the Securityholders
Agreement.
2. References to the Securityholders Agreement. All references in
the Securityholders Agreement to "this Agreement", and to all other words
referring to the Securityholders Agreement (such as "herein", "hereto",
"herewith" and "hereunder"), shall be deemed to mean and refer to the
Securityholders Agreement, as amended by this Amendment. All references in the
Securityholders Agreement to "Securityholder" shall be deemed to include each of
Xxxxxx and Rhotons.
3. Addition of Xxxxxx and Rhotons to Securityholders Agreement.
The parties hereto acknowledge and agree that each of the Xxxxxx and each of the
Rhotons shall each be deemed a "Securityholder" under the Securityholders
Agreement and the PM Shares held by Xxxxxx and Rhotons shall be treated as
"Securities" and "Common Stock" under the Securityholders Agreement.
4. Amendments to Securityholders Agreement.
(a) In Section 1.1 of the Securityholders Agreement, the
following definitions are hereby added:
"`Xxxxxx' shall mean Xxxxx X. Xxxxxx and Xxxx Xxxx
Xxxxxxxxx Xxxxxx, as trustees for the Xxxxx X. Xxxxxx and Xxxx
Xxxx Xxxxxxxxx Xxxxxx Living Trust."
"`Rhotons' shall mean Xxxxxxx X. Xxxxxx and Xxxxxx
X. Xxxxxx, as trustees for the Xxxxxxx X. Xxxxxx and Xxxxxx X.
Xxxxxx Living Trust."
(b) Section 3.1(b) of the Securityholders Agreement is
hereby amended by inserting the words ", Xxxxxx, Rhotons" before the word
"Xxxxxxxx" in clause (vi).
(c) Section 4.1(g) is hereby amended as follows:
(i) In the first sentence of clause (i), the words
", Xxxxxx, Rhotons" are inserted after the word "Xxxxxxxx";
(ii) In the second sentence of clause (i), the
words ", Xxxxxx, Rhotons" are inserted after the word "Xxxxxxxx";
2
57
(iii) In the last sentence of clause (i), the words
". Xxxxxx, Rhotons" are inserted after the word "Xxxxxxxx"; and
(iv) In the third sentence of clause (v), the words
", Xxxxxx, Rhotons" are inserted after the word "Xxxxxxxx."
(d) Section 5.3 of the Securityholders Agreement is hereby
amended by inserting the words ", Xxxxxx, Rhotons" after the word "Xxxxxxxx" in
the last sentence.
(e) Section 7.7 of the Securityholders Agreement is hereby
amended by inserting the following new paragraph immediately prior to the last
sentence of Sec- tion 7.7:
"if to Xxxxxx to:
Xxxxx X. Xxxxxx
Xxxx Xxxx Xxxxxxxxx Xxxxxx
000 Xxxxxxx Xxx
Xxx Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxxx, Xxxxxxx & XxXxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
if to Rhotons to:
Xxxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
00 Xxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
with a copy to:
Xxxxxxx, Xxxxxxx & XxXxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000"
3
58
5. Effect of Amendment. The Securityholders Agreement, as amended
hereby, shall remain in full force and effect.
6. Effectiveness. This Amendment shall be effective only upon the
Closing of the Stock Purchase Agreement.
7. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California without regard
to the conflicts of law provisions thereof.
[Signature Page to Follow]
4
59
COUNTERPART SIGNATURE PAGE TO
AMENDMENT TO SECURITYHOLDERS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to Securityholders Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
DLJ MERCHANT BANKING PARTNERS, L.P.
By DLJ MERCHANT BANKING, INC.
Managing General Partner
By: /s/DLJ Merchant Banking, Inc.
-------------------------------------------
Name:
Title:
DLJ INTERNATIONAL PARTNERS, C.V.
By DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/DLJ Merchant Banking, Inc.
-------------------------------------------
Name:
Title:
DLJ OFFSHORE PARTNERS, C.V.
By DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/DLJ Merchant Banking, Inc.
-------------------------------------------
Name:
Title:
DLJ MERCHANT BANKING FUNDING, INC.
By: /s/DLJ Merchant Banking Funding, Inc.
-------------------------------------------
Name:
5
60
Title:
DLJ CAPITAL CORPORATION
By: /s/DLJ Capital Corporation
-------------------------------------------
Name:
Title:
DLJ FIRST ESC L.L.C.
By: /s/DLJ First ESC L.L.C.
-------------------------------------------
Name:
Title:
SPROUT GROWTH II, L.P.
By DLJ Capital Corporation
Managing General Partner
By: /s/Xxxxxx Xxxxx
-------------------------------------------
Xxxxxx Xxxxx
Attorney-In-Fact
SPROUT CAPITAL VI, L.P.
By DLJ Capital Corporation
Managing General Partner
By: /s/Xxxxxx Xxxxx
-------------------------------------------
Xxxxxx Xxxxx
Attorney-In-Fact
THE FREEDLAND 1994 UNITRUST
By: /s/Xxxxxxx X. Xxxxxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxxxxx, Trustee
6
61
By: /s/Xxxxxxx X. Xxxxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxxxx, Trustee
THE XXXXXX 1994 UNITRUST
By: /s/Xxxx Xxxxxx
-----------------------------------------
Xxxx Xxxxxx, Trustee
By: /s/Xxxxxxx Xxxxxx
-----------------------------------------
Xxxxxxx Xxxxxx, Trustee
THE LE 1994 UNITRUST
By: /s/Hung Ba Le
-----------------------------------------
Hung Ba Le, Trustee
By: /s/Xxx Xx
-----------------------------------------
Xxx Xx, Trustee
THE XXXXXX 1994 UNITRUST
By: /s/Xxxx Xxxxxx
-----------------------------------------
Xxxx Xxxxxx, Trustee
By: /s/Xxxxxx Xxxxxx
-----------------------------------------
Xxxxxx Xxxxxx, Trustee
/s/Xxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxx
/s/Xxxx X. Xxxxxxxx
-----------------------------------------
Xxxx X. Xxxxxxxx
[Signatures Continued on Next Page]
7
62
COUNTERPART SIGNATURE PAGE TO
AMENDMENT TO SECURITYHOLDERS AGREEMENT
PHASE METRICS, INC.
By: /s/Xxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
/s/Xxxx X. Xxxxxxxxxx
---------------------------------------
Xxxx X. Xxxxxxxxxx
/s/Xxxx X. Xxxxxxxxxx
---------------------------------------
Xxxx X. Xxxxxxxxxx
8
63
ACKNOWLEDGED AND AGREED TO:
The undersigned parties hereby agree to be bound by the terms and conditions of
this Amendment and the Securityholders Agreement.
/s/Xxxxx X. Xxxxxx
---------------------------------------------
Xxxxx X. Xxxxxx, individually and as Co-
Trustee with Xxxx Xxxx Xxxxxxxxx Xxxxxx
for the Xxxxx X. Xxxxxx and Xxxx Xxxx
Xxxxxxxxx Xxxxxx Living Trust
/s/Xxxx Xxxx Xxxxxxxxx Xxxxxx
---------------------------------------------
Xxxx Xxxx Xxxxxxxxx Xxxxxx, individually
and as Co-Trustee with Xxxxx X. Xxxxxx for
the Xxxxx X. Xxxxxx and Xxxx Xxxx
Xxxxxxxxx Xxxxxx Living Trust
/s/Xxxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxxx X. Xxxxxx, individually and as Co-
Trustee with Xxxxxx X. Xxxxxx for the
Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx
Living Trust
/s/Xxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxx, individually and as Co-
Trustee with Xxxxxxx X. Xxxxxx as Co-
Trustee for the Xxxxxxx X. Xxxxxx and
Xxxxxx X. Xxxxxx Living Trust
9
64
FOURTH AMENDMENT TO
SECURITYHOLDERS AGREEMENT
THIS FOURTH AMENDMENT TO SECURITYHOLDERS AGREEMENT dated
as of August 23, 1996 (the "Amendment") amends that certain Securityholders'
Agreement (as hereinafter defined) and is made among DLJ Merchant Banking
Partners, L.P., a Delaware limited partnership; DLJ International Partners,
C.V., a Netherlands Antilles limited partnership; DLJ Offshore Partners, C.V., a
Netherlands Antilles limited partnership; DLJ Merchant Banking Funding, Inc., a
Delaware corporation; DLJ Capital Corporation, a Delaware corporation; Sprout
Growth II, L.P., a Delaware limited partnership; Sprout Capital VI, L.P., a
Delaware limited partnership; DLJ First ESC L.L.C., a Delaware limited liability
company; PM Funding, Inc., a Delaware corporation (collectively, the "DLJ
Entities"); Phase Metrics, Inc., a California corporation (the "Issuer"); Xxxxxx
X. Xxxxxxx, an individual ("Xxxxxxx"); Xxxx X. Xxxxxxxx, an individual
("Xxxxxxxx"); Xxxxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxxxxxx as Trustees of the
Freedland 1994 Unitrust, Xxxx Xxxxxx and Xxxxxxx Xxxxxx as Trustees of the
Xxxxxx 1994 Unitrust, Hung Ba Le and Xxx Xx as Trustees of the Le 1994 Unitrust,
and Xxxx Xxxxxx and Xxxxxx Xxxxxx as Trustees of the Xxxxxx 1994 Unitrust; Xxxx
X. Xxxxxxxxxx and Xxxx X. Xxxxxxxxxx; Xxxxx X. and Xxxx Xxxx Xxxxxxxxx Xxxxxx
and Xxxxx X. Xxxxxx and Xxxx Xxxx Xxxxxxxxx Xxxxxx, as trustees for the Xxxxx X.
Xxxxxx and Xxxx Xxxx Xxxxxxxxx Xxxxxx Living Trust; and Xxxxxxx X. and Xxxxxx X.
Xxxxxx and Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx, as trustees for the Xxxxxxx
X. Xxxxxx and Xxxxxx X. Xxxxxx Living Trust.
WHEREAS, on the date hereof, the DLJ Entities, Xxxxxxxx and Xxxxxxx are
entering into a Securities Purchase Agreement and in connection with the
purchase of certain Securities of Xxxxxxxx and Xxxxxxx thereunder by the DLJ
Entities to be effected on the date hereof, the parties agree to amend the
Securityholders Agreement as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto
covenant and agree as follows:
1. Defined Terms. Capitalized terms not otherwise defined in this
Amendment shall have the respective meanings assigned to them in the
Securityholders Agreement.
2. References to the Securityholders Agreement. All references in
the Securityholders Agreement to "this Agreement", and to all other words
referring to the Securityholders Agreement (such as "herein", "hereto",
"herewith" and "hereunder"), shall be deemed to mean and refer to the
Securityholders Agreement, as amended by this Amendment.
65
3. Amendments to Securityholders Agreement.
(a) The definition of "Permitted Transferee" set forth in
Section 1.1 shall be amended as follows:
A new subsection (iii) shall be added to the definition of
Permitted Transferee following subsection (ii) thereof and shall
read in full as follows:
"(iv) in the case of Xxxxxxxx and Xxxxxxx, not withstanding
clause (E) of subsection (ii) above, the DLJ Entities;
provided that in no event shall Xxxxxxxx or Xxxxxxx
transfer to the DLJ Entities in excess of 50,000 shares
each of the Series A Preferred Stock in reliance on this
subsection (iv)."
(b) The word "and" shall be deleted from the end of
subsection (i) the period at the end of subsection (ii) shall be deleted and
replaced with ";", and "; and" shall be inserted at the end of subsection (iii)
in place of the period.
4. Effect of Amendment. The Securityholders Agreement, as amended
hereby, shall remain in full force and effect.
5. Effectiveness. This Amendment shall be effective only upon the
Closing of the Stock Purchase Agreement.
6. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California without regard
to the conflicts of law provisions thereof.
[Signature Page to Follow]
2
66
COUNTERPART SIGNATURE PAGE TO
AMENDMENT TO SECURITYHOLDERS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to Securityholders Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
DLJ MERCHANT BANKING PARTNERS, L.P.
By DLJ MERCHANT BANKING, INC.
Managing General Partner
By: /s/DLJ Merchant Banking, Inc.
-----------------------------------------------
Name:
Title:
DLJ INTERNATIONAL PARTNERS, C.V.
By DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/DLJ Merchant Banking, Inc.
-----------------------------------------------
Name:
Title:
DLJ OFFSHORE PARTNERS, C.V.
By DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/DLJ Merchant Banking, Inc.
-----------------------------------------------
Name:
Title:
DLJ MERCHANT BANKING FUNDING, INC.
By: /s/DLJ Merchant Banking Funding, Inc.
-----------------------------------------------
Name:
3
67
Title:
COUNTERPART SIGNATURE PAGE TO
AMENDMENT TO SECURITYHOLDERS AGREEMENT
DLJ CAPITAL CORPORATION
By: /s/DLJ Capital Corporation
-----------------------------------------------
Name:
Title:
DLJ FIRST ESC L.L.C.
By: /s/DLJ First ESC L.L.C.
-----------------------------------------------
Name:
Title:
SPROUT GROWTH II, L.P.
By DLJ Capital Corporation
Managing General Partner
By: /s/Xxxxxx Xxxxx
-----------------------------------------------
Xxxxxx Xxxxx
Attorney-In-Fact
SPROUT CAPITAL VI, L.P.
By DLJ Capital Corporation
Managing General Partner
By: /s/Xxxxxx Xxxxx
-----------------------------------------------
Xxxxxx Xxxxx
Attorney-In-Fact
/s/Xxxxxx X. Xxxxxxx
-----------------------------------------------
Xxxxxx X. Xxxxxxx
4
68
/s/Xxxx X. Xxxxxxxx
-----------------------------------------------
Xxxx X. Xxxxxxxx
5
69
COUNTERPART SIGNATURE PAGE TO
AMENDMENT TO SECURITYHOLDERS AGREEMENT
PHASE METRICS, INC.
By: /s/Xxxx X. Xxxxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
6
70
FIFTH AMENDMENT TO
SECURITYHOLDERS AGREEMENT
THIS FIFTH AMENDMENT TO SECURITYHOLDERS AGREEMENT dated as of December
31, 1996 (the "Amendment") amends that certain Securityholders' Agreement (as
hereinafter defined) and is made among DLJ Merchant Banking Partners, L.P., a
Delaware limited partnership; DLJ International Partners, C.V., a Netherlands
Antilles limited partnership; DLJ Offshore Partners, C.V., a Netherlands
Antilles limited partnership; DLJ Merchant Banking Funding, Inc., a Delaware
corporation; DLJ Capital Corporation, a Delaware corporation; Sprout Growth II,
L.P., a Delaware limited partnership; Sprout Capital VI, L.P., a Delaware
limited partnership; DLJ First ESC L.L.C., a Delaware limited liability company;
(collectively, the "DLJ Entities"); Phase Metrics, Inc., a California
corporation (the "Issuer"); Xxxxxx X. Xxxxxxx, an individual ("Xxxxxxx"); Xxxx
X. Xxxxxxxx, an individual ("Xxxxxxxx"); Xxxxxxx X. Xxxxxxxxx and Xxxxxxx X.
Xxxxxxxxx as Trustees of the Freedland 1994 Unitrust, Xxxx Xxxxxx and Xxxxxxx
Xxxxxx as Trustees of the Xxxxxx 1994 Unitrust, Hung Ba Le and Xxx Xx as
Trustees of the Le 1994 Unitrust, and Xxxx Xxxxxx and Xxxxxx Xxxxxx as Trustees
of the Xxxxxx 1994 Unitrust (collectively, the "Shareholder Trusts"); Xxxx X.
Xxxxxxxxxx and Xxxx X. Xxxxxxxxxx (collectively "Brumberger"); Xxxxx X. and Xxxx
Xxxx Xxxxxxxxx Xxxxxx and Xxxxx X. Xxxxxx and Xxxx Xxxx Xxxxxxxxx Xxxxxx, as
trustees for the Xxxxx X. Xxxxxx and Xxxx Xxxx Xxxxxxxxx Xxxxxx Living Trust
(collectively, "Xxxxxx"); and Xxxxxxx X. and Xxxxxx X. Xxxxxx and Xxxxxxx X.
Xxxxxx and Xxxxxx X. Xxxxxx, as trustees for the Xxxxxxx X. Xxxxxx and Xxxxxx X.
Xxxxxx Living Trust (collectively, "Rhotons").
WHEREAS, the Issuer has entered into that certain Agreement and Plan of
Reorganization Agreement dated as of December 6, 1996, by and among the Issuer,
PM Acquisition Corporation, a California corporation and wholly-owned subsidiary
of Issuer ("Merger Sub"), Santa Xxxxxxx Metric, Inc., a California corporation
("SBM"), Xxxxxxx X. Xxxxx ("Xxxxx"), Xxxxxxx X. Xxx ("Bye") and Xxxxx X. Xxxxxx
("Xxxxxx"), pursuant to which Merger Sub will be combined with and into SBM, the
surviving corporation in the merger (the "Reorganization Agreement").
WHEREAS, in connection with the Reorganization Agreement, the Issuer
will issue shares of its Common Stock (the "PM Shares") to Karam, Bye and
Xxxxxx.
WHEREAS, in connection with the issuance of the PM Shares, each of
Karam, Bye and Xxxxxx have agreed to become parties to the Securityholders
Agreement dated as of November 23, 1994, as amended by the First Amendment to
Securityholders Agreement dated as of June 30, 1995, the Second Amendment to the
Securityholders Agreement dated as of July 18, 1995, the Third Amendment to
Securityholders Agreement dated as of January 18, 1996 and the Fourth Amendment
to Securityholders Agreement dated as of August 23, 1996 (the "Securityholders
Agreement"), by and among the DLJ Entities, Issuer, Schaefer, Cormier, the
Shareholder Trusts, Brumberger, Xxxxxx and Rhotons.
71
WHEREAS, in order for Karam, Bye and Xxxxxx to each become a party to
the Securityholders Agreement, certain terms of the Securityholders Agreement
must be amended.
NOW, THEREFORE, for good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto
covenant and agree as follows:
1. Defined Terms. Capitalized terms not otherwise defined herein
shall have the respective meanings assigned to them in the Securityholders
Agreement.
2. References to the Securityholders Agreement. All references in
the Securityholders Agreement to "this Agreement", and to all other words
referring to the Securityholders Agreement (such as "herein", "hereto",
"herewith" and "hereunder"), shall be deemed to mean and refer to the
Securityholders Agreement, as amended by this Amendment. All references in the
Securityholders Agreement to "Securityholder" shall be deemed to include each of
Karam, Bye and Xxxxxx.
3. Addition of Karam, Bye and Xxxxxx to Securityholders
Agreement. The parties hereto acknowledge and agree that each of Karam, Bye and
Xxxxxx shall each be deemed a "Securityholder" under the Securityholders
Agreement and the PM Shares held by Karam, Bye and Xxxxxx shall be treated as
"Securities" and "Common Stock" under the Securityholders Agreement.
4. Amendments to Securityholders Agreement.
a. In Section 1.1 of the Securityholders Agreement, the
following definitions are hereby added:
"`Xxxxxx' shall mean Xxxxx X. Xxxxxx."
"`Bye' shall mean Xxxxxxx X. Xxx."
"`Karam' shall mean Xxxxxxx X. Xxxxx."
b. Section 3.1(b) of the Securityholders Agreement is
hereby amended by inserting the words "Karam, Bye, Xxxxxx" before the words
"Xxxxxx, Rhotons" in clause (vi).
c. Section 4.1(g) is hereby amended as follows:
(1) In the first sentence of clause (i), the words,
", Karam, Bye and Xxxxxx" are inserted after the words "Xxxxxx,
Rhotons";
2
72
(2) In the second sentence of clause (i), the
words, ", Karam, Bye and Xxxxxx" are inserted after the words
"Xxxxxx, Rhotons";
(3) In the last sentence of clause (i), the words,
", Karam, Bye and Xxxxxx" are inserted after the words "Xxxxxx,
Rhotons"; and
(4) In the third sentence of clause (v), the words,
", Karam, Bye and Xxxxxx," are inserted after the words "Xxxxxx,
Rhotons."
d. Section 5.3 of the Securityholders Agreement is hereby
amended by inserting the words, ", Karam, Bye and Xxxxxx," after the words
"Xxxxxx, Rhotons" in the last sentence.
e. Section 7.7 of the Securityholders Agreement is hereby
amended by inserting the following new paragraph immediately prior to the last
sentence of Sec- tion 7.7:
"if to Karam to:
Xxxxxxx X. Xxxxx
000 Xxxx Xxxxxxxx
Xxxxx Xxxxxxx, XX 00000
with a copy to:
Price, Xxxxxx & Parma LLP
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xx Xxxxx
Fax: (000) 000-0000
if to Bye to:
Xxxxxxx X. Xxx
000 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
with a copy to:
Price, Xxxxxx & Parma LLP
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xx Xxxxx
3
73
Fax: (000) 000-0000
if to Xxxxxx to:
Xxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxx, #0
Xxxxx Xxxxxxx, XX 00000
with a copy to:
Price, Xxxxxx & Parma LLP
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xx Xxxxx
Fax: (000) 000-0000"
5. Effect of Amendment. The Securityholders Agreement, as amended
hereby, shall remain in full force and effect.
6. Effectiveness. This Amendment shall be effective only at the
Effective Time (as defined in the Reorganization Agreement).
7. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California without regard
to the conflicts of law provisions thereof.
[Signature Page to Follow]
4
74
COUNTERPART SIGNATURE PAGE TO
AMENDMENT TO SECURITYHOLDERS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment
to Securityholders Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
DLJ MERCHANT BANKING PARTNERS, L.P.
By DLJ MERCHANT BANKING, INC.
Managing General Partner
By: /s/DLJ Merchant Banking, Inc.
--------------------------------------------
Name:
Title:
DLJ INTERNATIONAL PARTNERS, C.V.
By DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/DLJ Merchant Banking, Inc.
--------------------------------------------
Name:
Title:
DLJ OFFSHORE PARTNERS, C.V.
By DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/DLJ Merchant Banking, Inc.
--------------------------------------------
Name:
Title:
DLJ MERCHANT BANKING FUNDING, INC.
By: /s/DLJ Merchant Banking Funding, Inc.
--------------------------------------------
Name:
5
75
Title:
DLJ CAPITAL CORPORATION
By: /s/DLJ Capital Corporation
--------------------------------------------
Name:
Title:
DLJ FIRST ESC L.L.C.
By: /s/DLJ First ESC L.L.C.
--------------------------------------------
Name:
Title:
SPROUT GROWTH II, L.P.
By DLJ Capital Corporation
Managing General Partner
By: /s/Xxxxxx Xxxxx
--------------------------------------------
Xxxxxx Xxxxx
Attorney-In-Fact
SPROUT CAPITAL VI, L.P.
By DLJ Capital Corporation
Managing General Partner
By: /s/Xxxxxx Xxxxx
--------------------------------------------
Xxxxxx Xxxxx
Attorney-In-Fact
/s/Xxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxx
/s/Xxxx X. Xxxxxxxx
--------------------------------------------
Xxxx X. Xxxxxxxx
6
76
[Signatures Continued on Next Page]
7
77
COUNTERPART SIGNATURE PAGE TO
AMENDMENT TO SECURITYHOLDERS AGREEMENT
PHASE METRICS, INC.
By: /s/Xxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
ACKNOWLEDGED AND AGREED TO:
The undersigned parties hereby agree to be bound by the terms and conditions of
this Amendment and the Securityholders Agreement.
/s/Xxxxxxx X. Xxxxx
-----------------------------------------
Xxxxxxx X. Xxxxx
/s/Xxxxxxx X. Xxx
-----------------------------------------
Xxxxxxx X. Xxx
/s/Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx
ACKNOWLEDGEMENT OF SPOUSES:
The undersigned spouses of the foregoing partner acknowledge and agree to be
bound by the terms and conditions of this Amendment and the Securityholders
Agreement.
________________________________________
________________________________________
________________________________________
8
78
SIXTH AMENDMENT TO
SECURITYHOLDERS AGREEMENT
THIS SIXTH AMENDMENT TO SECURITYHOLDERS AGREEMENT dated as of August 1,
1997 (the "Amendment") amends that certain Securityholders' Agreement (as
hereinafter defined) and is made among DLJ Merchant Banking Partners, L.P., a
Delaware limited partnership; DLJ International Partners, C.V., a Netherlands
Antilles limited partnership; DLJ Offshore Partners, C.V., a Netherlands
Antilles limited partnership; DLJ Merchant Banking Funding, Inc., a Delaware
corporation; DLJ Capital Corporation, a Delaware corporation; Sprout Growth II,
L.P., a Delaware limited partnership; Sprout Capital VI, L.P., a Delaware
limited partnership; DLJ First ESC L.L.C., a Delaware limited liability company;
(collectively, the "DLJ Entities"); Phase Metrics, Inc., a California
corporation (the "Issuer"); Xxxxxx X. Xxxxxxx, an individual ("Xxxxxxx"); Xxxx
X. Xxxxxxxx, an individual ("Xxxxxxxx"); Xxxxxxx X. Xxxxxxxxx and Xxxxxxx X.
Xxxxxxxxx as Trustees of the Freedland 1994 Unitrust, Xxxx Xxxxxx and Xxxxxxx
Xxxxxx as Trustees of the Xxxxxx 1994 Unitrust, Hung Ba Le and Xxx Xx as
Trustees of the Le 1994 Unitrust, and Xxxx Xxxxxx and Xxxxxx Xxxxxx as Trustees
of the Xxxxxx 1994 Unitrust (collectively, the "Shareholder Trusts"); Xxxx X.
Xxxxxxxxxx and Xxxx X. Xxxxxxxxxx (collectively "Brumberger"); Xxxxx X. and Xxxx
Xxxx Xxxxxxxxx Xxxxxx and Xxxxx X. Xxxxxx and Xxxx Xxxx Xxxxxxxxx Xxxxxx, as
trustees for the Xxxxx X. Xxxxxx and Xxxx Xxxx Xxxxxxxxx Xxxxxx Living Trust
(collectively, "Xxxxxx"); Xxxxxxx X. and Xxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxx
and Xxxxxx X. Xxxxxx, as trustees for the Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx
Living Trust (collectively, "Rhotons"); Xxxxx X. Xxxxxx, an individual
("Xxxxxx"); Xxxxxxx X. Xxx, an individual ("Bye"); and Xxxxxxx X. Xxxxx, an
individual ("Karam").
WHEREAS,the Issuer desires to increase the number of members of its
Board of Directors from five (5) to six (6);
NOW, THEREFORE, for good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto
covenant and agree as follows:
1. Defined Terms. Capitalized terms not otherwise defined herein
shall have the respective meanings assigned to them in the Securityholders
Agreement.
2. References to the Securityholders Agreement. All references in
the Securityholders Agreement to "this Agreement," and to all other words
referring to the Securityholders Agreement (such as "herein," "hereto,"
"herewith" and "hereunder"), shall be deemed to mean and refer to the
Securityholders Agreement, as amended by this Amendment.
79
3. Amendments to Securityholders Agreement.
Article 2, Section 2.1 shall be amended as follows:
2.1 Composition of the Board. The Board shall consist of
six members, of whom one shall be designated by DLJ Merchant
Banking Partners, L.P., one shall be designated by Sprout Growth
II, L.P., one shall be designated by Xxxxxxxx, one shall be
designated by Xxxxxxx, one shall be an individual (the "Fifth
Director") designated by Xxxxxxx and Xxxxxxxx and acceptable to
the DLJ Entities, which individual is neither an "Affiliate" nor
an "Associate" (as those terms are used within the meaning of
Rule 12b-2 of the General Rules and Regulations under the
Exchange Act) of the DLJ Entities, Xxxxxxxx or Xxxxxxx, and one
shall be an individual (the "Sixth Director") designated by a
majority of the other five directors, which individual is neither
an "Affiliate" nor an "Associate" (as those terms are used within
the meaning of Rule 12b-2 of the General Rules and Regulations
under the Exchange Act) of the DLJ Entities, Xxxxxxxx or Xxxxxxx.
Each Securityholder entitled to vote for the election of
directors to the Board agrees that it will vote its Securities or
execute consents, as the case may be, and take all other
necessary action (including causing the Issuer to call a special
meeting of shareholders) in order to ensure that the composition
of the Board is as set forth in this Section 2.1.
4. Effect of Amendment. The Securityholders Agreement, as amended
hereby, shall remain in full force and effect.
5. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California without regard
to the conflicts of law provisions thereof.
[Signature Page to Follow]
2
80
COUNTERPART SIGNATURE PAGE TO
AMENDMENT TO SECURITYHOLDERS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Sixth Amendment
to Securityholders Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
DLJ MERCHANT BANKING PARTNERS, L.P.
By DLJ MERCHANT BANKING, INC.
Managing General Partner
By: /s/DLJ Merchant Banking, Inc.
-------------------------------------------
Name:
Title:
DLJ INTERNATIONAL PARTNERS, C.V.
By DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/DLJ International Partners, C.V.
-------------------------------------------
Name:
Title:
DLJ OFFSHORE PARTNERS, C.V.
By DLJ MERCHANT BANKING, INC.
Advisory General Partner
By: /s/DLJ Offshore Partners, C.V.
-------------------------------------------
Name:
Title:
DLJ MERCHANT BANKING FUNDING, INC.
By: /s/DLJ Merchant Banking Funding, Inc.
-------------------------------------------
Name:
Title:
3
81
DLJ CAPITAL CORPORATION
By: /s/DLJ Capital Corporation
-------------------------------------------
Name:
Title:
DLJ FIRST ESC L.L.C.
By: /s/DLJ First ESC L.L.C.
-------------------------------------------
Name:
Title:
SPROUT GROWTH II, L.P.
By DLJ Capital Corporation
Managing General Partner
By: /s/Xxxxxx Xxxxx
-------------------------------------------
Xxxxxx Xxxxx
Attorney-In-Fact
SPROUT CAPITAL VI, L.P.
By DLJ Capital Corporation
Managing General Partner
By: /s/Xxxxxx Xxxxx
-------------------------------------------
Xxxxxx Xxxxx
Attorney-In-Fact
/s/Xxxxxx X. Xxxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxxx
/s/Xxxx X. Xxxxxxxx
-------------------------------------------
Xxxx X. Xxxxxxxx
[Signatures Continued on Next Page]
4
82
COUNTERPART SIGNATURE PAGE TO
AMENDMENT TO SECURITYHOLDERS AGREEMENT
PHASE METRICS, INC.
By: /s/Xxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
5
