SECOND AMENDED AND RESTATED CALL
OPTION AGREEMENT
AMONG
AMERICAN CAPITAL STRATEGIES, LTD.,
AMERICAN CAPITAL EQUITY I, LLC,
AMERICAN CAPITAL EQUITY II, LLC,
AND
THOMAS D. LOGAN
SECOND
AMENDED AND RESTATED CALL OPTION AGREEMENT (this “
Agreement ”), entered into this ___ day of December,
2007 by and among AMERICAN CAPITAL STRATEGIES, LTD., a corporation
existing under the laws of the State of Delaware (“
ACS ”), AMERICAN CAPITAL EQUITY I, LLC, a limited
liability company existing under the laws of the State of Delaware
(“ ACE I ”), AMERICAN CAPITAL EQUITY II, LLC, a
limited liability company existing under the laws of the State of
Delaware (“ ACE II ”, together with ACE I,
“ ACE ”, and together with ACS, “
ACAS ”), and THOMAS D. LOGAN (“ Logan
”).
WHEREAS,
as of the date hereof, the Major Investor (as defined below) is the
owner of shares of Preferred Stock, Warrants and Class B
Common Stock (each as defined below), of Mirion Technologies, Inc.,
a Delaware corporation (the “ Company
”);
WHEREAS,
in connection with the Master Restructuring Agreement and Plan of
Merger dated as of December 22, 2005, and effective as of
December 31, 2005, the Company became the sole stockholder of
each of Global Dosimetry Solutions (“ GDS ”),
Dosimetry Acquisitions (U.S.), LLC (“ Dosimetry
”) and IST Acquisitions, Inc. (“ IST
”);
WHEREAS,
pursuant to the Call Option Agreement between ACS and Logan dated
April 19, 2004, Logan was granted certain rights to purchase
common stock of GDS and Dosimetry from the Major Investor (the
“ Original Agreement ”);
WHEREAS,
the Original Agreement was amended and restated on August 18,
2006 (the “ Amended and Restated Agreement ”) to
provide Logan with a call option to purchase shares of Class A
Common Stock (as defined below) from the Major Investor;
and
WHEREAS,
each of ACAS and Logan desires to amend and restate the Amended and
Restated Agreement to add an ROI (as defined below) component to
the vesting of Logan’s IRR Options and to add ACE I and ACE
II as parties hereto.
NOW,
THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties hereto hereby agree
as follows:
Terms not
otherwise defined in the text of this Agreement shall have the
following meanings:
1.1
“ Affiliate ” shall mean any entity controlling,
controlled by or under common control with ACAS.
1.2
“ Business Day ” shall mean any day of the year
on which national banking institutions in New York, New York and
Orange County, California are open to the public for conducting
business and are not required or authorized to close.
1.3
“ Cash Inflows ” as used herein shall include
payments of dividends, distributions, redemptions, premiums and
proceeds received by the Major Investor in connection with the
Investment, excluding any structuring, management or other fees or
the reimbursement of any expenses received by the Major Investor in
connection therewith.
1.4
“ Cash Outflows ” as used herein shall mean the
purchase price paid by the Major Investor for the
Investment.
1.5
“ Change of Control ” shall mean a transaction
or a series of related transactions involving:
(a) The
sale of fifty-one percent (51%) or more of the assets (based on
their fair market value) of the Company; or
(b) The
sale by the Major Investor or stockholders of the Company in a
single transaction or in a series of related transactions of equity
securities constituting greater than fifty percent (50%) of the
voting power of the equity securities of the Company; or
(c) Any
consolidation, merger or recapitalization of the Company in which
the Company is not the continuing or surviving corporation or
pursuant to which the Company’s voting stock would be
converted into cash, securities and/or other property, other than
any such transaction in which holders of the Company’s voting
stock immediately before the transaction, in the aggregate, have
(or upon conversion, exercise or similar action would have) on the
same proportionate basis that existed prior to the transaction,
more than fifty percent (50%) of the voting power of all issued and
outstanding securities of the surviving corporation after the
transaction.
For the
avoidance of doubt, the conversion of Preferred Stock into Common
Stock by the Major Investor shall not be deemed a “ Change
of Control ”.
1.6
“ Class A Common Stock ” shall mean the
Company’s Class A Common Stock, par value $.001 per
share.
1.7
“ Class B Common Stock ” shall mean the
Company’s Class B Common Stock, par value $.001 per
share.
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1.8
“ Common Stock ” shall mean the Class A
Common Stock and the Class B Common Stock.
1.9
“ Fully Diluted Basis ” shall mean the total
number of shares of Common Stock which are issued and outstanding
plus the total number of shares of Common Stock which would
be issued and outstanding assuming the exercise of all outstanding
options issued pursuant to the Company’s 2006 Stock Plan, the
exercise of all warrants or rights to purchase Common Stock and the
conversion of all outstanding securities, including the Preferred
Stock.
1.10
“ Investment ” shall mean any investment,
whether before or after the date hereof, in any equity security (or
security convertible into equity) of the Company or any subsidiary
thereof by the Major Investor, including, for the avoidance of
doubt, the Preferred Stock, Warrants and Common Stock and any
investment in any equity security of each of GDS, Dosimetry and
IST.
1.11
“ IPO ” shall mean an initial public offering of
Common Stock in an underwritten offering under the Securities Act
of 1933, as amended.
1.12
“ IRR ” shall mean the interest rate (compounded
annually) determined using the XIRR function of the Microsoft Excel
program that, when used to calculate the net present value of all
Cash Inflows and all Cash Outflows, causes such net amount to equal
zero, and shall be calculated at the times and in the manner set
forth herein.
1.13
“ Logan Employment Agreement ” shall mean the
Employment Agreement between Logan and the Company dated as of the
date hereof, as amended from time to time.
1.14
“ Major Investor ” shall mean ACAS, together
with its Affiliates, or any successor or assign (provided that such
successor or assign is a successor or assign of all or a material
part of the assets of ACAS and its Affiliates).
1.15
“ Preferred Stock ” shall mean the
Series A-1 Convertible Participating Preferred Stock and
Series A-2 Convertible Participating Preferred Stock of the
Company, par value $.001 per share.
1.16
“ ROI ” shall be calculated by dividing
(x) the amount of cash return received by the Major Investor
in respect of the equity securities being transferred or sold in
connection with a Change of Control or IPO, as applicable, by
(y) the amount of total cash Investment made in such equity
securities.
1.17
“ Warrants ” shall mean the warrants to purchase
shares of Class A Common Stock.
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2.1
Grant of IRR Call Option . Subject to the terms hereof, the
Major Investor hereby grants Logan the option (the “ IRR
Call Option ”) to purchase from the Major Investor up to
54,564 shares of Class A Common Stock (the “ IRR
Option Shares ”). The IRR Call Option is exercisable at a price of
$88.75 per share (the “ IRR Exercise Price
”).
2.2
Vesting of IRR Option Shares . No IRR Option Share shall be
exercisable until it has vested as set forth herein. IRR Option
Shares shall vest and become exercisable in accordance with the
following:
(a) 18,188
IRR Option Shares shall automatically vest and become exercisable
in the event the Major Investor either (i) receives at least a
twenty-five percent (25%) IRR or (ii) achieves an ROI of at
least 2.0x, in each case with respect to the Investment upon a
Change of Control or an IPO;
(b) An
additional 18,188 IRR Option Shares shall automatically vest and
become exercisable in the event the Major Investor either
(i) receives at least a thirty percent (30%) IRR or (ii)
achieves an ROI of at least 2.25x, in each case with respect to the
Investment upon a Change of Control or an IPO; and
(c) The
remaining 18,188 IRR Option Shares shall automatically vest and
become exercisable in the event the Major Investor either
(i) receives at least a forty percent (40%) IRR and Cash
Inflows equal to at least two times Cash Outflows or
(ii) achieves an ROI of at least 2.75x, in each case with
respect to the Investment upon a Change of Control or an
IPO.
2.3
Determination of Major Investor’s IRR and ROI
.
(a) The
determination of the Major Investor’s IRR and ROI (and
Logan’s vesting as a result thereof) shall be measured, for
purposes of Sections 2.2(a)-(c) with respect to a Change of
Control or an IPO, as promptly as practicable (i) upon a
Change of Control and (ii) after the IPO in accordance with
Section 2.3(b).
(b) In
the event of an IPO, the determination of the Major
Investor’s IRR and ROI shall be determined in two
(2) stages:
(i) The IRR and
ROI determinations regarding one-half (1/2) of the IRR Option
Shares referred to in each of Sections 2.2(a)-(c) shall be
made as of the close of business on the thirtieth day (or if not a
Business Day, the next Business Day) following the effective date
of the IPO based on the average of the closing prices of the Common
Stock on the principal exchange or quotation system on which such
shares are traded on the trading days during the thirty
(30) day period following the IPO (the “ Initial
Trading Price ”). Such average closing price shall be
multiplied by
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the number of
shares of Common Stock (including shares of Common Stock
exercisable pursuant to any warrants or other convertible
securities but, with respect to the Preferred Stock, only Preferred
Stock which has a Conversion Price (as defined in the
Company’s Amended and Restated Certificate of Incorporation,
as amended from time to time) that is less than the Initial Trading
Price) held by the Major Investor and the result shall be treated
as a Cash Inflow and shall be added to all other Cash Inflows for
purposes of calculating the IRR and as a return on the Investment
for purposes of calculating the ROI. If any preferred stock that is
not convertible to Common Stock continues to be outstanding at the
time of the determination of the IRR and ROI or if the Conversion
Price of the Preferred Stock is equal to or greater than the
Initial Trading Price, such preferred stock shall be valued at its
liquidation preference plus any accrued but unpaid dividends and
such amount shall also be added to all other Cash Inflows for
purposes of calculating the IRR and treated as a return on the
Investment for purposes of calculating ROI. To the extent that any
such IRR Option Shares fail to vest based on such IRR and ROI
determinations, such IRR Option Shares shall immediately lapse and
be of no further effect.
(ii) Vesting of
the remainder of the IRR Option Shares shall be determined promptly
after the Major Investor sells all of the Investment, based on the
IRR and ROI taking into account the actual proceeds received by the
Major Investor in such transaction or transactions in which such
investment is sold. In the event that, following the IPO, the Major
Investor fails to dispose of all of the Investment (such remaining
portion referred to herein as the “ Unliquidated
Portion ”), within two (2) years from the date of
the IPO, the vesting of any remaining IRR Option Shares shall be
determined as of the close of business on the second anniversary of
the IPO (or if not a Business Day, the next Business Day) based
upon the IRR and ROI computed assuming such Unliquidated Portion is
sold at a price equal to the average closing price of the Common
Stock for all trading days during the 365 days prior to such
two (2) year anniversary (the “ Subsequent Trading
Price ”). Such average closing price shall be multiplied
by the number of shares of Common Stock that constitute the
Unliquidated Portion (including shares of Common Stock exercisable
pursuant to any warrants or other convertible securities but, with
respect to the Preferred Stock, only Preferred Stock which has a
Conversion Price that is less than the Subsequent Trading Price)
held by the Major Investor and the result shall be treated as a
Cash Inflow and shall be added to all other Cash Inflows for
purposes of calculating the IRR and as a return on the Investment
for purposes of calculating the ROI. If any preferred stock that is
not convertible to Common Stock continues to be part of the
Unliquidated Portion at the time of the determination of the IRR
and ROI or if the Conversion Price of the Preferred Stock is equal
to or greater than
5
the Subsequent
Trading Price, such preferred stock shall be valued at its
liquidation preference plus any accrued but unpaid dividends, and
such amount shall also be added to all other Cash Inflows for
purposes of calculating the IRR and be treated as a return on the
Investment for purposes of calculating the ROI. To the extent that
any IRR Option Shares fail to vest based on such IRR and ROI
determinations, such IRR Option Shares shall immediately lapse and
be of no further effect.
(c) Vesting
of IRR Option Shares shall occur immediately prior to, but
effective only upon, the Change of Control or IPO-related event
giving rise to such vesting.
(d) IRR
and ROI determinations shall give effect to any reduction of the
Major Investor’s IRR or ROI on the Investment as a result of
the vesting of IRR Option Shares or of any other performance-based
options, incentives, bonuses, restricted stock awards or other
compensation, whether awarded by the Major Investor, the Company,
or any of its subsidiaries that are tied to performance.
(e) In
calculating the IRR and ROI, it shall be assumed (1) that the
Major Investor owns the percentage of outstanding shares of Common
Stock as if on the date the IRR Call Option and the Time Call
Option were granted, such options had been granted by the Company
rather than by the Major Investor and (2) that the Major
Investor received the benefits of the Change of Control Transaction
or the IPO on the basis of such increased number of shares. In
other words, the calculation of the IRR and ROI should exclude the
increased dilution suffered by the Major Investor by granting the
IRR Call Option and the Time Call Option on shares owned by the
Major Investor rather than having the Company grant such options
with respect to authorized but unissued shares. For example, and
not by way of limitation, if on the date the IRR Call Option and
the Time Call Option were granted, the Major Investor owned 80
shares out of 100 outstanding shares on a Fully Diluted Basis, or
80%, and granted an option for 6 shares (6% of the outstanding
shares on a Fully Diluted Basis) to Logan, for purposes of
calculating the IRR and ROI it will be assumed that the Company
granted the options for 6 shares and that the Major Investor owned
after the grant of the options, 75.5% of the outstanding shares on
a Fully Diluted Basis (80 ÷ 106) rather than 74% (74
÷ 100) of the shares on a Fully Diluted Basis. If a Change
of Control Transaction were to occur, the Major Investor would be
deemed to have received an amount from the net proceeds as if the
Major Investor owned 75.5% of the outstanding shares on a Fully
Diluted Basis for purposes of calculating the IRR and ROI.
Similarly, if there is an IPO, in determining the number of shares
owned by the Major Investor and sold for purposes of
Section 2.3(b) above, the Major Investor will be deemed to
hold the number of shares it would have held applying the
adjustments and assumptions in this Section 2.3(e). If the IRR
or ROI is being calculated at time of and as a result of the
disposition by the Major Investor of all of its shares or as of the
second anniversary of the IPO, the Major Investor will be deemed to
have sold the additional shares deemed held as a result of the
application of the assumptions and adjustments in this
Section 2.3(e) at the time of and for the price
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realized by the
Major Investor in its final sale of shares, or as contemplated by
Section 2.3(b)(B), as applicable.
2.4
Exercise by Major Investor Upon Change of Control . Upon a
Change of Control (whether before or after the IPO), the Major
Investor will have the right and shall have the obligation, but
only to the extent that the IRR Option Shares vest upon such Change
of Control, to sell in the contemplated Change of Control, at the
same price and on the same terms as the Major Investor is selling
its shares of Common Stock, the vested IRR Option Shares and
promptly remit to Logan the net proceeds of such sale, less the
aggregate per share IRR Exercise Price of such shares. The IRR and
ROI of the Major Investor shall be determined, and any proceeds to
which Logan is entitled shall be remitted to him, within twenty
(20) days of a Change of Control transaction. To the extent
the Major Investor’s IRR and ROI is dependent upon any escrow
or contingent consideration, the Major Investor will recalculate
its IRR and ROI at the time any escrow payments are received or
contingent consideration paid and shall remit to Logan any
additional net proceeds, less the aggregate per share Exercise
Price of such additional shares, which are vested and sold as a
result thereof.
2.5
Exercise Upon IPO by Major Investor . At any time after the
IPO, if the Major Investor is selling its entire Investment, the
Major Investor shall be permitted to and shall have the obligation
to sell all of its remaining shares of Common Stock, including
those shares of Common Stock which may be exercisable for vested
IRR Option Shares based upon the final determination of the Major
Investor’s IRR and ROI (a “ Market Disposition
”). Any Market Disposition by the Major Investor shall be
subject to the Major Investor’s obligation to remit to Logan
the portion of the net proceeds attributable to his vested
unexercised IRR Option Shares less the aggregate IRR Exercise Price
thereof. In connection with a Market Disposition, the IRR and ROI
of the Major Investor shall be determined, and any proceeds to
which Logan is entitled shall be remitted to him, within thirty
(30) days following such event.
2.6
Exercise Procedure Generally .
(a) At
any time after any IRR Option Shares have vested, Logan may provide
the Major Investor with five (5) Business Days prior written
notice (the “ Exercise Notice ”) to exercise his
option to purchase any IRR Option Shares that may be vested at the
time. The Exercise Notice shall state the number of IRR Option
Shares Logan desires to purchase and the aggregate IRR Exercise
Price to be paid by Logan to the Major Investor for such
shares.
(b) The
closing of any exercise of the IRR Call Option shall take place at
10:00 a.m. local time at the offices of the Major Investor, on
the date specified for the pro
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