EXHIBIT 9.1
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EXECUTION COPY
WILMAR INDUSTRIES, INC.
AMENDED AND RESTATED
SHAREHOLDERS' AGREEMENT
DATED AS OF SEPTEMBER 29, 2000
TABLE OF CONTENTS
PAGE
SECTION 1. CERTAIN DEFINITIONS................................................................2
SECTION 2. CORPORATE GOVERNANCE..............................................................13
SECTION 2.1 Board of Directors................................................................13
SECTION 2.2 Vacancies.........................................................................16
SECTION 2.3 Covenant to Vote..................................................................16
SECTION 2.4 Registration of Common Stock......................................................17
SECTION 2.5 Certificate of Incorporation; No Conflict With Agreement..........................17
SECTION 2.6 Actions of the Board of Directors; Extraordinary Transactions.....................17
SECTION 3. TRANSFERS OF STOCK................................................................19
SECTION 3.1 Restrictions on Transfer..........................................................19
SECTION 3.2 Exceptions to Restrictions........................................................19
SECTION 3.3 Call and Put Options..............................................................20
SECTION 3.4 Endorsement of Certificates.......................................................24
SECTION 3.5 Improper Transfer.................................................................26
SECTION 4. RIGHTS OF FIRST OFFER; TAG ALONG SALES; NEW SECURITIES............................26
SECTION 4.1 Transfers By Shareholders.........................................................26
SECTION 4.2 Transfer of Offered Securities to Third Parties...................................29
SECTION 4.3 Purchase of Offered Securities....................................................29
SECTION 4.4 Waiting Period with Respect to Subsequent Transfers...............................29
SECTION 4.5 Tag-Along Rights..................................................................30
SECTION 4.6 Right of First Refusal for New Securities.........................................31
SECTION 4.7 Drag-Along Rights.................................................................33
SECTION 4.8 Treatment of Other Rights.........................................................34
SECTION 4.9 Sale Process......................................................................34
SECTION 4.10 Limitation on Indemnification.....................................................34
SECTION 4.11 Deposit ..........................................................................35
SECTION 4.12 Non-Accredited Shareholders.......................................................35
SECTION 5. REGISTRATION RIGHTS...............................................................35
SECTION 5.1 Piggyback Registrations...........................................................35
SECTION 5.2 Demand Registrations..............................................................37
SECTION 5.3 Registration Procedures...........................................................39
SECTION 5.4 Sale of Warrants to Underwriter...................................................44
SECTION 5.5 Indemnification...................................................................44
SECTION 5.6 Contribution......................................................................47
SECTION 5.7 Rule 144 .........................................................................48
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PAGE
SECTION 6. TERMINATION.......................................................................48
SECTION 7. MISCELLANEOUS.....................................................................48
SECTION 7.1 Inspection Rights.................................................................48
SECTION 7.2 Financial Information; List of Shareholders.......................................49
SECTION 7.3 Confidentiality...................................................................50
SECTION 7.4 Delivery Expenses.................................................................50
SECTION 7.5 Replacement of Instruments........................................................51
SECTION 7.6 Repurchases, Recapitalizations, etc...............................................51
SECTION 7.7 Successors and Assigns............................................................51
SECTION 7.8 Amendment and Modification; Waiver of Compliance; Conflicts.......................52
SECTION 7.9 Notices ..........................................................................52
SECTION 7.10 Entire Agreement; Governing Law...................................................57
SECTION 7.11 Injunctive Relief.................................................................57
SECTION 7.12 Availability of Agreement.........................................................58
SECTION 7.13 Headings .........................................................................58
SECTION 7.14 No Discriminatory Treatment.......................................................58
SECTION 7.15 Cooperation of Other Shareholders.................................................58
SECTION 7.16 Covenant Not to Amend.............................................................58
SECTION 7.17 Severability......................................................................58
SECTION 7.18 Further Assurances................................................................59
SECTION 7.19 Counterparts......................................................................59
Schedules
I Management Shareholders
II ▇▇▇▇▇▇▇ Management Shareholders
III Shareholder Schedule
Exhibits
A By-Laws
B Certificate of Incorporation
C Form of Transferee Agreement
D Regulatory Side Letter
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AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT
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AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT, dated as of
September 29, 2000 (this "AGREEMENT"), among WILMAR INDUSTRIES, INC., a New
Jersey corporation (the "COMPANY"), PARTHENON INVESTORS, L.P., a Delaware
limited partnership (together with its Permitted Transferees, "PARTHENON L.P."),
PCIP INVESTORS, a Delaware general partnership (together with its Permitted
Transferees, "PCIP"), J&R FOUNDERS FUND, L.P., a Delaware limited partnership
(together with its Permitted Transferees, "J&R FOUNDERS FUND"), PCAP FUNDING II,
LLC, a Delaware limited liability company (together with its Permitted
Transferees, "PCAP"), THE CHASE MANHATTAN BANK, AS TRUSTEE FOR FIRST PLAZA GROUP
TRUST, a pension trust managed by General Motors Investment Management
Corporation (together with its Permitted Transferees, "FIRST PLAZA"), CB CAPITAL
INVESTORS, LLC, a Delaware limited liability company (together with its
Permitted Transferees, "CHASE"), STERLING INVESTMENT PARTNERS, L.P., a Delaware
limited partnership (together with its Permitted Transferees, "STERLING"), JMH
PARTNERS CORP., a Delaware corporation (together with its Permitted Transferees,
"▇▇▇▇▇"), BANCBOSTON CAPITAL INC., a Massachusetts corporation (together with
its Permitted Transferees, "BANCBOSTON"), PRIVATE EQUITY PORTFOLIO FUND II, LLC,
a Delaware limited liability company (together with its Permitted Transferees,
"PRIVATE EQUITY PORTFOLIO FUND II"), ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & COMPANY QP, L.P., a
Delaware limited partnership (together with its Permitted Transferees, "▇▇▇▇▇▇▇
QP"), ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & COMPANY, L.P., a Delaware limited partnership (together
with its Permitted Transferees, "▇▇▇▇▇▇▇ ▇.▇."), FLEET CORPORATE FINANCE, INC.,
a Massachusetts corporation (together with its Permitted Transferees, "FLEET
FINANCE"), ALLIED CAPITAL CORPORATION, a Maryland corporation (together with its
Permitted Transferees, "ALLIED"), NATIONAL CITY EQUITY PARTNERS, INC., a
Delaware corporation (together with its Permitted Transferees, "NATIONAL CITY
EQUITY PARTNERS"), GREAT LAKES CAPITAL INVESTMENTS II, LLC, a Delaware limited
liability company (together with its Permitted Transferees, "GREAT LAKES
CAPITAL"), MELLON VENTURES II, L.P., a Delaware limited partnership (together
with its Permitted Transferees, "MELLON"), KEY PRINCIPAL PARTNERS, LLC, an Ohio
limited liability company (together with its Permitted Transferees, "KPP"),
BLACKSTONE MEZZANINE HOLDINGS L.P., a Delaware limited partnership (together
with its Permitted Transferees, "BLACKSTONE MEZZANINE HOLDINGS"), BLACKSTONE
MEZZANINE PARTNERS L.P., a Delaware limited partnership (together with its
Permitted Transferees, "BLACKSTONE MEZZANINE PARTNERS"), CITIZENS CAPITAL, INC.,
a Massachusetts corporation (together with its Permitted Transferees, "CITIZENS
CAPITAL"), the shareholders listed on Schedule I attached hereto (together with
their respective Permitted Transferees, collectively, the "MANAGEMENT
SHAREHOLDERS"), the shareholders listed on Schedule II attached hereto (together
with their respective Permitted Transferees, collectively, the "▇▇▇▇▇▇▇
MANAGEMENT SHAREHOLDERS"), and such other Persons who from time to time become
party hereto by executing counterpart signature pages hereof (together with
their Permitted Transferees, "OTHER INVESTORS").
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Parthenon L.P., PCIP, J&R Founders Fund, PCap, First Plaza,
Chase, Sterling, Huber, BancBoston, Private Equity Portfolio Fund II, ▇▇▇▇▇▇▇
QP, ▇▇▇▇▇▇▇ ▇.▇., National City Equity Partners, Great Lakes Capital, Mellon and
KPP are sometimes collectively referred to herein as the "INVESTORS". Parthenon
L.P., PCIP, J&R Founders Fund, PCap, First Plaza, Chase, Sterling, Huber,
BancBoston, Private Equity Portfolio Fund II, ▇▇▇▇▇▇▇ QP, ▇▇▇▇▇▇▇ ▇.▇., Fleet
Finance, Allied, National City Equity Partners, Great Lakes Capital, Mellon,
KPP, Blackstone Mezzanine Holdings, Blackstone Mezzanine Partners, Citizens
Capital, the Management Shareholders, the ▇▇▇▇▇▇▇ Management Shareholders and
the Other Investors are sometimes collectively referred to herein as the
"SHAREHOLDERS".
W I T N E S S E T H:
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WHEREAS, on the date hereof, the Company is authorized by its
Certificate of Incorporation to issue Capital Stock consisting of (i) 2,500,000
shares of Common Stock, no par value (the "COMMON STOCK"); and (ii) 27,000,000
shares of Senior Preferred Stock, par value $0.01 per share (the "PREFERRED
STOCK"); and each of such classes of Capital Stock has the respective voting
powers, designations, preferences and relative, participating, optional and
other special rights and the qualifications, limitations and restrictions set
forth with respect thereto in such Certificate of Incorporation;
WHEREAS, as of the date hereof, the Shareholders beneficially
own the shares of Common Stock, Preferred Stock, Warrants and/or Other Rights
set forth on Schedule III (the "SHAREHOLDER Schedule") attached hereto;
WHEREAS, the Company and certain Shareholders were parties to
a Shareholders' Agreement, dated as of May 16, 2000 (the "ORIGINAL SHAREHOLDERS'
AGREEMENT"); and
WHEREAS, the parties hereto desire to amend the Original
Shareholders' Agreement in certain respects.
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, the parties hereto hereby amend and restate the
Original Shareholders' Agreement in its entirety to read as follows:
SECTION 1 CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the following respective meanings:
"ACQUIROR" shall have the meaning specified in Section 4.7(a).
"AFFILIATE" shall mean as to any Person (a) any Person that
directly or indirectly controls, is controlled by, or is under common control
with such Person, (b) any Person who is a director, officer, partner or member
of such Person or of any Person that directly or indirectly controls, is
controlled by, or is under common control with such Person, and (c) any
individual who is a spouse, parent, sibling, child or other
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descendant (including by adoption) of any Person described in clause (a) or
clause (b) above. For purposes of this definition, "control" of a Person shall
mean the power, directly, or indirectly, (i) to vote or direct the voting of 10%
or more of the Voting Stock of such Person, or (ii) to direct or cause the
direction of the management and policies of such Person whether by ownership of
Capital Stock, by contract or otherwise. Notwithstanding the foregoing, First
Plaza shall not be deemed to be an Affiliate of any Chase Entity.
"AGREEMENT" shall mean this Agreement as in effect on the date
hereof and as hereafter from time to time amended, modified or supplemented in
accordance with the terms hereof.
"ALLIED" shall have the meaning specified in the Preamble.
"ALLIED ENTITIES" shall have the meaning specified in the
definition of the term "Control Affiliate."
"APPLICABLE STOCK" shall mean Common Stock or Preferred Stock,
as the context requires.
"APPRAISER" shall have the meaning specified in Section 3.3.4.
"APPROVING SHAREHOLDERS" shall have the meaning specified in
Section 4.7(a).
"BANCBOSTON" shall have the meaning specified in the Preamble.
"BANCBOSTON ENTITIES" shall have the meaning specified in the
definition of the term "Control Affiliate."
"▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇▇▇ Inc., a Delaware corporation.
"▇▇▇▇▇▇▇ MANAGEMENT SHAREHOLDERS" shall have the meaning
specified in the Preamble.
"BLACKSTONE" shall mean, collectively, Blackstone Mezzanine
Holdings and Blackstone Mezzanine Partners.
"BLACKSTONE ENTITIES" shall have the meaning specified in the
definition of the term "Control Affiliate."
"BLACKSTONE MEZZANINE HOLDINGS" shall have the meaning
specified in the Preamble.
"BLACKSTONE MEZZANINE PARTNERS" shall have the meaning
specified in the Preamble.
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"BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company as from time to time hereafter constituted.
"BY-LAWS" shall mean the By-Laws of the Company as in effect
on the date hereof, substantially in the form of Exhibit A hereto, and as
hereafter from time to time amended, modified, supplemented or restated in
accordance with the terms hereof and pursuant to applicable law.
"CALL CONSIDERATION" shall have the meaning specified in
Section 3.3.8.
"CALL NOTICE" shall have the meaning specified in Section
3.3.3.
"CALL OPTION" shall have the meaning specified in Section 3.3.
"CALL OPTION EXERCISE PERIOD" shall have the meaning specified
in Section 3.3.3.
"CAPITAL STOCK" of a Person shall mean and include (i) any and
all shares, interests, participations or other equivalents of or interests in
(however designated) corporate stock, including, without limitation, shares of
preferred or preference stock in any Person that is a corporation, (ii) all
partnership interests (whether general or limited) in any Person that is a
partnership, (iii) all membership interests or limited liability company
interests in any Person that is a limited liability company, and (iv) all equity
or ownership interests in any Person of any other type.
"CERTIFICATE OF INCORPORATION" shall mean the Certificate of
Incorporation of the Company as in effect on the date hereof, substantially in
the form of Exhibit B hereto, and as hereafter from time to time amended,
modified, supplemented or restated in accordance with the terms hereof and
pursuant to applicable law.
"CHASE" shall have the meaning specified in the Preamble.
"CHASE ENTITIES" shall have the meaning specified in the
definition of the term "Control Affiliate."
"CITIZENS CAPITAL" shall have the meaning specified in the
Preamble.
"COMMISSION" shall mean the Securities and Exchange Commission
and any successor commission or agency having similar powers.
"COMMON STOCK" shall mean the Company's Common Stock, no par
value, and any Capital Stock of any other class of the Company hereafter
authorized that is not limited to a fixed sum or percentage of par or stated
value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Company.
"COMPANY" shall have the meaning specified in the Preamble.
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"COMPANY SALE" shall have the meaning specified in Section
4.7(a).
"CONTINGENT OBLIGATION" shall mean, as applied to any Person,
any direct or indirect liability of that Person with respect to any
Indebtedness, lease, dividend, guaranty, letter of credit or other obligation,
contractual or otherwise (the "PRIMARY OBLIGATION") of another Person (the
"PRIMARY OBLIGOR"), whether or not contingent, (a) to purchase, repurchase or
otherwise acquire such primary obligations or any property constituting direct
or indirect security therefor, or (b) to advance or provide funds (i) for the
payment or discharge of any such primary obligation, or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, or (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation, or (d) otherwise to assure or hold harmless the owner of any such
primary obligation against loss or failure or inability to perform in respect
thereof. The amount of any Contingent Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the primary obligation in respect
of which such Contingent Obligation is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof.
"CONTROL AFFILIATE" shall mean, as to any Person, any other
Person that directly or indirectly controls, is controlled by, or is under
common control with such Person. For purposes of this definition, "control" of a
Person shall mean the power, directly, or indirectly, (i) to vote or direct the
voting of a majority of the outstanding Voting Stock of such Person, or (ii) to
direct or cause the direction of the management and policies of such Person
whether by ownership of Voting Stock, by contract or otherwise. Without limiting
the foregoing, each of CB Capital Investors, LLC, Chase Capital Partners, The
Chase Manhattan Corporation, each of their respective Control Affiliates (the
"CHASE ENTITIES") and any other person, fund or entity for whom any of the Chase
Entities acts as a fiduciary or provides discretionary management with respect
to any investments or any such direct or indirect interests therein shall be
deemed to be Control Affiliates of each other for purposes of this definition.
Notwithstanding the foregoing, First Plaza shall not be deemed to be a Control
Affiliate of any Chase Entity. Without limiting the foregoing, BancBoston
Capital Inc., each of its Control Affiliates (the "BANCBOSTON ENTITIES") and any
other person, fund or entity for whom any of the BancBoston Entities acts as a
fiduciary or provides discretionary management with respect to any investments
or any such direct or indirect interests therein shall be deemed to be Control
Affiliates of each other for purposes of this definition. Notwithstanding the
foregoing, Allied, each of its Control Affiliates (the "ALLIED ENTITIES") and
any limited or general partner, stockholder or member of an Allied Entity shall
be deemed to be Control Affiliates of each other for purposes of this
definition. Notwithstanding the foregoing, Blackstone, each of its Control
Affiliates (the "BLACKSTONE ENTITIES") and any limited or general partner,
stockholder or member of a Blackstone Entity shall be deemed to be Control
Affiliates of each other for purposes of this definition.
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"CREDIT AGREEMENT" shall have the meaning specified in the
definition of Existing Indebtedness.
"CUSTOMARY OBSERVER RIGHTS" shall mean, as to any Investor and
Allied, (i) the right to receive notice from the Company of and to have one
representative invited by the Company to attend all meetings of the Board of
Directors in a non-voting advisory capacity, and (ii) the right to have such
representative receive copies of all notices, minutes, consents and other
materials that the Company provides to its directors at the same time as such
materials are provided to the directors, PROVIDED that the Company reserves the
right to withhold any information or to exclude any such representative from any
meeting or portion thereof if the Board determines in good faith upon advice of
counsel that such exclusion is reasonably necessary to preserve the
attorney-client privilege between the Company and its counsel.
"DEFAULTING PARTY" shall have the meaning specified in Section
4.1(e).
"DEFERRED INTEREST RATE" shall have the meaning specified in
Section 3.3.8.
"DRAG-ALONG NOTICE" shall have the meaning specified in
Section 4.7(b).
"DRAG-ALONG RIGHT" shall have the meaning specified in Section
4.7(a).
"EMPLOYMENT AGREEMENTS" shall have the meaning specified in
Section 3.3.1.
"ERISA" shall mean the Employment Retirement Income Security
Act of 1974, as amended.
"EXCHANGE ACT" shall mean, as of any date, 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 include a reference to the
comparable section, if any, of any such similar Federal statute and the rules
and regulations thereunder.
"EXEMPT ISSUANCES" shall have the meaning specified in Section
2.6(a).
"EXISTING INDEBTEDNESS" shall mean the Company's Indebtedness
under each of (a) that certain Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of September 29, 2000, among the Company, the lenders
named therein and Fleet National Bank, as administrative agent (the "CREDIT
AGREEMENT"), and (b) the Purchase Agreement, together with the documents
relating to each of them, including, without limitation, all exhibits and
schedules thereto and any agreement relating to any extension, refunding,
refinancing, successor or replacement facility, whether or not with the same
agent or agents and financial institutions, and whether or not the principal
amount outstanding thereunder or the interest payable in respect thereof, shall
be increased, the promissory notes delivered thereunder and the other
agreements, instruments and documents, including without limitation security
agreements, loan agreements, notes, guarantees, keep well agreements, mortgages,
deeds of trust,
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subordination agreements, intercreditor agreements, pledges, powers of attorney,
consents, assignments, collateral assignments, reimbursement agreements,
contracts, notices, leases, financing statements and all other written matter,
in each case evidencing, securing or relating to the Credit Agreement or the
Purchase Agreement, including, without limitation, any agreement relating to any
extension, refunding, refinancing, successor or replacement facility, whether or
not with the same agent or agents and financial institutions, and whether or not
the principal amount outstanding thereunder or the interest payable in respect
thereof, shall be increased.
"FAIR MARKET VALUE" shall have the meaning specified in
Section 3.3.4.
"FIRST OFFER PRICE" shall have the meaning specified in
Section 4.1(a).
"FIRST PLAZA" shall have the meaning specified in the
Preamble.
"FLEET FINANCE" shall have the meaning specified in the
Preamble.
"GAAP" shall mean generally accepted accounting principles in
the United States in effect from time to time, applied on a consistent basis.
"GREAT LAKES CAPITAL" shall have the meaning specified in the
Preamble.
"▇▇▇▇▇" shall mean ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
"GREEN" shall mean ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
"HEIR" shall mean, with respect to any individual Shareholder,
his or her spouse, lineal descendant, a trust established for the benefit of any
of the foregoing or any personal representative, estate or executor under any
will of such Shareholder or pursuant to the laws of intestate succession.
"▇▇▇▇▇" shall have the meaning specified in the Preamble.
"INDEBTEDNESS" shall mean, as to any Person at any time, (a)
all obligations of such Person for borrowed money (including, without
limitation, reimbursement and all other obligations with respect to surety
bonds, letters of credit and bankers' acceptances, whether or not matured), (b)
all obligations of such Person evidenced by notes, bonds, debentures or similar
instruments, (c) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable and accrued
commercial or trade liabilities arising in the ordinary course of business, (d)
all interest rate and currency swaps, caps, collars and similar agreements or
hedging devices under which payments are obligated to be made by such Person,
whether periodically or upon the happening of a contingency, (e) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (f)
all obligations of such Person under leases that have been or should be, in
accordance
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with GAAP, recorded as capital leases, (g) all indebtedness secured by any lien
(other than liens in favor of lessors under leases other than leases included in
clause (f)) on any property or asset owned or held by that Person regardless of
whether the indebtedness secured thereby shall have been assumed by that Person
or is non-recourse to the credit of that Person, and (h) any Contingent
Obligation of such Person.
"INITIAL PUBLIC OFFERING" shall mean a Public Offering of
Common Stock of the Company pursuant to the initial registration thereof under
the Securities Act.
"INITIAL SHARES" shall have the meaning specified in Section
5.3(g).
"INSPECTORS" shall have the meaning specified in Section
5.3(a)(xiv).
"INVESTORS" shall have the meaning specified in the Preamble.
"J&R FOUNDERS FUND" shall have the meaning specified in the
Preamble.
"KPP" shall have the meaning specified in the Preamble.
"LAST-CHANCE DATE" shall have the meaning specified in Section
4.1(d).
"LAST-CHANCE NOTICE" shall have the meaning specified in
Section 4.1(d).
"LOSSES" shall have the meaning specified in Section 5.6.
"LUIGA" shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
"LUIGA RESTRICTED STOCK" shall mean the 15,722 shares of
Common Stock granted to Luiga pursuant to the Luiga Restricted Stock Award
Agreement.
"LUIGA RESTRICTED STOCK AWARD AGREEMENT" shall mean the
Restricted Stock Award Agreement under the Wilmar Industries, Inc. 2000 Stock
Award Plan, made effective as of September 29, 2000, between Luiga and the
Company.
"MANAGEMENT SHAREHOLDERS" shall have the meaning specified in
the Preamble.
"MELLON" shall have the meaning specified in the Preamble.
"NASD" shall mean the National Association of Securities
Dealers, Inc. and its successors and assigns.
"NATIONAL CITY" shall mean, collectively, National City Equity
Partners and Great Lakes Capital.
"NATIONAL CITY EQUITY PARTNERS" shall have the meaning
specified in the Preamble.
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"NEW ISSUE NOTICE" shall have the meaning specified in Section
4.6(c).
"NEW SECURITIES" shall have the meaning specified in Section
4.6(b).
"NON-COMPLYING HOLDER" shall have the meaning specified in
Section 4.11.
"NOTICE OF EXERCISE" shall have the meaning specified in
Section 4.1(b).
"NOTICE OF INTENTION" shall have the meaning specified in
Section 4.1(a).
"OFFERED SECURITIES" shall have the meaning specified in
Section 4.1(a).
"OPTION SHARES" shall have the meaning specified in Section
5.3(g).
"OTHER INVESTORS" shall have the meaning specified in the
Preamble.
"ORIGINAL SHAREHOLDERS' AGREEMENT" shall have the meaning
specified in the Preamble.
"OTHER RIGHT" shall mean any option, warrant, conversion right
or other right to subscribe for, purchase or acquire shares of Common Stock or
Preferred Stock, other than any of the Warrants.
"ParTHENON" shall mean, collectively, Parthenon L.P., PCIP,
J&R Founders Fund, PCap, Parthenon Investors II, L.P. and any other Shareholders
that are Control Affiliates of the foregoing.
"PARTHENON L.P." shall have the meaning specified in the
Preamble.
"PARTHENON INVESTORS" shall mean, collectively, Parthenon,
▇▇▇▇▇, BancBoston, ▇▇▇▇▇▇▇, National City and Mellon.
"PARTHENON INVESTORS II, L.P." shall mean Parthenon Investors
II, L.P., a Delaware limited partnership.
"PARTICIPATING SHAREHOLDERS" shall have the meaning specified
in Section 4.1(d).
"PCAP" shall have the meaning specified in the Preamble.
"PCIP" shall have the meaning specified in the Preamble.
"PERMITTED TRANSFEREE" shall have the meaning specified in
Section 3.2(a).
"PERSON" shall mean an individual or a corporation,
association, partnership, limited liability company, joint venture,
organization, business, trust, or any
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other entity or organization, including a government or any subdivision or
agency thereof.
"PRAY" shall mean ▇▇▇▇▇▇▇ ▇. ▇▇▇▇.
"PRAY RESTRICTED STOCK" shall mean the 34,056 shares of Common
Stock granted to Pray pursuant to the Pray Restricted Stock Award Agreement.
"PRAY RESTRICTED STOCK AWARD AGREEMENT" shall mean the
Restricted Stock Award Agreement under the Wilmar Industries, Inc. 2000 Stock
Award Plan, made effective as of September 29, 2000, between Pray and the
Company.
"PREFERRED STOCK" shall have the meaning specified in the
Preamble.
"PRIVATE EQUITY PORTFOLIO FUND II" shall have the meaning
specified in the Preamble.
"PROPOSED PURCHASER" shall mean any Person or group that makes
a good faith offer to purchase shares of Common Stock, Warrants or Other Rights.
"PRO RATA PORTION" shall mean, with reference to any
Shareholder at any time, a fraction, the numerator of which is the number of
outstanding shares of the Applicable Stock then held by such Shareholder and the
denominator of which is the aggregate number of shares of such Applicable Stock
then outstanding.
"PRO RATA SHARE" shall mean, with reference to any Shareholder
at any time, a fraction, the numerator of which is the number of shares of the
Applicable Stock then held by such Shareholder plus any shares of the Applicable
Stock that such Shareholder then has a right to purchase pursuant to any Warrant
or Other Right that is then exercisable or convertible, and the denominator of
which is the aggregate number of shares of such Applicable Stock held by, or
purchasable under any then exercisable or convertible Warrant or Other Right
held by, all of the Shareholders taken together.
"PUBLIC OFFERING" shall mean a public offering and sale of
equity securities of the Company pursuant to an effective registration statement
under the Securities Act (excluding any registration statement on Form ▇-▇, ▇▇▇▇
▇-▇ or any successor or similar form thereto).
"PURCHASE AGREEMENT" shall mean the Purchase Agreement, dated
as of September 29, 2000, among the Company, certain guarantors described
therein, Allied Capital Corporation, Blackstone Mezzanine Partners L.P.,
Blackstone Mezzanine Holdings L.P., Fleet Corporate Finance, Inc. and the other
purchasers named therein, as amended, modified or otherwise supplemented from
time to time as permitted herein and therein.
"PURCHASE OFFER" shall have the meaning specified in Section
4.5(b).
"PUT CONSIDERATION" shall have the meaning specified in
Section 3.3.8.
11
"PUT NOTICE" shall have the meaning specified in Section
3.3.7.
"PUT OPTION" shall have the meaning specified in Section 3.3.
"PUT OPTION EXERCISE PERIOD" shall have the meaning specified
in Section 3.3.7.
"QUALIFIED PUBLIC OFFERING" shall mean the first underwritten
Public Offering of Common Stock that results in aggregate gross proceeds to the
Company and any selling stockholders of at least $40 million.
"RECORDS" shall have the meaning specified in Section
5.3(a)(xiv).
"REGISTERED SELLING SHAREHOLDERS" shall have the meaning
specified in Section 5.2(a)(ii).
"REGISTRABLE SECURITIES" shall mean the following:
(a) ALL SHARES OF COMMON STOCK OUTSTANDING ON THE
DATE HEREOF and now or hereafter owned of record or beneficially by the
Shareholders;
(b) all shares of Common Stock issued or issuable
upon exercise of Warrants outstanding on the date hereof and now or
hereafter owned of record or beneficially by Allied; PROVIDED, HOWEVER,
that no holder of Warrants shall have any rights hereunder to
registration of any such Warrants, but only to registration of the
shares of Common Stock issuable upon the exercise of such Warrants;
and, solely for purposes of Section 5 of this Agreement, each holder of
a Warrant shall be deemed to be the holder of the shares of Common
Stock issuable upon the exercise of such Warrant; and
(c) any shares of Capital Stock issued or issuable by
the Company in respect of any shares of Common Stock referred to in any
of the foregoing clauses by way of a stock dividend or stock split or
in connection with a combination or subdivision of shares,
reclassification, recapitalization, merger, consolidation or other
reorganization of the Company.
As to any particular Registrable Securities that have been
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 under such registration statement, (ii) they shall have been sold
pursuant to Rule 144, (iii) they shall have been otherwise transferred or
disposed of, and new certificates therefor not bearing a legend restricting
further transfer shall have been delivered by the Company, and subsequent
transfer or disposition of them shall not require their registration or
qualification under the Securities Act or any similar state law then in force,
or (iv) they shall have ceased to be outstanding.
12
"REGISTRATION EXPENSES" shall mean any and all out-of-pocket
expenses incident to the Company's performance of or compliance with Section 5
hereof, including, without limitation, all Commission, stock exchange and NASD
registration and filing fees, all fees and expenses of complying with securities
and blue sky laws (including the reasonable fees and disbursements of
underwriters' counsel in connection with blue sky qualifications and NASD
filings), all fees and expenses of the transfer agent and registrar for the
Registrable Securities, all printing expenses, the fees and disbursements of
counsel for the Company and of its independent public accountants, including the
expenses of any special audits and/or "cold comfort" letters required by or
incident to such performance and compliance, and the reasonable fees and
disbursements of a counsel representing all the selling Shareholders, but
excluding underwriting discounts and commissions and applicable transfer and
documentary stamp taxes, if any, which shall be borne by the seller of the
securities in all cases.
"REGULATORY SIDELETTER" shall have the meaning specified in
Section 7.15.
"REMAINING OFFERED SHARES" shall have the meaning specified in
Section 4.1(d).
"REQUESTING PARTY" shall have the meaning specified in Section
5.2(a).
"REQUESTING SHAREHOLDERS" shall have the meaning specified in
Section 5.3(a)(i).
"SALE PROPOSAL" shall have the meaning specified in Section
4.1(a).
"SECURITIES ACT" shall mean, as of any date, the Securities
Act of 1933, as amended, or any similar Federal statute then in effect, and a
reference to a particular section thereof shall include a reference to the
comparable section, if any, of any such similar Federal statute and the rules
and regulations thereunder.
"SELLING SHAREHOLDER" shall have the meaning specified in
Section 4.1(a).
"SHAREHOLDER CALL GROUP" shall have the meaning specified in
Section 3.3.
"SHAREHOLDER SCHEDULE" shall have the meaning specified in the
Preamble.
"SHAREHOLDERS" shall have the meaning specified in the
Preamble.
"STERLING" shall have the meaning specified in the Preamble.
"SUBSIDIARY" shall mean as to any Person an entity either (i)
of which outstanding shares of Voting Stock having ordinary voting power to
elect a majority of corporate directors (or Persons performing similar
functions), of such entity are at the time owned, directly by such Person, or
indirectly through one or more intermediaries constituting Subsidiaries of such
Person, or (ii) more than a 50% interest in the profits or capital of which is
owned by such Person directly, or indirectly through one or more intermediaries
constituting Subsidiaries of such Person.
13
"▇▇▇▇▇▇▇" shall mean, collectively, ▇▇▇▇▇▇▇ QP and ▇▇▇▇▇▇▇
▇.▇.
"▇▇▇▇▇▇▇ ▇.▇." shall have the meaning specified in the
Preamble.
"▇▇▇▇▇▇▇ QP" shall have the meaning specified in the Preamble.
"TRANSFER" shall have the meaning specified in Section 3.1.
"TRANSFEREE AGREEMENT" shall have the meaning specified in
Section 3.2(a).
"UNDERWRITTEN OFFERING" shall have the meaning given to it in
Section 5.1(a).
"VOTING STOCK" of a Person shall mean Capital Stock of such
Person of any class or classes, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of corporate
directors (or Persons performing similar and/or management functions).
"VOTING STOCKHOLDER" shall mean any Shareholder who holds
Voting Stock of the Company.
"WARRANT AGREEMENT" shall mean the Warrant Agreement, dated as
of May 16, 2000, among the Company, Fleet Finance and Allied, as such agreement
may from time to time be amended, modified or supplemented in accordance with
the terms thereof.
"WARRANTS" shall mean the warrants to purchase shares of
Common Stock, issued to Allied pursuant to the terms of the Warrant Agreement,
as such Warrants may from time to time be amended, modified or supplemented in
accordance with the terms thereof.
"WHOLLY-OWNED SUBSIDIARY" shall mean, with respect to any
Person, any Subsidiary of such Person all of the Capital Stock (and all options,
warrants, conversion rights and other rights to subscribe for, purchase or
acquire such Capital Stock) of which, other than directors' qualifying shares,
are owned, beneficially and of record, by such Person and/or one or more
Wholly-owned Subsidiaries of such Person.
SECTION 2 CORPORATE GOVERNANCE.
SECTION 2.1 BOARD OF DIRECTORS. The Shareholders hereby
agree that (a) the Board of Directors shall consist of nine members and (b) the
Shareholders shall take all actions necessary to elect, or to cause the Board of
Directors to approve and appoint, when designated, the designees described below
to be members of the Board of Directors:
(i) (x) so long as the Parthenon Investors in the
aggregate own shares of Common Stock that represent at least 20% of the
then
14
outstanding Common Stock, three (3) individuals designated by
Parthenon, (y) so long as the Parthenon Investors in the aggregate own
shares of Common Stock that represent less than 20% but at least 5% of
the then outstanding Common Stock, two (2) individuals designated by
Parthenon, and (z) if the Parthenon Investors in the aggregate own
shares of Common Stock that represent less than 5% of the then
outstanding Common Stock, Parthenon shall no longer be entitled to
designate any directors under this subsection; provided, HOWEVER, that
in the case of (x) or (y) above, Parthenon Investors, L.P. shall have
the right to designate one of the three individuals under (x) or one of
the two individuals under (y) for so long as Parthenon Investors, L.P.
owns any shares of Common Stock and the requirements of (x) or (y), as
the case may be, are otherwise met, and Parthenon Investors II, L.P.
shall have the right to designate one of the three individuals under
(x) or one of the two individuals under (y) when and for so long as
Parthenon Investors II, L.P. owns any shares of Common Stock and the
requirements of (x) or (y), as the case may be, are otherwise met;
(ii) (p) so long as Chase owns shares of Common
Stock that represent at least 10% of the then outstanding Common Stock,
two (2) individuals designated by Chase, (q) so long as Chase owns
shares of Common Stock that represent less than 10% but at least 5% of
the then outstanding Common Stock, one (1) individual designated by
Chase, and (r) if Chase owns shares of Common Stock that represent less
than 5% of the then outstanding Common Stock, Chase shall no longer be
entitled to designate any directors;
(iii) so long as Sterling owns shares of Common
Stock that represent at least 3.3% of the then outstanding Common Stock
(excluding for purposes of this computation shares of Common Stock
issued in transactions in which Sterling did not have the right to
purchase additional shares of Common Stock (or securities convertible
into or exercisable or exchangeable for Common Stock) pursuant to
Section 4.6 hereof), one (1) individual designated by Sterling,
PROVIDED that (s) if Sterling is no longer entitled to designate a
director pursuant to this clause, then the Company shall ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Customary Observer Rights and Parthenon shall be entitled to designate
one (1) individual as director (in addition to any individuals it may
designate as directors under Section 2.1(i)) for so long as the
Parthenon Investors in the aggregate own shares of Common Stock that
represent at least 5% of the then outstanding Common Stock and if they
do not own such shares, then, except as provided in clause (t) below
neither Sterling nor Parthenon shall be entitled to designate any
directors, and (t) Sterling's right to designate a director shall not
terminate (notwithstanding that Sterling owns shares of Common Stock
representing less than 3.3% of the then outstanding Common Stock and
therefore would not otherwise have the right to designate one (1)
individual as a director pursuant to this Section 2.1(iii)) if, as a
result of such right terminating, Sterling shall cease to be a "venture
capital operating company" within the meaning of the rules and
regulations under ERISA;
(iv) so long as he serves as an executive officer
of the Company, Green;
15
(v) so long as he serves as an executive officer
of the Company, ▇▇▇▇▇; and
(vi) unless otherwise determined by the Board of
Directors, so long as he serves as an executive officer of ▇▇▇▇▇▇▇ or
the Company, Pray.
Any individual designated as a member of the Board of
Directors by the Persons specified in clauses (i), (ii) or (iii) above,
respectively, may be removed at any time, with or without cause, by the Person
or Persons so designating that individual. If for any reason either Green or
▇▇▇▇▇ is no longer an executive officer of the Company, he shall be deemed to
have resigned as a director of the Company. If for any reason Pray is no longer
an executive officer of ▇▇▇▇▇▇▇ or the Company, he shall be deemed to have
resigned as a director of the Company. The parties hereby designate and approve
the following individuals to serve as the initial members of the Board of
Directors, effective as of the date hereof: (x) pursuant to Section 2.1(i),
Parthenon hereby designates and approves ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and an
individual to be designated by Parthenon within ninety (90) days of the date
hereof, (y) pursuant to Section 2.1(ii), Chase hereby designates and approves
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and (z) pursuant to Section 2.1(iii),
Sterling hereby approves and designates ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇. So long as First Plaza
owns in the aggregate shares of Common Stock that represent at least 5% of the
then outstanding Common Stock, the Company shall grant it Customary Observer
Rights. Subject to the provisions of Section 4.5(a): so long as ▇▇▇▇▇ owns in
the aggregate shares of Common Stock that represent at least 2% of the then
outstanding Common Stock, the Company shall grant it Customary Observer Rights;
so long as BancBoston owns in the aggregate shares of Common Stock that
represent at least 2% of the then outstanding Common Stock, the Company shall
grant it Customary Observer Rights; so long as ▇▇▇▇▇▇▇ owns in the aggregate
shares of Common Stock that represent at least 2% of the then outstanding Common
Stock, the Company shall grant it Customary Observer Rights; so long as National
City owns in the aggregate shares of Common Stock that represent at least 1% of
the then outstanding Common Stock, the Company shall grant it Customary Observer
Rights; so long as Mellon owns in the aggregate shares of Common Stock that
represent at least 3% of the then outstanding Common Stock, the Company shall
grant it Customary Observer Rights; so long as KPP owns in the aggregate shares
of Common Stock that represent at least 3% of the then outstanding Common Stock,
the Company shall grant it Customary Observer Rights; and so long as Allied owns
at least 20,000 shares of Common Stock (appropriately adjusted for any stock
splits or stock dividends pursuant to the Warrant Agreement, and including in
such number shares of Common Stock issuable upon exercise of Warrants owned by
Allied but not exercised), the Company shall grant it Customary Observer Rights.
Each Investor agrees that in the event it is granted Customary Observer Rights,
it shall maintain the confidentiality of all financial, confidential and
proprietary information of the Company obtained by it as a result of the
exercise of such Customary Observer Rights.
16
SECTION 2.2 VACANCIES. (A) In the event that a vacancy is
created on the Board of Directors at any time by the death, disability,
retirement, resignation or removal of any member of the Board of Directors, or
for any other reason (other than removal of a director based upon reduction in
the equity ownership of the Company of the Parthenon Investors, Chase or
Sterling as set forth in Section 2.1(b)(i), (b)(ii) or (b)(iii) above or removal
of Green or ▇▇▇▇▇ as director by reason of such individual no longer serving as
an executive officer of the Company as set forth in Section 2.1(b)(iv) or (b)(v)
or removal of Pray as director by reason of his no longer serving as an
executive officer of ▇▇▇▇▇▇▇ or the Company as set forth in Section 2.1(b)(vi))
there shall exist or occur any vacancy on the Board of Directors, each
Shareholder hereby agrees to take such actions as will result in the election or
appointment as a director of an individual designated or elected to fill such
vacancy and serve as a director by the Shareholders that had designated or
elected (pursuant to Section 2.1) the director whose death, disability,
retirement, resignation or removal resulted in such vacancy on the Board of
Directors (in the manner set forth in Section 2.1).
(b) If as a result of Section 2.1(b)(i), (ii) or
(iii), Parthenon or Chase becomes entitled to designate a lesser number of
directors than it is entitled to on the date hereof, then each Shareholder shall
vote its shares of Voting Stock of the Company to cause the number of directors
constituting the entire Board of Directors to be reduced by the number of
directors that Parthenon and/or Chase is no longer entitled to designate unless
both Parthenon and Chase are no longer entitled to designate any directors
pursuant to Section 2.1.
(c) If as a result of Section 2.1(b), any of
Green, ▇▇▇▇▇ or Pray is deemed to have resigned as director then on each such
occasion each Shareholder shall vote its shares of Voting Stock of the Company
to cause the number of directors constituting the entire Board of Directors to
be reduced by one.
SECTION 2.3 COVENANT TO VOTE.
(a) ELECTION OF DIRECTORS. Each Shareholder hereby
agrees to take all actions necessary to call, or cause the Company and the
appropriate officers and directors of the Company to call, an annual meeting
(and when circumstances so require, a special meeting) of the stockholders of
the Company and to vote all shares of Voting Stock of the Company owned or held
of record by such Shareholder at any such meeting and at any other annual or
special meeting of stockholders in favor of, or take all actions by written
consent in lieu of any such meeting as may be necessary to cause, the election
as members of the Board of Directors of those individuals so designated in
accordance with, and to otherwise effect the intent of, this Section 2. In
addition, each Shareholder agrees to vote the shares of Voting Stock of the
Company owned by such Shareholder upon any other matter arising under this
Agreement submitted to a vote of the stockholders in such a manner as to
implement the terms of this Agreement.
(b) OTHER MATTERS. So long as (i) Parthenon in the
aggregate owns shares of Common Stock that represent at least 5% of the then
outstanding Common Stock AND (ii) the Parthenon Investors in the aggregate own
shares of Common
17
Stock that represent at least 15% of the then outstanding Common Stock, each of
the Management Shareholders, ▇▇▇▇▇▇▇ Management Shareholders, ▇▇▇▇▇, BancBoston,
▇▇▇▇▇▇▇, National City, Mellon, Parthenon and their respective Permitted
Transferees hereby agrees to vote all shares of Capital Stock of the Company
owned or held of record by such Shareholder at any meeting of stockholders, or
to take all actions by written consent in lieu of any such meeting, on any
matter submitted to the vote of the stockholders of the Company (including,
without limitation, any matter set forth in Section 2.6, but specifically
excluding any actions under Sections 4.7(a) (to become an Approving Shareholder)
and any actions under 7.8(a)), at the direction of Parthenon. Each of the
Management Shareholders, ▇▇▇▇▇▇▇ Management Shareholders, ▇▇▇▇▇, BancBoston,
Private Equity Portfolio Fund II, ▇▇▇▇▇▇▇, National City, Mellon, Parthenon and
their respective Permitted Transferees hereby grants to Parthenon an irrevocable
proxy to vote all of such Shareholder's shares of Capital Stock of the Company
in accordance with such Shareholder's agreements contained in this Section
2.3(b), which proxy shall be valid and remain in effect until the provisions of
this Section 2.3(b) expire pursuant to Section 6 or, if earlier, when Parthenon
in the aggregate owns shares of Common Stock that represent less than 5% of the
then outstanding Common Stock or when the Parthenon Investors in the aggregate
own shares of Common Stock that represent less than 15% of the then outstanding
Common Stock.
SECTION 2.4 REGISTRATION OF COMMON STOCK. In the event of
any Public Offering of the Common Stock approved in accordance with Section 2.6,
each Shareholder shall, at a meeting convened for the purpose of amending the
Certificate of Incorporation, vote to increase the number of authorized shares
of Common Stock and, if necessary, increase the number of issued and outstanding
shares of Common Stock, whether by stock split, stock dividend or otherwise, or
change in its par value in connection therewith, as recommended by a majority of
the members of the Board of Directors in order to facilitate such Public
Offering.
SECTION 2.5 CERTIFICATE OF INCORPORATION; NO CONFLICT WITH
AGREEMENT. Attached hereto as Exhibits A and B are copies of the By-laws and the
Certificate of Incorporation as in effect on the date hereof. Each Shareholder
shall vote its shares of Voting Stock of the Company, and shall take all actions
necessary, to ensure that the By-laws and the Certificate of Incorporation do
not, at any time, conflict with the provisions of this Agreement.
SECTION 2.6 ACTIONS OF THE BOARD OF DIRECTORS;
EXTRAORDINARY TRANSACTIONS. Notwithstanding anything to the contrary contained
in this Agreement, the Board of Directors shall not take, approve or otherwise
ratify any of the following actions without the prior consent of the holders of
at least sixty percent (60%) in aggregate amount of the then outstanding shares
of Common Stock:
(a) other than the issuance of any securities
described in Section 4.6(b)(i) and (ii) hereof ("EXEMPT ISSUANCES"), any
creation of a class or series of, issuance of or agreement to issue any Capital
Stock of the Company or its Subsidiaries or rights of any kind convertible into
or exchangeable for, any Capital Stock of the Company or its Subsidiaries, or
any option, warrant or other subscription or purchase
18
right with respect to such Capital Stock of the Company or its Subsidiaries,
including, without limitation, pursuant to any Public Offering;
(b) (i) any transaction of merger or consolidation
of the Company or its Subsidiaries with one or more Persons, (ii) any
transaction of merger or consolidation of one or more Persons into or with the
Company or any of its Subsidiaries or (iii) any recapitalization of the Company
(other than, in the case of clauses (i) and (ii), mergers or consolidations of
any Wholly-owned Subsidiaries of the Company with each other and mergers or
consolidations of a Wholly-owned Subsidiary of the Company with and into the
Company where the Company is the surviving entity);
(c) any sale, conveyance, exchange or transfer to
another Person of all or substantially all of the Capital Stock or assets of the
Company or its Subsidiaries (other than to the Company or any of its
Wholly-owned Subsidiaries);
(d) any transactions, or the amendment,
modification or waiver of any existing transactions, with any Shareholder or its
Affiliates or any officer, director or member of management of the Company,
other than any such transaction (or series of related transactions) that has an
aggregate consideration of less than $5,000 and is on terms no less favorable to
the Company taken as a whole than would be obtained in an arm's-length
transaction with an unrelated third Person (other than customary transactions
with management and compensation or management fee arrangements between the
Company and Parthenon or its designees, including the compensation and fees as
set forth in the Employment Agreements as in effect on the date of this
Agreement or as otherwise permitted by this Agreement);
(e) any declaration or making of dividend payments
or other payment or distribution on account of, or any redemption or repurchase
of, the Capital Stock of the Company (other than a pro-rata redemption of the
then outstanding Preferred Stock from all holders thereof);
(f) any voluntary or involuntary liquidation under
applicable bankruptcy or reorganization legislation, or any dissolution or
winding up of, the Company or its Subsidiaries;
(g) incur, create or maintain any Indebtedness in
an aggregate principal amount outstanding in excess of $200 million;
(h) assign any of its rights under Section 3.3 to
any Person other than the lenders under the Existing Indebtedness; or
(i) enter into any business materially different
in scope and character from the business in which the Company is engaged on the
initial date of this Agreement; or
(j) any material amendment, modification or
restatement of the Certificate of Incorporation or By-Laws.
19
SECTION 3 TRANSFERS OF STOCK.
SECTION 3.1 RESTRICTIONS ON TRANSFER. Each Shareholder
agrees that such Shareholder will not, directly or indirectly, offer, sell,
exchange, pledge, hypothecate, encumber, transfer, assign or otherwise dispose
of, whether voluntarily, involuntarily or by operation of law (collectively, for
purposes of Sections 3 and 4 hereof only, a "transfer"), any of its Common
Stock, Preferred Stock, Warrants or Other Rights, except as provided in Section
3.2, 3.3 or in accordance with Section 4, and except pursuant to an exercise or
conversion of Warrants or of such Other Rights. In addition to the other
restrictions noted in this Section 3.1, each Shareholder agrees that it will
not, directly or indirectly, transfer any of its Common Stock, Preferred Stock,
Warrants or Other Rights, except as permitted under the Securities Act and other
applicable federal or state securities laws.
SECTION 3.2 EXCEPTIONS TO RESTRICTIONS. The provisions of
Section 3.1, Sections 4.1 through 4.5, inclusive, and Section 4.7 shall not
apply to any of the following transfers:
(a) from any Shareholder to the Company or from
any Investor to any Control Affiliate of such Investor, from First Plaza to any
successor trust or successor trustee of First Plaza, from Fleet Finance to any
Control Affiliate of Fleet Finance, from Allied to any Control Affiliate of
Allied, from Blackstone to any Control Affiliate of Blackstone or from any
Shareholder that is an individual to any Heir of such Shareholder (each such
Control Affiliate, successor trust or trustee or Heir, a "PERMITTED
TRANSFEREE"), PROVIDED, that each such Control Affiliate, successor trust or
trustee or Heir shall execute a Transferee Agreement in the form of Exhibit C
hereto (a "TRANSFEREE AGREEMENT") pursuant to which such Control Affiliate,
successor trust or trustee or Heir shall agree to comply with the terms of the
Agreement and shall become bound by the terms of this Agreement, and, PROVIDED
FURTHER, that neither Chase nor any of its Control Affiliates shall be required
to provide any such notice of transfer to a Permitted Transferee, and no such
Permitted Transferee of Chase or any of its Control Affiliates shall be required
to execute any such Transferee Agreement to the extent that such Permitted
Transferee has previously agreed with Chase to comply with the terms of this
Agreement and to become bound by the terms hereof (and Chase shall be
responsible for the compliance by any of its Permitted Transferees with the
terms of this Agreement) and that Chase shall inform the Company of any such
transfer upon the Company's request and shall give notice to the Company if any
different Control Affiliate of Chase becomes record holder of its shares of
Common Stock or Preferred Stock;
(b) pursuant to a Qualified Public Offering;
(c) any transfer by Allied to a Person of
Warrants; PROVIDED that such transfer occurs simultaneously with a transfer by
such Shareholder to the same Person of senior subordinated notes of the Company
in accordance with the terms of the Purchase Agreement; PROVIDED FURTHER, that
the Warrants transferred in such transaction represent the same proportion of
Warrants held by such Shareholder on the date of this Agreement as the senior
subordinated notes transferred to the same Person
20
simultaneously by such Shareholder represent of the senior subordinated notes
held by such Shareholder on the date of this Agreement; and PROVIDED FURTHER
that each such Person to whom Warrants are transferred pursuant to this Section
3.2(c) shall execute a Transferee Agreement pursuant to which such Person shall
agree to comply with the terms of this Agreement and shall become bound by the
terms of this Agreement;
(d) any transfer by Fleet Finance, Allied or
Blackstone to a Person of such Shareholder's shares of Common Stock or Preferred
Stock; PROVIDED that such transfer occurs simultaneously with a transfer by such
Shareholder to the same Person of senior subordinated notes of the Company in
accordance with the terms of the Purchase Agreement; PROVIDED FURTHER, that the
shares transferred in such transaction represent the same proportion of shares
held by such Shareholder on the date of this Agreement as the senior
subordinated notes transferred to the same Person simultaneously by such
Shareholder represent of the senior subordinated notes held by such Shareholder
on the date of this Agreement; and PROVIDED FURTHER that each such Person to
whom such shares are transferred pursuant to this Section 3.2(d) shall execute a
Transferee Agreement pursuant to which such Person shall agree to comply with
the terms of this Agreement and shall become bound by the terms of this
Agreement; or
(e) with respect to 57,895 shares of Common Stock
and 992,481 shares of Preferred Stock held by a Parthenon Control Affiliate, any
pledge or transfer of such shares (and any property received in respect of such
shares) by such Parthenon Control Affiliate to a lender (and release of such
pledge), or any successor pledgee, and any subsequent transfer of such shares or
property to any other Person in connection with the exercise of such lender's
(or such successor's) rights under a pledge agreement entered into between such
Parthenon Control Affiliate and such lender; PROVIDED that, prior to any actual
transfer of ownership of such shares, each Person to whom shares are transferred
shall execute a Transferee Agreement pursuant to which such Person shall agree
to comply with the terms of this Agreement and shall become bound by the terms
of this Agreement.
SECTION 3.3 CALL AND PUT OPTIONS. Except as the Company
may otherwise agree, upon any termination of the employment by the Company or
its Subsidiaries of any Management Shareholder (other than Green) or any ▇▇▇▇▇▇▇
Management Shareholder for any reason, the Company shall have the right and
option to purchase (as provided below in this Section 3.3) all, but not less
than all, of the shares of Common Stock (other than Luiga Restricted Stock,
which shall be subject to the terms of the Luiga Restricted Stock Award
Agreement, or Pray Restricted Stock, which shall be subject to the terms of the
Pray Restricted Stock Award Agreement), Preferred Stock and Other Rights held by
such Management Shareholder or ▇▇▇▇▇▇▇ Management Shareholder or originally
issued to such holder but beneficially owned or held by direct or indirect
Permitted Transferees of such Management Shareholder or ▇▇▇▇▇▇▇ Management
Shareholder (collectively, the "Shareholder Call Group") on the following terms
(the "Call Option") and, if such Management Shareholder's or ▇▇▇▇▇▇▇ Management
Shareholder's employment is terminated under the circumstances set forth in
Section 3.3.5 and the Call Option has not been exercised by the Company, such
Management Shareholder or ▇▇▇▇▇▇▇ Management Shareholder shall have the right
and
21
option to require the Company to purchase all, but not less than all, of the
shares of Common Stock (other than Luiga Restricted Stock or Pray Restricted
Stock), Preferred Stock and Other Rights held by the Shareholder Call Group (the
"Put Option") on the following terms:
SECTION 3.3.1 TERMINATION. If a Management
Shareholder (other than Green) or ▇▇▇▇▇▇▇ Management Shareholder is
terminated by the Company or its Subsidiaries for Cause or voluntarily
terminates such holder's employment without Good Reason (as such terms
are defined in the Employment Agreements between the Company and each
of the Management Shareholders and ▇▇▇▇▇▇▇ Management Shareholders
dated and as in effect on the date hereof (the "EMPLOYMENT
AGREEMENTS")), the Company may purchase all of the shares of Common
Stock (other than Luiga Restricted Stock or Pray Restricted Stock) and
Preferred Stock held by such holder, including all of the shares of
Common Stock and Preferred Stock transferred by such holder to a member
of such holder's Shareholder Call Group, at a per share price equal to
the lesser of the original purchase price per share of such Common
Stock or Preferred Stock and the "Fair Market Value" of such shares (as
defined below). If a Management Shareholder (other than Green) or
▇▇▇▇▇▇▇ Management Shareholder voluntarily terminates such holder's
employment with Good Reason (as such term is defined in the Employment
Agreements), the Company may purchase all of the shares of Common Stock
(other than Luiga Restricted Stock or Pray Restricted Stock) and
Preferred Stock held by such holder, including all of the shares of
Common Stock and Preferred Stock transferred by such holder to a member
of such holder's Shareholder Call Group, at a per share price equal to
the greater of the original purchase price per share of such Common
Stock or Preferred Stock and the "Fair Market Value" of such shares (as
defined below). If such Management Shareholder's or ▇▇▇▇▇▇▇ Management
Shareholder's employment with the Company is terminated for any reason
other than those mentioned in the previous two sentences, the Company
may purchase all of the shares of Common Stock (other than Luiga
Restricted Stock or Pray Restricted Stock) and Preferred Stock held by
such holder including all of the shares of Common Stock and Preferred
Stock transferred by such holder to a member of such holder's
Shareholder Call Group at a per share price equal to the Fair Market
Value of such shares.
SECTION 3.3.2 TREATMENT OF OTHER RIGHTS. If a
terminated Management Shareholder or ▇▇▇▇▇▇▇ Management Shareholder as
referred to in Section 3.3.1 or any member of such holder's Shareholder
Call Group beneficially owns or holds Other Rights, the Company may
also purchase all of such Other Rights, and the beneficial owner or
holder of such Other Rights shall receive in exchange for such Other
Rights consideration equal to the amount (if greater than zero)
determined by multiplying (a) the applicable purchase price per share
of Common Stock and/or Preferred Stock determined as set forth in
Section 3.3.1 less the exercise price per share of such Other Rights by
(b) the number of shares of Common Stock and/or Preferred Stock
issuable upon exercise or conversion of such Other Rights (solely to
the extent exercisable or
22
convertible at the time of such sale), subject to reduction for any tax
or other amounts required to be withheld under applicable law.
SECTION 3.3.3 CALL NOTICES, ETC. Any Call Option
may be exercised by delivery of written notice thereof (the "CALL
NOTICE") to all members of the applicable Shareholder Call Group for
which the Company has a record within 30 days following the termination
of employment in question (the "CALL OPTION EXERCISE PERIOD"). The Call
Notice shall state that the Company has elected to exercise the Call
Option, and the number and price of the shares and Other Rights with
respect to which the Call Option is being exercised.
SECTION 3.3.4 FAIR MARKET VALUE. For the purposes
of this Section 3.3, "FAIR MARKET VALUE" will be determined, as of any
date, as to any share of Common Stock or Preferred Stock, by the Board
of Directors' good faith determination of the fair value of such share
as of the applicable termination date, factoring in the
non-marketability or otherwise of such security but not any minority
discount with respect thereto; PROVIDED that, if any Management
Shareholder or ▇▇▇▇▇▇▇ Management Shareholder disagrees with such
determination, then such holder shall, within five (5) days of the
Board of Directors' determination, contact and consult with the Board
of Directors and such holder and the Board of Directors shall, within
ten (10) days of the Board of Directors' original determination,
mutually agree upon an investment bank, appraisal company or similar
institution (the "APPRAISER") to which the disagreement shall be
submitted, and which will provide its opinion as to the fair value of
such share within sixty (60) days of submission; PROVIDED FURTHER that
if such Management Shareholder or ▇▇▇▇▇▇▇ Management Shareholder and
the Board of Directors are unable to agree on the Appraiser within such
ten (10) day period, such Management Shareholder or ▇▇▇▇▇▇▇ Management
Shareholder may request, upon notice to the Company within twelve (12)
days of the Board of Directors' determination, that the American
Arbitration Association select the Appraiser. Upon delivery to the
Company and the Management Shareholder or ▇▇▇▇▇▇▇ Management
Shareholder of a statement in writing setting forth the conclusion of
the Appraiser's opinion of the fair value, if such determination is
greater or lesser than the Board of Directors' determination by fifteen
percent (15%) or more, then the Appraiser's determination shall be
deemed the Fair Market Value, such determination shall be final and
binding upon the Company and the Management Shareholder or ▇▇▇▇▇▇▇
Management Shareholder without any further right of appeal, and the
Company shall pay all fees and expenses of the Appraiser incurred in
making its determination, OR, if the Appraiser's determination is
greater or lesser than the Board of Directors' determination by less
than fifteen percent (15%), then the Board of Directors' determination
shall remain the Fair Market Value, such determination shall be final
and binding upon the Company and the Management Shareholder or ▇▇▇▇▇▇▇
Management Shareholder without any further right of appeal, and the
Management Shareholder or ▇▇▇▇▇▇▇ Management Shareholder shall pay all
fees and expenses of the Appraiser incurred in making its
determination.
23
SECTION 3.3.5 PUT OPTION. If the employment of a
Management Shareholder (other than Green) or ▇▇▇▇▇▇▇ Management
Shareholder with the Company is terminated by the Company without Cause
or such Management Shareholder or ▇▇▇▇▇▇▇ Management Shareholder
voluntarily terminates such holder's employment as a result of Death or
Disability (as such terms are defined in the Employment Agreements),
AND the Company does not exercise its Call Option and the Call Option
Exercise Period under Section 3.3.3 expires, such Management
Shareholder or ▇▇▇▇▇▇▇ Management Shareholder or such holder's Heir, as
the case may be, may, within ninety (90) days of such termination,
require the Company to purchase all of the shares of Common Stock
(other than Luiga Restricted Stock and Pray Restricted Stock) and
Preferred Stock held by such holder, including all of the shares of
Common Stock and Preferred Stock transferred by such holder to a member
of such holder's Shareholder Call Group, at a per share price equal to
the Fair Market Value of such shares. If a Management Shareholder
(other than Green) or ▇▇▇▇▇▇▇ Management Shareholder voluntarily
terminates such holder's employment for Good Reason (as such term is
defined in the Employment Agreements), AND the Company does not
exercise its Call Option and the Call Option Exercise Period under
Section 3.3.3. expires, such Management Shareholder or ▇▇▇▇▇▇▇
Management Shareholder may, within ninety (90) days of such
termination, require the Company to purchase all of the shares of
Common Stock (other than Luiga Restricted Stock and Pray Restricted
Stock) and Preferred Stock held by such holder, including all of the
shares of Common Stock and Preferred Stock held by such holder to a
member of such holder s Shareholder Call Group, at a per share price
equal to the greater of the original purchase price per share of such
Common Stock or Preferred Stock and the Fair Market Value of such
shares.
SECTION 3.3.6 TREATMENT OF OTHER RIGHTS. If a
terminated Management Shareholder or ▇▇▇▇▇▇▇ Management Shareholder as
referred to in Section 3.3.5 or any member of such holder's Shareholder
Call Group beneficially owns or holds Other Rights, such Management
Shareholder or ▇▇▇▇▇▇▇ Management Shareholder or such holder's Heir, as
the case may be, may also require the Company to purchase all of such
Other Rights, and the beneficial owner or holder of such Other Rights
shall receive in exchange for such Other Rights consideration equal to
the amount (if greater than zero) determined by multiplying (a) the
purchase price per share of Common Stock determined as set forth in
Section 3.3.5 less the exercise price per share of such Other Rights by
(b) the number of shares of Common Stock issuable upon exercise or
conversion of such Other Rights (solely to the extent exercisable or
convertible at the time of such sale), subject to reduction for any tax
or other amounts required to be withheld under applicable law.
SECTION 3.3.7 PUT NOTICES, ETC. Any Put Option may
be exercised by a Management Shareholder (other than Green) or ▇▇▇▇▇▇▇
Management Shareholder or such holder's Heir, as the case may be, by
delivery of written notice thereof (the "PUT NOTICE") to the Company
within 15 days of the expiration of the Call Option Exercise Period
(the "PUT OPTION EXERCISE PERIOD").
24
The Put Notice shall state that such Management Shareholder or ▇▇▇▇▇▇▇
Management Shareholder or such holder's Heir, as the case may be, has
elected to exercise the Put Option, and the number and price of the
shares and Other Rights with respect to which the Put Option is being
exercised.
SECTION 3.3.8 CONSIDERATION FOR CALL OR PUT. The
aggregate consideration payable by the Company upon exercise of a Call
Option (the "CALL CONSIDERATION") or Put Option (the "PUT
CONSIDERATION") shall be paid as follows. The Company may pay the Call
Consideration or the Put Consideration, as the case may be, either (x)
in cash within 30 days of the exercise of the Call Option or the Put
Option, or (y) if the terms and covenants of the Company's equity and
debt financings prohibit full or partial payment of the Call
Consideration or the Put Consideration, as the case may be, then the
Company may either (i) delay full or partial payment of the Call
Consideration or Put Consideration until such prohibitions lapse,
PROVIDED that interest shall accrue on any unpaid Call Consideration or
Put Consideration, as the case may be, at the then prevailing prime
interest rate as most recently announced by Fleet National Bank, up to
a maximum of eight percent (8%) per annum, on or prior to the date of
expiration of the Call Option Exercise Period or the Put Option
Exercise Period (as applicable) (the "DEFERRED INTEREST RATE")
throughout such delay period, or (ii) pay any unpaid Call Consideration
or any unpaid Put Consideration, as the case may be, in the form of a
promissory note (reasonably acceptable to the administrative agent
under the Credit Agreement and the purchasers under the Purchase
Agreement) deliverable within 30 days of the exercise of the Call
Option or the Put Option, bearing interest at the Deferred Interest
Rate, fully subordinate in rights of payment and otherwise to the then
outstanding Existing Indebtedness and payable in full in cash upon
lapse of the cash payment prohibitions.
SECTION 3.3.9 WAIVER. The failure of the Company to
exercise its Call Option during the Call Option Exercise Period, and
the failure of a Management Shareholder or ▇▇▇▇▇▇▇ Management
Shareholder or such holder's Heir, as the case may be, to exercise such
holder's Put Option during the Put Option Exercise Period, shall be
deemed to be a waiver of the Company's or such Management Shareholder's
or ▇▇▇▇▇▇▇ Management Shareholder's (or such holder's Heir's, as the
case may be) rights, respectively, under this Section 3.3.
SECTION 3.4 ENDORSEMENT OF CERTIFICATES. (a) Upon the
execution of this Agreement, in addition to any other legend that the Company
may reasonably deem advisable under the Securities Act and certain state
securities laws, all certificates representing shares of issued and outstanding
Common Stock, Preferred Stock, all Warrants and all Other Rights shall be
endorsed at all times prior to any Qualified Public Offering as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO, AND ARE TRANSFERABLE ONLY UPON
COMPLIANCE WITH,
25
THE PROVISIONS OF AN AMENDED AND RESTATED
SHAREHOLDERS' AGREEMENT, DATED AS OF SEPTEMBER 29,
2000, AMONG THE COMPANY AND ITS SHAREHOLDERS. A COPY
OF THE ABOVE-REFERENCED AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT, OR AN EXEMPTION FROM
REGISTRATION, UNDER SAID ACT.
(b) Except as otherwise expressly provided in this
Agreement, all certificates or other instruments representing shares of Common
Stock, Preferred Stock, Warrants or Other Rights hereafter issued to or acquired
by any of the Shareholders or their successors, assigns or transferees
(including, without limitation, all certificates representing shares of Common
Stock or Preferred Stock hereafter issued upon the exercise of any Warrant or
Other Rights) shall bear the legends set forth above, and the shares of Common
Stock, Preferred Stock, Warrants or Other Rights represented by such
certificates or instruments shall be subject to the applicable provisions of
this Agreement. The obligations of each party hereto shall be binding upon each
transferee to whom shares of Common Stock, Preferred Stock, Warrants or Other
Rights are transferred by any party hereto, whether or not such transfer is
permitted under the terms of this Agreement, except for transfers pursuant to a
Public Offering. Prior to consummation of any transfer, except for transfers
pursuant to a Public Offering (or transfers pursuant to Section 3.2(a) by Chase
or one of its Permitted Transferees to Chase or any of its Permitted
Transferees), such party shall cause the transferee (unless otherwise fully
bound hereby with respect to such securities being transferred) to execute a
Transferee Agreement pursuant to which such transferee shall agree to comply
with the terms of this Agreement and shall become bound by this Agreement.
Except as otherwise provided in Section 3.2(a) with respect to Chase or any of
its Permitted Transferees, prompt notice shall be given to the Company and each
Shareholder by the transferor of any transfer (whether or not to a Permitted
Transferee) of any Common Stock, Preferred Stock, Warrants or Other Rights.
(c) The second paragraph of the legend set forth
in clause (a) of this Section 3.4 shall be removed from a particular certificate
representing shares of Common Stock, Preferred Stock, Warrants or Other Rights
when an opinion of counsel and/or other evidence has been delivered to the
Company to the effect that any such security may be freely sold to the public
without compliance with the registration provisions of the Securities Act. Such
counsel may include an attorney who is an employee of a Shareholder and such
opinion and/or other evidence shall be subject to the reasonable approval of the
Company, such approval or disapproval to be given within
26
5 days after receipt by the Company of the form of such opinion and/or other
evidence; and if the Company disapproves of such opinion and/or other evidence,
such notice of disapproval shall be accompanied by an opinion or memorandum of
counsel to the Company setting forth the basis of such disapproval.
(d) Whenever the restrictions imposed by this
Agreement shall terminate as to any particular shares of Common Stock, Preferred
Stock, Warrants or Other Rights (including pursuant to Section 6 hereof), the
holder thereof shall be entitled to receive from the Company, without expense,
upon delivery to the Company of the existing certificate representing shares of
Common Stock, Preferred Stock, Warrants or Other Rights, a new certificate not
bearing the respective legends otherwise required pursuant to this Section 3.4.
SECTION 3.5 IMPROPER TRANSFER. Any attempt to transfer or
encumber any shares of Common Stock, Preferred Stock or Warrants other than in
accordance with the terms of this Agreement shall be null and void and neither
the Company nor any transfer agent of such securities shall give any effect to
such attempted transfer or encumbrance in its stock records. Each Shareholder
that is an entity that was formed for the purpose of acquiring shares of Common
Stock, Preferred Stock, Warrants or Other Rights agrees that (a) shares of its
common stock or other instruments reflecting equity interests in such entity
(and the shares of common stock or other equity interests in any similar
entities controlling such entity) will note the restrictions contained in this
Agreement on the transfer of Common Stock, Preferred Stock, Warrants and Other
Rights as if such common stock or other equity interests were Common Stock and
(b) no shares of such common stock or other equity interests may be transferred
to any Person other than in accordance with the terms and provisions of this
Agreement as if such common stock or equity interests were Common Stock,
Preferred Stock, Warrants or Other Rights, as the case may be, MUTATIS MUTANDIS.
SECTION 4 RIGHTS OF FIRST OFFER; TAG ALONG SALES; NEW
SECURITIES.
SECTION 4.1 TRANSFERS BY SHAREHOLDERS. (A) Except in the
case of (i) transfers to a Permitted Transferee, (ii) transactions that are
otherwise permitted by Section 3.2, and (iii) transactions that are subject to
Section 4.7, if at any time any Shareholder shall desire to sell or otherwise
transfer any shares of Common Stock, Preferred Stock, Warrants or Other Rights
owned by it to a Proposed Purchaser (such Shareholder desiring to sell or
transfer shares of such Common Stock, Preferred Stock, Warrants or Other Rights
being referred to herein as a "SELLING SHAREHOLDER"), then such Selling
Shareholder shall deliver written notice of its intention to sell or transfer
such securities (a "NOTICE OF INTENTION"), accompanied by a copy of a proposal
relating to such sale (the "SALE PROPOSAL"), to each of the Investors, the
Management Shareholders, the ▇▇▇▇▇▇▇ Management Shareholders and to the Company,
setting forth such Selling Shareholder's desire to make such sale, the number of
shares of Common Stock, Preferred Stock, Warrants or Other Rights proposed to be
transferred (THE "OFFERED SECURITIES"), and the price and terms on which such
Selling Shareholder proposes to sell the Offered Securities (the "FIRST OFFER
PRICE") and other terms applicable thereto.
27
(b) Upon receipt of the Notice of Intention, the
Company, the Investors, the Management Shareholders and the ▇▇▇▇▇▇▇ Management
Shareholders shall then have the right to elect to purchase at the First Offer
Price and on the other terms specified in the Sale Proposal all or, subject to
Section 4.1(d), a portion of the Offered Securities in the following order of
priority: FIRST, the Company shall have the right to purchase the Offered
Securities, and THEREAFTER, the Investors, the Management Shareholders and the
▇▇▇▇▇▇▇ Management Shareholders shall have the right to purchase the Offered
Securities pro rata among such Investors, Management Shareholders and ▇▇▇▇▇▇▇
Management Shareholders so electing on the basis of the respective numbers of
shares of the Applicable Stock (based on whether the Offered Securities are
Common Stock, Preferred Stock or securities convertible or exercisable into
Common Stock or Preferred Stock) owned by such Investors, Management
Shareholders and ▇▇▇▇▇▇▇ Management Shareholders (or in such other proportion as
such Investors, Management Shareholders and ▇▇▇▇▇▇▇ Management Shareholders may
agree). The rights of such Investors, the Management Shareholders, the ▇▇▇▇▇▇▇
Management Shareholders and the Company pursuant to this Section 4.1(b) shall be
exercisable by the delivery of notice to the Selling Shareholder (the "NOTICE OF
EXERCISE") within 20 calendar days from the date of delivery of the Notice of
Intention. The Notice of Exercise shall state the total number of shares of the
Offered Securities such Investor, Management Shareholder, ▇▇▇▇▇▇▇ Management
Shareholder or the Company, as the case may be, is willing to purchase without
regard to whether or not the Company, the other Investors, the other Management
Shareholders or the other ▇▇▇▇▇▇▇ Management Shareholders purchase any shares of
the Offered Securities. A copy of such Notice of Exercise shall also be
delivered by such exercising Investor, Management Shareholder or ▇▇▇▇▇▇▇
Management Shareholder to the Company and the other Investors, Management
Shareholders and ▇▇▇▇▇▇▇ Management Shareholders. The rights of the Investors,
the Management Shareholders, the ▇▇▇▇▇▇▇ Management Shareholders and the Company
pursuant to this Section 4.1(b) shall terminate with respect to a Sale Proposal
if unexercised 20 calendar days after the date of delivery of the Notice of
Intention.
(c) In the event that the Investors, the
Management Shareholders, the ▇▇▇▇▇▇▇ Management Shareholders or the Company
exercise their rights to purchase all or, subject to Section 4.1(e), any of the
Offered Securities in accordance with Section 4.1(b), then the Selling
Shareholder must sell such Offered Securities to such Investors, Management
Shareholders, ▇▇▇▇▇▇▇ Management Shareholders or, as the case may be, the
Company, and such Investors, Management Shareholders, ▇▇▇▇▇▇▇ Management
Shareholders or, as the case may be, the Company, shall purchase such Offered
Securities, within 30 calendar days after the earliest of (x) the date upon
which the Company delivers to the Selling Shareholder a Notice of Exercise
electing to purchase all of the Offered Securities, (y) the date upon which
Investors, Management Shareholders and/or ▇▇▇▇▇▇▇ Management Shareholders have
delivered to the Company Notices of Exercise, which together with any Notice of
Exercise by the Company, constitute an election to purchase all of the Offered
Securities and (z) the Last-Chance Date (PROVIDED that such purchase date shall
be extended, by not more than 30 additional days, until the expiration or early
termination of any applicable waiting period required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Act to consummate such purchase(s)), at the First Offer Price and on the other
terms specified in the Sale Proposal.
28
(d) The Selling Shareholder shall, promptly after
the end of the 20 calendar day exercise period of the Company, the Investors and
the Management Shareholders under Section 4.1(b), notify (the "LAST-CHANCE
NOTICE") all Investors, Management Shareholders and ▇▇▇▇▇▇▇ Management
Shareholders that elected to exercise their option pursuant to Section 4.1(b)
("PARTICIPATING SHAREHOLDERS") whether the Offered Securities have been fully
subscribed for, and, if not, the number of Offered Securities not subscribed for
(the "REMAINING OFFERED SHARES"). Subject to Section 4.1(e), each Participating
Shareholder shall have the right to elect to purchase all, but not less than
all, of the Remaining Offered Shares. The right of each Participating
Shareholder to purchase the Remaining Offered Shares shall be exercisable by
written notice delivered to the Selling Shareholder, with a copy to the Company,
given within ten days after receipt of the Last-Chance Notice (such tenth day,
the "LAST-CHANCE DATE"). If more than one Participating Shareholder timely
elects to exercise its right to purchase the Remaining Offered Shares, the right
to purchase the Remaining Offered Shares shall (unless the Participating
Shareholders shall otherwise agree) be allocated pro rata among those
Participating Shareholders electing to purchase the Remaining Offered Shares, in
the proportion that the number of shares of the Applicable Stock owned by such
Participating Shareholders bears to the total number of shares of the Applicable
Stock owned by all Participating Shareholders that elect to purchase the
Remaining Offered Shares. A failure of any Participating Shareholder to exercise
such right by the Last-Chance Date shall be regarded as a waiver of its right to
purchase the Remaining Offered Shares as provided herein.
(e) Notwithstanding the foregoing provisions of
this Section 4.1, unless the Selling Shareholder shall have consented to the
purchase of less than all of the Offered Securities, neither the Company nor any
Investor, Management Shareholder or ▇▇▇▇▇▇▇ Management Shareholder may purchase
any Offered Securities hereunder unless all of the Offered Securities are so
purchased. However, if any Participating Shareholder (a "DEFAULTING PARTY")
fails to pay the applicable consideration for the portion of Offered Securities
it has agreed to purchase under Section 4.1(b) or (d) within the time period
specified in Section 4.1(c), then the Selling Shareholder shall immediately
notify by facsimile the Company and the remaining Investors, Management
Shareholders and ▇▇▇▇▇▇▇ Management Shareholders, who shall then have the right
to elect to purchase all, but not less than all, of the Defaulting Party's
unpurchased portion of the Offered Securities by notifying the Selling
Shareholder and the Company by facsimile within two (2) business days of
receiving the Selling Shareholder's facsimile. In the event that more than one
of the remaining Investors, Management Shareholders and ▇▇▇▇▇▇▇ Management
Shareholders indicate that they wish to purchase such securities, such
securities shall be allocated pro rata among those Investors, Management
Shareholders and ▇▇▇▇▇▇▇ Management Shareholders wishing to purchase, in the
proportion that the number of shares of the Applicable Stock owned by each such
Investor, Management Shareholder or ▇▇▇▇▇▇▇ Management Shareholder wishing to
purchase bears to the total number of shares of the Applicable Stock owned by
all the Investors, Management Shareholders and/or ▇▇▇▇▇▇▇ Management
Shareholders that have indicated that they wish to purchase. Purchases under
this subsection shall be consummated within two (2) business days of the
facsimile(s) being sent to the Selling Shareholder.
29
(f) For purposes of this Section 4.1, any Person
that has failed to give notice of the election of an option hereunder within the
time period specified herein will be deemed to have waived its rights with
respect thereto on the day immediately following the last day of such period.
SECTION 4.2 TRANSFER OF OFFERED SECURITIES TO THIRD
PARTIES. If all notices required to be given by the Selling Shareholder pursuant
to Section 4.1 have been duly given and either (a) the Investors, the Management
Shareholders, the ▇▇▇▇▇▇▇ Management Shareholders and the Company do not
exercise their respective options to purchase all of the Offered Securities, and
the Selling Shareholder does not desire to sell less than all the Offered
Securities, or (b) if with the consent of the Selling Shareholder, the other
Investors, Management Shareholders, ▇▇▇▇▇▇▇ Management Shareholders and the
Company purchase less than all of the Offered Securities pursuant to the
provisions hereof, then in either such event the Selling Shareholder shall have
the right, subject to Section 4.5, if applicable, for a period of 120 calendar
days from the earlier of (i) the expiration of all option periods pursuant to
Section 4.1 with respect to such Sale Proposal or (ii) the date on which such
Selling Shareholder receives notice from the Investors, the Management
Shareholders, the ▇▇▇▇▇▇▇ Management Shareholders and the Company that they will
not exercise in whole or in part the options granted pursuant to Section 4.1, to
sell the Offered Securities remaining unsold to any third party at a price not
less than the First Offer Price, and on other principal terms not materially
more favorable in the aggregate to the Proposed Purchaser than those specified
in the Sale Proposal. If, prior to consummation, the terms of such proposed
transfer shall change with the result that the price shall be less than the
First Offer Price set forth in the Notice of Intention or the other principal
terms shall be materially more favorable in the aggregate to the Proposed
Purchaser than those set forth in the Notice of Intention, it shall be necessary
for a separate Notice of Intention to be furnished, and the terms and provisions
of Sections 4.1 and 4.2 separately complied with, in order to consummate such
proposed transfer pursuant to this Section 4.2.
SECTION 4.3 PURCHASE OF OFFERED SECURITIES. Prior to the
consummation of any sale pursuant to Section 4.2, the Selling Shareholder shall
comply with Section 3.4(b) hereof. Upon the consummation of any such purchase
and sale, the Selling Shareholder shall deliver certificates evidencing the
Offered Securities sold, duly endorsed, or accompanied by written instruments of
transfer in form reasonably satisfactory to the purchaser duly executed by the
Selling Shareholder free and clear of any liens, against delivery of the First
Offer Price by certified or bank check. The delivery of a certificate or
certificates for the Offered Securities or any portion thereof by any Person
selling such Offered Securities pursuant to this Section 4.2 shall be deemed a
representation and warranty by such Person that: (a) such Person has full right,
title and interest in and to such Offered Securities; (b) such Person has all
necessary power and authority and has taken all necessary action to sell such
Offered Securities as contemplated; and (c) such Offered Securities are free and
clear of any and all liens or encumbrances.
SECTION 4.4 WAITING PERIOD WITH RESPECT TO SUBSEQUENT
TRANSFERS. In the event that the Investors, the Management Shareholders, the
▇▇▇▇▇▇▇ Management
30
Shareholders and the Company do not exercise their options to purchase all of
the Offered Securities pursuant to Section 4.1, and the Selling Shareholder
shall not have sold the remaining Offered Securities to a third party for any
reason before the expiration of the 120-day period described in Section 4.2,
then such Selling Shareholder shall not give another Notice of Intention
pursuant to Section 4.1 until the expiration of a period of 90 calendar days
after the last day of such 120-day period.
SECTION 4.5 TAG-ALONG RIGHTS. (A) Except in the case of
(i) transfers to a Permitted Transferee, (ii) transactions that are otherwise
permitted by Section 3.2, 3.3 or consummated pursuant to Section 4.1 and (iii)
transactions that are subject to Section 4.7, any Selling Shareholder shall
refrain from effecting any transaction that would, when aggregated with all
prior sales by such Shareholder pursuant to this Section 4, result in the sale
of 20% or more of the aggregate shares of Common Stock held by such Shareholder
(including all shares of Common Stock into which Warrants and Other Rights held
by such Shareholder are exercisable or convertible) on the date of this
Agreement, unless, prior to the consummation thereof, each other Shareholder
shall have been afforded the opportunity to join in such sale on a pro rata
basis, as hereinafter provided in this Section 4.5; provided that,
notwithstanding the foregoing, each of ▇▇▇▇▇, BancBoston, ▇▇▇▇▇▇▇, National
City, Allied, Blackstone and KPP may, as a Selling Shareholder, effect any sale
of shares of Common Stock that represent, when aggregated with all prior sales
by such Shareholder pursuant to this Section 4, less than one-and-a-half percent
(1.5%) of the aggregate shares of Common Stock then outstanding without
affording each other Shareholder the opportunity to join in such sale on a pro
rata basis as otherwise required by this Section 4.5, but if such sale would,
when aggregated with all prior sales by such Shareholder pursuant to this
Section 4, result in the sale of 20% or more of the aggregate shares of Common
Stock held by such Shareholder (including all shares of Common Stock into which
Warrants and Other Rights held by such Shareholder are exercisable or
convertible) on the date of this Agreement, then, notwithstanding the provisions
of Section 2.1, the Company shall no longer grant such Shareholder Customary
Observer Rights.
(b) Prior to consummation of any proposed sale,
disposition or transfer of securities described in Section 4.5(a), separately
for Common Stock and for securities convertible or exercisable into Common
Stock, each Selling Shareholder shall cause the Proposed Purchaser to offer in
writing (the "PURCHASE OFFER") to each other Shareholder to purchase securities
owned by such other Shareholder, such that the number of shares of such Common
Stock, Warrants and/or Other Rights so offered to be purchased from such
Shareholder shall be equal to the product obtained by multiplying the aggregate
number of shares of Common Stock proposed to be purchased by the Proposed
Purchaser (plus any shares of Common Stock into which Warrants or Other Rights
proposed to be purchased by the Proposed Purchaser are exercisable or
convertible) by such Shareholder's Pro Rata Share with respect to Common Stock.
Each Shareholder electing to accept such offer shall be entitled to sell to the
Proposed Purchaser that number of shares of Common Stock, Warrants and/or Other
Rights equal to that percentage of the securities proposed to be sold to the
Proposed Purchaser by the Selling Shareholder determined by dividing (i) the
total number of shares of Common Stock held by such Shareholder (including any
shares of Common Stock into which
31
Warrants or Other Rights held by such Shareholder are exercisable or
convertible) by (ii) the total number of shares of Common Stock held by all
Shareholders electing to accept the Proposed Purchaser's offer (including all
shares of Common Stock into which Warrants or Other Rights held by all such
electing Shareholders are exercisable or convertible) PLUS the total number of
shares of Common Stock held by the Selling Shareholder (including any shares of
Common Stock into which Warrants or Other Rights held by such Selling
Shareholder are exercisable or convertible). The number of securities to be sold
to the Proposed Purchaser by the Selling Shareholder, separately for Common
Stock and for securities convertible or exercisable into Common Stock, shall be
reduced accordingly. The purchase by the accepting Shareholders hereunder shall
be made at the highest price per share or other security and otherwise on the
same terms and conditions as the Proposed Purchaser shall have offered to
purchase shares of Common Stock, Warrants and/or Other Rights to be sold by the
Selling Shareholder. The Purchase Offer shall set forth such terms and
conditions and identify the Proposed Purchaser and any Person that controls the
Proposed Purchaser. Each Shareholder shall have 20 days from the date of receipt
of the Purchase Offer in which to accept such Purchase Offer, and the closing of
such purchase shall occur within 30 days after such acceptance or at such other
time as such Shareholder and the Proposed Purchaser may agree. Each Shareholder
that does not accept the Purchase Offer within its 20-day period shall be deemed
to have waived all of its rights with respect to such Purchase Offer. In the
event that a sale or other transfer subject to this Section 4.5 is to be made to
a Proposed Purchaser who is not a Shareholder, the Selling Shareholder shall
notify the Proposed Purchaser that the sale or other transfer is subject to this
Section 4.5 and shall ensure that no sale or other transfer is consummated
without the Proposed Purchaser first complying with this Section 4.5.
Notwithstanding the foregoing, no Management Shareholder may accept any Purchase
Offer to the extent that purchase of additional shares of Common Stock, Warrants
or Other Rights by such Management Shareholder shall, or is reasonably likely
to, in the judgment of the Company and/or its independent public accountants,
prevent the merger of Wilmar Industries, Inc. and WM Acquisition, Inc. and the
associated recapitalization immediately prior to the signing of this Agreement
from being treated for tax and/or accounting purposes as a recapitalization.
SECTION 4.6 RIGHT OF FIRST REFUSAL FOR NEW SECURITIES.
(a) The Company hereby grants to each of the Shareholders that is an "accredited
investor" (as such term is defined in Rule 501(a) of the Securities Act) as of
the time of any offer or sale of New Securities to such Shareholder) a right of
first refusal to purchase any New Securities (as defined below) that the Company
may, from time to time, propose to issue and sell. Such right of first refusal
shall allow each Shareholder to purchase its Pro Rata Share (determined
immediately prior to such issuance and sale of New Securities, and based upon
its Pro Rata Share of Common Stock) of the New Securities proposed to be issued.
In the event a Shareholder does not purchase any or all of its Pro Rata Share of
New Securities, each of the remaining Shareholders shall have the right to
purchase its Pro Rata Share (determined at such time) of such unpurchased New
Securities until all of the New Securities are purchased, or until no other
Shareholder desires to purchase any additional New Securities, in which case the
Company may sell such unpurchased New Securities to prospective purchasers on
the terms described in the New Issue Notice (as defined below) for a period of
120 days, but thereafter may sell additional New Securities
32
only after delivering another New Issue Notice as described in Section 4.6(c)
below. The right of first refusal granted hereunder shall terminate if
unexercised within 30 days after receipt of the notice described in Section
4.6(c) below.
(b) "NEW SECURITIES" shall mean any authorized but
unissued shares, and any treasury shares, of Common Stock or Preferred Stock of
the Company and all Other Rights (including units or strips of securities of the
Company or its Subsidiaries that may include components that do not constitute
Common Stock, Preferred Stock, Warrants or Other Rights); PROVIDED, HOWEVER,
that the term "New Securities" does not include (i) the issuance of any shares
of Common Stock or Preferred Stock upon the exercise of Warrants or Other Rights
outstanding as of the initial date of this Agreement; (ii) stock options, or
other rights to purchase or acquire shares of Common Stock, or "phantom" stock
or stock appreciation rights, granted pursuant to any stock option plan,
restricted stock plan or other plan adopted for the benefit of officers,
directors and employees of the Company and its Subsidiaries and approved by the
Board of Directors, shares of Common Stock or Preferred Stock issued upon the
exercise of such options or rights or otherwise issued pursuant to any such
plan, and up to 2,841 shares of Common Stock in the aggregate to be issued and
sold by the Company to employees of the Company at a price of $1.00 per share;
(iii) securities issued pursuant to the acquisition of another Person by the
Company or its Subsidiaries by merger, purchase of all or substantially all of
the assets of such Person or other transaction whereby the Company shall become
directly or indirectly the owner of more than 50% of the voting power of such
Person; (iv) shares of Common Stock or Preferred Stock issued pursuant to any
pro rata stock split or stock dividend; and (v) shares of Common Stock or
Preferred Stock issued pursuant to any Qualified Public Offering.
(c) In the event that the Company proposes to
undertake an issuance of New Securities, it shall give each Shareholder written
notice of its intention ("NEW ISSUE NOTICE"), describing the class and number of
securities it intends to issue as New Securities, the purchase price therefor
(which shall be payable solely in cash) and the terms upon which the Company
proposes to issue the same. Each Shareholder shall have 30 calendar days from
the date the New Issue Notice is received by it to elect to purchase all or any
portion of the Shareholder's Pro Rata Share of such New Securities (calculated
as described under Section 4.6(a)) for the purchase price and upon the terms
specified in the New Issue Notice by giving written notice to the Company,
stating therein the quantity of New Securities to be purchased. Any Shareholder
that is a holder of Warrants or Other Rights with respect to shares of Common
Stock or Preferred Stock shall be entitled, to the extent practicable (in lieu
of purchasing such New Securities, unless the New Securities are themselves
warrants or options to acquire shares of Capital Stock), to acquire warrants for
such New Securities exercisable at a nominal exercise price (but at a purchase
price, for such warrants, equal to the purchase price for such New Securities)
so that the Company and such Shareholder are in substantially the same position
as if such Shareholder had acquired such New Securities, but permitting such
Shareholder to acquire warrants for such New Securities in lieu thereof.
(d) The Company may condition the participation of
Shareholders in any issuance of New Securities upon the purchase by such
Shareholder
33
of any securities (including, without limitation, debt securities) other than
New Securities in the event that the participation of the prospective
subscribers in such issuance of New Securities is so conditioned.
(e) In the event that the participation in an
issuance of New Securities by a Shareholder would require under applicable
securities law (i) the registration or qualification of such securities or of
any person as a broker or dealer or agent with respect to such securities or
(ii) the provision of any information, pursuant to Regulation D of the
Securities Act or comparable securities laws, regarding the Company or the
securities to any participant, the provision of which would impose a substantial
burden or expense on the Company, such Shareholder shall not have the right to
participate in such issuance of New Securities.
SECTION 4.7 DRAG-ALONG RIGHTS. (a) If Shareholders holding
in the aggregate more than 50% of the then outstanding Common Stock (the
"Approving Shareholders") agree to or approve a sale or exchange, whether
directly or pursuant to a merger, consolidation, sale of all or substantially
all of the assets of the Company or its Subsidiaries, or otherwise (a "COMPANY
SALE"), of all or substantially all of the Common Stock or assets of the Company
to a third party (an "ACQUIROR") not an Affiliate of the Company or any one or
more of the Shareholders, and provided that Parthenon is one of the Approving
Shareholders, then the Approving Shareholders shall have the right, subject to
all of the provisions of this Section 4.7 ("DRAG-ALONG RIGHT"), to require each
of the other Shareholders to (a) if such Company Sale is structured as a sale of
Capital Stock, sell, transfer and deliver or cause to be sold, transferred and
delivered to such Acquiror all shares of Common Stock and all Warrants and Other
Rights owned by them, or (b) if such Company Sale is structured as a merger,
consolidation or other transaction requiring the consent or approval of the
Company's stockholders, vote such Shareholder's shares of Voting Stock in favor
thereof, and otherwise consent to and raise no objection to such transaction,
and waive any dissenters' rights, appraisal rights or similar rights that such
Shareholder may have in connection therewith; and, in any such event, subject to
the provisions of subsection (c) of this Section 4.7, each such other
Shareholder shall agree to and shall be bound by the same terms, provisions and
conditions in respect of the Company Sale as are applicable to the Approving
Shareholders. The provisions of Sections 4.1 through 4.5, inclusive, shall not
apply to any transaction to which this Section 4.7 applies to the extent the
Approving Shareholders shall have in fact exercised their "DRAG-ALONG RIGHT"
under this Section 4.7.
(b) If the Approving Shareholders desire to
exercise their Drag-Along Rights, they shall give written notice to the other
Shareholders ("DRAG-ALONG NOTICE") of the Company Sale, setting forth the name
and address of the Acquiror, the date on which such transaction is proposed to
be consummated (which shall be not less than 30 days after the date such
Drag-Along Notice is given) and the proposed amount and form of consideration
and terms and conditions of payment offered by the Acquiror, including, without
limitation, the material terms of any debt or equity securities proposed to be
included as part of such consideration, identifying the issuer or issuers
thereof.
34
(c) The obligations of the Shareholders in respect
of a Company Sale under this Section 4.7 are subject to the satisfaction of the
following conditions: (i) upon the consummation of the Company Sale, the same
form of consideration and the same proportion of the aggregate consideration
realized upon such Company Sale shall be paid or distributed in respect of each
share of Common Stock then issued and outstanding; PROVIDED that if any holder
of Common Stock is prohibited by applicable law or regulation from receiving the
same type of consideration as other Shareholders, the Company shall use its
reasonable commercial efforts to cause the prospective purchaser to accommodate
such holder of Common Stock by providing a reasonable equivalent substitute
consideration if possible); (ii) if any Shareholder is given an option as to the
form and amount of consideration to be received, each other Shareholder will be
given the same option; and (iii) each holder of Warrants or Other Rights then
currently exercisable or convertible into shares of Common Stock will be given a
reasonable opportunity to exercise or convert such Warrants or Other Rights
prior to the consummation of the Company Sale and thereby to participate in the
Company Sale as a holder of Common Stock.
SECTION 4.8 TREATMENT OF OTHER RIGHTS. If any Shareholder
shall sell Other Rights in any sale pursuant to Section 4.7, such Shareholder
shall receive in exchange for such Other Rights consideration equal to the
amount (if greater than zero) determined by multiplying (a) the purchase price
per share of Common Stock received by the Shareholders in such sale less the
exercise price per share of such Other Rights by (b) the number of shares of
Common Stock issuable upon exercise of such Other Rights (to the extent
exercisable at the time of such sale), subject to reduction for any tax or other
amounts required to be withheld under applicable law.
SECTION 4.9 SALE PROCESS. The Approving Shareholders
shall, in their sole discretion, decide whether or not to pursue, consummate,
postpone or abandon any proposed sale under Section 4.7 and the terms and
conditions thereof. No Investor or Approving Shareholder or any Affiliate of any
Investor or Approving Shareholder shall have any liability to any other holder
of shares of Common Stock, Warrants or Other Rights arising from, relating to or
in connection with the pursuit, consummation, postponement, abandonment or terms
and conditions of any proposed sale except to the extent such Investor shall
have failed to comply with the provisions of this Section 4.
SECTION 4.10 LIMITATION ON INDEMNIFICATION. Notwithstanding
anything contained in this Agreement to the contrary and subject to the
provisions of this Section 4.10, in no event will any Shareholder be required to
make any representations or warranties in connection with a transaction referred
to in Section 4.7 that are joint and several with any other Shareholder(s) or
that pertain to matters other than to title to the Common Stock or other
securities held by such Shareholder, such Shareholder's capacity, authority or
power to consummate or participate in the transaction in question and other
matters peculiar to such Shareholder and customary for the type of transaction
being consummated. In addition, in no event will any Shareholder be required to
incur indemnification or contribution obligations that are joint and several
with any Person by Section 4.7. For purposes of determining the obligations
described in this Section 4.10, (i) all securities of the same type shall be
similarly treated and (ii) the amount of each
35
Shareholder's obligation shall not exceed the aggregate consideration received
thereby in respect of the transaction in question (after aggregate taxes and
expenses allocable to the transaction).
SECTION 4.11 DEPOSIT. If any Shareholder (a "NON-COMPLYING
HOLDER") fails to deliver any certificate or certificates evidencing shares of
Common Stock, Warrants or Other Rights that may be required to be transferred
pursuant to Section 4.7 or any other provision of this Agreement in accordance
with the terms hereof, the Company or other Person entitled to purchase or
require the transfer of such securities may, at its option, in addition to all
other remedies it may have, deposit the price for such shares of Common Stock,
Warrants or Other Rights with any national bank or trust company having combined
capital, surplus and undivided profits in excess of $100,000,000 and which has
agreed to act as escrow agent in the manner contemplated by this Section 4.11
and thereupon the Company shall cancel on its books the certificate or
certificates representing such shares of Common Stock, Warrants or Other Rights,
as applicable, and, in the case of any such transfer of shares of Common Stock,
Warrants or Other Rights to a Person other than the Company issue, in lieu
thereof and in the name of such Person, a new certificate or certificates
representing such shares of Common Stock, Warrants or Other Rights and thereupon
all of the Non-Complying Holder's rights in and to such shares of Common Stock,
Warrants or Other Rights shall terminate. Thereafter, upon delivery to the
Company by such Non-Complying Holder of the certificate or certificates
evidencing such shares of Common Stock, Warrants or Other Rights (duly endorsed,
or with stock powers or other appropriate instruments of transfer duly endorsed,
for transfer, with signature guaranteed, free and clear of any liens or
encumbrances, and with all applicable stock transfer tax stamps affixed), the
Company shall instruct the escrow agent referred to above to deliver the
purchase price (without any interest from the date of the closing to the date of
such delivery, any such interest to accrue to the Person who deposited the
purchase price for such shares of Common Stock, Warrants or Other Rights) to
such Non-Complying Holder.
SECTION 4.12 NON-ACCREDITED SHAREHOLDERS. If the Company
and any of its Shareholders or their representatives enter into any negotiation
or transaction for which Rule 506 under the Securities Act (or any similar rule
then in effect) may be available with respect to such negotiation or transaction
(including a merger, consolidation or other reorganization), each Shareholder
who is not an "accredited investor" (as such term is defined in Rule 501(a)
under the Securities Act) will, at the request of the Company, appoint a
purchaser representative (as such term is defined in Rule 501(a) under the
Securities Act) reasonably acceptable to the Company and such non-accredited
Shareholder.
SECTION 5 REGISTRATION RIGHTS.
SECTION 5.1 PIGGYBACK REGISTRATIONS. (a) If the Company at
any time proposes to register any of its equity securities under the Securities
Act (other than a registration on Form S-4 or S-8 or any successor or similar
forms thereto), whether or not for sale for its own account, on a form and in a
manner that would permit registration of Registrable Securities for sale to the
public under the Securities Act, it will give written
36
notice to all the holders of Registrable Securities promptly of its intention to
do so, describing such securities and specifying the form and manner and the
other relevant facts involved in such proposed registration, including, without
limitation, (x) the intended method of disposition of the securities offered,
including whether or not such registration will be effected by means of a firm
commitment underwriting through a nationally recognized underwriter (an
"Underwritten Offering") or on a "best efforts" basis, and, in any case, the
identity of the managing underwriter, if any, and (y) the public offering price
at which the Registrable Securities are reasonably expected to be sold. Upon the
written request of any such holder delivered to the Company within 30 calendar
days after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such holder), the Company
will effect the registration under the Securities Act of all of the Registrable
Securities that the Company has been so requested to register; PROVIDED,
HOWEVER, that:
(i) if, at any time after giving such written
notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with
such registration, the Company shall determine for any reason not to
register any securities, the Company may, at its election, give written
notice of such determination to each holder of Registrable Securities
who shall have made a request for registration as hereinabove provided
and thereupon the Company shall be relieved of its obligation to
register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration
Expenses in connection therewith); and
(ii) if such registration involves an Underwritten
Offering, all holders of Registrable Securities requesting to be
included in the Company's registration must sell their Registrable
Securities to the underwriters selected by the Company on the same
terms and conditions as apply to the Company except as otherwise
specifically provided in this Section 5.
(b) The Company shall not be obligated to effect
any registration of Registrable Securities under this Section 5.1 incidental to
the registration of any of its securities in connection with mergers,
acquisitions, exchange offers, dividend reinvestment plans or stock option or
other employee benefit plans.
(c) If a registration pursuant to this Section 5.1
involves an Underwritten Offering and the managing underwriter advises the
issuer that, in its opinion, the number of securities proposed to be included in
such registration should be limited due to market conditions, then the Company
will include in such registration (i) first, the securities the Company proposes
to sell and (ii) second, the number of Registrable Securities requested by
holders thereof to be included in such registration that, in the opinion of such
managing underwriter, can be sold, such amount to be allocated among all such
holders of Registrable Securities pro rata on the basis of the respective number
of Registrable Securities then held by each such holder.
(d) In connection with any Underwritten Offering
with respect to which holders of Registrable Securities shall have requested
registration pursuant to
37
this Section 5.1, the Company shall have the right to select the managing
underwriter with respect to the offering; PROVIDED that such managing
underwriter shall be reasonably acceptable to the holders of a majority of the
Registrable Securities requested to be sold in such Underwritten Offering.
(e) The Company shall pay all Registration
Expenses incurred in connection with each of the registrations of Registrable
Securities effected by it pursuant to this Section 5.1.
SECTION 5.2 DEMAND REGISTRATIONS.
(a) REQUEST. At any time after the closing of an
Initial Public Offering, each of (i) Parthenon, (ii) Chase, and (iii) one or
more of the Shareholders then holding in the aggregate no less than 25% of the
Registrable Securities held by the Shareholders, acting through a designee,
shall have the right to make written requests that the Company effect the
registration under the Securities Act of all or part of their Registrable
Securities; PROVIDED, that, (x) the Registrable Securities requested to be
registered by such Shareholder(s) (collectively, the "REQUESTING PARTY") have an
aggregate sale price (calculated based upon the market price of such Registrable
Securities on the date of filing of the registration statement with respect to
such demand registration) to the public of at least $5,000,000. Subject to
Sections 5.2(g) and (h), the Company will promptly (and in any event within 10
business days) give written notice of such requested registration to all other
Shareholders holding Registrable Securities and offer such other Shareholders
the opportunity to register such amount of their Registrable Securities as such
Shareholders may request. The Company will thereupon file a registration
statement with respect to, and use its best efforts to make effective, at the
earliest possible date, the registration under the Securities Act, including,
without limitation, by means of a shelf registration pursuant to Rule 415 under
the Securities Act if so requested in such request (but only if the Company is
then eligible to use such a shelf registration), of:
(i) the Registrable Securities that the Company
has been so requested to register by the Requesting Party, and
(ii) all other Registrable Securities that the
Company has been requested to register by the other Shareholders
holding Registrable Securities (such Shareholders together with the
Requesting Party hereinafter are referred to as the "REGISTERED SELLING
SHAREHOLDERS") by written request given to the Company within 10
business days after the giving of such written notice by the Company,
all to the extent requisite to permit the disposition of the
Registrable Securities so to be registered.
(b) REGISTRATION OF OTHER SECURITIES. Whenever the
Company shall effect a registration pursuant to this Section 5.2, it may elect
to include authorized but unissued shares of Common Stock.
38
(c) REGISTRATION STATEMENT FORM. Registrations
under this Section 5.2 shall be on such appropriate registration form of the
Commission as shall be reasonably selected by the Registered Selling
Shareholders holding a majority of the Registrable Securities requested to be
included in the registration statement.
(d) EFFECTIVE REGISTRATION STATEMENT. A
registration requested pursuant to this Section 5.2 shall not be deemed to have
been requested under Section 5.2(g) or effected (i) unless a registration
statement with respect thereto has become effective and remained effective in
compliance with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such registration statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement (unless the failure to so
dispose of such Registrable Securities shall be caused solely by reason of a
failure on the part of the Registered Selling Shareholders); PROVIDED, that,
except with respect to any registration statement filed pursuant to Rule 415
under the Securities Act, such period need not exceed nine months, (ii) if after
it has become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court for any reason not attributable solely to the Registered Selling
Shareholders and has not thereafter become effective, or (iii) if the conditions
to closing specified in the underwriting agreement, if any, entered into in
connection with such registration are not satisfied or waived, other than solely
by reason of a failure on the part of the Registered Selling Shareholders.
(e) SELECTION OF UNDERWRITERS. If the Company or
the Requesting Party desire to engage an underwriter or underwriters with
respect to an offering of the Registrable Securities so to be registered, such
underwriter shall be selected by the Registered Selling Shareholders holding a
majority of the Registrable Securities requested to be included in the
registration statement and shall be reasonably acceptable to the Company.
(f) PRIORITY IN REQUESTED REGISTRATION. If the
managing underwriter of any underwritten offering shall advise the Company (and
the Company shall so advise each Registered Selling Shareholder of such advice)
that, in its opinion, the number of securities requested to be included in such
registration exceeds the number that can be sold in such offering; then the
Company will include in such registration, to the extent of the number of
Registrable Securities that the Company is so advised can be sold in (or during
the time of) such offering at a price acceptable to the Registered Selling
Shareholders holding a majority of the Registrable Securities requested to be
included in such registration statement (i) FIRST, the number of Registrable
Securities requested by each Requesting Party that is either Allied, Fleet
Finance, Blackstone or an Investor to be included in such registration that, in
the opinion of such managing underwriter, can be sold, such amount to be
allocated among all such requesting Investors, Allied and/or Fleet Finance pro
rata on the basis of the respective number of Registrable Securities then held
by each requesting Investor, Allied, Fleet Finance and/or Blackstone; (ii)
SECOND, the number of Registrable Securities requested by the other Registered
Selling Shareholders to be included in such registration that, in the opinion of
such managing underwriter, can
39
be sold, such amount to be allocated among all such holders of Registrable
Securities pro rata on the basis of the respective number of Registrable
Securities then held by each such holder; and (iii) THIRD, the securities the
Company proposes to sell.
(g) LIMITATIONS ON REGISTRATION ON REQUEST. The
Shareholders shall be limited in their rights to request registration pursuant
to Section 5.2 as follows: Parthenon shall be limited to a maximum of three (3)
such requests; Chase to a maximum of two (2) such requests; and each of the
other Shareholders to a maximum of one (1) such request as a Requesting Party.
In addition, no party hereto shall have the right to request registration
pursuant to this Section 5.2 within 120 days following the effective date of a
registration statement filed by the Company.
(h) COMPANY DELAY. Notwithstanding anything herein
to the contrary, if, after a Requesting Party has given a written request under
Section 5.2(a), the Board of Directors of the Company shall determine in its
good faith judgment that the filing or continued effectiveness of such
registration statement would be undesirable and would interfere with any
material financing, investment, acquisition or other transaction then under
active consideration or would reasonably in the judgment of the Board of
Directors of the Company adversely affect the interests of the Company, the
Company may decide to delay or discontinue, as the case may be, the registration
of such Registrable Securities, and if the Board of Directors of the Company
makes such determination, the Company shall give written notice of such
determination to each Registered Selling Shareholder. Such delay or
discontinuance shall be for the period the Company determines on the basis
provided above in good faith is necessary or desirable, but in no event greater
than ninety (90) days in any twelve calendar month period. The Company shall
notify the Requesting Party of the expiration of the period of delay or
discontinuance. Following such delay or discontinuance, the Company shall
promptly cause the Registrable Securities to be registered unless, within 15
days of receipt of notice from the Company, the Requesting Party withdraws its
written request made pursuant to Section 5.2(a), in which case, such written
request will not be considered a request for registration for the purposes of
Section 5.2(g).
(i) EXPENSES. The Company will pay all
Registration Expenses incurred in connection with any registration of
Registrable Securities effected pursuant to this Section 5.2.
SECTION 5.3 REGISTRATION PROCEDURES. (a) If and whenever
the Company is required to use its best efforts to effect or cause the
registration of any Registrable Securities under the Securities Act as provided
in Section 5.1 or Section 5.2 the Company will, as expeditiously as possible:
(i) prepare and, in any event within 90 calendar
days after the end of the period within which requests for registration
may be given to the Company, file with the Commission a registration
statement with respect to such Registrable Securities and use its best
efforts to cause such registration statements to become and remain
effective; PROVIDED that as far in advance as practical before filing
such registration statement or any amendment thereto, the
40
Company will furnish to the Shareholders that (whether pursuant to
Section 5.1 or 5.2) have requested to have Registrable Securities
included in such registration ("REQUESTING SHAREHOLDERS") copies of
reasonably complete drafts of all such documents proposed to be filed
(including exhibits), and any such holder shall have the opportunity to
object to any information pertaining solely to such holder that is
contained therein and the Company will make the corrections reasonably
requested by such holder with respect to such information prior to
filing any such registration statement or amendment and, PROVIDED,
FURTHER that the Company may discontinue any registration of its
securities that is being effected pursuant to Section 5.1 at any time
prior to the effective date of the registration statement relating
thereto;
(ii) prepare and file with the Commission such
amendments (including post-effective 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 may be requested by the holders of
Registrable Securities being registered thereby, but not exceeding nine
months except with respect to any registration filed under Section 5.2
pursuant to Rule 415 under the Securities Act, and to comply with the
provisions of the Securities Act with respect to the disposition of all
Common Stock covered by such registration statement during such period
in accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such registration statement;
(iii) furnish to each holder of Registrable
Securities covered by the registration statement and to each
underwriter, if any, of such Registrable Securities, such number of
copies of a prospectus and preliminary prospectus for delivery in
conformity with the requirements of the Securities Act, and such other
documents, as such Person may reasonably request, in order to
facilitate the public sale or other disposition of the Registrable
Securities;
(iv) 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
each seller shall reasonably request, and do any and all other acts and
things that may be reasonably necessary or advisable to enable such
seller to consummate the disposition of the Registrable Securities
owned by such seller in such jurisdictions, except that the Company
shall not for any such purpose be required (A) to qualify to do
business as a foreign corporation in any jurisdiction where, but for
the requirements of this Section 5.3(a)(iv), it is not then so
qualified, or (B) to subject itself to taxation in any such
jurisdiction, or (C) to take any action that would subject it to
general or unlimited service of process in any such jurisdiction;
(v) use its best efforts to cause such Registrable
Securities covered by such registration statement to be registered with
or approved by such other governmental agencies or authorities as may
be necessary
41
to enable the seller or sellers thereof to consummate the disposition
of such Registrable Securities;
(vi) immediately notify each seller of Registrable
Securities covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act within the appropriate period mentioned in Section
5.3(a)(ii), if the Company becomes aware that the prospectus included
in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing,
and, at the request of any such seller, deliver a reasonable number of
copies of an amended or supplemental prospectus as may be necessary 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 to make the statements therein not misleading in
the light of the circumstances then existing;
(vii) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission and make
generally available to its security holders, in each case as soon as
practicable, but not later than 45 calendar days after the close of the
period covered thereby (90 calendar days in case the period covered
corresponds to a fiscal year of the Company), an earnings statement of
the Company that will satisfy the provisions of Section 11(a) of the
Securities Act;
(viii) use its best efforts in cooperation with the
underwriters to list such Registrable Securities on each securities
exchange as they may reasonably designate;
(ix) provide a transfer agent and registrar for all
such Registrable Securities not later than the effective date of such
registration statement;
(x) in the event such registration is effected
through an Underwritten Offering, use its best efforts to obtain a
"cold comfort" letter from the independent public accountants for the
Company in customary form and covering such matters of the type
customarily covered by such letters as the holders of Registrable
Securities requesting registration may reasonably request in order to
effect an underwritten public offering of such Registrable Securities;
and
(xi) execute and deliver all instruments and
documents (including in an Underwritten Offering an underwriting
agreement in customary form) and take such other actions and obtain
such certificates and opinions as the holders of Registrable Securities
requesting registration may reasonably request in order to effect an
underwritten public offering of such Registrable Securities;
42
(xii) promptly notify each Requesting Shareholder
and the underwriter or underwriters, if any:
(A) when such registration statement or any
prospectus used in connection therewith, or any amendment or
supplement thereto, has been filed and, with respect to such
registration statement or any post-effective amendment
thereto, when the same has become effective;
(B) of any written comments from the
Commission with respect to any filing referred to in clause
(A) and of any written request by the Commission for
amendments or supplements to such registration statement or
prospectus;
(C) of the notification to the Company by
the Commission of its initiation of any proceeding with
respect to the issuance by the Commission of, or of the
issuance by the Commission of, any stop order suspending the
effectiveness of such registration statement; and
(D) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of any Registrable Securities for sale under the
applicable securities or blue sky laws of any jurisdiction;
(xiii) furnish to each Requesting Shareholder a
signed counterpart, addressed to such holder (and the underwriters, if
any), of an opinion of counsel for the Company, dated the effective
date of such registration statement (or, if such registration includes
an underwritten Public Offering, dated the date of any closing under
the underwriting agreement), covering substantially the same matters
with respect to such registration statement (and the prospectus
included therein) as are customarily covered in opinions of issuer's
counsel delivered to the underwriters in underwritten Public Offerings
of securities; and
(xiv) make available for inspection by any
Requesting Shareholder, any underwriter participating in any
disposition pursuant to such registration statement and any attorney,
accountant or other agent retained by any such seller or underwriter
(collectively, the "INSPECTORS"), all financial and other records,
pertinent corporate documents and properties of the Company
(collectively, the "RECORDS") as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause
the Company's officers, directors and employees to supply all
information reasonably requested by any such Inspector in connection
with such registration statement, and permit the Inspectors to
participate in the preparation of such registration statement and any
prospectus contained therein and any amendment or supplement thereto to
the extent they reasonably request. Records that the Company
determines, in good faith, to be confidential and that it notifies the
Inspectors are confidential shall not
43
be disclosed by the Inspectors unless (A) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in
the registration statement, (B) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent
jurisdiction or (C) the information in such Records has been made
generally available to the public. The seller of Registrable Securities
agrees by acquisition of such Registrable Securities that it will, upon
learning that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to
prevent disclosure of the Records deemed confidential.
(b) It shall be a condition precedent to the
obligation of the Company to take any action pursuant to this Section 5 in
respect of Registrable Securities that each holder requesting registration
thereof shall furnish to the Company such information regarding the Registrable
Securities held by such holder and the intended method of disposition thereof as
the Company shall reasonably request and as shall be required in connection with
the action taken by the Company; PROVIDED, HOWEVER, that the failure of any
holder of Registrable Securities to furnish such information shall not affect
the obligations of the Company pursuant to this Section 5 with respect to any
holder of Registrable Securities who furnishes such information to the Company.
(c) Each holder of Registrable Securities will,
upon receipt of any notice from the Company of the happening of any event of the
kind described in Section 5.3(a)(vi), forthwith discontinue disposition of the
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 5.3(a)(vi).
(d) If a registration pursuant to Section 5.1 or
Section 5.2 involves an Underwritten Offering, each holder of Registrable
Securities agrees, whether or not such holders' Registrable Securities are
included in such registration, not to effect any public sale or distribution,
including any sale pursuant to Rule 144 under the Securities Act, of any
Registrable Securities, or of any security convertible into or exchangeable or
exercisable for any Registrable Securities (other than as part of such
Underwritten Offering), without the consent of the managing underwriter, during
a period commencing seven calendar days before and ending 90 calendar days (or
such lesser number as the managing underwriter shall designate) after the
effective date of such registration.
(e) If a registration pursuant to Section 5.1 or
Section 5.2 involves an Underwritten Offering, the Company agrees, if so
required by the managing underwriter, not to effect any public sale or
distribution of any of its equity or debt securities, as the case may be, or
securities convertible into or exchangeable or exercisable for any of such
equity or debt securities, as the case may be, during a period commencing seven
calendar days before and ending 90 calendar days (or such lesser number as the
managing underwriter shall designate) after the effective date of such
registration, except for such Underwritten Offering or except in connection with
a stock
44
option plan, stock purchase plan, savings or similar plan, or an acquisition,
merger or exchange offer.
(f) If a registration pursuant to Section 5.1 or
Section 5.2 involves an Underwritten Offering, any holder of Registrable
Securities requesting to be included in such registration may elect, in writing,
prior to the effective date of the registration statement filed in connection
with such registration, not to register such securities in connection with such
registration, unless such holder has agreed with the Company or the managing
underwriter to limit its rights under this Section 5.3.
(g) It is understood that in any Underwritten
Offering in addition to any shares of Common Stock (the "INITIAL SHARES") the
underwriters have committed to purchase, the underwriting agreement may grant
the underwriters an option to purchase up to a number of additional authorized
but unissued shares of Common Stock (the "OPTION SHARES") (up to the maximum
amount as the NASD may then permit), solely to cover over-allotments. Shares of
Common Stock proposed to be sold by the Company and the other sellers shall be
allocated between Initial Shares and Option Shares as agreed or, in the absence
of agreement, pursuant to Sections 5.1(c) and 5.2(f), as the case may be. The
number of Initial Shares and Option Shares to be sold by requesting holders
shall be allocated pro rata among all such holders on the basis of the relative
number of shares of Registrable Securities each such holder has requested to be
included in such registration.
SECTION 5.4 SALE OF WARRANTS TO UNDERWRITER.
Notwithstanding anything in this Section 5 to the contrary, in lieu of
exercising any Warrant prior to or simultaneously with the filing or the
effectiveness of any registration statement filed pursuant to this Section 5,
the holder of such Warrant may sell such Warrant to the underwriters of the
offering being registered upon the undertaking of such underwriter to exercise
such Warrant before making any distribution pursuant to such registration
statement and to include the shares of Common Stock issued upon such exercise
among the securities being offered pursuant to such registration statement. The
Company agrees to cause such shares to be included among the securities being
offered pursuant to such registration statement to be issued within such time as
will permit the underwriter to make and complete the distribution contemplated
by the underwriting.
SECTION 5.5 INDEMNIFICATION. (a) In the event of any
registration of any securities under the Securities Act pursuant to Section 5.1
or Section 5.2 hereof, the Company will, and it hereby agrees to, indemnify and
hold harmless, to the extent permitted by law, each seller of any Registrable
Securities covered by such registration statement, its directors, officers,
employees and agents, each Person who participates as an underwriter in the
offering or sale of such securities and each other Person, if any, who controls
such seller or underwriter within the meaning of the Securities Act, as follows:
(i) against any and all loss, liability, claim,
damage or expense whatsoever arising out of or based upon an untrue
statement or alleged untrue statement of a material fact contained in
any registration statement (or any amendment or supplement thereto),
including all documents incorporated therein
45
by reference, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or arising out of an untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus or prospectus (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein not
misleading;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(iii) against any and all expense reasonably
incurred by them in connection with investigating, preparing or
defending against any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not otherwise paid under clauses (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any such seller or underwriter expressly for use in the preparation of
any registration statement (or any amendment thereto) or any preliminary
prospectus or prospectus (or any amendment or supplement thereto); and PROVIDED,
FURTHER, that the Company will not be liable to any Person who participates as
an underwriter in the offering or sale of Registrable Securities or any other
Person, if any, who controls such underwriter within the meaning of the
Securities Act, under the indemnity agreement in this Section 5.5(a) with
respect to any preliminary prospectus or final prospectus or final prospectus as
amended or supplemented, as the case may be, to the extent that any such loss,
claim, damage or liability of such underwriter or controlling Person results
from the fact that such underwriter sold Registrable Securities to a Person to
whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the final prospectus or of the final prospectus as then
amended or supplemented, whichever is most recent, if the Company has previously
furnished copies thereof to such underwriter. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
such seller, director, officer, employee, agent, underwriter or controlling
Person, and shall survive the transfer of such securities by such seller.
(b) The Company may require, as a condition to
including any Registrable Securities in any registration statement filed in
accordance with Section 5.1 or Section 5.2 hereof, that the Company shall have
received an undertaking reasonably satisfactory to it from the prospective
seller of such Registrable Securities or any
46
underwriter, to indemnify and hold harmless (in the same manner and to the same
extent as set forth in Section 5.5(a) hereof) the Company and its directors and
officers and each other Person, if any, who controls the Company within the
meaning of the Securities Act, 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 such
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 the Company by or on behalf of such seller or
underwriter 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 the Company or any such director,
officer or controlling Person and shall survive the transfer of such securities
by such seller. In that event, the obligations of the Company and such sellers
pursuant to this Section 5.5 are to be several and not joint; PROVIDED, HOWEVER,
that, with respect to each claim pursuant to this Section 5.5, the Company shall
be liable for the full amount of such claim, and each such seller's liability
under this Section 5.5 shall be limited to an amount equal to the net proceeds
(after deducting the underwriters' discount and expenses) received by such
seller from the sale of Registrable Securities held by such seller pursuant to
this Section 5.5.
(c) Promptly after receipt by an indemnified party
hereunder of written notice of the commencement of any action or proceeding
involving a claim referred to in this Section 5.5, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party, give
written notice to such indemnifying party of the commencement of such action;
PROVIDED, HOWEVER, that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under this Section 5.5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim (in which case the
indemnifying party shall not be liable for the fees and expenses of more than
one counsel for the sellers of Registrable Securities or for more than one
counsel for the underwriters in connection with any one action or separate but
similar or related actions), the indemnifying party will be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof. No indemnifying party
shall be liable for any settlement entered into without its written consent,
which consent shall not be unreasonably withheld. No indemnifying party shall,
without the consent of such indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which such indemnified party is a
party and indemnity has been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability for claims that are the subject matter of such proceeding.
Notwithstanding the foregoing, in any
47
action, the indemnified party shall have the right to employ separate counsel at
any time and participate in the defense thereof, PROVIDED that the fees and
expenses of such counsel shall be paid by the indemnified party.
(d) The Company and each seller of Registrable
Securities shall provide for the foregoing indemnity (with appropriate
modifications) in any underwriting agreement with respect to any required
registration or other qualification of securities under any federal or state law
or regulation of any governmental authority.
(e) Notwithstanding anything herein to the
contrary, the rights and obligations contained in this Section 5.5 shall survive
any termination of this Agreement.
SECTION 5.6 CONTRIBUTION. In order to provide for just and
equitable contribution in circumstances under which the indemnity contemplated
by Section 5.5 hereof is for any reason not available, the parties required to
indemnify by the terms thereof shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement (collectively, "Losses") incurred by the Company, any seller
of Registrable Securities and one or more of the underwriters, except to the
extent that contribution is not permitted under Section 11(f) of the Securities
Act. In determining the amounts that the respective parties shall contribute,
there shall be considered 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 that resulted in such Losses, as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, the parties' relative knowledge and access to
information concerning the matter with respect to which the claim was asserted,
the opportunity to correct and prevent any statement or omission and any other
equitable considerations appropriate under the circumstances. The Company and
each Person selling securities agree with each other that no seller of
Registrable Securities shall be required to contribute any amount in excess of
the amount such seller would have been required to pay to an indemnified party
if the indemnity under Section 5.5 hereof were available. The Company and each
such seller agree with each other and the underwriters of the Registrable
Securities, if requested by such underwriters, that it would not be equitable if
the amount of such contribution were determined by pro rata or per capita
allocation (even if the underwriters were treated as one entity for such
purpose) or for the underwriters' portion of such contribution to exceed the
percentage that the underwriting discount bears to the initial public offering
price of the Registrable Securities. For purposes of this Section 5.6, each
Person, if any, who controls an underwriter within the meaning of the Securities
Act shall have the same rights to contribution as such underwriter, and each
director and each officer of the Company who signed the registration statement,
and each Person, if any, who controls the Company or a seller of Registrable
Securities, shall have the same rights to contribution as the Company or a
seller or Registrable Securities, as the case may be. Notwithstanding anything
herein the contrary, the rights and obligations contained in this Section 5.6
shall survive any termination of this Agreement.
48
SECTION 5.7 RULE 144. If the Company shall have filed a
registration statement pursuant to the requirements of Section 12 of the
Exchange Act or a registration statement pursuant to the requirements of the
Securities Act, the Company covenants that it will file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any holder of
Registrable Securities, make publicly available other information), and it will
take such further action as any holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holder to
sell shares of Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the Commission. Upon the request
of any holder of Registrable Securities, the Company will deliver to such holder
a written statement as to whether it has complied with such requirements.
SECTION 6 TERMINATION. (a) THE PROVISIONS OF SECTIONS 2,
3 (OTHER THAN THE LAST SENTENCE OF EACH OF SECTION 3.1 AND SECTION 3.4(A) AND
ALL OF SECTION 3.4(C)) AND 4 SHALL TERMINATE ON THE DATE ON WHICH ANY OF THE
FOLLOWING EVENTS FIRST OCCURS: (I) THE CONSUMMATION OF A QUALIFIED PUBLIC
OFFERING, OR (II) THE CONSUMMATION OF ANY SALE OR OTHER DISPOSITION OF A
MAJORITY OF THE OUTSTANDING COMMON STOCK OF THE COMPANY, MERGER, CONSOLIDATION
OR REORGANIZATION INVOLVING THE COMPANY, OR SALE OF ALL OR SUBSTANTIALLY ALL OF
THE ASSETS OF THE COMPANY OR ITS SUBSIDIARIES, IN EACH CASE WHERE IMMEDIATELY
AFTER GIVING EFFECT TO SUCH TRANSACTION THE SHAREHOLDERS (AS OF IMMEDIATELY
PRIOR TO SUCH TRANSACTION) OWN LESS THAN A MAJORITY OF THE OUTSTANDING SHARES OF
COMMON STOCK, ON A FULLY DILUTED BASIS, OF THE SURVIVING, RESULTING, SUCCESSOR
OR PURCHASING PERSON (AS THE CASE MAY BE).
(b) Notwithstanding the foregoing or any other
provision of this Agreement (other than Section 5.5(e) and the last sentence of
Section 5.6), this Agreement shall in any event terminate with respect to (i)
any Shareholder when such Shareholder no longer owns any shares of Common Stock,
Preferred Stock, Warrants or Other Rights, and (ii) any particular shares of
Common Stock, Preferred Stock, Warrants or other Rights sold in a Public
Offering.
SECTION 7 MISCELLANEOUS.
SECTION 7.1 INSPECTION RIGHTS. Each Shareholder that holds
5% or more of the Common Stock (excluding, for purposes of this computation,
shares of Common Stock issued in transactions in which Shareholders did not have
the right to purchase shares of Common Stock (or securities convertible into or
exercisable or exchangeable for, Common Stock) pursuant to Section 4.6 hereof)
at the time outstanding, shall have the right, upon reasonable prior notice to
the Company, to visit and inspect the properties of the Company and its
Subsidiaries and to examine and copy (at its own expense) their books of record
and accounts, and to discuss their affairs, finances and accounts with their
officers and their current and prior independent public
49
accountants, all at such times (during normal business hours) as such
Shareholder may reasonably request.
SECTION 7.2 FINANCIAL INFORMATION; LIST OF SHAREHOLDERS.
(a) The Company agrees to furnish to each Shareholder the following financial
statements and other information:
(i) as soon as available and in any event within
45 days after the end of each quarterly fiscal period of each fiscal
year of the Company, a consolidated statement of income, retained
earnings and cash flows of the Company and its Subsidiaries for such
period and for the period from the beginning of the respective fiscal
year to the end of such period, and the related consolidated balance
sheet of the Company and its Subsidiaries as at the end of such period
(together with, in each case, statements identifying, among other
things, sales, cost of goods sold and gross profit segmented by product
category, and segmented by domestic and international operations),
setting forth in each case in comparative form the corresponding
consolidated (and segmented) figures for the respective period during
the prior fiscal year (except that, in the case of balance sheets, such
comparison shall be to the last day of the prior fiscal year),
accompanied by a certificate of a senior financial officer of the
Company, which certificate shall state that said consolidated financial
statements fairly present the consolidated financial condition and
results of operations of the Company and its Subsidiaries and said
segmented income statements fairly present the respective results of
operations for the respective segments covered thereby, in each case in
accordance with GAAP, as at the end of, and for, such period (subject
to normal year-end audit adjustments);
(ii) as soon as available and in any event within
90 days after the end of each fiscal year of the Company, a
consolidated statement of income, retained earnings and cash flows for
such fiscal year and the related consolidated balance sheet of the
Company and its Subsidiaries as at the end of such fiscal year
(together with, in each case, statements identifying, among other
things, sales, costs of goods sold and gross profit segmented by
product category, and segmented by domestic and international
operations), setting forth in each case in comparative form the
corresponding consolidated (and segmented) figures for the respective
period during the prior fiscal year (except that, in the case of
balance sheets, such comparison shall be to the last day of the prior
fiscal year), and accompanied (i) in the case of said consolidated
statements and balance sheet of the Company, by an opinion thereon of
independent certified public accountants of recognized national
standing, which opinion shall state that said consolidated financial
statements fairly present the consolidated financial condition and
results of operations of the Company and its Subsidiaries as at the end
of, and for, such fiscal year in accordance with GAAP, and (ii) in the
case of said segmented financial statements, by a certificate of a
senior financial officer of the Company, which certificate shall state
that said financial statements fairly present the respective individual
unconsolidated financial condition and results of operations of the
Company and of each of its Subsidiaries, and said segmented
50
income statements fairly present the respective results of operations
for the respective segments covered thereby, in each case in accordance
with GAAP, as at the end of, and for, such fiscal year; and
(iii) copies of any proxy statements, financial
statements and other reports as the Company shall send or make
available generally to its stockholders, and copies of all regular and
periodic reports and of all registration statements (other than on Form
S-8 or Form 701 or a similar form) that the Company may file with the
Commission or with any securities exchange.
(b) Not less than 30 calendar days after the end
of each fiscal year of the Company, and from time to time upon the request of
any Shareholder, the Company shall furnish to each such Shareholder a copy of a
list of all stockholders of the Company (and holders of Warrants and Other
Rights) indicating the respective numbers of shares of Common Stock, Preferred
Stock, Warrants and Other Rights (on a primary and a fully-diluted, as-converted
basis) held by them as of the most recent practicable date.
SECTION 7.3 CONFIDENTIALITY. All materials and information
obtained by any Shareholder pursuant to Section 7.1 or Section 7.2 shall be kept
confidential and shall not be disclosed to any third party except (a) as has
become generally available to the public (other than through disclosure by such
Shareholder in contravention of this Agreement), (b) to such Shareholder's
directors, officers, trustees, shareholders, partners, employees, agents and
professional consultants on a need to know basis, (c) to any other holder of
Common Stock, Preferred Stock, Warrants or Other Rights, (d) to any Person to
which such Shareholder offers to sell or transfer any shares of Common Stock or
Warrants, PROVIDED that the prospective transferee shall agree to be bound by
the provisions of this Section 7.3, (e) in any report, statement, testimony or
other submission to any governmental authority having or claiming to have
jurisdiction over such Shareholder, or to the National Association of Insurance
Commissioners or any similar organization, including self-regulatory
organizations (such as securities exchanges), (f) in order to comply with any
law, rule, regulation or order applicable to such Shareholder or (g) in
connection with any litigation to which any Shareholder is a party or formal or
any informal investigative demand issued to such Shareholder in the course of
any litigation, investigation or administrative proceeding; provided that, any
Shareholder disclosing pursuant to subsections (e), (f) or (g) of this Section
7.3 shall notify the Company promptly of any such disclosure.
SECTION 7.4 DELIVERY EXPENSES. If any Shareholder
surrenders any certificate for shares of Common Stock, Preferred Stock, Warrants
or Other Rights to the Company or a transfer agent of the Company for exchange
for instruments of other denominations or registered in another name or names,
the Company shall cause such new instruments to be issued and shall pay the cost
of delivering to or from the office of such Shareholder from or to the Company
or its transfer agent, duly insured, the surrendered instrument and any new
instruments issued in substitution or replacement for the surrendered
instruments.
51
SECTION 7.5 REPLACEMENT OF INSTRUMENTS. Upon receipt by
the Company of evidence reasonably satisfactory to it of the ownership of and
the loss, theft, destruction or mutilation of any certificate or instrument
evidencing any shares of Common Stock, Preferred Stock, Warrants or Other Rights
and
(a) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it (PROVIDED that, if the owner of the same
is an institutional lender or investor, its own agreement of indemnity shall be
deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender or
cancellation thereof, the Company, at its expense, shall execute, register and
deliver, in lieu thereof, a new certificate or instrument for (or covering the
purchase of) an equal number of shares of Common Stock, Preferred Stock,
Warrants or Other Rights, as the case may be.
SECTION 7.6 REPURCHASES, RECAPITALIZATIONS, ETC. (a)
Except as otherwise specifically provided herein, the Company shall not effect
any repurchase, recapitalization, reorganization, reclassification, merger,
consolidation, share exchange, liquidation, spin-off, stock split, dividend,
distribution or stock consolidation, subdivision or combination that would not
afford to each Shareholder the same type and amount of consideration per
security of the Company (after taking into account any exercise price or similar
fee necessary to convert a Warrant or Other Right into Capital Stock of the
Company).
(b) Except as otherwise specifically provided
herein, the Company shall not effect any repurchase or redemption of Common
Stock from any Shareholder and shall cause its Subsidiaries not to effect any
repurchase or redemption of Common Stock from any Shareholder, other than on a
pro rata basis from all Shareholders participating in such repurchase or
redemption at the same type and amount of consideration.
SECTION 7.7 SUCCESSORS AND ASSIGNS. Except as otherwise
provided herein, all of the terms and provisions of this Agreement shall be
binding upon, shall inure to the benefit of and shall be enforceable by the
respective successors and assigns of the parties hereto. No Shareholder may
assign any of its rights hereunder to any Person other than a transferee that
has complied in all respects with the requirements of this Agreement (including,
without limitation, Section 3.2 hereof). The Company may not assign any of its
rights hereunder to any Person other than the lenders under the Existing
Indebtedness, except as set forth in Section 2.6(h). If any transferee of any
Shareholder shall acquire any shares of Common Stock in any manner, whether by
operation of law or otherwise, such shares shall be held subject to all of the
terms of this Agreement, and by taking and holding such shares such Person shall
be entitled to receive the benefits of and be conclusively deemed to have agreed
to be bound by and to comply with all of the terms and provisions of this
Agreement. None of the provisions hereof shall create, or be construed or deemed
to create, any right to employment in favor of any Person by the Company or any
of its Subsidiaries.
52
SECTION 7.8 AMENDMENT AND MODIFICATION; WAIVER OF
COMPLIANCE; CONFLICTS.(a) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by any party from the terms of any provision of
this Agreement, shall be effective only if it is made or given in writing and
signed by the Company and Shareholders holding shares of Common Stock
representing at least eighty percent (80%) of the shares of Common Stock in the
aggregate owned by all of the Shareholders; provided that, notwithstanding the
foregoing, any amendment, supplement or modification of or to Section 2.3(b) of
this Agreement, any waiver of Section 2.3(b) of this Agreement, and any consent
to any departure by any party from the terms of Section 2.3(b) of this
Agreement, shall be effective only if it is made or given in writing and signed
by Parthenon, each Management Shareholder, each ▇▇▇▇▇▇▇ Management Shareholder,
Sterling, Huber, BancBoston, Private Equity Portfolio Fund II, ▇▇▇▇▇▇▇, National
City and Mellon, provided, further, that any amendment, modification or waiver
that would adversely affect the rights hereunder of any Shareholder, in its
capacity as a Shareholder, without similarly affecting the rights hereunder of
all Shareholders holding securities of the same class, in their capacities as
securityholders of such class (including, without limitation, any amendment that
makes any Person a "plan fiduciary" of First Plaza), shall not be effective as
to such Shareholder without its prior written consent; and, provided further,
that no amendment, modification or waiver with respect to (I) Section 2.1(b)(ii)
(or any other section of this Agreement in furtherance of the rights under such
Section 2.1(b)(ii)) or Section 3.2(a) shall be effective unless consented to in
writing by Chase and (II) Section 2.1(b)(iii) (or any other section of this
Agreement in furtherance of the rights under such Section 2.1(b)(iii)) shall be
effective unless consented to in writing by Sterling. Any such amendment,
supplement, modification, waiver or consent shall be binding upon the Company
and all of the Shareholders. In the event of an amendment or a modification of
this Agreement in accordance with its terms, the Shareholders shall cause the
Board of Directors to meet within 30 calendar days following such amendment or
modification or as soon thereafter as is practicable for the purpose of adopting
any amendment to the Certificate of Incorporation or By-Laws of the Company that
may be required as a result of such amendment or modification to this Agreement,
and, if required, proposing such amendments to the Shareholders entitled to vote
thereon, and the Shareholders agree to vote in favor of such amendments.
(b) Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
(c) In the event of any conflict between the
provisions of this Agreement and the provisions of any other agreement, the
provisions of this Agreement shall govern and prevail.
SECTION 7.9 NOTICES. All notices and other communications
provided for hereunder, unless expressly stated otherwise, shall be in writing
and delivered by
53
hand or sent by first class mail, nationally recognized overnight courier
service or by telecopy (with such telecopy to be confirmed promptly in writing
sent by first class mail or nationally recognized overnight courier service),
sent as follows:
(i) if to Parthenon:
Parthenon Investors, L.P.
c/o Parthenon Capital
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
1285 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Chase:
Chase Capital Partners
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇'▇▇▇▇▇▇▇▇, Graev & Karabell
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) if to the Company:
Wilmar Industries, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
54
(iv) if to First Plaza:
The Chase Manhattan Bank, as Trustee for
First Plaza Group Trust
▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(v) if to Fleet Finance:
Fleet Securities, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Mail Code: MADE 10011G
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention:
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Wall Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(vi) if to Allied:
Allied Capital Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
55
(vii) if to Sterling:
Sterling Investment Partners, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(viii) if to ▇▇▇▇▇:
JMH Partners Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(ix) if to BancBoston:
BancBoston Capital Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ Parent
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(x) if to Private Equity Portfolio Fund II:
Private Equity Portfolio Fund II, LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(xi) if to ▇▇▇▇▇▇▇: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ L.L.C.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(xii) if to National City:
National City Capital
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
56
(xiii) if to Mellon:
Mellon Ventures, Inc.
Suite 170
Five Radnor Corporate Center
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(xiv) if to KPP:
Key Principal Partners, LLC
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Moses & Singer
1301 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(xv) if to Blackstone:
Blackstone Mezzanine Partners, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: [ ]
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(xvi) if to Citizens Capital:
Citizens Capital Incorporated
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(xviii) if to any of the Management Shareholders:
c/o Wilmar Industries, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
57
(xvix) if to any of the ▇▇▇▇▇▇▇ Management Shareholders:
c/o Barnett Inc.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(xx) If to any Shareholder other than any of the foregoing
Persons, to the address of such Shareholder set forth in the stock
records of the Company maintained for such purpose; or to such other
address or addresses or telecopy number of numbers as any such party
may most recently have designated in writing to the other parties
hereto by such notice.
All such communications shall be deemed to have been given or made when so
delivered by hand, by nationally recognized courier service or sent by telecopy,
or three business days after being mailed.
SECTION 7.10 ENTIRE AGREEMENT; GOVERNING LAW. (A) This
Agreement and the other writings referred to herein or delivered pursuant hereto
that form a part hereof contain the entire agreement among the parties hereto
with respect to the subject transactions contemplated hereby and supersede all
prior oral and written agreements and memoranda and undertakings among the
parties hereto with regard to this subject matter. The Company represents to the
Shareholders that the rights granted to the holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted or obligations
accepted under any other agreement (including the Certificate of Incorporation)
to which the Company is a party. Except as otherwise specifically referred to
herein, each Shareholder represents to the other Shareholders that it is not a
party to any agreement, proxy, voting trust or other arrangement with any other
Shareholder or any other Person(s) that is inconsistent with the terms hereof.
Each Shareholder agrees that it shall not enter into agreement, proxy, voting
trust or other arrangement of any kind with any other Shareholder or any other
Person with respect to the Common Stock, the Preferred Stock, the Warrants or
Other Rights on terms inconsistent with the provisions of this Agreement,
including (without limitation) agreements or arrangements with respect to the
acquisition or disposition of securities of the Company in a manner that are
inconsistent with this Agreement.
(b) THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCEPT WITH
RESPECT TO MATTERS INVOLVING CORPORATE FORMATION, GOOD STANDING AND OTHER
CORPORATE PROCEDURAL MATTERS, WHICH SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF NEW JERSEY) WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES THEREOF.
SECTION 7.11 INJUNCTIVE RELIEF. The Shareholders
acknowledge and agree that a violation of any of the terms of this Agreement
will cause the Shareholders irreparable injury for which an adequate remedy at
law is not available. Therefore, the Shareholders agree that each Shareholder
shall be entitled to an injunction, restraining
58
order or other equitable relief from any court of competent jurisdiction,
restraining any other Shareholder from committing any violations of the
provisions of this Agreement.
SECTION 7.12 AVAILABILITY OF AGREEMENT. For so long as this
Agreement shall be in effect, this Agreement shall be made available for
inspection by any Shareholder upon request at the principal executive offices of
the Company.
SECTION 7.13 HEADINGS. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
SECTION 7.14 NO DISCRIMINATORY TREATMENT. Notwithstanding
any provision contained herein that may be to the contrary, (a) in no event
shall the Company and/or the Shareholders effect any amendment to the Company's
Certificate of Incorporation or By-Laws that would treat any Shareholder, in its
capacity as a Shareholder, in a non-ratable, discriminatory manner with respect
to securities of the Company held by it without the prior written consent of
such Shareholder and (b) in no event shall the Company declare or pay any
dividend or distribution with respect to any class of capital stock of the
Company that would treat any Shareholder, in its capacity as a Shareholder, in a
non-ratable, discriminatory manner with respect to securities of the Company
held by it without the prior written consent of such Shareholder.
SECTION 7.15 COOPERATION OF OTHER SHAREHOLDERS. Each
Shareholder agrees to cooperate with the Company in all reasonable respects at
no additional cost to such Shareholder in complying with the terms and
provisions of the letter agreement dated as of May 16, 2000 among the Company
and Chase, a copy of which is attached hereto as EXHIBIT D, regarding regulatory
matters (the "REGULATORY SIDELETTER"), including (without limitation) voting to
approve amending the Certificate of Incorporation, the By-Laws or this Agreement
in a manner reasonably acceptable to the Shareholders and Chase or any Affiliate
of Chase entitled to make such request pursuant to the Regulatory Sideletter in
order to remedy a Regulatory Problem (as defined in the Regulatory Sideletter).
Anything contained in this Section 7.15 to the contrary notwithstanding, no
Shareholder shall be required under this Section 7.15 to take any action that
would adversely affect in any material respect such Shareholder's rights under
this Agreement or as a shareholder of the Company or would adversely affect or
impair the value of the securities of the Company held by such Shareholder.
SECTION 7.16 COVENANT NOT TO AMEND. The Company and each
Shareholder agree not to amend or waive the voting or other provisions of the
Certificate of Incorporation or By-Laws or this Agreement if such amendment or
waiver would cause Chase or any of its Affiliates to have a Regulatory Problem
(as defined in the Regulatory Sideletter). Chase agrees to notify the Company as
to whether or not it would have a Regulatory Problem promptly after Chase has
notice of any such amendment or waiver.
SECTION 7.17 SEVERABILITY. If any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or
59
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
SECTION 7.18 FURTHER ASSURANCES. Each of the parties shall
execute such documents and perform such further acts (including, without
limitation, obtaining any consents, exemptions, authorizations or other actions
by, or giving any notices to, or making any filings with, any governmental
authority or any other Person) as may be reasonably required or desirable to
carry out or to perform the provisions of this Agreement and to consummate and
make effective as promptly as possible the transactions contemplated by this
Agreement.
SECTION 7.19 COUNTERPARTS. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
60
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized parties to this Agreement as of the date first
above written.
WILMAR INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman and CEO
PARTHENON INVESTORS, L.P.
By: Parthenon Investment Advisors, L.L.C.,
its General Partner
By: Parthenon Investment Partners, L.L.C.,
its Managing Member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
PCIP INVESTORS
By: Parthenon Capital, Inc., a General
Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
THE CHASE MANHATTAN BANK, AS TRUSTEE FOR
FIRST PLAZA GROUP TRUST
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Title: Vice President
61
CB CAPITAL INVESTORS, LLC
By: CHASE CAPITAL PARTNERS, as Manager
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: General Partner
STERLING INVESTMENT PARTNERS, L.P.
By: Sterling Investment Partners
Management, LLC, its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Member
JMH PARTNERS CORP.
By: /s/ Philiple ▇▇▇▇▇▇
-------------------------------------
Name: Philiple ▇▇▇▇▇▇
Title:
BANCBOSTON CAPITAL INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. Parent
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. Parent
Title: Vice President
62
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & COMPANY QP, L.P.
By: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ L.L.C., its
General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Member
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & COMPANY L.P.
By: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ L.L.C., its
General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Member
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
FLEET CORPORATE FINANCE, INC.
By: /s/ M.D. ▇▇▇▇▇▇
-------------------------------------
Name: M. D. ▇▇▇▇▇▇
Title: Managing Director
63
ALLIED CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Principal
64
SCHEDULE I
----------
MANAGEMENT SHAREHOLDERS
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
65
SCHEDULE II
-----------
▇▇▇▇▇▇▇ MANAGEMENT SHAREHOLDERS
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
66
SCHEDULE III
------------
SHAREHOLDER SCHEDULE
--------------------
------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER SHARES OF % OF SHARES OF % OF WARRANTS TO OTHER RIGHTS
PREFERRED CLASS COMMON STOCK CLASS PURCHASE TO PURCHASE
STOCK SHARES OF SHARES OF
COMMON STOCK COMMON STOCK(1)
-----------------------------------------------------------------------------------------------------------------------
INVESTORS:
-----------------------------------------------------------------------------------------------------------------------
Parthenon Investors L.P. 4,774,873 20.2 345,293 19.2 - -
-----------------------------------------------------------------------------------------------------------------------
PCIP Investors 172,646 0.73 12,485 0.7 - -
-----------------------------------------------------------------------------------------------------------------------
J&R Founders Fund, L.P. 14,887 0.06 868 0.048 - -
-----------------------------------------------------------------------------------------------------------------------
Pcap Funding II, LLC 992,481 4.2 57,895 3.2
-----------------------------------------------------------------------------------------------------------------------
CB Capital Investors, LLC 5,420,475 23.0 385,367 21.5 - -
-----------------------------------------------------------------------------------------------------------------------
The Chase Manhattan Bank, 3,721,805 15.8 260,338 14.5 - -
as Trustee for First
Plaza Group Trust
-----------------------------------------------------------------------------------------------------------------------
Sterling Investment 1,290,225 5.5 92,556 5.2 - -
Partners, L.P.
-----------------------------------------------------------------------------------------------------------------------
BancBoston Capital, Inc. 858,878 3.6 58,748 3.3 - -
-----------------------------------------------------------------------------------------------------------------------
Private Equity Portfolio 198,496 0.84 11,579 0.65 - -
Fund II, LLC
-----------------------------------------------------------------------------------------------------------------------
JMH Partners Corp. 591,672 2.5 43,161 2.4 - -
-----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ QP, L.P. 625,754 2.7 42,802 2.4 - -
-----------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.▇. 233,124 1.0 15,946 0.89 - -
-----------------------------------------------------------------------------------------------------------------------
Mellon Ventures II, L.P. 1,488,722 6.3 86,842 4.8
-----------------------------------------------------------------------------------------------------------------------
National City Equity 421,805 1.8 24,605 1.4 - -
Partners, Inc.
-----------------------------------------------------------------------------------------------------------------------
Great Lakes Capital 74,436 0.32 4,342 0.24 - -
Investments II, LLC
-----------------------------------------------------------------------------------------------------------------------
Key Principal Partners, 1,450,550 6.1 84,615 4.7 - -
LLC
-----------------------------------------------------------------------------------------------------------------------
Fleet Corporate Finance, 103,347 .44 8,097 .45 - -
Inc.
-----------------------------------------------------------------------------------------------------------------------
Citizens Capital, Inc. 29,527 .13 2,313 .13 - -
-----------------------------------------------------------------------------------------------------------------------
Allied Capital Corporation 199,313 .84 15,615 .87 25,049 -
-----------------------------------------------------------------------------------------------------------------------
67
------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER SHARES OF % OF SHARES OF % OF WARRANTS TO OTHER RIGHTS
PREFERRED CLASS COMMON STOCK CLASS PURCHASE TO PURCHASE
STOCK SHARES OF SHARES OF
COMMON STOCK COMMON STOCK(1)
-----------------------------------------------------------------------------------------------------------------------
Blackstone Mezzanine 19,931 .084 1,562 .087 - -
Holdings L.P.
-------------------------------------------------------------------------------------------------------------
Blackstone Mezzanine 179,382 .76 14,053 .78
Partners L.P.
-------------------------------------------------------------------------------------------------------------
INVESTORS TOTAL 22,862,329 96.8 1,569,082 87.4 - -
-------------------------------------------------------------------------------------------------------------
MANAGEMENT SHAREHOLDERS:
-------------------------------------------------------------------------------------------------------------
Green 454,740 1.9 99,743 5.6 - -
-------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ 56,165 .24 38,346 2.1 - 24,850
-------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ 57,293 .24 27,068 1.5 - 17,085
-------------------------------------------------------------------------------------------------------------
Pray 169,487 0.72 43,943 2.4 - -
-------------------------------------------------------------------------------------------------------------
Luiga 19,874 0.08 16,881 0.94 - -
-------------------------------------------------------------------------------------------------------------
MANAGEMENT SHAREHOLDERS 757,559 3.2 225,981 12.6 - -
TOTAL
-------------------------------------------------------------------------------------------------------------
TOTAL 23,619,888 100.0 1,795,063 100.0 25,049 41,935
-------------------------------------------------------------------------------------------------------------
--------------
(1) 175,000 shares of common stock have been authorized for issuance under the
2000 Stock Award Plan, of which (a) 34,086 and 15,722 restricted shares
were issued to Mr. Pray and Ms. Luiga, respectively, on September 29, 2000,
and (b) options in respect of 24,850 and 17,085 shares have been issued to
▇▇. ▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇, respectively. In addition, 25,049 shares of
common stock have been reserved for issuance upon the exercise of
outstanding warrants held by Allied Capital Corporation.
68
EXHIBIT A
BY-LAWS
69
EXHIBIT B
CERTIFICATE OF INCORPORATION
70
EXHIBIT C
FORM OF TRANSFEREE AGREEMENT
This Transferee Agreement ("AGREEMENT") is executed by the transferee whose
signature appears below ("TRANSFEREE") pursuant to the terms of the Amended and
Restated Shareholders' Agreement (the "SHAREHOLDERS' AGREEMENT") dated as of
September 29, 2000 by and among Wilmar Industries, Inc., a New Jersey
corporation (the "COMPANY") and certain of its shareholders and warrant holders,
a copy of which is attached hereto and is incorporated herein by reference. By
execution of this Agreement, Transferee hereby agrees as follows:
7.19.1 ACKNOWLEDGMENT. Transferee acknowledges (a) that
Transferee is acquiring certain securities of the Company from [ ] subject to
the terms and conditions of the Shareholders' Agreement and (b) that Transferee
is an assignee of [ ] and that for purposes of the Shareholders' Agreement,
Transferee shall be deemed a/an [" "].2
7.19.2 AGREEMENT. Transferee (a) agrees that such securities
of the Company to be acquired by Transferee shall be bound by and subject to the
terms of the Shareholders' Agreement pursuant to the terms thereof and (b)
hereby adopts the Shareholders' Agreement with the same force and effect as if
Transferee was originally a party thereto.
7.19.3 NOTICE. Any notice required by the Shareholders'
Agreement shall be given to Transferee at the address listed below Transferee's
signature below.
EXECUTED AND DATED this the ____ day of _________, 2___.
TRANSFEREE:
By:
----------------------------
Address:
----------------------------
-------------------------
2 Fill in as appropriate