Exhibit 2
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STOCKHOLDERS AGREEMENT
by and among
PAMECO ACQUISITION, INC.,
XXXXXXXXXX FUND II, L.P.
and
QUILVEST AMERICAN EQUITY LTD.
dated as of
March 6, 2001
TABLE OF CONTENTS
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Page
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1. Certain Matters Relating to Newco and the Merger.................................. 2
2. Agreements to Vote; Irrevocable Proxy............................................. 4
3. Transfers of Securities........................................................... 5
4. Participation Rights.............................................................. 6
5. Joinder Requirements.............................................................. 7
6. Composition, Nomination and Election of Board..................................... 8
7. Stock Splits...................................................................... 9
8. Representations and Warranties of Xxxxxxxxxx...................................... 9
9. Representations and Warranties of Quilvest........................................ 10
10. Representations and Warranties of Newco........................................... 10
11. Termination; Securities Free from Agreement....................................... 11
12. Expenses.......................................................................... 12
13. Fees.............................................................................. 12
14. Certain Covenants................................................................. 13
15. Financial Reports and Information................................................. 14
16. Transaction with Affiliates....................................................... 14
17. Legend and Stop Transfer Instructions............................................. 14
18. Survival of Representations and Warranties........................................ 14
19. Notices........................................................................... 14
20. Entire Agreement; Amendment....................................................... 16
21. Successors and Assigns............................................................ 16
22. Governing Law; Consent to Jurisdiction............................................ 17
23. Injunctive Relief................................................................. 17
24. Counterparts; Facsimile Signatures................................................ 17
25. Severability...................................................................... 17
26. Further Assurances................................................................ 17
27. No Third Party Beneficiaries; No Partnership or Fiduciary Relationship............ 17
28. Legal Expenses.................................................................... 18
29. Interpretation.................................................................... 18
30. Effectiveness; and Termination of Prior Agreements................................ 18
Appendix A - Certain Defined Terms
Exhibit A - Newco By-laws
Exhibit B - Form of Merger Agreement
Exhibit C - Form of Irrevocable Proxy
Schedule 1 - Ownership of Securities and Newco Common Stock
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STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of March 6,
2001, by and among Xxxxxxxxxx Fund, II, L.P., a Delaware limited partnership
("Xxxxxxxxxx"), Quilvest American Equity Ltd. a British Virgin Islands company
("Quilvest" and Xxxxxxxxxx are sometimes hereinafter referred to, individually,
as a "Stockholder" and, collectively, as the "Stockholders"), and Pameco
Acquisition, Inc., a Delaware corporation ("Newco").
W I T N E S S E T H:
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WHEREAS, the Stockholders are proposing to acquire all of the issued
and outstanding Common Stock, par value $.01 per share, of Pameco Corporation, a
Delaware corporation (the "Company"), through the formation of Newco and the
merger of Newco with and into the Company (the "Merger") pursuant to that
certain Merger Agreement dated as of the date hereof (the "Merger Agreement"),
between Newco and the Company;
WHEREAS, the parties desire to enter into this Agreement providing
for, among other things, the organization and capitalization of Newco, certain
restrictions on the transfer of the capital stock of Newco and, upon the
effective time of the Merger (the "Effective Time"), the Company, the voting of
the capital stock of Newco and, upon the Effective Time, the Company, and the
composition of the boards of directors of Newco and, upon the Effective Time,
the Company;
WHEREAS, the parties desire that, except as expressly provided herein,
upon the Effective Time, this Agreement shall be deemed to supersede, replace
and terminate that certain Shareholders Agreement, dated February 18, 2000,
among the Stockholders, the Company and Willem X.X. xx Xxxxx (the "Original
Shareholders Agreement"), and shall terminate that certain Registration Rights
Agreement among the Stockholders and the Company (the "Registration Rights
Agreement");
WHEREAS, it is the intention of the parties hereto and Willem X.X. xx
Xxxxx that, upon the Effective Time and the replacement and termination of the
Original Shareholders Agreement, Willem X.X. xx Xxxxx, individually, shall have
no further rights or obligations under the Original Shareholders Agreement,
except to the extent a right or obligation referred to therein expressly by its
terms survives the termination of the Original Shareholders Agreement; and
WHEREAS, as used in this Agreement, the terms set forth in Appendix A
have the meanings set forth therein (such meanings to be equally applicable to
both the singular and plural forms of the terms defined);
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other, good and valuable consideration the
receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound, the parties hereto,
hereby agree as follows:
1. Certain Matters Relating to Newco and the Merger.
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1.1. Formation and Capitalization. The Stockholders have caused Newco
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to be formed as a Delaware corporation by the filing of a Certificate of
Incorporation with the Delaware Secretary of State on March 1, 2001 and, on such
date, Xxxxxxxxxx has contributed $4,000.00 in cash in exchange for eight shares
of Newco Common Stock and Quilvest has contributed $1,000.00 in cash in exchange
for two shares of Newco Common Stock. Immediately prior to the Effective Time,
Xxxxxxxxxx shall contribute to Newco as an additional capital contribution to
Newco an amount in cash equal to 80% of the Merger Consideration (as defined in
the Merger Agreement), and Quilvest shall contribute to Newco as an additional
capital contribution to Newco an amount in cash equal to 20% of the Merger
Consideration. The by-laws of Newco shall be as set forth in Exhibit A hereto.
1.2. Directors of Newco. The board of directors of Newco (the "Newco
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Board") shall consist of four directors, three of which shall be nominated by
Xxxxxxxxxx and one of which shall be nominated by Quilvest. Xxxxx X. Xxxxxxxxxx,
Xx., Xxxxxxx X. Xxxxx and Xxxxxx X. Xxxxxx shall be the initial nominees of
Xxxxxxxxxx, and Willem X.X. xx Xxxxx shall be the initial nominee of Quilvest.
By execution of this Agreement, each of Xxxxxxxxxx and Quilvest hereby votes
their shares of Newco Common Stock in favor of the foregoing four director
nominees. If there shall occur a vacancy for any reason, whether by resignation,
removal or otherwise, in the position of any director who was nominated by a
particular Stockholder pursuant to this Agreement, then the Stockholder who
originally nominated such director shall be entitled to nominate such director's
successor, and the Stockholders shall promptly take such action, including
removing such Stockholder's nominee(s) for director(s), if any, so as to cause
the successor director(s) to be duly elected or appointed. No Stockholder shall
take any action, or permit any director nominated by it to take any action, to
remove a director which was nominated by another Stockholder without the prior
written consent of such other Stockholder. Any person nominated to serve as a
director by a Stockholder may be removed from such position, with or without
cause, only by the Stockholder nominating such director, and the other
Stockholders shall promptly take such action, including causing such
Stockholder's nominee(s) for director(s), if any, to take such action, as may be
requested by the Stockholder who nominated the director(s) sought to be removed,
to duly and properly effect the removal of such director(s) from such position.
1.3. The Merger. (i) Each Stockholder hereby approves and adopts the
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Merger Agreement in substantially the form attached hereto as Exhibit B, and
approves and adopts any amendments, supplements or modifications thereto that
the Newco Board may approve from time to time; provided that the approval of the
director nominated by Quilvest is a prerequisite to approval of any amendment,
supplement or modification to the Merger
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Agreement which has the effect of treating Quilvest differently from Xxxxxxxxxx
in their respective capacities as stockholders of Newco. Each Stockholder
covenants to the other that the Transaction Statement on Schedule 13E-3 to be
prepared and filed by them in connection with the Merger (the "Schedule 13E-3"),
at the time it is filed with the Commission or mailed to the Company's
stockholders, will not contain 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, in light of the circumstances under which they were made,
not misleading; provided, no representation or warranty is deemed made by such
Stockholder with respect to information supplied by the Company or any other
Stockholder for use in preparing the Schedule 13E-3 or any such Schedule 13E-3
amendment. Such Stockholder will provide the other Stockholders who are members
of the "group" (within the meaning of the Exchange Act) filing such Schedule
13E-3 with a reasonable opportunity to review and comment on the original
Schedule 13E-3 and on any proposed Schedule 13E-3 amendment prior to filing such
with the Commission (subject to any requirements of law to file promptly), will
provide such other Stockholders with a copy of all such filings made with the
Commission and will notify such other Stockholders as promptly as practicable
after the receipt of any comments or any request for additional information from
the Commission or its staff and, upon request of any such other Stockholder,
will supply each of them and their legal counsel with copies of all
correspondence between it or any of its representatives, on the one hand, and
the Commission, its staff or any state securities administrators, on the other
hand. Such Stockholder further agrees to promptly notify the other Stockholders
after becoming aware that any information provided by it for inclusion in the
Schedule 13E-3 contains an untrue statement of material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
1.4. Transfer of Newco Common Stock. Neither Stockholder shall
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transfer, sell, offer to sell, assign, pledge or encumber, whether directly,
indirectly, by contract, by operation of law or otherwise, any shares of Newco
Common Stock, except to an Affiliate of such Stockholder who executes an
instrument agreeing to be bound by the terms and conditions of this Agreement as
a Stockholder. The provisions of this Section 1.4 shall automatically terminate
and be of no further force or effect upon the Effective Time.
1.5. Dissolution of Newco. If the Merger Agreement shall terminate in
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accordance with its terms as in effect from time to time, each Stockholder
hereby agrees to take such actions as are necessary or appropriate to dissolve
and liquidate Newco, including executing, delivering and filing such documents,
agreements and instruments as are necessary or appropriate to dissolve and
liquidate Newco.
1.6. Post Merger Ownership: It is the intention of Xxxxxxxxxx and
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Quilvest that immediately following consummation of the Merger, each of
Xxxxxxxxxx and Quilvest shall own that percentage of the equity of the surviving
company (computed on a common stock equivalent basis, assuming conversion of all
Preferred Stock (the "Common
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Equivalent Basis")) (the "Equity") equal to the amount that the aggregate amount
invested by such party in the Company to acquire the Preferred Stock plus an
amount equal to the accrued and unpaid dividends on the Preferred Stock held by
such party through the day immediately preceding the Effective Time plus the
amounts invested in Newco by such party (collectively, the "Investment Amount")
bears to the aggregate Investment Amount of both parties.
2. Agreements to Vote; Irrevocable Proxy.
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2.1. Agreement to Vote on All Matters. Quilvest hereby agrees that at
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any meeting or vote of the stockholders of the Company to be held after the
Effective Time, however called, it shall vote all Securities which are entitled
by the DGCL, the Certificate of Incorporation or the Bylaws to be voted ("Voting
Securities") which are beneficially owned by it in accordance with written
instructions which it reasonably believes in good faith after reasonable inquiry
were signed by an authorized officer of Xxxxxxxxxx. In the absence of receipt of
such written instructions as to how such Voting Securities should be voted with
respect to a particular meeting, Quilvest shall refrain from voting such Voting
Securities on such particular matter. Notwithstanding anything to the contrary,
Xxxxxxxxxx shall be entitled to exercise the voting rights attributable to such
Voting Securities at any time pursuant to the Irrevocable Proxy without notice
to Quilvest. Nothing contained in this Section 2.1 shall require Quilvest, or
shall permit Xxxxxxxxxx through the exercise of the Irrevocable Proxy, to vote
the Voting Securities beneficially owned by Quilvest, in the case of the
election of members of the board of directors of the Company ("Board"), in
contravention of the provisions of Section 6 hereof or in contravention of
Section 16 hereof.
2.2. Irrevocable Proxy. Contemporaneously with the execution of this
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Agreement: (a) Quilvest shall deliver to Xxxxxxxxxx a proxy in the form attached
hereto as Exhibit C, which shall become effective as of the Effective Time and
shall be irrevocable to the fullest extent permitted by law (the "Irrevocable
Proxy"), with respect to all Voting Securities owned of record by it as of the
Effective Date; (b) Quilvest shall cause to be delivered to Xxxxxxxxxx
additional Irrevocable Proxies executed on behalf of each record owner of any
Voting Securities owned beneficially (but not owned of record) by it; and (c)
any and all existing irrevocable proxies delivered to Xxxxxxxxxx pursuant to the
Original Shareholders Agreement shall be terminated and have no further force or
effect. From time to time after the date of this Agreement: (i) if Quilvest
shall become the record owner of additional Voting Securities, it shall
immediately deliver to Xxxxxxxxxx an Irrevocable Proxy with respect to such
additional Voting Securities; and (ii) if Quilvest shall become the beneficial
owner (but not the record owner) of additional Voting Securities, it shall
immediately cause to be delivered to Xxxxxxxxxx an Irrevocable Proxy with
respect to such additional Voting Securities from the record holder of such
additional Voting Securities.
2.3. Written Consents. The provisions of this Section 2 shall be
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equally applicable to any action taken or proposed to be taken by the Company's
stockholders without a
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meeting, including any such action taken or proposed to be taken by written
consent pursuant to Section 228 of the DGCL.
2.4. General. Quilvest hereby confirms each and every action to be
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taken by Xxxxxxxxxx pursuant to the Irrevocable Proxy (so long as such action
was taken when the Irrevocable Proxy was in effect and was taken in accordance
with the last sentence of Section 2.1) as if it were its own and waives any
right to make any claim against Xxxxxxxxxx that may arise, directly or
indirectly, as a result of Xxxxxxxxxx'x voting of any of the Voting Securities
pursuant to the Irrevocable Proxy.
2.5. Indemnity. Quilvest hereby agrees to defend, indemnify and hold
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Xxxxxxxxxx harmless from and against any Losses and Investigatory and Defense
Costs (as defined in the Purchase Agreement) that Xxxxxxxxxx may sustain, suffer
or incur, directly or indirectly, as a result of a breach by Quilvest of any of
its representations, warranties, covenants or agreements contained in this
Agreement. Xxxxxxxxxx hereby agrees to defend, indemnify and hold Quilvest
harmless from and against any Losses and Investigatory and Defense Costs (as
defined in the Purchase Agreement) that Quilvest may sustain, suffer or incur,
directly or indirectly, as a result of a breach by Xxxxxxxxxx of any of its
representations, warranties, covenants or agreement contained in this Agreement.
3. Transfers of Securities. After the Effective Time:
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3.1. Except as expressly permitted by the terms of this Agreement,
Quilvest hereby agrees that it shall not Transfer, or permit the Transfer of,
all or any of the Securities beneficially owned by it. Xxxxxxxxxx agrees that it
will not Transfer any Securities if such Transfer is prohibited by the terms and
conditions of this Agreement. As a condition to any Transfer to an Affiliate of
Xxxxxxxxxx, such Affiliate of Xxxxxxxxxx shall execute a counterpart agreeing to
be bound by the terms and conditions of this Agreement to the same extent as its
transferor. No Transfer shall be effective and the Company shall not, and shall
not be compelled to, recognize any Transfer or record any Transfer on its books
if such Transfer is prohibited by this Agreement, or issue any certificate
representing any Securities to any Person who has received such Securities in a
Transfer made in contravention of the terms of this Agreement, and only if such
Person has delivered to the Company and Xxxxxxxxxx an executed counterpart where
one is required to be delivered hereunder.
3.2. Quilvest shall be permitted to transfer to any of its Affiliates
Securities beneficially owned by Quilvest, provided that, in any such case, any
such Affiliate shall, as a condition to such Transfer, execute a counterpart,
and deliver such counterpart to the Company and Xxxxxxxxxx, providing that such
Affiliate shall be bound by the terms and provisions of this Agreement to the
same extent as Quilvest was bound.
3.3. In the case of a proposed Transfer of Securities by Quilvest to
someone other than one of its Affiliates (other than pursuant to Section 4 or 5
of this
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Xxxxxxxxx), Xxxxxxxx shall provide Xxxxxxxxxx with written notice at least 20
days prior to the anticipated Transfer. Such notice shall contain (a) the
identity of the proposed transferor and (b) the proposed number of Securities to
be Transferred. Within 15 days of receipt of written notice of a proposed
Transfer, Xxxxxxxxxx shall provide either (i) written consent to the proposed
Transfer, which consent may be denied for any reason or for no reason, and which
may be given or denied in Xxxxxxxxxx'x sole and absolute discretion, (ii)
written notice specifying an alternate number of shares to be transferred to
which it would be prepared to provide consent, or (iii) written notice to
Quilvest of Xxxxxxxxxx'x decision not to consent to the proposed Transfer. If
Xxxxxxxxxx shall fail to respond, it shall be deemed not to have consented to
such Transfer. Quilvest shall provide Xxxxxxxxxx with such other information as
Xxxxxxxxxx shall reasonably request, including the terms and conditions of the
Transfer and information concerning the proposed transferee. Upon receipt of the
written consent of Xxxxxxxxxx, if at all, Quilvest may consummate the proposed
Transfer. Quilvest may also consummate a Transfer of the number of Securities
set forth in the alternate proposal of Xxxxxxxxxx, provided, however, that
Quilvest shall notify Xxxxxxxxxx of its decision to accept the Xxxxxxxxxx
alternate proposed number of Securities to be Transferred not less than 10 days
after receipt of the same from Xxxxxxxxxx, if at all.
3.4. The provisions of Sections 3.1 and 3.3 hereof, shall not apply to
sales of Securities by Quilvest pursuant to Rule 144 promulgated under the
Securities Act ("Rule 144").
3.5. The parties agree that the transfer restrictions set forth in
this Section 3 are not manifestly unreasonable.
4. Participation Rights.
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4.1. If at any time after the Effective Time Xxxxxxxxxx or an
Affiliate of Xxxxxxxxxx (for purposes of this section, a "Selling Stockholder")
proposes to sell a portion of the Securities beneficially owned by it ("Offered
Securities"), whether or not the transaction is exempt from the registration
requirements of the Securities Act but excluding sales under Rule 144, to a
proposed transferee which is not an Affiliate of Xxxxxxxxxx (the "Purchaser"),
it shall give written notice ("Participation Notice") to Quilvest hereunder and
comply with this Section 4 before making such sale. The Participation Notice
shall identify the third party purchaser (if the transaction is a private sale)
and the material terms (including the proposed closing date) of the proposed
sale of the Offered Securities (the "Third Party Offer Terms").
4.2. Quilvest may elect to participate in the Selling Stockholder's
sale of Offered Securities to the Purchaser in accordance with this Section 4.
4.3. For a period of 15 days after receipt of the Participation Notice
(the "Option Period"), Quilvest shall have the right ("Participation Right") to
Transfer to the Purchaser, on the same terms and conditions as the Selling
Stockholder, part or all of the Offered Securities to be sold to the Purchaser,
as determined pursuant to Section 4.5 below.
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4.4. The Participation Right shall be exercised, if at all, by
Quilvest giving written notice of exercise of the Participation Right, including
the number of Securities it desires to sell, to the Selling Stockholder before
the expiration of the Option Period.
4.5. The number of Offered Securities to be sold by the Stockholders
in a transaction governed by this Section 4 shall be allocated between
Xxxxxxxxxx and its Affiliates, on the one hand, and Quilvest, and its permitted
transferees who are party to this Agreement, on the other hand, such that
Xxxxxxxxxx and its Affiliates will be permitted to sell up to Xxxxxxxxxx'x
Applicable Percentage of the Offered Securities, allocated among them as they
shall so determine, and Quilvest, and its permitted transferees who are party to
this Agreement will be permitted to sell up to Quilvest's Applicable Percentage
of the Offered Securities, allocated among them as they shall so determine.
4.6. Notwithstanding anything to the contrary contained in
this Section 4, any sale of Securities in connection with an effective
registration statement, or pursuant to the provisions of Rule 144 of the
Securities Act (if the Company becomes a reporting company under Section 12(g)
or 15(d) of the Exchange Act), shall not be restricted by Section 3, 4 or 5 of
this Agreement.
5. Joinder Requirements.
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5.1. If at any time after the Effective Time Xxxxxxxxxx or its
Affiliates (for purposes of this section, the "Initiating Holder") proposes to
sell at least 90% of the Securities beneficially owned by it to a prospective
purchaser which is not an Affiliate of Xxxxxxxxxx, and the purchaser of such
Securities requires as a condition of the sale that it acquire the same
percentage of the Securities beneficially owned by Quilvest and its permitted
transferees who are party to this Agreement, then Quilvest and its permitted
transferees who are party to this Agreement, shall be required to sell the same
percentage of its respective Securities to the purchaser as Xxxxxxxxxx and its
Affiliates, in the aggregate, are selling to the purchaser on terms providing
Quilvest and its permitted transferees who are party to this Agreement, with
substantially the same economic benefit as was provided to the Initiating
Holder, after taking into consideration the relative rights, preferences and
privileges of the various Securities to be purchased and sold, and otherwise on
the same terms and conditions as those offered to the Initiating Holder.
Quilvest agrees to execute an irrevocable proxy in favor of the purchaser under
this Section 5 if the purchaser so requires it in order to retain voting control
of the Company, which irrevocable proxy shall be in substantially the form of
Exhibit C attached hereto.
5.2. Any sale of Securities pursuant to this Section 5 shall not be
subject to the provisions of Sections 3 and 4 of this Agreement. Nothing
contained in this Section 5 shall apply to sales made pursuant to Rule 144 under
the Securities Act or pursuant to an effective registration statement.
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6. Composition, Nomination and Election of Board. After the Effective
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Time:
6.1. Number of Directors. The Board shall at all times have between
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five and nine directors. At the Effective Time, the Board shall have eight
directors.
6.2. Nomination and Election of Board Members. Commencing with the
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Effective Time, Quilvest shall have the right to nominate two persons to stand
for election to serve as directors, at least one of whom shall not be an
Affiliate or Associate (as defined for purposes of the Securities Act or the
DGCL) of Quilvest, the Chief Executive Officer of the Company shall be nominated
to stand for election to serve as a director, and Xxxxxxxxxx shall have the
right to nominate all remaining persons to stand for election to serve as
directors, at least one of whom shall not be an Affiliate or Associate (as
defined for purposes of the Securities Act or the DGCL) of Xxxxxxxxxx. Each of
the Stockholders shall vote their Voting Securities in favor of the eight
persons nominated as provided above in this Section 6.2. If there shall occur a
vacancy for any reason, whether by resignation, removal or otherwise, in the
position of any director who was nominated by a particular Stockholder pursuant
to this Agreement, then the Stockholder who originally had the right to nominate
such director, shall be entitled to nominate such director's successor, and the
Stockholders shall promptly take such action, including causing such
Stockholder's nominee(s) for director(s), if any, to take such action, so as to
cause the successor director to be duly and properly elected or appointed. No
Stockholder shall take any action, or permit any director nominated by it to
take any action, to remove a director which was nominated by another Stockholder
without the consent of such other Stockholder. Any person nominated to serve as
a director by a Stockholder may be removed from such position, with or without
cause, only by the Stockholder nominating such director, and the other
Stockholders shall promptly take such action, including causing such
Stockholder's nominee(s) for director(s), if any, to take such action, as may be
requested by the Stockholder who nominated the director sought to be removed, to
duly and properly effect the removal of such director from such position.
6.3. Minimum Ownership. Notwithstanding the foregoing, the provisions
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of Section 6.2 shall remain in full force and effect (i) in the case of
Xxxxxxxxxx, so long as it beneficially owns at least 25% of the Common Stock
then outstanding on a fully-diluted basis, and (ii) in the case of Quilvest, so
long as it beneficially owns at least 5% of the Common Stock then outstanding on
a fully-diluted basis and Xxxxxxxxxx beneficially owns at least 25% of the
Common Stock then outstanding on a fully-diluted basis. After such time, if any,
that either Xxxxxxxxxx or Quilvest shall no longer be entitled to nominate
persons to stand for election to serve as a director in accordance with clause
(i) or clause (ii) above, upon the expiration of the term, resignation or
removal of any director nominated by such Shareholder which is no longer
entitled to nominate persons to stand for election to serve as a director, the
successor to such director(s) shall be designated or nominated in accordance
with the requirements of the DGCL and the rules and regulations of the
Commission, if applicable, and the principal national
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securities exchange or trading market on which shares of the Common Stock are
then listed, if any.
6.4. Contrary Proposals. Each Stockholder shall vote its Voting
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Securities against any proposal brought before the Stockholders, including a
proposal to amend the Company's Certificate of Incorporation or Bylaws, which,
if adopted, would frustrate the provisions of this Section 6.
7. Stock Splits. If there shall be any change in the Securities of the
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Company as a result of any merger, consolidation, reorganization,
recapitalization, stock dividend, split-up, combination, exchange or otherwise,
the provisions of this Agreement shall apply with equal force to additional
and/or substitute Securities, if any, received by each Stockholder in exchange
for or by virtue of its ownership of Securities.
8. Representations and Warranties of Xxxxxxxxxx. Xxxxxxxxxx represents
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and warrants to Quilvest as follows:
8.1. Ownership of Shares. The Newco Common Stock and the Preferred
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Stock listed by its name on Schedule 1 are all of the securities of Newco and
the Company, respectively, which are beneficially owned by Xxxxxxxxxx.
Xxxxxxxxxx has with respect to the Securities listed by its name on Schedule 1,
good, valid and marketable title, free and clear of all liens, encumbrances,
restrictions, options, warrants, rights to purchase, voting agreements or voting
trusts, and claims of every kind (other than the encumbrances created by this
Agreement and other than restrictions on transfer under applicable federal and
state securities laws).
8.2. Power; Non-Contravention; Binding Agreement. Xxxxxxxxxx has the
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full power and authority to enter into this Agreement and perform all of its
obligations herewith. Neither the execution, delivery nor performance of this
Agreement by Xxxxxxxxxx will violate its charter, bylaws or other organizational
or constitutive documents, or any other agreement, contract or arrangement to
which it is a party or is bound, including any voting agreement, stockholders
agreement or voting trust. This Agreement has been duly executed and delivered
by Xxxxxxxxxx and constitutes a legal, valid and binding agreement of
Xxxxxxxxxx, enforceable in accordance with its terms. Neither the execution or
delivery of this Agreement nor the consummation by Xxxxxxxxxx of the
transactions contemplated hereby will (a) require any consent or approval of or
filing with any governmental or other regulatory body, other than filings
required under the federal or state securities laws, or (b) constitute a
violation of, conflict with or constitute a default under (i) any law, rule or
regulation applicable to Xxxxxxxxxx, or (ii) any order, judgment or decree to
which Xxxxxxxxxx is bound.
8.3. Finder's Fees. No person is, or will be, entitled to any
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commission or finder's fees from Xxxxxxxxxx in connection with this Agreement or
the transactions contemplated hereby.
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9. Representations and Warranties of Quilvest. Quilvest represents and
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warrants to Xxxxxxxxxx as follows:
9.1. Ownership of Securities. The Newco Common Stock and the
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Securities listed by its name on Schedule 1 are all of the Securities which are
beneficially owned by Quilvest as of the date hereof. Quilvest does not have any
rights to acquire any additional Securities other than pursuant to the Warrants
it beneficially owns. Quilvest has with respect to the Securities listed by its
name on Schedule 1 good, valid and marketable title, free and clear of all
liens, encumbrances, restrictions, options, warrants, rights to purchase, voting
agreements or voting trusts, and claims of every kind (other than the
encumbrances created by the Original Shareholders Agreement and this Agreement
and other than restrictions on transfer under applicable federal and state
securities laws).
9.2. Power; Non-Contravention; Binding Agreement. Quilvest has the
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full, right, power and authority to enter into this Agreement and perform all of
its obligations hereunder. Neither the execution, delivery nor performance of
this Agreement by Quilvest will violate its charter, bylaws or other
organizational or constitutive documents or any other agreement, contract or
arrangement to which it is a party or is bound, including any voting agreement,
stockholders agreement or voting trust. This Agreement has been duly executed
and delivered by Quilvest and constitutes a legal, valid and binding agreement
of Quilvest, enforceable in accordance with its terms. Neither the execution or
delivery of this Agreement nor the consummation by Quilvest of the transactions
contemplated hereby will (a) require any consent or approval of or filing with
any governmental or other regulatory body, other than filings required under the
federal or state securities laws, or (b) constitute a violation of, conflict
with or constitute a default under (i) any law, rule or regulation applicable to
Quilvest, or (ii) any order, judgment or decree to which Quilvest is bound.
9.3. Finder's Fees. No person is, or will be, entitled to any
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commission or finder's fees from Quilvest in connection with this Agreement or
the transactions contemplated hereby.
10. Representations and Warranties of Newco. Newco represents and warrants
---------------------------------------
to each Stockholder as follows:
10.1. Power Authority; Non-Contravention; Binding Agreement. Newco has
-----------------------------------------------------
full right, power and authority to enter into and perform all of its obligations
under this Agreement. Neither the execution, delivery nor performance of this
Agreement by Newco will violate the charter, bylaws or other organizational or
constitutive documents of Newco, or any other agreement, contract or arrangement
to which Newco is a party or is bound. This Agreement has been duly executed and
delivered by Newco and constitutes a legal, valid and binding agreement of
Newco, enforceable in accordance with its terms. Neither the execution of this
Agreement nor the consummation by Newco of the transactions contemplated hereby
will
-10-
(a) require any consent or approval of or filing with any governmental or other
regulatory body other than filings required under federal or state securities
laws, or (b) constitute a violation of, conflict with or constitute a default
under (i) any law, rule or regulation applicable to Newco, or (ii) any order,
judgment or decree to which Newco is bound.
10.2. Finder's Fees. No person is, or will be, entitled to any
-------------
commission or finder's fee from Newco in connection with this Agreement or the
transactions contemplated hereby.
11. Termination; Securities Free from Agreement.
-------------------------------------------
11.1. This Agreement (other than Sections 2.4, 12 and 18
through 30 which shall survive any termination of this Agreement), shall
terminate on the earliest of (i) 10 years from the date hereof, (ii) the mutual
agreement of the Stockholders which beneficially own a majority of the Common
Stock issued or issuable upon conversion of the Preferred Stock or upon the
exercise of the Warrants, in each case which are subject to this Agreement,
(iii) the sale of 90% or more of the Securities described in clause (ii) to a
Person which is not an Affiliate of Xxxxxxxxxx or a permitted transferee of
Quilvest who becomes party to this Agreement and (iv) the termination of the
Merger Agreement in accordance with its terms as in effect from time to time.
11.2. Securities which are sold by a Stockholder pursuant to
and in accordance with the provisions of Rule 144 or Section 4 or Section 5
hereof shall be deemed sold, upon the consummation of such sale in accordance
therewith, free and clear of this Agreement and the Irrevocable Proxy granted to
Xxxxxxxxxx.
-11-
12. Expenses. Except as provided in Section 28, each party hereto
--------
will pay all of its expenses in connection with Merger and the other the
transactions contemplated by this Agreement, including, without limitation, the
fees and expenses of its counsel and other advisors; provided, however, if the
Merger is consummated, all such expenses shall be paid by Newco. Newco agrees
that if the Merger is consummated, it will pay to Quilvest the full amount of
the Merger Consideration (as defined in the Merger Agreement), without deduction
or offset whatsoever (including with respect to taxes), which may become due and
owing to Quilvest in connection with the cancellation of the Common Stock
pursuant to the Merger Agreement, and Newco hereby releases and forever
discharges Quilvest from and against any claims which it may have against
Quilvest or its successors and assigns with respect to any taxes which may be
required to be paid by or with respect to Quilvest in connection with its
receipt of the Merger Consideration in connection with the cancellation of the
Common Stock pursuant to the Merger Agreement.
13. Fees.
----
13.1. Commencing August 31, 2001, the Company shall pay to
Xxxxxxxxxx & Co., LLC and Quilvest or its designees, pro rata based upon their
respective Applicable Percentages, a management fee in such amount, not to
exceed $500,000 for each annual period ended on August 31st, determined by
Xxxxxxxxxx and the Company (the "Management Fee"), payable on the last Business
Day in February and August of each year, or on such dates as the parties shall
otherwise agree. Notwithstanding the foregoing, the Management Fee shall not be
paid (and shall not accrue) if at the time of the payment of the Management Fee,
the Company would not be in violation of the financial covenants contained in
the Loan and Security Agreement dated as of February 17, 2000, between the
Company, Fleet Capital Corporation, as agent, and the lenders named therein, as
amended from time to time the ("Credit Agreement").
13.2. Until such time as the Credit Agreement is amended to
increase the amount of Guaranteed Out-of-Formula Loans (as defined in the Credit
Agreement) from the current $5.0 million level and Xxxxxxxxxx amends its
existing Guaranty (as defined in the Credit Agreement) to guarantee 80% of the
Guaranteed Out-of-Formula Loans and Quilvest enters into a new guaranty pursuant
to which it guarantees to Agent for the benefit of the Lenders (both as defined
in the Credit Agreement) 20% of such loans (the "Guaranty Amendment Date"), the
provisions of Section 13(b) of the Original Shareholders Agreement shall
continue to apply. After the Guaranty Amendment Date, to compensate Xxxxxxxxxx
and Quilvest for their guaranties with respect to any Out-of-Formula Loans under
the Credit Agreement, the Company agrees to pay to Quilvest and Xxxxxxxxxx a fee
(the "Overadvance Fee") calculated at a rate of 8% per annum of the actual
amount of such Out-of-Formula Loans outstanding from time to time which
Xxxxxxxxxx and Quilvest are then guarantying. The Overadvance Fee shall be paid
80% to Xxxxxxxxxx and 20% to Quilvest and shall be payable quarterly in arrears
commencing three months after the Guaranty Amendment Date and only with respect
to such days in which there are
-12-
outstanding Out-of-Formula Loans. Notwithstanding the foregoing, the Company
shall not be required to pay an Overadvance Fee to the extent that, at the time
of or after giving effect to the payment thereof, the Company is, or would be in
violation of the financial covenants contained in the Credit Agreement, in which
case any such Overadvance Fee would accrue and be payable as soon as possible
thereafter.
14. Certain Covenants.
------------------
14.1. Except in accordance with the provisions of this
Agreement, Quilvest agrees not to, directly or indirectly grant any proxies,
deposit any Securities into a voting trust or enter into a voting agreement with
respect to any Securities.
14.2. Each Stockholder agrees, while this Agreement is in
effect and to the extent disclosure would be required under the Exchange Act, to
notify the Company, as soon as practicable, of the number of any Voting
Securities, beneficial ownership of which is acquired by such Stockholder after
the date hereof, and to prepare and file with the Commission an amendment to its
Schedule 13D, as and when required to be filed, which amendment shall comply as
to form in all material respects with the applicable provisions of the Exchange
Act. Such Stockholder represents and warrants that any such Schedule 13D
amendment, at the time it is filed with the Commission, will not contain 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, in light of the
circumstances under which they were made, not misleading; provided, no
representation or warranty is deemed made by such Stockholder with respect to
information supplied by any other Stockholder for use in preparing the Schedule
13D or any such Schedule 13D amendment. Such Stockholder will provide the other
Stockholders who are members of the "group" (within the meaning of the Exchange
Act) filing such Schedule 13D with a reasonable opportunity to review and
comment on any proposed Schedule 13D amendment prior to filing such with the
Commission (subject to any requirements of law to file promptly), will provide
such other Stockholders with a copy of all such filings made with the Commission
and will notify such other Stockholders as promptly as practicable after the
receipt of any comments or any request for additional information from the
Commission or its staff and, upon request of any such other Stockholder, will
supply each of them and their legal counsel with copies of all correspondence
between it or any of its representatives, on the one hand, and the Commission,
its staff or any state securities administrators, on the other hand.
14.3. In the event the Company determines to raise additional
monies after the Effective Time through the sale of additional Securities and
Xxxxxxxxxx is afforded the opportunity to purchase from the Company such
additional Securities then, from time to time after the date hereof, subject to
applicable law, Xxxxxxxxxx shall permit Quilvest to purchase from the Company
such additional securities offered for sale to Xxxxxxxxxx in proportion with
Xxxxxxxxxx pro rata based upon their respective Applicable Percentages.
-13-
15. Financial Reports and Information. If the Company is not required
---------------------------------
to file periodic reports under Section 12(g) or 15(d) of the Exchange Act, it
will furnish to each Stockholder financial statements (including accompanying
notes) similar in form and substance to those which would be required to be
filed by it in any annual or quarterly report filed under the Exchange Act if
the Company were subject to such Exchange Act. Such reports will be furnished
within 45 days after the end of the first, second and third fiscal quarters of
each year, and within 90 days after the end of each fiscal year.
16. Transaction with Affiliates. The Company hereby agrees that it
---------------------------
shall not enter into any transaction with an Affiliate except upon fair and
reasonable terms that are no less favorable to it than it reasonably believes it
could obtain in a comparable arm's length transaction with a Person not its
Affiliate.
17. Legend and Stop Transfer Instructions. Immediately after the
-------------------------------------
execution of this Agreement (and from time to time prior to the termination of
this Agreement), each Stockholder, if the particular restriction is applicable
to it, shall request the Company and Newco to provide that each certificate
representing Securities or Newco Common Stock beneficially owned by it will bear
a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE (I) MAY NOT BE SOLD, EXCHANGED
OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE TERMS
AND CONDITIONS OF THE STOCKHOLDERS AGREEMENT, AND (II) ARE SUBJECT TO THE
TERMS AND CONDITIONS OF THE STOCKHOLDERS AGREEMENT DATED AS OF MARCH 6,
2001, AND THE IRREVOCABLE PROXY REFERRED TO THEREIN, AS SUCH AGREEMENT MAY
BE AMENDED FROM TIME TO TIME, AND COPIES OF WHICH ARE ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER.
Immediately after the execution of this Agreement (and from time to time prior
to the termination of this Agreement), each Stockholder shall request the
Company to require that the transfer agent for its Securities shall make a
notation in its records prohibiting the transfer of any of the Securities owned
of record by such Stockholder, except in accordance with the terms and
conditions of this Agreement. Each Stockholder agrees to surrender to the
Company each certificate representing Securities in order to effectuate the
provisions of this Section 17.
18. Survival of Representations and Warranties. Except as expressly
------------------------------------------
set forth herein, the representations, warranties, covenants and agreements made
by the Stockholders or Newco in this Agreement shall survive the date hereof and
the Effective Time.
19. Notices. All notices or other communications required or
-------
permitted hereunder shall be in writing, shall be given by hand delivery, U.S.
Express Mail (return receipt
-14-
requested), overnight courier guaranteeing next business day delivery, or
facsimile, and shall be deemed duly given when received, addressed as follows:
If to Newco (after the Effective Time), to:
c/o Pameco Corporation
000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: President and Chief Executive Officer
Facsimile: 000-000-0000
Telephone 000-000-0000
with a copy to:
Powell, Goldstein, Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
00xx Xxxxx
Xxxxxxx, XX 00000
Attention: G. Xxxxxxx Xxxxx, Esq.
Facsimile: 000-000-0000
Telephone: 000-000-0000
If to Newco (prior to the Effective Time) or Xxxxxxxxxx, to:
c/x Xxxxxxxxxx & Co., LLC
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxxxxxxxx, Xx.
Facsimile: 000-000-0000
Telephone: 000-000-0000
-15-
with a copy to:
Xxxxxx Xxxxxxxx LLP
3000 Two Xxxxx Square
Eighteenth and Arch Streets
Philadelphia, PA 19103-2799
Attention: Xxxxx X. Xxxxxxx, Esq. or
Xxxx X. Xxxxxxxx, III, Esq.
Facsimile: 000-000-0000
Telephone: 000-000-0000
If to Quilvest to:
c/o Three Cities Research, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Mr. Willem X. X. xx Xxxxx
Facsimile: 000-000-0000
Telephone: 000-000-0000
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Facsimile: 000-000-0000
Telephone: 000-000-0000
20. Entire Agreement; Amendment. This Agreement, together with the
---------------------------
documents expressly referred to herein, constitute the entire agreement among
the parties hereto with respect to the subject matter contained herein and
supersede all prior agreements and understandings among the parties with respect
to such subject matter (including any agreements between Quilvest and the
Company regarding stockholder rights); provided, however, that, until the
-------- -------
Effective Time, the Original Shareholders Agreement will remain in full force
and effect. This Agreement may not be modified, amended, altered or supplemented
except by an agreement in writing executed by the party against whom such
modification, amendment, alteration or supplement is sought to be enforced.
21. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors
(including the Company), and permitted assigns, but neither this Agreement nor
any of the rights, interests or obligations
-16-
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other parties.
22. Governing Law; Consent to Jurisdiction. This Agreement shall be
--------------------------------------
construed and enforced in accordance with the laws of the State of Delaware
without regard to the application of the principles of conflicts or choice of
laws. Each party hereto submits to the jurisdiction of the courts of the State
of Delaware in New Castle County and to the jurisdiction of the United States
District Court for the District of Delaware, and hereby agrees that service of
process may be effected in accordance with the delivery methods described in
Section 19 hereof.
23. Injunctive Relief. The parties agree that in the event of a breach
-----------------
of any provision of this Agreement, the aggrieved party may be without an
adequate remedy at law. The parties therefore agree that in the event of a
breach of any provision of this Agreement, the aggrieved party shall be entitled
to obtain in any court of competent jurisdiction a decree of specific
performance or to enjoin the continuing breach of such provision, in each case
without the requirement that a bond be posted, as well as to obtain damages for
breach of this Agreement. By seeking or obtaining such relief, the aggrieved
party will not be precluded from seeking or obtaining any other relief to which
it may be entitled.
24. Counterparts; Facsimile Signatures. This Agreement may be executed
----------------------------------
in any number of counterparts (including by facsimile signature), each of which
shall be deemed to be an original and all of which together shall constitute one
and the same document.
25. Severability. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
26. Further Assurances. Each party hereto shall execute and deliver
------------------
such additional documents as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
27. No Third Party Beneficiaries; No Partnership or Fiduciary
---------------------------------------------------------
Relationship. Nothing in this Agreement, expressed or implied, shall be
------------
construed to give any person, other than a party hereto, any legal or equitable
right, remedy or claim under or by reason of this Agreement or any provision
contained herein. Nothing in this Agreement shall create, or is intended to
create, a fiduciary relationship between Quilvest and Xxxxxxxxxx or a
partnership or similar relationship between Quilvest and Xxxxxxxxxx.
-17-
28. Legal Expenses. In the event any legal proceeding is commenced by
--------------
any party to this Agreement to enforce, or recover damages for any breach of,
the provisions hereof, the prevailing party in such legal proceeding shall be
entitled to recover in such legal proceeding from the losing party such
prevailing party's costs and expenses incurred in connection with such legal
proceedings, including reasonable attorneys fees and disbursements.
29. Interpretation. Unless the context of this Agreement otherwise
--------------
requires, (i) words of any gender include each gender and the neuter; (ii) words
using the singular or plural number also include the plural or singular number,
respectively; (iii) the terms "hereof," "herein," "hereby" and derivative or
similar words refer to this entire Agreement; (iv) the term "Section" refers to
the specified Section of this Agreement; and (v) the term "including" or similar
words shall be construed as to refer to such matter without limitation thereof.
Whenever this Agreement refers to a number of days, such number shall refer to
calendar days unless Business Days are specified. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
30. Effectiveness; and Termination of Prior Agreements. This Agreement
--------------------------------------------------
shall become effective as of the date hereof and, as of the Effective Time, this
Agreement shall supersede and replace, in its entirety, the Original
Shareholders Agreement (which Xxxxxxxxxx and Quilvest hereby agree shall
terminate pursuant to Section 11 thereof) except that the representations and
warranties of Quilvest contained in Section 9.4 of the Original Shareholders
Agreement shall survive the Effective Time. As of the Effective Time, Willem
X.X. xx Xxxxx, individually, shall have no further right or obligation under the
Original Shareholders Agreement, except to the extent a right or obligation
referred to therein expressly by its terms survives the termination of the
Original Shareholders Agreement. As of the Effective Time, the Registration
Rights Agreement dated as of February 18, 2000 shall be of no further force or
effect.
-18-
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date and year first above written.
PAMECO ACQUISITION, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx, Xx.
-----------------------------
Name: Xxxxx X. Xxxxxxxxxx, Xx.
Title: President
XXXXXXXXXX FUND II, L.P.
By: Xxxxxxxxxx Associates II, L.L.C.
its General Partner
By: /s/ Xxxxx X. Xxxxxxxxxx, Xx.
----------------------------
Name: Xxxxx X. Xxxxxxxxxx, Xx.
Title: Manager
QUILVEST AMERICAN EQUITY LTD.
By: /s/ Willem X.X. xx Xxxxx
----------------------------
Name: Willem X.X. xx Xxxxx
Title: Attorney-in-Fact
The undersigned, Willem X.X. xx Xxxxx, hereby executes this Agreement in
his individual capacity solely to confirm his agreement that upon the Effective
Time, the Original Shareholders Agreement shall automatically terminate and be
of no further force or effect, and that he shall have no rights under or
obligations under the Original Shareholders Agreement, except to the extent a
right or obligation referred to therein expressly by its terms survives the
termination of the Original Shareholders Agreement.
/s/ Willem X.X. xx Xxxxx
_____________________________
Willem X.X. xx Xxxxx
-19-
Appendix A
----------
As used in this Agreement, the following terms have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"Affiliate" of a Person shall mean any Person which, directly or
indirectly, controls, is controlled by, or is under common control with such
Person. The term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to elect
a majority of the board of directors (or other governing body) or to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise and, in any
event and without limiting the generality of the foregoing, any Person owning
10% or more of the voting securities of another Person shall be deemed to
control that Person. Notwithstanding anything to the contrary in the foregoing
definition, for the purposes of this Agreement, neither Xxxxxxxxxx, Quilvest,
nor the directors of the Company or Newco acting in their capacities as such,
shall be considered an "Affiliate" of the Company or Newco, as applicable.
"Applicable Percentage" means (a) in the case of Xxxxxxxxxx, the ratio
stated as a percentage that Xxxxxxxxxx'x Investment Amount bears to the
Aggregate Investment, and (b) in the case of Quilvest, the ratio stated as a
percentage that Quilvest's Investment Amount bears to of the Aggregate
Investment.
"Beneficial Owner" and "beneficial ownership" shall be determined in
accordance with Rule 13d-3 promulgated under the Exchange Act.
"Board" has the meaning set forth in Section 2.1 hereof.
"Business Day" means any day other than a Saturday, Sunday, legal
holiday, or other day on which banks in the State of Delaware are authorized to
close.
"Bylaws" means the Bylaws of the Company, as they may hereafter be
amended or modified.
"Certificate of Incorporation" means the Certificate of Incorporation
of the Company, as it may hereafter be amended or modified.
"Commission" means the United States Securities and Exchange
Commission, or any successor thereto.
A-1
"Common Stock" means the Common Stock of the Company, par value $0.01
per share.
"Company" has the meaning set forth in the preamble hereof prior to
the Effective Time, and, after the Effective Time, means the surviving company
of the Merger.
"Credit Agreement" has the meaning set forth in Section 13.1 hereof.
"DGCL" means the Delaware General Corporation Law.
"Effective Time" has the meaning set forth in the preamble hereof.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Governmental Body" means any government, or governmental or
regulatory body thereof, or political subdivision thereof, whether federal,
state, local or foreign, or any agency or instrumentality thereof, or any court
or arbitrator (public or private).
"Initiating Holder" has the meaning set forth in Section 5.1 hereof.
"Irrevocable Proxy" has the meaning set forth in Section 2.2 hereof.
"Lenders" shall have the meaning set forth in the Credit Agreement.
"Xxxxxxxxxx" means Xxxxxxxxxx Fund II, L.P., a Delaware limited
partnership.
"Management Fee" has the meaning set forth in Section 13.1 hereof.
"Merger" has the meaning set forth in the preamble hereof.
"Merger Agreement" has the meaning set forth in the preamble hereof.
"Newco Board" has the meaning set forth in Section 1.2 hereof.
"Newco Common Stock" means the Common Stock of Newco, par value $.01
per share.
"Offered Securities" has the meaning set forth in Section 4.1 hereof.
"Option Period" has the meaning set forth in Section 4.3 hereof.
"Original Shareholders Agreement" has the meaning set forth in the
preamble hereof.
A-2
"Overadvance Fee" has the meaning set forth in Section 13.2 hereof.
"Participation Notice" has the meaning set forth in Section 4.1
hereof.
"Participation Right" has the meaning set forth in Section 4.3 hereof.
"Person" means any individual, corporation, partnership, firm, joint
venture, limited liability company or partnership, association, joint-stock
company, trust, unincorporated organization or Governmental Body.
"Preferred Stock" means any series of preferred stock, par value $1.00
per share, of the Company.
"Purchase Agreement" means that certain Securities Purchase Agreement,
dated as of February 18, 2000, by and among the Company, Quilvest and
Xxxxxxxxxx, as amended from time to time.
"Purchaser" has the meaning set forth in Section 4.1 hereof.
"Quilvest" means Quilvest American Equity Ltd., a British Virgin
Islands company.
"Registration Rights Agreement" means that certain registration rights
agreement, dated February 18, 2000, among the Company, Xxxxxxxxxx and Quilvest,
as the same may be amended or modified from time to time.
"Securities" means and include (a) all shares of the Common Stock and
Preferred Stock, (b) all options, warrants or rights to acquire shares of Common
Stock or Preferred Stock, (c) all securities which are convertible into or
exchangeable or exercisable for, Common Stock or Preferred Stock, and (d) all
other securities of the Company which may be issued in exchange for or in
respect of shares of Common Stock or Preferred Stock (whether by way of stock
split, stock dividend, combination, reclassification, reorganization or any
other means).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Selling Stockholder" has the meaning set forth in Section 4.1 hereof.
"Series A Preferred Shares" means the Series A Cumulative Pay-in-Kind
Preferred Stock, par value $1.00 per share, of the Company, as the same may be
amended or modified from time to time.
A-3
"Series B Preferred Shares" means the Series B Cumulative Pay-in-Kind
Convertible Preferred Stock, par value $1.00 per share, of the Company, as the
same may be amended or modified from time to time.
"Series C Preferred Shares" means the Series C Cumulative Pay-in-Kind
Convertible Preferred Stock, par value $1.00 per share, of the Company, as the
same may be amended or modified from time to time.
"Third Party Offer Terms" has the meaning set forth in Section 4.1
hereof.
"Transfer" means any transfer of Securities, whether by sale,
assignment, gift, will, devise, bequest, operation of the laws of descent and
distribution, or in trust, pledge, hypothecation, mortgage, encumbrance or other
disposition. The verb to "transfer" means to sell, assign, give, dispose,
transfer (including by gift, will, devise, bequest, or operation of laws of
descent and distribution, or in trust), pledge, hypothecate, mortgage, or
encumber.
"Voting Securities" has the meaning set forth in Section 2.1 hereof.
"Warrants" means the warrants to purchase shares of Series A
Cumulative Pay-in-Kind Preferred Stock of the Company as issued and sold to
Xxxxxxxxxx and Quilvest pursuant to that certain Securities Purchase Agreement,
dated February 18, 2000, by and among Xxxxxxxxxx, Quilvest and the Company.
A-4
EXHIBIT C
FORM OF IRREVOCABLE PROXY
The undersigned stockholder of Pameco Corporation, a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes Xxxxxxxxxx Fund II, L.P., a Delaware limited
partnership ("Xxxxxxxxxx"), the attorney and proxy of the undersigned with full
power of substitution and resubstitution, to the full extent of the
undersigned's rights with respect to (i) the issued and outstanding shares of
voting Securities of the Company, whether common stock, preferred stock or
otherwise, owned of record by the undersigned as of the date of this proxy,
which Securities are specified on the final page of this proxy and (ii) any and
all other Securities of the Company as to which the undersigned may acquire
record ownership after the date hereof (the Securities of the Company referred
to in clauses (i) and (ii) of the immediately preceding sentence are
collectively referred to as the "Subject Shares"). As of the Effective Time,
all prior proxies given by the undersigned with respect to any of the Subject
Shares are hereby revoked, and no subsequent proxies will be given with respect
to any of the Subject Shares.
This proxy is irrevocable, is coupled with an interest and is granted
in connection with a Stockholders Agreement, dated as of the date hereof,
between the Company (as the successor to Pameco Acquisition, Inc. by merger),
Xxxxxxxxxx and the undersigned (as hereafter amended from time to time, the
"Stockholders Agreement"), and is granted in consideration of Xxxxxxxxxx'x
participation, by way of its interest in Pameco Acquisition, Inc. in the Merger
Agreement, dated as of March 6, 2001, between the Company and Pameco
Acquisition, Inc.
(a) The attorney and proxy named above will be empowered,
and may exercise this proxy, to vote the Subject Shares, at any time and from
time to time, in its sole and absolute discretion (subject only to the terms and
conditions of the Stockholders Agreement), at any meeting of the stockholders of
the Company, however called, or in any written action by consent of stockholders
of the Company, with respect to all matters brought before a vote of the
stockholders, including a vote for the election of directors; provided, that
nothing contained in this proxy shall permit Xxxxxxxxxx to vote the Subject
Shares in contravention of the provisions of the Stockholders Agreement.
This proxy shall be binding upon the heirs, successors and assigns of
the undersigned (including any transferee of any of the Subject Shares in
accordance with the Stockholders Agreement).
The undersigned hereby confirms each and every action to be taken by
Xxxxxxxxxx pursuant to this proxy as if it were its own and waives any right to
make any claim against
C-1
Xxxxxxxxxx that may arise, directly or indirectly, as a result of Xxxxxxxxxx'x
voting of any of the Subject Shares by virtue of this proxy.
Any term or provision of this proxy which is invalid or unenforceable,
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this proxy or affecting the
validity or enforceability of any of the terms or provisions of this proxy in
any other jurisdiction. If any provision of this proxy is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
Notwithstanding anything to the contrary, this proxy shall become
effective only as of, and subject to, the occurrence of the Effective Time, and
shall terminate immediately upon the termination of the Stockholders Agreement
pursuant to Section 11 thereof and shall terminate earlier as to particular
Subject Shares to the extent set forth in Section 11 of the Stockholders
Agreement.
Dated: ____________, ____
Name: _____________________
[By: ___________________________]
[Name:]
[Title:]
Number of shares of Common Stock,
$.01 par value per share, of the Company
owned of record as of the date of this proxy: ___________
Number of shares of Series A Cumulative
Pay-in-Kind Preferred Stock, $1.00 par value per share, of the Company
owned of record as of the date of this proxy: ___________
Number of shares of Series B Cumulative
Pay-in-Kind Convertible Preferred Stock, $1.00 par value per share, of the
Company
owned of record as of the date of this proxy: ___________
Number of shares of Series C Cumulative
Pay-in-Kind Convertible Preferred Stock, $1.00 par value per share, of the
Company
owned of record as of the date of this proxy: ___________
C-2
Number of Warrants to purchase
Series A Cumulative Pay-in-Kind
Preferred Stock, $1.00 par value per
share, of the Company owned of
record as of the date of this
proxy: ________________________
C-3
Schedule 1
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Ownership of Securities
Name of Stockholder Number of Number of Number of Number of Number of
Shares of Shares of Series A Series B Series C
Newco Common Common Preferred Preferred Preferred Number of
Stock Stock Shares Shares Shares Warrants
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Xxxxxxxxxx Fund II, L.P. 8 0 112,000 52,500 50,000 112,000
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Quilvest American Equity Ltd. 2 616,667 28,000 10,000 12,500 28,000
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S-1
