STOCKHOLDERS' AGREEMENT
By and among
PACKARD BIOSCIENCE COMPANY,
THE MANAGEMENT INVESTORS LISTED IN SCHEDULE 1,
THE NON-MANAGEMENT INVESTORS LISTED IN SCHEDULE 2,
MERRILL LYNCH KECALP L.P. 1994,
KECALP INC.
And
STONINGTON CAPITAL APPRECIATION 1994 FUND, L.P.
Dated as of March 4, 1997
STOCKHOLDERS' AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS........................................................... 2
ARTICLE II
TRANSFER RESTRICTIONS................................................. 11
Section 2.1. General Restrictions on Transfer................. 11
Section 2.2. Certain Permitted Transfers...................... 11
Section 2.3. Rights of First Refusal.......................... 13
Section 2.4. Termination of Rights of First Refusal
and Restrictions on Transfer................... 16
Section 2.5. Sale of Shares to a Third Party.................. 16
Section 2.6. Legend on Certificates........................... 17
Section 2.7. Limitation on Institutional Investors............ 18
ARTICLE III
PUT AND CALL RIGHTS................................................... 19
Section 3.1. Put Rights....................................... 19
Section 3.2. Call Rights...................................... 21
Section 3.3. Reallocation Right............................... 23
Section 3.4. Termination of Put and Call Rights............... 24
ARTICLE IV
CORPORATE GOVERNANCE.................................................. 24
Section 4.1. Directors........................................ 24
Section 4.2. Voting........................................... 24
ARTICLE V
REGISTRATION RIGHTS................................................... 25
Section 5.1. Registration..................................... 25
Section 5.2. Registration Procedures.......................... 27
Section 5.3. Indemnification.................................. 30
Section 5.4. Holdback Agreement............................... 34
(i)
PAGE
ARTICLE VI
MISCELLANEOUS ....................................................... 35
Section 6.1. Binding Effect................................... 35
Section 6.2. No Right of Employment; Expiration
of Consulting Arrangements..................... 35
Section 6.3. Recapitalizations, Exchanges, Etc.
Affecting Shares............................... 35
Section 6.4. Waiver and Amendment............................. 35
Section 6.5. Tax Withholding and Other Tax Matters............ 36
Section 6.6. Notices.......................................... 37
Section 6.7. Applicable Law and Time of Essence............... 38
Section 6.8. Integration...................................... 38
Section 6.9. Descriptive Headings, Etc........................ 38
Section 6.10. Counterparts..................................... 38
Section 6.11. Successors, Assigns and Transferees.............. 38
Section 6.12. Severability..................................... 39
Section 6.13. Termination...................................... 39
Section 6.14. Community Property States........................ 39
Schedule 1. List of Management Investors
Schedule 2. List of Non-Management Investors
(ii)
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (the "Agreement"), dated as of March
4, 1997, by and among Packard BioScience Company, a Delaware corporation
formerly known as Canberra Industries, Inc. ("Packard"), the employee
stockholders and the holders of Existing Shares, Existing Options (each as
defined below) or options under the Management Stock Incentive Plan (the
"Management Stock Incentive Plan") listed in Schedule 1 hereto, as such Schedule
1 may be amended from time to time (collectively, the "Management Investors,"
and each individually, a "Management Investor"), certain other stockholders
listed in Schedule 2 hereto, as such Schedule 2 may be amended from time to time
(collectively, the "Non-Management Investors," and each individually, a "Non-
Management Investor," and together with the Management Investors, the "Packard
Investors"), KECALP Inc., Merrill Lynch KECALP L.P. 1994 (together with KECALP
Inc., the "Institutional Investors"), and Stonington Capital Appreciation 1994
Fund, L.P., a Delaware limited partnership ("Stonington").
W I T N E S S E T H:
WHEREAS, pursuant to a Recapitalization and Stock Purchase
Agreement, dated as of November 26, 1996 (the "Recapitalization Agreement"),
by and among Packard, the Management Investors and Stonington, simultaneously
with the execution and delivery of this Agreement, Packard is being
recapitalized (the "Recapitalization");
WHEREAS, the Institutional Investors and Stonington are acquiring
Shares (as defined below) and certain of the Packard Investors (i) will be
retaining Existing Shares and/or Existing Options and/or (ii) will be granted
Performance Options and/or Incentive Options (each as defined below) to purchase
additional Shares pursuant to the terms of the Management Stock Incentive Plan;
and
WHEREAS, Packard and the Stockholders (as defined below) wish to
enter into this Agreement to provide certain rights and obligations among them.
NOW, THEREFORE, in consideration of the premises and mutual
agreements, covenants and provisions contained herein, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
meanings ascribed to them below:
"Agreement" shall have the meaning specified in the preamble hereto.
"Board of Directors" shall mean the board of directors of Packard.
"Call Event" shall have the meaning specified in Section 3.2(a)
hereof.
"Call Notice" shall have the meaning specified in Section 3.2(a)
hereof.
"Call Notice Period" shall have the meaning specified in Section
3.2(a) hereof.
"Call Options" shall have the meaning specified in Section 3.2(a)
hereof.
"Call Right" shall have the meaning specified in Section 3.2(a)
hereof.
"Call Shares" shall have the meaning specified in Section 3.2(a)
hereof.
"Cause" used in connection with a termination of employment (or, in
the case of a director or consultant, the termination of such person's retention
or appointment as a director or consultant) of a Management Investor by Packard
and its subsidiaries shall mean (unless otherwise defined in an employment (or
consulting or similar) agreement between such Management Investor and Packard or
any of its subsidiaries, in which case the term "Cause" as used herein with
respect to such Management Investor shall have the meaning ascribed to it
therein), (i) the Management Investor's willful failure to perform the duties of
his or her employment (or director or consulting relationship, as the case may
be) in any material respect after notice from Packard and failure to cure within
ten business days after delivery of such notice, (ii) malfeasance or gross
negligence in the performance of a Management Investor's duties of employment
(or director or consulting relationship, as the case may be), (iii) the
Management Investor's commission of a felony under the laws of the United States
or any state thereof (whether or not in connection with
-2-
his or her employment (or director or consulting relationship, as the case may
be)), (iv) the Management Investor's disclosure of confidential information
respecting Packard's or any of its subsidiaries' business to any individual or
entity which is not in the performance of the duties of his or her employment
(or director or consulting relationship, as the case may be) and which is
harmful to Packard, or (v) any other act or omission by the Management Investor
(other than an act or omission resulting from the exercise by the Management
Investor of good faith business judgment) which is materially injurious to the
financial condition or the business reputation of Packard or any of its
affiliates.
"Closing" shall have the meaning specified in Section 3.1 of the
Recapitalization Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Compensation Committee" shall have the meaning specified in Section
5 of the Management Stock Incentive Plan.
"Credit Agreement" shall mean the Credit Agreement, dated as of the
date hereof, among Packard, the lenders who are parties thereto and Bank of
America National Trust and Savings Association, as Administrative Agent.
"Disability" with respect to a Management Investor shall mean
(unless otherwise defined in an employment (or consulting or similar) agreement
between such Management Investor and Packard or any of its subsidiaries, in
which case the term "Disability" as used herein with respect to such Management
Investor shall have the meaning ascribed to it therein), the inability of such
Management Investor to perform substantially such Management Investor's duties
and responsibilities to Packard or any of its subsidiaries as an employee,
consultant or director, as the case may be, by reason of a physical or mental
disability or infirmity (i) for a continuous period of six months or (ii) at
such earlier time as such Management Investor submits medical evidence of such
disability satisfactory to the Compensation Committee acting reasonably that
such Management Investor has a physical or mental disability or infirmity that
will likely prevent such Management Investor from substantially performing such
Management Investor's duties and responsibilities for six months or longer. The
date of such Disability shall be on the last day of such six-month period or the
day on which the Compensation Committee determines that the Management Investor
has a physical or mental disability or infirmity as provided in clause (ii)
herein.
-3-
"Drag-Along Right" shall have the meaning specified in Section 2.5
hereof.
"Duly Endorsed" shall mean duly endorsed in blank by the person or
persons in whose name a Share is registered or accompanied by a duly executed
stock or security assignment or stock transfer power separate from the Share
with the signature(s) thereon guaranteed by a commercial bank or trust company
or a member of a national securities exchange or the National Association of
Securities Dealers, Inc. or such other executed stock or security assignment as
the Compensation Committee may in its sole discretion deem acceptable.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute then in effect, and a reference to a
particular section thereof shall be deemed to include a reference to the
comparable section, if any, of such similar federal statute.
"Existing Options" and "Existing Shares" shall mean Shares and
options to purchase Shares held by Packard Investors prior to the Closing and
retained by such Packard Investors in the Recapitalization.
"Fair Value Price" shall mean, with respect to each Share, and
option to purchase Shares then exercisable in accordance with its terms as the
case may be, as of any date of determination an amount equal to the average of
the last reported sale price for the 20 consecutive trading days ended
immediately preceding the date of determination for a Share on the principal
national securities exchange registered under the Exchange Act on which Shares
are listed or admitted to trading, or, if not listed on any such exchange, the
average of the closing sale prices per Share during the 20 consecutive trading
days ended immediately preceding the date of determination on NASDAQ or, if not
quoted on NASDAQ, the average of the highest reported bid and lowest reported
asked quotation on NASDAQ during the 20 consecutive trading days immediately
preceding the date of determination; provided that if such sales prices or
quotations are not available, the Fair Value Price as of any date of
determination shall be an amount equal to the quotient obtained by dividing (1)
the difference between (a) the product of (i) Packard's consolidated earnings
from continuing operations before interest, taxes and depreciation or
amortization, excluding extraordinary items, for the four full fiscal quarters
ending immediately preceding the date of determination and (ii) 7.0, and (b)
Packard's average outstanding consolidated indebtedness and preferred stock
(valued, with respect to each series thereof, at the greater of its liquidation
preference and its call or redemption price then in effect, if any) based
-4-
upon such amounts outstanding at the end of each of the four fiscal quarters
ending immediately preceding the date of determination (net of any cash and cash
equivalents) by (2) the number of Shares then outstanding determined on a fully
diluted basis (using the "treasury stock method" in accordance with generally
accepted accounting principles), except that, if any date of determination
occurs during the first full fiscal quarter immediately following the Closing,
the Fair Value Price, in lieu of the result of the formula set forth in this
proviso, shall be the Original Purchase Price (as defined below), and if any
date of determination occurs during the second, third or fourth full fiscal
quarters immediately following the Closing, the Fair Value Price shall be
calculated in accordance with the formula set forth in this proviso based on
actual results of Packard during the period since the Closing extrapolated on an
annualized basis; provided, further, that if there has been a disposition of
assets, an acquisition, recapitalization or reclassification of securities or
any other extraordinary transaction in the preceding four quarters, then the
Fair Value Price as determined by the formula set forth in the immediately
preceding proviso may (but shall not be required to) be adjusted as determined
by the Board of Directors acting reasonably.
"Hart-Scott Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Incentive Option Agreements" shall mean each Incentive Option
Agreement dated as of the date hereof or a date after the date hereof between
Packard and the employee, director or consultant named therein.
"Incentive Options" shall mean Incentive Options granted pursuant to
the Management Stock Incentive Plan.
"Initial Public Offering" shall have the meaning specified in
Section 2.1 hereof.
"Institutional Investors" shall have the meaning specified in the
preamble hereto.
"Institutional Shares" shall mean the Shares (from time to time)
beneficially owned by the Institutional Investors.
"Involuntary Termination" shall mean, with respect to a Management
Investor, (a) the termination of his or her employment (or director or
consulting relationship, as the case may be) with Packard or its subsidiaries by
Packard or its subsidiaries, or successors or assigns which termination is not
-5-
for Cause or the result of the Management Investor's Retirement, death or
Disability, or (b) the sale or transfer (other than to Packard or another of its
subsidiaries) by Packard or any of its subsidiaries of substantially all of the
capital stock of Packard or of the subsidiary of Packard which employs such
Management Investor or a sale (other than to Packard or another of its
subsidiaries) of all or substantially all of the assets of the business unit of
Packard which employs such Management Investor, provided that as a result
thereof the Management Investor is no longer an employee (or director or
consultant, as the case may be) of Packard or one of its subsidiaries.
"Management Investors" shall have the meaning specified in the
preamble hereto. Unless the context otherwise requires, when used in this
Agreement the term "Management Investors" shall include any employee, director
or consultant of Packard or any of its subsidiaries who has been granted an
option pursuant to the Management Stock Incentive Plan.
"Management Investor's Estate" shall mean a Management Investor's
executors, administrators or testamentary trustees.
"Management Shares" shall mean the Shares (from time to time)
beneficially owned by the Management Investors or their Permitted Transferees,
including Shares issued upon the exercise of an option granted under the
Management Stock Incentive Plan or any other benefit plan.
"Management Stock Incentive Plan" shall mean the Management Stock
Incentive Plan adopted by the Board of Directors as of the Closing.
"Non-Management Investors" shall have the meaning specified in the
preamble hereto.
"Option Call Price" shall have the meaning specified in Section
3.2(a) hereof.
"Option Put Price" shall have the meaning specified in Section
3.1(a) hereof.
"Original Purchase Price" shall mean, with respect to Shares, the
actual purchase price per Share (including the exercise price for Shares
purchased pursuant to options or similar securities), except that, with respect
to Existing Shares, the Original Purchase Price shall mean the Share Purchase
Price (as such term is defined in the Recapitalization Agreement).
-6-
"Packard" shall have the meaning specified in the preamble hereto.
"Packard Default Offerees" shall have the meaning specified in
Section 2.3(e) hereof.
"Packard Investors" shall have the meaning specified in the preamble
hereto.
"Packard Note" shall have the meaning specified in Section 3.1(b)
"Packard Offerees" shall have the meaning specified in Section
2.3(b) hereof.
"Packard Proposal" shall have the meaning specified in Section
2.3(a) hereof.
"Packard Purchaser" shall have the meaning specified in Section
2.3(a) hereof.
"Packard Shares" shall mean the Management Shares and the Shares
(from time to time) beneficially owned by the Non-Management Investors or their
Permitted Transferees.
"Packard Transfer Default Shares" shall have the meaning specified
in Section 2.3(e) hereof.
"Packard Transfer Notice" shall have the meaning specified in
Section 2.3(a) hereof.
"Packard Transfer Offerees" shall have the meaning specified in
Section 2.3(b) hereof.
"Packard Transfer Shares" shall have the meaning specified in
Section 2.3(a) hereof.
"Performance Option Agreements" shall mean each Performance Option
Agreement, dated as of the date hereof or a date after the date hereof, between
Packard and the employee, director or consultant named therein.
"Performance Options" shall mean Performance Options granted
pursuant to the Management Stock Incentive Plan.
"Permitted Transferee" shall have the meaning specified in Section
2.2(d) hereof.
"Permitted Transfers" shall have the meaning specified in Section
2.2 hereof.
-7-
"Person" shall mean an individual, partnership, joint venture,
corporation, trust, unincorporated organization or government or any department
or agency thereof.
"Put Notice" shall have the meaning specified in Section 3.1(a)
hereof.
"Put Notice Period" shall have the meaning specified in Section
3.1(a) hereof.
"Put Options" shall have the meaning specified in Section 3.1(a)
hereof.
"Put Right" shall have the meaning specified in Section 3.1(a)
hereof.
"Put Shares" shall have the meaning specified in Section 3.1(a)
hereof.
"Recapitalization" shall have the meaning specified in the first
WHEREAS clause hereto.
"Recapitalization Agreement" shall have the meaning specified in the
first WHEREAS clause hereto.
"Registrable Securities" shall mean the Packard Shares, the
Institutional Shares and the Stonington Shares, collectively; provided, however,
as to any particular Registrable Securities, once issued such securities shall
cease to be Registrable Securities when (i) a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (ii) such securities shall have been sold
pursuant to Rule 144 (or any successor provision) under the Securities Act,
(iii) such securities shall have been otherwise transferred and new certificates
for such securities not bearing a legend restricting further transfer shall have
been delivered by Packard, (iv) such securities shall have ceased to be
outstanding (in the case of Shares underlying options granted under the
Management Stock Incentive Plan, such Shares cease to be outstanding after such
options have been exercised), or (v) in the case of Shares held by a Packard
Investor, such securities shall have been transferred to any Person other than a
Packard Investor or a Permitted Transferee.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with Article V of this Agreement, including without
limitation, (i) all SEC
-8-
and stock exchange or National Association of Securities Dealers, Inc.
registration and filing fees, (ii) all fees and expenses of complying with
securities or "blue sky" laws (including reasonable fees and disbursements of
counsel for the underwriters in connection with "blue sky" qualifications of the
Registrable Securities), (iii) all printing, messenger and delivery expenses,
(iv) the fees and disbursements of counsel for Packard and of Packard's
independent public accountants, including the expenses of any special audits
and/or "cold comfort" letters required by or incident to such performance and
compliance, (v) the reasonable fees and disbursements of one counsel retained by
each of Stonington and the Packard Investors as a group in connection with each
such registration, (vi) any fees and disbursements of underwriters customarily
paid by issuers or sellers of securities and the reasonable fees and expenses of
any special experts retained in connection with the requested registration,
including any fee payable to a qualified independent underwriter within the
meaning of the rules of the National Association of Securities Dealers, Inc.,
but excluding underwriting discounts and commissions and transfer taxes, if any,
(vii) internal expenses of Packard or any of its subsidiaries (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties) and (viii) securities acts liability
insurance (if Packard elects to obtain such insurance).
"Remaining Packard Transfer Shares" shall have the meaning specified
in Section 2.3(b) hereof.
"Repurchase Period" shall have the meaning specified in Section 3.3
hereof.
"Repurchased Equity" shall have the meaning specified in Section 3.3
hereof.
"Resale Notice" shall have the meaning specified in Section 3.3.
"Retirement" shall mean with respect to any Management Investor
(unless otherwise defined in an employment (or consulting or similar) agreement
between such Management Investor and Packard or any of its subsidiaries, in
which case the term "Retirement" as used herein with respect to such Management
Investor shall have the meaning ascribed to it therein) his termination of
employment after attainment of age 65 or such other retirement policy as may be
in force from time to time or as may otherwise be approved by the Compensation
Committee.
-9-
"Retirement Put Event" shall have the meaning specified in Section
3.1(a) hereof.
"SEC" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act or the Exchange Act.
"Section 5.1 Notice" shall have the meaning specified in Subsection
5.1(a) hereof.
"Section 5.1 Sale Number" shall have the meaning specified in
Subsection 5.1(c) hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute then in effect, and a reference to a particular
section thereof shall be deemed to include a reference to the comparable
section, if any, of any such similar federal statute.
"Share Call Price" shall have the meaning specified in Section
3.2(a) hereof.
"Share Put Price" shall have the meaning specified in Section 3.1(a)
hereof.
"Shares" shall mean the shares of common stock, par value $.01 per
share, of Packard.
"Stockholders" shall mean the beneficial owners of the Packard
Shares (including holders of options granted to employees, directors and
consultants of Packard or any of its subsidiaries under the Management Stock
Incentive Plan), the Institutional Shares and the Stonington Shares
collectively, and each such individual holder shall be referred to as a
"Stockholder."
"Stonington" shall have the meaning specified in the preamble
hereto.
"Stonington Shares" shall mean the Shares from time to time
beneficially owned by Stonington.
"Tag-Along Right" shall have the meaning specified in Section 2.5
hereof.
"Termination Put Event" shall have the meaning specified in Section
3.1(a) hereof.
"Third Party" shall have the meaning specified in Section 2.5
hereof.
-10-
"Transferring Packard Investor" shall have the meaning specified in
Section 2.3(a) hereof.
"Voluntary Resignation" shall mean (unless otherwise defined in an
employment (or consulting or similar) agreement between a Management Investor
and Packard or any of its subsidiaries, in which case the term "Voluntary
Resignation" as used herein with respect to such Management Investor shall have
the meaning ascribed to it therein) the termination of a Management Investor's
employment (or director or consultant relationship) with Packard or any of its
subsidiaries by such Management Investor, other than for Retirement, death or
Disability.
"Withdrawal Election" shall have the meaning specified in Subsection
5.1(c) hereof.
ARTICLE II
TRANSFER RESTRICTIONS
Section 2.1 General Restrictions on Transfer. Prior to the earlier
of (a) the fifth anniversary of the Closing or (b) the completion of a sale of
Shares pursuant to an effective registration statement under the Securities Act
(other than a registration statement relating to Shares issuable upon exercise
of employee stock options or in connection with any employee benefit plan of
Packard or any of its subsidiaries and other than a registration statement
relating to the public offering of Shares representing (when taken together
with all Shares sold under previous registration statements which were not in
connection with employee stock options or employee benefit plans) less than 10%
of the then outstanding Shares) (an "Initial Public Offering"), the Packard
Investors shall not, without the prior written consent of Packard, directly or
indirectly sell, offer, transfer, assign, pledge, hypothecate or otherwise
dispose of any Packard Shares, except for transfers made in accordance with the
provisions of Sections 2.2 and 2.5 and Articles III and V hereof and which are
made in compliance with the federal securities laws and all applicable state
securities, or "blue sky," laws. No transfer of Packard Shares in violation of
this Agreement shall be made or recorded on the books of Packard and any such
transfer shall be void and of no effect.
Section 2.2 Certain Permitted Transfers. Each of the Stockholders
and Packard acknowledges and agrees that any of the following transfers of
Shares (collectively, the "Permitted Transfers") are deemed to be permitted
transfers of such securities:
-11-
(a) a transfer made to Packard pursuant to the provisions of
Sections 2.3, 2.5, and Article III hereof ;
(b) a transfer made with the prior written consent of Packard;
(c) if a Packard Investor is an individual, a transfer of Packard
Shares upon the death of such Packard Investor to his executors, administrators
and testamentary trustees; and
(d) a transfer of Management Shares made in compliance with the
federal and all applicable state securities laws to the Management Investor's
spouse, parents, children or grandchildren or to a trust or similar entity, the
beneficiaries of which, or to a corporation or partnership, the stockholders or
limited and general partners of which, include only the Management Investor and
such Management Investor's spouse, parents, children or grandchildren;
provided that no transfers pursuant to Section 2.2(c) or (d) shall be permitted
(and any such transfer shall be void and of no effect) unless and until the
applicable transferee shall agree in writing, in form and substance reasonably
satisfactory to Packard, to become bound, and becomes bound, by all the terms of
this Agreement to the same extent as a Packard Investor is so bound. Each Person
to whom Packard Shares may be transferred or pledged pursuant to Sections 2.2(c)
and (d) is hereinafter sometimes referred to as a "Permitted Transferee." Any
Permitted Transferee may further transfer any Packard Shares hereafter acquired
by such Permitted Transferee to any other Permitted Transferee of the Packard
Investor (including the Packard Investor); provided that no such transfer shall
be made to a Permitted Transferee (or the Packard Investor) hereunder (whether
by a Packard Investor or another Permitted Transferee) unless and until such
Permitted Transferee (or, in the event of transfers to the Packard Investor, the
Packard Investor) shall agree in writing, in form and substance reasonably
satisfactory to Packard, to become bound, and becomes bound, by all the terms of
this Agreement to the same extent as a Packard Investor is so bound.
Notwithstanding anything to the contrary contained herein, no transfer to or
from the Packard Investor or any Permitted Transferee shall be made if, as a
result thereof, Packard would be required to register any Shares under the
Securities Act, the Exchange Act and any applicable state securities, or "blue
sky," laws; and
(e) transfers made in connection with an Initial Public Offering or
pursuant to Article V hereof.
-12-
Section 2.3 Rights of First Refusal. (a) On or after the fifth
anniversary of the Closing and prior to the tenth anniversary of the Closing,
provided that an Initial Public Offering has not occurred, the Packard Investors
and their Permitted Transferees may not, directly or indirectly sell, offer,
transfer, assign, pledge, hypothecate or otherwise dispose of (except for
transfers made in accordance with the provisions of Sections 2.2 and 2.5 and
Articles III and V hereof and which are made in compliance with the federal
securities laws and all applicable state securities, or "blue sky," laws) any or
all of the Packard Shares then owned by such Packard Investor or such Packard
Investor's Permitted Transferees unless (i) such Packard Investor or his or her
Permitted Transferee (either of the foregoing a "Transferring Packard Investor")
shall have received a written offer (the "Packard Proposal") from a bona fide
proposed purchaser of the Packard Shares (the "Packard Purchaser"), which
Packard Proposal shall remain open and available for acceptance for a period of
at least 40 calendar days and provide for the sale of a designated number of
Packard Shares (the "Packard Transfer Shares") to the Packard Purchaser (subject
only to the rights of Packard and the other Packard Investors under this Section
2.3) at a sales price consisting solely of cash in United States currency at
closing and containing the written agreement of the Packard Purchaser to be
bound by the terms and conditions of this Agreement, as amended from time to
time, and (ii) such Transferring Packard Investor shall have first given a
written notice (the "Packard Transfer Notice") to Packard containing an
irrevocable offer (open to acceptance for a period of 20 calendar days after the
date such Packard Transfer Notice is given) to sell such Packard Transfer Shares
to the Packard Transfer Offerees (as defined below) at the price and on terms no
less favorable than those specified in the Packard Proposal.
(b) The Packard Transfer Notice shall give Packard the right to
purchase all the Packard Transfer Shares. If Packard elects to purchase less
than all of the Packard Transfer Shares, Packard shall communicate, at least 10
calendar days prior to expiration of the 20-day period under the Packard
Transfer Notice, to all the Packard Investors (other than the selling Packard
Investor) listed in Schedule 1 or Schedule 2 hereto who then hold of record any
Shares ("Packard Offerees" and, together with Packard, the "Packard Transfer
Offerees") the Packard Transfer Notice and the number of Packard Transfer Shares
Packard intends to elect not to purchase ("Remaining Packard Transfer Shares").
A Packard Offeree who wishes to purchase Remaining Packard Transfer Shares shall
provide Packard with written notice specifying the number of Remaining Packard
Transfer Shares as to which such Packard Offeree desires to accept the offer
within 7 calendar days of the giving
-13-
of such notice by Packard. If the aggregate number of Remaining Packard Transfer
Shares as to which notice of acceptance is provided by all Packard Offerees
exceeds the number of Remaining Packard Transfer Shares, then the right to
purchase Remaining Packard Transfer Shares shall be allocated among the Packard
Offerees on a pro rata basis (with rounding to avoid fractional Shares) based on
the percentage of Remaining Packard Transfer Shares corresponding to the
relationship of the aggregate number of Remaining Packard Transfer Shares sought
by each accepting Packard Offeree to the aggregate number of Remaining Packard
Transfer Shares sought by all accepting Packard Offerees. If the aggregate
number of Remaining Packard Transfer Shares as to which notice of acceptance is
provided by all Packard Offerees is less than the number of Remaining Packard
Transfer Shares, Packard shall have the right, but not the obligation, to
purchase the remainder of such Remaining Packard Transfer Shares.
(c) Packard, on behalf of itself, if it elects to purchase Packard
Transfer Shares, or its designee, and/or on behalf of all purchasing Packard
Offerees, if any, may accept such offer as to all, but not less than all, of the
Packard Transfer Shares by providing the Transferring Packard Investor with
written notice (specifying the number of Packard Transfer Shares as to which
each Packard Transfer Offeree is accepting the offer) within 20 calendar days
after the date the Packard Transfer Notice is given to Packard.
(d) The closing of the purchase by the Packard Transfer Offerees of
the Packard Transfer Shares shall take place at the principal office of Packard
on the later of (x) the 10th business day after the expiration of the 20-day
period after the giving of the Packard Transfer Notice and (y) the second
business day after the receipt of any required governmental approval or the
expiration or termination of any waiting period, including any waiting period
pursuant to the Hart-Scott Act. At such closing, such Packard Transfer Offerees
shall deliver a certified check or checks in the appropriate amount to the
Transferring Packard Investor against delivery of Duly Endorsed certificates
representing the Packard Transfer Shares so purchased.
(e) If any Packard Transfer Shares allocated to a Packard Offeree
are not purchased by such Packard Offeree (the "Packard Transfer Default
Shares"), such Packard Transfer Default Shares may be purchased by the other
Packard Offerees purchasing Packard Transfer Shares (the "Packard Default Of-
ferees"), allocated among such Packard Default Offerees (with rounding to avoid
fractional Shares) in proportion to the number of Packard Transfer Shares
otherwise being purchased by
-14-
those of such Packard Default Offerees who agree to purchase Packard Transfer
Default Shares, allocated among those electing to purchase in a manner
consistent with the allocation provisions of Section 2.3(b). If the Packard
Default Offerees do not purchase all of the Packard Transfer Default Shares,
Packard may purchase the remaining Packard Transfer Default Shares. Nothing
contained herein shall prejudice Packard's right to maintain any cause of action
or pursue any other remedies available to it as a result of such default.
(f) If at the end of the 20-day period after the giving of the
Packard Transfer Notice, Packard has not accepted, on behalf of itself (if it
elects to purchase Packard Transfer Shares) or its designee and/or any
purchasing Packard Offerees, the offer contained in such Packard Transfer Notice
as to all of the Packard Transfer Shares covered thereby, then the Transferring
Packard Investor shall have 20 calendar days in which to complete the sale of
the Packard Transfer Shares to the Packard Purchaser in accordance with the
Packard Proposal, except where failure to consummate such sale is not caused, in
whole or in part, by the Transferring Packard Investor (provided that any
extension beyond such 20-calendar day period may not extend beyond the period
referred to in the next to last sentence of this Subsection 2(f)). Promptly
after any sale to a Packard Purchaser pursuant to this Section 2.3, the
Transferring Packard Investor shall notify Packard of the consummation thereof
and shall furnish such evidence of the completion and time of completion of such
sale and of the terms thereof as Packard may request. If the sale of the Packard
Transfer Shares to a Packard Purchaser is not completed within 40 calendar days
after the first to occur of (i) the expiration of the 20-day period referred to
in Subsection 2.3(d) above or (ii) receipt from the Packard Transfer Offerees of
written notice declining the offer contained in the Packard Transfer Notice, the
Transferring Packard Investor shall no longer be permitted to sell such Packard
Transfer Shares pursuant to this Section 2.3 without again complying with this
Section 2.3 and all of the transfer restrictions contained in this Agreement
shall again be in effect with respect to all of such Transferring Packard
Investor's Packard Shares, including the Packard Transfer Shares. In no event
shall any sale of Packard Shares by a Packard Investor pursuant to this Section
2.3 be permitted to a Packard Purchaser that is a competitor, potential
competitor, customer or supplier of Packard or any of its subsidiaries or any
other Person that the Board of Directors determines, in its good faith judgment,
would be injurious to Packard or any of its subsidiaries.
-15-
Section 2.4 Termination of Rights of First Refusal and Restrictions
on Transfer. Upon the termination of the restrictions on transfer set forth in
Sections 2.1 and 2.3, transfers of the Packard Shares beneficially owned by the
Packard Investors or their Permitted Transferees shall be permitted subject to
all applicable federal and state securities, or "blue sky," laws.
Section 2.5 Sale of Shares to a Third Party. (a) If at any time
prior to an Initial Public Offering Stonington proposes to sell, for its own
account, in one or more transactions, shares which, in the aggregate, represent
40% or more of the capital stock of Packard on a fully diluted basis to a third
party in one or more private transactions which is not, and following such sale
will not be, affiliated with Stonington (a "Third Party"), the Management
Investors (other than a Management Investor whose employment, consultancy or
directorship has been terminated for Cause), the Non-Management Investors and/or
each of their Permitted Transferees, shall have the right to participate (a
"Tag-Along Right") in such sale with respect to any Shares (including Shares
obtainable upon exercise of options) held by them on a pro rata basis (based on
the percentage of Packard Shares corresponding to the relationship of the
aggregate number of Shares to be sold by Stonington to the aggregate number of
Stonington Shares) for the same consideration per Share and otherwise on the
same terms as Stonington sells its Shares. If circumstances occur which give
rise to the Tag-Along Right, then Stonington shall give written notice to the
Packard Investors providing a summary of the terms of the proposed sale to the
Third Party and advising such Packard Investors of their Tag-Along Rights. Each
Packard Investor may exercise his or her Tag-Along Right by written notice to
Packard stating the number of Shares that he or she wishes to sell, up to the
maximum number permitted (being his or her pro rata amount referred to above and
as disclosed in the notice to be given to him or her). If a Packard Investor
gives written notice indicating that he or she wishes to sell, he or she shall
be obligated to sell that number of Shares specified in his or her written
acceptance notice upon the same terms and conditions as Stonington is selling to
the Third Party conditional upon and contemporaneous with completion of the
transaction of purchase and sale with the Third Party.
(b) If at any time prior to an Initial Public Offering Stonington
proposes to sell for its own account, in one or more transactions, Shares which,
in the aggregate, represent more than 40% of the capital stock of Packard on a
fully diluted basis to a Third Party in one or more private transactions,
Stonington shall, upon written request, have the right to require the Management
Investors (regardless of whether such
-16-
Management Investor is then an employee, director or consultant of Packard or
any of its subsidiaries and regardless of any termination of employment,
consultancy or directorship), the Non-Management Investors and/or each of their
Permitted Transferees, to participate (a "Drag-Along Right") in such sale with
respect to any Shares (including Shares obtainable upon exercise of options)
held by them on a pro rata basis (based on the percentage of Packard Shares
corresponding to the relationship of the aggregate number of Shares to be sold
by Stonington to the aggregate number of Stonington Shares) for the same
consideration per Share and otherwise on the same terms as Stonington sells its
Shares. For purposes of Sections 2.5(a) and 2.5(b), to the extent that Shares
issuable upon exercise of an option granted under the Management Stock Incentive
Plan are to be sold pursuant to the exercise of a Tag-Along Right or Drag-Along
Right, the holders of such options shall not be required to exercise their
options until all conditions to the commitment by the Third Party to purchase
the Shares into which such options are exercisable pursuant to the exercise of a
Tag-Along Right or Drag-Along Right have been satisfied or waived.
(c) Tag-Along Rights and Drag-Along Rights pursuant to this Section
2.5 shall be exercisable upon 15 calendar days' prior written notice.
Section 2.6 Legend on Certificates. Without limiting the provisions
of Section 2.1 or 2.2 hereof, no Stockholder shall make any transfer of any
shares of capital stock of Packard (or interest therein) if such action would
constitute a violation of any federal or state securities or blue sky laws, or
if (other than in the case of a transfer by Stonington) such transfer would
subject Packard to any reporting obligations under the Exchange Act. No
transfer of any shares of capital stock of Packard shall be effective (other
than in connection with transfers pursuant to Article V hereof) unless Packard,
upon its request, has been furnished with an opinion of counsel for the
Stockholder, which opinion and counsel shall be reasonably satisfactory to
Packard, to the effect that such transfer is exempt from the registration
provisions of Section 5 of the Securities Act and the rules and regulations in
effect thereunder and such transfer can be effected without similar
registration under applicable state securities or "blue sky" laws. Any such
opinion may be delivered by counsel to Packard, and, in the case of any
transfer pursuant to a Drag-Along Right, shall be delivered by counsel to
Packard. Any attempt to transfer any Shares (or interest therein) not in
accordance with this Agreement shall be null and void and neither Packard nor
any transfer agent of such securities shall transfer upon the books of Packard
any shares of capital stock of Packard to any Person unless such transfer or
attempted transfer is permitted by this
-17-
Agreement. Each certificate representing Shares shall bear the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, ENCUMBERED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE
PROVISIONS OF A STOCKHOLDERS' AGREEMENT DATED AS OF MARCH __, 1997
(A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF PACKARD BIOSCIENCE
COMPANY AND WILL BE MAILED TO A STOCKHOLDER WITHOUT CHARGE WITHIN
FIVE DAYS AFTER RECEIPT BY PACKARD BIOSCIENCE COMPANY OF A WRITTEN
REQUEST THEREFOR FROM SUCH STOCKHOLDER). NO TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION, ENCUMBRANCE OR OTHER DISPOSITION
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT
AS OTHERWISE PROVIDED IN SUCH STOCKHOLDERS' AGREEMENT AND (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 (THE "ACT") AND ANY APPLICABLE STATE SECURITIES, OR
"BLUE SKY," LAWS, OR (B) IF PACKARD BIOSCIENCE COMPANY HAS BEEN
FURNISHED WITH AN OPINION OF COUNSEL FOR THE HOLDER, WHICH OPINION
AND COUNSEL SHALL BE REASONABLY SATISFACTORY TO PACKARD BIOSCIENCE
COMPANY, TO THE EFFECT THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF
SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN EFFECT
THEREUNDER AND SUCH STATE SECURITIES, OR "BLUE SKY," LAWS.
In addition, each such certificate shall bear such other legends as Packard may
deem necessary or appropriate. At the Closing, the Packard Investors shall
submit to Packard certificates representing Existing Shares so that the above
legend can be imprinted upon them.
Section 2.7 Limitation on Institutional Investors. Notwithstanding
anything contained herein to the contrary, the Institutional Investors may not,
without the prior written consent of Stonington, sell or otherwise dispose of
their Institutional Shares prior to the sale or other disposition by Stonington
of a like proportion of its Stonington Shares and then only on the same terms
and conditions as Stonington's sale or other disposition, provided that, if
Merrill Lynch KECALP L.P. 1997 agrees in writing, in form and substance
reasonably satisfactory to Stonington and Packard, to become bound, and becomes
bound, by all the terms of this Agreement to the same extent as the
Institutional Investors are so bound, KECALP Inc. may
-18-
transfer all, but not less than all, of its Institutional Shares to Merrill
Lynch KECALP L.P. 1997.
ARTICLE III
PUT AND CALL RIGHTS
Section 3.1 Put Rights. (a) Upon termination of a Management
Investor's employment, consultancy or directorship with Packard or any of its
subsidiaries due to death, Disability, Retirement of the Management Investor or
due to the circumstances described in clause (b) of the definition of
Involuntary Termination with respect to such Management Investor (any of the
foregoing, a "Put Event") in each case prior to the earlier of an Initial
Public Offering and the tenth anniversary of the Closing, such Management
Investor and his Permitted Transferees shall have the right (the "Put Right"),
exercisable by delivery of a written notice (the "Put Notice") to Packard
within a period of 180 calendar days after the date of occurrence of the Put
Event (subject to extension for up to three months in the event that Packard is
legally prohibited or contractually prohibited, by virtue of its, or any of its
subsidiaries', debt or other contractual obligations, from honoring a Put
Right) (the "Put Notice Period"), to require Packard to purchase all, but not
less than all, of the Management Shares owned by such Management Investor or
his or her Permitted Transferees (the "Put Shares") and all vested options to
purchase Shares held by such Management Investor or Management Investor's
Permitted Transferees (the "Put Options") on the date of the occurrence of the
Put Event at a price per Put Share or Put Option equal to the Share Put Price
(as defined below) or Option Put Price (as defined below), respectively, and
upon receipt of such notice Packard shall purchase such Put Shares and Put
Options, subject to the terms hereof. For purposes of this Section 3.1, the
term "Share Put Price" shall mean the Fair Value Price of the Put Shares on the
date of occurrence of such Put Event, all calculations described in this
sentence to be made on a per Share basis. For purposes of this Section 3.1, the
term "Option Put Price" of any Put Options sold pursuant to the exercise of the
Put Right shall mean the product of the number of Shares issuable upon exercise
of a Management Investor's then-vested Put Options times the difference, if
positive (if negative such price shall be equal to zero), between (i) the Share
Put Price and (ii) the exercise price of each Put Option.
(b) The Put Notice shall specify the number of Put Shares and/or Put
Options to be sold and shall contain an irrevocable offer to sell such Put
Shares and/or Put Options to
-19-
Packard in the manner set forth below at the applicable Share Put Price or
Option Put Price, respectively. The closing of the purchase by Packard of Put
Shares and/or Put Options shall take place at the principal office of Packard on
the tenth business day after the date of the Put Notice. At such closing,
Packard shall deliver to the Management Investor or his or her Permitted
Transferees against delivery of Duly Endorsed certificates representing such Put
Shares or Put Options, a certified check or checks in the amount of the
applicable Share Put Price and/or Option Put Price. Notwithstanding anything to
the contrary contained in this Section 3.1(b), to the extent that the payment
for Put Shares and/or Put Options with cash would, at the time of payment or
issuance thereof, constitute or cause a breach or default (immediately or with
notice or the lapse of time or both) under any agreement or instrument to which
Packard, or any of its subsidiaries, is a party or by which Packard, or any of
its subsidiaries, or any of their assets are bound or violate any law, statute,
order, writ, injunction, decree, judgment, rule, regulation, policy or guideline
promulgated, or judgment entered, by any federal, state, local or foreign court
or governmental authority applicable to Packard or any of its subsidiaries,
Packard shall be permitted to pay for the Put Shares and/or Put Options with a
subordinated note of Packard payable in three equal annual installments
commencing on the first anniversary of the issuance thereof, bearing interest
payable annually at 8% and containing subordination terms which are reasonably
satisfactory to the relevant senior lenders to Packard, or any of its
subsidiaries, (a "Packard Note") with an original principal amount equal to the
balance of the applicable Share Put Price and/or Option Put Price (provided,
that such notes may have maturities of longer than three years and may provide
for interest to accrue or be payable in kind rather than cash if necessary to
avoid a potential breach or default of any such agreement or instrument,
provided that such maturities and interest shall be adjusted only to the minimum
extent reasonably necessary to avoid such potential breach or default) and as
would not cause such a breach or default or violate any law, statute, order,
writ, injunction, decree, judgment, rule, regulation, policy or guideline
promulgated, or judgment entered, by any federal, state, local or foreign court
or governmental authority applicable to Packard or any of its subsidiaries.
(c) Notwithstanding anything to the contrary contained in this
Section 3.1, Packard shall not be obligated to acquire any Put Shares or Put
Options pursuant to Section 3.1(a) hereof to the extent that the acquisition
thereof would (i) violate any law, statute, order, writ, injunction, decree,
judgment, rule, regulation, policy or guideline promulgated, or judgment
entered, by any federal, state, local or foreign court
-20-
or governmental authority applicable to Packard or any of its subsidiaries, or
(ii) constitute or cause a breach or default (immediately or with notice or
lapse of time or both) of any agreement or instrument to which Packard, or any
of its subsidiaries, is a party or by which Packard, or any of its subsidiaries,
or any of their assets are bound.
(d) To the extent that the provisions of Section 3.1(c) limit but do
not preclude Packard from acquiring any Put Shares or Put Options, Packard shall
acquire such Put Shares and/or Put Options on the date specified in Section
3.1(b) to the extent permitted pro rata from each Management Investor or
Permitted Transferee who or which has exercised such Management Investor's or
Management Investor's Estate's right pursuant to Section 3.1(a) in accordance
with the number of such Put Shares and/or Put Options Packard is required to
purchase from each such Management Investor or Permitted Transferee.
(e) To the extent that Put Shares and/or Put Options as to which Put
Rights have been exercised are not purchased by Packard in accordance with
Sections 3.1(c) and (d) hereof, Packard shall acquire such Put Shares and/or Put
Options on the tenth business day after such date as Packard learns that it is
no longer restricted under Section 3.1(c) hereof from acquiring all such Put
Shares and/or Put Options. The price to be paid to acquire such Put Shares
and/or Put Options shall be the amount that would have been paid pursuant to
Section 3.1(a) hereof if such acquisition had not been delayed plus interest
calculated from such date at 8%.
(f) Notwithstanding anything to the contrary contained in this
Section 3.1, Packard may, in its sole discretion, at any time prior to the
consummation of the purchase of the Put Shares and/or Put Options pursuant to
this Section 3.1, cause its designee or designees (which may include Stonington
or any of its affiliates) to consummate such purchase pursuant to the terms and
conditions of this Section 3.1.
Section 3.2 Call Rights. (a) Upon termination of a Management
Investor's employment, consultancy or directorship with Packard or any of its
subsidiaries for any reason (a "Call Event") in each case prior to the earlier
of an Initial Public Offering and the tenth anniversary of the Closing, Packard
shall have the right (the "Call Right"), exercisable by delivery of a written
notice (the "Call Notice") to such Management Investor or Permitted Transferee
within a period of 190 days after the date of occurrence of the Call Event
(subject to extension for up to three months in the event Packard is legally
prohibited or contractually prohibited, by virtue of its or any of its
subsidiary's debt or other obligations, from exercising
-21-
its Call Rights) (the "Call Notice Period"), to require such Management Investor
or such Management Investor's Permitted Transferees to sell all, or any portion,
of the Management Shares owned by such Management Investor or his or her
Permitted Transferees (the "Call Shares") and any then vested options to
purchase Shares held by such Management Investor or such Management Investor's
Permitted Transferee (the "Call Options") on the date of occurrence of the Call
Event at a price per Call Share or Call Option equal to the Share Call Price (as
defined below) or Option Call Price (as defined below), respectively, and upon
receipt of such notice the Management Investor who receives such notice shall
sell such Call Shares and Call Options, subject to the terms hereof. For
purposes of this Section 3.2, the term "Share Call Price" shall mean, as
determined on the date of the applicable Call Notice, (i) in the event of a
termination of employment, consultancy or directorship for Cause (provided that
for purposes of this Section 3.2(a) with respect to Existing Shares or Existing
Options "Cause" shall be limited to the commission of a felony or perpetration
of a fraud upon Packard), the lower of the Original Purchase Price and the Fair
Value Price of the Call Shares; and (ii) in the event of termination of
employment for any other reason, the Fair Value Price of such Shares, such
calculations to be made on a per Share basis. For purposes of this Section 3.2,
the term "Option Call Price" of any Call Options to be purchased pursuant to the
exercise of the Call Right shall mean the product of the number of Shares
issuable upon exercise of the Management Investor's then-vested Call Options
times the difference, if positive (if negative such price shall be equal to
zero), between (i) the Share Call Price and (ii) the exercise price of each Call
Option.
(b) The Call Notice shall specify the number of Call Shares and/or
Call Options to be purchased and shall contain an offer to purchase the Call
Shares and/or Call Options at the applicable Share Call Price or Option Call
Price, respectively. The closing of the acquisition by Packard of Call Shares
and/or Call Options shall take place at the principal office of Packard as soon
as practicable after the date of the Call Notice. At such closing, Packard shall
deliver to the Management Investor or such Management Investor's Permitted
Transferees, against delivery of Duly Endorsed certificates representing such
Call Shares or Call Options, a certified check or checks in the amount of the
applicable Share Call Price and/or Option Call Price. Notwithstanding anything
to the contrary contained in this Section 3.2(b), in the case of termination of
employment, consultancy, or directorship of a Management Investor for Cause,
Packard may acquire Call Shares and/or Call Options in any proportion of cash
and Packard Notes such that the sum of the amount of cash plus the aggregate
principal amount of the
-22-
Packard Notes is equal to the product of (x) the applicable Share Call Price
and/or Option Call Price and (y) the number of Call Shares and/or Call Options
to be purchased, as the case may be.
(c) In the event Packard is not permitted to or elects not to
exercise its Call Rights (in whole or in part) for any reason, then,
notwithstanding anything to the contrary contained in this Section 3.2, Packard
may, in its sole discretion, at any time prior to the consummation of the
purchase of the Call Shares and/or Call Options pursuant to this Section 3.2,
cause its designee or designees (which may include Stonington or any of its
affiliates) to consummate such purchase pursuant to the terms and conditions of
this Section 3.2.
(d) In the event that a Management Investor's employment with
Packard is terminated due to Voluntary Resignation or Involuntary Termination
(but not if such Management Investor is terminated by Packard for Cause), and
Packard (or its designee or designees pursuant to paragraph (c) of this Section
3.2) does not exercise its Call Rights with respect to any of such Management
Investor's Existing Options, Packard agrees that the term of such Existing
Options shall be extended for a period of five years from the date of the
termination of such Management Investor's employment with Packard, provided that
such Existing Options shall remain subject to the terms of this Agreement during
such period, and provided, further, that such Existing Options shall expire and
be cancelled on the thirtieth day following an Initial Public Offering.
Section 3.3 Reallocation Right. In the event Packard purchases Call
Shares, Call Options, Put Shares or Put Options (collectively, the "Repurchased
Equity") and desires to resell any or all Repurchased Equity, then Packard shall
have the obligation to first offer such Repurchased Equity for sale to the
Management Investors by delivery of a written notice (the "Resale Notice")
setting forth the price per share or price per option and other terms on which
Packard is willing to sell such Repurchased Equity. A Management Investor who
wishes to purchase such Repurchased Equity shall provide Packard with written
notice specifying the amount of such Repurchased Equity as to which such
Management Investor desires to accept the offer within 20 calendar days after
the Resale Notice is given (the "Repurchase Period"). If the aggregate amount of
Repurchased Equity as to which notice of acceptance is provided by all
Management Investors exceeds the amount of Repurchased Equity as to which the
Resale Notice is given, the right to purchase such Repurchased Equity shall be
allocated among the Management Investors on a pro rata basis (with rounding to
avoid fractional Shares or options, as the case may be) based on the
-23-
percentage of Repurchased Equity corresponding to the relationship of the
aggregate amount of Repurchased Equity sought by each accepting Management
Investor to the aggregate amount of Repurchased Equity sought by all accepting
Management Investors. If at the end of the Repurchase Period, Management
Investors have not accepted the offer contained in the Resale Notice as to all
of the Repurchased Equity covered thereby, then Packard may sell such
Repurchased Equity to any party at the price and on terms no less favorable than
those specified in the Resale Notice for a period of 180 calendar days following
the end of the Repurchase Period. If the sale of such Repurchased Equity is not
completed within such 180-day period, Packard shall no longer be permitted to
sell such Repurchased Equity without again complying with this Section 3.3.
Section 3.4 Termination of Put and Call Rights. Notwithstanding
anything to the contrary contained herein, no Put Right or Call Right shall be
exercisable after an Initial Public Offering.
ARTICLE IV
CORPORATE GOVERNANCE
Section 4.1 Directors. (a) As of the Closing, the Board of Directors
of Packard will consist of nine directors: three Management Investors, four
designees of Stonington and two independent directors mutually agreed upon
between Stonington and the chief executive officer of Packard. Subject to the
forgoing the Stockholders agree and acknowledge that Stonington has the right to
nominate all directors of Packard and that, prior to the date hereof, Stonington
has appointed to the board of directors of Packard all the individuals who are
directors of Packard as of the date hereof. The Stockholders further agree that
Stonington shall be entitled to reduce or expand the size of the board of
directors and to nominate successors to all directors of Packard. Subject to
applicable law, if Stonington proposes to remove any director, the Stockholders
agree to cooperate in such removal (including voting as Stockholders, if
necessary) and any resulting vacancy shall be filled in accordance with the
preceding sentence.
(b) The Board of Directors will have an audit committee and a
compensation committee and such other committees as the Board of Directors
designates.
Section 4.2 Voting. The Institutional Investors hereby agree to vote
their Institutional Shares as directed by Stonington.
-24-
ARTICLE V
REGISTRATION RIGHTS
Section 5.1 Registration.
(a) Right to Include Registrable Securities. If Packard at any time
proposes to register under the Securities Act any of its equity securities
beneficially owned by Stonington (other than a registration on Form S-4 or Form
S-8, or any successor or similar forms), in a manner that would permit
registration of Registrable Securities for sale to the public under the
Securities Act and in an underwritten offering, it will each such time promptly
give written notice to all Stockholders who beneficially own any Registrable
Securities of its intention to do so, of the registration form of the SEC that
has been selected by Packard and of such holders' rights under this Section 5.1
(the "Section 5.1 Notice"); provided that, if, at the time of such proposed
registration, any Packard Investors (or their Permitted Transferees) are able to
sell Registrable Securities owned by them pursuant to Rule 144 under the
Securities Act, Packard shall not be required to give a Section 5.1 Notice to
such Packard Investors (or their Permitted Transferees), and such Packard
Investors (or their Permitted Transferees) shall not be entitled to any rights
under this Section 5.1(a). Packard will use its reasonable best efforts to
include in the proposed registration all Registrable Securities that Packard is
requested in writing, within 15 calendar days after the Section 5.1 Notice is
given, to register by the Stockholders thereof; provided, however, that (i) if,
at any time after giving written notice of its intention to register any equity
securities and prior to the effective date of the registration statement filed
in connection with such registration, Packard shall determine for any reason not
to register such equity securities, Packard may, at its election, give written
notice of such determination to all Stockholders who beneficially own any
Registrable Securities and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such abandoned
registration, and (ii) in case of a determination by Packard to delay
registration of its equity securities, Packard shall be permitted to delay the
registration of such Registrable Securities for the same period as the delay in
registering such other equity securities.
(b) Registration Rights Upon Request. (i) If Packard at any time
proposes to register under the Securities Act any of its equity securities, it
will each such time promptly give written notice to Stonington. In addition,
Packard, upon the request of Stonington (which must hold at least 10% of the
-25-
outstanding equity securities of Packard at the time of such request), shall,
from time to time, register any reasonable portion of such securities held by
Stonington (including in an underwritten offering) and bear all expenses in
connection with such offering in a manner consistent with paragraph (c) below
and shall enter into such other agreements in furtherance thereof (including
with underwriters reasonably acceptable to Packard), and Packard shall provide
customary indemnifications in such instances (in a manner consistent with the
indemnification provisions of this Article V) to Stonington and any such
underwriters.
(ii) After an Initial Public Offering, Packard, upon the request of
the holders (other than Stonington) of at least 20% of the Registrable
Securities, shall register such number of Registrable Securities as such holders
request (including in an underwritten offering), provided that such holders
request that Packard register at least 10% of the Registrable Securities, and
bear all expenses in connection with such offering in a manner consistent with
paragraph (c) below and shall enter into such other agreements in furtherance
thereof (including with underwriters reasonably acceptable to Packard), and
Packard shall provide customary indemnifications in such instances (in a manner
consistent with the indemnification provisions of this Article V) to the sellers
of Registrable Securities and any such underwriters; provided that, for so long
as any holders of Registrable Securities (or their Permitted Transferees) are
able to sell Registrable Securities owned by them pursuant to Rule 144 under the
Securities Act, such holders shall not be entitled to any rights under this
Section 5.1(b)(ii). Packard shall not be required to effect more than one
registration pursuant to this Section 5.1(b)(ii).
(c) Expenses. Packard shall pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 5.1; provided, however, that each Stockholder shall pay all
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Stockholder's Registrable Securities pursuant to
a registration statement effected pursuant to this Section 5.1.
(d) Priority in Incidental Registrations. If the managing
underwriter for a registration pursuant to this Section 5.1 shall advise Packard
in writing that, in its opinion, the number of securities requested to be
included in such registration exceeds the number (the "Section 5.1 Sale Number")
that can be sold in an orderly manner in such offering within a price range
acceptable to Stonington, Packard shall include in
-26-
such offering (i) first, all the securities that Packard proposes to register
for its own sale, and (ii) second, to the extent that the securities Packard
proposes to register are less than the Section 5.1 Sale Number, all Registrable
Securities requested to be included by all Stockholders, provided, however, that
if the number of such Registrable Securities exceeds the Section 5.1 Sale Number
less the number of securities included pursuant to clause (i) hereof, then the
number of such Registrable Securities included in such registration shall be
allocated pro rata among all requesting Stockholders, on the basis of the
relative number of shares of such Registrable Securities each such Stockholder
has requested to be included in such registration. If, as a result of the
proration provisions of this Subsection (d), any Stockholder shall not be
entitled to include all Registrable Securities in a registration pursuant to
this Section 5.1 that such Stockholder has requested be included, such
Stockholder may elect to withdraw his request to include Registrable Securities
in such registration (a "Withdrawal Election"); provided, however, that such
Withdrawal Election shall be irrevocable and, after making a Withdrawal
Election, a Stockholder shall no longer have any right to include Registrable
Securities in the registration as to which such Withdrawal Election was made.
Section 5.2 Registration Procedures. If and whenever Packard is
required to use its best efforts to effect or cause the registration of any
Registrable Securities under the Securities Act as provided in this Article V,
Packard will, as soon as practicable:
(a) prepare and file with the SEC the requisite registration
statement with respect to such Registrable Securities and use its best
efforts to cause such registration statement to become and remain
effective; provided, however, that Packard may discontinue or delay any
registration of securities that is being effected pursuant to Section 5.1
at any time prior to the effective date of the registration statement
relating thereto;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective for such period as Packard shall deem appropriate and to comply
with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such registration statement
during such period;
-27-
(c) furnish to each seller of such Registrable Securities such
number of copies of such registration statement and of each amendment and
supplement thereto (in each case including all exhibits), such number of
copies of the prospectus included in such registration statement
(including each preliminary prospectus and summary prospectus), in
conformity with the requirements of the Securities Act, and such other
documents as such seller may reasonably request;
(d) use its best efforts to register or qualify such Registrable
Securities covered by such registration statement under such other
securities or "blue sky" laws of such jurisdictions as any sellers of
Registrable Securities representing more than 15% of the total number of
securities covered by such registration statement or any managing
underwriter shall reasonably request, and do any and all other acts and
things that may be necessary or advisable to enable such seller and each
managing underwriter, if any, to consummate the disposition in such
jurisdictions of such Registrable Securities owned by such seller;
provided, however, that neither Packard nor any of its subsidiaries shall
for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this clause (d) be obligated to be so qualified, to
subject itself to taxation in any such jurisdiction or to consent to
general service of process in any such jurisdiction;
(e) notify each seller of any such Registrable Securities covered by
such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of Packard's
becoming aware that the prospectus, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
and at the request of any such seller promptly prepare and furnish to such
seller a reasonable number of copies of a prospectus supplemented or
amended so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
-28-
(f) use its best efforts to cause all such Registrable Securities
covered by such registration statement to be listed on the principal
securities exchange on which similar equity securities issued by Packard
are then listed or eligible for listing, if the listing of such securities
is then permitted under the rules of such exchange;
(g) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months, but not more than eighteen months,
beginning with the first day of its first calendar quarter after the
effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder;
(h) enter into an underwriting agreement with the underwriter of
such offering in the form customary for such underwriter for similar
offerings, including such representations and warranties by Packard,
provisions regarding the delivery of opinions of counsel for Packard and
accountants' letters, provisions regarding indemnification and
contribution, and such other terms and conditions as are at the time
customarily contained in such underwriter's underwriting agreements for
similar offerings (the sellers of Registrable Securities which are to be
distributed by such underwriter(s) may, at their option, require that any
or all of the representations and warranties by, and the other agreements
on the part of, Packard to and for the benefit of such underwriter(s)
shall also be made to and for the benefit of such sellers of Registrable
Securities);
(i) provide a transfer agent and registrar for all such Registrable
Securities covered by such registration statement not later than the
effective date of such registration statement;
(j) upon receipt of such confidentiality agreements as Packard may
reasonably request, make available for inspection by any seller of such
Registrable Securities covered by such registration statement and by any
attorney, accountant or other agent retained by any such seller, all
pertinent financial and other records, pertinent corporate documents and
properties of Packard and its subsidiaries, and cause all of Packard's and
its subsidiaries' officers,
-29-
directors and employees to supply all information reasonably requested by
any such seller, attorney, accountant or agent in connection with such
registration statement; and
(k) permit any beneficial owner of Registrable Securities who, in
the sole judgment, exercised in good faith, of such holder, might be
deemed to be a controlling person of Packard, to participate in the
preparation of such registration or comparable statement and to require
the insertion therein of material, furnished to Packard in writing, that
in the judgment of such holder, as aforesaid, should be included.
Packard may require each seller of Registrable Securities as to
which any registration is being effected to furnish Packard such information
regarding such seller and the distribution of such securities as Packard may
from time to time reasonably request in writing. Packard shall not be required
to register or qualify any Registrable Securities covered by such registration
statement under any state securities, or "blue sky," laws of such jurisdictions
other than as it deems necessary in connection with its chosen method of
distribution or to take any other actions or do any other things other than
those it deems necessary or advisable to consummate such distribution, and
Packard shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not
otherwise be obligated to be so qualified, to subject itself to taxation in any
such jurisdiction or to consent to general service of process in any such
jurisdiction.
Each beneficial owner of Registrable Securities agrees that upon
receipt of any notice from Packard of the happening of any event of the kind
described in clause (d) of this Section 5.2, such beneficial owner will
forthwith discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such
beneficial owner's receipt of the copies of the supplemented or amended
prospectus contemplated by clause (d) of this Section 5.2, and, if so directed
by Packard, such beneficial owner will deliver to Packard (at Packard's expense)
all copies, other than permanent file copies then in such beneficial owner's
possession, of the prospectus covering such Registrable Securities that was in
effect prior to such amendment or supplement.
Section 5.3 Indemnification.
(a) Indemnification by Packard. In the event of any registration of
any securities of Packard under the Securities
-30-
Act pursuant to Section 5.1, Packard will, and hereby does, indemnify and hold
harmless, to the extent permitted by law, the seller of any Registrable
Securities covered by such registration statement, its directors and officers or
general and limited partners (and the directors and officers thereof), and each
other Person, if any, who controls such seller within the meaning of the
Securities Act, against any and all losses, claims, damages or liabilities,
joint or several, and expenses (including any amounts paid in any settlement
effected with Packard's consent, which consent shall not be unreasonably
withheld) to which such seller, any such director or officer or general or
limited partner or any such controlling Person may become subject under the
Securities Act, common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) arise out of or
are based upon (a) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement under which such
securities were registered under the Securities Act or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or (b) any violation by
Packard of any federal, state or common law rule or regulation applicable to
Packard and relating to action required of or inaction by Packard in connection
with any such registration, and Packard will reimburse such seller and each such
director, officer, general or limited partner, and controlling Person for any
legal or any other expenses reasonably incurred by any of them in connection
with investigating or defending any such loss, claim, liability, action or
proceeding; provided, that Packard shall not be liable to any such seller or any
such director, officer, general or limited partner, or controlling Person in any
such case to the extent that any such loss, claim, damage, liability (or action
or proceeding in respect thereof) or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or amendment thereof or supplement thereto
or in any such preliminary, final or summary prospectus in reliance upon and in
conformity with written information furnished to Packard by or on behalf of any
such seller or any such director, officer, general or limited partner, or
controlling Person, specifically stating that it is for use in the preparation
thereof. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or any director, officer,
general or limited partner or controlling Person and shall survive the transfer
of such securities by such seller.
(b) Indemnification by the Sellers. Packard may require, as a
condition to including any Registrable Securities in any registration statement
filed in accordance with Section
-31-
5.1, that Packard shall have received an undertaking reasonably satisfactory to
it from the prospective seller of such Registrable Securities to indemnify and
hold harmless (in the same manner and to the same extent as set forth in
Subsection (a)) Packard and its directors and officers and each Person
controlling Packard within the meaning of the Securities Act and all other
prospective sellers and their directors, officers, general and limited partners
and respective controlling Persons with respect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary, final or summary prospectus contained therein, or any amendment
or supplement, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to Packard or its representatives by or on behalf of such seller
specifically stating that it is for use in the preparation of such registration
statement, preliminary, final or summary prospectus or amendment or supplement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of Packard or any of the prospective sellers
or any of their respective directors, officers, general or limited partners or
controlling Persons and shall survive the transfer of such securities by such
seller. Packard shall use its best efforts to provide that the indemnification
obligation of any Stockholder does not exceed the net proceeds to the
Stockholder in such underwritten offering.
(c) Notices of Claims, Etc. As soon as possible after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 5.3, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of this
Section 5.3, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. If any such claim or action shall be
brought against an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate therein, and,
to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party; provided that the indemnifying party
shall not be entitled to so participate or so assume the defense if, in the
indemnified party's reasonable judgment, a conflict of interest between the
indemnified party and the indemnifying party exists in respect of such claim.
After notice from the indemnifying
-32-
party to such indemnified party of its election to assume the defense of such
claim or action, the indemnifying party shall not be liable to the indemnified
party under this Section 5.3 for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof; and
provided further that the sellers and their respective officers, directors,
general and limited partners and controlling Persons or Packard and its
officers, directors and controlling Persons, as the case may be, shall have the
right to employ one counsel to represent such indemnified parties if, in such
indemnified parties' reasonable judgment, a conflict of interest between the
indemnified parties and the indemnifying parties exists in respect of such
claim, and in that event the fees and expenses of such separate counsel (not to
exceed one such firm and local counsel, if necessary) shall be paid by the
indemnifying party. No indemnifying party will consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such claim or litigation.
(d) Contribution. If the indemnification provided for in this
Section 5.3 is unavailable or insufficient to hold harmless an indemnified party
under Subsection (a) or (b), then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in Subsection (a) or (b) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and the indemnified party on the other hand in connection
with statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault 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
indemnifying party or the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue or alleged untrue statements or omission. The parties hereto agree that
it would not be just and equitable if contributions pursuant to this Subsection
(d) were to be determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the first sentence of this Subsection (d). The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this Subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim (which
-33-
shall be limited as provided in Subsection (c) if the indemnifying party has
assumed the defense of any such action in accordance with the provisions
thereof) which is the subject of this Subsection (d). 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. Promptly after receipt by an
indemnified party under this Subsection (d) of notice of the commencement of any
action against such party in respect of which a claim for contribution may be
made against an indemnifying party under this Subsection (d), such indemnified
party shall notify the indemnifying party in writing of the commencement thereof
if the notice specified in Subsection (c) has not been given with respect to
such action; provided that the omission so to notify the indemnifying party
shall not relieve the indemnifying party from any liability which it may have to
any indemnified party otherwise under this Subsection (d), except to the extent
that the indemnifying party is actually prejudiced by such failure to give
notice. Notwithstanding anything in this Subsection (d) to the contrary, no
indemnifying party (other than Packard) shall be required pursuant to this
Subsection (d) to contribute any amount in excess of the proceeds received by
such indemnifying party from the sale of Registrable Securities in the offering
to which the losses, claims, damages or liabilities of the indemnified parties
relate.
Section 5.4 Holdback Agreement. If requested in writing by Packard
or the underwriter, if any, of any offering affording Stockholders registration
rights pursuant to Section 5.1, each Stockholder beneficially owning securities
of Packard representing or convertible into or exchangeable or exercisable for,
in the aggregate, more than .5% of the common equity of Packard then outstanding
agrees not to effect any public sale or distribution, including any sale
pursuant to Rule 144, of any Registrable Securities or any other equity security
of Packard or of any security convertible into or exchangeable or exercisable
for any equity security of Packard (in each case, other than as part of such
underwritten public offering) within 14 days before or 180 days after the
effective date of a registration statement affording Stockholders registration
rights pursuant to Section 5.1, and Packard hereby also so agrees and agrees to
use its reasonable efforts to cause other holders of any equity security, or of
any security convertible into or exchangeable or exercisable for any equity
security, of Packard purchased from Packard (at any time other than in a public
offering) to so agree.
-34-
ARTICLE VI
MISCELLANEOUS
Section 6.1 Binding Effect. The provisions of this Agreement shall
be binding upon the parties hereto and their respective heirs, legal
representatives, successors and assigns.
Section 6.2 No Right of Employment; Expiration of Consulting
Arrangements. Neither this Agreement nor any purchase or sale of Packard Shares
pursuant hereto shall create, or be construed or deemed to create, any right of
employment in favor of any person by Packard or any of its subsidiaries.
Expiration of a consulting arrangement without the prior termination thereof
shall not be deemed a termination of such arrangement for purposes of this
Agreement.
Section 6.3 Recapitalizations, Exchanges, Etc. Affecting Shares. The
provisions of this Agreement regarding Shares shall apply to any and all shares
of capital stock of Packard or any successor or assign of Packard (whether by
merger, consolidation, sale of assets, reorganization or otherwise) which may be
issued in respect of, in exchange for, or in substitution of the Shares by
reason of any stock dividend, stock split, stock issuance, reverse stock split,
combination, recapitalization, reclassification, merger, consolidation, or
otherwise. The provisions of this Agreement regarding Shares shall also apply to
any and all shares of any subsidiary of Packard which are distributed to the
stockholders of Packard pursuant to a plan to spin-off such subsidiary. Upon the
occurrence of any of such events, amounts hereunder shall be appropriately
adjusted. Subject only to the provisions of the preceding sentence, nothing
contained in this Agreement shall prohibit or restrict Packard from taking any
corporate action, including, without limitation, declaring any dividend (whether
in cash or stock) or engaging in any corporate transaction of any kind,
including, without limitation, any merger, consolidation, liquidation or sale of
assets.
Section 6.4 Waiver and Amendment. (a) Any party hereto may waive its
rights under this Agreement at any time, and Packard may waive its rights under
this Agreement with respect to any Stockholder or group of Stockholders at any
time, and no such waiver shall operate to waive Packard's rights under this
Agreement with respect to any other Stockholder or group of Stockholders. Any
agreement on the part of any such party to any such waiver shall be valid only
if set forth in an instrument in writing signed by such party. This Agreement
may be amended only by a written instrument signed by (i) Packard,
-35-
(ii) Stonington and (iii) Packard Investors beneficially owning a majority of
the then outstanding Packard Shares; provided that any amendment that adversely
affects the rights of the Institutional Investors shall be of no force or effect
unless the Institutional Investors shall have consented in writing thereto;
provided further that Schedule 1 and Schedule 2 may be amended by Packard
(without any additional consent or agreement of any other party hereto) to add
parties who become holders of stock, options or other securities of Packard
(including Packard Purchasers purchasing Shares in accordance with Section 2.3)
and such persons or entities may thereby become signatories hereto. Stockholders
shall be bound from and after the date of the receipt of a written notice from
Packard setting forth such amendment or waiver by any consent authorized by this
Section 6.4, whether or not Shares shall have been marked to indicate such
consent.
(b) Each Packard Investor hereby releases and discharges Packard and
its successors and assigns from any and all claims whatsoever that such Packard
Investor now has arising out of, or related to, Shares owned by such Packard
Investor on or prior to the date hereof, including, without limitation, claims
relating to (i) the issuance of 4,000 Shares in March 1989 to Sowa Trading Co.,
Inc. and the issuance of 16,500 Shares in March 1988 and 6,000 Shares in March
1987 to Daniel Meert, and (ii) any other preemptive rights as set forth in
Article Tenth of Packard's Certificate of Incorporation (as in effect from time
to time and immediately prior to the date hereof).
Section 6.5 Tax Withholding and Other Tax Matters. (a) No later than
the date as of which an amount first becomes includible in the gross income of a
Management Investor for federal income tax purposes with respect to any
Management Shares (or any options to acquire Management Shares), such Management
Investor shall pay to Packard, or make arrangements satisfactory to Packard
regarding the payment of, any federal, state, local or foreign taxes of any kind
required by law to be withheld with respect to such amount. The obligations of
Packard hereunder shall be conditional on such payment or arrangements, and
Packard shall, to the extent permitted by law, have the right to deduct any such
taxes from any payment otherwise due to the Management Investor.
-36-
(b) Packard shall indemnify and hold the Management Investors who
are party to the Recapitalization Agreement harmless against any additional tax
liability imposed on such Management Investors as a result of the "puts" and
"calls" pursuant to Section 3.1 or Section 3.2 hereof resulting in "dividend"
distributions pursuant to Section 302 of the Internal Revenue Code.
Section 6.6 Notices. All notices and other communications provided
for herein shall be dated and in writing and shall be deemed to have been duly
given when delivered, if delivered personally, or when deposited in the mail if
sent by registered or certified mail, return receipt requested, postage prepaid
and when received if delivered otherwise, to the party to whom it is directed:
(a) If to Packard, to:
Packard BioScience Company
800 Research Parkway
Meriden, CT 06450
Attn: President
Telecopy No.: (203) 235-6089
(b) If to any of the Packard Investors, to the ad-
dress of such Packard Investor as shown in the
stock record book of Packard
(c) If to Stonington, to the address of Stonington
as shown in the stock record book of Packard
(d) If to the Institutional Investors, to the address of such
Institutional Investor as shown in the stock record book of
Packard or as from time to time designated by such
Institutional Investors in writing to Packard
with copies to:
Stonington Partners, Inc.
767 Fifth Avenue
48th Floor
New York, New York 10153
Attn: Stephen M. McLean
Telecopy No.: (212) 339-8585
or at such other address as the parties hereto shall have specified by notice in
writing to the other parties.
-37-
Section 6.7 Applicable Law and Time of Essence. The laws of the
State of Delaware shall govern the interpretation, validity and performance of
the terms of this Agreement, without regard to the application of principles of
conflicts of law. Time shall be of the essence of this Agreement and of every
part thereof.
Section 6.8 Integration. This Agreement and the documents referred
to herein or delivered pursuant hereto which form a part hereof contain the
entire understanding of the parties with respect to its subject matter. There
are no restrictions, agreements, promises, representations, warranties,
covenants or undertakings with respect to the subject matter hereof other than
those expressly set forth herein and in the Management Stock Incentive Plan, the
Incentive Option Agreements and the Performance Option Agreements. It is
understood that each employee of Packard who is granted an option pursuant to
the Management Stock Incentive Plan shall be deemed a Management Investor
hereunder. This Agreement supersedes all prior agreements and understandings
between the parties with respect to its subject matter other than such
agreements and understandings set forth in the Management Stock Incentive Plan,
the Incentive Option Agreements, the Performance Option Agreements and any
employment agreements between a Management Investor and Packard or any of its
subsidiaries.
Section 6.9 Descriptive Headings, Etc. The headings in this
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning of terms contained herein. Unless the context of this
Agreement otherwise requires, (i) words of any gender shall be deemed to include
each other gender; (ii) words using the singular or plural number shall also
include the plural or singular number, respectively; and (iii) references to
"hereof," "herein," "hereby" and similar terms shall refer to this entire
Agreement.
Section 6.10 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
Section 6.11 Successors, Assigns and Transferees. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors, assigns and transferees except to the extent that
the terms of this Agreement limit or otherwise restrict the transferability of
any rights or obligations hereunder.
-38-
Section 6.12 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
Section 6.13 Termination. This Agreement shall terminate, and
thereby become null and void, on the tenth anniversary of the date hereof;
provided, however, that the provisions of Section 5.3 hereof shall survive the
termination of this Agreement.
Section 6.14 Community Property States. Each Packard Investor who is
a natural person and whose Packard Shares or options or rights under this
Agreement would be subject to the community property laws of any state hereby
represents that such Packard Investor's spouse has duly executed the Consent of
Spouse attached hereto and such Consent was delivered to Packard along with such
Packard Investor's signature page hereto.
-39-
Stockholders Agreement
Signature page
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first above written.
PACKARD BIOSCIENCE COMPANY
By: /s/ Emery G. Olcott
----------------------------------
Name: Emery G. Olcott
Title: President
STONINGTON CAPITAL APPRECIATION
1994 FUND, L.P.
By: Stonington Partners, L.P.,
its general partner
By: Stonington Partners, Inc. II,
its general partner
By: /s/ Bradley J. Hoecker
----------------------------------
Name: Bradley J. Hoecker
Title: Authorized Signatory
MERRILL LYNCH KECALP L.P. 1994
By: KECALP Inc., its general
partner
By: /s/ James V. Caruso
----------------------------------
Name: James V. Caruso
Title: Vice President
KECALP INC.
By: /s/ James V. Caruso
----------------------------------
Title: Vice President
By: /s/ [Packard Investors]
----------------------------------
[Packard Investors]
Stockholders Agreement
Signature page
Consent of Spouse
The undersigned is a spouse of one of the Stockholders and hereby
acknowledges that he/she has read the foregoing Agreement and knows its
contents. The undersigned is aware that by its provisions, his/her spouse agrees
to sell all of his/her Shares, Incentive Options and Performance Options in
Packard, including his/her community property interest therein, if any, on the
occurrence of certain events. The undersigned hereby consents to the sale,
approves the provisions of the Agreement, and agrees that those securities and
his/her interest in them, if any, are subject to the provisions of the Agreement
and that he/she will take no action at any time to hinder operation of the
Agreement on those securities or his/her interest, if any, in them, and, to the
extent required, will take any further actions necessary to effectuate the
provisions of the Agreement.
______________________________
______________________________
[Print name]
______________________________
[Print name of spouse]