STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT, dated as of this 11th day of June, 1997,
is by and among Wavetek Corporation, a Delaware corporation (the "COMPANY"), DLJ
Merchant Banking Partners II, L.P. ("DLJMB"), DLJ Offshore Partners II, C.V.,
DLJ Diversified Partners, L.P., DLJMB Funding II, Inc., UK Investment Plan 1997
Partners, DLJ First ESC L.L.C, DLJ EAB Partners, L.P. and DLJ Millennium
Partners, L.P. (collectively, and together with DLJMB, the "DLJ INVESTORS"),
Green Equity Investors II, L.P. ("GEI"), Schroder UK Venture Fund III, L.P.,
Schroder UK Venture Fund III, L.P.2, Schroder UK Venture Fund III Trust
(collectively, "SCHRODER"), Yokogawa Electric Corporation ("YOKOGAWA", and
together with the DLJ Investors, GEI and Schroder, the "INSTITUTIONAL
INVESTORS"), Dr. Terence J. Gooding ("GOODING"), and the management Stockholders
listed on Schedule I hereto (the "MANAGEMENT STOCKHOLDERS" and together with the
Institutional Investors and Gooding, the "STOCKHOLDERS").
RECITALS
A. WHEREAS, pursuant to the terms of the Stock Purchase and
Recapitalization Agreement dated as of May 23, 1997 (the "RECAPITALIZATION
AGREEMENT") by and among the Company, the DLJ Investors, GEI, and certain
stockholders of the Company, the DLJ Investors and GEI will purchase from the
Company 1,674,810 and 753,660 shares, respectively, of Common Stock (as defined
below) representing 34.28% and 15.43%, respectively, of the outstanding shares
of Common Stock immediately after the transactions contemplated by the
Recapitalization Agreement.
B. WHEREAS, the Company and the Stockholders are concurrently
entering into a Registration Rights Agreement to provide for piggy-back and
demand registration rights for the benefit of the Stockholders (the
"REGISTRATION RIGHTS AGREEMENT").
C. WHEREAS, the Company and the Stockholders desire to enter into
this Agreement for the purpose of regulating certain aspects of the
Stockholders' relationships with regard to each other and the Company.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the parties agree as
follows:
ARTICLE 1
DEFINITIONS
As used herein, the terms below shall have the following meanings.
Any such term, unless the context otherwise requires, may be used in the
singular or plural, depending upon reference.
"ACT" shall mean the Securities Act of 1933, as amended.
"AFFILIATE" shall mean, with respect to any Person, any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For purposes of this definition, ownership of 10% or
more of the voting common equity of a Person shall be deemed to be control of
such Person.
"COMMISSION" shall mean the Securities and Exchange Commission.
"COMMON STOCK" shall mean the Common Stock, $.01 par value per share, of
the Company.
"DLJSC" shall mean Donaldson, Lufkin & Jenrette Securities Corporation.
"EXEMPT TRANSFER" shall mean (i) transfers by a Stockholder to its
Permitted Transferees; or (ii) transfers by a Stockholder who is an employee of
the Company of his or her Shares to the Company in connection with the
termination of employment by such employee; PROVIDED, HOWEVER, that no such
transfer pursuant to the foregoing clause (i) shall be an Exempt Transfer unless
the transferee agrees in writing to be bound by this Agreement as if such
transferee were a Stockholder with respect to such transferred Shares, after
which such transferee shall be deemed a "Stockholder" for all purposes under
this Agreement.
"PERMITTED TRANSFEREE" means any of the following who agrees to be bound by
and become a party to this Agreement: (i) with respect to transfers by the
Institutional Investors, any Affiliates thereof, and (ii) with respect to
transfers by Gooding or the Management Stockholders, a spouse, child,
grandchild, stepchild or a child of a stepchild thereof or a trust as to which
Gooding, the Management Stockholder or such spouse, child, grandchild, stepchild
or child of a stepchild thereof exercises substantial control over the
investment of the trust assets. Upon (i) execution and delivery by a Permitted
Transferee of this Agreement and (ii) receipt of Shares of Common Stock from the
transferring Stockholder, the Permitted Transferee shall be deemed to be a
"Stockholder" for all purposes under this Agreement.
"PERSON" shall be construed broadly and shall include an individual, a
partnership, a corporation, an association, a joint stock company, a limited
liability company, a trust, a joint venture, an unincorporated organization and
a governmental entity or any department, agency or political subdivision
thereof.
"PROPOSED SALE" shall have the meaning set forth in Section 4.1.
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"QUALIFIED IPO" shall mean the initial underwritten offering by the Company
of Common Stock registered with the Commission under the Act (i) after which the
Common Stock is included for quotation on the Nasdaq National Market or listed
on a national securities exchange and (ii) having an aggregate offering price to
the public (before underwriters' discounts and commissions) of at least
$20,000,000.
"SELLING STOCKHOLDER" shall have the meaning set forth in Section 4.1.
"SECURITIES" shall have the meaning set forth in Section 4.3.
"SHARES" shall mean the shares of Common Stock now owned and hereafter
acquired by the Stockholders.
"STOCKHOLDER'S PERCENTAGE SHARE" shall mean, as applied to any transaction
covered by Section 4.1, a fraction, the numerator of which is the number of
shares of Common Stock held by such Stockholder, and the denominator of which is
the number of shares of Common Stock held by all Stockholders other than the
Stockholder(s) participating in the transaction which gave rise to the
first-offer right contained in Section 4.1.
"TAG-ALONG NOTICE" shall have the meaning set forth in Section 4.2.
"TAG-ALONG RIGHT" shall have the meaning set forth in Section 4.2.
"TAG-ALONG STOCKHOLDERS" shall have the meaning set forth in Section 4.2.
ARTICLE 2
GOVERNANCE
2.1 BOARD OF DIRECTORS.
(a) The Stockholders hereby agree to take, at any time and from time
to time, all action necessary (including, without limitation, voting the Shares
owned by them, calling special meetings of stockholders and executing and
delivering written consents) such that the Board of Directors of the Company
shall consist of up to nine directors, who shall be designated as follows: (i)
two (or three if an additional director is designated pursuant to the last
sentence of this Section 2.1(a)) of such members shall be persons designated by
DLJMB for as long as the DLJ Investors and/or their Permitted Transferees shall
own at least 20% of the outstanding Common Stock of the Company; (ii) one of
such members shall be a person designated by GEI for as long as GEI and/or its
Permitted Transferees shall own at least 5% of the outstanding Common Stock of
the Company; (iii) three (or four if an additional director is designated
pursuant to the last sentence of this Section 2.1(a)) of such members shall be
persons designated by Gooding for as long as Gooding and/or his Permitted
Transferees shall own at least 10% of the outstanding Common Stock of the
Company; and (iv) one of such members shall be a person designated by Gooding
for as long as Gooding and/or his Permitted Transferees shall own at
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least 10% of the outstanding Common Stock of the Company, subject to approval
by DLJMB for as long as the DLJ Investors and/or their Permitted Transferees
own at least 20% of the outstanding Common Stock of the Company. It is
agreed that, as of the effective date of this Agreement, the directors
initially designated in clause (i) shall be Kenneth D. Moelis and David B.
Wilson; the director initially designated in clause (ii) shall be Peter J.
Nolan; the directors initially designated in clause (iii) shall be Gooding,
Derek T. Morikawa and Ben J. Constantini;
and the director initially designated in clause (iv) shall be Kenneth Baker. In
the event the DLJ Investors and/or their Permitted Transferees own at least 10%
but less than 20% of the outstanding Common Stock of the Company, DLJMB shall
have the right to appoint only two directors. In the event the DLJ Investors
and/or their Permitted Transferees own at least 5% but less than 10% of the
outstanding Common Stock of the Company, DLJMB shall have the right to appoint
only one director. In the event Gooding and/or his Permitted Transferees own at
least 5% but less than 10% of the outstanding Common Stock of the Company,
Gooding shall have the right to appoint only two directors. Prior to a
Qualified IPO, each of DLJMB and Gooding may designate an additional director
pursuant to clause (i) or (iii) above.
(b) Upon the consummation of a Qualified IPO, the parties hereto
agree that the size of the Board of Directors shall consist of nine members, at
least two of which shall be "independent directors" (or the legal equivalent)
under the rules and regulations of the New York Stock Exchange, Inc. or other
principal securities exchange on which the Common Stock is listed or traded.
(c) If a director has been designated by a Stockholder and elected
pursuant to this Section 2.1 and if such Stockholder requests that such director
be removed (with or without cause) by written notice thereof to the other
Stockholders of the Company, then such director shall be removed, upon the
affirmative vote of holders of a majority of the outstanding shares of Common
Stock, and each Stockholder hereby agrees to vote all Shares owned or held of
record by such persons or entities to effect such removal upon such request.
(d) In the event a vacancy is created on the Board of Directors at
any time by the death, disability, retirement, resignation or removal of a
director or otherwise, the Stockholder who originally designated such director
shall nominate a replacement director, and each Stockholder agrees to cause the
director(s) designated by such Stockholder to vote for such nominated individual
to fill such vacancy.
(e) If neither DLJMB, GEI nor Gooding has the right to designate any
one of the directors, the right to designate such director shall devolve on all
holders of the Common Stock.
2.2 APPROVAL OF CERTAIN TRANSACTIONS. In addition to any approval of the
Board of Directors required by applicable law, the following transactions shall
require the specific approval of (i) DLJMB for as long as the DLJ Investors
and/or their Permitted Transferees shall own at least 20% of the outstanding
Common Stock of the Company and (ii) Gooding for as long as Gooding and/or his
Permitted Transferees shall own at least 20% of the outstanding Common Stock of
the Company:
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(a) any direct or indirect investment by the Company in, or purchase
or other acquisition by the Company of, in one or a series of transactions, any
business, assets, securities or other property of another person, which
transaction or series of transactions has an aggregate value in excess of
$10,000,000;
(b) any sale, lease, exchange or other disposition of any material
asset or assets of the Company having an aggregate fair market value in excess
of $10,000,000;
(c) any merger, consolidation or sale of all, or substantially all,
of the assets of the Company;
(d) any incurrence by the Company or its subsidiaries of indebtedness
in excess of $10,000,000 other than the incurrence of debt to finance working
capital in the ordinary course of business and other than refinancing of
indebtedness existing at the date of this Agreement;
(e) any issuance by the Company of equity securities other than (i)
pursuant to agreements in existence as of the date of this Agreement (ii)
pursuant to any stock option or other incentive-based plan for employees of the
Company and (iii) in connection with a transaction described in clause (a) or
(b) above with a value of $10,000,000 or less;
(f) the engagement of any investment banking firm by the Company in
connection with an offering of securities or any other transaction;
(g) any significant change in or expansion of the Company's business
outside of the test instrument industry or any business reasonably related
thereto;
(h) the appointment of any chief executive officer who succeeds
Gooding to such position;
(i) any agreement or transaction between the Company and any
Affiliate of the Company involving the transfer of any consideration (whether
cash, securities, property or otherwise) between the Company and such Affiliate;
PROVIDED, HOWEVER, that the foregoing shall not restrict (A) transactions
between the Company and any of its subsidiaries, or among any of such
subsidiaries, (B) payments or advances to employees of the Company or its
subsidiaries in the ordinary course of business, (C) transactions pursuant to
any stock option or other incentive-based plan for employees of the Company or
its subsidiaries that is approved by the Board of Directors, (D) transactions
contemplated by this Agreement or agreements entered into in connection with the
closing of the Recapitalization Agreement and (E) transactions pursuant to any
arrangements existing on the date hereof; and
(j) any action to amend or repeal any provision of the Company's
Articles of Incorporation or By-laws.
2.3 QUORUM. For so long as DLJMB shall have the right under this
Agreement to designate any directors, in regard to a meeting of the Board of
Directors, a quorum of the Board
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shall not be deemed to exist unless there is a majority of the members of the
Board of Directors present and at least one director designated by DLJMB is a
part of such quorum; PROVIDED, HOWEVER, if there would have otherwise been a
quorum but for the absence of all of the directors designated by DLJMB, a
majority of directors present for such meeting may adjourn the meeting and
send a special notice to the directors designated by DLJMB and the other
directors not in attendance at the meeting setting a date for reconvening the
meeting of the Board of Directors at least three business days after the
meeting as to which no quorum existed by virtue of the absence of all of the
directors designated by DLJMB was adjourned, and the Board of Directors may
reconvene at such time and conduct business if a quorum is otherwise present,
regardless of whether a director designated by DLJMB is in attendance.
2.4 NOTICE. The Stockholders agree to cause the Bylaws of the Company to
provide that the Board of Directors will not take any action at a meeting unless
notice of such meeting shall have been given to each director at least ten days
prior thereto.
ARTICLE 3
TRANSFER RESTRICTIONS
3.1 FIRST YEAR ANNIVERSARY. Prior to the earlier of the first anniversary
of this Agreement and the consummation of a Qualified IPO, no Stockholder may
transfer or pledge any Shares other than in connection with an Exempt Transfer.
3.2 SECOND THROUGH FIFTH YEAR ANNIVERSARIES. From and after the first
anniversary of this Agreement until the earlier of the fifth year anniversary of
this Agreement and the consummation of a Qualified IPO:
(a) the Institutional Investors may transfer their Shares subject to
the other Stockholders' rights of first offer under Section 4.1 and Tag-Along
Rights under Section 4.2;
(b) the Management Stockholders (other than Gooding) may transfer
their Shares only pursuant to exercise of the Tag-Along Rights granted to them
in Sections 4.2;
(c) Gooding may transfer (i) such number of Shares of Common Stock
such that, after such transfer, Gooding owns Shares representing not less than
20% of the number of Shares outstanding at the time of this Agreement, subject
to the other Stockholders' rights of first offer under Section 4.1 and Tag-Along
Rights under Section 4.2 and (ii) the remainder of his Shares only pursuant to
exercise of the Tag-Along Rights granted to him in Sections 4.2; PROVIDED,
HOWEVER, that in the event Gooding is no longer the chief executive officer of
the Company, Gooding may transfer all of his Shares of Common Stock pursuant to
clause (i) of this Section 3.2(c); and
(d) any Stockholder may transfer its Shares in an Exempt Transfer.
3.3 FIFTH THROUGH TENTH YEAR ANNIVERSARIES. From and after the fifth
anniversary of this Agreement until the earlier of the tenth year anniversary of
this and the consummation of
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a Qualified IPO, any Stockholder may transfer its Shares subject to the other
Stockholders' rights of first offer under Section 4.1 and Tag-Along Rights
under Section 4.2.
3.4 RELEASE OF TRANSFER RESTRICTIONS IN CONNECTION WITH QUALIFIED IPO.
In addition, Stockholders may transfer Shares in connection with a
Qualified IPO in accordance with the following provisions:
(a) If the Company elects to offer Common Stock pursuant to a
Qualified IPO
or is required to make a registration that would constitute a Qualified IPO, the
Board of Directors shall deliver a written notice to each of the Stockholders at
least 30 days prior to the filing of the initial registration statement in
connection with such Qualified IPO (the "IPO Notice"). Within 10 days of
receipt of such notice, the DLJ Investors may elect to participate in such
Qualified IPO as a selling Stockholder by delivering to the Company and each
other Stockholder, a notice stating (i) the DLJ Investors' bona fide intention
of participating in such Qualified IPO and (ii) and the number of Shares the DLJ
Investors wish to sell in such Qualified IPO. The number of Shares that the DLJ
Investors may include in the Qualified IPO will be determined in accordance with
the Registration Rights Agreement.
(b) If the DLJ Investors elect to participate in the Qualified IPO in
accordance with Section 3.4(a) above, the other Institutional Investors may also
elect to participate in such Qualified IPO by delivering a notice to the Company
and each of the other Stockholders within 20 days of receipt of the IPO Notice,
which notice shall state (i) such Stockholder's bona fide intention of
participating in such Qualified IPO and (ii) and the number of Shares such
Stockholder wishes to sell in such Qualified IPO; PROVIDED, HOWEVER, that the
maximum number of Shares a Stockholder may sell in a Qualified IPO is the total
number of Shares owned by such Stockholder MULTIPLIED BY a fraction, the
numerator of which is the number of Shares to be sold by the DLJ Investors in
the Qualified IPO and the denominator of which is the total number of Shares
owned by the DLJ Investors, subject to the provisions of Sections 2(d) and 3(b)
of the Registration Rights Agreement (the "IPO PORTION").
(c) If the DLJ Investors elect to participate in the Qualified IPO in
accordance with Section 3.4(a) above, Gooding and the Management Stockholders
may sell such number of Shares, if any, in the Qualified IPO as the managing
underwriter for such Qualified IPO approve; PROVIDED, HOWEVER, that the maximum
number of Shares Gooding and each Management Stockholder may sell in a Qualified
IPO is such Stockholder's IPO Portion; PROVIDED, further, that if Gooding is no
longer Chief Executive Officer of the Company, he shall have the rights of an
Institutional Investor pursuant to Section 3.4(b) above.
(d) If the DLJ Investors do not elect to participate in a Qualified
IPO, no other Stockholder may participate in the offering unless such Qualified
IPO has been demanded by the Stockholders holding at least 40% of the
outstanding Common Stock of the Company in accordance with the provisions of
Section 2(c) of the Registration Rights Agreement. If the Offering has been
demanded in accordance with such provisions of the Registration Rights
Agreement, the Stockholders demanding such registration shall have the right to
participate in the Qualified IPO.
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3.5 NO FURTHER TRANSFER RESTRICTIONS. The Stockholders shall no longer be
bound by the transfer restrictions of this Article III following the first to
occur of (i) the consummation of a Qualified IPO, (ii) the later of the date
upon which the DLJ Investors and their Permitted Transferees own less than 5% of
the outstanding Shares of Common Stock or the date on which Gooding and his
Permitted Transferees own less than 5% of the outstanding shares of Common
Stock, or (iii) the ten year anniversary of this Agreement.
ARTICLE 4
RIGHT OF FIRST OFFER; TAG-ALONG RIGHTS;
CERTAIN PURCHASE RIGHTS; SHARES SUBJECT TO THIS AGREEMENT
4.1. RIGHT OF FIRST OFFER.
(a) GENERAL. If, prior to the consummation of a Qualified IPO, a
Stockholder ("Selling Stockholder") proposes to sell Shares to a third party
other than pursuant to an Exempt Transfer (a "PROPOSED SALE"), the Selling
Stockholder must first comply with the procedures set forth in this Section 4.1
and in Section 4.2.
(i) The consideration for the Proposed Sale shall consist
solely of cash.
(ii) The Selling Stockholder shall deliver a notice (the
"OFFERING NOTICE") to the Company and to each of the Stockholders
stating (1) the Selling Stockholder's bona fide intention to sell
Shares in the Proposed Sale; (2) the number of Shares it proposes to
sell; and (3) the price and terms of the Proposed Sale.
(iii) Within 20 days after the Offering Notice is given, the
Company may elect by written notice to the Selling Stockholder to
purchase from the Selling Stockholder, at the price and on the terms
specified in the Offering Notice, any or all of the Shares proposed to
be sold in the Proposed Sale; PROVIDED, HOWEVER, that in the event the
Company elects to purchase some but not all of the Shares proposed to
be sold in the Proposed Sale, the Company's right to purchase such
Shares will be conditioned upon the purchase of the remainder of such
Shares by the Stockholders pursuant to Section 4.1(a)(v) and (vi).
(iv) Subject to Subsection 4.1(a)(vi), the purchase of such
Shares by the Company shall take place within 20 days after the date
of the Company's notice.
(v) In the event the Company does not elect to purchase all of
the Shares offered in the Offering Notice, the Company shall give
written notice to each of the Stockholders (the "REOFFER NOTICE"), of
the number of Shares available for purchase (the "REOFFERED SHARES")
on or before the final day of such 20-day period and the right to
purchase such Reoffered Shares shall pass automatically to each of
such Stockholders. Each such Stockholder shall initially
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be entitled to purchase such Stockholder's Percentage Share of the
Reoffered Shares. In the event that any Shares remain after such
allocation and Stockholders remain who desire to purchase additional
Shares in excess of their Stockholder's Percentage Share, all of the
remaining Shares which such Stockholders have elected to purchase shall
be allocated to them PRO RATA based on the number of Shares held by
them, or otherwise as agreed to among such remaining Stockholders.
Each Stockholder will have 20 days from receipt of the Reoffer Notice
to exercise its purchase rights under this Section 4.1 by written
notice to the Selling Stockholder and to the Company. The closing of
any purchase and sale under this subsection shall be held within 20
days following the exercise by such Stockholder of the purchase
rights hereunder.
(vi) Such purchase rights shall only apply if the Company and
the Stockholders, collectively, acquire all, but not less than all,
of the Shares proposed to be sold in the Offering Notice. In the
event the Company elects to acquire some but not all of the Shares
proposed to be sold in the Offer Notice, the Company's purchase of
Shares shall occur simultaneously with the purchase of Shares by the
Stockholders.
(vii) In the event that the rights of first offer set forth in
Section 4.1 are not exercised, and the Selling Stockholder, to the
extent applicable, has complied with Section 4.2 below, the Selling
Stockholder may sell, at any time within 120 days from the date of
the Reoffer Notice, the number of Shares it proposed to sell in the
Proposed Sale on price and terms no less favorable to the purchaser
than those of the Proposed Sale, provided that the Selling
Stockholder may not sell such Shares to a Person if the Board of
Directors has determined that such Person is reasonably likely to be
a competitor of the Company or a person whose interests would be
adverse to the Company.
4.2. TAG-ALONG RIGHT. In the event that the rights of first offer set
forth in Section 4.1 are not exercised, each of the other Stockholders (the
"TAG-ALONG STOCKHOLDERS") shall have the right (the "TAG-ALONG RIGHT") to
include up to the following number of its Shares in the Proposed Sale: the
total number of Shares proposed to be sold by the Selling Stockholder in the
Proposed Sale MULTIPLIED BY a fraction the numerator of which is the number of
Shares owned by such Tag-Along Stockholder and the denominator of which is the
aggregate number of Shares owned by such Selling Stockholder and by all
Tag-Along Stockholders exercising their Tag-Along Rights hereunder. Any Shares
purchased from such Stockholders pursuant to this Section 4.2 shall be at the
same price per Share and upon the same terms and conditions as such Proposed
Sale. The Selling Stockholder shall, not less than 30 days prior to each
Proposed Sale, notify, or cause to be notified, each Stockholder in writing of
each such Proposed Sale. Such notice shall set forth: (A) the name of the
Selling Stockholder and the number of Shares proposed to be sold, (B) the name
and address of the proposed purchaser, (C) the proposed per share purchase price
(which must be payable in cash) and the terms and conditions of payment offered
by such proposed purchaser, and (D) that the proposed purchaser has been
informed of the Tag-Along Right provided for in this Section 4.2 and has agreed
to purchase Shares in accordance with the terms hereof.
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The Tag-Along Right may be exercised by any Stockholder by delivery
of a written notice to the Selling Stockholder (the "TAG-ALONG NOTICE") within
15 business days following its receipt of the notice specified in the last
sentence of the preceding paragraph. The Tag-Along Notice shall state the
number of Shares that such Stockholder proposes to include in such transfer to
the proposed purchaser determined as aforesaid.
The Company agrees not to effect any transfer of Shares by any
Stockholder until it has received evidence reasonably satisfactory to it that
the Tag-Along Right, if applicable to such transfer, has been complied with.
Notwithstanding the foregoing, (i) only GEI is entitled to exercise
Tag-Along Rights with respect to the first 335,000 Shares transferred by the DLJ
Investors and (ii) only the DLJ Investors are entitled to exercise Tag-Along
Rights with respect to the first 150,000 Shares transferred by GEI.
4.3. CERTAIN PREEMPTIVE RIGHTS. If prior to a Qualified IPO the Company
proposes to issue, sell, or grant securities convertible into shares of Common
Stock (collectively, the "Securities"), then the Company shall, no later than
30 days prior to the consummation of such issuance, give written notice to all
Stockholders of such proposed issuance. Such notice shall describe the proposed
issuance, and contain an offer to each of the Stockholders to sell to such
Stockholder, at the same price and for the same consideration to be paid by the
proposed purchasers, such Stockholder's pro rata portion (which shall be a
percentage equal to the percentage of the outstanding Common Stock held by such
Stockholder before such proposed issuance; PROVIDED, HOWEVER, that if the use of
proceeds of such Securities issuance shall include the repurchase of Common
Stock, then such percentage shall be calculated assuming the consummation of
such repurchase) of the Securities to be sold. If any such Stockholder fails to
accept such offer by written notice within 25 days after its receipt of the
Company's notice, the Company may proceed with such proposed issuance, free of
any right on the part of such Stockholder under this Section 4.3 in respect
thereof. This Section 4.3 shall not apply to: (i) issuances to employees or
pursuant to employee benefit or stock option plans which shall not exceed 10% in
the aggregate of the shares of capital stock of the Company, on a fully diluted
basis; (ii) Securities distributed or set aside to all holders of Common Stock
on a per share equivalent basis; (iii) any other issuance of Securities pursuant
to or as a result of the transactions contemplated by the Recapitalization
Agreement or issuance of Securities upon the conversion, exercise or exchange of
such Securities or (iv) Securities issued in a business combination or
acquisition approved pursuant to Section 2.2.
4.4 SHARES SUBJECT TO THIS AGREEMENT. If, prior to a Qualified IPO, the
Company shall issue any Securities in a transaction as to which the rights under
Section 4.3 apply, or any Stockholder shall transfer Shares in a transaction
subject to Sections 4.1 and 4.2, the purchaser of such Securities shall execute
a copy of this Agreement and such purchaser shall be subject to this Agreement.
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ARTICLE 5
MISCELLANEOUS
5.1 LEGEND. The certificates representing the Common Stock to be
purchased by each of the Stockholders shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
(A "TRANSFER") EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF A STOCKHOLDERS
AGREEMENT DATED AS OF JUNE 11, 1997. SUCH SECURITIES ARE ALSO SUBJECT TO
A REGISTRATION RIGHTS AGREEMENT DATED JUNE 11, 1997. ANY TRANSFEREE OF
THESE SECURITIES TAKES SUBJECT TO THE TERMS OF SUCH AGREEMENTS, COPIES OF
WHICH ARE ON FILE WITH THE COMPANY.
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR UNDER ANY STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EXEMPTION THEREFROM UNDER THE ACT OR LAW OR THE RULES AND
REGULATIONS PROMULGATED THEREUNDER."
Each of the parties hereto agrees that it will not transfer any Shares
without complying with each of the restrictions set forth herein and agrees that
in connection with any such transfer it will, if requested by the Company,
deliver at its expense to the Company an opinion of counsel (including in-house
or special counsel), in form and substance reasonably satisfactory to the
Company and counsel for the Company, that such transfer is not in violation of
the securities laws of the United States of America or any state thereof;
PROVIDED, HOWEVER, that in case of any sale or other transfer of Shares to any
person or entity who is an "accredited investor" (as such term is defined and
used in Rule 501 of Regulation D under the Act), no opinion of counsel shall be
required if the transferor obtains a representation from such person or entity
that it is an accredited investor and is acquiring such Shares for its own
account and with no intention of distributing or reselling said Shares or any
part thereof, or interest therein, in any transaction that would violate the
securities laws of the United States of America or any state thereof, without
prejudice, however, to such person's or entity's right at all times to sell or
otherwise dispose of all or any part of said Shares pursuant to an effective
registration statement under the Act or any exemption from such registration
available under the Act, and subject, nevertheless, to such person's or entity's
disposition of its property being at all times within its control.
5.2 TERMINATION OF SUCCESSION PLAN. Upon the effective date of this
Agreement, the succession plan in the event of Gooding's death adopted by the
Company pursuant to a Board resolution dated as of June 27, 1994 shall terminate
and be of no further effect.
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5.3 SUCCESSORS, ASSIGNS AND TRANSFEREES. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective legal
representatives, heirs, legatees, successors and assigns including any party to
which any Stockholder has transferred or sold his or its Shares. Except as
provided herein, each transferee of Shares from a party hereto or a Permitted
Transferee thereof shall take such Shares subject to the same restrictions as
existed in the hands of the transferor; PROVIDED that if Gooding or an
Institutional Investor transfers Shares, the transferee shall only have rights
as a Stockholder hereunder and not the rights of Gooding or such Institutional
Investor.
5.4 NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method; the day after it is sent, if sent for next day delivery to a domestic
address by recognized overnight delivery service (E.G., Federal Express);
and upon receipt, if sent by certified or registered mail, return receipt
requested. In each case notice shall be sent to:
If to the Company addressed to:
Wavetek Corporation
11995 El Camino Real, Suite 301
San Diego, California 92130
Telecopy No.: (619) 793-2310
Attention: Chief Executive Officer
If to any Stockholder to such Stockholder at the address indicated on
Schedule II hereto.
5.5 RECAPITALIZATIONS, ETC. The provisions of this Agreement shall
apply, to the full extent set forth herein with respect to the Shares, to any
and all shares of capital stock of the Company or any capital stock, partnership
units or any other security evidencing ownership interests in any successor or
assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) that may be issued in respect of, in exchange for, or in substitution
of the Common Stock by reason of any stock dividend, split, reverse split,
combination, recapitalization, liquidation, reclassification, merger,
consolidation or otherwise.
5.6 LEAD UNDERWRITER. As long as the DLJ Investors own 5% or more of the
outstanding Shares, DLJSC shall have the right but not the obligation to act as
the lead underwriter in a Qualified IPO. If requested, the Stockholders agree
to vote in favor of such engagement.
5.7 INSPECTION AND COMPLIANCE WITH LAW. Copies of this Agreement will be
available for inspection or copying by any Stockholder at the offices of the
Company through the Secretary of the Company.
12
5.8 CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND
THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE (WITHOUT REFERENCE TO THE CHOICE OF LAW PROVISIONS OF DELAWARE LAW).
5.9 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement constitutes
the entire agreement among the parties pertaining to the subject matter hereof
and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties. This Agreement may not be
amended except by an instrument in writing signed on behalf of the Stockholders
holding at least two-thirds of the outstanding Shares. However, no amendment,
supplement, modification or waiver of this Agreement diminishing a Stockholder's
right of first offer pursuant to Section 4.1 or Tag-Along Rights pursuant to
Section 4.2 hereof shall be binding unless executed in writing by each such
Stockholder affected. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
5.10 MULTIPLE COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.11 INVALIDITY. In the event that any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, then to the maximum extent permitted by
law, such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement.
5.12 TITLES. The titles, captions or headings of the Articles and
Sections herein are for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
5.13 CUMULATIVE REMEDIES. All rights and remedies of either party hereto
are cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
5.14 WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY WAIVES, AND COVENANTS
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT, OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND,
CAUSE OF ACTION, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR BASED UPON THIS
AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. ANY OF THE
PARTIES HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 5.13
WITH ANY COURT AS WRITTEN
13
EVIDENCE OF THE CONSENT OF EACH OF THE PARTIES HERETO TO THE WAIVER OF HIS OR
ITS RIGHT TO TRIAL BY JURY.
5.15 ASSUMPTION OF THIS AGREEMENT. In the event any Stockholder sells,
transfers or otherwise disposes of any of his or its Shares to a Permitted
Transferee such transferee shall execute an assumption agreement in the form of
Exhibit A hereto pursuant to which such transferee agrees to assume the rights
and obligations of such transfer pursuant to this Agreement. In addition, in
the event any Stockholder or any of his or its Permitted Transferees sells,
transfers or otherwise disposes of his or its Shares to a person or entity other
than a Permitted Transferee, such person or entity shall execute an assumption
agreement pursuant to which such person or entity agrees to assume the
obligations of such or such Permitted Transferee.
5.16 TERM. Unless earlier terminated by mutual agreement among the
parties hereto, the provisions of Articles 3 and 4 shall terminate upon the
earlier to occur of a Qualified IPO or upon the tenth year anniversary of this
Agreement and all other provisions of this Agreement shall terminate upon the
tenth year anniversary of this Agreement. Notwithstanding the foregoing, this
Agreement shall in any event terminate with respect to any Stockholder and its
Permitted Transferees when such Stockholder and its Permitted Transferees no
longer own any shares of Registrable Securities (except if such shares are
transferred in violation of this Agreement).
5.17 TERMINATION OF OLD STOCKHOLDERS AGREEMENTS. This Agreement
supersedes and replaces the following agreements, which as of this date shall be
deemed null and void and without further effect: (i) the Stockholders' Agreement
dated April 23, 1996 and the Supplemental Stockholders' Agreement dated April
23, 1996 with Yokogawa Electric Corporation and (ii) the Stock Purchase
Agreement dated June 26, 1991, the Supplemental Stockholders' Agreement dated
October 25, 1994 and Addenda Number One to the Stockholders Agreement dated
April 23, 1996 with Schroder UK Venture Fund III L.P., Schroder UK Venture Fund
III L.P. 2 and Schroder UK Venture Fund III Trust.
14
IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders Agreement as of the date first written above.
WAVETEK CORPORATION
By: /s/ Terence J. Gooding
---------------------------------------------
Name: Dr. Terence J. Gooding
Title: Chief Executive Officer
DLJ MERCHANT BANKING PARTNERS II, L.P.
By: DLJ Merchant Banking II, Inc.
Managing General Partner
By: /s/ David B. Wilson
---------------------------------------------
Name:
Title:
DLJ OFFSHORE PARTNERS II, C.V.
By: DLJ Merchant Banking II, L.P.
Managing General Partner
By: /s/ David B. Wilson
---------------------------------------------
Name:
Title:
DLJ DIVERSIFIED PARTNERS, L.P.
By: DLJ Diversified Partners, Inc.
By: /s/ David B. Wilson
---------------------------------------------
Name:
Title:
15
DLJMB FUNDING II, INC.
By: /s/ David B. Wilson
---------------------------------------------
Name:
Title:
UK INVESTMENT PLAN 1997 PARTNERS
By: Donaldson, Lufkin & Jenrette, Inc.
General Partner
By: /s/ David B. Wilson
---------------------------------------------
Name:
Title:
DLJ FIRST ESC L.L.C.
By: DLJ LBO Plans Management Corporation
As Manager
By: /s/ David B. Wilson
---------------------------------------------
Name:
Title:
DLJ EAB PARTNERS, L.P.
By: DLJ Merchant Banking II, Inc.
Managing General Partner
By: /s/ David B. Wilson
---------------------------------------------
Name:
Title:
16
DLJ MILLENNIUM PARTNERS, L.P.
By: DLJ Merchant Banking II, Inc.
Managing General Partner
By: /s/ David B. Wilson
---------------------------------------------
Name:
Title:
GREEN EQUITY INVESTORS II, L.P.
By: Grand Avenue Capital Partners, L.P.
Grand Avenue Capital Corporation,
its general partner
By: /s/ Peter Nolan
---------------------------------------------
Name:
Title:
DR. TERENCE J. GOODING
/s/ Terence J. Gooding
-------------------------------------------------
Dr. Terence J. Gooding
SCHRODER UK VENTURE FUND III
A Group consisting of three entities:
Schroder UK Venture Fund III Trust
Schroder UK Venture Fund III L.P.
Schroder UK Venture Fund III L.P. 2
By: SCHRODER VENTURE MANAGERS LIMITED,
Manager
By: /s/ Peter L. Everson
---------------------------
Peter L. Everson, Director of
the Manager of each of the
three entities comprising the
Fund
17
YOKOGAWA ELECTRIC CORPORATION
By: /s/ Tetsuji Ishizuka
---------------------------------------------
Name: Tetsuji Ishizuka
Title: General Counsel
BARBARA A. GOODING
TERENCE J. AND BARABARA A. GOODING CRUT
TERENCE J. GOODING GRAT 1
TERENCE J. GOODING GRAT 2
BARBARA A. GOODING GRAT
GOODING FAMILY FOUNDATION
GOODING INVESTMENTS, INC.
ANTHONY P. GOODING
ANTHONY P. GOODING CRUT
TERENCE J. GOODING, JR.
TERENCE J. GOODING, JR. CRUT
PAUL L. GOODING
PAUL L. GOODING CRUT
KATHRYN A. VALVERDE
KATHRYN A. VALVERDE CRUT
MATTHEW T. LONDON
MATTHEW T. LONDON CRUT
REBECCA J. BELLATI
REBECCA J. BELLATI CRUT
VICTORIA L. GOODING
VICTORIA L. GOODING CRUT
KYLE L. GOODING INTER VIVOS TRUST
AMANDA L. GOODING INTER VIVOS TRUST
PATRICK A. GOODING INTER VIVOS TRUST
AMANDA N. MCPHERSON INTER VIVOS TRUST
CODY C. MCPHERSON INTER VIVOS TRUST
TERENCE M. LONDON INTER VIVOS TRUST
TERENCE J. GOODING 1994 TRUST
BARBARA A. GOODING 1994 TRUST
IVERNA REDMOND
MAUREEN WISCHHUSEN
MARGARET GOODING
MARY J. OLSON
YVONNE DUGGER
DARREL WEBLEY
DUANE WEBLEY
DEBORAH SPARKS
SNOW HILL TRUSTEES
RICHARD J. BERRY
18
GERALDINE MARY BERRY
PAUL STEVENSON
SUZANNE EVE STEVENSON
PHILIP J. COOKE
By: /s/ Terence J. Gooding
----------------------------------------
Terence J. Gooding, as Attorney-in-Fact
BEN J. CONSTANTINI
By: /s/ Ben J. Constantini
----------------------------------------
Ben J. Constantini
DEREK T. MORIKAWA
/s/ Derek T. Morikawa
-----------------------------
Derek T. Morikawa
MEGAN MORIKAWA INTER VIVOS TRUST
EVAN MORIKAWA INTER VIVOS TRUST
By: /s/ Derek T. Morikawa
-------------------------------------------
Derek T. Morikawa, Attorney-in-Fact
ROD BALLARD
KEITH BARGROFF
RICHARD BERRY
PAT BONFILS
JOSEPH A. BUDANO
VICKIE L. CAPPS
CHARLES CITRON
BEN J. CONSTANTINI
DANIEL FISH
BRUCE GOULD
MICHAEL HUFF
RICHARD JAWORSKI
RONALD JENT
BARRY KITAEN
MICHAEL LATHAM
ANN LITTLE
JOSEPH MATIBAG
NORMAN MILLER
DEREK T. MORIKAWA
ERNEY NIKOU
JEFFREY PERRIN
19
MICHAEL RICHARDSON
MICHAEL SCIULLI
BRYAN WHATLEY
PAUL ASHTIANI
ANTHON EDWARD BAYLY
DAVID COOPER
PAUL ROBERTS
RICHARD RODDIS
PAUL STEVENSON
DAVID WALKER
STEVEN MANNING
KOON ENG TAN
YONG CHANG YANG
ULRICH DIEHL
ROL KAINDL
WINFRIED LENNE
PETER MASSAM
JOUKE RIJPSTRA
KLAUS ROMANEK
SOREN SCHNAPKA
DIETER SCHWEISTHAL
NORBERT STADHOUDERS
WIELAND WEIGLER
MICHEL BOUQUAIN
ENZO DI LUIGI
OLIVIER MASSELIN
FRANCOIS PLAZANET
FREDERICK TROJANI
LUKA RADOMIROV
By: /s/ Terence J. Gooding
-----------------------------------------------
Terence J. Gooding, as Attorney-in-Fact
20