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EXHIBIT 3.2
[FORM OF]
AMENDED AND RESTATED BY-LAWS
OF
WHITE CAP INDUSTRIES, INC.
A Delaware Corporation
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation in
the State of Delaware shall be located in the City of Wilmington, County of New
Castle, State of Delaware, and the name of the corporation's registered agent at
such address shall be The Corporation Trust Company. The registered office
and/or registered agent of the corporation may be changed from time to time by
action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Annual Meeting. An annual meeting of the stockholders shall be
held each year within 150 days after the close of the immediately preceding
fiscal year of the corporation or at such other time specified by the Board of
Directors for the purpose of electing directors and conducting such other proper
business as may come before the meeting. At the annual meeting stockholders
shall elect directors and transact such other business as properly may be
brought before the meeting pursuant to ARTICLE II, Section 11 hereof.
Section 2. Special Meetings. Special Meetings of the stockholders may only
be called in the manner provided in the restated certificate of incorporation.
Section 3. Place of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting. If no designation is made, or
if a special meeting be otherwise called, the place of meeting shall be the
principal executive office of the corporation. If for any reason any annual
meeting shall not be held during any year, the business thereof may be
transacted at any special meeting of the stockholders.
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Section 4. Notice. Whenever stockholders are required or permitted to take
action at a meeting, written or printed notice stating the place, date, time,
and, in the case of special meetings, the purpose or purposes, of such meeting,
shall be given to each stockholder entitled to vote at such meeting not less
than ten (10) nor more than sixty (60) days before the date of the meeting. All
such notices shall be delivered, either personally or by mail, by or at the
direction of the board of directors, the chairman of the board, the president or
the secretary, and if mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, postage prepaid, addressed to the
stockholder at his, her or its address as the same appears on the records of the
corporation. Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when the person attends for the express purpose
of objecting at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened.
Section 5. Stockholders List. The officer having charge of the stock
ledger of the corporation shall make, at least ten (10) days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at such meeting arranged in alphabetical order, showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 6. Quorum. The holders of a majority of the outstanding shares of
capital stock entitled to vote, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders, except as otherwise
provided by the General Corporation Law of the State of Delaware or by the
restated certificate of incorporation. If a quorum is not present, the holders
of a majority of the shares present in person or represented by proxy at the
meeting, and entitled to vote at the meeting, may adjourn the meeting to another
time and/or place. When a specified item of business requires a vote by a class
or series (if the corporation shall then have outstanding shares of more than
one class or series) voting as a class, the holders of a majority of the shares
of such class or series shall constitute a quorum (as to such class or series)
for the transaction of such item of business.
Section 7. Adjourned Meetings. When a meeting is adjourned to another time
and place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty (30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless (i) by express provisions of an applicable law or of the
restated certificate of incorporation a different vote is required, in which
case such express provision shall govern and control the decision of such
question, or (ii) the subject matter is the
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election of directors, in which case Section 2 of ARTICLE III hereof shall
govern and control the approval of such subject matter.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the restated certificate of
incorporation of the corporation or any amendments thereto and subject to
Section 3 of ARTICLE VI hereof, every stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
common stock held by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period. A duly executed proxy
shall be irrevocable if it states that it is irrevocable and if, and only as
long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally. Any proxy is suspended when the person
executing the proxy is present at a meeting of stockholders and elects to vote,
except that when such proxy is coupled with an interest and the fact of the
interest appears on the face of the proxy, the agent named in the proxy shall
have all voting and other rights referred to in the proxy, notwithstanding the
presence of the person executing the proxy. At each meeting of the stockholders,
and before any voting commences, all proxies filed at or before the meeting
shall be submitted to and examined by the secretary or a person designated by
the secretary, and no shares may be represented or voted under a proxy that has
been found to be invalid or irregular.
Section 11. Business Brought Before an Annual Meeting. At an annual
meeting of the stockholders, only such business shall be conducted as shall have
been properly brought before the meeting. To be properly brought before an
annual meeting, business must be (i) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the board of directors, (ii)
brought before the meeting by or at the direction of the board of directors, or
(iii) otherwise properly brought before the meeting by a stockholder. For
business to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the secretary of
the corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the corporation, not
less than sixty (60) days nor more than ninety (90) days prior to the meeting;
provided, however, that in the event that less than seventy days' notice or
prior public announcement of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the tenth (10th) day following the date on
which such notice of the date of the annual meeting was mailed or such public
announcement was made. A stockholder's notice to the secretary shall set forth
as to each matter the stockholder proposes to bring before the annual meeting
(i) a brief description of the business desired to be brought before the annual
meeting, (ii) the name and address, as they appear on the corporation's books,
of the stockholder proposing such business, (iii) the class and number of shares
of the corporation which are beneficially owned by the stockholder, and (iv) any
material interest of the stockholder in such business. Notwithstanding anything
in these by-laws to the contrary, no business shall be conducted at an annual
meeting except in accordance with the procedures set forth in this Section 11.
The presiding officer of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not
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properly brought before the meeting and in accordance with the provisions of
this Section 11; and if he should so determine, he shall so declare to the
meeting and any such business not properly brought before the meeting shall not
be transacted. For purposes of this Section 11, "public announcement" shall mean
disclosure in a press release reported by Dow Jones News Service, Associated
Press or a comparable national news service. Nothing in this Section 11 shall be
deemed to affect any rights of stockholders to request inclusion of proposals in
the corporation's proxy statement pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors. In
addition to such powers as are herein and in the restated certificate of
incorporation expressly conferred upon it, the board of directors shall have and
may exercise all the powers of the corporation, subject to the provisions of the
laws of Delaware, the restated certificate of incorporation and these by-laws.
Section 2. Number, Election and Term of Office. Subject to any rights of
the holders of any series of Preferred Stock to elect additional directors under
specified circumstances, the number of directors which shall constitute the
board shall be such as from time to time shall be fixed by resolution adopted by
the affirmative vote of a majority of the total number of directors then in
office. The directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote in
the election of directors; provided that, whenever the holders of any class or
series of capital stock of the corporation are entitled to elect one or more
directors pursuant to the provisions of the restated certificate of
incorporation of the corporation (including, but not limited to, for purposes of
these by-laws, pursuant to any duly authorized certificate of designation), such
directors shall be elected by a plurality of the votes of such class or series
present in person or represented by proxy at the meeting and entitled to vote in
the election of such directors. The directors shall be elected and shall hold
office only in the manner provided in the restated certificate of incorporation.
Section 3. Removal and Resignation. No director may be removed from office
without cause and without the affirmative vote of the holders of a majority of
the voting power of the then outstanding shares of capital stock entitled to
vote generally in the election of directors voting together as a single class;
provided, however, that if the holders of any class or series of capital stock
are entitled by the provisions of this restated certificate of incorporation (it
being understood that any references to this restated certificate of
incorporation shall include any duly authorized certificate of designation) to
elect one or more directors, such director or directors so elected may be
removed without cause only by the vote of the holders of a majority of the
outstanding shares of that class or series entitled to vote. Any director may
resign at any time upon written notice to the corporation.
Section 4. Vacancies. Vacancies and newly created directorships resulting
from any increase in the total number of directors may be filled only in the
manner provided in the restated certificate of incorporation.
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Section 5. Nominations.
(a) Only persons who are nominated in accordance with the procedures
set forth in these by-laws shall be eligible to serve as directors. Nominations
of persons for election to the board of directors of the corporation may be made
at a meeting of stockholders (i) by or at the direction of the board of
directors or (ii) by any stockholder of the corporation who was a stockholder of
record at the time of giving of notice provided for in this by-law, who is
entitled to vote for the election of directors at the meeting and who shall have
complied with the notice procedures set forth below in Section 5(b).
(b) In order for a stockholder to nominate a person for election to
the board of directors of the corporation at a meeting of stockholders, such
stockholder shall have delivered timely notice of such stockholder's intent to
make such nomination in writing to the secretary of the corporation. To be
timely, a stockholder's notice shall be delivered to or mailed and received at
the principal executive offices of the corporation (i) in the case of an annual
meeting, not less than sixty (60) nor more than ninety (90) days prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that in the event that the date of the annual meeting is changed by more than
thirty (30) days from such anniversary date, notice by the stockholder to be
timely must be so received not later than the close of business on the tenth
(10th) day following the earlier of the day on which notice of the date of the
meeting was mailed or public disclosure of the meeting was made, and (ii) in the
case of a special meeting at which directors are to be elected, not later than
the close of business on the tenth (10th) day following the earlier of the day
on which notice of the date of the meeting was mailed or public announcement of
the meeting was made. Such stockholder's notice shall set forth (i) as to each
person whom the stockholder proposes to nominate for election as a director at
such meeting all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Exchange Act
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected); (ii) as to the
stockholder giving the notice (A) the name and address, as they appear on the
corporation's books, of such stockholder and (B) the class and number of shares
of the corporation which are beneficially owned by such stockholder and also
which are owned of record by such stockholder; and (iii) as to the beneficial
owner, if any, on whose behalf the nomination is made, (A) the name and address
of such person and (B) the class and number of shares of the corporation which
are beneficially owned by such person. At the request of the board of directors,
any person nominated by the board of directors for election as a director shall
furnish to the secretary of the corporation that information required to be set
forth in a stockholder's notice of nomination which pertains to the nominee.
(c) No person shall be eligible to serve as a director of the
corporation unless nominated in accordance with the procedures set forth in this
Section 5. The chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by this Section 5, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be disregarded. A
stockholder seeking to nominate a person to serve as a director must also comply
with all applicable requirements of the Exchange Act, and the rules and
regulations thereunder with respect to the matters set forth in this Section 5.
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Section 6. Annual Meetings. The annual meeting of the board of directors
shall be held without other notice than this by-law immediately after, and at
the same place as, the annual meeting of stockholders.
Section 7. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by the
chairman of the board, the president (if the president is a director) or, upon
the written request of at least a majority of the directors then in office, the
secretary of the corporation on at least 24 hours notice to each director,
either personally, by telephone, by mail, or by telecopy.
Section 8. Chairman of the Board, Quorum, Required Vote and Adjournment.
The board of directors shall elect, by the affirmative vote of a majority of the
total number of directors then in office, a chairman of the board, who shall
preside at all meetings of the stockholders and board of directors at which he
or she is present. If the chairman of the board is not present at a meeting of
the stockholders or the board of directors, the president (if the president is a
director and is not also the chairman of the board) shall preside at such
meeting, and, if the president is not present at such meeting, a majority of the
directors present at such meeting shall elect one of their members to so
preside. A majority of the total number of directors then in office shall
constitute a quorum for the transaction of business. Unless by express provision
of an applicable law, the corporation's amended and restated certificate of
incorporation or these by-laws a different vote is required, the vote of a
majority of directors present at a meeting at which a quorum is present shall be
the act of the board of directors. If a quorum shall not be present at any
meeting of the board of directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 9. Committees. The board of directors may, by resolution passed by
a majority of the total number of directors then in office, designate one or
more committees, each committee to consist of one or more of the directors of
the corporation, which to the extent provided in such resolution or these
by-laws shall have, and may exercise, the powers of the board of directors in
the management and affairs of the corporation, except as otherwise limited by
law. The board of directors may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. Such committee or committees shall have such name
or names as may be determined from time to time by resolution adopted by the
board of directors. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
Section 10. Committee Rules. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. Unless otherwise provided in such a
resolution, in the event that a member and that member's alternate, if
alternates are designated by the board of directors as provided in Section 9 of
this ARTICLE III, of such committee is or are absent or disqualified, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not such member or members constitute a quorum, may unanimously
appoint another member of the board of directors to act at the meeting in place
of any such absent or disqualified member.
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Section 11. Communications Equipment. Members of the board of directors or
any committee thereof may participate in and act at any meeting of such board or
committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
and speak with each other, and participation in the meeting pursuant to this
Section 11 shall constitute presence in person at the meeting.
Section 12. Waiver of Notice and Presumption of Assent. Any member of the
board of directors or any committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
Section 13. Action by Written Consent. Unless otherwise restricted by the
restated certificate of incorporation, any action required or permitted to be
taken at any meeting of the board of directors, or of any committee thereof, may
be taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the corporation shall be elected by the
board of directors and shall consist of a chairman of the board, if any is
elected, chief executive officer, a president, one or more vice-presidents, a
secretary, a chief financial officer, a treasurer and such other officers and
assistant officers as may be deemed necessary or desirable by the board of
directors. Any number of offices may be held by the same person. In its
discretion, the board of directors may choose not to fill any office for any
period as it may deem advisable, except that the offices of president and
secretary shall be filled as expeditiously as possible.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as convenient.
Vacancies may be filled or new offices created and filled at any meeting of the
board of directors. Each officer shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of directors
may be removed by the board of directors at its discretion, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
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Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by the
board of directors.
Section 5. Compensation. Compensation of all executive officers shall be
approved by the board of directors, and no officer shall be prevented from
receiving such compensation by virtue of his or her also being a director of the
corporation.
Section 6. The Chairman of the Board. The Chairman of the Board, if one
shall have been elected, shall be a member of the board, an officer of the
Corporation, and, if present, shall preside at each meeting of the board of
directors or shareholders. The Chairman of the Board shall, in the absence or
disability of the president, act with all of the powers and be subject to all
the restrictions of the president. He shall advise the president, and in the
president's absence, other officers of the Corporation, and shall perform such
other duties as may from time to time be assigned to him by the board of
directors.
Section 7. Chief Executive Officer. The chief executive officer shall have
the powers and perform the duties incident to that position. Subject to the
powers of the board of directors, he shall be in the general and active charge
of the entire business and affairs of the corporation, and shall be its chief
policy making officer. In the absence of the Chairman of the Board, he shall
preside at all meetings of the board of directors and stockholders and shall
have such other powers and perform such other duties as may be prescribed by the
board of directors or provided in these by-laws. The chief executive officer is
authorized to execute bonds, mortgages and other contracts requiring a seal,
under the seal of the corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the board of directors to some other
officer or agent of the corporation. Whenever the president is unable to serve,
by reason of sickness, absence or otherwise, the chief executive officer shall
perform all the duties and responsibilities and exercise all the powers of the
president.
Section 8. The President. The president of the corporation shall, subject
to the powers of the board of directors and the chairman of the board, have
general charge of the business, affairs and property of the corporation, and
control over its officers, agents and employees; and shall see that all orders
and resolutions of the board of directors are carried into effect. The president
is authorized to execute bonds, mortgages and other contracts requiring a seal,
under the seal of the corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the board of directors to some other
officer or agent of the corporation. The president shall have such other powers
and perform such other duties as may be prescribed by the chief executive
officer, the board of directors or as may be provided in these by-laws.
Section 9. Vice-presidents. The vice-president, or if there shall be more
than one, the vice-presidents in the order determined by the board of directors
or the chairman of the board, shall, in the absence or disability of the
president, act with all of the powers and be subject to all the restrictions of
the president. The vice-presidents shall also perform such other duties and have
such other powers as the board of directors, the chief executive officer, the
president or these by-laws may, from time to time, prescribe. The
vice-presidents may also be designated as executive vice-presidents or senior
vice-presidents, as the board of directors may from time to time prescribe.
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Section 10. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose or shall ensure that
his or her designee attends each such meeting to act in such capacity. Under the
chairman of the board's supervision, the secretary shall give, or cause to be
given, all notices required to be given by these by-laws or by law; shall have
such powers and perform such duties as the board of directors, the chief
executive officer, the president or these by-laws may, from time to time,
prescribe; and shall have custody of the corporate seal of the corporation. The
secretary, or an assistant secretary, shall have authority to affix the
corporate seal to any instrument requiring it and when so affixed, it may be
attested by his or her signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
or her signature. The assistant secretary, or if there be more than one, any of
the assistant secretaries, shall in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors, the
chief executive officer, the president, or secretary may, from time to time,
prescribe.
Section 11. The Chief Financial Officer. The chief financial officer shall
have the custody of the corporate funds and securities; shall keep full and
accurate all books and accounts of the corporation as shall be necessary or
desirable in accordance with applicable law or generally accepted accounting
principles; shall deposit all monies and other valuable effects in the name and
to the credit of the corporation as may be ordered by the chairman of the board
or the board of directors; shall cause the funds of the corporation to be
disbursed when such disbursements have been duly authorized, taking proper
vouchers for such disbursements; and shall render to the board of directors, at
its regular meeting or when the board of directors so requires, an account of
the corporation; shall have such powers and perform such duties as the board of
directors, the chief executive officer, the president or these by-laws may, from
time to time, prescribe. If required by the board of directors, the chief
financial officer shall give the corporation a bond (which shall be rendered
every six years) in such sums and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of the office of chief financial officer and for the restoration to the
corporation, in case of death, resignation, retirement, or removal from office,
of all books, papers, vouchers, money, and other property of whatever kind in
the possession or under the control of the chief financial officer belonging to
the corporation.
Section 12. Treasurer. The treasurer shall, in the absence or disability
of the chief financial officer, act with all of the powers and be subject to all
the restrictions of the chief financial officer. The treasurer shall also
perform such other duties and have such other powers as the board of directors,
the chief executive officer, the chief financial officer or these by-laws may,
from time to time, prescribe.
Section 13. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
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Section 14. Absence or Disability of Officers. In the case of the absence
or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person selected by it.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the chairman of the board, the chief executive officer or the president or any
vice president and the secretary or an assistant secretary of the corporation,
certifying the number of shares owned by such holder in the corporation. If such
a certificate is countersigned (i) by a transfer agent or an assistant transfer
agent other than the corporation or its employee or (ii) by a registrar, other
than the corporation or its employee, the signature of any such chairman of the
board, chief executive officer, president, vice president, secretary, or
assistant secretary may be facsimiles. In case any officer or officers who have
signed, or whose facsimile signature or signatures have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
corporation whether because of death, resignation or otherwise before such
certificate or certificates have been delivered by the corporation, such
certificate or certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates or whose
facsimile signature or signatures have been used thereon had not ceased to be
such officer or officers of the corporation. All certificates for shares shall
be consecutively numbered or otherwise identified. The name of the person to
whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the books of the corporation. Shares of stock
of the corporation shall only be transferred on the books of the corporation by
the holder of record thereof or by such holder's attorney duly authorized in
writing, upon surrender to the corporation of the certificate or certificates
for such shares endorsed by the appropriate person or persons, with such
evidence of the authenticity of such endorsement, transfer, authorization, and
other matters as the corporation may reasonably require, and accompanied by all
necessary stock transfer stamps. In that event, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate or certificates, and record the transaction on its books.
The board of directors may appoint a bank or trust company organized under the
laws of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the corporation.
Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the corporation
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a bond
sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
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Section 3. Fixing a Record Date for Stockholder Meetings. In order that
the corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the board of
directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be the close of business on the next
day following the day on which notice is first given. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the board of directors may fix a new record date for the adjourned meeting.
Section 4. Fixing a Record Date for Other Purposes. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the board of directors adopts the
resolution relating thereto.
Section 5. Registered Stockholders. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner. The corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof.
Section 6. Subscriptions for Stock. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the corporation,
subject to the provisions of the restated certificate of incorporation, if any,
may be declared by the board of directors at any regular or special meeting, in
accordance with applicable law. Dividends may be paid in cash, in property, or
in shares of the capital stock, subject to the provisions of the restated
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certificate of incorporation. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
any other purpose and the directors may modify or abolish any such reserve in
the manner in which it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders
for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
Section 3. Contracts. In addition to the powers otherwise granted to
officers pursuant to ARTICLE IV hereof, the board of directors may authorize any
officer or officers, or any agent or agents, of the corporation to enter into
any contract or to execute and deliver any instrument in the name of and on
behalf of the corporation, and such authority may be general or confined to
specific instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiaries, including any officer or employee who is a
director of the corporation or its subsidiaries, whenever, in the judgment of
the directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section shall be deemed to deny, limit
or restrict the powers of guaranty or warranty of the corporation at common law
or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors may provide a corporate
seal which shall be in the form of a circle and shall have inscribed thereon the
name of the corporation and the words "Corporate Seal, Delaware." The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in
any other corporation held by the corporation shall be voted by the chief
executive officer, the president or a vice-president, unless the board of
directors specifically confers authority to vote with respect thereto, which
authority may be general or confined to specific instances, upon some other
person or officer. Any person authorized to vote securities shall have the power
to appoint proxies, with general power of substitution.
Section 8. Inspection of Books and Records. The board of directors shall
have power from time to time to determine to what extent and at what times and
places and under what conditions and regulations the accounts and books of the
corporation, or any of them, shall be open to the inspection
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of the stockholders; and no stockholder shall have any right to inspect any
account or book or document of the corporation, except as conferred by the laws
of the State of Delaware, unless and until authorized so to do by resolution of
the board of directors or of the stockholders of the corporation.
Section 9. Section Headings. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
these by-laws is or becomes inconsistent with any provision of the restated
certificate of incorporation, the General Corporation Law of the State of
Delaware or any other applicable law, the provision of these by-laws shall not
be given any effect to the extent of such inconsistency but shall otherwise be
given full force and effect.
ARTICLE VII
AMENDMENTS
In furtherance and not in limitation of the powers conferred by statute,
the board of directors of the corporation is expressly authorized to make,
alter, amend, change, add to or repeal these by-laws by the affirmative vote of
70% of the total number of directors then in office. Any alteration or repeal of
these by-laws by the stockholders of the corporation shall require the
affirmative vote of a majority of the outstanding shares of the corporation
entitled to vote on such alteration or repeal; provided, however, that Section
11 of ARTICLE II and Sections 2, 3, 4 and 5 of ARTICLE III and this ARTICLE VII
of these by-laws shall not be altered, amended or repealed and no provision
inconsistent therewith shall be adopted without the affirmative vote of the
holders of at least 66 2/3% of the outstanding shares of the corporation
entitled to vote on such alteration or repeal.
October 1997
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EXHIBIT 10.3
[FORM OF]
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
effective as of January 1, 1997 by and between WHITE CAP INDUSTRIES, INC., a
California corporation (the "Company"), and RICHARD GAGNON, an individual
("Executive").
R E C I T A L S
WHEREAS, the Company and Executive entered into that certain Employment
Agreement dated February 25, 1997 (the "Employment Agreement"); and
WHEREAS, the parties desire to amend the Employment Agreement as provided
herein; and
WHEREAS, the Company desires to retain the services of Executive, and
Executive desires to be employed by the Company, on the terms and subject to the
conditions set forth in this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive accepts
employment with the Company, upon the terms and conditions set forth in this
Agreement for the period beginning January 1, 1997 and ending as provided in
Section 5 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, Executive shall serve as a Senior Vice
President and the National Sales Manager of the Company and shall have the
normal and reasonable duties, responsibilities and authority commensurate with
such position as determined by the Board of Directors of the Company and as
directed by the President of the Company. Executive's services pursuant to this
Agreement shall be performed primarily at the Company's principal place of
business in Orange County, California, and at such other facilities of the
Company as are necessary for the Executive to perform his duties hereunder.
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(b) Executive shall report to the President of the Company. Executive
shall devote Executive's reasonable best efforts and Executive's full business
time and attention (except for permitted vacation periods and reasonable periods
of illness or other incapacity) to the business and affairs of the Company
during the normal business hours of the executive offices of the Company.
Executive shall perform Executive's duties and responsibilities to the best of
Executive's abilities in a reasonably diligent, trustworthy, businesslike and
efficient manner.
3. Base Salary and Benefits.
(a) During the Employment Period, Executive's base salary shall be
$200,000 per annum (the "Base Salary"), which salary shall be payable in regular
installments in accordance with the Company's general payroll practices,
including those related to withholding for taxes, insurance and similar items.
Executive's Base Salary shall be increased on January 1 of each calendar year,
commencing January 1, 1998, by at least the Adjustment Percentage (as defined
below) of the Base Salary applicable to the previous fiscal year. As used
herein, "Adjustment Percentage" means the sum of (x) the Consumer Price Index
for the State of California, published by the Bureau of Labor Statistics of the
United States Department of Labor for the immediately preceding fiscal year,
plus (y) three percent (3%). In addition, during the Employment Period,
Executive shall be entitled to participate in all of the Company's employee
benefit, profit sharing, stock option, incentive compensation, vacation and
other perquisite plans and programs ("Benefits") for which key employees of the
Company are generally eligible; provided, however, in no event shall Executive's
benefits be less than the Benefits described on Exhibit "A" hereto.
(b) During the Employment Period, the Company shall reimburse Executive
for all reasonable expenses incurred by Executive in the course of performing
Executive's duties under this Agreement which are consistent with the Company's
policies in effect from time to time with respect to travel, entertainment and
other business expenses, subject to the Company's requirements with respect to
reporting and documentation of such expenses.
(c) During the Employment Period, the Company shall pay for or reimburse
Executive for all fees and reasonable expenses of Executive's participation in
professional organizations, trade associations or other organizations reasonably
related to Executive's position and responsibilities as an officer of the
Company.
4. Bonus; Incentive Compensation.
(a) Fixed Bonus. In the event that gross margin percentage of the Company
(determined by dividing the net operating income of the Company by the gross
revenues of the Company, calculated in accordance with generally accepted
accounting principles applied consistently with past practices) for any full
fiscal year during the term of this Agreement is equal to, or greater than 90%
of the gross margin percentage (which gross margin percentage shall be agreed
upon by the Chief Executive Officer of the Company and the Executive prior to
completion of the first fiscal quarter of such fiscal year of the Company) of
the Company for the prior full
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fiscal year, Executive shall be entitled to receive a fixed bonus equal to
$100,000 at the end of such year, payable within 95 days following the end of
such fiscal year. For the fiscal year ended March 31, 1998, the prior full
fiscal year shall be deemed to be the fiscal year ended December 31, 1996.
(b) Variable Bonus. In addition to the Fixed Bonus described in Section
4(a) above, Executive shall also be entitled to receive an annual bonus at the
end of each full fiscal year of employment by the Company, payable within 95
days following the end of such fiscal year, equal to $10,000 for each 1% point
increase in the greater of (i) Future EBITDA over the Base Year EBITDA plus 5%,
or (ii) Three Year Average Future EBITDA over Base Year EBITDA plus 5%. For
purposes of the foregoing, any fractional percentage point of EBITDA growth
shall be multiplied by $10,000 to determine the bonus allocable to such
fractional percentage point.
Base Year EBITDA for the fiscal year ending March 31, 1997 (the
"Base Year") shall be $13,634,691 as determined in accordance with Schedule II
attached hereto and agreed to by the Company and Executive.
For each fiscal year thereafter, Base Year EBITDA shall be
determined by the audited financial statements for the Company for the
immediately preceding fiscal year on a consolidated basis, and shall also
include Restated EBITDA of any entity acquired by the Company during the subject
fiscal year ("Acquired Entity"), based upon the most recently completed fiscal
year of the Acquired Entity.
Restated EBITDA shall mean EBITDA of an Acquired Entity for any
period prior to the acquisition, restated to exclude discontinued owner
compensation and other owner related restatements deemed appropriate by the
Company's Chief Executive Officer and Chief Financial Officer.
Future EBITDA shall be determined by the audited financial
statements for the Company for the subject fiscal year on a consolidated basis
utilizing the actual EBITDA of the Company for the subject fiscal year,
including the actual EBITDA of any Acquired Entity for the period of the fiscal
year the Company actually owned the Acquired Entity, and the pro forma Restated
EBITDA of the Acquired Entity for the period of the fiscal year the Acquired
Entity was not owned by the Company.
Three Year Average Future EBITDA shall mean the average of the
Future EBITDA for the immediately preceding three (3) years, or such shorter
period of time if less than three years have elapsed since the Base Year.
Base Year EBITDA and Future EBITDA shall be determined within 75
days following the end of the Company's fiscal year, and shall be set forth in
Schedule II attached hereto and initialed and agreed to by the Company and
Executive. Schedule III attached hereto
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contains an example of the calculation of the Variable Bonus for the fiscal year
ended March 31, 1998 and after giving effect to the acquisition of an Acquired
Entity during the fiscal year.
(c) Incentive Compensation. As an incentive to continue employment with
the Company, the Company shall pay to the Executive on the third anniversary of
this Agreement an amount equal to $1,000,000 (the "Incentive Compensation").
Executive shall be required to be employed by the Company on the third
anniversary of this Agreement to be eligible to receive the Incentive
Compensation; provided, however, if Executive has been terminated without Cause,
has resigned for Good Reason or if Executive dies or becomes permanently
disabled or incapacitated prior to the third anniversary of this Agreement,
Executive shall still be eligible to receive the Incentive Compensation in
accordance with this Section 4(c) and Section 5 below. Notwithstanding the
foregoing, the Company may defer one-third of the Incentive Compensation to the
fourth anniversary of this Agreement and an additional one-third of the
Incentive Compensation to the fifth anniversary of this Agreement in the event
the payment thereof at the third anniversary would cause the Company to breach
any of its financial covenants contained in agreements between the Company and
its institutional lenders. In the event of such deferral, the Company agrees to
(i) pay such deferred amount on the earlier to occur of (A) such time as it is
able without breaching the aforementioned financial covenants or (B) the fourth
or fifth anniversary of this Agreement, as applicable; and (ii) shall pay to the
Executive simple interest on the amount of the deferred Incentive Compensation
equal to 10% per annum, which interest shall be paid at the time of payment of
the deferred Incentive Compensation.
5. Term.
(a) The Employment Period shall end on the fifth anniversary hereof
("Original Term") unless extended as set forth below; provided that (i) the
Employment Period shall terminate prior to the Original Term upon Executive's
death or permanent disability or incapacity; (ii) the Employment Period may be
terminated by the Company at any time prior to such date for Cause (as
hereinafter defined) or without Cause; and (iii) the Employment Period may be
terminated by Executive for Good Reason at any time or by his Voluntary
Resignation after the second anniversary hereof. For purposes of the foregoing,
Executive's permanent disability or incapacity shall be determined in accordance
with the Company's disability insurance policy, if such a policy is then in
effect, or if no such policy is then in effect, such permanent disability or
incapacity shall be determined by the Board in its good-faith judgment based
upon inability to perform the essential functions of his position, with
reasonable accommodation by the Company, for a period in excess of 180 days
during any period of 365 calendar days. For purposes of the foregoing,
Executive's "Voluntary Resignation" shall mean resignation by Employee other
than for Good Reason. The Employment Period shall automatically extend for
successive one-year periods (each, a "Supplemental Term") following the fifth
anniversary of this Agreement, unless either party delivers written notice to
the other party no later than one hundred twenty (120) days prior to the end of
the fifth anniversary of this Agreement or any successive anniversary of this
Agreement, as the case may be, of intent not to renew.
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(b) If the Employment Period is terminated without Cause by the Company or
by Executive with Good Reason prior to the end of the Original Term or a
Supplemental Term, as the case may be, the Executive shall be entitled to
receive (i) his Base Salary (determined in accordance with Section 3(a)) during
the period that is the lesser of (A) twelve months, or (B) the remainder of the
Original Term or a Supplemental Term, as the case may be, (ii) a prorated
portion of any fixed or variable bonus payable pursuant to Sections 4(a) and (b)
earned through the date of such termination for the calendar year in which the
termination occurs, and (iii) the Incentive Compensation referred to in Section
4(c). If the Executive's employment is terminated without Cause by the Company,
the Company shall keep in force existing health insurance covering the Executive
and his dependents for a period of eighteen (18) months from the date of
termination on the basis in effect at the date of Executive's employment at the
Company's expense. If Executive's employment is a resignation with Good Reason,
the Company shall keep in force existing health insurance covering the Executive
and his dependents for a period of six (6) months from the date of termination
on the basis in effect at the date of Executive's employment.
(c) If the Employment Period is terminated by the Company for Cause or is
terminated as a result of Executive's Voluntary Resignation, (i) Executive shall
be entitled to receive Executive's Base Salary only through the date of
termination, and (ii) Executive shall not be entitled to any Incentive
Compensation payment earned as of the date of termination, unless such
termination is after the third anniversary hereof, in which case the Incentive
Compensation shall be deemed fully earned.
(d) If the Employment Period is terminated as a result of permanent
disability, incapacity or death, Executive or Executive's representatives or
beneficiaries shall be entitled to receive (i) Executive's Base Salary through
the date of termination, plus twelve months of Executive's then Base Salary,
(ii) a prorated portion of any fixed or variable bonus payable pursuant to
Sections 4(a) and (b) earned through the date of such termination for the
calendar year in which the termination occurs, and (iii) any remaining Incentive
Compensation payments referred to in Section 4(c). If the Executive's employment
is terminated by reason of Executive's death, incapacity or disability, the
Company shall keep in force existing health insurance covering the Executive and
his dependents for a period of 18 months from the date of termination on the
basis in effect at the date of termination of the Executive's employment. The
Executive and his dependents shall also be entitled to any continuation of
coverage rights under an applicable law.
(e) The amount of Base Salary payable pursuant to Sections 5(b) and (c)
shall be payable in accordance with the Company's normal payroll procedures
applied to Executive as if he remained an employee of the Company. The amount of
any fixed or variable bonus payable pursuant to Sections 5(b) and (c) shall be
payable in accordance with the terms of Sections 4(a) and (b). The amount of any
Incentive Compensation payable pursuant to Sections 5(b) and (c) shall be
payable on the dates set forth in Section 4(c).
(f) All of Executive's rights to any other employee benefit hereunder
(except as described above or pursuant to law) accruing after the termination of
the Employment Period shall
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cease upon such termination. Upon termination of this Agreement for any reason
whatsoever, Executive shall have the right to receive any accrued but unused
vacation time and any and all benefits due Executive pursuant to Section 3(a) as
of termination.
(g) For purposes of this Agreement, "Cause" shall mean (1) the conviction
of any act constituting a felony under the laws of any state or of the United
States, or a crime involving moral turpitude that causes material harm to
Company, (2) willful misconduct by Executive causing material harm to Company,
but only if Executive shall not have discontinued such misconduct within 30 days
after receiving written notice from the Company describing the misconduct and
stating that the Company will consider the continuation of such misconduct as
cause for termination of this Agreement, or (3) substantial failure to perform
the duties required by Section 2(a) hereof which is not cured within 180 days
after receiving written notice from the Company describing the failure to
perform and stating that the Company will consider the continuation of such
failure to perform as cause for termination of this Agreement. Resignation with
"Good Reason" shall mean (x) the assignment to Executive of duties substantially
and materially inconsistent with the position and nature of Executive's
employment as set forth in Section 2(a) of this Agreement, (y) a reduction of
compensation and benefits that would substantially diminish the aggregate value
of Executive's compensation and benefits or a substantial change in the
allocation between Executive's variable and fixed compensation without
Executive's consent, or (z) the failure by the Company to obtain from any
successor an agreement to assume and perform this Agreement.
(h) Nothing in this Agreement shall be deemed to limit or otherwise
abrogate the Company's obligation to make the payments under Section 5(b) if
Executive is terminated without Cause following a merger, consolidation or sale
of the Company or following a change in the control of the Company's outstanding
voting securities. A "change in control" shall be deemed to have occurred if any
person or any persons acting together that would constitute a group (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) (other than
Greg Grosch, KRG Capital Partners, LLC, a Colorado limited liability company
("KRG"), or its affiliates, or a group in which Greg Grosch, KRG or its
affiliates are the controlling participants) shall beneficially own at least 50%
of the aggregate voting power of all classes of capital stock (including shares
convertible into voting securities) entitled to vote on the election of
directors to the Board. Without limiting the foregoing, any sale of
substantially all of the Company's assets to another entity without an express
assumption by such entity of the Company's obligations under this Agreement
shall be deemed to constitute termination without Cause pursuant to Section 5(b)
above and the Company shall be obligated to make the specified payments pursuant
to Section 5(b) upon consummation of the transaction pursuant to which the
Company is selling substantially all of its assets.
6. Confidential Information. As used herein, the term "Confidential Information"
shall mean all information disclosed to Executive or known by Executive as a
consequence of or through Executive's employment by the Company (including,
without limitation, information belonging to third parties or companies
affiliated with or related to the Company in the Company's
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possession) not generally known in the trade or industry in which such
information is used, about the Company's products, processes, services,
customers, marketing strategy and business plans. Executive agrees that
Executive shall not disclose to any unauthorized person or use for Executive's
own account any Confidential Information without the prior written consent of
the Board or the President, unless and to the extent that the aforementioned
matters become generally known to and available for use by the public other than
as a result of Executive's acts or omissions to act. Executive shall deliver to
the Company at the termination of the Employment Period, or at any other time as
the Company may request, all memoranda, notes, plans, records, computer tapes
and software and other documents and data (and copies thereof) relating to the
Confidential Information or the business of the Company or any subsidiary which
Executive may then possess or have under Executive's control.
7. Non-Solicitation. During the Original Term or during any Supplemental Term,
Executive shall not directly or indirectly through another entity (i) induce or
attempt to induce or encourage any employee of the Company or any subsidiary to
leave the employ of the Company or such subsidiary, (ii) solicit or hire any
person who was an employee of the Company or any subsidiary of the Company at
any time during the Employment Period if such person was employed by the Company
or a subsidiary of the Company at any time during the one-year period prior to
such hiring, or (iii) induce or attempt to induce any customer, supplier,
licensee or other business relation of the Company or any subsidiary to
withdraw, curtail or cease doing business with the Company or such subsidiary.
8. Enforcement. If, at the time of enforcement of Sections 6 and 7 of this
Agreement, a court holds that the restrictions stated herein are unreasonable
under circumstances then existing, the parties hereto agree that the maximum
period or scope reasonable under such circumstances shall be substituted for the
stated period or scope. Because Executive's services are unique and because
Executive has access to Confidential Information, the parties hereto agree that
money damages would be an inadequate remedy for any breach of this Agreement.
Therefore, in the event a breach or threatened breach of this Agreement, the
Company or its successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent jurisdiction
for specific performance and/or injunctive or other relief in order to enforce,
or prevent any violations of, the provisions hereof (without posting a bond or
other security).
9. Representations.
(a) Executive hereby represents and warrants to the Company that (i) the
execution, delivery and performance of this Agreement by Executive does not and
will not conflict with, breach, violate or cause a default under any contract,
agreement, instrument, order, judgment or decree to which Executive is a party
or by which Executive is bound, (ii) Executive is not a party to or bound by any
employment agreement, noncompete agreement or confidentiality agreement with any
other person or entity, and (iii) upon the execution and delivery of this
Agreement by the Company, this Agreement shall be the valid and binding
obligation of Executive, enforceable in accordance with its terms.
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(b) Company hereby represents and warrants to the Executive that (i) the
execution, delivery and performance of this Agreement by the Company does not
and will not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which Executive is
a party or by which Executive is bound, and (ii) upon the execution and delivery
of this Agreement by the Executive, this Agreement shall be the valid and
binding obligation of the Company, enforceable in accordance with its terms.
10. Successors and Assigns. This Agreement is intended to bind and inure to the
benefit of and be enforceable by Executive, the Company and their respective
heirs, successors and assigns, except that Executive may not assign Executive's
rights or delegate Executive's obligations hereunder without the prior written
consent of the Company. Without limiting the foregoing, the Company may not,
without Executive's prior written consent, assign rights or delegate its
obligations under this Agreement.
11. Survival. Sections 6, 7, 8 and 9 shall survive and continue in full force in
accordance with their terms, notwithstanding any termination of the Employment
Period.
12. Notices. Any notice provided for in this Agreement shall be in writing and
shall be either personally delivered by nationally recognized overnight courier
service, or mailed by certified mail, return receipt requested, to the recipient
at the address indicated below.
If to Executive: Richard Gagnon
c/o White Cap Industries, Inc.
3120 Airway Drive
Costa Mesa, CA 92626
If to the Company: White Cap Industries, Inc.
c/o KR Capital Corporation
370 17th Street, Suite 2300
Denver, CO 80202
or such other address or to the attention of such person as the recipient party
shall leave specified by prior written notice to the sending party. Any notice
under this Agreement will be deemed to have been given when so delivered or
mailed. Any Notice of Termination of Executive's employment by the Company shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
13. Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be elective and valid under applicable law but
if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced
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in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
14. Complete Agreement. This Agreement, together with the other agreements
referred to herein, embodies the complete agreement and understanding among the
parties and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
15. Counterparts. This Agreement may be executed in separate counterparts, each
of which is deemed to be an original and all of which taken together constitute
one and the same agreement.
16. Choice of Law. This Agreement will be governed by the internal law and not
the laws of conflicts, of the State of California.
17. Agreement to Arbitrate; Expenses. Except for the enforcement of any covenant
herein that would be the subject of specific performance contemplated by Section
8, any controversy or claim arising out of or relating to this Agreement or the
formation, breach or interpretation hereof, will be settled by arbitration
before one arbitrator in accordance with the National Rules for the Resolution
of Employment Disputes of the American Arbitration Association in Orange County,
California. Judgment upon the award rendered by the arbitration may be entered
and enforced in the court with jurisdiction over the appropriate party. All
controversies not subject to arbitration or contesting any arbitration will be
litigated in the State of California, Orange County Superior Court or a federal
court in the Central District of California (and each of the parties hereto
hereby consents to the exclusive jurisdiction of such courts and waives any
objections thereto). The expenses (including reasonable attorneys' fees)
incurred by the prevailing party in any arbitration or litigation related to
this Agreement shall be borne by the non-prevailing party in such arbitration or
litigation.
18. Amendment and Waiver. The provisions of this Agreement may be amended or
waived only with the prior written consent of the Company and Executive, and no
course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
19. Nondisclosure and Invention and Copyright Assignment Agreement.
Executive's employment also is subject to the requirement that Executive
sign, observe, and agree to be bound, both during and after Executive's
employment, by the provisions of the Company's Nondisclosure and Invention and
Copyright Assignment Agreement, a copy of which is attached as Exhibit "A".
Executive's execution of the Nondisclosure and Invention and Copyright
Assignment Agreement is an express condition precedent to the Company's
obligations under this Agreement. Executive also agrees to execute, deliver and
perform, during the term of his employment with the Company and thereafter, any
other reasonable confidentiality and
-9-
23
nondisclosure agreements concerning the Company and any of its affiliates which
the Company promulgates for other key employees and executives of the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
COMPANY: WHITE CAP INDUSTRIES, INC.,
a California corporation
By:_________________________________
Greg Grosch
President
EXECUTIVE: ____________________________________
RICHARD GAGNON
-10-
24
EXHIBIT "A"
NONDISCLOSURE AND INVENTION AND
COPYRIGHT ASSIGNMENT AGREEMENT
In consideration of my employment by WHITE CAP INDUSTRIES, INC. or any of
its subsidiaries and affiliates (the "Company"):
1. I will promptly disclose to the Company in writing all discoveries,
concepts and ideas, whether patentable or unpatentable, including but not
limited to processes, designs, innovations, inventions, formulas, methods, and
techniques, as well as improvements and know-how related thereto, made,
conceived, reduced to practice or learned by me while in the Company's employ,
either solely or jointly with others during my employment ("Company
Inventions"). This Agreement shall not apply to any Invention developed entirely
on my own time without using the Company's equipment, supplies, facilities or
trade secret information, except for those items and inventions that either: (a)
relate, at the time of conception or reduction to practice of the invention, to
the Company's business or any of the products or services being developed,
manufactured or sold by the Company or which may conveniently be used in
relation therewith, or actual, or demonstrably anticipated research or
development of the Company, or (b) result from any work performed by me for the
Company.
THIS AGREEMENT DOES NOT APPLY TO ANY INVENTION WHICH QUALIFIES FULLY UNDER
THE PROVISIONS OF CALIFORNIA LABOR CODE SECTION 2870.
(a) I hereby assign to the Company all of my right, title and
interest in and to all such Company Inventions and to applications for
United States and/or foreign letters patent and to United States and/or
foreign letters patent granted upon such Company Inventions.
(b) I will acknowledge and deliver promptly to the Company such
written instruments and do such other acts, such as giving testimony in
support of my inventorship (and I understand I shall be paid for my time
spent in connection with such acts at a rate equal to the last hourly rate
paid to me by the Company), as may be necessary in the opinion of the
Company to obtain and maintain United States and/or foreign letters patent
and to vest the entire right and title thereunto in Company.
(c) I agree that title to any and all copyrights, copyright
registrations and copyrightable subject matter which occurs as a result of
my employment by the Company shall be the sole and exclusive property of
the Company, and that such works comprise works made for hire. I hereby
assign, and agree to assign, all of said copyrights to the Company.
25
(d) I have listed on the attached Annex A all unpatented, but
potentially patentable, ideas and inventions conceived before my
employment with the Company and which are exempt from the obligations of
this Agreement.
(e) In the event the Company is unable (after good faith efforts are
made by the Company) to secure my signature on any document necessary to
apply for, prosecute, obtain, or enforce any patent, copyright, or other
right of protection relating to any Company Inventions, I hereby
irrevocably designate and appoint the Company and each of its duly
authorized officers and agents as my agent and attorney-in-fact to act for
and in my behalf and stead to execute and file any such document and to do
all other lawfully permitted acts to further the prosecution, issuance and
enforcement of patents, copyrights or other rights or protections with the
same force and effect as if executed and delivered by me.
2. As a direct or indirect consequence of my employment with the Company I
have been and will/may be exposed to highly sensitive and confidential
information (some of which I may in the past have, or may in the future, develop
or contribute to) not generally, if at all, known or available to persons or
entities not in some way affiliated with the Company and/or affiliates
(hereinafter "Confidential Information"). Confidential Information shall
include, without limitation, all (i) information that has or could have
commercial value or other utility in the business in which the Company and its
affiliates are engaged or contemplate engaging in, and (ii) all information the
unauthorized disclosure of which could be detrimental to the interests of the
Company and/or its affiliates, whether or not such information is identified as
Confidential Information by the Company. By example, and without limitation,
Confidential Information includes: financial statements and records,
illustrations, prototypes, models, whether patentable or unpatentable, trade
secrets, know-how, concepts and other data, trademarks, copyrights, design
features, or configurations of any kind, procedures, demonstrations, methods,
processes, uses, manufacturing information, techniques, formulas, improvements,
research and development data, pamphlets, books, reports or other documents,
inspection procedures, apparatuses, compounds, compositions, combinations,
programs, software and works of authorships, whether discovered, conceived,
developed, made or produced, research and development projects; strategic
alliances; confidential information of other entities or companies with whom the
Company or its affiliates may enter into joint ventures, strategic alliances or
other business relationships; the identity of consultants and assistants; future
advertising and marketing methods and plans; detailed sales and pricing
information and formulas; budgets; product performance; sources of products;
production and distribution methods or procedures; business methods, procedures
and plans; licensing arrangements; customer product preferences and
requirements; and, additional information relating to financial, marketing,
technical, developmental and/or other business aspects, of the Company and/or
the Company's affiliates. I agree and understand that any and all of the
foregoing is considered by the Company to be of a highly confidential nature and
as a trade secret. The term "Confidential Information" shall not include any
information obtained by me through (i) industry publications which are
disseminated to or can be acquired by businesses in the industry, (ii) local and
state contractors license lists, (iii) Dodge Reports and Dun & Bradstreet and
any similar
26
information services, (iv) any Chamber of Commerce or other trade association
reports, or (v) reports from governmental agencies. In furtherance of the
foregoing, I agree as follows:
(a) To refrain from reproducing or making any summary, extract or
abridgement of, other than in the regular course of business, or removing,
any business record, document, schematic, drawing, instrument, component
or any other item dealing with the Confidential Information without prior
written consent therefor.
(b) To refrain from discussing with any other person or persons,
whether or not said persons are in the employ of the Company, any aspect
of the Confidential Information, except as said discussions directly
relate to completion of the particular task at hand and/or in compliance
with instructions to do so.
(c) To accept and maintain the Confidential Information on a
confidential basis and to protect and safeguard same against unauthorized
publication or disclosure. I will not be justified in disregarding the
obligation of confidentiality by selecting individual pieces of public
information and fitting them together by use of integrated disclosure to
contend that such Confidential Information is in the public domain.
(d) Other than in furtherance of my employment with the Company, not
to use, directly or indirectly, for my own or for my future employer's
advantage, any Confidential Information learned during my employment with
the Company and which is not made publicly known (through no fault of
mine).
(e) Not to disclose, publicize, reveal or make available, directly
or indirectly, any of the Confidential Information to any firm, person, or
entity whatsoever, except for a disclosure which is required, if at all,
by statute, order of court or otherwise by law, and then only after first
advising the Company of such demand with reasonably sufficient advance
notice, if possible, so as to afford the Company an opportunity to seek a
protective order.
(f) Upon termination of my employment, to turn over to a designated
individual employed by the Company all property then in my possession or
custody belonging to the Company. I will not retain any original, copy,
summary or abridgement of any document which contains Confidential
Information, including correspondence, memoranda, reports, calendars,
contracts, notebooks, drawings, photos or other documents relating in any
way to the affairs of the Company or to the affairs of its affiliated
companies and which are entrusted to me or developed by me at any time
during my employment with the Company, all of which, will be delivered to
the Company immediately upon termination of my employment.
(g) Not to interfere with the relationship between and/or among the
Company and its consultants, agents, employees or others working on
research and development
27
projects or providing services or products to or for the Company, nor
disclose the identity of said individuals and/or entities so long as not
otherwise generally known in the trade.
3. Notwithstanding the definition of "Confidential Information," I
understand that I shall not be liable for disclosure to any third party or use
of any Confidential Information which: (a) at the time of disclosure or
thereafter becomes a part of the public domain through no act or omission by me;
(b) has been independently generated, discovered or perfected by me and is
listed on the attached Annex A; (c) is subsequently and lawfully disclosed to me
by a third party, which third party did not acquire the information under an
obligation of confidentiality from or through the Company; or (d) is required to
be disclosed as a matter of law.
4. I acknowledge and agree that the Confidential Information, and the
strict confidentiality thereof, materially affects the successful conduct of the
Company's business and its goodwill; therefore, any breach of the terms of this
Agreement by me is a material breach thereof, and may result in termination of
my employment, the imposition of injunctive relief, and liability for damages
sustained by the Company. The expenses (and reasonable attorneys' fees) incurred
by the prevailing party in any arbitration or litigation relating to this
Agreement shall be borne by the non-prevailing party in such arbitration or
litigation.
5. No modification or waiver of this Agreement or any of its provisions
shall be binding upon the Company unless made in writing and signed on behalf of
the Company by one of its officers (other than me). The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision and such invalid or
unenforceable provision shall be reformed to the extent possible in order to
give its intended effect and/or meaning. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
6. This Agreement together with my Employment Agreement with the Company
supersedes any and all agreements between me and the Company with respect to the
subject matter hereof. In the event of any controversy, dispute or claim arising
out of or relating to this Agreement, the arbitration provisions of Section 17
of the Employment Agreement between me and the Company shall be applicable. The
covenants and agreements undertaken herein shall survive termination of my
employment.
28
I have read and fully understand the foregoing, and by affixing my
signature below, I agree to be fully bound hereby.
________________________________
EMPLOYEE'S NAME
(Please Print)
Dated: ______________________ ________________________________
EMPLOYEE'S SIGNATURE
29
WRITTEN NOTIFICATION TO EMPLOYEE
In accordance with California Labor Code Section 2872, you are hereby
notified that your Employee Nondisclosure and Invention and Copyright Assignment
Agreement does not require you to assign to the Company any invention which
qualifies fully under the provisions of California Labor Code Section 2870.
You are hereby provided a copy of California Labor Code Section 2870.
I hereby acknowledge receipt of this written notification.
Dated: _______________, 1997 ________________________________
EMPLOYEE'S SIGNATURE
30
AMENDMENT TO AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (the "Agreement") is entered into as of this _________ day of
_____________, 1997 by and between WHITE CAP INDUSTRIES, INC., a California
corporation (the "Company"), and RICHARD GAGNON, an individual ("Executive").
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. A new Section 4(d) to the Amended and Restated Employment Agreement dated
effective as of January 1, 1997 is hereby added to read in full as follows:
(d) Accelerated Incentive Compensation. Notwithstanding anything in this
Agreement to the contrary, the Company hereby agrees to accelerate the payment
of the Incentive Compensation provided for in Section 4(c) in the amount of
$1,000,000 and such Incentive Compensation shall be deemed to be fully earned by
Executive effective upon the closing of an initial public offering of common
stock in White Cap Industries, Inc. (the "IPO"). Such Incentive Compensation
shall be due and payable within thirty (30) days of the closing of the IPO. If
the IPO does not close for any reason, the Incentive Compensation shall be paid
in accordance with the provisions of Section 4(c).
Except as provided in this Amendment, the Amended and Restated Employment
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
COMPANY: WHITE CAP INDUSTRIES, INC.,
a California corporation
By:________________________________
Greg Grosch
President
EXECUTIVE: ________________________________
RICHARD GAGNON