Initial Public Offering (IPO): Pre-Effective Amendment to Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1/A Amendment No. 4 to Form S-1 123 712K
2: EX-3.1 Restated Certificate of Incorporation 8 29K
3: EX-3.2 Amended and Restated By-Laws 7 27K
4: EX-5.1 KSFH&H Opinion Re: Issuance of Shares 1 8K
5: EX-10.1 Amended & Restated Mgt. Shareholder Agreement 18 59K
6: EX-10.2 Amended & Restated Dir. Shareholder Agreement 14 50K
7: EX-10.22 Amended & Restated Employment Agreement-Parker 15 40K
8: EX-10.23 Amended & Restated Employment Agreement-Highland 15 39K
9: EX-10.28 1995 Stock Option Plan 10 34K
10: EX-10.29 1996 Stock Option Plan 11 36K
EX-10.1 — Amended & Restated Mgt. Shareholder Agreement
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Exhibit 10.1
FORM OF AMENDED AND RESTATED
MANAGEMENT SHAREHOLDERS AGREEMENT
THIS AMENDED AND RESTATED MANAGEMENT SHAREHOLDERS
AGREEMENT dated as of November __, 1996 amends and restates in its entirety the
Amended and Restated Management Shareholders Agreement dated May 31, 1995, as
amended by Amendment No. 1 thereto dated as of December 8, 1995 (as so amended,
the "Original Agreement"), among ProSource, Inc., formerly known as Onex
Distribution, Inc., a Delaware corporation (the "Corporation"), Onex DHC LLC, a
Wyoming limited liability company ("Onex"), as successor-in-interest (with
respect to the shares of the Common Stock of the Corporation) to Onex U.S.
Investments, Inc., and the individuals named from time to time on Schedule I to
this Agreement (each a "Management Holder" and collectively the "Management
Holders").
RECITALS
A. The parties desire to amend and restate the Original
Agreement in contemplation of the proposed initial public offering (the
"Offering") of shares of the Corporation's Class A Common Stock (as hereinafter
defined).
B. Prior to commencement of the Offering, (i) the Corporation
intends to file a restated certificate of incorporation (the "Restated
Certificate of Incorporation"), providing for, among other things, two classes
of authorized common stock, Class A Common Stock, par value $.01 per share
("Class A Common Stock"), and Class B Common Stock, par value $.01 per share
("Class B Common Stock"), and (ii) all of the Corporation's outstanding shares
of common stock, par value $.01 per share ("Common Stock"), will be converted
into shares of Class B Common Stock.
C. The powers, preferences, rights, limitations and
restrictions of the Class B Common Stock, including certain provisions with
respect to transfer thereof and conversion into shares of Class A Common Stock,
are set forth in the Restated Certificate of Incorporation.
D. Each of the Management Holders is an employee of the
Corporation or any direct or indirect subsidiary of the Corporation (each a
"Subsidiary", collectively, the "Subsidiaries") and purchased shares of Common
Stock from the Corporation prior to the date of this Agreement. As used herein,
the term "Shares" shall mean such shares of Common Stock, the shares of Class B
Common Stock issued or to be issued upon conversion of Common Stock, and any
shares of Class A Common Stock issued upon conversion of Class B Common Stock.
The parties hereby agree as follows:
1. RESTRICTIONS ON TRANSFER OF SHARES
1.1 REPRESENTATION. Each of the Management Holders represents and
agrees that the Management Shares owned by him were acquired for his own account
and will not be transferred in violation of this Agreement, the securities laws
of the United States, or any other applicable law.
1.2 RESTRICTIONS. A Management Holder may transfer Management Shares as
a whole or in part only if such transfer is permitted by and made in accordance
with the terms of this Agreement. Any purported transfer in any manner contrary
to the terms of this Agreement shall be null and void. For purposes of this
Agreement, the term "transfer" shall mean any sale, exchange, assignment, gift,
bequest, pledge, creation of a lien or security interest or other disposition or
encumbrance of any kind, whether voluntary or involuntary or by operation of
law, affecting title to or possession of the Management Shares. The Corporation
may refuse to register any transfer of Shares that would violate this Agreement,
the securities laws of the United States, or any other applicable law, and may,
as a condition to registration of such transfer, require the transferor to
furnish to the Corporation an opinion of counsel reasonably acceptable to the
Corporation as to compliance with the foregoing.
1.3 PLEDGE OF SHARES AS SECURITY. Each of the Management Holders may
finance up to 66 2/3% of the purchase price of such Holder's Shares and may
pledge such Shares to the lender to secure the financing or to any affiliate of
the Corporation that guarantees repayment of any loan made to finance the
purchase of Shares if the lender or guarantor agrees in writing to be bound by
this Agreement.
1.4 SALES FREE OF ENCUMBRANCES. Upon the transfer of Management Shares
pursuant to this Agreement, the Management Holder shall discharge any
indebtedness permitted by Section 1.3 and deliver to the purchaser the share
certificates representing such Management Shares free and clear of any pledge,
lien, security interest or other encumbrance of any kind. If the Management
Holder fails to comply with the preceding sentence, the purchaser may withhold
from the purchase price an amount equal to the indebtedness secured by any such
pledge, lien, security interest or other encumbrance or, if the amount of such
indebtedness is not known by the purchaser, an amount equal to the purchaser's
good faith estimate thereof (no limitation of any other remedy available to the
purchaser being intended) and apply such withheld amount to extinguish such
debt. Any such payment of such withheld amount shall discharge the purchaser's
obligation to make payment for the purchased shares to the extent of such
withheld amount. If a selling Management Holder fails to deliver certificates
representing Management Shares being sold as required at the closing of such
sale, the purchaser may deposit the purchase price therefor with the Corporation
and, upon such deposit, those certificates shall be deemed cancelled and of no
effect (no limitation of any other remedy available to the purchaser being
intended).
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2. SALE OR TRANSFER OF MANAGEMENT SHARES
2.1 TRANSFER TO MANAGEMENT HOLDER'S FAMILY. A Management Holder may
transfer Management Shares to his parents, siblings, spouse, or issue or to a
trust or custodianship for the exclusive benefit of himself or any of them (each
a "Family Group Member"); provided that any such transferee agrees in writing to
be bound by the provisions of this Agreement that bind the transferor Management
Holder.
2.2 SALE TO MANAGEMENT HOLDERS OR OTHER MANAGEMENT EMPLOYEES. A
Management Holder may transfer Management Shares to either another Management
Holder or to a management employee of the Corporation or a Subsidiary who is
acceptable to the Board of Directors of the Corporation if (a) due to hardship
or unusual circumstances, such Management Holder determines that it is in his
best interest to effect a transfer of his Management Shares and (b) the
Corporation's Board of Directors approves the same. A Management Holder who
desires to transfer Management Shares in accordance with this Section 2.2 shall
give the Corporation notice thereof ("Notice"), attaching thereto a copy of a
bona fide written offer to purchase such Shares for cash ("Offer"). The
Corporation or a subsidiary designated by it shall have the option, exercisable
by notice to the Management Holder given within 30 days after the date of
receipt of the Notice by the Corporation, to purchase all or any portion of the
Management Shares proposed to be sold pursuant to the Offer for the same price
per share and on the same terms as the Offer. If the Corporation or its designee
does not exercise such option within such 30-day period and the Board of
Directors of the Corporation consents to the proposed sale, the Management
Holder shall have the right at any time within 60 days after the expiration of
the 30-day option period provided for in this Section, to sell the Management
Shares as to which the option was not exercised to the proposed offeree in
accordance with the terms of the Offer; any transferee shall, by its purchase of
such Shares and acceptance of the certificates therefor be deemed to agree to,
and shall agree in writing to be bound by, the provisions of this Agreement. If
the Management Shares as to which the option was not exercised remain unsold at
the end of such 60-day period, such Management Shares may not thereafter be
transferred unless the Management Holder complies with this Section 2.2 again.
2.3 SALE: CORPORATION IS A PUBLIC COMPANY. Notwithstanding Section 2.2,
if the Corporation is a Public Company, a Management Holder may sell during any
90-day period up to the greater of (a) five Shares (subject to adjustment to
reflect the effect of stock splits, combinations and the like effected after the
date of the Original Agreement) and (b) 5% of the sum of (i) the Management
Holder's Shares then held by him and (ii) the Management Holder's Shares
previously sold by him pursuant to this Section 2.3, except that no such sales
shall be made within 180 days after any offering of securities registered under
the 1933 Act that involves shares of the same class as Management Shares. Any
such sale or sales shall be through the facilities of any securities exchange on
which the Management Shares may then be listed and shall be made in a manner
that complies with applicable securities law and regulations. Such sales may not
be made, however, unless the Management Holder gives the Corporation written
notice of its intention to sell not less than five and not more than ten
business days before effecting any sale ("Market Sale Notice") and offers to
sell to it all or any part of that number of Management Shares (no partial
purchase that
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would result in the remaining Shares offered to be sold constituting an odd lot
shall be permitted) that it proposes to sell, at a price equal to the Market
Price Per Share (as defined in Section 11.4). The Corporation (or, at the
Corporation's option, a subsidiary of the Corporation) may accept such offer by
giving notice to the Management Holder within seven days after receipt of such
Market Sale Notice by the Corporation, which notice shall designate the number
of Management Shares to be purchased. The Management Holder shall thereupon be
bound to sell such Management Shares to the Corporation or a subsidiary of the
Corporation, as the case may be, and the Corporation or a subsidiary of the
Corporation, as the case may be, shall be obligated to buy such Management
Shares. Notwithstanding the foregoing, no Management Holder shall sell more than
50% of the sum of (x) the Management Holder's Shares then held by him and (y)
the Management Holder's Shares previously sold by him pursuant to this Section
2.3 without the prior approval of the Board of Directors of the Corporation.
2.4 SALE UPON TERMINATION OF EMPLOYMENT; CORPORATION IS NOT A PUBLIC
COMPANY. If a Management Holder ceases to be employed in a full-time capacity by
the Corporation or a Subsidiary at any time when the Corporation is not a Public
Company, the Management Shares owned by such Management Holder shall be
transferred as follows:
(a) Upon termination without cause or as a result of death,
retirement, or Disability, the Corporation shall purchase, and the Management
Holder shall sell, all of the Management Shares owned by such Management Holder
for a purchase price equal to Book Value Per Share multiplied by the number of
Management Shares owned by such Management Holder (the "Initial Section 2.4(a)
Payment"). However, if the Management Holder's employment is terminated by the
Corporation or a Subsidiary (i) other than for cause and (ii) as a result of the
planned restructuring or consolidation of the Corporation and its subsidiaries
and the Corporation has achieved its plan objectives through the date of
termination, the Initial Section 2.4(a) Payment shall equal the greater of
$1,000 per share or the then current Book Value Per Share. If the Corporation
effects any offering of securities registered under the 1933 Act that involves
an offering of shares of the same class as Management Shares within four months
after the termination of the Management Holder's employment, the purchase price
per Share shall be increased by an amount equal to the excess, if any, of the
public offering price per Share (after deduction of any applicable underwriter's
commissions or discounts) over the Book Value Per Share used in calculating the
original purchase price, less interest at the Prime Rate on the portion of the
purchase price previously paid in cash (the "Additional Section 2.4(a)
Payment"). Subject to the limitations set forth in Section 2.4(c), the Initial
Section 2.4(a) Payments shall be paid in cash at the closing of the purchase and
sale and Additional Section 2.4(a) Payments shall be paid in cash within 60 days
of the closing of the registered offering.
(b) Upon termination for any reason not described in Section
2.4(a) (including without limitation, termination for cause or voluntary
termination by the Management Holder), the Corporation shall purchase, and the
Management Holder shall sell, all of the Management Shares owned by such
Management Holder for a purchase price equal to 90% of Book Value Per Share
multiplied by the number of Management Shares owned by such Management Holder.
Subject to
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the limitations set forth in Section 2.4(c), 50% of the purchase price for
Management Shares purchased pursuant to this subsection (b) shall be paid in
cash (or, if greater, the amount required to pay both the outstanding balance of
any financing pursuant to Section 1.3 and the amount of any federal income tax
owed by the Management Holder for the year in which the sale occurs in respect
of the portion of the gain recognized by such Management Holder with respect to
the sale during such year) at the closing of the purchase and sale (the "Initial
Section 2.4(b) Payment") and the balance of the purchase price shall be paid in
approximately equal quarterly installments over the two-year period following
the sale, the last payment to be paid on the second anniversary of the sale (the
"Additional Section 2.4(b) Payment"). Interest on any unpaid portion of the
Additional Section 2.4(b) Payment shall be paid quarterly from the closing at
Prime Rate. The payment of Initial Section 2.4(b) Payments and the Additional
Section 2.4(b) Payments is subject to the limitations set forth in Section
2.4(c).
(c) The amount of the purchase price payable by the
Corporation to any Management Holder pursuant to Section 2.4(a) and (b) shall be
reduced by any amount paid by the Corporation or any affiliate of the
Corporation to NCNB National Bank (or any successor bank) to discharge the
principal portion of any indebtedness incurred by such Management Shareholder to
purchase the Management Shares. If, as a result of restrictions in its loan
agreement with NationsBank of Georgia, N.A., ProSource Services Corporation
("PSC"), formerly known as BDKA Corporation, is unable to pay sufficient
dividends to the Corporation to enable the Corporation to pay the amount of the
purchase price required to be paid by it in cash either at the closing of the
sale or at any time thereafter in accordance with the terms set forth in
Sections 2.4(a) and 2.4(b) and to cash-out Options pursuant to Section 6.4 of
the Option Plans, the Corporation shall be entitled to pay any unpaid portion of
the payments required to be made under Sections 2.4(a) and 2.4(b) and under
Section 6.4 of the Option Plans, together with interest thereon at the Prime
Rate, at such time as it has received from PSC sufficient dividends to enable it
to do so. The Corporation shall use available funds received from PSC first to
pay all amounts due on account of any Initial Section 2.4(a) Payments and
Initial Section 2.4(b) Payments, then to pay all amounts due on account of
Additional Section 2.4(a) Payments and Additional Section 2.4(b) Payments, and
then to pay all amounts due on account of the cash-out of Options pursuant to
Section 6.4 of the Option Plans.
2.5 SALE UPON TERMINATION OF EMPLOYMENT: CORPORATION IS A PUBLIC
COMPANY.
(a) If a Management Holder ceases to be employed in a
full-time capacity by the Corporation or a Subsidiary when the Corporation is a
Public Company, Onex or its designee shall have the option to purchase all or
any portion of the Management Shares owned by such Management Holder. The
purchase price for such Management Shares shall be equal to the number of such
Shares to be purchased multiplied by Market Price Per Share and shall be paid in
cash at the closing of the sale.
(b) If Onex or its designee does not exercise such option
within 30 days from the date of the termination of the Management Holder's
employment, the Management Holder shall be entitled to sell his Management
Shares through the facilities of any securities exchange on which the
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Shares may then be listed in a manner that complies with applicable securities
laws and regulations; provided that the Management Holder shall not sell during
the year following the termination of the Management Holder's employment in the
aggregate more than 50% of the Management Shares owned by such Management Holder
and his Family Group Members unless such termination arises from (i) his death
or Disability, in which case the foregoing restriction shall not apply or (ii)
his retirement, in which case the Management Holder may sell during the year
following the termination of the Management Holder's employment in the aggregate
up to 66-2/3% of the Management Shares owned by such Management Holder and his
Family Group Members.
(c) The parties acknowledge that, pursuant to paragraph 4 of
Article Fourth, Section 2B of the Company's Restated Certificate of
Incorporation, Class B Common Stock automatically converts in accordance with
such paragraph of the Restated Certificate of Incorporation into Class A Common
Stock upon termination of the Management Holder's employment, unless transferred
to Onex (or an affiliate thereof) or another Management Holder.
2.6 SALE UPON DEFAULT ON INDEBTEDNESS. If a Management Holder defaults
on any indebtedness referred to in Section 1.3, the Corporation shall have the
option, exercisable upon notice to the Management Holder at any time following a
default, to purchase all or any portion of the Management Shares with respect to
which such debt was incurred at a purchase price equal to (i) 85% of Book Value
Per Share, if the Corporation is not a Public Company at the time of the closing
of the purchase or (ii) 85% of Market Price Per Share, if the Corporation is a
Public Company at the time of the closing of the purchase.
2.7 CLOSING OF SALE. The closing of any purchase and sale of Management
Shares pursuant to the exercise of a right under this Section 2 (other than
transfers or sales made pursuant to Sections 2.1 or 2.2 or through the
facilities of any securities exchange pursuant to Sections 2.3 and 5) shall be
held at the principal offices of the Corporation on a date designated by the
purchaser but in any event not later than the last day upon which a purchase is
permitted or required to be made. At the closing, the Management Holder selling
Shares shall deliver to the purchaser the stock certificates and other
instruments representing such Shares, together with stock powers and other
instruments transferring such Shares, duly endorsed for transfer and free and
clear of all claims, liens, encumbrances and security interests, and the
purchaser shall deliver to the Management Holder the consideration payable upon
closing.
3. OPTIONS TO PURCHASE SHARES
3.1 Shares received by a Management Holder upon the exercise or
conversion of any options, warrants, rights to purchase shares or securities
convertible into Shares, including the Options, shall be subject to the terms
and conditions of this Agreement and may not be transferred except as permitted
by this Agreement.
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4. SALE OF SHARES BY ONEX AND THE CORPORATION
4.1 TAG ALONG. (a) If at any time any member of the Onex Group proposes
to sell any Shares except for (i) sales to another member of the Onex Group that
becomes bound by the terms of this Agreement (an "Onex Group Member"), (ii)
sales to a Management Holder or other management employee or directors of the
Corporation or a Subsidiary, (iii) sales of the 500 Shares purchased by Onex on
June 30, 1992 for later disposition to persons providing services to the
Corporation or any of the Corporation's subsidiaries (the "500 Shares"), (iv)
sales effected on a national securities exchange in the regular way or in the
over-the-counter market, or (v) pursuant to an offering of securities registered
under the 1933 Act (a "Tag Along Disposition"), each of the Management Holders
shall have the right to sell to the proposed purchaser a number of his Manage-
ment Shares equal to the total number of his Management Shares multiplied by a
ratio, the numerator of which is the number of Shares to be sold by the Onex
Group Member to the proposed purchaser and the denominator of which is the total
number of Shares then owned by the Onex Group. Such ratio is referred to herein
as the "Share Ratio." A sale of Management Shares pursuant to this Section shall
be made at the same price, upon the same terms, and at the same time as the sale
by the Onex Group Member of its Shares.
(b) The Onex Group Member shall give notice (the "Tag Along Notice") to
each Management Holder of the proposed Tag Along Disposition at least 20 days
prior to the same. The Tag Along Notice shall be in writing and shall describe
the terms of the Tag Along Disposition in reasonable detail, the identity of the
proposed purchaser, the proposed date of sale, the purchase price per Share, and
the Share Ratio and shall state that (i) the Management Holder has the option to
sell to the proposed purchaser a number of Management Shares equal to the total
number of Management Shares then owned by such Holder multiplied by the Share
Ratio, (ii) the sale, if made, shall be made at the same price per share, upon
the same terms, and at the same time as the sale by the Onex Group Member of its
Shares to the proposed purchaser, and (iii) the sale by Management Holders will
be conditioned upon a sale of Shares by the Onex Group Member pursuant to this
Section.
(c) A Management Holder may exercise its sale option pursuant to
Section 4.1 by delivering to the Onex Group Member, within ten days after such
Management Holder receives the Tag Along Notice, written notice of his offer to
sell Management Shares pursuant to this Section and indicating the number of
Management Shares offered for sale. If a Management Holder gives notice of his
election to sell, he shall be obligated to do so, but the sale and his
obligation to sell shall be conditioned upon the closing of the Tag Along
Disposition. If the purchaser specifies a limited number of Shares that it is
willing to purchase in the aggregate, each Management Holder and the Onex Group
Member shall have the right to sell its or his proportion of the number of
Shares that the purchaser is purchasing, i.e., the proportion that the number of
Shares owned by such Person bears to the aggregate number of Shares owned by the
shareholders who are selling Shares. If any Person does not elect to sell the
full number of Shares that he or it is entitled to sell, the balance shall be
available, in accordance with such procedures as the Onex Group Member may
designate, to the shareholder that has elected to sell the maximum number of
Shares initially available to it or him for
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such purpose. For purposes of this Section 4.1, the number of Shares owned by
any Onex Group Member shall not be deemed to include any portion of the 500
Shares then owned by any Onex Group Member.
(d) If a transferee of Onex Shares pursuant to this Section 4.1
acquires such Shares free of this Agreement, then such transferee shall also
take the Management Shares being sold by a Management Holder free of this
Agreement. If, however, any Onex Group Member is required to transfer any Onex
Shares subject to this Agreement, then the Management Holder shall also transfer
his Management Shares subject to this Agreement.
4.2 DRAG ALONG. Notwithstanding anything herein to the contrary, if any
Onex Group Member proposes to sell any Shares to any Person, except for (i)
sales of the 500 Shares, (ii) sales effected on a national securities exchange
in the regular way or in the over-the-counter market, and (iii) sales to any
other Onex Group Member (a "Drag Along Disposition"), it may, upon giving notice
to each Management Holder at least 20 days prior to the Drag Along Disposition
(the "Drag Along Notice") require the Management Holders to sell a number of
Management Shares equal to the total number of Management Shares then owned by
such Holder multiplied by the Share Ratio. The Drag Along Notice shall be in
writing and shall contain the same information as is required to be set forth in
the Tag Along Notice. A sale of Management Shares pursuant to this Section shall
be made at the same price, upon the same terms, and at the same time as the sale
by the Onex Group Member of its Shares pursuant to this Section. Any transferee
of Shares owned by any Onex Group Member or of the Management Holders pursuant
to this Section 4.2 shall acquire such Shares free of this Agreement, unless the
agreement between the Onex Group Member and such transferee provides otherwise.
4.3 REPRESENTATIONS AND WARRANTIES ON A DISPOSITION. In connection with
any transfer described in this Section 4 in which Management Shares are to be
sold by a Management Holder, Onex and the selling Onex Group Member may require
the Management Holder to enter into agreements with the purchaser representing
and warranting that, except as specifically disclosed to the purchaser in
writing, such Management Holder at the time of the closing of such transfer,
does not have actual knowledge that any representation or warranty made by the
Corporation or any other shareholder in connection with the disposition was
untrue in any material respect when made or is untrue in any material respect as
of the closing; the liability of the selling Management Holder under such
representation and warranty shall be limited to the amount which he receives
from the sale of his Management Shares in connection with such transfer and
shall be pro rata in accordance with the number of Shares sold by the Management
Holder in relation to the Shares being sold by all holders.
4.4 PRE-EMPTIVE RIGHTS. If, prior to the time when the Corporation
becomes a Public Company, the Corporation intends to sell shares of its capital
stock or options, warrants, rights to purchase, or securities convertible into,
or exchangeable for, shares of its capital stock to any member of the Onex Group
for cash, the Corporation shall give notice thereof (the "Sale Notice") to each
of the Management Holders. The Sale Notice shall be in writing, shall describe
the securities to be offered, the price of such securities, and other terms of
the offer in reasonable detail. Each
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Management Holder shall have the right, subject to applicable law and
exercisable by notice to the Corporation within 45 days after his receipt of the
Sale Notice, to purchase his Pro Rata Share (as defined in this Section 4.4) of
the securities offered for the same price per unit and on the same terms as the
securities are offered to Onex and as are described in the Sale Notice. As used
in this Section 4.4, the term "Pro Rata Share" shall mean the product of (x) the
total number of securities referred to in the Sale Notice as proposed to be sold
to members of the Onex Group and (y) a fraction, the numerator of which is the
number of Management Shares of all classes held by the Management Holder on the
date the Sale Notice is given and the denominator of which is the sum of the
number of Shares of all classes of the Corporation's stock of the same class or
classes as Management Shares outstanding on such date (including the Management
Shares). Any securities acquired by a Management Holder pursuant to this Section
4.4 shall be subject to the terms of this Agreement. The provisions of this
Section 4.4 shall not apply to the issuance of securities, with or without
consideration, to officers and employees of the Corporation and its subsidiaries
or plans for the benefit of such employees, by the Corporation from time to time
and shall not require the Corporation to offer securities under circumstances
that could require registration under the 1933 Act.
5. PIGGY-BACK REGISTRATION RIGHTS
5.1 If the Corporation proposes to effect a registration under the 1933
Act involving an offering of securities of the same class as the Management
Shares, it shall give written notice of its intention to do so (the "Public
Offering Notice") to each Management Holder.
5.2 Upon the written request of a Management Holder (the "Management
Holder's Request") delivered to the Corporation within ten days after such
Holder's receipt of the Public Offering Notice, the Corporation shall use its
best efforts to cause the registration under the 1933 Act of the number of
Management Shares stated in the Management Holder's Request for disposition in
accordance with the intended method of disposition as stated in the Management
Holder's Request; provided, that:
(a) if, the number of Management Shares stated in the
Management Holder's request represents a greater proportion of the total number
of Management Shares owned by such Management Holder than the number of Shares
proposed to be sold and distributed by the Onex Group pursuant to the public
offering bears to the total number of Shares owned by the Onex Group, the
Corporation shall not be obligated to effect the registration of such excess
number of Management Shares;
(b) if, at any time after giving such written notice of its
intention to register any of its securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Corporation determines for any reason not to effect such registration or to
delay such registration, it may, at its election, give written notice of such
determination to each Management Holder and thereupon the Corporation (i) in the
case of a determination not to effect registration, shall be relieved of its
obligation to register any Management Shares in connection with
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such registration or (ii) in the case of a determination to delay registration,
shall be entitled to delay the registration of the Management Shares for the
same period as the delay in the registration of its securities;
(c) if (i) the registration involves an underwritten offering
of the securities being registered (in which case the Management Holder shall be
required to make its offering through the underwriters selected by the
Corporation and to sign the same underwriting agreement), whether or not for
sale for the account of the Corporation and (ii) the managing underwriter of
such underwritten offering advises the Corporation that the number of Shares
that members of the Onex Group and the Management Holders wish to sell exceeds
the number thereof that, in the sole discretion of the underwriter, is the
maximum number thereof that may be included in the offering without adversely
affecting the offering, then the Corporation shall not be required to include in
the offering the excess number of Shares requested to be sold by the members of
the Onex Group and each Management Holder above such maximum number (the Shares
so included to be apportioned pro rata among the members of the Onex Group and
each Management Holder so that each member of the Onex Group and each Management
Holder shall be entitled to have included in the offering a number of Shares
that is proportionate to his or its respective ownership of Shares; if any
member of the Onex Group or any Management Holder is entitled to have included
in the offering more Shares than he wishes to sell, each remaining Management
Holder and members of the Onex Group shall be entitled to make up the difference
pro rata from its or his respective ownership of Shares); and
(d) the Corporation shall not be obligated to effect any
registration of Management Holder's Shares under this Section 5 incidental to
the registration of any of its securities in connection with mergers,
acquisitions, exchange offers, dividend reinvestment plans or stock options or
other employee benefit plans or incidental to the registration of any nonequity
securities not convertible into equity securities.
5.3 Except as otherwise prohibited by applicable law or regulations,
the Corporation shall pay all expenses incurred in connection with the
registration of Management Holder's Shares pursuant to this Section 5, including
all registration and filing fees, printing expenses, blue sky fees and expenses
and accountant expenses to the extent permitted by law, but not including
commissions and expenses payable to underwriters in respect of Management Shares
and the fees of any counsel or other advisers retained by Management Holders.
6. LEGEND
All certificates representing Management Shares held by any Management
Holder (and held by a transferee of Management Shares, except (i) as set forth
in Section 4, (ii) with respect to Shares transferred to Onex, and (iii) with
respect to a transferee pursuant to Section 2.3 or 2.5 or pursuant to a
registration statement in accordance with Section 5) shall bear the following
legend:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and the
transfer and
10
voting of such shares is subject to conditions specified in
the Amended and Restated Management Shareholders Agreement,
dated November __, 1996, between the Corporation, Onex DHC LLC
and the holder hereof, among others, and no transfer of such
shares shall be valid or effective until such conditions have
been fulfilled with respect to such transfer. A copy of such
Agreement will be furnished by the Corporation to the holder
of this Certificate upon written request and without charge."
7. INTENTIONALLY OMITTED
8. CERTAIN PROHIBITED TRANSACTIONS AND REQUIRED ACTIONS
The Corporation shall not merge, consolidate, or amalgamate with
another corporation, or sell all or substantially all of its assets to another
Person, if pursuant thereto any member of the Onex Group is to receive equity
securities as full or partial consideration for its Shares unless all Management
Holders have the right to receive the same securities in proportion to their
respective holdings of Shares.
9. MANAGEMENT REPRESENTATIVES
Each of the Management Holders hereby irrevocably constitutes and
appoints the Management Representatives (as defined in this Section 9) as his
representatives to take all actions on his behalf in connection with this
Agreement, in their sole and absolute discretion, including but not limited to,
executing any consents or waivers in connection with, or any amendments to, this
Agreement but not any decision to sell his Management Shares or any decision to
buy any securities of the Corporation pursuant to Section 4.4. The term
"Management Representative" shall mean, any two of the Chairman of the Board of
Directors of ProSource Services Corporation, a subsidiary of the Corporation
("PSC"), the President of PSC, and the Vice Chairman of the Board of Directors
of PSC.
10. INTENTIONALLY OMITTED
11. CERTAIN DEFINITIONS
11.1 The term "BOOK VALUE PER SHARE" as of any date shall mean the
quotient obtained by dividing (X) consolidated stockholders' equity of the
Corporation and its subsidiaries as at the end of the fiscal quarter immediately
preceding the date of the event that required the purchase and sale pursuant to
Section 2.4 determined in accordance with generally accepted accounting
principles in effect in the United States on the date of this Agreement by (Y)
the number of shares of common stock of the Corporation outstanding on such
date; in making calculations for purposes of clauses (X) and (Y), (i) the number
of Shares into which the Subordinated Note are convertible shall be
11
excluded and (ii) it shall be assumed that all Options outstanding on the date
as of which the calculation is being made had been exercised to the extent that
the exercise price does not exceed Book Value Per Share (determined without
regard to this clause) and any purchase price for Shares payable upon such
exercise had been paid. The determination of Book Value Per Share shall be based
upon the audited (in the case of the end of the last quarter of a fiscal year)
or unaudited (in the case of the end of any of the first three quarters of a
fiscal year) balance sheet of the Corporation as at the end of the fiscal
quarter in question. Notwithstanding the foregoing, Book Value Per Share shall
be equitably adjusted by the Board of Directors of the Corporation if a stock
dividend, recapitalization or other material event occurs outside of the
ordinary course of business after the end of such fiscal quarter and before the
closing of the sale in respect of which the determination is being made.
11.2 The term "1933 ACT" shall mean the Securities Act of 1933, as in
force on the date in question, or any similar federal statute then in force.
11.3 The term "DISABILITY" shall mean the inability of a Management
Holder to perform his duties of employment for the Corporation or any of its
Subsidiaries or affiliates, including PSC, for an aggregate of 180 days or more
in any 365-day period, because of physical or mental disability.
11.4 The term "MANAGEMENT SHARES" shall mean the Shares owned at any
time by any Management Holder.
11.5 The term "MARKET PRICE PER SHARE" shall mean the average closing
price per Share on the principal securities exchange on which the Shares are
listed (or, if the Shares are not then listed on a securities exchange, the mean
between the closing bid and asked prices in the over-the-counter market) for the
ten trading days thereon immediately preceding the Market Sale Notice (in the
case of a sale pursuant to Section 2.3) or the closing of the sale (in the case
of a sale pursuant to Section 2.5).
11.6 The term "ONEX GROUP" shall mean Onex Corporation, an Ontario
Corporation, and any Person controlled by, controlling or under common control
with, or a shareholder of, Onex Corporation. A Person ("Parent") controls
another Person if Persons controlled by it (within the meaning of this sentence)
own or have the right (by contract or otherwise) to vote or direct the vote of
securities or other interests having the power to elect a majority of that
Person's board of directors or similar governing body (other than securities or
interests having that power only upon the happening of a contingency that has
not occurred) or to otherwise direct the management of such Person.
11.7 The term "ONEX SHARES" shall mean the Shares owned at any time by
the Onex Group.
11.8 The term "OPTION PLANS" shall mean the Corporation's Amended and
Restated Management Option Plan (1995) and the Corporation's 1996 Stock Option
Plan, as each may be
12
amended, restated or modified from time to time, except that the term "Option
Plan" as used in Section 2.4(c) shall exclude the Corporation's 1996 Stock
Option Plan.
11.9 The term "OPTION" shall mean Option as defined in the Option
Plans.
11.10 The term "PERSON" shall mean an individual, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, and a
government or any department or agency thereof.
11.11 The term "PRIME RATE" shall mean the prime rate announced from
time to time by NationsBank of Georgia, N.A.
11.12 The Corporation is a "PUBLIC COMPANY" if shares of its capital
stock are registered under Section 12 or if the Corporation is subject to
reporting requirements under Section 15(d) of the Securities Exchange Act of
1934 or any similar federal statute in force.
11.13 The term "SUBORDINATED NOTE" shall mean the convertible
subordinated note, dated March 31, 1995, evidencing the Corporation's
indebtedness to Onex Ohio Holdings, Inc. in the principal amount of $3,500,000.
12. TERMINATION
This Agreement shall terminate when the Onex Group ceases to hold in
the aggregate 20% of the outstanding voting capital stock of the Corporation or
when another Person (as defined in Rule 144 of the 1933 Act) holds in the
aggregate a greater percentage of the outstanding voting capital stock of the
Corporation than the Onex Group (excluding the Corporation) owns, whichever is
earlier. This Agreement shall terminate as to any Person when that Person no
longer owns any Management Shares or Onex Shares, as the case may be.
13. EFFECTIVE DATE
This Agreement shall become effective upon the consummation of the
Offering.
14. MISCELLANEOUS
14.1 NOTICES
All notices, consents and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given when (a)
delivered by hand, (b) sent by telex or telecopier (with receipt confirmed),
provided that a copy is mailed by registered mail, return receipt requested, or
(c) when received by the addressee, if sent by Express Mail, Federal Express or
other express delivery service (receipt requested), in each case to the
appropriate addresses, telex numbers and
13
telecopier numbers set forth below (or to such other addresses, telex numbers
and telecopier numbers as a party may designate as to itself by notice to the
other parties):
(a) if to the Corporation:
ProSource, Inc.
530 Biltmore Way, 10th Floor
Coral Gables, Florida 33134
Attention: President
Telecopy: (305) 529-2573
with a copy to:
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
Attention: Joel I. Greenberg, Esq.
Telecopy: (212) 836-7149
(b) if to Onex or any member of the Onex Group:
Onex Corporation
161 Bay Street, 49th Floor
P.O. Box 700
Toronto, Ontario
M5J 2S1
Canada
Attention: President and
Chief Executive Officer
Telephone: (416) 362-7711
Telecopy: (416) 362-5765
(c) if to any Management Holder, to him at his address as it appears on
Schedule I attached hereto or as shown on the records of the Corporation.
14.2 ASSIGNMENT
No party may assign any rights or delegate any of its duties under this
Agreement, but this Agreement shall be binding upon and inure to the benefit of
the successors to the business and assets of the Corporation, Onex and the
Management Holders.
14
14.3 NO WAIVER
The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to that term or
any other term of this Agreement. Any waiver must be in writing.
14.4 EXCLUSIVE AGREEMENT AND AMENDMENT
This Agreement supersedes all prior agreements among the parties with
respect to its subject matter, is intended as a complete and exclusive statement
of the terms of the Agreement among the parties with respect thereto and cannot
be changed or terminated orally. This Agreement may only be amended or altered
by the mutual agreement of the parties hereto, such amendments or alterations to
become effective when reduced to writing and signed by Onex, the Corporation and
Management Representatives or by Onex, the Corporation and the holders of at
least 75% of the Management Shares.
14.5 GOVERNING LAW
This Agreement and all amendments hereof and waivers and consents
hereunder shall be governed by the internal law of the State of Delaware without
regard to the conflicts of law principles thereof.
14.6 CAPTIONS
The captions in this Agreement are for convenience of reference only
and shall not be given any effect in the interpretation of this Agreement.
14.7 JURISDICTION
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Delaware, or, if it has or can acquire
jurisdiction, in the United States District Court for Delaware, and each of the
parties hereby consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding, and waives any
objection to venue laid therein. Process in any such action or proceeding may be
served anywhere in the world, whether within or without the State of Delaware.
14.8 COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
considered an original, but all of which together shall constitute one and the
same instrument.
15
14.9 SEVERABILITY
The provisions of this Agreement are intended to be and shall be deemed
severable. The invalidity or unenforceability of any particular provision of
this Agreement shall not affect the other provisions hereof, and this Agreement
shall be construed in all respects as if such invalid or unenforceable provision
were omitted.
ONEX DHC LLC
By:__________________________________
Name:
Title:
PROSOURCE, INC.
By:__________________________________
Name:
Title:
16
MANAGEMENT REPRESENTATIVES
On behalf of the Management Holders listed
on Schedule I hereto pursuant to Section 9
of the Original Agreement
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
17
Schedule I
List of Management Holders
[To Be Attached]
18
Dates Referenced Herein
| Referenced-On Page |
|---|
| This ‘S-1/A’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| Filed on: | | 11/6/96 | | | | | | | None on these Dates |
| | 12/8/95 | | 1 |
| | 5/31/95 | | 1 |
| | 3/31/95 | | 13 |
| | 6/30/92 | | 7 |
| List all Filings |
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