EXHIBIT 10.1

EXECUTION VERSION

 

 

 

INVESTMENT AGREEMENT

dated as of August 24, 2017

by and among

Beacon Roofing Supply, Inc.,

CD&R Boulder Holdings, L.P.

and

Clayton, Dubilier & Rice Fund IX, L.P.

(solely for purposes of Sections 4.13 and 4.14 hereof)

 

 

 

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Table of Contents

 

         Page     Article I      Purchase; Closing   

Section 1.1

  Purchase      1  

Section 1.2

  Closing      2  

Section 1.3

  Closing Conditions      2     Article II      Representations and Warranties
of the Company   

Section 2.1

  Organization and Authority      5  

Section 2.2

  Capitalization.      5  

Section 2.3

  Authorization      6  

Section 2.4

  Sale and Status of Securities      7  

Section 2.5

  SEC Documents; Financial Statements      8  

Section 2.6

  Undisclosed Liabilities      9  

Section 2.7

  Absence of Changes      9  

Section 2.8

  Brokers and Finders      9  

Section 2.9

  Registration Rights      9  

Section 2.10

  Compliance with Laws; Anti-Corruption; Trade Controls      9  

Section 2.11

  Listing and Maintenance Requirements      11  

Section 2.12

  No Additional Representations      11     Article III      Representations and
Warranties of the Purchaser   

Section 3.1

  Organization and Authority      11  

Section 3.2

  Authorization      12  

Section 3.3

  Purchase for Investment      12  

Section 3.4

  Financial Capability      13  

Section 3.5

  Brokers and Finders      13  

Section 3.6

  Ownership      13  

Section 3.7

  Acknowledgment of No Other Representations or Warranties      13     Article
IV      Covenants   

Section 4.1

  Filings; Other Actions      14  

Section 4.2

  Reasonable Best Efforts to Close      15  

Section 4.3

  Confidentiality      15  

 

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Section 4.4

  State Securities Laws      16  

Section 4.5

  Interim Operating Covenants      16  

Section 4.6

  Exclusivity      17  

Section 4.7

  Tax Matters      18  

Section 4.8

  United States Real Property Interest      18  

Section 4.9

  Transfer Restrictions      18  

Section 4.10

  Board Representation      20  

Section 4.11

  Preemptive Rights      21  

Section 4.12

  [Reserved]      24  

Section 4.13

  Voting of Company Shares; Standstill      24  

Section 4.14

  Restrictive Covenants      26  

Section 4.15

  Legend      27     Article V      Indemnity   

Section 5.1

  Indemnification by the Company      28  

Section 5.2

  Indemnification by the Purchaser      28  

Section 5.3

  Indemnification Procedure      29  

Section 5.4

  Tax Matters      30  

Section 5.5

  Survival      30  

Section 5.6

  Limitations on Indemnification      30  

Section 5.7

  Limitation on Damages      31  

Section 5.8

  Exclusive Remedy      32     Article VI      Miscellaneous   

Section 6.1

  Expenses      32  

Section 6.2

  Amendment; Waiver      33  

Section 6.3

  Counterparts; Electronic Transmission      33  

Section 6.4

  Governing Law      33  

Section 6.5

  WAIVER OF JURY TRIAL      33  

Section 6.6

  Notices      33  

Section 6.7

  Entire Agreement      34  

Section 6.8

  Assignment      34  

Section 6.9

  Interpretation; Other Definitions      35  

Section 6.10

  Captions      44  

Section 6.11

  Severability      44  

Section 6.12

  No Third Party Beneficiaries      44  

Section 6.13

  Public Announcements      44  

Section 6.14

  Specific Performance      44  

Section 6.15

  Termination      45  

Section 6.16

  Effects of Termination      46  

Section 6.17

  Non-Recourse      46  

 

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Exhibit A: Form of Certificate of Designations

Exhibit B: Form of Registration Rights Agreement

Schedules

 

 

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INVESTMENT AGREEMENT, dated as of August 24, 2017 (this “Agreement”), by and
among Beacon Roofing Supply, Inc., a Delaware corporation (the “Company”), CD&R
Boulder Holdings, L.P., a Cayman Islands exempted limited partnership (the
“Purchaser”), and, solely for purposes of Sections 4.13 and 4.14 hereof,
Clayton, Dubilier & Rice Fund IX, L.P., a Cayman Islands exempted limited
partnership (the “CD&R Fund”).

RECITALS:

WHEREAS, the Company proposes to enter into a Stock Purchase Agreement (as it
may be amended or supplemented from time to time, the “Allied Acquisition
Agreement”), by and among the Company, Oldcastle, Inc., a Delaware corporation,
and Oldcastle Distribution, Inc., a Delaware corporation (“Seller”), pursuant
to, and on the terms and subject to the conditions of which, the Company will
purchase all of the issued and outstanding shares of Allied Building Products
Corp., a New Jersey corporation, and Kapalama Kilgos Acquisition Corp., a
Delaware corporation (collectively, the “Target”), from Seller (the “Allied
Acquisition”);

WHEREAS, the Company proposes to issue and sell to the Purchaser shares of its
preferred stock, par value $0.01 per share, designated as “Series A Cumulative
Convertible Participating Preferred Stock” (the “Preferred Stock”), having the
terms set forth in the Certificate of Designations, Preferences and Rights of
Series A Cumulative Convertible Participating Preferred Stock in the form
attached hereto as Exhibit A (the “Certificate of Designations”), subject to the
terms and conditions set forth in this Agreement;

WHEREAS, the Preferred Stock will be convertible into shares of Common Stock of
the Company; and

WHEREAS, capitalized terms used in this Agreement have the meanings set forth in
Section 6.9.

NOW, THEREFORE, in consideration of the premises, and of the representations,
warranties, covenants and agreements set forth herein, the parties agree as
follows:

ARTICLE I

Purchase; Closing

Section 1.1 Purchase.

(a) At least three (3) business days prior to the Closing Date, the Company will
deliver to the Purchaser a written notice (the “Election Notice”) setting forth
the number of shares of Preferred Stock to be purchased by the Purchaser from
the Company at the Closing pursuant to Section 1.1(b) (the “Purchased Shares”),
in exchange for an aggregate purchase price equal to the number of Purchased
Shares set forth in the Election Notice multiplied by $1,000.00 (such aggregate
purchase price, the “Purchase Price”); provided, that in no event shall the
number of Purchased Shares set forth in the Election Notice (A) be less than
400,000 or (B) exceed 498,000.

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(b) On the terms and subject to the conditions herein, on the Closing Date, the
Company agrees to sell and issue to the Purchaser, and the Purchaser agrees to
purchase from the Company the Purchased Shares, in exchange for the Purchase
Price, free and clear of any Liens (other than restrictions arising under
applicable securities Laws and restrictions set forth in Section 4.9).

Section 1.2 Closing.

(a) Subject to the satisfaction or waiver of the conditions set forth in this
Agreement, the closing of the purchase and sale by the Purchaser of the
Purchased Shares pursuant to this Agreement (the “Closing”) shall be held at the
offices of Sidley Austin LLP, One South Dearborn Street, Chicago, Illinois
60603, at 10:00 a.m. New York time on the date the closing of the Allied
Acquisition as contemplated by the Allied Acquisition Agreement occurs
(provided, that notice of such date of closing of the Allied Acquisition has
been delivered to the Purchaser at least thirteen (13) business days prior to
such date), after the satisfaction or waiver of the latest to occur of the
conditions set forth in Section 1.3 (other than those conditions that by their
nature are to be satisfied by actions taken at the Closing, but subject to their
satisfaction or waiver) or at such other date, time and place as the Company and
the Purchaser mutually agree in writing (the “Closing Date”).

(b) Subject to the satisfaction or waiver at or prior to the Closing of the
applicable conditions to the Closing set forth in Section 1.3, at the Closing:

(1) the Company shall deliver to the Purchaser: (A) evidence of the issuance of
the Purchased Shares reasonably satisfactory to the Purchaser, (B) the
Registration Rights Agreement, in the form of Exhibit B hereto, executed by the
Company, and (C) the officer’s certificate required to be delivered by the
Company to the Purchaser pursuant to Section 1.3(b)(6) of this Agreement; and

(2) the Purchaser shall deliver or cause to be delivered (A) to a bank account
designated by the Company in writing at least two (2) business days prior to the
Closing Date, the Purchase Price by wire transfer of immediately available
funds, (B) the Registration Rights Agreement, in the form of Exhibit B hereto,
executed by Purchaser, and (C) the officer’s certificate required to be
delivered by the Purchaser to the Company pursuant to Section 1.3(c)(3) of this
Agreement.

Section 1.3 Closing Conditions.

(a) The obligation of the Purchaser, on the one hand, and the Company, on the
other hand, to effect the Closing is subject to the satisfaction or waiver by
the Purchaser and the Company at or prior to the Closing of the following
conditions:

(1) no temporary restraining order, preliminary or permanent injunction or other
judgment or order issued by any Governmental Entity, and no Law shall be in
effect restraining, enjoining, making illegal or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement; provided,
however, that the party claiming such failure of condition shall have used its
reasonable best efforts to prevent the entry of any such injunction or order and
to appeal as promptly as possible any injunction or other order that may be
entered;

 

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(2) all applicable waiting periods (and any extension thereof) prescribed by the
HSR Act shall have expired or shall have been terminated; and

(3) the Allied Acquisition shall have been consummated, or is being consummated
substantially concurrently with the Closing, in accordance with the terms and
conditions set forth in the Allied Acquisition Agreement (subject to any
amendments, supplements or other modifications permitted by the last sentence of
Section 4.2 or otherwise consented to by the Purchaser), without waiver of
(x) the condition contained in Section 6.2(a)(ii) to the Allied Acquisition
Agreement without Purchaser’s prior written consent or (y) any of the other
conditions to the obligation of the Company to complete the Allied Acquisition
without Purchaser’s prior written consent (which consent shall not be
unreasonably withheld, conditioned or delayed).

(b) The obligation of the Purchaser to effect the Closing is also subject to the
satisfaction or waiver by the Purchaser at or prior to the Closing of the
following conditions:

(1) substantially contemporaneous with the Closing, the Company shall have
reimbursed Purchaser for the out-of-pocket costs and expenses described in
clauses (a) and (b) of Section 6.1 to the extent such out-of-pocket costs and
expenses are incurred prior to the Closing and invoices evidencing the same are
delivered to the Company at least two (2) business days prior to the Closing
Date;

(2) if the Purchaser has identified the Purchaser Designees to the Company in
writing at least three (3) business days prior to the Closing Date, the Company
Board shall have taken all actions necessary to, effective immediately upon the
Closing and in accordance with Section 4.10, cause each Purchaser Designee to be
elected to the Company Board as permitted by Law, and the Purchaser shall have
received evidence reasonably satisfactory to it of the taking of such actions;

(3) (i) the representations and warranties of the Company set forth in
Article II hereof (other than Sections 2.1, 2.2, 2.3(a), 2.4 and 2.8) shall be
true and correct (disregarding all qualifications or limitations as to
materiality or Company Material Adverse Effect) as of the date of this Agreement
and as of the Closing Date as though made on and as of such date (except to the
extent that any such representation or warranty speaks to an earlier date, in
which case such representation or warranty shall be true and correct as of such
earlier date), except where the failure of such representations and warranties
to be so true and correct would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, (ii) the
representations and warranties of the Company set forth in Section 2.2 shall be
true and correct in all but de minimis respects as of the Capitalization Date,
and (iii) the representations and warranties of the Company set forth in
Sections 2.1, 2.3(a), 2.4 and 2.8 shall be true and correct in all respects as
of the date of this Agreement and as of the Closing Date as though made on and
as of such date;

 

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(4) the Company shall have performed in all material respects all obligations
required to be performed by it pursuant to this Agreement at or prior to the
Closing;

(5) since the date hereof, there shall not have occurred any Company Material
Adverse Effect; and

(6) the Purchaser shall have received a certificate signed on behalf of the
Company by a duly authorized senior executive officer of the Company certifying
to the effect that the conditions set forth in Sections 1.3(b)(2), (3), (4) and
(5) have been satisfied.

(c) The obligation of the Company to effect the Closing is also subject to the
satisfaction or waiver by the Company at or prior to the Closing of the
following conditions:

(1) (i) the representations and warranties of the Purchaser set forth in Article
III hereof (other than Section 3.1, 3.2(a) and 3.5) shall be true and correct
(disregarding all qualifications or limitations as to materiality) as of the
date of this Agreement and as of the Closing Date as though made on and as of
such date (except to the extent that any such representation or warranty speaks
to an earlier date, in which case such representation or warranty shall be true
and correct as of such earlier date), except where the failure of such
representations and warranties to be so true and correct would not, individually
or in the aggregate, reasonably be expected to prevent or materially delay the
consummation of the transactions contemplated by this Agreement or the ability
of the Purchaser to fully perform its covenants and obligations under this
Agreement, and (ii) the representations and warranties of the Purchaser set
forth in Section 3.1, 3.2(a) and 3.5 shall be true and correct in all respects
as of the date of this Agreement and as of the Closing Date as though made on
and as of such date;

(2) the Purchaser shall have performed in all material respects all obligations
required to be performed by it pursuant to this Agreement at or prior to the
Closing; and

(3) the Company shall have received a certificate signed on behalf of the
Purchaser by a duly authorized senior executive officer of the Purchaser
certifying to the effect that the conditions set forth in Section 1.3(c)(1) and
(2) have been satisfied.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth (a) in the SEC Documents filed or furnished by the Company
with the SEC, and publicly available, after December 31, 2014 and before the
date of this Agreement (but excluding any disclosures set forth in risk factors
or any “forward looking statements” within the meaning of the Securities Act or
the Exchange Act) or (b) in a correspondingly identified schedule attached
hereto (such schedules, collectively, the “Disclosure Schedules”), the Company
represents and warrants to the Purchaser, as of the date hereof and as of the
Closing Date (except to the extent made only as of a specified date, in which
case as of such date), that:

 

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Section 2.1 Organization and Authority.

(a) The Company is a corporation duly organized and validly existing under the
laws of the State of Delaware, has all requisite corporate power and authority
to own its properties and conduct its business as presently conducted, is duly
qualified to do business and is in good standing in all jurisdictions where its
ownership or leasing of property or the conduct of its business requires it to
be so qualified (in the case of good standing, to the extent such jurisdiction
recognizes such concept), except where such failure to be so qualified,
individually or in the aggregate, would not be reasonably expected to have a
Company Material Adverse Effect. True and accurate copies of the certificate of
incorporation of the Company (the “Certificate of Incorporation”) and the bylaws
of the Company (the “Bylaws”), each as in effect as of the date of this
Agreement, have been made available to the Purchaser prior to the date hereof.

(b) Each material Company Subsidiary is duly organized and validly existing
under the laws of its jurisdiction of organization, has all requisite corporate
or other applicable entity power and authority to own its properties and conduct
its business as presently conducted, is duly qualified to do business and is in
good standing in all jurisdictions where its ownership or leasing of property or
the conduct of its business requires it to be so qualified (in the case of good
standing, to the extent such jurisdiction recognizes such concept), except where
such failure to be so qualified, individually or in the aggregate, would not be
reasonably expected to have a Company Material Adverse Effect. As used herein,
“Subsidiary” means, with respect to any Person, any corporation, partnership,
joint venture, limited liability company or other entity (i) of which such
Person or a subsidiary of such Person is a general partner or (ii) of which a
majority of the voting securities or other voting interests, or a majority of
the securities or other interests of which having by their terms ordinary voting
power to elect a majority of the board of directors or persons performing
similar functions with respect to such entity, that is directly or indirectly
owned by such person and/or one or more subsidiaries thereof; and “Company
Subsidiary” means any Subsidiary of the Company.

Section 2.2 Capitalization.

(a) The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, par value $0.01 per share, and 5,000,000 shares of preferred
stock, par value $0.01 per share. As of the close of business on August 23, 2017
(the “Capitalization Date”), there were 60,389,882 shares of Common Stock issued
and outstanding and no shares of preferred stock of the Company issued and
outstanding. As of the close of business on the Capitalization Date, (i)
2,122,431 shares of Common Stock were subject to issuance upon the exercise of
stock options outstanding on such date that were granted pursuant to the Company
Equity Plans (“Company Stock Options”), of which 671,231 were then unvested,
(ii) 517,699 unvested time-based restricted stock units from awards granted
pursuant to the Company Equity Plans (“Company RSUs”) were outstanding, (iii)
253,960 unvested performance-based restricted stock units (at target level of
performance) granted pursuant to the Company Equity Plans (“Company PRSUs”) were
outstanding, (iv) no shares of Common Stock were held by the Company in its
treasury, and (v) 4,094,211 shares of Common Stock were available for future
awards under the Company Equity Plans. All of the issued and outstanding shares
of Common Stock have been duly authorized and validly issued and are fully paid,
non-assessable and free of

 

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preemptive rights. From the Capitalization Date through and as of the date of
this Agreement, no other shares of Common Stock or preferred stock have been
issued other than those shares of Common Stock subject to issuance upon the
exercise of outstanding Company Stock Options granted under the Company Equity
Plans. The Company does not have outstanding shareholder purchase rights or
“poison pill” or any similar arrangement in effect.

(b) No bonds, debentures, notes or other Indebtedness having the right to vote
(or convertible into or exchangeable for, securities having the right to vote)
on any matters on which the stockholders of the Company may vote (“Voting Debt”)
are issued and outstanding. As of the date of this Agreement, except
(i) pursuant to any cashless exercise provisions of any Company Stock Options or
pursuant to the surrender of shares to the Company or the withholding of shares
by the Company to cover tax withholding obligations under Company Stock Options,
Company RSUs or Company PRSUs, and (ii) as set forth in Section 2.2(a), the
Company does not have and is not bound by any outstanding options, preemptive
rights, rights of first offer, warrants, calls, commitments or other rights or
agreements calling for the purchase or issuance of, or securities or rights
convertible into, or exchangeable for, any shares of Common Stock or any other
equity securities of the Company or Voting Debt or any securities representing
the right to purchase or otherwise receive any shares of capital stock of the
Company (including any rights plan or agreement).

Section 2.3 Authorization.

(a) The Company has the corporate power and authority to enter into this
Agreement and the other Transaction Documents and to carry out its obligations
hereunder and thereunder. The execution, delivery and performance of this
Agreement and the other Transaction Documents by the Company and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by the board of directors of the Company (the “Company Board”),
including all approvals required by Section 203 of the Delaware General
Corporation Law. This Agreement has been, and (as of the Closing) the other
Transaction Documents will be, duly and validly executed and delivered by the
Company and, assuming due authorization, execution and delivery by the
Purchaser, this Agreement is, and (as of the Closing) each of the other
Transaction Documents will be, a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms (except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general applicability
relating to or affecting creditors’ rights or by general equity principles). No
other corporate proceedings are necessary for the execution and delivery by the
Company of this Agreement or the other Transaction Documents, and no other
corporate proceedings (except to the extent set forth in the other Transaction
Documents and except for the adoption of Company Board resolutions appointing
the Purchaser Designees at Closing) are necessary for the performance by the
Company of its obligations hereunder or thereunder or the consummation by it of
the transactions contemplated hereby or thereby.

(b) Neither the execution and delivery by the Company of this Agreement or the
other Transaction Documents, nor the consummation of the transactions
contemplated hereby or thereby, nor compliance by the Company with any of the
provisions hereof or thereof, will (i) violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in

 

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the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration of, or result in the creation of any Lien
upon any of the material properties or assets of any Company Group Member under
any of the terms, conditions or provisions of (x) the Certificate of
Incorporation, the Certificate of Designations, the Bylaws or the certificate of
incorporation, charter, articles of association, bylaws or other governing
instrument of any Company Subsidiary or (y) any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which any Company Group Member is a party or by which it may be bound, or to
which any Company Group Member or any of the properties or assets of any Company
Group Member may be subject, or (ii) violate any law, statute, ordinance, rule,
regulation, permit, franchise or any judgment, ruling, order, writ, injunction
or decree applicable to any Company Group Member or any of its respective
properties or assets, except in the case of clauses (i)(y) and (ii), for such
violations, conflicts and breaches as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.

(c) Other than the securities or blue sky laws of the various states and
approval or expiration of applicable waiting periods under the HSR Act, no
notice to, registration, declaration or filing with, exemption or review by, or
authorization, order, consent or approval of any Governmental Entity, nor
expiration or termination of any statutory waiting period, is necessary for the
consummation by the Company of the transactions contemplated by this Agreement
or the other Transaction Documents.

Section 2.4 Sale and Status of Securities.

(a) Subject to the accuracy of the representations made by the Purchaser in
Section 3.3, the offer, sale and issuance of the Purchased Shares (i) have been
and will be made in compliance with applicable exemptions from the registration
and prospectus delivery requirements of the Securities Act and (ii) will have
been registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state blue sky laws.

(b) (i) The Purchased Shares and (ii) the shares of Common Stock issuable upon
conversion of the Purchased Shares (including shares of Preferred Stock issued
as dividends thereon as provided in the Certificate of Designations) have been
duly authorized by all necessary corporate action. When issued and sold against
receipt of the consideration therefor as provided in this Agreement or the
Certificate of Designations, the Purchased Shares will be validly issued, fully
paid and nonassessable, will not be subject to preemptive rights of any other
stockholder of the Company, and will effectively vest in the Purchaser good
title to the Purchased Shares, free and clear of all Liens (other than
restrictions arising under applicable securities Laws or pursuant to
Section 4.9). Upon any conversion of any Purchased Shares (including shares of
Preferred Stock issued as dividends thereon as provided in the Certificate of
Designations), the shares of Common Stock upon such conversion will be validly
issued, fully paid and non-assessable, and will not be subject to preemptive
rights of any other stockholder of the Company, and will effectively vest in the
Purchaser good title to all such securities, free and clear of all Liens (other
than restrictions arising under applicable federal, state or foreign securities
Laws or pursuant to Section 4.9). The respective rights, preferences, privileges
and restrictions of the Common Stock and the Preferred Stock are as stated in
the Certificate of

 

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Incorporation and the Certificate of Designations. The shares of Common Stock
and shares of Preferred Stock to be issued upon any conversion of the Purchased
Shares (including shares of Preferred Stock issued as dividends thereon as
provided in the Certificate of Designations) and have been duly reserved for
such issuance.

Section 2.5 SEC Documents; Financial Statements.

(a) The Company has filed all required reports, proxy statements, forms, and
other documents with the U.S. Securities and Exchange Commission (the “SEC”)
since December 31, 2014 (collectively, the “SEC Documents”). Each of the SEC
Documents, as of its respective date, complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the “Securities Act”),
and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as the
case may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such SEC Documents. Except to the extent that information
contained in any SEC Document has been revised or superseded by a later filed
SEC Document filed and publicly available prior to the date of this Agreement,
as of their respective dates, or if amended, as of the date of the last such
amendment, none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

(b) The Company (i) has implemented and maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are
reasonably designed to ensure that material information relating to the Company
Group is made known to the individuals responsible for the preparation of the
Company’s filings with the SEC and (ii) has disclosed, based on its most recent
evaluation prior to the date of this Agreement, to the Company’s outside
auditors and the Company Board’s audit committee (A) any significant
deficiencies and material weaknesses in the design or operation of internal
controls over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act) that are reasonably likely to adversely affect the Company’s
ability to record, process, summarize and report financial information and
(B) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s internal controls over
financial reporting. As of the date of this Agreement, to the Knowledge of the
Company, there is no reason that its outside auditors and its chief executive
officer and chief financial officer will not be able to give the certifications
and attestations required pursuant to the rules and regulations adopted pursuant
to Section 404 of the Sarbanes-Oxley Act of 2002, without qualification, when
next due.

(c) There is no transaction, arrangement or other relationship between the
Company and/or any of its Subsidiaries and an unconsolidated or other
off-balance sheet entity that is required by applicable Law to be disclosed by
the Company in its SEC Documents and is not so disclosed.

(d) The financial statements of the Company and its consolidated subsidiaries
included in the SEC Documents (i) complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, in each case as of the date such SEC Document
was filed, and (ii) have been prepared in

 

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accordance with generally accepted accounting principles in the United States
(“GAAP”) applied on a consistent basis during the periods involved (except as
may be indicated in such financial statements or the notes thereto) and fairly
present in all material respects the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows of the Company and its
consolidated subsidiaries for the periods then ended (subject, in the case of
unaudited statements, to the absence of footnote disclosures and normal audit
adjustments, which are not reasonably expected to be material individually or in
aggregate).

Section 2.6 Undisclosed Liabilities. Except for (i) those liabilities that are
reflected or reserved for in the consolidated financial statements of the
Company included in its Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 2017, (ii) liabilities incurred since June 30, 2017 in the
ordinary course of business consistent with past practice, (iii) liabilities
incurred pursuant to the transactions contemplated by the Transaction Documents
and the Debt Commitment Letter (as defined in the Allied Acquisition Agreement),
and (iv) liabilities that would not, individually or in the aggregate, be
material to the Company Group, taken as a whole, the Company Group does not have
any liabilities or obligations of any nature whatsoever (whether accrued,
absolute, contingent or otherwise) that would be required under GAAP, as in
effect on the date hereof, to be reflected on a consolidated balance sheet of
the Company (including the notes thereto).

Section 2.7 Absence of Changes. Since November 22, 2016 through the date of this
Agreement, there has not been any (i) Company Material Adverse Effect or
(ii) action taken by any Company Group Member that, if such action had been
taken between the date of this Agreement and the Closing Date, would violate
Section 4.5 without the prior written consent of Purchaser.

Section 2.8 Brokers and Finders. Except for Citigroup Global Markets Inc. and
Wells Fargo Securities, LLC, the fees and expenses of which will be paid by the
Company, no Company Group Member and none of their respective officers,
directors, employees or agents has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions or
finder’s fees, and no broker or finder has acted directly or indirectly for the
Company in connection with this Agreement or the transactions contemplated
hereby.

Section 2.9 Registration Rights. Except as provided in the Registration Rights
Agreement, the Company has not granted or agreed to grant, and is not under any
obligation to provide, any rights to register under the Securities Act any of
its presently outstanding equity securities or any of its equity securities that
may be issued subsequently.

Section 2.10 Compliance with Laws; Anti-Corruption; Trade Controls.

(a) No Company Group Member is, or since January 1, 2012, has been, in violation
in any respect of any applicable Law, except as would not, individually or in
the aggregate, be material to the Company Group, taken as a whole. No Company
Group Member is subject to a pending investigation by a Governmental Entity with
respect to compliance with any applicable Law, except for (i) such of the
foregoing as would not, individually or in the aggregate, reasonably be material
to the Company Group, taken as a whole, and (ii) as otherwise expressly
disclosed in the SEC Documents.

 

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(b) Since January 1, 2012, each Company Group Member and, to the Knowledge of
the Company, each of its respective officers, directors, employees and agents,
(together with the term Company Group Member, collectively, the “Relevant
Persons”) have not directly or indirectly violated or taken any act in
furtherance of violating any provision of the U.S. Foreign Corrupt Practices Act
of 1977 (as amended), the U.K. Bribery Act 2010 or any other anti-corruption or
anti-bribery Laws applicable to any Company Group Member.

(c) Since January 1, 2012, the Relevant Persons have not directly or indirectly
taken any act in furtherance of any unlawful payment, gift, bribe, rebate, loan,
payoff, kickback or any other unlawful transfer of value, or offer, promise or
authorization thereof, to any Person, including any Government Official, for the
purpose of: (i) improperly influencing or inducing such Person to do or omit to
do any act or to make any decision in an official capacity or in violation of a
lawful duty or (ii) inducing such Person to influence improperly his or her or
its employer, public or private, or any Governmental Entity, to affect an act or
decision of such employer or Governmental Entity, including to assist any Person
in obtaining or retaining business, except as would not, individually or in the
aggregate, be material to the Company Group, taken as a whole.

(d) Since January 1, 2012, the Relevant Persons have not in the course of their
actions for, or on behalf of, any Company Group Member engaged directly or
indirectly in transactions: (i) connected with any of North Korea, Crimea, Cuba,
Iran, Syria, Myanmar or Sudan; (ii) connected with any government, country or
other entity or Person that is the target of U.S. economic sanctions
administered by the U.S. Treasury Department Office of Foreign Assets Control
(“OFAC”) or by Her Majesty’s Treasury in the U.K., or the target of any
applicable U.N., E.U. or other international sanctions regime, including any
transactions with specially designated nationals or blocked persons designated
by OFAC or with persons on any U.N., E.U. or U.K. assets freeze list; or
(iii) that is prohibited by any Law administered by OFAC, or by any other
economic or trade sanctions Law of the U.S. or any other jurisdiction, except as
would not, individually or in the aggregate, be material to the Company Group,
taken as a whole.

(e) Since January 1, 2012, no Relevant Person is a Person whose property or
interests in property are blocked or frozen under the economic sanctions laws of
the U.S., the E.U. or any other jurisdiction; and no Relevant Person is
designated as a denied person by the U.S. Commerce Department Bureau of Industry
and Security or as a debarred party by the U.S. State Department’s Directorate
of Defense Trade Control, except as would not, individually or in the aggregate,
be material to the Company Group, taken as a whole.

(f) Since January 1, 2012, the Relevant Persons have not in the course of their
actions for, or on behalf of, any Company Group Member exported or reexported
(including deemed exportation or reexportation) any merchandise, software or
technology in violation of the Export Administration Regulations, the
International Traffic in Arms Regulations, or any other applicable export
control laws of the U.S. or any other jurisdiction, except as would not,
individually or in the aggregate, be material to the Company Group, taken as a
whole.

 

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(g) Since January 1, 2012, the Relevant Persons have not in the course of their
actions for, or on behalf of, any Company Group Member taken any actions,
refused to take any actions, or furnished any information in violation of the
applicable U.S. laws restricting participation in international boycotts, except
as would not, individually or in the aggregate, be material to the Company
Group, taken as a whole.

Section 2.11 Listing and Maintenance Requirements. The Common Stock is
registered pursuant to Section 12(b) of the Exchange Act, and the Company has
taken no action designed to, or which to the Knowledge of the Company is
reasonably likely to, have the effect of, terminating the registration of the
Common Stock under the Exchange Act nor has the Company received as of the date
of this Agreement any notification that the SEC is contemplating terminating
such registration.

Section 2.12 No Additional Representations. Except for the representations and
warranties made by the Company in Article II, neither the Company nor any other
person makes any express or implied representation or warranty with respect to
any Company Group Member or their respective businesses, operations, assets,
liabilities, employees, employee benefit Plans, conditions or prospects, and the
Company hereby disclaims any such other representations or warranties. In
particular, without limiting the foregoing disclaimer, neither the Company nor
any other person makes or has made any representation or warranty to the
Purchaser, or any of its Affiliates or representatives, with respect to (i) any
financial projection, forecast, estimate, budget or prospect information
relating to any Company Group Member or their respective business, or
(ii) except for the representations and warranties made by the Company in
Article II, any oral or written information presented to the Purchaser or any of
its Affiliates or representatives in the course of their due diligence
investigation of the Company, the negotiation of this Agreement or in the course
of the transactions contemplated hereby.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser hereby represents and warrants to the Company, as of the date
hereof and as of the Closing Date (except to the extent made only as of a
specified date, in which case as of such date), that:

Section 3.1 Organization and Authority. The Purchaser is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and where failure to be so qualified
would reasonably be expected to materially and adversely affect the Purchaser’s
ability to perform its obligations under this Agreement or consummate the
transactions contemplated hereby on a timely basis, and the Purchaser has the
requisite power and authority and governmental authorizations to own its
properties and assets and to carry on its business as it is now being conducted.

 

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Section 3.2 Authorization.

(a) The Purchaser has the requisite power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution, delivery
and performance of this Agreement by the Purchaser and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Purchaser, and no further approval or authorization by
any of its stockholders, partners, members or other equity owners, as the case
may be, is required. This Agreement has been duly and validly executed and
delivered by the Purchaser and assuming due authorization, execution and
delivery by the Company, is a valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms (except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general applicability
relating to or affecting creditors’ rights or by general equity principles).

(b) None of the execution, delivery and performance by the Purchaser of this
Agreement, the consummation of the transactions contemplated hereby, or
compliance by the Purchaser with any of the provisions hereof, will (i) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration of,
or result in the creation of any Lien upon any of the properties or assets of
the Purchaser under any of the terms, conditions or provisions of (x) its
governing instruments or (y) any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which the
Purchaser is a party or by which it may be bound, or to which the Purchaser or
any of the properties or assets of the Purchaser may be subject, or (ii) subject
to compliance with the statutes and regulations referred to in the next
paragraph, violate any Law, statute, ordinance, rule or regulation, permit,
concession, grant, franchise or any judgment, ruling, order, writ, injunction or
decree applicable to the Purchaser or any of its respective properties or assets
except in the case of clauses (i)(y) and (ii) for such violations, conflicts and
breaches as would not reasonably be expected to materially and adversely affect
the Purchaser’s ability to perform its respective obligations under this
Agreement or consummate the transactions contemplated hereby on a timely basis.

(c) Other than the securities or blue sky laws of the various states, and
approval or expiration of applicable waiting periods under the HSR Act, no
notice to, registration, declaration or filing with, exemption or review by, or
authorization, order, consent or approval of, any Governmental Entity, nor
expiration or termination of any statutory waiting period, is necessary for the
consummation by the Purchaser of the transactions contemplated by this
Agreement.

Section 3.3 Purchase for Investment. The Purchaser acknowledges that the
Purchased Shares have not been registered under the Securities Act or under any
state or other applicable securities laws. The Purchaser (i) acknowledges that
it is acquiring the Purchased Shares and the Common Stock issuable upon
conversion of the Preferred Stock pursuant to an exemption from registration
under the Securities Act solely for investment with no present intention to
distribute any of the Purchased Shares to any Person in violation of applicable
securities laws, (ii) will not sell or otherwise dispose of any of the Purchased
Shares or the Common Stock issuable upon conversion of the Purchased Shares,
except in compliance with the registration requirements or

 

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exemption provisions of the Securities Act and any other applicable securities
laws (and the provisions of Section 4.9 hereof), (iii) has such knowledge and
experience in financial and business matters and in investments of this type
that it is capable of evaluating the merits and risks of its investment in the
Purchased Shares and of making an informed investment decision, (iv) is an
“accredited investor” (as that term is defined by Rule 501 of the Securities
Act), (v) is a “qualified institutional buyer” (as that term is defined in Rule
144A of the Securities Act), and (vi) (A) has been furnished with or has had
full access to all the information that it considers necessary or appropriate to
make an informed investment decision with respect to the Purchased Shares and
the Common Stock issuable upon conversion of the Purchased Shares, (B) has had
an opportunity to discuss with management of the Company the intended business
and financial affairs of the Company and to obtain information (to the extent
the Company possessed such information or could acquire it without unreasonable
effort or expense) necessary to verify any information furnished to it or to
which it had access and (C) can bear the economic risk of (x) an investment in
the Purchased Shares and the Common Stock issuable upon conversion of the
Purchased Shares indefinitely and (y) a total loss in respect of such
investment. The Purchaser has such knowledge and experience in business and
financial matters so as to enable it to understand and evaluate the risks of and
form an investment decision with respect to its investment in the Purchased
Shares and the Common Stock issuable upon conversion of the Purchased Shares and
to protect its own interest in connection with such investment.

Section 3.4 Financial Capability. Purchaser has delivered to the Company a true
and complete copy of the Equity Commitment Letter, pursuant to which Clayton,
Dubilier & Rice Fund IX, L.P. has committed, subject only to the terms and
conditions thereof, to invest the amounts set forth therein in an amount up to
the Purchase Price assuming the purchase of 498,000 Purchased Shares pursuant to
Section 1.1(a) on the date on which the Closing should occur pursuant to
Section 1.2. As of the date of this Agreement, the Equity Commitment Letter is
in full force and effect and constitutes the enforceable, legal, valid and
binding obligations of each of the parties thereto. At the Closing, the
Purchaser will have available funds necessary to consummate the purchase and pay
the Purchase Price (assuming the purchase of 498,000 Purchased Shares pursuant
to Section 1.1(a)) on the terms and conditions contemplated by this Agreement.
Purchaser is not aware of any reason why the funds sufficient to pay the
Purchase Price will not be available on the Closing Date.

Section 3.5 Brokers and Finders. Neither the Purchaser nor its Affiliates or any
of their respective officers, directors, employees or agents has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder’s fees, and no broker or finder has acted
directly or indirectly for the Purchaser, in connection with this Agreement or
the transactions contemplated hereby.

Section 3.6 Ownership. As of the date of this Agreement, neither the Purchaser
nor any of its controlled Affiliates are the owners of record or the Beneficial
Owners of shares of Common Stock or securities convertible into or exchangeable
for Common Stock.

Section 3.7 Acknowledgment of No Other Representations or Warranties. Each of
Purchaser and its Affiliates acknowledges that it has conducted its own
independent investigation and analysis of the business, operations, assets,
liabilities, results of operations, condition (financial or otherwise) and
prospects of the Company. Each of Purchaser and its Affiliates

 

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acknowledges and agrees that, except for the representations and warranties
contained in Article II, neither the Company nor any of its Subsidiaries, nor
any other Person, makes any express or implied representation or warranty with
respect to any Company Group Member or their respective businesses, operations,
assets, liabilities, employees, employee benefit Plans, conditions or prospects,
and the Company hereby disclaims any such other representations or warranties.
In particular, without limiting the foregoing disclaimer, neither the Company
nor any of its Subsidiaries, nor any other Person, makes or has made any
representation or warranty to the Purchaser, or any of its Affiliates or
representatives, with respect to (i) any financial projection, forecast,
estimate, budget or prospect information relating to any Company Group Member or
their respective business, or (ii) except for the representations and warranties
made by the Company in Article II, any oral or written information presented to
the Purchaser or any of its Affiliates or representatives in the course of their
due diligence investigation of the Company, the negotiation of this Agreement or
in the course of the transactions contemplated hereby. To the fullest extent
permitted by applicable Law, except with respect to the representations and
warranties contained in Article II, neither the Company nor any of its
Affiliates shall have any liability (except in the case of actual fraud) to
Purchaser or its Affiliates or representatives on any basis (including in
contract or tort, under federal or state securities Laws or otherwise) based
upon any other representation or warranty, either express or implied, included
in any information or statements (or any omissions therefrom) provided or made
available by the Company or its Affiliates to Purchaser or its Affiliates or
representatives in the course of their due diligence investigation of the
Company, the negotiation of this Agreement or in the course of the transactions
contemplated by this Agreement.

ARTICLE IV

Covenants

Section 4.1 Filings; Other Actions. During the period commencing on the date
hereof and terminating on the earlier to occur of (a) the Closing and (b) the
termination of this Agreement in accordance with the provisions hereof (the
“Pre-Closing Period”), each of the Purchaser, on the one hand, and the Company,
on the other hand, will cooperate and consult with the other and use their
respective reasonable best efforts to prepare and file all necessary
documentation, to effect all necessary applications, notices, petitions, filings
and other documents, and to obtain all necessary permits, consents, orders,
approvals and authorizations of, or any exemption by, all third parties and
Governmental Entities, and the expiration or termination of any applicable
waiting period, necessary or advisable to consummate the transactions
contemplated by this Agreement, and to perform the covenants contemplated by
this Agreement. Each party shall execute and deliver both before and after the
Closing such further certificates, agreements and other documents and take such
other actions as the other parties may reasonably request to consummate or
implement the transactions contemplated by this Agreement or to evidence such
events or matters. In particular, the Purchaser and the Company shall use all
reasonable best efforts to as promptly as reasonably practicable following the
date hereof, submit the notifications under the HSR Act, with respect to the
transactions contemplated hereby, including the issuance of the Purchased Shares
to the Purchaser (and the issuance of Common Stock upon conversion of any
Purchased Shares). The Purchaser and the Company will have the right to review
in advance, and to the extent reasonably practicable, each will consult with the
other, in each case subject to applicable Laws relating to the exchange of

 

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information, all the information relating to such other party, and any of their
respective Affiliates, which appears in any filing made with, or written
materials submitted to, any third party or any Governmental Entity in connection
with the transactions contemplated by this Agreement. In exercising the
foregoing right, each of the parties hereto agrees to act reasonably and as
promptly as reasonably practicable. Each party hereto agrees to keep the other
party reasonably apprised of the status of matters referred to in this
Section 4.1. The Purchaser shall promptly furnish the Company, and the Company
shall promptly furnish the Purchaser, to the extent permitted by applicable Law,
with copies of written communications received by it or its Subsidiaries from
any Governmental Entity in respect of the transactions contemplated by this
Agreement. Notwithstanding anything herein to the contrary, under no
circumstances shall any Company Group Member be required to (x) make any payment
to any Person to secure such Person’s consent, approval or authorization
(excluding any applicable filing fees or other de minimis expenses that are
required to be paid by the Company) or (y) proffer to, or agree to, license,
dispose of, sell or otherwise hold separate or restrict the operation of any of
its assets, operations or other rights.

Section 4.2 Reasonable Best Efforts to Close. During the Pre-Closing Period, the
Company and the Purchaser each will use reasonable best efforts in good faith to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things reasonably necessary under applicable Laws so as to permit consummation
of the transactions contemplated hereby as promptly as reasonably practicable
and otherwise to enable consummation of the transactions contemplated hereby and
shall cooperate reasonably with the other party hereto to that end, including in
relation to the satisfaction of the conditions to Closing set forth in Sections
1.3(a), (b) and (c) and cooperating in seeking to obtain any consent required
from Governmental Entities; provided, that under no circumstances shall the
Purchaser or any Company Group Member be required to make any material payment
in respect of the obligations set forth in this Section 4.2. During the
Pre-Closing Period, the Company shall not cause or permit any amendment,
modification or supplement to the Allied Acquisition Agreement in a manner that
would be materially less favorable to the Company without the prior written
consent of the Purchaser (which consent shall not be unreasonably withheld,
conditioned or delayed).

Section 4.3 Confidentiality. Each party to this Agreement will hold, and will
cause its respective Affiliates and their respective directors, managers,
officers, employees, agents, consultants and advisors to hold, in strict
confidence, unless disclosure to a Governmental Entity is necessary in
connection with any necessary regulatory approval, examination or inspection or
unless disclosure is required by judicial or administrative process or by other
requirement of Law or the applicable requirements of any Governmental Entity or
relevant stock exchange (in which case, other than in connection with a
disclosure in connection with a routine audit or examination by, or document
request from, a regulatory or self-regulatory authority, bank examiner or
auditor, the party disclosing such information shall provide the other party
with prior written notice of such permitted disclosure to the extent lawful),
all non-public records, books, contracts, instruments, computer data and other
data and information (collectively, “Information”) concerning the other party
hereto furnished to it by or on behalf of such other party or its
representatives pursuant to this Agreement (except to the extent that such
Information can be reasonably demonstrated to have been (a) previously known by
such party from other sources, provided that such source was not known by such
party to be bound by a contractual, legal or fiduciary obligation of
confidentiality to the other party, (b) in the public domain through no

 

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violation of this Section 4.3 by such party or (c) later lawfully acquired from
other sources by the party to which it was furnished), and neither party hereto
shall release or disclose such Information to any other person, except its
auditors, attorneys, financial advisors, financing sources and other consultants
and advisors.

Section 4.4 State Securities Laws. During the Pre-Closing Period, the Company
shall use its reasonable best efforts to (a) obtain all necessary permits and
qualifications, if any, or secure an exemption therefrom, required by any state
or country prior to the offer and sale of the Purchased Shares and (b) cause
such authorization, approval, permit or qualification to be effective as of the
Closing.

Section 4.5 Interim Operating Covenants. Except as set forth on Schedule 4.5,
during the Pre-Closing Period, the Company shall, and shall cause each other
member of the Company Group (i) to operate its business in the ordinary course
in substantially the same manner in which it previously has been conducted and
(ii) use its reasonable best efforts to preserve intact in all material respects
its business and assets and its relationships with customers, suppliers,
employees and others having business dealings with it. Without limiting the
generality of the foregoing, during the Pre-Closing Period, without the prior
written consent of the Purchaser, the Company shall not, and shall cause each
other member of the Company Group to not:

(a) declare, or make payment in respect of, any dividend or other distribution
upon any shares of capital stock of the Company;

(b) redeem, repurchase or acquire any capital stock of any Company Group Member,
other than repurchases of capital stock from employees, officers or directors of
any Company Group Member in the ordinary course of business for purposes of the
payment of the exercise price of a Company Stock Option or for purposes of tax
withholding pursuant to, or as required by, any of the Company Group’s
agreements or Plans in effect as of the date hereof;

(c) amend the Certificate of Incorporation, the Certificate of Designations or
the Bylaws (other than in connection with the filing of the Certificate of
Designations with the Secretary of State of the State of Delaware at or prior to
Closing) or take or authorize any action to wind up its affairs or dissolve;

(d) authorize, grant, issue or reclassify any capital stock, or securities
exercisable for, exchangeable for or convertible into capital stock (including
options, warrants or rights), of any Company Group Member other than grants of
Company Stock Options, Company RSUs and Company PRSUs under the Company Equity
Plans in the ordinary course of business to employees, officers or directors of
any Company Group Member or issuances of capital stock, or securities
exercisable for, exchangeable for or convertible into shares or other capital
stock, of the Company upon the exercise or settlement of any Company Stock
Option, Company RSU, or Company PRSU outstanding on the date of this Agreement;

(e) (i) amend the Debt Commitment Letter (as defined in the Allied Acquisition
Agreement), (ii) amend any agreements in existence as of the date hereof
relating to indebtedness for borrowed money of the Company (excluding any such
agreements that will be amended or amended and restated, as applicable, on or
prior to the Closing, which amended or

 

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amended and restated agreements are addressed by clause (iii) below) that will
remain in effect following the Closing, or (iii) enter into any agreements or
arrangements relating to indebtedness for borrowed money (including any Debt
Documents (as defined in the Allied Acquisition Agreement)) or otherwise
complete the Debt Financing (as defined in the Allied Acquisition Agreement) on
any terms that are inconsistent with the terms set forth in the Debt Commitment
Letter (as defined in the Allied Acquisition Agreement), in the case of each of
clauses (i) through (iii), in a manner (x) that is material and adverse to the
Purchaser (it being understood and agreed that any change that would limit or
restrict the Company’s ability to take any action in accordance with the
Certificate of Designations, which failure to take such action would result in a
Triggering Event (as defined in the Certificate of Designations), would be
material and adverse to the Purchaser) or (y) that would otherwise restrict or
limit in any respect the ability of the Company to pay dividends on the
Preferred Stock in kind or limit in any material respect the ability of the
Company to pay cash dividends on the Preferred Stock under the terms of the
Certificate of Designations; or

(f) agree or commit to do any of the foregoing.

Section 4.6 Exclusivity.

(a) Prior to the Closing, without Purchaser’s prior written consent, neither the
Company nor any Company Subsidiary shall, directly or indirectly, take (and the
Company shall not authorize or permit any directors, officers or employees of
the Company or, to the extent within the Company’s control, other Affiliates or
representatives of the Company or any Company Subsidiary to take) any action to
(i) encourage (including by way of furnishing non-public information), solicit,
initiate or facilitate any Acquisition Proposal, (ii) enter into any agreement
with respect to any Acquisition Proposal or enter into any agreement,
arrangement or understanding requiring it to abandon, terminate or fail to
consummate the issuance of at least 400,000 Purchased Shares or any other
transaction contemplated by this Agreement or the Transaction Documents or
(iii) participate in any way in discussions or negotiations with, or furnish any
information to, any Person in connection with, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
would reasonably be expected to lead to, any Acquisition Proposal. Prior to the
Closing, the Company shall use reasonable best efforts to take all actions
reasonably necessary to ensure that the directors, officers and employees of the
Company or any Company Subsidiary and, to the extent within the Company’s
control, other Affiliates or representatives of the Company or any Company
Subsidiary, do not take or do any of the actions referenced in the immediately
foregoing sentence. Upon execution of this Agreement and prior to the Closing,
unless Purchaser otherwise consents in writing, the Company shall, if
applicable, cease immediately and cause to be terminated any and all existing
discussions or negotiations with any parties conducted heretofore with respect
to an Acquisition Proposal and promptly request that all confidential
information with respect thereto furnished on behalf of the Company be returned.

(b) Prior to the Closing, the Company shall, as promptly as practicable (and in
no event later than one business day after receipt thereof), advise the
Purchaser of any Acquisition Proposal, potential Acquisition Proposal, or any
inquiry received by it relating to any potential Acquisition Proposal and of the
material terms of any proposal or inquiry, including, but not limited to, the
identity of the Person and its Affiliates making the same, that it may

 

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receive in respect of any such Acquisition Proposal, potential Acquisition
Proposal, or inquiry, or of any information requested from it or of any
negotiations or discussions being sought to be initiated with it, shall furnish
to the Purchaser a copy of any such proposal or inquiry, if it is in writing, or
a reasonably accurate written summary of any such proposal or inquiry, if it is
not in writing, and shall keep the Purchaser informed on a reasonably prompt
basis with respect to any developments with respect to the foregoing.

Section 4.7 Tax Matters.

(a) The Company shall pay any and all documentary, stamp and similar issue or
transfer taxes due upon the issuance of (i) the Purchased Shares and (ii) the
shares of Common Stock issuable upon conversion of the Purchased Shares
(including shares of Preferred Stock issued as dividends thereon pursuant to the
Certificate of Designations), and the Company shall, at its own expense, file
all necessary Tax Returns and other documentation with respect to all such Taxes
and fees and, if required by Law, the Purchaser shall, and shall cause its
Affiliates to, join in the execution of any such Tax Returns and other
documentation; provided, however, in the case of conversion of shares of
Preferred Stock, the Company shall not be required to pay any Tax that may be
payable in respect of any transfer involved in the issue and delivery of shares
of Common Stock in a name other than that of the holder of the shares to be
converted, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Company the amount of any such tax
or duty, or has established to the satisfaction of the Company that such tax or
duty has been paid.

(b) Unless required under applicable Law, the Purchaser and the Company agree
not to treat the Purchased Shares (based on their terms as set forth in the
Certificate of Designations) as “preferred stock” within the meaning of
Section 305 of the Code, and Treasury Regulation Section 1.305-5 for U.S.
federal income tax and withholding tax purposes and shall not take any position
inconsistent with such treatment.

(c) The Company and its paying agent shall be entitled to withhold Taxes on all
payments on the Purchased Shares and the Common Stock issuable upon conversion
thereof to the extent required by applicable Law.

Section 4.8 United States Real Property Interest. As and when reasonably
requested by Purchaser, the Company agrees to provide prompt assistance in
connection with determinations by Purchaser of whether specified shares of
Common Stock or shares of Preferred Stock that Purchaser holds or has held
constitute a “United States real property interest” under Section 897 of the
Code.

Section 4.9 Transfer Restrictions.

(a) In order to induce the Company to consummate the transactions contemplated
by this Agreement, the Purchaser hereby agrees that, from the Closing until the
day that is eighteen (18) months after the Closing Date (the “Lock-up Period”),
the Purchaser Parties shall not, directly or indirectly, in any single
transaction or series of related transactions: (a) sell, offer to sell, contract
or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise
dispose of or agree to dispose of, directly or indirectly, or establish or
increase a put

 

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equivalent position or liquidate or decrease a call equivalent position within
the meaning of Section 16 of the Exchange Act, with respect to (collectively,
“Transfer”) any of the Purchased Shares (or any shares of Preferred Stock issued
as dividends on the Purchased Shares) or any shares of Common Stock received
upon conversion thereof (such shares, collectively, the “Lock-up Shares”), (b)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of any of the Lock-up
Shares, for cash or otherwise, or (c) publicly announce any intention to effect
any transaction specified in clause (a) or (b). The Purchaser hereby authorizes
the Company during the Lock-up Period to cause its transfer agent for the
Lock-up Shares to decline to transfer, and to note stop transfer restrictions on
the stock register and other records relating to, Lock-up Shares for which the
Purchaser (or any Purchaser Party) is the record holder. Following the Lock-up
Period, the Purchaser hereby agrees that the Purchaser Parties shall not
Transfer the Purchased Shares (or any shares of Preferred Stock issued as
dividends on the Purchased Shares) unless such shares are converted into Common
Stock in connection with such Transfer; provided, that the Purchaser Parties
shall be permitted to Transfer the Purchased Shares (and any shares of Preferred
Stock issued as dividends on the Purchased Shares) without converting such
shares into Common Stock if the Common Stock ceases to be listed or quoted on
the NASDAQ (or its successor) or another U.S. national securities exchange or
automated inter-dealer quotation system. Notwithstanding the foregoing
provisions of this Section 4.9(a), any Purchaser Party may Transfer the
Purchased Shares (or any shares of Preferred Stock issued as dividends on the
Purchased Shares) or any shares of Common Stock received upon conversion thereof
to (i) another Purchaser Party, but only if such other Purchaser Party agrees in
writing for the benefit of the Company (in form and substance reasonably
satisfactory to the Company) to be bound by the terms of this Agreement and if
the transferee and the transferor agree for the express benefit of the Company
that the transferee shall Transfer the Purchased Shares (or any shares of
Preferred Stock issued as dividends on the Purchased Shares) or any shares of
Common Stock received upon conversion thereof so Transferred back to the
transferor at or before such time as the transferee ceases to be an Affiliate of
the transferor; (ii) any other person to the extent such Transfer has been
approved in writing by a majority of the Company Board excluding the Purchaser
Designees; and (iii) the Company (including by way of surrender or repurchase)
or any Company Subsidiary.

(b) Notwithstanding Section 4.9(a), the Purchaser Parties shall not at any time,
directly or indirectly, without the prior written consent of the Company Board
excluding the Purchaser Designees, in any single transaction or series of
related transactions, Transfer any of the Purchased Shares (or any shares of
Preferred Stock issued as dividends on the Purchased Shares) or any shares of
Common Stock received upon conversion thereof:

(1) other than in accordance with all applicable Laws and the other terms and
conditions of this Agreement; or

(2) to any Prohibited Transferee, other than any Transfer (i) effected pursuant
to an underwritten Block Sale (as defined in the Registration Rights Agreement)
or (ii) into the public market pursuant to a bona fide, broadly distributed
underwritten public offering, in each case made pursuant to the Registration
Rights Agreement.

 

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The Purchaser Parties shall not be deemed to have breached their obligations
under Section 4.9(b)(2) as it relates to Activist Investors with respect to the
Transfer of Purchased Shares to any Person so long as the Purchaser Parties act
in good faith, based on generally available public information and the advice of
its financial advisors, to determine whether such person is an Activist
Investor. The reporting by a Person of its ownership of the securities of an
issuer on Schedule 13G shall be deemed to establish conclusively that such
person is not an Activist Investor with respect to such issuer for purposes of
the definition of “Activist Investor”, except to the extent such person
subsequently (but prior to such transfer) files a Schedule 13D with respect to
such issuer; provided that any such determination for any Person with respect to
one issuer shall not preclude such Person from otherwise being an Activist
Investor.

(c) Any attempted Transfer in violation of this Section 4.9 shall be null and
void ab initio.

Section 4.10 Board Representation.

(a) From and after the Closing, until such time as the Purchaser Parties
collectively no longer Beneficially Own a number of shares of Purchased Shares
equal to (i) at least 50% of the Purchased Shares received by the Purchaser
pursuant to this Agreement (adjusted for subdivisions, stock-splits,
combinations, recapitalizations or similar events, and provided that any shares
of Common Stock issued upon conversion of shares of Preferred Stock shall be
treated as that number of shares of Preferred Stock with respect to which such
shares of Common Stock was converted into), the Purchaser shall be entitled to
designate two (2) persons, who shall be Partners, Managing Directors, Advisors
or Principals of the Purchaser, Clayton Dubilier & Rice, LLC or their respective
Affiliates (an “Affiliated Fund”), to serve on the Company Board (the “Purchaser
Designees” and each a “Purchaser Designee”) and (ii) at least 25% (but less than
50%) of the Purchased Shares received by the Purchaser pursuant to this
Agreement (adjusted for subdivisions, stock-splits, combinations,
recapitalizations or similar events, and provided that any shares of Common
Stock issued upon conversion of shares of Preferred Stock shall be treated as
that number of shares of Preferred Stock with respect to which such shares of
Common Stock was converted into), the Purchaser shall be entitled to designate
one (1) Purchaser Designee. At such time that the Purchaser is no longer
entitled to designate one or both Purchaser Designees pursuant to the previous
sentence, the Purchaser shall promptly cause one or both Purchaser Designees, as
applicable, to offer to resign from the Company Board. The Purchaser Designees
shall initially be those persons named on Schedule 4.10 to this Agreement. A
person that is a Purchaser Designee shall remain and be regarded as a Purchaser
Designee for purposes of this Agreement for the remainder of such person’s term
on the Company Board or, if earlier, death or resignation. The Company’s
obligations to have any Purchaser Designee appointed to the Company Board or
nominate any Purchaser Designee for election as a director at any meeting of the
Company’s stockholders pursuant to this Section 4.10, as applicable, shall in
each case be subject to such Purchaser Designee’s satisfaction of all
requirements regarding service as a director of the Company under applicable Law
and stock exchange rules regarding service as a director of the Company. The
Purchaser Parties will cause each Purchaser Designee to make himself or herself
reasonably available for interviews and to consent to such reference and
background checks or other investigations and provide such information as the
Company Board may reasonably request to determine the Purchaser’s Designee’s
eligibility and qualification to serve as a director of the Company Board.

 

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(b) From and after the Closing, the Company shall take such actions as are
necessary to cause the Purchaser Designees to be nominated as members of the
Company Board and shall, subject to applicable Law, include in any proxy
statement prepared, used, delivered or publicly filed by the Company to solicit
the vote of its stockholders in connection with any meeting of Company
stockholders the recommendation of the Company Board that stockholders of the
Company vote in favor of the Purchaser Designees and solicit votes in favor of
the election of the Purchaser Designees to Company Board consistent with the
Company’s efforts to solicit votes in favor of the election of the Company’s
other nominees to the Company Board.

(c) The Company, the Purchaser and each Purchaser Designee shall enter into a
confidentiality and non-disclosure agreement on reasonably acceptable terms and
which shall provide that a Purchaser Designee shall be permitted to disclose
confidential or non-public information received by such Purchaser Designee in
its capacity as a member of the Company Board to representatives of the
Purchaser and its Affiliates.

Section 4.11 Preemptive Rights.

(a) From the Closing until such time as the Purchaser Parties cease to
Beneficially Own at least 25% of the Purchased Shares received by the Purchaser
pursuant to this Agreement (adjusted for subdivisions, stock-splits,
combinations, recapitalizations or similar events; and provided that any shares
of Common Stock issued upon conversion of shares of Preferred Stock shall be
treated as that number of shares of Preferred Stock with respect to which such
shares of Common Stock was converted into), if the Company makes any public or
non-public offering of any Equity Securities or any securities that are
convertible or exchangeable into (or exercisable for) Equity Securities,
including, for the purposes of this Section 4.11, warrants, options or other
such rights (any such security, a “New Security”) (other than (1) pursuant to
any employee or director benefit Plan or the granting or exercise of employee
stock options or RSUs or PRSUs or other equity incentives pursuant to the
Company Equity Plans (or any successor equity incentive Plans of the Company) or
employment or consulting arrangements with the Company or any of its
Subsidiaries, (2) issuances made as consideration for any acquisition (by sale,
merger in which the Company is the surviving corporation, or otherwise) by the
Company of equity in, or assets of, another Person, business unit, division or
business, (3) issuances of any securities issued as a result of a stock split,
stock dividend, reclassification or reorganization or similar event,
(4) issuances of Equity Securities issued upon conversion or exchange of, or as
a dividend on, shares of Preferred Stock then outstanding, and (5) as set forth
on Schedule 4.11(a)), Purchaser and each Purchaser Party to whom Purchaser later
transfers any shares of Preferred Stock purchased on the Closing Date (or any
shares of Common Stock issued upon conversion of such shares of Preferred Stock)
shall be afforded the opportunity to acquire from the Company such Purchaser
Party’s Preemptive Rights Portion of such New Securities for the same price as
that offered to the other purchasers of such Equity Securities or other
securities; provided, that the Purchaser Parties shall not be entitled to
acquire any New Securities pursuant to this Section 4.11 to the extent the
issuance of such New Securities to the Purchaser Parties would require approval
of the stockholders of the Company as a result of any such Purchaser Party’s
status as an Affiliate of the Company or pursuant to the rules and listing
standards of NASDAQ (including NASDAQ Rule 5635), in which case the Company may
consummate the proposed issuance of New Securities to other Persons prior to
obtaining approval of the stockholders of the Company (subject to compliance by
the Company with Section 4.11(f) below).

 

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(b) Subject to the foregoing proviso in Section 4.11(a), the amount of New
Securities that each Purchaser Party shall be entitled to purchase in the
aggregate shall be determined by multiplying (1) the total number of such
offered shares of New Securities by (2) a fraction, the numerator of which is
the number of shares of As-Converted Common Stock held by such Purchaser Party,
as of such date, and the denominator of which is the number of shares of
As-Converted Common Stock then outstanding, as of such date (the “Preemptive
Rights Portion”).

(c) If the Company proposes to offer New Securities, it shall give the Purchaser
written notice of its intention, describing the anticipated price (or range of
anticipated prices), anticipated amount of New Securities and other material
terms and timing upon which the Company proposes to offer the same (including,
in the case of a registered public offering and to the extent possible, a copy
of the prospectus included in the registration statement filed with respect to
such offering) at least five (5) business days prior to such issuance (or, in
the case of a registered public offering, at least five (5) business days prior
to the commencement of such registered public offering) (provided that, to the
extent the terms of such offering cannot reasonably be provided five
(5) business days prior to such issuance, notice of such terms may be given as
promptly as reasonably practicable but in any event prior to such issuance). The
Company may provide such notice to the Purchaser on a confidential basis prior
to public disclosure of such offering. Other than in the case of a registered
public offering, the Purchaser may notify the Company in writing at any time on
or prior to the second business day immediately preceding the date of such
issuance (or, if notice of all such terms has not been given prior to the second
business day immediately preceding the date of such issuance, at any time prior
to such issuance) whether any of the Purchaser Parties will exercise such
preemptive rights and as to the amount of New Securities the Purchaser Parties
desires to purchase, up to the maximum amount calculated pursuant to
Section 4.11(b). In the case of a registered public offering, the Purchaser
shall notify the Company in writing at any time prior to the second business day
immediately preceding the date of commencement of such registered public
offering (or, if notice of all such terms has not been given prior to the second
business day immediately preceding the date of commencement of such registered
public offering, at any time prior to the date of commencement of such
registered public offering) whether any of the Purchaser Parties will exercise
such preemptive rights and as to the amount of New Securities the Purchaser
Parties desires to purchase, up to the maximum amount calculated pursuant to
Section 4.11(b). Such notice to the Company shall constitute a binding
commitment by the Purchaser Parties to purchase the amount of New Securities so
specified at the price and other terms set forth in the Company’s notice to it.
Subject to receipt of the requisite notice of such issuance, the failure of
Purchaser to respond prior to the time a response is required pursuant to this
Section 4.11(c) shall be deemed to be a waiver of the Purchaser Parties’
purchase rights under this Section 4.11 only with respect to the offering
described in the applicable notice.

(d) Each Purchaser Party shall purchase the New Securities that it has elected
to purchase under this Section 4.11 concurrently with the related issuance of
such New Securities by the Company (subject to the receipt of any required
approvals from any Governmental Entity to consummate such purchase by such
Purchaser Party); provided, that if such related issuance is

 

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prior to the fifteenth (15th) business day following the date on which such
Purchaser Party has notified the Company that it has elected to purchase New
Securities pursuant to this Section 4.11, then each Purchaser Party shall
purchase such New Securities within fifteen (15) business days following the
date of the related issuance. If the proposed issuance by the Company of
securities which gave rise to the exercise by the Purchaser Parties of its
preemptive rights pursuant to this Section 4.11 shall be terminated or abandoned
by the Company without the issuance of any securities, then the purchase rights
of the Purchaser Parties pursuant to this Section 4.11 shall also terminate as
to such proposed issuance by the Company (but not any subsequent or future
issuance), and any funds in respect thereof paid to the Company by the Purchaser
Parties in respect thereof shall be refunded in full.

(e) In the case of the offering of securities for consideration in whole or in
part other than cash, including securities acquired in exchange therefor (other
than securities by their terms so exchangeable), the consideration other than
cash shall be deemed to be the fair value thereof as reasonably determined by
the Company Board; provided, however, that such fair value as determined by the
Company Board shall not exceed the aggregate market price of the securities
being offered as of the date the Company Board authorizes the offering of such
securities.

(f) In the event that the Purchaser Parties are not entitled to acquire any New
Securities pursuant to this Section 4.11 because such issuance would require the
Company to obtain stockholder approval in respect of the issuance of such New
Securities to the Purchaser Parties as a result of any such Purchaser Party’s
status as an Affiliate of the Company or pursuant to the rules and listing
standards of NASDAQ (including NASDAQ Rule 5635), the Company shall, upon the
Purchaser’s reasonable request delivered to the Company in writing within five
(5) business days following its receipt of the written notice of such issuance
to Purchaser pursuant to Section 4.11(c), at Purchaser’s election, (i) waive the
restrictions set forth in Section 4.13(b) solely to the extent necessary to
permit any Purchaser Party to acquire such number of New Securities equivalent
to its Preemptive Rights Portion of such issuance such Purchaser Party would
have been entitled to purchase had it been entitled to acquire such New
Securities pursuant to Section 4.11(a)-(c); (ii) consider and discuss in good
faith modifications proposed by the Purchaser Parties to the terms and
conditions of such portion of the New Securities which would otherwise be issued
to the Purchaser Parties such that the Company would not be required to obtain
stockholder approval in respect of the issuance of such New Securities as so
modified; and/or (iii) solely to the extent that stockholder approval is
required in connection with the issuance of Equity Securities to Persons other
than the Purchaser Parties, use reasonable best efforts to seek stockholder
approval in respect of the issuance of any New Securities to the Purchaser
Parties.

(g) The election by any Purchaser Party to not exercise its subscription rights
under this Section 4.11 in any one instance shall not affect its right as to any
subsequent proposed issuance.

(h) The Company and the Purchaser Parties shall cooperate in good faith to
facilitate the exercise of the Purchaser Parties’ rights pursuant to this
Section 4.11, including securing any required approvals or consents.

 

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Section 4.12 [Reserved].

Section 4.13 Voting of Company Shares; Standstill.

(a) Voting of Company Shares:

(1) At each meeting of the stockholders of the Company and at every postponement
or adjournment thereof, each of CD&R Fund and the Purchaser Parties shall, and
shall use reasonable best efforts to cause each of their respective Affiliates
and representatives to, take such action as may be required so that all of the
shares of Preferred Stock and Common Stock Beneficially Owned, directly or
indirectly, by CD&R Fund or the Purchaser Parties and entitled to vote at such
meeting of stockholders are voted (i) in favor of each director nominated and
recommended by the Company Board for election at any such meeting (which
nomination and recommendation shall include the Purchaser Designees) and
(ii) against any stockholder nominations for director or other stockholder
proposals which are not approved and recommended by the Company Board for
election at any such meeting.

(2) The Purchaser shall, and each of CD&R Fund and Purchaser shall (to the
extent necessary to comply with this Section 4.13(a)) cause the Purchaser
Parties to, be present, in person or by proxy, at all meetings of the
stockholders of the Company at which directors are nominated so that all shares
of Preferred Stock and Common Stock Beneficially Owned by CD&R Fund or the
Purchaser Parties may be counted for the purposes of determining the presence of
a quorum and voted in accordance with Section 4.13(a)(1) at such meetings
(including at any adjournments or postponements thereof).

(b) Standstill: Each of CD&R Fund and the Purchaser Parties agree that during
the Standstill Period, without the prior written approval of the Company Board,
CD&R Fund and the Purchaser Parties shall not, directly or knowingly indirectly,
and shall use reasonable best efforts to cause their respective Affiliates not
to (either individually, or in concert with any other Person, or as a “group”
(as such term is used in Section 13(d)(3) of the Exchange Act)):

(1) acquire, offer or seek to acquire, agree to acquire or make a proposal to
acquire, by purchase or otherwise, any securities or direct or indirect rights
to acquire any equity securities of the Company or any of its Affiliates, any
securities convertible into or exchangeable for any such equity securities, any
options or other derivative securities or contracts or instruments in any way
related to the price of shares of Common Stock or substantially all of the
assets or property of the Company and its Subsidiaries (but in any case
excluding (1) any issuance by the Company of shares of Common Stock or options,
warrants or other rights to acquire Common Stock (or the exercise thereof) (A)
to any Purchaser Designee as compensation for their membership on the Company
Board or (B) as a result of a dividend payment on, or the conversion of, the
Preferred Stock pursuant to the provisions of the Certificate of Designations
and (2) the use of cash dividends received by the Purchaser Parties on the
Preferred Stock to acquire shares of Common Stock in open market purchases (but
only to the extent of such cash dividends paid by the Company on the Preferred
Stock), to the extent permitted by applicable Law);

 

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(2) other than to effectuate the nomination and election of the Purchaser
Designees pursuant to Section 4.10, make or in any way participate or engage in
any “solicitation” of “proxies” (whether or not relating to the election or
removal of directors), as such terms are used in the rules of the SEC, to vote,
or knowingly seek to advise or influence any Person with respect to voting of,
any voting securities of the Company or any of its Subsidiaries, or call or seek
to call a meeting of the Company’s stockholders or initiate any stockholder
proposal for action by the Company’s stockholders, or other than with respect to
the Purchaser Designees, seek election to or to place a representative on the
Company Board or seek the removal of any director from the Company Board;

(3) make any public announcement with respect to, or offer, seek, propose or
indicate an interest in (in each case with or without conditions), any merger,
consolidation, business combination, tender or exchange offer, recapitalization,
reorganization or purchase of all or substantially all of the assets of the
Company and its Subsidiaries, or any other extraordinary transaction involving
the Company or any Subsidiary of the Company or any of their respective
securities or assets, or enter into any discussions, negotiations, arrangements,
understandings or agreements (whether written or oral) with any other Person
regarding any of the foregoing;

(4) effect or seek to effect (including by entering into discussions,
negotiations, agreements or understandings with any third person), offer or
propose (whether publicly or otherwise) to effect, or cause or participate in,
or in any way assist or facilitate any other person to effect or seek, offer or
propose (whether public or otherwise) to effect or participate (except as a
holder of Common Stock or Preferred Stock) in a merger, consolidation, division,
acquisition or exchange of substantially all assets or equity, change of control
transaction, recapitalization, restructuring, liquidation or similar transaction
involving the Company or any of its Subsidiaries;

(5) excluding Purchaser Designees, otherwise act, alone or in concert with
others, to seek to control or influence, in any manner, management or the
Company Board or any of its Subsidiaries;

(6) make any public proposal or public statement of inquiry or publicly disclose
any intention, plan or arrangement inconsistent with any of the foregoing;

(7) advise, assist, knowingly encourage or direct any Person to do, or to
advise, assist, encourage or direct any other person to do, any of the
foregoing;

(8) take any action that would reasonably be expected to require the Company to
make a public announcement regarding the possibility of a transaction or any of
the events described in this Section 4.13(b);

(9) enter into any discussions, negotiations, arrangements or understandings
with any third party (including security holders of the Company, but excluding,
for the avoidance of doubt, any Purchaser Parties) with respect to any of the
foregoing, including forming, joining or in any way participating in a “group”
(as such term is used in Section 13(d)(3) of the Exchange Act) with any third
party with respect to any securities of the Company or otherwise in connection
with any of the foregoing;

 

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(10) request the Company or any of its representatives, directly or indirectly,
to amend or waive any provision of this Section 4.13(b), provided that this
clause shall not prohibit the Purchaser Parties from making a confidential
request to the Company seeking an amendment or waiver of the provisions of this
Section 4.13(b), which the Company may accept or reject in its sole discretion,
so long as any such request is made in a manner that does not require public
disclosure thereof by any Person; or

(11) contest the validity of this Section 4.13(b) or make, initiate, take or
participate in any demand, action (legal or otherwise) or proposal to amend,
waive or terminate any provision of this Section 4.13(b);

provided, however, that nothing in this Section 4.13(b) will limit (1) the
Purchaser Parties’ ability to vote (subject to Section 4.12 4.13(a) and the
other Transaction Documents) or Transfer (subject to Section 4.9 and the other
Transaction Documents) their shares of Preferred Stock or Common Stock, or
otherwise exercise rights under their shares of Preferred Stock pursuant to the
Certificate of Designations, (2) the preemptive rights of any Purchaser Party
pursuant to Section 4.11, or (3) the ability of any Purchaser Designee to act in
his or her capacity as a member of the Company Board, including, but not limited
to, his or her ability to vote or otherwise exercise his or her fiduciary
duties.

Section 4.14 Restrictive Covenants. During the Standstill Period, each of CD&R
Fund and the Purchaser Parties shall not, and shall cause their respective
Affiliates and all other investment funds or Persons controlled or managed by
any of the general partners of CD&R Fund or the Purchaser Parties or their
respective Affiliated Funds not to, directly or indirectly:

(a) solicit for employment, employ or attempt to employ or divert any senior
management-level employee of any Group Company as of the date hereof; provided,
that the Purchaser and its Affiliates may (1) engage in general solicitations of
employment (including through search firms) not specifically directed at such
employees and (2) solicit for employment or employ or attempt to employ any
person who is no longer employed by any Group Company at such time; or

(b) engage or participate, as an owner, investor, partner, member, shareholder
or lender, in a business primarily engaged in the distribution of roofing
materials, drywall or ceiling tile and related accessories anywhere in the
United States or Canada.

Notwithstanding the foregoing, the restrictions set forth in this Section 4.14
shall not apply to any portfolio company of CD&R Fund, the Purchaser Parties or
any Affiliated Fund (or any controlled Affiliate of any such portfolio company),
except to the extent CD&R Fund, the Purchaser Parties or any Affiliated Fund
(other than their respective portfolio companies or controlled Affiliates
thereof) either directs or causes such portfolio company (or controlled
Affiliate) to take an action that would be a breach of this Section 4.14 if CD&R
Fund or the Purchaser Parties had taken such action; provided that service by
one or more representatives of the Purchaser Parties, CD&R Fund or any
Affiliated Fund as a director of a portfolio company

 

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shall not, on its own, constitute directing or causing such portfolio company
(or controlled Affiliate) to take any action that would be a breach of this
Section 4.14 if the Purchaser Parties or CD&R Fund had taken such action. Each
of CD&R Fund and the Purchaser Parties shall not, and shall cause the Affiliated
Funds not to, vote in their capacity as equityholders in favor of, or fail to
exercise a contractual veto right over, an action by such portfolio company (or
controlled Affiliate) that would be a breach of this Section 4.14 if CD&R Fund
or the Purchaser Parties had taken such action.

Section 4.15 Legend.

(a) Purchaser agrees that any certificates or other instruments representing the
Preferred Stock or Common Stock subject to this Agreement will bear a legend
substantially to the following effect:

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION
STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR
SUCH LAWS.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND OTHER
RESTRICTIONS SET FORTH IN AN INVESTMENT AGREEMENT, DATED AS OF AUGUST 24, 2017,
COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE ISSUER.

(b) Upon request of Purchaser, upon receipt by the Company of an opinion of
counsel reasonably satisfactory to the Company to the effect that such legend is
no longer required under the Securities Act and applicable state laws, the
Company shall promptly cause the first paragraph of the legend to be removed
from any certificate for any Preferred Stock or Common Stock to be Transferred
in accordance with the terms of this Agreement and the second paragraph of the
legend shall be removed upon the expiration of such transfer and other
restrictions set forth in this Agreement (and, for the avoidance of doubt,
immediately prior to any termination of this Agreement). Purchaser acknowledges
that the Preferred Stock and Common Stock issuable upon conversion of the
Preferred Stock or, if applicable, issued pursuant to this Agreement have not
been registered under the Securities Act or under any state securities laws and
agrees that it will not sell or otherwise dispose of any of the Preferred Stock
or Common Stock issuable upon conversion of the Preferred Stock or, if
applicable, issued pursuant to this Agreement, except in compliance with the
registration requirements or exemption provisions of the Securities Act and any
other applicable securities laws.

 

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ARTICLE V

Indemnity

Section 5.1 Indemnification by the Company. From and after the Closing, the
Company agrees to indemnify the Purchaser and its Affiliates and its and their
respective officers, directors, managers, employees, partners, representatives
and agents (collectively, “Purchaser Related Parties”) from, and hold each of
them harmless against, any and all losses (including losses arising from the
diminution in value of the Company as a result of such indemnification by the
Company, in each case subject to Section 5.7), damages, actions, suits,
proceedings (including any investigations, litigation or inquiries), demands and
causes of action, and, in connection therewith, all reasonable costs, losses,
liabilities, damages or expenses of any kind or nature whatsoever (including the
reasonable and documented fees and disbursements of outside counsel and all
other reasonable expenses incurred in connection with investigating, defending
or preparing to defend any such matter that may be incurred by them or asserted
against or involve any of them) (collectively, “Losses”), whether or not
involving a Third Party Claim, incurred by or asserted against such Purchaser
Related Parties, as a result of or arising out of (i) the failure of the
representations or warranties made by the Company contained in Article II or in
any certificate delivered pursuant hereto to be true and correct or (ii) the
breach of any of the covenants of the Company contained herein; provided, that
in the case of the immediately preceding clause (i), such claim for
indemnification relating to a breach of any representation or warranty is made
prior to the expiration of such representation or warranty as set forth in
Section 5.5; provided, further, that for purposes of determining when an
indemnification claim has been made, the date upon which a Purchaser Related
Party shall have given written notice (stating in reasonable detail the basis of
the claim for indemnification) to the Company shall constitute the date upon
which such claim has been made; provided, further, for the purposes of
calculating the amount of Losses and for determining whether a breach of any
representation or warranty has occurred for purposes of this Section 5.1, all
materiality, Company Material Adverse Effect and similar qualifiers contained in
Article II shall be disregarded therefrom. For the avoidance of doubt, for
purposes of determining Losses of the Purchaser Related Parties as a result of
diminution of value attributable solely to Losses of the Company and its
Subsidiaries (as opposed to Losses of the Purchaser Related Parties that do not
result indirectly from Losses of the Company and its Subsidiaries), such Losses
shall be measured by reference to the Purchaser Related Parties’ proportionate
ownership of the Common Stock (assuming full conversion of all outstanding
shares of Preferred Stock held by the Purchaser Related Parties into Common
Stock).

Section 5.2 Indemnification by the Purchaser. From and after the Closing, the
Purchaser agrees to indemnify the Company and its respective officers,
directors, managers, employees, partners, representatives and agents
(collectively, “Company Related Parties”) from, and hold each of them harmless
against, any and all Losses, whether or not involving a Third Party Claim,
incurred by or asserted against such Company Related Parties as a result of or
arising out of (i) the failure of any of the representations or warranties made
by the Purchaser contained in Article III or in any certificate delivered
pursuant hereto to be true and correct or (ii) the breach of any of the
covenants of the Purchaser contained herein; provided, that in the case of the
immediately preceding clause (i), such claim for indemnification relating to a
breach of any representation or warranty is made prior to the expiration of such
representation or warranty as set forth in Section 5.5; provided, further, that
for purposes of determining when an indemnification claim has been made, the
date upon which a Company Related Party shall have given written notice (stating
in reasonable detail the basis of the claim for indemnification) to the
Purchaser shall constitute the date upon which such claim has been made.

 

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Section 5.3 Indemnification Procedure.

(a) A claim for indemnification for any matter not involving a Third Party Claim
may be asserted by written notice to the party from whom indemnification is
sought; provided, however, that failure to so notify the indemnifying party
shall not preclude the indemnified party from any indemnification that it may
claim in accordance with this Article V, except as otherwise provided in
Sections 5.1 and 5.2 and except to the extent that the indemnifying party is
materially prejudiced by such failure.

(b) Promptly after any Company Related Party or Purchaser Related Party
(hereinafter, the “Indemnified Party”) has received notice of any indemnifiable
claim hereunder, or the commencement of any action, suit or proceeding by a
third person, which the Indemnified Party believes in good faith is an
indemnifiable claim under this Agreement (each, a “Third Party Claim”), the
Indemnified Party shall give the indemnitor hereunder (the “Indemnifying Party”)
written notice of such Third Party Claim; provided, that failure or delay to so
notify the Indemnifying Party will not relieve the Indemnifying Party from any
liability it may have to such Indemnified Party hereunder, except to the extent
that the Indemnifying Party is materially prejudiced by such failure or delay.
Such notice shall specify in reasonable detail the nature and the basis of such
Third Party Claim to the extent then known. The Indemnifying Party shall have
the right to assume and control the defense of, and settle, at its own expense
and by its own counsel, any such matter as long as the Indemnifying Party
pursues the same diligently and in good faith. If the Indemnifying Party
undertakes to assume and control the defense or settle such Third Party Claim,
it shall promptly, and in no event later than fifteen (15) business days after
notice of such indemnification claim, notify the Indemnified Party of its
intention to do so, and the Indemnified Party shall cooperate with the
Indemnifying Party and its counsel in all reasonable respects in the defense
thereof and/or the settlement thereof. Such cooperation shall include, but shall
not be limited to, furnishing the Indemnifying Party with any books, records and
other information reasonably requested by the Indemnifying Party and related to
such Third Party Claim and in the Indemnified Party’s possession or control.
Such cooperation of the Indemnified Party shall be at the cost of the
Indemnifying Party. After the Indemnifying Party has notified the Indemnified
Party of its intention to undertake to defend or settle any such asserted
liability, and for so long as the Indemnifying Party diligently pursues such
defense, the Indemnifying Party shall not be liable for any additional legal
expenses incurred by the Indemnified Party in connection with any defense or
settlement of such asserted liability; provided, however, that the Indemnified
Party shall be entitled (i) at its own expense, to participate in the defense of
such asserted liability and any negotiations of the settlement thereof and
(ii) if (A) the Indemnifying Party has, within fifteen (15) business days of
when the Indemnified Party provides written notice of a Third Party Claim,
failed to assume the defense or settlement of such Third Party Claim and notify
the Indemnified Party of such assumption, or (B) the defendants in any such
action include both the Indemnified Party and the Indemnifying Party and counsel
to the Indemnified Party shall have concluded that there may be reasonable
defenses available to the Indemnified Party that are different from or in
addition to those available to the Indemnifying Party or if the interests of the
Indemnified Party reasonably may be deemed to conflict with the interests of the
Indemnifying Party, then, in each case, the Indemnified Party shall have the
right to select a separate counsel and, upon prompt notice to the Indemnifying
Party, to assume such settlement or legal defense and otherwise to participate
in the defense of such action, with the expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed by the
Indemnifying Party; provided, that the Indemnified Parties shall not be entitled
to reimbursement of fees and expenses of more than one firm of

 

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separate counsel (other than in respect of appropriate local counsel in the
applicable jurisdiction). Notwithstanding any other provision of this Agreement,
neither the Indemnifying Party nor the Indemnified Party shall settle any
indemnified claim without the written consent of the other (which consent shall
not be unreasonably withheld, conditioned or delayed), unless the settlement
thereof (x) does not involve any Governmental Entity and (y) imposes no
liability, restriction or obligation on, and includes a complete release from
liability of, and does not contain any admission of wrongdoing by, the
Indemnified Party or the Indemnifying Party, as applicable.

Section 5.4 Tax Matters. All indemnification payments under this Article V shall
be treated as adjustments to the Purchase Price for U.S. federal income tax
purposes, except as otherwise required by applicable Law.

Section 5.5 Survival. The representations and warranties of the parties
contained in this Agreement shall survive for twelve (12) months following the
Closing, except that (i) the representations and warranties of the Company
contained in Sections 2.1, 2.3(a) and Section 2.4 shall survive until sixty
(60) days following the expiration of the applicable statutes of limitation,
(ii) the representations and warranties of the Company contained in Section 2.2
shall survive indefinitely, and (iii) the representations and warranties of the
Purchaser contained in Section 3.1 and Section 3.2(a) shall survive until sixty
(60) days following the expiration of the applicable statutes of limitation. All
of the covenants or other agreements of the parties contained in this Agreement
shall survive until fully performed or fulfilled, unless and to the extent that
non-compliance with such covenants or agreements is waived in writing by the
party entitled to such performance.

Section 5.6 Limitations on Indemnification .

(a) In the case of any matter for which a party may seek indemnification under
this Article V:

(1) no Losses shall be indemnifiable under Section 5.1(i) or Section 5.2(i)
unless and until the Purchaser Related Parties or the Company Related Parties,
as the case may be, have suffered, incurred, sustained or become subject to
Losses referred to in Section 5.1(i) or Section 5.2(i), respectively, in excess
of one percent (1%) of the Purchase Price (the “Deductible”), in which case the
Indemnified Parties shall be entitled to recover the amount of such Losses in
excess of the Deductible; provided, however, that this Section 5.6(a)(1) shall
not apply to the failure of any of the representations and warranties of the
Company contained in Section 2.1, 2.2, 2.3(a), Section 2.4 or Section 2.8 or the
failure of any of the representations and warranties of the Purchaser contained
in Section 3.1, Section 3.2(a) or Section 3.5 to be true and correct; and

(2) no Losses shall be indemnifiable pursuant to Section 5.1(i) or
Section 5.2(i) as a result of or arising out of the failure of any of the
representations and warranties of the Company or the Purchaser, as applicable,
to be true and correct (other than the representations and warranties of the
Company contained in Section 2.1, 2.2, 2.3(a), Section 2.4 or Section 2.8 and
the representations and warranties of the Purchaser contained in Section 3.1,
Section 3.2(a) or Section 3.5) if the amount of Losses with respect to such
indemnity claim is less than $100,000 (each such claim referred to in this
Section 5.6(a)(2) being referred to as a “De Minimis Claim”), and no such De
Minimis Claim shall be counted towards the Deductible.

 

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(b) In calculating amounts payable to an Indemnified Party, the amount of any
indemnified Losses shall be determined without duplication of any other Loss for
which an indemnification payment has been made, shall be increased by any net
Tax detriment (determined on a with and without basis) actually incurred by an
Indemnified Party or its Affiliates or its direct and indirect partners, as a
result of the receipt or accrual of the indemnification payment required to be
made hereunder in respect of such Losses and shall be computed net of
(i) payments actually recovered by the Indemnified Party under any insurance
policy with respect to such Losses or pursuant to any contribution rights,
(ii) any amounts actually recovered by the Indemnified Party from any Person
with respect to such Losses (including pursuant to any indemnification agreement
or arrangement with any third party) and (iii) any net Tax Benefit (determined
on a with and without basis) actually realized by the Indemnified Party or its
Affiliates or its direct and indirect partners, in each of clauses (i), (ii) and
(iii), calculated net of any out-of-pocket documented reasonable expenses
related to the receipt of such recovery, including any incremental insurance
premium costs (it being understood that with respect to (i) and (ii), each
Indemnified Party shall use its reasonable best efforts to pursue all available
insurance recoveries and indemnification). For the purposes hereof, “Tax
Benefit” shall mean any refund of Taxes paid or credit of or reduction in the
amount of Taxes which otherwise would have been paid in the year such Losses
were incurred or in the following year.

(c) In respect of any Loss for which indemnification may be sought pursuant to
this Article V, nothing herein shall relieve an Indemnified Party from its duty
to mitigate its Losses under applicable Laws. If an Indemnified Party shall have
failed to mitigate any Loss to the extent required by the preceding sentence,
then notwithstanding anything contained in this Agreement to the contrary,
neither the Company nor the Purchaser (as the case may be) shall be required to
indemnify such Indemnified Party for that portion of the Losses that would
reasonably be expected to have been avoided if such Indemnified Party had not
failed to mitigate any Loss to the extent required by the preceding sentence.

(d) Upon making payment to an Indemnified Party for any claim for
indemnification pursuant to this Article V, the Indemnifying Party shall be
subrogated to the extent of such payment to the rights of the Indemnified Party
against any other Persons with respect to the subject matter of such claim, and
the Indemnified Party shall take such actions, at the cost and expense of the
Indemnifying Party, as the Indemnifying Party may reasonably require to perfect
such subrogation or to pursue such rights against such other Persons as the
Indemnified Party or its Affiliates may have; provided, however, that the
Indemnifying Party shall not be subrogated with respect to any cost of recovery
to an Indemnified Party or any indemnified Losses not covered by reason of a
limitation of liability provision set forth in this Article V.

Section 5.7 Limitation on Damages. Notwithstanding any other provision of this
Agreement, except in the case of actual fraud, neither party hereto shall have
any liability to the other party in excess of the Purchase Price, and neither
party shall be liable for any exemplary or punitive damages, remote or
speculative Losses or any other damages arising out of or in connection with
this Agreement or the transactions contemplated hereby to the extent not
reasonably foreseeable (in each case, unless any such damages are specifically
awarded pursuant to a Third Party Claim).

 

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Section 5.8 Exclusive Remedy. Except in the case of actual fraud, from and after
the Closing, recovery pursuant to this Article V shall constitute the
Indemnified Parties’ sole and exclusive remedy for any and all Losses relating
to or arising from this Agreement and the transactions contemplated hereby;
provided, however, that the foregoing shall not be deemed to deny any party
injunctive or equitable relief when it is otherwise available under Section 6.14
or applicable Law (it being understood that this provision does not impact any
rights that the Company has as a third party beneficiary of the Equity
Commitment Letter prior to the Closing).

ARTICLE VI

Miscellaneous

Section 6.1 Expenses. Except as set forth in Section 4.7(a), each party will
bear and pay all other costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated pursuant to this Agreement;
provided, that the Company shall (a) reimburse the Purchaser for all filing fees
under the HSR Act and (b) (i) upon the Closing (or, to the extent any such costs
and expenses are incurred after the Closing, promptly following written notice
from Purchaser requesting reimbursement thereof) or (ii) promptly following the
termination of this Agreement pursuant to (x) Section 6.15(b) or Section 6.15(e)
hereof, in each case at a time when Purchaser could have terminated this
Agreement pursuant to Section 6.15(c) hereof or (y) Section 6.15(c) hereof (and
provided, in the case of each of clauses (x) and (y), that the Allied
Acquisition Agreement is terminated by the Company pursuant to
(I) Section 7.1(d) thereof, (II) Section 7.1(b) thereof (in the case of each of
clauses (I) and (II), in a circumstance in which the failure to close the Allied
Acquisition or termination of the Allied Acquisition Agreement, as applicable,
resulted from the Company’s failure to use its reasonable best efforts pursuant
to Section 4.2 of this Agreement) or (III) by mutual agreement of the parties
thereto pursuant to Section 7.1(a) thereof (excluding, in each case, any such
termination (x) arising from the failure of one or more conditions to closing
the Allied Acquisition to be satisfied on or prior to the Termination Date
(other than as a result of the Company’s failure to use its reasonable best
efforts pursuant to Section 4.2 of this Agreement) or (y) consented to by
Purchaser in writing)), reimburse the Purchaser for its reasonable and
documented out-of-pocket costs and expenses incurred in connection with the
evaluation (including due diligence), negotiation and consummation of this
Agreement and the other Transaction Documents and the transactions contemplated
hereby and thereby (including the Allied Acquisition), including fees and
expenses of its outside legal and accounting advisors in connection with any of
the foregoing. In the event that the Company brings an action against the
Purchaser or CD&R Fund to enforce the terms of the Equity Commitment Letter,
then the non-prevailing party in such action shall reimburse the prevailing
party for its costs and expenses (including, without limitation, legal fees and
expenses) incurred in connection with such action.

 

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Section 6.2 Amendment; Waiver. No amendment or waiver of any provision of this
Agreement will be effective with respect to any party unless made in writing and
signed by an officer or duly authorized representative of such party. No failure
or delay by any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The conditions to each party’s obligation to
consummate the Closing are for the sole benefit of such party and may be waived
by such party in whole or in part to the extent permitted by applicable Law. No
waiver of any party to this Agreement will be effective unless it is in a
writing signed by a duly authorized officer of the waiving party that makes
express reference to the provision or provisions subject to such waiver. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by Law.

Section 6.3 Counterparts; Electronic Transmission. For the convenience of the
parties hereto, this Agreement may be executed in any number of separate
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts will together constitute the same agreement. Executed
signature pages to this Agreement may be delivered by facsimile or other means
of electronic transmission and such facsimiles or other means of electronic
transmission will be deemed as sufficient as if actual signature pages had been
delivered.

Section 6.4 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
principles or rules of conflict of laws to the extent such principles or rules
would require or permit the application of Laws of another jurisdiction. The
parties hereby irrevocably and unconditionally consent to submit to the
exclusive jurisdiction of the state and federal courts located in the State of
Delaware for any actions, suits or proceedings arising out of or relating to
this Agreement and the transactions contemplated hereby. The parties hereby
irrevocably and unconditionally consent to the jurisdiction of such courts (and
of the appropriate appellate courts therefrom) in any such action, suit or
proceeding and irrevocably waive, to the fullest extent permitted by Law, any
objection that they may now or hereafter have to the laying of the venue of any
such action, suit or proceeding in any such court or that any such action, suit
or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such action, suit or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 6.6 shall be deemed
effective service of process on such party.

Section 6.5 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 6.6 Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the other will be in writing and will be deemed
to have been duly given (a) on the date of delivery if delivered personally or
by telecopy, facsimile or electronic mail, upon confirmation of receipt, (b) on
the first business day following the date of dispatch if delivered by a
recognized next-day courier service, or (c) on the third business day following
the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered as set
forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice.

 

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(a) If to Purchaser:

c/o Clayton, Dubilier & Rice, LLC

375 Park Avenue, 18th Floor

New York, NY 10152

Attn: Nathan K. Sleeper, JL Zrebiec

Fax: (212) 407-5252

Email: nsleeper@cdr-inc.com, jzrebiec@cdr-inc.com

with a copy to (which copy alone shall not constitute notice):

Debevoise & Plimpton LLP

919 Third Avenue

New York, New York 10022

Attention: Paul S. Bird; Uri Herzberg

Email: psbird@debevoise.com; uherzberg@debevoise.com

(b) If to the Company:

Beacon Roofing Supply, Inc.

6701 Democracy Blvd., Suite 200

Bethesda, Maryland 20817

Attention: Ross D. Cooper, Executive Vice President, General Counsel &

                 Secretary

Fax: (301) 272-2125

Email: rcooper@becn.com

with a copy to (which copy alone shall not constitute notice):

Sidley Austin LLP

1 South Dearborn Street

Chicago, Illinois 60603

Attention: Jeffrey N. Smith; Michael P. Heinz

Fax: (312) 853-7036

Email: jnsmith@sidley.com; mheinz@sidley.com

Section 6.7 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) constitutes the entire agreement, and supersedes all other
prior agreements, understandings, representations and warranties, both written
and oral, among the parties, with respect to the subject matter hereof.

Section 6.8 Assignment. Neither this Agreement, nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of Law or otherwise) without the prior written consent of the other
party, provided, however, that (a) the Purchaser may assign its rights,
interests and obligations under this Agreement, in whole

 

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or in part, to one or more Permitted Transferees in accordance with this
Agreement, including Section 4.9, and (b) in the event of such assignment, such
assignee shall agree in writing to be bound by the provisions of this Agreement,
including the rights, interests and obligations so assigned; provided, that no
such assignment will relieve the Purchaser of its obligations hereunder prior to
the Closing. This Agreement shall bind and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted
assigns.

Section 6.9 Interpretation; Other Definitions. Wherever required by the context
of this Agreement, the singular shall include the plural and vice versa, and the
masculine gender shall include the feminine and neuter genders and vice versa,
and, unless specified otherwise, references to any agreement, document or
instrument shall be deemed to refer to such agreement, document or instrument as
amended, supplemented or modified from time to time. All article, section,
paragraph or clause references not attributed to a particular document shall be
references to such parts of this Agreement, and all exhibit, annex and schedule
references not attributed to a particular document shall be references to such
exhibits, annexes and schedules to this Agreement. In addition, the following
terms are ascribed the following meanings:

 

  (1) the term “business day” means any day that is not a Saturday, a Sunday or
any other day on which commercial banks are generally required or authorized by
Law to be closed in New York City, New York;

 

  (2) the terms “herein,” “hereof” and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular section,
paragraph or subdivision;

 

  (3) the words “including,” “includes,” “included” and “include” are deemed to
be followed by the words “without limitation”;

 

  (4) the word “or” is not exclusive; and

 

  (5) the term “person” has the meaning given to it in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act.

 

  (6) “accredited investor” shall have the meaning set forth in Section 3.3.

 

  (7)

“Acquisition Proposal” means any proposal or offer from any Person relating to
any direct or indirect (i) sale, lease or other disposition directly or
indirectly by merger, consolidation, business combination, share exchange, joint
venture or otherwise of assets of the Company or any Subsidiary representing 20%
or more of the consolidated assets of the Company Group (other than sales of
inventory in the ordinary course of business and consistent with past practice);
(ii) issuance, sale or other disposition, directly or indirectly (including by
way of merger, consolidation, business combination, share exchange, joint
venture or any similar transaction), of securities (or options, rights or
warrants to purchase, or securities convertible into or exchangeable for, such
securities) representing 10% or more of any class of equity securities of the
Company (other than grants of Company Stock Options, Company RSUs and Company
PRSUs under the Company Equity Plans in the ordinary course of business to
employees, officers or directors of any

 

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  Company Group Member); (iii) tender offer or exchange offer as defined
pursuant to the Exchange Act that, if consummated, would result in any Person
Beneficially Owning 10% or more of any class or series (or the voting power of
any class or series) of equity securities of the Company or any other
transaction in which any Person shall acquire Beneficial Ownership or the right
to acquire Beneficial Ownership, of 10% or more of any class or series (or the
voting power of any class or series) of equity securities; (iv) merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving any Company Group Member representing 20% or
more of the consolidated assets of the Company Group; or (v) combination of the
foregoing (in each case, other than the arrangements contemplated by the
Transaction Documents).

 

  (8) “Activist Investor” means, as of any date, any Person that has, directly
or indirectly through its publicly disclosed Affiliates, whether individually or
as a member of a publicly disclosed “group” (as such term is used in
Section 13(d)(3) of the Exchange Act), within the two-year period immediately
preceding such date, and in each case with respect to the Company or any of its
equity securities (i) publicly made, engaged in or been a participant (as
defined in Instruction 3 to Item 4 of Schedule 14A under the Exchange Act) in
any “solicitation” of “proxies” (as such terms are defined in Regulation 14A as
promulgated by the SEC), to vote any equity securities of the Company, including
in connection with a proposed change in control or other extraordinary or
fundamental transaction involving the Company or any of its Subsidiaries, or a
public proposal for the election or replacement of any directors of the Company,
not approved by the Company Board prior to first public disclosure thereof,
(ii) publicly called, or publicly sought to call, a meeting of stockholders of
the Company or publicly initiated any stockholder proposal or meeting agenda
item for action by stockholders of the Company (including through action by
written consent), in each case not approved by the Company Board prior to first
public disclosure thereof, (iii) commenced a “tender offer” (as such term is
used in Regulation 14D under the Exchange Act) to acquire equity securities of
the Company that was not approved (at or before the time of commencement) by the
Company Board, (iv) otherwise publicly acted, alone or in concert with others,
to seek to control or influence the Company Board or stockholders of the Company
(provided that this clause (iv) is not intended to apply to the activities of
any member of the Company Board, with respect to the Company, taken in good
faith solely in his or her capacity as a director of the Company), or to vote
against any recommendations of the Company Board or influence the stockholders
of the Company with respect to any meeting agenda item for action by
stockholders of the Company, or (v) publicly disclosed any intention, plan,
arrangement or other Contract to do any of the foregoing.

 

  (9)

“Affiliate” means, with respect to any Person, any Person directly or indirectly
controlling, controlled by or under common control with, such other person;
provided, that (i) portfolio companies in which any Person or any of its
Affiliates has an investment shall not be deemed an Affiliate of such Person
(other than for

 

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  purposes of Section 3.5 and Section 3.6), (ii) no Company Group Member, and
none of the Company’s other controlled Affiliates, will be deemed to be
Affiliates of Purchaser for purposes of this Agreement and (iii) each Company
Subsidiary shall be deemed an Affiliate of the Company and of each other Company
Subsidiary. For purposes of this definition, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control with”)
when used with respect to any Person, means the possession, directly or
indirectly, of the power to cause the direction of management or policies of
such person, whether through the ownership of voting securities, by contract or
otherwise.

 

  (10) “Affiliated Fund” shall have the meaning set forth in Section 4.10(a).

 

  (11) “Agreement” shall have the meaning set forth in the Preamble.

 

  (12) “Allied Acquisition” shall have the meaning set forth in the Recitals.

 

  (13) “Allied Acquisition Agreement” shall have the meaning set forth in the
Recitals.

 

  (14) “Antitrust Laws” means the Sherman Act, 15 U.S.C. §§ 1-7, as amended; the
Clayton Act, 15 U.S.C. §§ 12-27, 29 U.S.C. §§ 52-53, as amended; the HSR Act;
the Federal Trade Commission Act, 15 U.S.C. § 41-58, as amended; and all other
federal, state and foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other Laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade.

 

  (15) “As-Converted Common Stock” means at the time of determination (i) the
issued and outstanding Common Stock, (ii) shares of Common Stock issuable upon
conversion of all issued and outstanding shares of Preferred Stock (including
shares of Preferred Stock issued as dividends thereon pursuant to the
Certificate of Designations), disregarding for this purpose the last sentence of
Section 6(a)(i)(B) of the Certificate of Designations, and (iii) shares of
Common Stock issuable upon the conversion of any other issued and outstanding
convertible securities of the Company but only if at the time of determination
the holder thereof has the right to so convert such securities.

 

  (16) “Beneficial Ownership” or “Beneficially Own” shall have the meaning given
such term in Rule 13d-3 under the Exchange Act and a Person’s Beneficial
Ownership of securities shall be calculated in accordance with the provisions of
such Rule; provided, however, that for purposes of determining any Person’s
Beneficial Ownership, such person shall be deemed to be the Beneficial Owner of
any Equity Securities which may be acquired by such person, whether within sixty
(60) days or thereafter, upon the conversion, exchange, redemption or exercise
of any warrants, options, rights or other securities issued by the Company or
any Company Subsidiary.

 

  (17) “Bylaws” shall have the meaning set forth in Section 2.1(a).

 

37

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  (18) “Capitalization Date” shall have the meaning set forth in Section 2.2(a).

 

  (19) “CD&R Fund” shall have the meaning set forth in the Preamble.

 

  (20) “Certificate of Designations” shall have the meaning set forth in the
Recitals.

 

  (21) “Certificate of Incorporation” shall have the meaning set forth in
Section 2.1(a).

 

  (22) “Closing” shall have the meaning set forth in Section 1.2(a).

 

  (23) “Closing Date” shall have the meaning set forth in Section 1.2(a).

 

  (24) “Code” means the United States Internal Revenue Code of 1986, as amended.

 

  (25) “Common Stock” means the shares of common stock, par value $0.01 per
share, of the Company.

 

  (26) “Company” shall have the meaning set forth in the Preamble.

 

  (27) “Company Board” shall have the meaning set forth in Section 2.3(a).

 

  (28) “Company Competitor” means, at any time, (a) any Person (other than the
Company and its Subsidiaries) that, directly or indirectly, is primarily engaged
in the distribution of roofing materials, drywall or ceiling tile and related
accessories anywhere in the United States or Canada, (b) without limiting the
generality of the preceding clause (a), any of the Persons listed in Schedule A
to this Agreement or any Person that directly or indirectly controls such
Persons and (c) any controlled Affiliate of any such Person in the preceding
clause (a) or clause (b).

 

  (29) “Company Equity Plans” means the Beacon Roofing Supply, Inc. Amended and
Restated 2004 Stock Plan and the Beacon Roofing Supply, Inc. Amended and
Restated 2014 Stock Plan, in each case, as amended to date, and the forms of
award agreements thereunder.

 

  (30) “Company Group” means the Company and the Company Subsidiaries from time
to time.

 

  (31) “Company Group Member” means any corporation, partnership, joint venture,
limited liability company, unincorporated association, trust or other entity
within the Company Group.

 

  (32)

“Company Material Adverse Effect” means, with respect to the Company, any Effect
that, individually or taken together with all other Effects that have occurred
prior to the date of determination of the occurrence of the Company Material
Adverse Effect, is or is reasonably likely to be materially adverse to the
business, assets, liabilities, results of operations or financial condition of
the Company Group, taken as a whole; provided, however, that in no event shall
any of the following occurring after the date hereof, alone or in combination,
be deemed to

 

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  constitute, or be taken into account in determining whether a Company Material
Adverse Effect has occurred: (A) any decrease in the market price of the
Company’s Common Stock on NASDAQ, (B) any failure by the Company to meet any
internal or public revenue or earnings projections, (C) any Effect that results
from changes affecting the industry in which the Company operates, or the United
States economy generally, or any Effect that results from changes affecting
general worldwide economic or capital market conditions, (D) except with respect
to Section 2.3(b), any Effect caused by the announcement or pendency of the
transactions contemplated by this Agreement or the Allied Acquisition Agreement;
(E) acts of war or terrorism or natural disasters, (F) actions or omissions of
the Company expressly required by the terms of this Agreement, the Allied
Acquisition Agreement and the transactions contemplated hereby and thereby,
including compliance with the covenants set forth herein or therein (excluding
Section 4.5 of this Agreement), or any action taken or omitted to be taken by
the Company at the written request of the Purchaser; (G) changes in GAAP or
other accounting standards (or any interpretation thereof); or (H) changes in
any Laws or other binding directives issued by any Governmental Entity or
interpretations or enforcement thereof; provided, however, that (x) the
exceptions in clause (A) and (B) shall not prevent or otherwise affect a
determination that any Effect underlying such decrease or failure has resulted
in, or contributed to, a Company Material Adverse Effect, (y) with respect to
clauses (C), (E), (G) and (H), such Effects, alone or in combination, may be
deemed to constitute, or be taken into account in determining whether a Company
Material Adverse Effect has occurred, but only to the extent such Effects
disproportionately affect the Company Group, taken as a whole, relative to other
companies operating in the same industry as the Company Group. An Effect or
Effects on Target that would not be a Company Material Adverse Effect with
respect to the Target, taken alone, will not be deemed a Company Material
Adverse Effect.

 

  (33) “Company PRSUs” shall have the meaning set forth in Section 2.2(a).

 

  (34) “Company Related Parties” shall have the meaning set forth in
Section 5.2.

 

  (35) “Company RSUs” shall have the meaning set forth in Section 2.2(a).

 

  (36) “Company Stock Options” shall have the meaning set forth in
Section 2.2(a).

 

  (37) “Company Subsidiary” shall have the meaning set forth in Section 2.1(b).

 

  (38) “Contract” means any written or oral agreement, arrangement, commitment
or other instrument or obligation.

 

  (39) “Debt Financing Documents” shall have the meaning set forth in the
Certificate of Designations.

 

  (40)

“Disclosure Schedules” shall have the meaning set forth in Article II.

 

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  (41) “Effect” means any change, event, effect, state of facts, occurrence,
development or circumstance.

 

  (42) “Election Notice” shall have the meaning set forth in Section 1.1(a).

 

  (43) “Equity Commitment Letter” means that certain Equity Commitment Letter by
and between CD&R Fund and Purchaser, dated as of the date hereof, a copy of
which has been delivered to the Company concurrently with the execution of this
Agreement.

 

  (44) “Equity Securities” means the equity securities of the Company, including
the Common Stock.

 

  (45) “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and all rules, regulations, rulings and
interpretations adopted by the Internal Revenue Service or the Department of
Labor thereunder.

 

  (46) “Exchange Act” shall have the meaning set forth in Section 2.5.

 

  (47) “GAAP” shall have the meaning set forth in Section 2.5(d).

 

  (48) “Government Official” means any (i) officer, employee or other Person
acting for or on behalf of any Governmental Entity or public international
organization or (ii) holder of, or candidate for, public office, political party
or official thereof or member of a royal family, or any other Person acting for
or on behalf of the foregoing.

 

  (49) “Governmental Entity” means any transnational, multinational, domestic or
foreign federal, state, provincial or local governmental, regulatory or
administrative authority, instrumentality, department, court, arbitrator,
agency, commission or official, including any political subdivision thereof, any
state-owned or state-controlled enterprise, or any non-governmental
self-regulatory agency, commission or authority.

 

  (50) “Group Companies” means, collectively, Allied Building Products Corp., a
New Jersey corporation, and Kapalama Kilgos Acquisition Corp., a Delaware
corporation, and each of their respective Subsidiaries (direct or indirect).

 

  (51) “Holder” shall have the meaning set forth in the Certificate of
Designations.

 

  (52) “HSR Act” means the Hart-Scott Rodino Antitrust Improvements Act of 1976,
as amended.

 

  (53)

“Indebtedness” means, with respect to any Person, all obligations (including all
obligations in respect of principal, interest, penalties, fees and premiums and
all fees, expenses, payments and costs associated with prepayment, termination,
redemption, breakage or unwinding) of such Person (a) for borrowed money,
(b) evidenced by notes, bonds, debentures or similar instruments, (c) in respect
of

 

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  reimbursement obligations under letters of credit, bankers’ acceptances, bank
overdrafts, surety or performance bonds and similar instruments, (d) for the
deferred purchase price of goods or services, including earn-outs, but excluding
trade payables and other current liabilities incurred in the ordinary course of
business, (e) under leases required to be classified as capital leases under
GAAP, (f) under hedging or swap obligations or similar arrangements, (g) that
are secured by an Encumbrance (as defined in the Allied Acquisition Agreement)
(other than a Permitted Encumbrance (as defined in the Allied Acquisition
Agreement)) on any assets or properties of such Person and (h) guarantees of, or
assurances to a creditor against, a loss with respect to the obligations
described in clauses (a) through (g) above of any other Person. Notwithstanding
the foregoing, “Indebtedness” shall not include any intercompany obligations or
any accounts payable or accrued expenses arising in the ordinary course of
business, or obligations under leases that are properly accounted for as
operating leases under GAAP.

 

  (54) “Indemnified Party” shall have the meaning set forth in Section 5.3(b).

 

  (55) “Indemnifying Party” shall have the meaning set forth in Section 5.3(b).

 

  (56) “Information” shall have the meaning set forth in Section 4.3.

 

  (57) “Knowledge of the Company” means the actual knowledge, after reasonable
inquiry, of the individuals set forth in Section 6.9.

 

  (58) “Law” or “Laws” mean any statute, law, ordinance, treaty, rule, code,
regulation or other binding directive issued, promulgated or enforced by any
Governmental Entity.

 

  (59) “Lien” means any mortgage, deed of trust, pledge, option, power of sale,
retention of title, right of pre-emption, right of first refusal, hypothecation,
security interest, encumbrance, claim, lien or charge of any kind, or an
agreement, arrangement or obligation to create any of the foregoing.

 

  (60) “Lock-up Period” shall have the meaning set forth in Section 4.9.

 

  (61) “Lock-up Shares” shall have the meaning set forth in Section 4.9.

 

  (62) “Losses” shall have the meaning set forth in Section 5.1.

 

  (63) “Multiemployer Plan” means (x) a “multiemployer plan” as defined in
Section 3(37) of ERISA that is maintained in the United States and (y) a
non-U.S. defined-benefit pension plan for the benefit of employees of multiple
unrelated employers, in each case, to which any Company Group Member contributes
or is or has been required to contribute.

 

  (64) “NASDAQ” means the NASDAQ Stock Market (or its successor).

 

41

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  (65) “New Security” shall have the meaning set forth in Section 4.11(a).

 

  (66) “Non-Recourse Party” shall have the meaning set forth in Section 6.17.

 

  (67) “OFAC” shall have the meaning set forth in Section 2.10(d).

 

  (68) “Permitted Transferee” means, with respect to any Person, (i) any
Affiliate of such Person, (ii) any successor entity of such Person and
(iii) with respect to any Person that is an investment fund, vehicle or similar
entity, any other investment fund, vehicle or similar entity of which such
person or an Affiliate, advisor or manager of such person serves as the general
partner, manager or advisor; provided, however, that no portfolio company of any
Person shall be a Permitted Transferee.

 

  (69) “Person” means an individual, a corporation, a general or limited
partnership, a limited liability company, an association, a trust, other legal
entity or organization or Governmental Entity.

 

  (70) “Plan” means any employee benefit plan (as defined in Section 3(3) of
ERISA, whether or not subject to ERISA) maintained for current or former
employees of the Company, any Company Subsidiary or any other person with whom
the Company is considered a single employer under Section 414 of the Code or
Title IV of ERISA, to which any Company Group Member is required to contribute,
including any pension, profit-sharing, retirement, death, disability,
supplemental retirement, welfare benefit, retiree health, and life insurance
plan, agreement or arrangement, or any other compensation plan, policy, program,
agreement or arrangement, including any employment, change in control, bonus,
equity or equity-based compensation, retention, severance, termination, deferred
compensation or other similar agreement, arrangement, plan, policy or program
that any Company Group Member, maintains, sponsors, is a party to, or as to
which any Company Group Member otherwise has or would reasonably be expected to
have any material obligation or material liability, but excluding any
Multiemployer Plans.

 

  (71) “Pre-Closing Period” shall have the meaning set forth in Section 4.1.

 

  (72) “Preemptive Rights Portion” shall have the meaning set forth in
Section 4.11(b).

 

  (73) “Preferred Stock” shall have the meaning set forth in the Recitals.

 

  (74) “Prohibited Transferee” means (a) any Company Competitor, (b) any Person
or “group” (as such term is used in Section 13(d)(3) of the Exchange Act) who,
without giving effect to the Transfer, Beneficially Owns five percent (5%) or
more of any class or series (or the voting power of any class or series) of
equity securities of the Company or (c) any Activist Investor.

 

  (75) “Purchase Price” shall have the meaning set forth in the Section 1.1(a).

 

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  (76) “Purchased Shares” shall have the meaning set forth in Section 1.1(a).

 

  (77) “Purchaser” shall have the meaning set forth in the Preamble.

 

  (78) “Purchaser Designee” shall have the meanings set forth in
Section 4.10(a).

 

  (79) “Purchaser Parties” means Purchaser and any Affiliated Fund.

 

  (80) “Purchaser Related Parties” shall have the meaning set forth in
Section 5.1.

 

  (81) “Registration Rights Agreement” means that certain Registration Rights
Agreement, the form of which is set forth as Exhibit B.

 

  (82) “Relevant Persons” shall have the meaning set forth in Section 2.10(b).

 

  (83) “SEC” shall have the meaning set forth in Section 2.5(a).

 

  (84) “SEC Documents” shall have the meaning set forth in Section 2.5(a).

 

  (85) “Securities Act” shall have the meaning set forth in Section 2.5.

 

  (86) “Software” means all computer software, whether in source code and object
code formats, including mobile applications, in any and all forms and media, and
all related documentation.

 

  (87) “Standstill Period” means the longer of (x) the 24-month period following
the Closing Date and (y) the period beginning on the Closing Date and ending on
the date that is six (6) months after the date on which a Purchaser Designee is
no longer serving on the Company Board (whether due to resignation or
otherwise).

 

  (88) “Subsidiary” shall have the meaning set forth in Section 2.1(b).

 

  (89) “Target” shall have the meaning set forth in the Recitals.

 

  (90) “Tax Return” means any return, declaration, report, statement or other
document filed or required to be filed in respect of Taxes (including any
attached schedules), including any information return, claim for refund, amended
return and declaration of estimated Tax.

 

  (91) “Taxes” means any federal, state, local, provincial or non-U.S. taxes,
charges, fees, levies or other assessments, including income, capital gains,
alternative minimum, accumulated earnings, personal holding company, franchise,
capital stock, profits, windfall profits, gross receipts, production, goods and
services, sales, use, value added, transfer, registration, stamp, premium,
excise, customs duties, severance, environmental (including taxes under section
59A of the Code), real property, personal property, ad valorem, escheat,
occupancy, license, occupation, employment, payroll, social security,
disability, unemployment, workers’ compensation, withholding, estimated or other
similar tax, duty, fee, assessment or other governmental charge or deficiencies
thereof (including all interest and penalties thereon, related liabilities and
additions thereto).

 

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  (92) “Termination Date” shall have the meaning set forth in Section 6.15(b).

 

  (93) “Third Party Claim” shall have the meaning set forth in Section 5.3(b).

 

  (94) “Transaction Documents” means this Agreement, the Certificate of
Designations and the Registration Rights Agreement.

 

  (95) “Transfer” shall have the meaning set forth in Section 4.9.

 

  (96) “Voting Debt” shall have the meaning set forth in Section 2.2(b).

Section 6.10 Captions. The article, section, paragraph and clause captions
herein are for convenience of reference only, do not constitute part of this
Agreement and will not be deemed to limit or otherwise affect any of the
provisions hereof.

Section 6.11 Severability. If any provision of this Agreement or the application
thereof to any Person (including the officers and directors of the parties
hereto) or circumstance is determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions hereof, or the
application of such provision to persons or circumstances other than those as to
which it has been held invalid or unenforceable, will remain in full force and
effect and shall in no way be affected, impaired or invalidated thereby, so long
as the economic or legal substance of the transactions contemplated hereby is
not affected in any manner materially adverse to any party. Upon such
determination, the parties shall negotiate in good faith in an effort to agree
upon a suitable and equitable substitute provision to effect the original intent
of the parties.

Section 6.12 No Third Party Beneficiaries. Except as expressly provided herein,
nothing contained in this Agreement, expressed or implied, is intended to confer
upon any Person other than the parties hereto (and their permitted assigns), any
benefit, right or remedies.

Section 6.13 Public Announcements. Subject to each party’s disclosure
obligations imposed by Law or regulation or the rules of any stock exchange upon
which its securities are listed, each of the parties hereto will cooperate with
each other in the development and distribution of all news releases and other
public information disclosures with respect to this Agreement and any of the
transactions contemplated by this Agreement, and neither the Company nor the
Purchaser will make any such news release or public disclosure without first
consulting with the other, and, in each case, also receiving the other’s consent
(which consent shall not be unreasonably withheld or delayed) and each party
shall coordinate with the party whose consent is required with respect to any
such news release or public disclosure.

Section 6.14 Specific Performance. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement and the
transactions contemplated hereby were not performed in accordance with their
specific terms or were otherwise breached and that time is of the essence. It is
accordingly agreed that, without the necessity of posting bond or other
undertaking, the parties shall be entitled to specific performance of the terms

 

44

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hereof, and the Company as a third party beneficiary shall have the rights of
specific performance as provided for in the Equity Commitment Letter, this being
in addition to any other remedies to which the parties are entitled at Law or
equity, and in the event that any action or suit is brought in equity to enforce
the provisions of this Agreement, and no party will allege, and each party
hereby waives, the defense or counterclaim that there is an adequate remedy at
Law.

Section 6.15 Termination. This Agreement will survive the Closing so long as any
shares of Preferred Stock are outstanding. Prior to the Closing, this Agreement
may only be terminated:

(a) by mutual written agreement of the Company and the Purchaser;

(b) by the Company or the Purchaser, upon written notice to the other party
given at any time on or after February 28, 2018 (the “Termination Date”);
provided, however, that the right to terminate this Agreement pursuant to this
Section 6.15(b) shall not be available to any party whose failure to fulfill any
obligations under this Agreement shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur on or prior to such date; and
further provided that, if all of the conditions specified in Article VI to the
Allied Acquisition Agreement have been satisfied or waived as of such date (or,
with respect to those conditions which, by their nature can only be satisfied at
the closing thereof, would reasonably be capable of satisfaction as of such
date), other than the conditions specified in Section 6.1 to the Allied
Acquisition Agreement with respect to the HSR Act or Antitrust Laws, then the
Termination Date shall automatically be extended to August 31, 2018;

(c) by the Company or the Purchaser, upon written notice to the other party
given at any time after the termination of the Allied Acquisition Agreement in
accordance with its terms; provided, however, that the right to terminate this
Agreement pursuant to this Section 6.15(c) shall not be available to any party
whose failure to fulfill any obligations under this Agreement shall have been
the cause of, or shall have resulted in, the termination of the Allied
Acquisition Agreement in accordance with its terms;

(d) by notice given by the Company to the Purchaser, if there have been one or
more inaccuracies in or breaches of one or more representations, warranties,
covenants or agreements made by the Purchaser in this Agreement such that the
conditions in Section 1.3(c) would not be satisfied and which have not been
cured by the Purchaser within the earlier of (i) thirty (30) days after receipt
by the Purchaser of written notice from the Company requesting such inaccuracies
or breaches to be cured or (ii) if applicable, five (5) business days after
receipt by the Purchaser from the Company of a copy of the written notice from
the Seller pursuant to Section 7.3(b) of the Allied Acquisition Agreement; or

(e) by notice given by the Purchaser to the Company, if there have been one or
more inaccuracies in or breaches of one or more representations, warranties,
covenants or agreements made by the Company in this Agreement such that the
conditions in Section 1.3(b) would not be satisfied and which have not been
cured by the Company within thirty (30) days after receipt by the Company of
written notice from the Purchaser requesting such inaccuracies or breaches to be
cured.

 

45

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Section 6.16 Effects of Termination. In the event of any termination of this
Agreement in accordance with Section 6.15, neither party (nor any of its
Affiliates) shall have any liability or obligation to the other (or any of its
Affiliates) under or in respect of this Agreement, except to the extent of
(A) any liability arising from any intentional and material breach by such party
of its obligations under this Agreement arising prior to such termination or
(B) any fraud of this Agreement. In the event of any such termination, this
Agreement shall become void and have no effect, and (if such termination is
prior to the Closing) the transactions contemplated hereby shall be abandoned
without further action by the parties hereto, in each case, except (x) as set
forth in the preceding sentence and (y) that the provisions of Section 4.3
(Confidentiality), Section 6.1 (Expenses), Section 6.2 through Section 6.13
(Amendment, Waiver; Counterparts; Governing Law; Waiver of Jury Trial; Notices;
Entire Agreement, Assignment; Interpretation; Other Definitions; Captions;
Severability; No Third Party Beneficiaries; Public Announcements) and
Section 6.17 (Non-Recourse) shall survive the termination of this Agreement. For
the avoidance of doubt, an intentional and material breach by Purchaser shall be
deemed to include any failure by Purchaser to consummate the Closing if it is
obligated to do so hereunder.

Section 6.17 Non-Recourse. This Agreement may only be enforced against, and any
claims or causes of action that may be based upon, arise out of or relate to
this Agreement, or the negotiation, execution or performance of this Agreement
may only be made against the entities that are expressly identified as parties
hereto, including entities that become parties hereto after the date hereof, and
no former, current or future equityholders, controlling persons, directors,
officers, employees, agents or Affiliates of any party hereto or any former,
current or future equityholder, controlling person, director, officer, employee,
general or limited partner, member, manager, advisor, agent or Affiliate of any
of the foregoing (each, a “Non-Recourse Party”) shall have any liability for any
obligations or liabilities of the parties to this Agreement or for any claim
(whether in tort, contract or otherwise) based on, in respect of, or by reason
of, the transactions contemplated hereby or in respect of any representations
made or alleged to be made in connection herewith. Without limiting the rights
of either party against the other party hereto, in no event shall either party
or any of its Affiliates seek to enforce this Agreement against, make any claims
for breach of this Agreement against, or seek to recover monetary damages from,
any Non-Recourse Party.

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized officers of the parties hereto as of the date first herein above
written.

 

BEACON ROOFING SUPPLY, INC. By:  

/s/ Ross D. Cooper

  Name: Ross D. Cooper   Title:   Executive Vice President, General  
            Counsel & Secretary CD&R BOULDER HOLDINGS, L.P. By:  

/s/ Theresa A. Gore

  Name: Theresa A. Gore  

Title:   Vice President, Treasurer & Assistant

            Secretary

CLAYTON, DUBILIER & RICE FUND IX, L.P. (solely for purposes of Sections 4.13 and
4.14 hereof) By:   CD&R Associates IX, L.P., its general partner By:   CD&R
Investment Associates IX, Ltd., its general partner By:  

/s/ Theresa A. Gore

  Name: Theresa A. Gore   Title: Vice President, Treasurer & Assistant
          Secretary

[Signature Page to Investment Agreement]

 

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Exhibit A

Form of Certificate of Designations

 

--------------------------------------------------------------------------------

FORM OF CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF

SERIES A CUMULATIVE CONVERTIBLE PARTICIPATING PREFERRED STOCK

OF BEACON ROOFING SUPPLY, INC.

 

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

 

 

The undersigned, pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware (the “DGCL”), does hereby certify that,
pursuant to the authority expressly vested in the Board of Directors of Beacon
Roofing Supply, Inc., a Delaware corporation (the “Corporation”), by the
Certificate of Incorporation, the Board of Directors has by resolution duly
provided for the issuance of and created a series of preferred stock of the
Corporation, par value $0.01 per share, and in order to fix the designation and
amount and the voting powers, preferences and relative, participating, optional
and other special rights, and the qualifications, limitations and restrictions,
of such series of preferred stock, has duly adopted resolutions setting forth
such rights, powers and preferences, and the qualifications, limitations and
restrictions thereof, of such series of preferred stock as set forth in this
Certificate of Designations, Preferences and Rights of Series A Cumulative
Convertible Participating Preferred Stock (this “Certificate”).

Section 1. Number of Shares and Designation. [•] shares of preferred stock of
the Corporation shall constitute a series of preferred stock designated as
Series A Cumulative Convertible Participating Preferred Stock (the “Preferred
Stock”). Subject to and in accordance with the provisions of Section 11(b), the
number of shares of Preferred Stock may be increased (to the extent of the
Corporation’s authorized and unissued preferred stock) by further resolution
duly adopted by the Board of Directors and the filing of a certificate of
increase with the Secretary of State of the State of Delaware.

Section 2. Rank. Each share of Preferred Stock shall rank equally in all
respects and shall be subject to the provisions herein. The Preferred Stock
shall, with respect to payment of dividends, redemption payments, rights
(including as to the distribution of assets) upon liquidation, dissolution or
winding up of the affairs of the Corporation, or otherwise (i) rank senior and
prior to the Corporation’s common stock, par value $0.01 per share (the “Common
Stock”), and each other class or series of equity securities of the Corporation,
whether currently issued or issued in the future, that by its terms does not
expressly rank senior to, or on parity with, the Preferred Stock as to payment
of dividends, redemption payments, rights (including as to the distribution of
assets) upon liquidation, dissolution or winding up of the affairs of the
Corporation, or otherwise (all of such equity securities, including the Common
Stock, are collectively referred to herein as “Junior Securities”), (ii) rank
junior to each class or series of equity securities of the Corporation, whether
currently issued or issued in the future without violation of this Certificate,
that by its terms expressly ranks senior to the Preferred Stock as to payment of
dividends, redemption payments, rights (including as to the distribution of
assets) upon liquidation, dissolution or winding up of the affairs of the
Corporation, or otherwise (all of such equity securities are collectively
referred to herein as “Senior Securities”), and (iii) rank on parity with each
class or series of equity securities of the Corporation, whether currently
issued or issued in the future without violation of this Certificate, that
expressly provides that it ranks

 

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on parity with the Preferred Stock as to payment of dividends, redemption
payments or rights (including as to the distribution of assets) upon
liquidation, dissolution or winding up of the affairs of the Corporation (all of
such equity securities are collectively referred to herein as “Parity
Securities”). The respective definitions of Junior Securities, Senior Securities
and Parity Securities shall also include any securities, rights or options
exercisable or exchangeable for or convertible into any of the Junior
Securities, Senior Securities or Parity Securities, as the case may be.

Section 3. Definitions.

(a) As used herein, the following terms shall have the meanings set forth below
or in the section cross-referenced below, as applicable, whether used in the
singular or the plural:

“Accrued Dividends” means, as of any date, with respect to any share of
Preferred Stock, all dividends that have accrued pursuant to Section 4(a)(ii)
but that have not been paid as of such date.

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with, such Person.

“Base Amount” means, with respect to any share of Preferred Stock, as of any
date, the sum of (x) the Liquidation Preference and (y) the Base Amount Accrued
Dividends with respect to such share.

“Base Amount Accrued Dividends” means, with respect to any share of Preferred
Stock, as of any date, (i) if a Preferred Dividend Payment Date has occurred
since the issuance of such share, the Accrued Dividends with respect to such
share as of the preceding Preferred Dividend Payment Date (taking into account
the payment of Preferred Dividends in respect of such period ending on such
preceding Preferred Dividend Payment Date, if any, as of such Preferred Dividend
Payment Date) or (ii) if no Preferred Dividend Payment Date has occurred since
the issuance of such share, zero.

“Base Dividend Rate” means, for any day, 6.00% per annum.

“Beneficially Own” and “Beneficial Ownership” has the meaning given such term in
Rule 13d-3 under the Exchange Act, and a Person’s beneficial ownership of
Capital Stock of any Person shall be calculated in accordance with the
provisions of such rule, but without taking into account any contractual
restrictions or limitations on voting or other rights; provided, however, that
for purposes of determining beneficial ownership, a Person shall be deemed to be
the beneficial owner of any security which may be acquired by such Person,
whether within sixty (60) days or thereafter, upon the conversion, exchange or
exercise of any warrants, options, rights or other securities.

“Board of Directors” means the board of directors of the Corporation or any
committee thereof duly authorized to act on behalf of such board of directors
for the purposes in question.

 

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“Business Day” means any day that is not a Saturday, a Sunday or any other day
on which commercial banks are generally required or authorized by Law to be
closed in New York City, New York.

“By-laws” means the Amended and Restated By-Laws of the Corporation, as amended
from time to time.

“Capital Stock” of any Person means any and all shares, interests (including
partnership interests), rights to purchase, warrants, options, participations or
other equivalents of or interests in (however designated) equity of such Person,
including any preferred stock, but excluding any debt securities convertible
into such equity.

“Certificate” has the meaning set forth in the preamble.

“Certificate of Incorporation” means the Second Amended and Restated Certificate
of Incorporation of the Corporation, as amended from time to time.

“Change of Control” means the occurrence, directly or indirectly, of any of the
following:

(i) any purchase, merger, acquisition or other transaction or series of related
transactions immediately following which any Person or Group (excluding the
Investor or its Affiliates or any Group including the Investor or its
Affiliates) shall Beneficially Own, directly or indirectly, Voting Stock
entitling such Person to exercise more than 50% of the total voting power of all
classes of Voting Stock of the Corporation, other than as a result of any such
transaction in which (x) the holders of securities that represented 100% of the
Voting Stock of the Corporation immediately prior to such transaction are
substantially the same as the holders of securities that represent a majority of
the total voting power of all classes of Voting Stock of the surviving Person or
any parent entity thereof immediately after such transaction and (y) the holders
of securities that represented 100% of the Voting Stock of the Corporation
immediately prior to such transaction own directly or indirectly Voting Stock of
the surviving Person or any parent entity thereof in substantially the same
proportion to each other as immediately prior to such transaction;

(ii) any transaction or series of related transactions immediately following
which the Persons who Beneficially Own the Voting Stock of the Corporation
immediately prior to such transaction or transactions cease to Beneficially Own
more than 50% of the Voting Stock of the Corporation, any successor thereto or
any parent entity thereof immediately following such transaction or
transactions; or

(iii) (x) the Corporation merges or consolidates with or into any other Person,
another Person merges with or into the Corporation, or the Corporation conveys,
sells, transfers or leases all or substantially all of the Corporation’s assets
to another Person or (y) the Corporation engages in any recapitalization,
reclassification or other transaction in which all or substantially all of the
Common Stock is exchanged for or converted into cash, securities or other
property, in each case other than a merger or consolidation:

(A) that does not result in a reclassification, conversion, exchange or
cancellation of the outstanding Common Stock;

 

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(B) which is effected solely to change the Corporation’s jurisdiction of
incorporation and results in a reclassification, conversion or exchange of
outstanding shares of Common Stock solely into shares of common stock of the
surviving entity; or

(C) where the Voting Stock outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock of the surviving or transferee
Person constituting a majority of the outstanding shares of such Voting Stock of
such surviving or transferee Person (immediately after giving effect to such
merger or consolidation).

“Change of Control Effective Date” has the meaning set forth in Section 8(a).

“Change of Control Sale” has the meaning set forth in Section 8(a).

“Common Stock” has the meaning set forth in Section 2.

“Common Stock Dividend Record Date” has the meaning set forth in
Section 4(a)(iv).

“Common Stock Trading Price” means, as of any Trading Day, the closing price of
a share of Common Stock on such Trading Day (as reported on Bloomberg, based on
composite transactions for the NASDAQ).

“control” (including the terms “controlling”, “controlled by” and “under common
control with”), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly, of the power to direct or
cause the direction of the affairs or management of a Person, whether through
the ownership of voting securities, as trustee or executor, by contract or
otherwise.

“Conversion Date” has the meaning set forth in Section 6(b)(iv).

“Conversion Notice” has the meaning set forth in Section 6(b)(i).

“Conversion Option” has the meaning set forth in Section 6(a)(i)(A).

“Conversion Option Date” has the meaning set forth in Section 6(a)(i)(A).

“Conversion Option Measurement Period” has the meaning set forth in
Section 6(a)(i)(A).

“Conversion Price” means, as of any date, the Initial Conversion Price, as
adjusted pursuant to Section 9.

“Conversion Right” has the meaning set forth in Section 6(a)(i)(B).

“Convertible Securities” means indebtedness or shares of Capital Stock
convertible into or exchangeable for Common Stock.

“Corporation” has the meaning set forth in the preamble.

 

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“Debt Financing Documents” means [•].

“DGCL” has the meaning set forth in the preamble.

“Dividend Payment Record Date” has the meaning set forth in Section 4(a)(iv).

“Dividend Rate” means, for any day, the Base Dividend Rate as increased by the
Noncompliance Additional Rate, if any, applicable on such day pursuant to
Section 4(b).

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time.

“Excess Conversion Shares” means, prior to receipt of any Requisite Stockholder
Approval, in connection with any conversion of shares of Preferred Stock
(disregarding for this purpose the last sentence of Section 6(a)(i)(B)), those
shares of Common Stock (if any) that would result in the number of shares of
Common Stock issued in such conversion (when taken together with all shares of
Common Stock previously issued in connection with any conversion of shares of
Preferred Stock) exceeding 12,071,937.

“Excess PIK Dividends” means, prior to receipt of any Requisite Stockholder
Approval, additional shares of Preferred Stock paid as dividends on the
Purchased Shares (and on any shares of Preferred Stock issued as dividends
thereon) to the extent such additional shares of Preferred Stock would, when
taken together with the Purchased Shares (and any shares of Preferred Stock
issued as dividends thereon), upon conversion of all such shares of Preferred
Stock into shares of Common Stock (disregarding for this purpose the last
sentence of Section 6(a)(i)(B)), cause the number of shares of Common Stock
issued in such conversion (when taken together with all shares of Common Stock
previously issued in connection with any conversion of shares of Preferred
Stock) to exceed 12,071,937.

“Exchange Property” has the meaning set forth in Section 7(a).

“Ex-Date” means, when used with respect to any distribution, the first date on
which the Common Stock or other securities in question do not have the right to
receive the distribution giving rise to an adjustment to the Conversion Price.

“Group” means any “group” as such term is used in Section 13(d)(3) of the
Exchange Act.

“Holder” means, at any time, any Person in whose name shares of Preferred Stock
are registered, which may be treated by the Corporation as the absolute owner of
such shares of Preferred Stock for the purpose of making payment and settling
the related conversions and for all other purposes.

“Implied Quarterly Dividend Amount” means, with respect to any share of
Preferred Stock, as of any date, the product of (a) the Base Amount of such
share of Preferred Stock as of the first day of the applicable Payment Period
and (b) one-fourth of the Dividend Rate applicable to such share on such date.

 

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“Initial Conversion Price” means (i) with respect to each share of Preferred
Stock issued on the Original Issuance Date, $41.26 per share of Common Stock and
(ii) with respect to each share of Preferred Stock issued as payment of a
Preferred Dividend in accordance with Section 4, the Conversion Price in effect
immediately prior to the issuance of such share.

“Investment Agreement” means that certain Investment Agreement, dated as of
August 24, 2017, by and among the Corporation, CD&R Boulder Holdings, L.P. and
Clayton, Dubilier & Rice Fund IX, L.P. (solely for purposes of Sections 4.13 and
4.14 thereof), as the same may be amended from time to time.

“Investor” means, collectively, one or more investment vehicles affiliated with
or managed by Clayton, Dubilier & Rice, LLC who acquire shares of Preferred
Stock pursuant to the Investment Agreement.

“Issuance Date” means, with respect to a share of Preferred Stock, the date of
issuance of such share of Preferred Stock.

“Junior Securities” has the meaning set forth in Section 2.

“Law” has the meaning set forth in the Investment Agreement.

“Liquidation” means the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation.

“Liquidation Preference” means, with respect to each share of Preferred Stock,
$1,000.00 per share.

“Market Price” means, with respect to any particular security on any particular
date, (i) if such security is listed or quoted on a principal U.S. national or
regional securities exchange or traded on an over-the-counter market, the volume
weighted average price per share (as reported on Bloomberg based, in the case of
a listed security, on composite transactions for the principal U.S. national or
regional securities exchange on which such security is listed or quoted) of such
security for the period of ten (10) consecutive Trading Days preceding the date
of determination (or for any other period specified for this purpose in the
applicable provision of this Certificate), or (ii) if such security is not
listed or quoted on a principal U.S. national or regional securities exchange or
traded on an over-the-counter market, the fair market value of such security on
the date of determination, as determined by a nationally recognized independent
investment banking firm that has for this purpose (x) been selected by the Board
of Directors and (y) been consented to by Holders of a majority of the
outstanding shares of Preferred Stock.

“NASDAQ” means the NASDAQ Stock Market (or its successor).

“Noncompliance Additional Rate” means 3.00% per annum.

“Options” means rights, options or warrants to subscribe for, purchase or
otherwise acquire Common Stock or Convertible Securities.

“Original Issuance Date” means the date of closing pursuant to the Investment
Agreement.

 

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“Parity Securities” has the meaning set forth in Section 2.

“Participating Dividends” has the meaning set forth in Section 4(a)(i).

“Payment Period” means, with respect to a share of Preferred Stock, the period
beginning on the day after the preceding Preferred Dividend Payment Date (or if
no Preferred Dividend Payment Date has occurred since the Issuance Date of such
Preferred Share, the day that would have been the day after the preceding
Preferred Dividend Payment Date had the Issuance Date with respect to such
Preferred Share occurred prior to such date) to and including the next Preferred
Dividend Payment Date.

“Person” means an individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act).

“Preferred Dividend Payment Date” means January 15, April 15, July 15 and
October 15 of each year (each, a “Quarterly Date”), commencing on the first
Quarterly Date immediately following the Original Issuance Date; provided, that
if any such Quarterly Date is not a Business Day then the “Preferred Dividend
Payment Date” shall be the next Business Day immediately following such
Quarterly Date.

“Preferred Dividends” has the meaning set forth in Section 4(a)(ii).

“Preferred Stock” has the meaning set forth in Section 1.

“Pro Rata Repurchase” means any purchase of shares of Common Stock by the
Corporation or any Affiliate thereof (other than, if applicable, the Investor or
any of its Affiliates) pursuant to any tender offer or exchange offer subject to
Section 13(e) of the Exchange Act, or pursuant to any other offer available to
substantially all holders of Common Stock, whether for cash, shares of capital
stock of the Corporation, other securities of the Corporation, evidences of
indebtedness of the Corporation or any other Person or any other property
(including shares of capital stock, other securities or evidences of
indebtedness of a Subsidiary of the Corporation), or any combination thereof,
effected while any shares of Preferred Stock are outstanding; provided, however,
that “Pro Rata Repurchase” shall not include any purchase of shares by the
Corporation or any Affiliate thereof made in accordance with the requirements of
Rule 10b-18 as in effect under the Exchange Act. The “Effective Date” of a Pro
Rata Repurchase means the date of acceptance of shares for purchase or exchange
under any tender or exchange offer which is a Pro Rata Repurchase or the date of
purchase with respect to any Pro Rata Repurchase that is not a tender or
exchange offer.

“Purchased Shares” has the meaning set forth in Section 9(a)(iv).

“Redemption Date” has the meaning set forth in Section 10(a).

“Redemption Notice” has the meaning set forth in Section 10(a).

“Redemption Price” has the meaning set forth in Section 10(a).

 

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“Register” means the securities register maintained in respect of the Preferred
Stock by the Corporation, or to the extent the Corporation has engaged a
transfer agent, such transfer agent.

“Reorganization Event” means any of the following transactions:

(i) any reorganization, consolidation, merger, share exchange, statutory
exchange, tender or exchange offer or other similar business combination
involving the Corporation with or into another Person, in each case, pursuant to
which the Common Stock will be converted into, or exchanged for, cash,
securities or other property of the Corporation or another Person;

(ii) any reclassification, recapitalization or reorganization of the Common
Stock into securities other than the Common Stock; or

(iii) any direct or indirect sale, assignment, conveyance, transfer, lease or
other disposition (including in connection with any Liquidation) by the
Corporation of all or substantially all of its assets or business, in each case
under this clause (iii), pursuant to which the Common Stock will be converted
into cash, securities or other property.

“Requisite Stockholder Approval” means the affirmative vote of a majority of the
votes cast at a regular or special meeting of the stockholders of the
Corporation (at which a quorum is present), in accordance with the NASDAQ
Listing Rule 5635(d) for the approval of the conversion and the voting of Excess
Conversion Shares in accordance with this Certificate.

“Securities Act” means the Securities Act of 1933, as amended.

“Senior Securities” has the meaning set forth in Section 2.

“Subsidiary” or “Subsidiaries” means, with respect to any Person, any other
Person of which (i) if a corporation, a majority of the total voting power of
shares of capital stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a limited liability company, partnership, association or other
business entity (other than a corporation), a majority of partnership or other
similar ownership interest thereof is at the time owned or controlled, directly
or indirectly, by that Person or one or more other Subsidiaries of that Person
or a combination thereof and for this purpose, a Person or Persons owns a
majority ownership interest in such a business entity (other than a corporation)
if such Person or Persons shall be allocated a majority of such business
entity’s gains or losses or shall be or control any managing director or general
partner of such business entity (other than a corporation). For the purposes
hereof, the term “Subsidiary” shall include all Subsidiaries of such Subsidiary.

“Trading Day” means a day on which the NASDAQ is open for the transaction of
business.

“Transfer Restrictions” means the restrictions on Transfer (as defined in the
Investment Agreement) set forth in Section 4.9 of the Investment Agreement.

 

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“Triggering Event” means: (i) the Corporation’s failure to pay any Participating
Dividends when required pursuant to, and in accordance with, Section 4(a)(i) or
to pay Preferred Dividends on each Preferred Dividend Payment Date pursuant to,
and in accordance with, Section 4(a)(ii) and Section 4(a)(iii); (ii) the
Corporation’s failure to comply with its obligations to effect the conversion of
shares of Preferred Stock (including to reserve and keep available for issuance
the requisite number of shares of Common Stock and Preferred Stock) in
compliance with Section 6, (iii) the Corporation’s failure to comply with its
obligations to repurchase shares of Preferred Stock in compliance with
Section 8, (iv) the Corporation’s violation of any restrictions set forth in
this Certificate relating to payment of dividends or distributions to the
holders of Common Stock or other Capital Stock, (v) the Corporation taking any
action described in Section 11(b) without the prior affirmative vote or written
consent of the Holders representing at least a majority of the then-issued and
outstanding shares of Preferred Stock, voting as a separate class, (vi) the
Corporation’s failure to maintain the listing of the Common Stock on the NASDAQ
(or its successor) or another U.S. national securities exchange or automated
inter-dealer quotation system (or its successor), or (vii) the payment of any
shares of Preferred Stock paid as dividends pursuant to, and in accordance with,
Section 4(a)(ii) and Section 4(a)(iii) that would constitute Excess PIK
Dividends (for so long as any outstanding shares of Preferred Stock so paid as
dividends would constitute Excess PIK Dividends).

“Voting Stock” means Capital Stock of the class or classes pursuant to which the
holders thereof have the general voting power under ordinary circumstances
(determined without regard to any classification of directors) to elect one or
more members of the Board of Directors (without regard to whether or not, at the
relevant time, Capital Stock of any other class or classes (other than Common
Stock) shall have or might have voting power by reason of the happening of any
contingency).

(b) In addition to the above definitions, unless the context requires otherwise:

(i) any reference to any statute, regulation, rule or form as of any time shall
mean such statute, regulation, rule or form as amended or modified and shall
also include any successor statute, regulation, rule or form from time to time;

(ii) the word “including” shall be deemed to be followed by the words “without
limitation”;

(iii) references to “$” or “dollars” means the lawful coin or currency the
United States of America; and

(iv) references to “Section” are references to Sections of this Certificate.

Section 4. Dividends.

(a) Holders of the issued and outstanding shares of Preferred Stock shall be
entitled to receive, out of assets legally available for the payment of
dividends, dividends on the terms described below:

 

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(i) Holders of shares of Preferred Stock shall be entitled to participate
equally and ratably with the holders of shares of Common Stock in all dividends
paid on the shares of Common Stock (other than dividends paid in the form of
Common Stock, Convertible Securities or Options) as if immediately prior to each
Common Stock Dividend Record Date, all shares of Preferred Stock then
outstanding were converted into shares of Common Stock (including any Excess
Conversion Shares and disregarding for this purpose the last sentence of
Section 6(a)(i)(B)). Dividends payable pursuant to this Section 4(a)(i) (the
“Participating Dividends”) shall be payable on the same date that such dividends
are payable to holders of shares of Common Stock, and no dividends shall be
payable to holders of shares of Common Stock unless the full dividends
contemplated by this Section 4(a)(i) are paid at the same time to the Holders of
the Preferred Stock.

(ii) In addition to any dividends pursuant to Section 4(a)(i), the Corporation
shall pay, if, as and when declared by the Board of Directors, out of funds
legally available therefor, on each Preferred Dividend Payment Date dividends on
each outstanding share of Preferred Stock (the “Preferred Dividends”) at a rate
per annum equal to the Dividend Rate as further specified in this
Section 4(a)(ii) and in accordance with Section 4(a)(iii) below. Preferred
Dividends on each share of Preferred Stock shall accrue and accumulate on a
daily basis from the Issuance Date of such share, whether or not declared and
whether or not the Corporation has funds legally available for the payment of
such dividends, shall compound quarterly on each Preferred Dividend Payment Date
(to the extent not paid on such Preferred Dividend Payment Date) and shall be
payable quarterly in arrears, if, as and when so authorized and declared by the
Board of Directors, on each Preferred Dividend Payment Date, commencing on the
first Preferred Dividend Payment Date following the Issuance Date of such share.
The amount of Preferred Dividends accruing with respect to any share of
Preferred Stock for any day shall be determined by dividing (x) the Implied
Quarterly Dividend Amount as of such day by (y) the actual number of days in the
applicable Payment Period; provided that if, during any current Payment Period,
Accrued Dividends are paid in respect of one or more prior Payment Periods, then
after the date of such payment, the amount of Preferred Dividends accruing with
respect to any share of Preferred Stock for any day shall be determined by
dividing (x) the Implied Quarterly Dividend Amount (recalculated to take into
account such payment of Accrued Dividends) by (y) the actual number of days in
such current Payment Period. The amount of Preferred Dividends payable with
respect to any share of Preferred Stock for any Payment Period shall equal the
sum of the Preferred Dividends accrued in accordance with the prior sentence of
this Section 4(a)(ii) with respect to such share during such Payment Period.
Preferred Dividend payments shall be aggregated per Holder and shall be made to
the nearest cent (with $.005 being rounded upward).

(iii) The Preferred Dividends may, at the option of the Corporation, be paid in
cash or by issuing fully paid and nonassessable shares of Preferred Stock;
provided that (A) Preferred Dividends paid on any date shall be paid by issuing
fully paid and nonassessable shares of Preferred Stock to the extent payment in
cash on such date would be prohibited under the terms, conditions or provisions
of any of the Debt Financing Documents and (B) any Base Amount Accrued Dividends
shall be paid by issuing fully paid and nonassessable shares of Preferred Stock;
and provided further that, if the Corporation elects to pay any Preferred
Dividends in shares of Preferred Stock with respect to any Payment Period, the
Corporation shall make the same election with respect to all Preferred Dividends
paid with respect to such Payment Period. If the Corporation pays any Preferred
Dividend in shares of Preferred Stock, the number of shares of Preferred Stock
to be paid in respect of such Preferred Dividend will be equal to the number of
shares (including fractional shares) that have an aggregate Liquidation
Preference equal to the amount of such Preferred Dividend.

 

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(iv) Each Participating Dividend or Preferred Dividend shall be paid pro rata to
the Holders of shares of Preferred Stock entitled thereto. Each Participating
Dividend or Preferred Dividend shall be payable to the Holders of Preferred
Stock as they appear on the Register at the close of business on the record date
designated by the Board of Directors for such dividends (each such date, a
“Dividend Payment Record Date”), which (i) with respect to Participating
Dividends, shall be the same day as the record date for the payment of dividends
to the holders of shares of Common Stock (the “Common Stock Dividend Record
Date”), and (ii) with respect to Preferred Dividends, shall be not more than
thirty (30) days nor less than ten (10) days preceding the applicable Preferred
Dividend Payment Date. Notwithstanding the foregoing, but subject to the proviso
in the first sentence of Section 4(a)(iii), the Base Amount Accrued Dividends
may be declared and paid in cash or in shares of Preferred Stock at any time to
Holders of record on the Dividend Payment Record Date therefor.

(b) Upon the occurrence of a Triggering Event, the Dividend Rate shall increase
by the Noncompliance Additional Rate from and including the date on which the
Triggering Event shall occur and be continuing through but excluding the date on
which all then occurring Triggering Events are no longer continuing. The
Dividend Rate shall not be increased further pursuant to this Section 4(b) for a
subsequent Triggering Event occurring while the Dividend Rate is already
increased pursuant to this Section 4(b).

(c) At any time during which a Triggering Event shall be occurring, without the
consent of the Holders representing at least a majority of the then-issued and
outstanding shares of Preferred Stock, no dividends shall be declared or paid or
set apart for payment, or other distributions declared or made, upon any Junior
Securities, nor shall any Junior Securities be redeemed, purchased or otherwise
acquired for any consideration (nor shall any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any such Junior
Securities) by the Corporation, directly or indirectly (except, subject to and
in accordance with the provisions of Section 6 hereof, by conversion into or
exchange for Junior Securities or the payment of cash in lieu of fractional
shares in connection therewith).

(d) Without the consent of the Holders representing at least a majority of the
then-issued and outstanding shares of Preferred Stock, the Corporation shall not
(i) declare, pay or set aside for payment any dividends or distributions upon
any Junior Securities or (ii) repurchase, redeem or otherwise acquire any Junior
Securities (other than repurchases of shares of Common Stock from employees,
officers or directors of the Corporation in the ordinary course of business) for
any consideration or pay any moneys or make available for a sinking fund for the
redemption of any shares of such Junior Securities, unless, in each case,
(A) immediately before and after the taking of such action, the fair value of
the Corporation’s assets would exceed the sum of its debts (including for this
purpose the aggregate Liquidation Preference and the aggregate Accrued Dividends
of the Preferred Stock), (B) immediately after the taking of such action, the
Corporation, in its good faith judgment, would be able to pay all of its debts
(including the aggregate Liquidation Preference and the aggregate Accrued
Dividends of the Preferred Stock) as they are reasonably expected to come due
and (C) such action is otherwise in compliance with applicable Law.

 

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(e) For the avoidance of doubt, the consequences described in Sections 4(b), (c)
and (d) above shall constitute the sole and exclusive remedies of the Holders
upon the occurrence of the Triggering Event described in clause (vii) of the
definition thereof.

Section 5. Liquidation Rights.

(a) In the event of any Liquidation, each Holder shall be entitled to receive
liquidating distributions out of the assets of the Corporation legally available
for distribution to its stockholders, before any payment or distribution of any
assets of the Corporation shall be made or set apart for holders of any Junior
Securities, including the Common Stock, for such Holder’s shares of Preferred
Stock in an amount equal to the greater of (i) the sum of (A) the aggregate
Liquidation Preference and (B) the aggregate Accrued Dividends of such shares as
of the date of the Liquidation and (ii) the amount such Holder would have
received had such shares of Preferred Stock, immediately prior to such
Liquidation, been converted into shares of Common Stock (including in respect of
any Excess Conversion Shares and disregarding for this purpose the last sentence
of Section 6(a)(i)(B)) pursuant to Section 6, without regard to any of the
limitations on conversion or convertibility contained therein.

(b) In the event the assets of the Corporation available for distribution to
stockholders upon a Liquidation shall be insufficient to pay in full the amounts
payable with respect to all outstanding shares of Preferred Stock pursuant to
Section 5(a), such assets, or the proceeds thereof, shall be distributed among
the Holders ratably in proportion to the full respective liquidating
distributions to which they would otherwise be respectively entitled upon such
Liquidation.

(c) Neither the sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
assets, capital stock or business of the Corporation (other than in connection
with the liquidation, dissolution or winding up of the Corporation) nor the
merger, consolidation, share exchange, statutory exchange or any other business
combination transaction of the Corporation into or with any other Person shall
by itself be deemed to be a Liquidation for purposes of this Section 5.

Section 6. Conversion.

(a) Conversion of Preferred Stock.

(i) Subject to and in accordance with the provisions of this Section 6, shares
of Preferred Stock may be converted into shares of Common Stock as follows:

(A) If (a) at any time after the Original Issuance Date, the Common Stock
Trading Price exceeds 200% of the then applicable Conversion Price for at least
75 Trading Days (whether or not consecutive) during any 90 consecutive Trading
Day period (such period, the “Conversion Option Measurement Period”) and (b) the
Corporation, at its option, delivers a written notice to the Holders of the
Preferred Stock within 10 Business Days following the conclusion of the
applicable Conversion Option Measurement Period, then each share of Preferred
Stock outstanding shall be converted (the “Conversion Option ”), as of the
Business Day immediately prior to the date of such notice (the “Conversion
Option Date”), into such number of fully paid and non-assessable shares of
Common Stock (calculated as to each conversion to the nearest 1/10,000th of a
share) equal to the quotient of (A) the sum of (1) the

 

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Liquidation Preference and (2) the Accrued Dividends on such share as of the
Conversion Option Date, divided by (B) the Conversion Price of such share in
effect as of the Conversion Option Date; provided that if any shares of Common
Stock issuable in connection with any Conversion Option would constitute Excess
Conversion Shares, the Corporation may not exercise the Conversion Option until
after the Requisite Stockholder Approval has been obtained.

(B) Subject to the last sentence of this Section 6(a)(i)(B), each Holder of
shares of Preferred Stock shall have the right (the “Conversion Right”), at any
time and from time to time, at such Holder’s option, to convert all or any
portion of such Holder’s shares of Preferred Stock into fully paid and
non-assessable shares of Common Stock. Upon a Holder’s election to exercise its
Conversion Right, each share of Preferred Stock for which the Conversion Right
is exercised shall be converted into such number of shares of Common Stock
(calculated as to each conversion to the nearest 1/10,000th of a share) equal to
the quotient of (A) the sum of (1) the Liquidation Preference and (2) the
Accrued Dividends on such share as of the Conversion Date, divided by (B) the
Conversion Price of such share in effect at the time of conversion.
Notwithstanding anything to the contrary contained in this Certificate, prior to
the Requisite Stockholder Approval, in no event shall the number of shares of
Preferred Stock converted pursuant to this Section 6(a)(i)(B) result in the
issuance of any Excess Conversion Shares (when taken together with all shares of
Common Stock previously issued in connection with any conversion of shares of
Preferred Stock).

(ii) No fractional shares of Common Stock shall be issued upon the conversion of
any shares of Preferred Stock. If more than one share of Preferred Stock subject
to conversion is held by the same Holder, the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on the basis of the sum
of (A) the aggregate Liquidation Preference and (B) the aggregate Accrued
Dividends as of the Conversion Date on all shares of Preferred Stock so subject.
If the conversion of any share or shares of Preferred Stock results in a
fractional share of Common Stock issuable after application of the immediately
preceding sentence, the Corporation shall pay a cash amount in lieu of issuing
such fractional share in an amount equal to the value of such fractional
interest multiplied by the Market Price of a share of Common Stock on the
Trading Day immediately prior to the Conversion Date.

(iii) The Corporation will at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting
conversions of the Preferred Stock into shares of Common Stock, a number of
shares of Common Stock equal to 110% of the number of shares of Common Stock
issuable upon conversion of all then outstanding shares of Preferred Stock
(including any Excess Conversion Shares and disregarding for this purpose the
last sentence of Section 6(a)(i)(B)). The Corporation shall take all action
permitted by Law, including calling meetings of stockholders of the Corporation
and soliciting proxies for any necessary vote of the stockholders of the
Corporation, to amend the Certificate of Incorporation to increase the number of
authorized and unissued shares of Common Stock, if at any time there shall be
insufficient authorized and unissued shares of Common Stock to permit such
reservation or to permit the conversion of all outstanding shares of Preferred
Stock (including any Excess Conversion Shares and disregarding for this purpose
the last sentence of Section 6(a)(i)(B)). The Corporation covenants that the
Preferred Stock and all Common Stock that may be issued upon conversion of
Preferred Stock shall upon issuance be duly authorized, fully paid and
non-assessable and will not be subject to preemptive rights or subscription
rights of any other stockholder of the Corporation. The Corporation further
covenants that the

 

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Corporation shall, if permitted by the rules of the NASDAQ, at its sole expense,
cause to be authorized for listing or quotation on the NASDAQ, all Common Stock
issuable upon conversion of the Preferred Stock, subject to official notice of
issuance. The Corporation will use its reasonable best efforts to ensure that
such Common Stock may be issued without violation of any applicable Law or
regulation.

(b) Mechanics of Conversion.

(i) If the Corporation exercises the Conversion Option and delivers notice
thereof in accordance with Section 6(a)(i)(A), the Corporation shall notify the
Holders of Preferred Stock in writing of the Conversion Option promptly
following the Conversion Option Date by delivery of written notice to such
Holders and shall update or cause to be updated the Register, effective as of
the Conversion Option Date, to reflect the shares of Common Stock held by such
Holders as a result of the Conversion Option and shall, as promptly as
practicable thereafter, issue or cause to be issued to each such Holder the
number of validly issued, fully paid and non-assessable shares of Common Stock
to which such Holder shall be entitled and deliver or cause to be delivered to
each such Holder evidence of such issuance reasonably satisfactory to such
Holders.

(ii) The Conversion Right of a Holder of Preferred Stock shall be exercised by
the Holder by delivering written notice to the Corporation that the Holder
elects to convert all or a portion of the shares of Preferred Stock held by such
Holder (a “Conversion Notice”) and specifying the name or names (with address or
addresses) in which shares of Common Stock are to be issued and (if so required
by the Corporation or the Corporation’s transfer agent, if any) by a written
instrument or instruments of transfer in form reasonably satisfactory to the
Corporation or the transfer agent, as applicable, duly executed by the Holder or
its legal representative.

(iii) As promptly as practicable after the receipt of the Conversion Notice, and
the payment of required taxes or duties pursuant to Section 12(i), if
applicable, and in no event later than three Trading Days thereafter, the
Corporation shall update or cause to be updated the Register to reflect the
shares of Common Stock held by such Holder as a result of such conversion and
shall issue and shall deliver or cause to be issued and delivered to such
Holder, or to such other Person on such Holder’s written order (A) evidence of
such issuance reasonably satisfactory to such Holder, and (B) cash for any
fractional interest in respect of a share of Common Stock arising upon such
conversion settled as provided in Section 6(a)(ii).

(iv) The conversion of any share of Preferred Stock shall be deemed to have been
made (i) in connection with any Conversion Option, at the close of business on
the Conversion Option Date, and (ii) in connection with any exercise of the
Conversion Right, at the close of business on the date of giving the Conversion
Notice (the “Conversion Date”). Until the Conversion Date with respect to any
share of Preferred Stock has occurred, such share of Preferred Stock will remain
outstanding and will be entitled to all of the powers, designations, preferences
and other rights provided herein, including that such share shall (A) accrue and
accumulate Preferred Dividends and participate in Participating Dividends
pursuant to Section 4 and (B) entitle the Holder thereof to the voting rights
provided in Section 11; provided, however, that any such shares that are
repurchased pursuant to Section 8 or redeemed pursuant to Section 10 shall not
be entitled to be converted.

 

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(c) Corporation’s Obligations to Issue Common Stock. Subject to the last
sentence of Section 6(a)(i)(B), the Corporation’s obligations to issue and
deliver shares of Common Stock or Preferred Stock (as applicable) upon
conversion of shares of Preferred Stock in accordance with the terms hereof are
absolute and unconditional, irrespective of any action or inaction by any Holder
to enforce the same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to enforce the
same, or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by any Holder or any other Person of any obligation to
the Corporation or any violation or alleged violation of Law by any Holder or
any other Person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Corporation to any Holder in connection
with the issuance of such shares of Common Stock or Preferred Stock (as
applicable).

Section 7. Reorganization Events.

(a) Treatment of Preferred Stock Upon a Reorganization Event. Subject to
applicable Law, upon the occurrence of any Reorganization Event, (i) if the
Corporation is the surviving company in such Reorganization Event, each share of
Preferred Stock outstanding immediately prior to such Reorganization Event shall
remain outstanding following such Reorganization Event (or be exchanged for an
equivalent share of Preferred Stock governed by the terms herein); provided,
that (x) each share of Preferred Stock shall become convertible into the kind
and amount of securities, cash and other property that the Holder of such share
of Preferred Stock (other than the counterparty to the Reorganization Event or
an Affiliate of such other party) would have received in such Reorganization
Event had such share of Preferred Stock, immediately prior to such
Reorganization Event, been converted into the applicable number of shares of
Common Stock using the Conversion Price immediately prior to such Reorganization
Event (including in respect of any Excess Conversion Shares and disregarding for
this purpose the last sentence of Section 6(a)(i)(B)) (such securities, cash and
other property, the “Exchange Property”), without interest on such Exchange
Property, and (y) appropriate adjustments shall be made to the conversion
provisions set forth in Section 6 and the adjustment to conversion price
provisions set forth in Section 9 as determined reasonably and in good faith by
the Board of Directors to place the Holders in as nearly as equal of a position
as possible with respect to such matters following such Reorganization Event as
compared to immediately prior to such Reorganization Event, or (ii) if the
Corporation is not the surviving company in such Reorganization Event or will be
dissolved in connection with such Reorganization Event, each share of Preferred
Stock outstanding immediately prior to such Reorganization Event shall be
converted or exchanged into a security of the Person surviving such
Reorganization Event or such other continuing entity in such Reorganization
Event having rights, powers and preferences, and the qualifications, limitations
and restrictions thereof, as nearly equal as possible to those provided herein
(with such adjustments as are appropriate to place the Holders in as nearly as
equal of a position as possible following such Reorganization Event as compared
to immediately prior to such Reorganization Event).

(b) Form of Consideration. In the event that shares of Preferred Stock are
converted into Exchange Property and the holders of Common Stock have the
opportunity to elect the form of consideration to be received in such
transaction, the Exchange Property shall be based on the types and amounts of
consideration received by the holders of Common Stock on a pro rata basis;
provided, however, that, to the extent the applicable transaction agreement
provides for adjustments to such elected types and amounts of consideration that
are generally applicable to holders of Common Stock making such elections, the
Exchange Property will be subject to such adjustments.

 

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(c) Successive Reorganization Events. The provisions of this Section 7 shall
similarly apply to successive Reorganization Events.

(d) Notice of Reorganization Events. The Corporation (or any successor) shall,
within 10 days following the consummation of any Reorganization Event, provide
written notice to the Holders of such consummation of such event and of the kind
and amount of the cash, securities or other property that constitutes the
Exchange Property. Failure to deliver such notice shall not affect the operation
of this Section 7.

(e) Requirements of Reorganization Events. The Corporation shall not, without
consent of the Holders representing at least a majority of the then-issued and
outstanding shares of Preferred Stock, enter into any agreement for, or
consummate, any transaction or series of transactions constituting a
Reorganization Event unless (i) such agreement provides for or does not
interfere with or prevent (as applicable) conversion of the Preferred Stock into
the Exchange Property in a manner that is consistent with and gives effect to
this Section 7, and (ii) to the extent that the Corporation is not the surviving
company in such Reorganization Event or will be dissolved in connection with
such Reorganization Event, proper provision shall be made in the agreements
governing such Reorganization Event for the conversion of the Preferred Stock
into a security of the Person surviving such Reorganization Event or such other
continuing entity in such Reorganization Event.

(f) Change of Control. For the sake of clarity, if a Reorganization Event
constitutes a Change of Control, then Section 8 shall take precedence over this
Section 7 to the extent there is any inconsistency between such sections.

Section 8. Change of Control Sale.

(a) Change of Control Sale. In the event of a Change of Control, each Holder of
shares of Preferred Stock shall have the option, during the period beginning on
the effective date of the Change of Control (the “Change of Control Effective
Date”) and ending on the date that is 20 Business Days after the later of
(x) receipt of written notice contemplated by Section 8(c) and (y) the Change of
Control Effective Date, to require the Corporation (or the successor thereto) to
purchase, to the extent permitted by applicable Law, all or any portion of its
shares of Preferred Stock at a purchase price per share, payable in cash, equal
to the sum of (A) the Liquidation Preference and (B) the Accrued Dividends of
each such share of Preferred Stock as of the date of such purchase (a “Change of
Control Sale”).

(b) Initial Change of Control Notice. On or before the 20th Business Day prior
to the date on which the Corporation anticipates consummating any Change of
Control (or, if later, promptly after the Corporation discovers that the Change
of Control will occur or has occurred), the Corporation shall deliver to each
Holder (as appearing in the Register of the Corporation) a written notice
setting forth a description of the anticipated Change of Control and the date on
which the Change of Control is anticipated to be effected (or, if applicable,
the date on which a Schedule TO or other schedule, form or report disclosing a
Change of Control was filed).

 

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(c) Final Change of Control Notice. On the Change of Control Effective Date (or,
if later, promptly after the Corporation discovers that the Change of Control
has occurred), the Corporation shall deliver to each Holder a written notice
setting forth:

(i) the date, which shall be no earlier than the 20th Business Day after the
Change of Control Effective Date (or, if later, the date of delivery of such
notice), by which the Change of Control Sale option must be exercised;

(ii) the amount of cash payable per share of Preferred Stock in accordance with
Section 8(a) and the purchase date for such shares, which shall be no greater
than 10 Business Days following the expiration of the twenty (20) Business Day
period referred to in Section 8(a) (which purchase date will be the effective
date of such Change of Control Sale if such option is exercised); and

(iii) the instructions (which shall be reasonable and consistent with this
Section 8) a Holder must follow to exercise its Change of Control Sale option in
connection with such Change of Control.

(d) Change of Control Sale Procedure. To exercise a Change of Control Sale
option, a Holder must, no later than 5:00 p.m., New York City time, on the date
specified in the written notice referred to in Section 8(c)(i) by which such
option must be exercised, notify the Corporation in writing of the number of
shares of Preferred Stock as to which such Change of Control Sale option is
being exercised.

(e) Delivery upon Change of Control Sale. Upon a Change of Control Sale, the
Corporation shall deliver or cause to be delivered to the Holder by wire
transfer the purchase price payable upon the purchase by the Corporation of such
Holder’s shares of Preferred Stock in accordance with this Section 8
substantially concurrently with the Change of Control Sale. Subject to the
payment of the purchase price for shares of Preferred Stock to be purchased
pursuant to this Section 8 substantially concurrently with a Change of Control
Sale, from and after the Change of Control Sale, the dividend, voting and other
powers, designations, preferences and rights provided herein with respect to
such repurchased shares of Preferred Stock shall cease.

(f) Insufficient Legally Available Funds. If, on the date on which the Change of
Control Sale is otherwise to occur in accordance with this Section 8, the
Corporation does not have sufficient legally available funds to purchase all
shares of Preferred Stock surrendered in connection with such Change of Control
Sale in accordance with this Section 8, then (i) the Corporation shall purchase
the maximum number of shares of Preferred Stock that may be purchased, on a pro
rata basis, with such legally available funds and (ii) except to the extent a
Holder withdraws its exercise of the Change of Control Sale option with respect
to unpurchased shares, shall purchase any remaining shares, on a pro rata basis,
as soon as it has any additional legally available funds. Notwithstanding the
foregoing, if the Corporation does not have legally available funds that are
available to purchase all shares of Preferred Stock that Holders have elected to
be purchased, or otherwise fails to comply with any provisions of Section 8, the
price per share for any share of Preferred Stock purchased pursuant to clause
(ii) above after the date on which the Change of Control Sale is otherwise to
occur in accordance with this Section 8 (disregarding this Section 8(f)) shall
be increased by the amount of any Accrued Dividends accruing between the date on
which the Change of Control Sale is otherwise to occur and the date of such
purchase.

 

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(g) Senior Indebtedness. Notwithstanding anything in this Section 8 to the
contrary, in the event that the Corporation is also required upon a Change of
Control to repurchase or repay amounts outstanding under the Debt Financing
Documents (and the holders of rights to receive payment of such amounts have not
waived such rights and have not otherwise failed to exercise such rights), the
rights of holders of debt obligations of the Corporation to receive payments
under the Debt Financing Documents in the event of such Change of Control will
be senior pursuant to and to the extent provided by applicable law to the rights
of each Holder of such shares of Preferred Stock to receive the purchase price
payable in respect of such shares of Preferred Stock surrendered in connection
with a Change of Control Sale in accordance with this Section 8 (it being
understood that the foregoing shall not limit the rights of the Holders in any
voluntary or involuntary bankruptcy, reorganization, insolvency or liquidation
proceeding).

(h) Partial Change of Control Sale. If a portion, but less than all, of the
shares of Preferred Stock held by any Holder are purchased in accordance with
this Section 8 on any particular date, the Corporation shall promptly thereafter
reflect in the Register the remaining shares of Preferred Stock held by such
Holder.

Section 9. Adjustments to Conversion Price.

(a) Adjustments to Conversion Price. Except as provided in Section 9(d), the
Conversion Price shall be subject to the following adjustments:

(i) Stock Dividends and Distributions. If the Corporation declares a dividend or
makes a distribution on the Common Stock payable in shares of Common Stock, then
the Conversion Price in effect at the opening of business on the Ex-Date for
such dividend or distribution shall be adjusted to the price determined by
multiplying the Conversion Price at the opening of business on such Ex-Date by
the following fraction:

        OS0         

OS1

Where,

OS0 = the number of shares of Common Stock outstanding at the close of business
on the Business Day immediately preceding the Ex-Date for such dividend or
distribution.

OS1 = the sum of the number of shares of Common Stock outstanding at the close
of business on the Business Day immediately preceding the Ex-Date for such
dividend or distribution plus the total number of shares of Common Stock
constituting such dividend or distribution.

If any dividend or distribution described in this Section 9(a)(i) is declared
but not so paid or made, the Conversion Price shall be readjusted, effective as
of the date and time the Board of Directors determines not to make such dividend
or distribution, to such Conversion Price that would be in effect if such
dividend or distribution had not been declared.

 

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(ii) Subdivisions, Splits and Combination of the Common Stock. If the
Corporation subdivides, splits or combines the shares of Common Stock, then the
Conversion Price in effect immediately prior to the effective date of such share
subdivision, split or combination shall be adjusted to the price determined by
multiplying the Conversion Price in effect immediately prior to the effective
date of such share subdivision, split or combination by the following fraction:

    OS0    

OS1

Where,

OS0 = the number of shares of Common Stock outstanding immediately prior to the
effective date of such share subdivision, split or combination.

OS1 = the number of shares of Common Stock outstanding immediately after the
opening of business on the effective date of such share subdivision, split or
combination.

If any subdivision, split or combination described in this Section 9(a)(ii) is
announced but the outstanding shares of Common Stock are not subdivided, split
or combined, the Conversion Price shall be readjusted, effective as of the date
the Board of Directors determines not to subdivide, split or combine the
outstanding shares of Common Stock, to such Conversion Price that would be in
effect if such subdivision, split or combination had not been announced.

(iii) Other Distributions. If the Corporation distributes to all holders of
shares of Common Stock any Convertible Securities or Options or any other assets
for which there is no corresponding distribution in respect of the Preferred
Stock pursuant to Section 4(a)(i) (which excludes, for the avoidance of doubt,
any distribution of cash or non-cash property for which there is a corresponding
distribution in respect of the Preferred Stock pursuant to Section 4(a)(i)),
then the Conversion Price in effect immediately prior to the Ex-Date for such
distribution shall be adjusted to the price determined by multiplying the
Conversion Price in effect immediately prior to the Ex-Date for such
distribution by the following fraction:

        SP0 – FMV    

SP0

Where,

SP0 = the Market Price of a share of Common Stock on the date immediately prior
to the Ex-Date for such distribution.

 

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FMV = the fair market value of the portion of the distribution applicable to one
share of Common Stock on the Ex-Date for such distribution, in the case of a
non-cash distribution or with respect to the non-cash portion of a distribution,
if any, as determined (i) by the good faith determination of the Board of
Directors or (ii) if, within five Business Days following notice from the
Corporation of the value determined by the Board of Directors pursuant to clause
(i), the Holders of a majority of the outstanding shares of Preferred Stock
object in good faith to such determination, then the fair market value will be
determined by a nationally recognized independent investment banking firm that
has for this purpose (x) been selected by the Board of Directors, and (y) is
reasonably acceptable to Holders of a majority of the outstanding shares of
Preferred Stock; provided, that such value, whether determined pursuant to the
foregoing clause (i) or (ii), shall not for the purposes hereof in any event be
equal to or greater than the Market Price of a share of Common Stock on such
date.

In a “spin-off,” where the Corporation makes a distribution to all holders of
shares of Common Stock consisting of capital stock of any class or series, or
similar equity interests of, or relating to, a Subsidiary of the Corporation or
other business unit, the Conversion Price will be adjusted on the 15th Trading
Day after the effective date of the distribution by multiplying such Conversion
Price in effect immediately prior to such 15th Trading Day by the following
fraction:

        MP0         

MP0 + MPs

Where,

MP0 = (i) if the Common Stock is listed or quoted on a principal U.S. national
or regional securities exchange or traded on an over-the-counter market, the
Market Price of a share of Common Stock for the period ending on and including
the tenth Trading Day following the effective date of such distribution, or
(ii) if the Common Stock is not listed or quoted on a principal U.S. national or
regional securities exchange or traded on an over-the-counter market, the Market
Price of a share of Common Stock on the effective date of such distribution.

MPs = (i) if the capital stock or equity interests distributed to the holders of
shares of Common Stock are listed or quoted on a principal U.S. national or
regional securities exchange or traded on an over-the-counter market, an amount
equal to the product of (x) the number of shares of such capital stock or equity
interests representing the portion of the distribution applicable to one share
of Common Stock and (y) the Market Price of such capital stock or equity
interests for the period ending on and including the tenth Trading Day following
the effective date of such distribution, or (ii) if such capital stock or equity
interests are not listed or quoted on a principal U.S. national or regional
securities exchange or traded on an over-the-counter market, the Market Price of
the capital stock or equity interests representing the portion of the
distribution applicable to one share of Common Stock on the effective date of
such distribution (after giving effect to such distribution).

In the event that such distribution described in this Section 9(a)(iii) is not
so paid or made, the Conversion Price shall be readjusted, effective as of the
date the Board of Directors publicly announces its decision not to pay or make
such dividend or distribution, to the Conversion Price that would then be in
effect if such dividend or distribution had not been declared.

 

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(iv) Certain Repurchases of Common Stock. If the Corporation effects a Pro Rata
Repurchase of Common Stock that involves the payment by the Corporation of
consideration per share of Common Stock that exceeds the Market Price of a share
of Common Stock on the Effective Date of such Pro Rata Repurchase (provided that
if part or all of the consideration is not cash, the fair market value of the
non-cash consideration shall be determined by a nationally recognized
independent investment banking firm that has for this purpose (x) been selected
by the Board of Directors, and (y) been consented to by Holders of a majority of
the outstanding shares of Preferred Stock, voting as a separate class, then the
Conversion Price in effect immediately prior to the Effective Date of such Pro
Rata Repurchase shall be adjusted (such adjustment to become effective
immediately prior to the opening of business on the day following the Effective
Date of such Pro Rata Repurchase) by multiplying the Conversion Price in effect
immediately prior to the Effective Date of such Pro Rata Repurchase by the
following fraction:

(OS0 x SP0) – AC

SP0 x OS1

Where,

SP0 = the Market Price of a share of Common Stock on the Trading Day immediately
preceding the first announcement of the intent to effect such Pro Rata
Repurchase.

OS0 = the number of shares of Common Stock outstanding at the Effective Date of
such Pro Rata Repurchase, including, if applicable, any shares validly tendered
and not withdrawn or exchanged shares.

OS1= the number of shares of Common Stock outstanding at the Effective Date of
such Pro Rata Repurchase, including, if applicable, any shares validly tendered
or exchanged and not withdrawn, minus the number of shares purchased in such Pro
Rata Repurchase (which shares shall equal the Purchased Shares (as defined
below) if such Pro Rata Repurchase is effected pursuant to a tender offer or
exchange offer).

AC = the aggregate cash and fair market value of the other consideration payable
in such Pro Rata Repurchase, and in the case of non-cash consideration, as
determined by a nationally recognized independent investment banking firm that
has for this purpose (x) been selected by the Board of Directors, and (y) been
consented to by Holders of a majority of the outstanding shares of Preferred
Stock, voting as a separate class, based, in the case of a tender offer or
exchange offer, on the number of shares actually accepted for purchase (the
“Purchased Shares”).

In the event that the Corporation, or one of its Affiliates, is obligated to
purchase shares of Common Stock pursuant to any such Pro Rata Repurchase, but
the Corporation, or such Affiliate, is permanently prevented by applicable Law
from effecting any such purchases, or all such purchases are rescinded, then the
Conversion Price shall be readjusted to be such Conversion Price that would then
be in effect if such Pro Rata Repurchase had not been made.

 

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(v) Rights Plans. To the extent that the Corporation has a rights plan in effect
with respect to the Common Stock on any Conversion Date, upon conversion of any
shares of the Preferred Stock into Common Stock, the Holders will receive, in
addition to the shares of Common Stock, the rights under the rights plan,
unless, prior to such Conversion Date, the rights have separated from the shares
of Common Stock, in which case the Conversion Price will be adjusted at the time
of separation as if the Corporation had issued the rights to all holders of the
Common Stock in an issuance triggering an adjustment pursuant to
Section 9(a)(iii), subject to readjustment in the event of the expiration,
termination or redemption of such rights.

(b) Other Adjustments.

(i) The Corporation may make decreases in the Conversion Price, in addition to
any other decreases required by this Section 9, if the Board of Directors deems
it advisable to avoid or diminish any income tax to holders of the Common Stock
resulting from any dividend or distribution of shares of Common Stock (or
issuance of Options for Common Stock) or from any event treated as such for
income tax purposes.

(ii) If the Corporation takes any action affecting the Common Stock, other than
an action described in Section 9(a), which upon a determination by the Board of
Directors, in its good faith discretion (such determination intended to be a
“fact” for purposes of Section 151(a) of the DGCL), would materially adversely
affect the conversion rights of the Holders of shares of Preferred Stock, the
Conversion Price shall be adjusted, to the extent permitted by Law, in such
manner, if any, and at such time, as the Board of Directors determines in good
faith to be equitable in the circumstances.

(c) Successive Adjustments. Successive adjustments in the Conversion Price shall
be made, without duplication, whenever any event specified in Section 9(a) or
Section 9(b) shall occur.

(d) Rounding of Calculations; Minimum Adjustments. All adjustments to the
Conversion Price shall be calculated to the nearest one-tenth (1/10th) of a
cent. No adjustment in the Conversion Price shall be required if such adjustment
would be less than $0.01; provided, that any adjustments which by reason of this
Section 9(d) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment; provided, further that on any Conversion
Date adjustments to the Conversion Price will be made with respect to any such
adjustment carried forward and which has not been taken into account before such
date.

(e) Statement Regarding Adjustments; Notices. Whenever the Conversion Price is
to be adjusted in accordance with one or more of Section 9(a) or Section 9(b),
the Corporation shall: (i) compute the Conversion Price in accordance with
Section 9(a) or Section 9(b), taking into account the one cent threshold set
forth in Section 9(d); (ii) (x) in the event that the Corporation shall give
notice or make a public announcement to the holders of Common Stock of any
action of the type described in Section 9(a) (but only if the action of the type
described in Section 9(a) would result in an adjustment to the Conversion Price
or a change in the type of securities or property to be delivered upon
conversion of the Preferred Stock), the Corporation shall, at the time of such
notice or announcement, and in the case of any action which would require the
fixing of a record date, at least ten (10) days prior to such record date, give
notice to each Holder by mail, first class postage prepaid, at the address
appearing in the

 

23

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Register, which notice shall specify the record date, if any, with respect to
any such action, the approximate date on which such action is to take place and
the facts with respect to such action as shall be reasonably necessary to
indicate the effect on the Conversion Price and the number, kind or class of
shares or other securities or property which shall be deliverable upon
conversion or redemption of the Preferred Stock or (y) in the event that the
Corporation does not give notice or make a public announcement as set forth in
subclause (x) of this clause (ii), the Corporation shall, as soon as practicable
following the occurrence of an event that requires an adjustment to the
Conversion Price pursuant to one or more of Section 9(a) or Section 9(b), taking
into account the one cent threshold set forth in Section 9(d) (or if the
Corporation is not aware of such occurrence, as soon as practicable after
becoming so aware), provide, or cause to be provided, a written notice to the
Holders of the occurrence of such event, in the same manner and with the same
detail as the notice set forth in subclause (x) of this clause (ii); and
(iii) whenever the Conversion Price shall be adjusted pursuant to one or more of
Section 9(a) or Section 9(b), the Corporation shall, as soon as practicable
following the determination of the revised Conversion Price, (x) file at the
principal office of the Corporation, a statement showing in reasonable detail
the facts requiring such adjustment, the Conversion Price that shall be in
effect after such adjustment and the method by which the adjustment to the
Conversion Price was determined and (y) cause a copy of such statement to be
sent in the manner set forth in subclause (x) of clause (ii) to each Holder.

(f) Certain Adjustment Rules. If an adjustment in the Conversion Price made
hereunder would reduce the Conversion Price to an amount below par value of the
Common Stock, then such adjustment in Conversion Price made hereunder shall
reduce the Conversion Price to the par value of the Common Stock. As a condition
precedent to the taking of any action which would require an adjustment pursuant
to this Section 9, the Corporation shall use its reasonable best efforts to take
any and all actions which may be necessary, including obtaining regulatory,
NASDAQ (or such exchange or automated quotation system on which the Common Stock
is then listed) or stockholder approvals or exemptions, in order that the
Corporation may thereafter validly and legally issue as fully paid and
nonassessable all shares of Common Stock issuable upon conversion of the
Preferred Stock in compliance with the applicable listing standards of NASDAQ
(or such exchange or automated quotation system on which the Common Stock is
then listed).

Section 10. Optional Redemption.

(a) Subject to and in accordance with the provisions of this Section 10, the
Corporation shall have the right, at its option, at any time (subject to
Section 10(c)), to redeem, out of funds legally available therefor, (i) all or
(ii) any portion of the shares of Preferred Stock then outstanding at a
redemption price per share in cash (the “Redemption Price”) equal to two times
(2x) the sum of (A) the Liquidation Preference and (B) the Accrued Dividends of
each such share of Preferred Stock as of the date of such redemption; provided,
that any Accrued Dividends that have accrued since the most recent Preferred
Dividend Payment Date shall instead be calculated at one times (1x) the amount
of such current period Accrued Dividends; provided, further, that any redemption
under this Section 10 for less than all of the shares of Preferred Stock then
outstanding must be for no less than one-third (1/3) of the total number of
shares of Preferred Stock initially issued to the Investor on the Original
Issuance Date and must not result in the Investor’s Beneficial Ownership of the
Common Stock (on an as-converted to Common Stock basis) falling below five
percent (5%) of the Common Stock then outstanding as

 

24

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of the Redemption Date (on an as-converted to Common Stock basis). The
Corporation may exercise its right to require redemption under this Section 10
by sending a written notice to each Holder of Preferred Stock (the “Redemption
Notice”) specifying (x) the date on which the redemption shall occur (the
“Redemption Date”), which shall be a Business Day that is no earlier than 30
days and no later than 60 days from the date the Redemption Notice is sent and
(y) the aggregate number of shares of Preferred Stock which are being redeemed
pursuant to such redemption. If fewer than all of the shares of Preferred Stock
then outstanding are to be redeemed pursuant to this Section 10(a), then such
redemption shall occur on a pro rata basis with respect to all Holders of
Preferred Stock based on the total number of shares of Preferred Stock then held
by such Holder relative to the total number of shares of Preferred Stock then
outstanding. Notwithstanding anything to the contrary in this Section 10(a),
each Holder of shares of Preferred Stock to be redeemed by the Corporation may
elect to convert all or any portion of the shares of Preferred Stock held by
such Holder into Common Stock in accordance with the provisions of
Section 6 (taking into account the limitation in the last sentence of
Section 6(a)(i)(B), applied ratably with respect to each outstanding share of
Preferred Stock) at any time prior to the applicable Redemption Date.

(b) Redemption pursuant to Section 10(a) shall become effective on the
Redemption Date and the aggregate Redemption Price for such redeemed shares
shall be due and payable in cash to the record Holder of the shares of Preferred
Stock being redeemed on such date. If a Redemption Notice has been delivered in
accordance with Section 10(a) and if the funds necessary for redemption have
been paid to the Holders of shares of Preferred Stock being redeemed, then from
and after the applicable Redemption Date, dividends and distributions will cease
to accrue on such redeemed shares of Preferred Stock, such redeemed shares of
Preferred Stock shall no longer be deemed outstanding and all rights of the
Holders with respect to such redeemed shares of Preferred Stock will terminate,
except the right to receive the aggregate Redemption Price for such redeemed
shares of Preferred Stock held by each such Holder.

(c) The Corporation’s optional redemption right provided by Section 10(a) shall
not be available to the Corporation at any time at which:

(i) the Common Stock Trading Price has exceeded 200% of the then applicable
Conversion Price (x) for more than five (5) Trading Days during the 30-Trading
Day period immediately preceding the date of delivery of the Redemption Notice
or (y) for any Trading Day during the five (5) consecutive Trading Day period
immediately preceding the date of delivery of the Redemption Notice; or

(ii) the Corporation is, or was during the five (5) consecutive Trading Day
period immediately preceding the date of delivery of the Redemption Notice, in
possession of material non-public information relating to the Corporation, that,
if publicly disclosed, would be reasonably expected to have a material and
positive effect on the Common Stock Trading Price on the Trading Day immediately
following the date on which such information is publicly disclosed relative to
the Common Stock Trading Price on the Trading Day immediately preceding the date
on which such information is publicly disclosed (assuming such information is
publicly disclosed pre-market open on a Trading Day or on a day that is not a
Trading Day).

 

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Section 11. Voting Rights.

(a) General. The Holders of shares of Preferred Stock shall be entitled to vote
with the holders of the Common Stock on all matters submitted to a vote of
stockholders of the Corporation, except as otherwise provided herein or as
required by applicable Law, voting together with the holders of Common Stock as
a single class. For such purposes, each Holder shall be entitled to a number of
votes in respect of the shares of Preferred Stock owned of record by it equal to
the number of shares of Common Stock into which such shares of Preferred Stock
could be converted (taking into account the limitation in the last sentence of
Section 6(a)(i)(B), applied ratably with respect to each outstanding share of
Preferred Stock) as of the record date for the determination of stockholders
entitled to vote on such matters or, if no such record date is established, as
of the date such vote is taken or any written consent of stockholders is
solicited. For the avoidance of doubt, the Holders of shares of Preferred Stock
shall not be entitled to any voting rights in respect of any Excess Conversion
Shares prior to the Requisite Stockholder Approval. The Holders of shares of
Preferred Stock shall be entitled to notice of any stockholders’ meeting in
accordance with the Certificate of Incorporation and the By-laws as if they were
holders of record of Common Stock for such meeting.

(b) Class Voting Rights. So long as any shares of Preferred Stock are
outstanding, in addition to any other vote required by applicable Law, the
Corporation may not take any of the following actions (including by means of
merger, consolidation, reorganization, recapitalization or otherwise) without
the prior affirmative vote or written consent of the Holders representing at
least a majority of the then-issued and outstanding shares of Preferred Stock,
voting as a separate class:

(i) amend, alter, repeal or otherwise modify any provision of the Certificate of
Incorporation, this Certificate or the By-laws in a manner that would alter or
change the terms or the powers, preferences, rights or privileges of the
Preferred Stock as to affect them adversely;

(ii) authorize, create, increase the authorized amount of, or issue (x) any
class or series of Senior Securities, Parity Securities or Junior Securities
(other than Common Stock) or any security convertible into, or exchangeable or
exercisable for any of the foregoing (other than Common Stock) that could have
the “result of the receipt of property by some shareholders” within the meaning
of Section 305(b)(2)(A) of the Internal Revenue Code of 1986, as amended from
time to time, including but not limited to (A) any non-participating preferred
stock (including by means of merger, consolidation, reorganization,
recapitalization or otherwise) or (B) any debt securities convertible into
shares of Capital Stock by their terms or (y) any other class or series of
Senior Securities or Parity Securities;

(iii) increase or decrease the authorized number of shares of Preferred Stock
(except for the cancellation and retirement of shares set forth in Section 13(c)
or as necessary for the payment of Preferred Dividends in kind in accordance
with Section 4(a)) or issue additional shares of Preferred Stock (except for
shares of Preferred Stock issuable as payment of a Preferred Dividend in
accordance with Section 4);

 

26

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(iv) (1) amend, restate, supplement, modify or replace the Debt Financing
Documents in any manner that would (i) include provisions relating to the
ability of the Corporation or its Subsidiaries to pay cash dividends pursuant to
this Certificate or any amounts due pursuant to Section 7 or Section 8 that are
more restrictive in any material respect than those set forth in the Debt
Financing Documents in effect as of the Original Issuance Date or (ii) restrict
the ability of the Corporation to pay Preferred Dividends in kind in accordance
with Section 4(a), or (2) enter into any agreements or arrangements relating to
indebtedness or otherwise (a) containing provisions relating to the ability of
the Corporation or its Subsidiaries to pay cash dividends pursuant to this
Certificate or any amounts due pursuant to Section 7 or Section 8 that are more
restrictive in any material respect than those set forth in the Debt Financing
Documents as of the Original Issuance Date or (b) that would restrict the
ability of the Corporation to pay Preferred Dividends in kind in accordance with
Section 4(a) (or subsequently amend, restate, supplement or otherwise modify any
such agreements in any manner that would (x) include provisions relating to the
ability of the Corporation or its Subsidiaries to pay cash dividends pursuant to
this Certificate or any amounts pursuant to Section 7 or Section 8 that are more
restrictive in any material respect than those set forth in such agreements or
(y) restrict the ability of the Corporation to pay Preferred Dividends in kind
in accordance with Section 4(a)); or

(v) adopt any plan of liquidation, dissolution or winding up of the Corporation
or file any voluntary petition for bankruptcy, receivership or any similar
proceeding.

(c) The consent or votes required in Section 11(b) shall be in addition to any
approval of stockholders of the Corporation which may be required by Law or
pursuant to any provision of the Certificate of Incorporation or the By-laws.
Each Holder of shares of Preferred Stock will have one vote per share on any
matter on which Holders of shares of Preferred Stock are entitled to vote
separately as a class, whether at a meeting or by written consent.

Section 12. Transfer Agent.

(a) The Corporation may appoint a transfer agent and remove its transfer agent
in accordance with the agreement between the Corporation and such transfer
agent; provided that the Corporation shall appoint a successor transfer agent of
recognized standing who shall accept such appointment prior to the effectiveness
of such removal. Upon any such removal or appointment, the Corporation shall
send notice thereof by first-class mail, postage prepaid, to the Holders. When a
Holder requests to register the transfer of shares of Preferred Stock, the
Corporation or the Corporation’s transfer agent, as applicable, shall register
the transfer as requested if its reasonable requirements for such transaction
are met.

Section 13. Miscellaneous.

(a) Taxes. The issuance or delivery of shares of Preferred Stock, shares of
Common Stock or other securities issued on account of Preferred Stock pursuant
hereto, or certificates representing such shares or securities, shall be made
without charge to the Holder for such shares or certificates or for any tax in
respect of the issuance or delivery of such certificates or the securities
represented thereby, including any share transfer, documentary, stamp or similar

 

27

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tax; provided, however, that the Corporation shall not be required to pay any
tax that may be payable in respect of any transfer involved in the issuance or
delivery of shares of Preferred Stock, shares of Common Stock or other
securities in a name other than that in which the shares of Preferred Stock with
respect to which such shares or other securities were issued, delivered or
registered, or in respect of any payment to any Person other than a payment to
the Holder thereof, and the transferee or payee, as the case may be, shall pay
or bear the cost of any such tax, and the Corporation shall not be required to
make any such issuance, delivery or payment unless and until the Person
otherwise entitled to such issuance, delivery or payment has paid to the
Corporation the amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid or is not payable.

(b) Good Faith. The Corporation shall not, by amendment of the Certificate of
Incorporation or through reorganization, consolidation, merger, dissolution,
sale of assets, or otherwise, avoid or seek to avoid the observance or
performance of any of the terms of this Certificate, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the Holders of Preferred Stock against dilution or other impairment as set forth
in this Certificate.

(c) Status of Shares. Shares of Preferred Stock which have been converted,
redeemed, repurchased or otherwise cancelled shall be retired and, following the
filing of any certificate required by the DGCL, have the status of authorized
and unissued shares of Preferred Stock, without designation as to series until
such shares are once more, subject to and in accordance with the provisions of
Section 11, designated as part of a particular series of Preferred Stock by the
Board of Directors.

(d) Notices. All notices referred to herein shall be in writing, and, unless
otherwise specified herein, all notices hereunder shall be deemed to have been
given upon the earlier of receipt thereof or three Business Days after the
mailing thereof if sent by registered or certified mail (or by first class mail
if the same shall be specifically permitted for such notice under the terms of
this Certificate) with postage prepaid, addressed: (i) if to the Corporation, to
its office at 505 Huntmar Park Drive, Suite 300, Herndon, Virginia 20170,
Attention: General Counsel, or to any transfer or other agent of the Corporation
designated to receive such notice as permitted by this Certificate of
Designations, or (ii) if to any Holder, to such Holder at the address of such
Holder as listed in the Register or (iii) to such other address as the
Corporation or any such Holder, as the case may be, shall have designated by
written notice similarly given.

(e) Severability. If any right, preference or limitation of the Preferred Stock
set forth in this Certificate (as amended from time to time) is invalid,
unlawful or incapable of being enforced by reason of any rule of Law or public
policy, all other rights, preferences and limitations set forth in this
Certificate (as so amended) which can be given effect without the invalid,
unlawful or unenforceable right, preference or limitation shall, nevertheless,
remain in full force and effect, and no right, preference or limitation herein
set forth shall be deemed dependent upon any other such right, preference or
limitation unless so expressed herein.

(f) Other Rights. Except as expressly provided in any agreement between a Holder
and the Corporation, the shares of Preferred Stock shall not have any voting
powers, preferences or relative, participating, optional or other special
rights, or qualifications, limitations or restrictions thereof, other than as
set forth herein or in the Certificate of Incorporation or as provided by
applicable Law.

 

28

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(g) Headings. The headings of the various subdivisions hereof are for
convenience of reference only and shall not affect the interpretation of any of
the provisions hereof.

(h) Effectiveness. This Certificate shall become effective upon the filing
thereof with the Secretary of State of the State of Delaware.

[Remainder of this page intentionally left blank]

 

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IN WITNESS WHEREOF, the Corporation has caused this Certificate to be duly
executed and acknowledged by its undersigned duly authorized officer this [•]
day of [•], 201[•].

 

BEACON ROOFING SUPPLY, INC. By:  

 

  Name:   Title:

 

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Exhibit B

Form of Registration Rights Agreement

 

31

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FORM OF REGISTRATION RIGHTS AGREEMENT

of

BEACON ROOFING SUPPLY, INC.

dated as of [•], 201[•]

 

 

 

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TABLE OF CONTENTS

 

 

         Page  

1.

  Definitions      1  

2.

  Registration Rights      5    

(a)    Shelf Registration

     5    

(b)    Shelf Takedowns

     5    

(c)    Cooperation with Shelf Takedowns

     6    

(d)    Automatic Shelf Registration Statements

     6    

(e)    Demand Rights

     6    

(f)     Effectiveness of Demand Registration

     7    

(g)    Continued Effectiveness

     7    

(h)    Priority on Registration

     7    

(i)     Postponements in Requested Registrations

     8    

(j)     Registration Expenses

     9    

(k)    Registration Statement Form

     9    

(l)     Selection of Underwriters

     9  

3.

  Piggyback Restrictions      9    

(a)    Right to Piggyback

     9    

(b)    Underwritten Registration

     9    

(c)    Piggyback Registration Expenses

     10    

(d)    Priority on Primary Registrations

     10    

(e)    Priority on Secondary Registrations

     11  

4.

  Registration Procedures      11  

5.

  Indemnification      16    

(a)    Indemnification by the Company

     16    

(b)    Indemnification by CD&R Stockholder of Registrable Securities

     17    

(c)    Conduct of Indemnification Proceedings

     18  

 

i

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TABLE OF CONTENTS

(continued)

 

         Page    

(d)    Contribution

     18    

(e)    Deemed Underwriter

     19    

(f)     Other Indemnification

     19    

(g)    Non-Exclusivity

     19  

6.

 

Registration Expenses

     19  

7.

 

Rule 144

     20  

8.

 

Certain Additional Agreements

     20  

9.

 

Miscellaneous

     20    

(a)    Termination

     20    

(b)    Holdback Agreement

     21    

(c)    Amendments and Waivers

     21    

(d)    Successors, Assigns and Transferees

     21    

(e)    Notices

     22    

(f)     Further Assurances

     22    

(g)    No Inconsistent Agreements

     22    

(h)    Entire Agreement; No Third Party Beneficiaries

     22    

(i)     Governing Law; Jurisdiction and Forum; Waiver of Jury Trial

     23    

(j)     Severability

     23    

(k)    Enforcement

     23    

(l)     Titles and Subtitles

     24    

(m)   No Recourse

     24    

(n)    Counterparts; Facsimile Signatures

     24  

 

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This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of [•],
201[•], by and among Beacon Roofing Supply, Inc., a Delaware corporation (the
“Company”), CD&R Boulder Holdings, L.P., a Cayman Islands exempted limited
partnership (“CD&R Investor”), and any Person who becomes a party hereto
pursuant to Section 8(d) (each such party and CD&R Investor, a “CD&R
Stockholder” and collectively, the “CD&R Stockholders”). Capitalized terms used
herein shall have the meaning assigned to such terms in the text of this
Agreement or in Section 1.

WHEREAS, on or prior to the date hereof, the Company has adopted and filed with
the Secretary of State of the State of Delaware the Certificate of Designations,
Preferences and Rights of Series A Cumulative Convertible Participating
Preferred Stock in the form attached hereto as Exhibit A (the “Certificate of
Designations”) in order to create a series of preferred stock, par value $0.01
per share, designated as Series A Cumulative Convertible Participating Preferred
Stock (the “Preferred Stock”);

WHEREAS, pursuant to the Investment Agreement, dated as of August 24, 2017, by
and among the Company, CD&R Investor and Clayton, Dubilier & Rice Fund IX, L.P.
(solely for purposes of Sections 4.13 and 4.14 thereof) (as such agreement may
be amended from time to time, the “Investment Agreement”), CD&R Investor
acquired from the Company, and the Company issued to CD&R Investor, an aggregate
of [•] shares of Preferred Stock;

WHEREAS, pursuant to the Certificate of Designations, the Preferred Stock may be
converted into a certain number of shares of Common Stock, on the terms and
subject to certain conditions specified in the Certificate of Designations; and

WHEREAS, the Company desires to provide to the CD&R Stockholders rights to
registration under the Securities Act of Registrable Securities, on the terms
and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual
promises hereinafter set forth, the parties hereto agree as follows:

AGREEMENT

1. Definitions. As used in this Agreement, the following capitalized terms shall
have the following respective meanings:

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with, such person.

“Agreement” has the meaning given to such term in the Preamble.

“Automatic Shelf Registration Statement” has the meaning given to such term in
Section 2(d).

“Block Sale” means the sale of shares of Common Stock to one or several
purchasers in a registered transaction by means of a bought deal, a block trade
or a direct sale.

--------------------------------------------------------------------------------

“Board” means the Board of Directors of the Company.

“Business Day” means any day that is not a Saturday, a Sunday or other day on
which banks are required or authorized by law to be closed in New York City.

“CD&R Investor” has the meaning given to such term in the Preamble.

“CD&R Stockholders” has the meaning given to such term in the Preamble.

“Certificate of Designations” has the meaning given to such term in the
Recitals.

“Closing” means the closing of the transactions contemplated by the Investment
Agreement.

“Closing Date” means the date on which the Closing occurs.

“Common Stock” means the common stock, par value $0.01 per share, of the
Company, including any shares of capital stock into which the Common Stock may
be converted (as a result of recapitalization, share exchange or similar event)
or are issued including with respect to any stock split or stock dividend, or a
successor security.

“Company” has the meaning given to such term in the Preamble.

“control” (including the terms “controlling”, “controlled by” and “under common
control with”), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly, of the power to direct or
cause the direction of the affairs or management of a Person, whether through
the ownership of voting securities, as trustee or executor, by contract or
otherwise.

“Covered Person” has the meaning given to such term in Section 5(a).

“Demand Registration” has the meaning given to such term in Section 2(e).

“Demand Request” has the meaning defined in Section 2(e).

“Effective Period” has the meaning given to such term in Section 2(g).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any
successor statute thereto and the rules and regulations of the SEC promulgated
thereunder.

“FINRA” means the Financial Industry Regulatory Authority.

“Free Writing Prospectus” has the meaning given to such term in Section 4(a).

“Holdback Period” means, with respect to any registered offering covered by this
Agreement 90 days after (or such shorter period as may be agreed to by the
managing underwriter(s) for such offering) and during the 10 days before, the
effective date of the related Registration Statement or, in the case of an
underwritten takedown from a Shelf

 

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Registration Statement, 90 days after (or such shorter period as may be agreed
to by the managing underwriter(s) for such offering) the date of the Prospectus
supplement filed with the SEC in connection with such takedown and during such
prior period (not to exceed 10 days) as the Company has given reasonable written
notice to the CD&R Stockholders holding Registrable Securities.

“including” means “including without limitation”.

“Indemnified Party” has the meaning given to such term in Section 5(c).

“Indemnifying Party” has the meaning given to such term in Section 5(c).

“Investment Agreement” has the meaning given to such term in the Recitals.

“Lock-Up Period” means the period commencing on the Closing Date and ending on
the date that is eighteen (18) months after the Closing Date.

“Losses” has the meaning given to such term in Section 5(a).

“Marketed Underwritten Offering” means (i) an Underwritten Offering pursuant to
a Demand Registration or (ii) a Marketed Underwritten Shelf Offering.

“Marketed Underwritten Shelf Offering” has the meaning given to such term in
Section 2(b).

“Permitted Rights Transferee” means, for the purposes of this Agreement, any
Person to whom CD&R Investor transfers shares of Preferred Stock or Common Stock
in accordance with Section 4.9 of the Investment Agreement.

“Person” means any individual, partnership, joint venture, corporation, limited
liability company, trust, unincorporated organization, government or any
department or agency thereof or any other entity.

“Piggyback Registration” has the meaning given to such term in Section 3(a).

“Piggybacking Holder” has the meaning given to such term in Section 2(h)(iii).

“Preferred Stock” has the meaning given to such term in the Recitals.

“Prospectus” means the prospectus included in any Registration Statement
(including a prospectus that discloses information previously omitted from a
prospectus filed as part of an effective Registration Statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, relating to Registrable Securities, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.

“Registration Expenses” has the meaning given to such term in Section 6.

 

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“Registrable Securities” means, as of any date of determination, (a)(i) any
shares of Common Stock held by a CD&R Stockholder and (ii) any shares of Common
Stock issuable upon conversion of shares of Preferred Stock (including shares of
Preferred Stock issued as dividends thereon as permitted under the terms of the
Certificate of Designations) held by a CD&R Stockholder and (b) any equity
securities or other equity interests issued or issuable, directly or indirectly,
with respect to the shares of Common Stock described in clause (a) by way of
conversion or exchange thereof or stock dividends, stock splits or in connection
with a combination of shares, reclassification, recapitalization, merger,
consolidation or other reorganization. As to any particular Registrable
Securities, once issued, such securities shall cease to be Registrable
Securities when (i) they are disposed of pursuant to an effective Registration
Statement under the Securities Act, (ii) they are sold to the public pursuant to
Rule 144 or Rule 145 (or other exemption from registration under the Securities
Act), (iii) they shall have ceased to be outstanding, or (iv) they have been
sold in a private transaction.

“Registration Statement” means any registration statement of the Company filed
with the SEC under the Securities Act which covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including any
Prospectus, Free Writing Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.

“Rule 144” means Rule 144 under the Securities Act, as such rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
SEC.

“Rule 145” means Rule 145 under the Securities Act, as such rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
SEC.

“Rule 405” means Rule 405 under the Securities Act, as such rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
SEC.

“SEC” means the U.S. Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act or the Exchange Act.

“Securities Act” means the Securities Act of 1933, as amended, and any successor
statute thereto and the rules and regulations of the SEC promulgated thereunder.

“Selling Expenses” means all underwriting and brokerage discounts, selling
commissions, transfer taxes, if any, and the fees and expenses of separate
counsel and other advisors and agents, if any, to the CD&R Stockholders
associated with the CD&R Stockholders effecting any sales of Registrable
Securities under any Registration Statement.

 

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“Shelf Registration Statement” has the meaning given to such term in
Section 2(a).

“Shelf Takedown” has the meaning given to such term in Section 2(b).

“Subsidiary” means (i) any corporation of which a majority of the securities
entitled to vote generally in the election of directors thereof, at the time as
of which any determination is being made, are owned by another entity, either
directly or indirectly and (ii) any joint venture, general or limited
partnership, limited liability company or other legal entity in which an entity
is the record or beneficial owner, directly or indirectly, of a majority of the
voting interests or the general partner.

“Underwritten Offering” means an offering registered under the Securities Act in
which securities of the Company are sold to one or more underwriters on a
firm-commitment basis for reoffering to the public.

“WKSI” has the meaning given to such term in Section 2(d).

2. Registration Rights.

(a) Shelf Registration. The Company shall file with the SEC and thereafter use
its reasonable best efforts to cause to be declared effective promptly upon the
expiration of the Lock-Up Period a registration statement on Form S-3 or any
comparable or successor form or forms or any similar short-form registration
constituting a “shelf” registration statement providing for the registration of,
and the sale by the CD&R Stockholders on a continuous or delayed basis of, all
of the Registrable Securities, pursuant to Rule 415 or otherwise (a “Shelf
Registration Statement”).

(b) Shelf Takedowns. Subject to the provisions of Section 2(c) hereof, the CD&R
Stockholders shall be entitled, at any time and from time to time when a Shelf
Registration Statement is effective, to sell such Registrable Securities held by
them as are then registered pursuant to a Shelf Registration Statement (each, a
“Shelf Takedown”). The number of Shelf Takedowns that the CD&R Stockholders may
effect pursuant to this Section 2(b) shall not be limited, provided that the
number of Underwritten Offerings that may be effected hereunder shall be limited
to a total of four (4) (less any Demand Requests made pursuant to Section 2(e)),
with only two (2) such Underwritten Offerings where the plan of distribution
contemplates a customary “road show” (including an “electronic road show”) or
other substantial marketing effort by the Company and the underwriters (any such
Underwritten Offering, a “Marketed Underwritten Shelf Offering”). Any such Shelf
Takedown may be made in the United States by and pursuant to any method or
combination of methods legally available to the CD&R Stockholders (including an
underwritten offering, a direct sale to purchasers, a sale to or through
brokers, dealers or agents, a sale over the internet, Block Sales, derivative
transactions with third parties, sales in connection with short sales and other
hedging transactions). The Company shall comply with the applicable provisions
of the Securities Act with respect to the disposition of all Registrable
Securities covered by the Shelf Registration Statement in accordance with the
intended methods of disposition by the CD&R Stockholders participating in such
Shelf Takedown. The CD&R Stockholders selling any Registrable Securities
pursuant to a Shelf Takedown shall give the Company prompt written notice of the
consummation of each Shelf Takedown (whether or not such Shelf Takedown
constitutes an Underwritten Offering).

 

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(c) Cooperation with Shelf Takedowns. Upon receipt of prior written notice by
the CD&R Stockholders that they intend to effect a Shelf Takedown, the Company
shall use its reasonable best efforts to cooperate in such Shelf Takedown,
whether or not such Shelf Takedown constitutes an Underwritten Offering, by
amending or supplementing the Prospectus related to such Shelf Registration
Statement as may be reasonably requested by the CD&R Stockholders for so long as
any CD&R Stockholders hold Registrable Securities; provided that the Company
shall not be obligated to cooperate in an Underwritten Offering to be effected
by means of a Block Sale if notice of such Underwritten Offering has not been
delivered to the Company at least seven (7) Business Days prior to the intended
launch of such Block Sale.

(d) Automatic Shelf Registration Statements. To the extent the Company is a
well-known seasoned issuer (as defined in Rule 405) (a “WKSI”) at a time when it
is obligated to file a Shelf Registration Statement pursuant to this Agreement,
the Company shall file an automatic shelf registration statement (as defined in
Rule 405) on Form S-3 (an “Automatic Shelf Registration Statement”) in
accordance with the requirements of the Securities Act and the rules and
regulations of the SEC thereunder, that covers the Registrable Securities. The
Company shall pay the registration fee for all Registrable Securities to be
registered pursuant to an Automatic Shelf Registration Statement at the time of
filing of the Automatic Shelf Registration Statement and shall not elect to pay
any portion of the registration fee on a deferred basis. The Company shall use
its reasonable best efforts to remain a WKSI (and not to become an ineligible
issuer (as defined in Rule 405)) during the period during which any Automatic
Shelf Registration Statement is effective. If at any time following the filing
of an Automatic Shelf Registration Statement when the Company is required to
re-evaluate its WKSI status the Company determines that it is not a WKSI, the
Company shall use its reasonable best efforts to post-effectively amend the
Automatic Shelf Registration Statement to a Shelf Registration Statement that is
not automatically effective or file a new Shelf Registration Statement or, if
the Company is not eligible at such time to file a Shelf Registration Statement,
a Registration Statement on Form S-1; have such Registration Statement declared
effective by the SEC; and keep such Registration Statement effective during the
period during which such Shelf Registration Statement or Registration Statement
on Form S-1 is required to be kept effective in accordance with Section 2(g)
hereof.

(e) Demand Rights. After the expiration of the Lock-up Period, in the event the
Company ceases to be eligible to register Registrable Securities on Form S-3 or
has failed to perform its obligations under Section 2(a), the CD&R Stockholders
shall have the right on three (3) occasions (provided, that the aggregate number
of such rights effected pursuant to this Section 2(e) plus the number of any
Marketed Underwritten Shelf Offerings effected pursuant to Section 2(b) shall
not exceed four (4)) to require the Company to file a registration statement
under the Securities Act in respect of all or a portion of Registrable
Securities owned by the CD&R Stockholders (so long as such request covers at
least $25,000,000 worth of the then current value of shares of Common Stock
(including, for purposes of such determination, any shares of Common Stock
issuable upon conversion of shares of Preferred Stock (including shares of
Preferred Stock issued as dividends thereon as permitted under the terms of the
Certificate of Designations))), by delivering to the Company written notice
stating that such right is being

 

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exercised, specifying the number of Registrable Securities owned by the CD&R
Stockholders to be included in such registration, and describing the intended
method of distribution thereof (each, a “Demand Request” and any registration
effected pursuant thereto, a “Demand Registration”). Notwithstanding the
foregoing, the Company shall not be required to file any Registration Statement
pursuant to a Demand Request within 90 days after the effective date of a
previous Demand Registration or any previous Registration Statement in which the
holders of Registrable Securities were given piggyback rights pursuant to
Section 3 in which there was no reduction in the number of Registrable
Securities to be included, and in each case, in which the sale of the
Registrable Securities included therein was consummated. The Company shall
comply with the applicable provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by the Demand Registration in
accordance with the intended methods of disposition by the CD&R Stockholders.

(f) Effectiveness of Demand Registration. As promptly as practicable, but in no
event later than 20 Business Days after the Company receives a Demand Request
pursuant to Section 2(e) hereof, the Company shall file with the SEC and
thereafter use its reasonable best efforts to cause to be declared effective
promptly a registration statement on the appropriate form (it being agreed that,
subject to Section 2(l) hereof, such Registration Statement shall be an
Automatic Shelf Registration Statement, if then available to the Company)
providing for the registration of such number of Registrable Securities the CD&R
Stockholders shall have requested be registered for distribution in accordance
with such intended method of distribution; provided, however, no sale shall be
made by any CD&R Stockholder pursuant to any Demand Registration prior to the
expiration of the Lock-Up Period, except with the prior written consent of the
Company. The Company shall comply in all material respects with the applicable
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by any such registration statement in accordance
with the intended method or methods of disposition by the CD&R Stockholders.

(g) Continued Effectiveness. The Company shall use its reasonable best efforts
to keep (A) any Shelf Registration Statement filed pursuant to this Agreement
continuously effective and usable for the resale of the Registrable Securities
covered thereby until the earlier of (i) three (3) years from the effective date
of such Shelf Registration Statement and (ii) the date on which all of the
Registrable Securities covered by such Shelf Registration Statement have been
sold pursuant to such Shelf Registration Statement and (B) any Registration
Statement filed pursuant to a Demand Request effective for a period of at least
180 days after the effectiveness thereof or such shorter period during which all
Registrable Securities included therein shall have actually been sold (such
period, the “Effective Period”); provided, however, that in the event the
Company suspends, postpones or delays the filing of a Registration Statement
required to be filed pursuant to this Agreement, the Effective Period shall be
extended by the duration of each such applicable suspension, postponement or
delay.

(h) Priority on Demand Registration or Shelf Takedown. If any of the Registrable
Securities registered pursuant to a Demand Request or a Shelf Takedown are to be
sold in a Marketed Underwritten Offering, and the managing underwriter(s) advise
the CD&R Stockholders that in its good faith opinion the total number or dollar
amount of Registrable Securities proposed to be sold in such Marketed
Underwritten Offering (including securities proposed to be included by other
holders of securities entitled to include securities in such

 

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Registration Statement pursuant to incidental or piggyback registration rights),
is such as to adversely affect the success of such offering, then there shall be
included in such Marketed Underwritten Offering the number or dollar amount of
Registrable Securities that in the good faith opinion of such managing
underwriter(s) can be sold without adversely affecting such offering, and such
number of Registrable Securities shall be allocated as follows, unless the
underwriters require a different allocation:

(i) first, to the CD&R Stockholders requesting such registration pro rata on the
basis of the percentage of Registrable Securities owned by each such CD&R
Stockholder relative to the number of Registrable Securities owned by all CD&R
Stockholders, until with respect to each such CD&R Stockholder, all Registrable
Securities requested for registration by such Holders have been included in such
registration;

(ii) second, the securities for which inclusion in such Registration Statement
was requested by the Company; and

(iii) third, Common Stock requested by other holders of Common Stock (each, a
“Piggybacking Holder”) to be included in such Marketed Underwritten Offering, on
a pro rata basis or in such other manner as such Piggybacking Holders shall
agree.

Notwithstanding the foregoing, no securities other than Registrable Securities
held by the CD&R Stockholders shall be eligible for inclusion in the total
number or dollar amount of Registrable Securities proposed to be sold in any
Block Sale effected pursuant to Section 2(b) or Section 2(e) of this Agreement.

(i) Postponements in Requested Registrations. If the filing, initial
effectiveness or continued use of a Registration Statement, including a Shelf
Registration Statement, filed hereunder would require the Company to make a
public disclosure of material non-public information, which disclosure in the
good faith judgment of the Board (after consultation with external legal
counsel) (i) would be required to be made in any Registration Statement so that
such Registration Statement would not be materially misleading, (ii) would not
be required to be made at such time but for the filing, effectiveness or
continued use of such Registration Statement and (iii) would reasonably be
expected to adversely affect in any material respect the Company or its business
or the Company’s ability to effect a bona fide material proposed acquisition,
disposition, financing, reorganization, recapitalization or similar transaction,
then the Company may, upon giving prompt written notice of such action to the
CD&R Stockholders participating in such registration, delay the filing or
initial effectiveness of, or suspend use of, such Registration Statement;
provided that the Company shall not be permitted to do so (x) more than once in
any 6-month period or (y) for any single period of time in excess of 90 days, or
for periods exceeding, in the aggregate, 90 days during any 12-month period. In
the event that the Company exercises its rights under the preceding sentence,
such CD&R Stockholders agree to suspend, promptly upon receipt of the notice
referred to above, the use of any Prospectus relating to such registration in
connection with any sale or offer to sell Registrable Securities. If the Company
so postpones the filing of a Prospectus or the effectiveness of a Registration
Statement, the demanding CD&R Stockholder shall be entitled to withdraw such
request and, if such request is withdrawn, such registration request shall not
count for the purposes of the limitations set forth in Section 2(e). The Company
shall promptly give the CD&R Stockholders requesting registration thereof
pursuant to this Section 2 written notice of any postponement made in accordance
with the preceding sentence.

 

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(j) Registration Expenses. The Company shall pay, and shall be responsible for,
all Registration Expenses in connection with any registrations and offerings
pursuant to this Section 2, including any underwritten offering, direct sales to
purchasers, sales to or through brokers, dealers or agents, derivative
transactions with third parties, sales in connection with short sales and other
hedging transactions, that are effectuated pursuant to this Section 2; provided,
however, that the CD&R Stockholders shall pay all Selling Expenses, if any, with
respect to Registrable Securities sold by them.

(k) Selection of Underwriters. The lead underwriters of any Underwritten
Offering effected pursuant to a Demand Registration or a Shelf Takedown shall be
selected by the CD&R Stockholders, subject to the consent, not to be
unreasonably withheld, of the Company. If the CD&R Stockholders intend that the
Registrable Securities requested to be covered by a Demand Registration shall be
distributed by means of an Underwritten Offering, the CD&R Stockholders shall so
advise the Company in writing. The right of any CD&R Stockholder to participate
in an Underwritten Offering pursuant to this Section 2 will be conditioned upon
such CD&R Stockholder’s participation in such underwriting and the inclusion of
such CD&R Stockholder’s Registrable Securities in the underwriting and each such
CD&R Stockholder will (together with the Company and any Piggybacking Holder
distributing its securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter(s) selected for
such underwriting (including pursuant to the terms of any over-allotment or
“green shoe” option requested by the managing underwriter(s)), provided that
(A) no CD&R Stockholder shall be required to sell more than the number of
Registrable Securities that such CD&R Stockholder has requested the Company to
include in any registration and (B) if any CD&R Stockholder disapproves of the
terms of the underwriting, such CD&R Stockholder may elect to withdraw therefrom
by written notice to the Company, the managing underwriter(s) and, in connection
with an Underwritten Offering pursuant to this Section 2, the other CD&R
Stockholders, provided, further, that no such Person (other than the Company)
shall be required to make any representations or warranties other than (x) those
related to the title and ownership of, and power and authority to transfer,
Registrable Securities and (y) those related to the accuracy and completeness of
statements made in a Registration Statement, Prospectus or other document in
reliance upon, and in conformity with, written information prepared and
furnished to the Company or the managing underwriter(s) by such Person
pertaining exclusively to such CD&R Stockholder. Notwithstanding the foregoing,
no CD&R Stockholder shall be required to agree to any indemnification
obligations on the part of such CD&R Stockholder that are greater than its
obligations pursuant to Section 5.

3. Piggyback Restrictions.

(a) Right to Piggyback. Whenever the Company proposes to register any of its
securities for its own account (other than (x) a registration pursuant to this
Agreement or (y) a registration relating solely to employee benefit plans, or
relating to a registration relating solely to the sale of debt or convertible
debt instruments) and the registration form to be filed may be used for the
registration or qualification for distribution of Registrable Securities, the
Company will give written notice at least fifteen (15) days before the
anticipated filing date to the CD&R

 

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Stockholders of its intention to effect such a registration and will include in
such registration all Registrable Securities held by the CD&R Stockholders with
respect to which the Company has received from the CD&R Stockholder a written
request for inclusion therein within ten (10) days after the date of the
Company’s notice (a “Piggyback Registration”). If the CD&R Stockholder has made
such a written request, it may withdraw its or any Registrable Securities from
such Piggyback Registration by giving written notice to the Company and the
managing underwriter(s), if any, on or before the fifth (5th) day prior to the
planned effective date of such Piggyback Registration. The Company may terminate
or withdraw any registration under this Section 3 prior to the effectiveness of
such registration, whether or not the CD&R Stockholder has elected to include
Registrable Securities in such registration, and, except for the obligation to
pay Registration Expenses pursuant to Section 3(c), the Company will have no
liability to the CD&R Stockholder in connection with such termination or
withdrawal.

(b) Underwritten Registration. If the registration referred to in Section 3(a)
is proposed to be an Underwritten Offering, the Company will so advise the CD&R
Stockholders as a part of the written notice given pursuant to Section 3(a). In
such event, the right of any CD&R Stockholder to registration pursuant to this
Section 3 will be conditioned upon such CD&R Stockholder’s participation in such
underwriting and the inclusion of such CD&R Stockholder’s Registrable Securities
in the underwriting, and any CD&R Stockholder that holds Registrable Securities
that are to be sold in such offering will (together with the Company and any
other holders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such offering by the Company. If the CD&R Stockholder
disapproves of the terms of the underwriting, the CD&R Stockholder may elect to
withdraw therefrom by written notice to the Company and the managing
underwriter(s).

(c) Piggyback Registration Expenses. The Company will pay all Registration
Expenses in connection with any Piggyback Registration, whether or not any
registration or prospectus becomes effective or final; provided, however, that
the CD&R Stockholders shall pay all Selling Expenses, if any, with respect to
Registrable Securities sold by them.

(d) Priority on Primary Registrations. If a Piggyback Registration relates to a
primary Underwritten Offering on behalf of the Company, and the managing
underwriter(s) advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold without adversely affecting the marketability of such
offering, the Company will include in such registration or prospectus only such
number of securities that in the opinion of such underwriters can be sold
without adversely affecting the marketability of the offering, which securities
will be so included in the following order of priority: (i) first, the
securities the Company proposes to sell, (ii) second, the Registrable Securities
requested to be included in such registration by the CD&R Stockholders on a pro
rata basis relative to the total number of Registrable Securities requested to
be included therein by all CD&R Stockholders, until with respect to each such
CD&R Stockholder, all Registrable Securities requested for registration by such
CD&R Stockholders have been included in such registration and (iii) third,
Common Stock requested by any other persons to be included in the Piggyback
Registration, on a pro rata basis relative to the total number of Registrable
Securities requested to be included in the Piggyback Registration by such other
requesting persons, or in such other manner as such other requesting persons
shall agree.

 

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(e) Priority on Secondary Registrations. If a Piggyback Registration relates to
a secondary Underwritten Offering on behalf of other holders of the Company’s
securities, and the managing underwriter(s) advise the Company in writing that
in their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold without adversely affecting
the marketability of the offering, the Company will include in such registration
only such number of securities that in the opinion of such underwriters can be
sold without adversely affecting the marketability of the offering, which
securities shall include securities requested to be included therein by the
holder(s) making demand for such Underwritten Offering together with any
Registrable Securities requested to be included in such registration by the CD&R
Stockholders on a pro rata basis relative to the number of total shares of
Common Stock requested to be included therein by such other holder(s) and the
number of Registrable Securities requested to be included therein by the CD&R
Stockholders.

4. Registration Procedures. If and whenever the Company is required to use its
reasonable best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Section 2, the Company shall effect such
registration to permit the sale of such Registrable Securities in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
the Company shall cooperate in the sale of such Registrable Securities and
shall, as expeditiously as possible:

(a) prepare and file, in each case as promptly as practicable, with the SEC a
Registration Statement or Registration Statements on such form as shall be
available for the sale of the Registrable Securities by the CD&R Stockholders
thereof or by the Company in accordance with the intended method or methods of
distribution thereof, make all required filings with FINRA, and, if such
Registration Statement is not automatically effective upon filing, use its
reasonable best efforts to cause such Registration Statement to be declared
effective as soon as practicable and to remain effective as provided herein;
provided, however, that before filing a Registration Statement or Prospectus or
any amendments or supplements thereto (including free writing prospectuses under
Rule 433 (each a “Free Writing Prospectus”)), the Company shall furnish or
otherwise make available to the CD&R Stockholders, their counsel and the
managing underwriter(s), if any, copies of all such documents proposed to be
filed (including exhibits thereto), which documents will be subject to the
reasonable review and comment of such counsel, and such other documents
reasonably requested by such counsel, including any comment letter from the SEC,
and, if requested by such counsel, provide such counsel reasonable opportunity
to participate in the preparation of such Registration Statement and each
Prospectus included therein and such other opportunities to conduct a reasonable
investigation within the meaning of the Securities Act, including reasonable
access to the Company’s books and records, officers, accountants and other
advisors. The Company shall not file any such Registration Statement or
Prospectus, or any amendments or supplements thereto (including Free Writing
Prospectuses) with respect to a Demand Registration to which CD&R Stockholders
or the managing underwriter(s), if any, shall reasonably object, in writing, on
a timely basis, unless, in the opinion of the Company, such filing is necessary
to comply with applicable law;

(b) prepare and file with the SEC such amendments and supplements to such
Registration Statement and the Prospectus used in connection therewith and such
Free Writing Prospectuses and Exchange Act reports as may be necessary to keep
such Registration Statement continuously effective during the period provided
herein and comply in all material respects with

 

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the provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement; and cause the related
Prospectus to be supplemented by any Prospectus supplement as may be necessary
to comply with the provisions of the Securities Act with respect to the
disposition of the securities covered by such Registration Statement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar provisions then in
force) under the Securities Act in each case, until such time as all of such
securities have been disposed of in accordance with the intended method or
methods of disposition by the seller or sellers thereof set forth in such
Registration Statement;

(c) notify each selling CD&R Stockholder of Registrable Securities, its counsel
and the managing underwriter(s) of any Underwritten Offering (i) when a
Registration Statement, pre-effective amendment to any Registration Statement,
Prospectus or any Prospectus supplement or post-effective amendment or any Free
Writing Prospectus has been filed, and, with respect to a Registration Statement
or any post-effective amendment, when the same has become effective, (ii) of any
request by the SEC or any other federal or state governmental authority for
amendments or supplements to a Registration Statement or related Prospectus or
for additional information, (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of such Registration Statement or the initiation or
threatening of any proceedings for that purpose, (iv) if at any time the Company
has reason to believe that the representations and warranties of the Company
contained in any agreement (including any underwriting agreement) contemplated
by Section 4(n) below cease to be true and correct, (v) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of such Registrable Securities for sale in any
jurisdiction, or the initiation of any proceeding for such purpose, and (vi) of
the happening of any event that makes any statement made in such Registration
Statement or related Prospectus, Free Writing Prospectus, amendment or
supplement thereto, or any document incorporated or deemed to be incorporated
therein by reference, as then in effect, untrue in any material respect or that
requires the making of any changes in such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
not misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading (which notice shall notify the selling CD&R
Stockholders only of the occurrence of such an event and shall provide no
additional information regarding such event to the extent such information would
constitute material non-public information);

(d) use its reasonable best efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement, or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction at the earliest date
reasonably practical;

(e) if requested by the CD&R Stockholders, or, in the case of an Underwritten
Offering, the managing underwriter(s) of such Underwritten Offering, promptly
include in a Prospectus supplement or post-effective amendment such information
as the CD&R Stockholders or such managing underwriter(s), as the case may be,
may reasonably request in order to facilitate the disposition of the Registrable
Securities in accordance with the intended

 

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method or methods of distribution of such securities set forth in the
Registration Statement and make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received such request; provided, however, that the Company shall not
be required to take any actions under this Section 4(e) that are not, in the
opinion of counsel for the Company, in compliance with applicable law;

(f) deliver to each selling CD&R Stockholder of Registrable Securities, its
counsel, and the underwriters, if any, without charge, as many copies of the
Prospectus or Prospectuses (including each form of Prospectus) and each
amendment or supplement thereto (including any Free Writing Prospectus) as such
Persons may reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities in accordance with the intended method
or methods of disposition thereof; and the Company, subject to the last
paragraph of this Section 4, hereby consents to the use of such Prospectus and
each amendment or supplement thereto by each of the selling CD&R Stockholders of
Registrable Securities and the underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and
any such amendment or supplement thereto;

(g) use its reasonable best efforts to register or qualify or cooperate with the
selling CD&R Stockholders of Registrable Securities, the underwriters, if any,
and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions within the United States as any seller or underwriter
reasonably requests in writing and to keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and to take any other
action that may be necessary or advisable to enable such CD&R Stockholders of
Registrable Securities to consummate the disposition of such Registrable
Securities in such jurisdiction in accordance with the intended method or
methods of disposition thereof; provided, however, that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 4(g), (ii)
subject itself to taxation in any jurisdiction wherein it is not so subject or
(iii) take any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject;

(h) cooperate with the selling CD&R Stockholders of Registrable Securities and
the managing underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates (not bearing any legends) representing Registrable
Securities to be sold after receiving written representations from each CD&R
Stockholder of such Registrable Securities that the Registrable Securities
represented by the certificates so delivered by such CD&R Stockholder will be
transferred in accordance with the Registration Statement, and enable such
Registrable Securities to be in such denominations and registered in such names
as the managing underwriter(s), if any, or CD&R Stockholders may request at
least two Business Days prior to any sale of Registrable Securities in a firm
commitment public offering, but in any other such sale, within 10 Business Days
prior to having to issue the securities;

(i) upon the occurrence of any event contemplated by Section 4(c)(vi) above,
prepare a supplement or post-effective amendment to the Registration Statement
or a supplement to the related Prospectus or any document

 

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incorporated or deemed to be incorporated therein by reference, or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Securities being sold thereunder, such Prospectus 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
the light of the circumstances under which they were made, not misleading;

(j) provide and cause to be maintained a transfer agent and registrar for all
such Registrable Securities from and after the effective date of such
Registration Statement;

(k) use its reasonable best efforts to cause all shares of Registrable
Securities covered by any Registration Statement to be listed on each primary
national securities exchange (if any) on which shares of the particular class of
Registrable Securities are at that time listed;

(l) in the case of any Underwritten Offering in which any CD&R Stockholder
participates, enter into an underwriting agreement containing such provisions
(including provisions for indemnification, lockups, opinions of counsel and
comfort letters), and take all such other customary and reasonable actions as
the managing underwriters of such offering may request in order to facilitate
the disposition of such Registrable Securities, including adding information
requested by the managing underwriters to the Prospectus, and making such
representations and warranties to the holders of such Registrable Securities and
the underwriters, if any, with respect to the business of the Company and its
material subsidiaries, and the Registration Statement, Prospectus and documents,
if any, incorporated or deemed to be incorporated by reference therein, in each
case, in form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings, and, if true, confirm the same if and
when requested;

(m) in the case of any Underwritten Offering in which any CD&R Stockholder
participates, (A) make reasonably available, for inspection by the managing
underwriters of such Underwritten Offering and one law firm and accounting firm
acting for such managing underwriters, pertinent corporate documents and
financial and other records of the Company and its subsidiaries and controlled
Affiliates, (B) cause the Company’s officers and employees to supply information
reasonably requested by such managing underwriters or law firm or accounting
firm in connection with such offering, (C) make the Company’s independent
auditor available for any such managing underwriters’ due diligence and have
them provide customary comfort letters to such underwriters in connection
therewith and to each CD&R Stockholder selling Registrable Securities in such
offering (unless such accountants shall be prohibited from so addressing such
letters by applicable standards of the accounting profession) and (D) cause the
Company’s outside counsel to furnish customary legal opinions and updates
thereof (which legal opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing

 

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underwriter(s)) to such underwriters and to each CD&R Stockholder selling
Registrable Securities in such offering in connection therewith (subject to
delivery to outside counsel of each such CD&R Stockholder’s representation that
it is knowledgeable with respect to the due diligence review process that an
underwriter would perform in connection with an offering of securities
registered pursuant to the Securities Act), covering the matters customarily
covered in opinions requested in underwritten offerings and such other matters
as may be reasonably requested by such counsel and underwriters; provided,
however, that any such records and other information provided under clauses
(A) and (B) above that is not generally publicly available shall be subject to
such confidential treatment as is customary for underwriters’ due diligence
reviews;

(n) in the case of any Underwritten Offering in which any CD&R Stockholder
participates, cause its management to use their reasonable best efforts to
support the marketing of the Registrable Securities covered by the Registration
Statement (including participation in such number of “road shows” as the
underwriter(s) reasonably request, and in any management diligence meetings or
teleconferences as the underwriter(s) or their counsel reasonably request);

(o) cooperate with each seller of Registrable Securities and each underwriter or
agent participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with the
FINRA; and

(p) otherwise use its reasonable best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least twelve months beginning with the first day of the Company’s first full
calendar quarter after the effective date of any Registration Statement, which
earnings statement will satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.

The Company may require each CD&R Stockholder of Registrable Securities as to
which any registration is being effected to furnish to the Company in writing
such information required in connection with such registration regarding such
seller and the distribution of such Registrable Securities as the Company may,
from time to time, reasonably request and the Company may exclude from such
registration the Registrable Securities of any CD&R Stockholder who unreasonably
fails to furnish such information within a reasonable time after receiving such
request.

The Company agrees not to file or make any amendment to any Registration
Statement with respect to any Registrable Securities, or any amendment of or
supplement to the Prospectus or any Free Writing Prospectus used in connection
therewith, that refers to any CD&R Stockholder covered thereby by name, or
otherwise identifies such CD&R Stockholder as the holder of any securities of
the Company, without first furnishing or otherwise making available

 

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to such CD&R Stockholder a copy of any such amendment or supplement no less than
five Business Days prior to the filing of such amendment or supplement (unless
and to the extent such amendment or supplement is required by law to be filed
earlier) and including all comments reasonably and timely requested by such CD&R
Stockholder thereon.

If the Company files any Shelf Registration Statement for the benefit of the
holders of any of its securities other than the CD&R Stockholders, the Company
agrees that it shall use its reasonable best efforts to include in such
registration statement such disclosures as may be required by Rule 430B under
the Securities Act (referring to the unnamed selling security holders in a
generic manner by identifying the initial offering of the securities to the CD&R
Stockholders) in order to ensure that the CD&R Stockholders may be added to such
Shelf Registration Statement at a later time through the filing of a Prospectus
supplement rather than a post-effective amendment.

Each CD&R Stockholder holding Registrable Securities agrees if such CD&R
Stockholder has Registrable Securities covered by such Registration Statement
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Sections 4(c)(ii), 4(c)(iii), 4(c)(iv), 4(c)(v) and
4(c)(vi) hereof, such CD&R Stockholder will promptly discontinue disposition of
such Registrable Securities covered by such Registration Statement or Prospectus
until such CD&R Stockholder’s receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(i) hereof, or until it is advised
in writing by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus;
provided, however, that the time periods under Section 2 with respect to the
length of time that the effectiveness of a Registration Statement must be
maintained shall automatically be extended by the amount of time the CD&R
Stockholder is required to discontinue disposition of such securities.

5. Indemnification.

(a) Indemnification by the Company. The Company shall, without limitation as to
time, indemnify and hold harmless, to the fullest extent permitted by law, each
CD&R Stockholder of Registrable Securities whose Registrable Securities are
covered by a Registration Statement or Prospectus, the officers, directors,
partners, members, managers, shareholders, accountants, attorneys, agents and
employees of each of them, each Person who controls (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) each such
CD&R Stockholder and the officers, directors, partners, members, managers,
shareholders, accountants, attorneys, agents and employees of each such
controlling person, each underwriter, if any, and each Person who controls
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) such underwriter (each such person being referred to herein as a
“Covered Person”), from and against any and all losses, claims, damages,
liabilities, costs (including costs of preparation and reasonable attorneys’
fees and any legal or other fees or expenses incurred by such party in
connection with any investigation or proceeding), expenses, judgments, fines,
penalties, charges and amounts paid in settlement (collectively, “Losses”), as
incurred, arising out of or based upon any untrue or alleged untrue statement of
a material fact contained in any Prospectus, Registration Statement or Free
Writing Prospectus or any amendment thereof or supplement thereto or any
document incorporated by

 

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reference therein or based on any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the Company of the
Securities Act, the Exchange Act, any state securities law, or any rule or
regulation thereunder applicable to the Company and relating to any action or
inaction in connection with the related offering of Registrable Securities, and
will reimburse each such Covered Person for any legal and any other expenses
reasonably incurred in connection with investigating and defending or settling
any such Loss, provided that the Company will not be liable in any such case to
the extent that any such Loss arises out of or is based on any untrue statement
or omission by such Covered Person relating to such Covered Person or its
Affiliates (other than the Company or any of its Subsidiaries), but only to the
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such Registration Statement, Prospectus, Free
Writing Prospectus or any amendment thereof or supplement thereto, or any
document incorporated by reference therein, in each case in reliance upon and in
conformity with written information furnished to the Company by such Covered
Person with respect to such Covered Person for use therein. It is agreed that
the indemnity agreement contained in this Section 5(a) shall not apply to
amounts paid in settlement of any such Loss or action if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld).

(b) Indemnification by CD&R Stockholder of Registrable Securities. As a
condition to including any Registrable Securities in any Registration Statement
filed in accordance with Section 4 hereof, the Company shall have received an
undertaking reasonably satisfactory to it from the prospective seller of such
Registrable Securities to indemnify, to the fullest extent permitted by law,
severally and not jointly with any other CD&R Stockholders holding Registrable
Securities, the Company, its directors and officers and each Person who controls
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act) the Company and all other prospective sellers, from and against
all Losses arising out of or based on any untrue or alleged untrue statement of
a material fact contained in any such Registration Statement, Prospectus or Free
Writing Prospectus or any amendment thereof or supplement thereto, or any
document incorporated by reference therein, or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse the Company, such
directors, controlling persons and prospective sellers for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such Loss, in each case to the extent, but only to the extent, that such
untrue statement or omission is made in such Registration Statement, Prospectus
or Free Writing Prospectus or any amendment thereof or supplement thereto, or
any document incorporated by reference therein, in each case in reliance upon
and in conformity with written information furnished to the Company by such CD&R
Stockholder with respect to such CD&R Stockholder for inclusion in such
Registration Statement, Prospectus or Free Writing Prospectus or any amendment
thereof or supplement thereto, or any document incorporated by reference
therein; provided, however, that the obligations of such CD&R Stockholder
hereunder shall not apply to amounts paid in settlement of any such Losses (or
actions in respect thereof) if such settlement is effected without the consent
of such CD&R Stockholder (which consent shall not be unreasonably withheld); and
provided, further, that the liability of such CD&R Stockholder of Registrable
Securities shall be limited to the net proceeds received by such selling CD&R
Stockholder from the sale of Registrable Securities covered by such Registration
Statement.

 

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(c) Conduct of Indemnification Proceedings. If any Person shall be entitled to
indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall give
prompt notice to the party from which such indemnity is sought (the
“Indemnifying Party”) of any claim or of the commencement of any proceeding with
respect to which such Indemnified Party seeks indemnification or contribution
pursuant hereto; provided, however, that the delay or failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party from any obligation
or liability except to the extent that the Indemnifying Party has been
materially prejudiced by such delay or failure. The Indemnifying Party shall
have the right, exercisable by giving written notice to an Indemnified Party
promptly after the receipt of written notice from such Indemnified Party of such
claim or proceeding, to, unless in the Indemnified Party’s reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim, assume, at the Indemnifying Party’s expense, the
defense of any such claim or proceeding, with counsel reasonably satisfactory to
such Indemnified Party; provided, however, that an Indemnified Party shall have
the right to employ separate counsel in any such claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless: (i) the Indemnifying
Party agrees to pay such fees and expenses; or (ii) the Indemnifying Party fails
promptly to assume, or in the event of a conflict of interest cannot assume, the
defense of such claim or proceeding or fails to employ counsel reasonably
satisfactory to such Indemnified Party; in which case the Indemnified Party
shall have the right to employ counsel and to assume the defense of such claim
or proceeding at the Indemnifying Party’s expense; provided, further, however,
that the Indemnifying Party shall not, in connection with any one such claim or
proceeding or separate but substantially similar or related claims or
proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one firm of attorneys (together with appropriate local counsel) at any time for
all of the Indemnified Parties, or for fees and expenses that are not
reasonable. Whether or not such defense is assumed by the Indemnifying Party,
such Indemnifying Party will not be subject to any liability for any settlement
made without its consent (but such consent will not be unreasonably withheld).
The Indemnifying Party shall not consent to entry of any judgment or enter into
any settlement that (x) does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release, in
form and substance reasonably satisfactory to the Indemnified Party, from all
liability in respect of such claim or litigation for which such Indemnified
Party would be entitled to indemnification hereunder or (y) involves the
imposition of equitable remedies or the imposition of any obligations on the
Indemnified Party or adversely affects such Indemnified Party other than as a
result of financial obligations for which such Indemnified Party would be
entitled to indemnification hereunder.

(d) Contribution. If the indemnification provided for in this Section 5 is
unavailable to an Indemnified Party in respect of any Losses (other than in
accordance with its terms), then each applicable Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party, on
the one hand, and such Indemnified Party, on the other hand, in connection with
the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party, on the one hand, and Indemnified Party, on the other hand, shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission

 

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or alleged omission to state a material fact, has been made (or omitted) by, or
relates to information supplied by, such Indemnifying Party or Indemnified
Party, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent any such action, statement or omission.

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), an Indemnifying Party that
is a selling CD&R Stockholder holding Registrable Securities shall not be
required to contribute any amount in excess of the amount that such Indemnifying
Party has otherwise been, or would otherwise be, required to pay pursuant to
Section 5(b) by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.

Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.

(e) Non-Exclusivity. The obligations of the parties under this Section 5 shall
be in addition to any liability which any party may otherwise have to any other
party.

6. Registration Expenses. All fees and expenses incurred in the performance of
or compliance with this Agreement by the Company including (i) all registration
and filing fees (including fees and expenses (A) with respect to filings
required to be made with the SEC, all applicable securities exchanges and/or
FINRA and (B) of compliance with securities or blue sky laws, including any fees
and disbursements of counsel for the underwriters in connection with blue sky
qualifications of the Registrable Securities pursuant to Section 4(g)), (ii)
printing expenses (including expenses of printing certificates for Registrable
Securities in a form eligible for deposit with The Depository Trust Company and
of printing Prospectuses if the printing of Prospectuses is requested by the
managing underwriter(s), if any, of an Underwritten Offering, or by the CD&R
Stockholders, (iii) messenger, telephone and delivery expenses of the Company,
(iv) fees and disbursements of counsel for the Company, (v) expenses of the
Company incurred in connection with any road show, and (vi) fees and
disbursements of all independent registered public accounting firms referred to
in Section 4(m) hereof (including the expenses of any “cold comfort” letters
required by this Agreement) and any other persons, including special experts
retained by the Company, shall be borne by the Company whether or not any
Registration Statement is filed or becomes effective (all such expenses,
“Registration Expenses”). In addition, the Company shall pay its internal
expenses (including all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the securities to
be registered on any securities exchange on which similar securities issued by
the Company are then listed and rating agency fees and the fees and expenses of
any Person, including special experts, retained by the Company.

 

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The Company shall not be required to pay (i) fees and disbursements of any
counsel retained by any CD&R Stockholder holding Registrable Securities or by
any underwriter, (ii) any underwriter’s fees (including discounts, commissions
or fees of underwriters, selling brokers, dealer managers or similar securities
industry professionals) relating to the distribution of the Registrable
Securities (other than with respect to Registrable Securities sold by the
Company), (iii) expenses (other than the Company’s internal expenses) in
connection with any offering pursuant to a Demand Request or Shelf Takedown
begun pursuant to Section 2, the request of which has been subsequently
withdrawn by the demanding CD&R Stockholder unless (x) the withdrawal is based
upon (A) any fact, circumstance, event, change, effect or occurrence that
individually or in the aggregate with all other facts or circumstances, events,
changes, effects or occurrences has a material adverse effect on the Company or
(B) material adverse information concerning the Company that the Company had not
publicly disclosed at least forty-eight (48) hours prior to such registration
request or that the Company had not otherwise notified, in writing, the
demanding CD&R Stockholder of at the time of such request, (y) the CD&R
Stockholder issuing such Demand Request or requesting such Shelf Takedown, as
applicable, has not withdrawn two Demand Requests relating to Underwritten
Offerings of a type not covered by the foregoing clauses (iii)(x)(A) or
(iii)(x)(B) or (z) after the demanding CD&R Stockholder’s withdrawal of two such
Demand Requests where such withdrawal is not covered by clauses (iii)(x)(A) or
(iii)(x)(B), such demanding CD&R Stockholder agrees to forfeit its right to one
Demand Registration pursuant to Section 2 with respect to the limit set forth in
Section 2(e) or (iv) any other expenses of the CD&R Stockholders holding
Registrable Securities not specifically required to be paid by the Company
pursuant to the first paragraph of this Section 6.

7. RULE 144. The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, if the Company is not required to
file such reports, it will, upon the request of any of the CD&R Stockholders,
make publicly available such information so long as necessary to permit sales of
Registrable Securities pursuant to Rule 144), and it will take such further
action as any CD&R Stockholder of Registrable Securities (or, if the Company is
not required to file reports as provided above, any of the CD&R Stockholders)
may reasonably request, all to the extent required from time to time to enable
such CD&R Stockholder to sell shares of Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144. Upon the request of any CD&R Stockholder of Registrable
Securities, the Company will deliver to such CD&R Stockholder a written
statement as to whether it has complied with such requirements and will, within
the limitations of the exemption provided by Rule 144 (as such rule may be
amended from time to time) or any similar rule enacted by the SEC, instruct the
transfer agent to remove the restrictive legend affixed to any Common Stock to
enable such shares to be sold in compliance with Rule 144 (as such rule may be
amended from time to time) or any similar rule enacted by the SEC.

8. MISCELLANEOUS.

(a) Termination. The provisions of this Agreement (other than Section 5) shall
terminate upon the earliest to occur of (i) its termination by the written
agreement of all parties hereto or their respective successors in interest,
(ii) the date on which the CD&R Stockholders cease to own any Registrable
Securities or shares of Preferred Stock and (iii) the dissolution, liquidation
or winding up of the Company. Nothing herein shall relieve any party from any
liability for the breach of any of the agreements set forth in this Agreement.

 

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(b) Holdback Agreement. In consideration for the Company agreeing to its
obligations under this Agreement, each CD&R Stockholder agrees in connection
with any Underwritten Offering of the Company’s Common Stock (whether or not
such CD&R Stockholder is participating in such transaction) upon the request of
the Company and the underwriter(s) managing such Underwritten Offering, not to
effect (other than pursuant to such registration) any public sale or
distribution of Common Stock, including, but not limited to, any sale pursuant
to Rule 144, or make any short sale of, loan, grant any option for the purchase
of, or otherwise dispose of, or enter into any swap or other arrangement that
transfers to another Person any of the economic consequences of ownership of,
any Common Stock, any other equity securities of the Company or any securities
convertible into or exchangeable or exercisable for any equity securities of the
Company without the prior written consent of the Company or such underwriters,
as the case may be, during the Holdback Period.

If any registration pursuant to Section 2 of this Agreement shall be in
connection with any Underwritten Offering, the Company will not effect any
public sale or distribution of any common equity (or securities convertible into
or exchangeable or exercisable for common equity) (other than a registration
statement (i) on Form S-4, Form S-8 or any successor forms promulgated for
similar purposes or (ii) filed in connection with an exchange offer or any
employee benefit or dividend reinvestment plan) for its own account, during the
Holdback Period.

(c) Amendments and Waivers. This Agreement may be amended and the Company may
take any action herein prohibited, or omit to perform any act herein required to
be performed by it, only if any such amendment, action or omission to act, has
received the written consent of the Company and each of the CD&R Stockholders.
The failure of any party to enforce any of the provisions of this Agreement
shall in no way be construed as a waiver of such provisions and shall not affect
the right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms. Any CD&R Stockholder may waive (in
writing) the benefit of any provision of this Agreement with respect to itself
for any purpose. Any such waiver shall constitute a waiver only with respect to
the specific matter described in such writing and shall in no way impair the
rights of the CD&R Stockholder granting such waiver in any other respect or at
any other time.

(d) Successors, Assigns and Transferees. This Agreement may not be assigned
without the prior written consent of the Company. Notwithstanding the foregoing,
(i) the CD&R Investor may assign any of its rights, interests and obligations
hereunder to any Permitted Rights Transferee, and (ii) in the event of any such
assignment, such assignee shall agree in writing to be bound by the provisions
of this Agreement, including the rights, interests and obligations so assigned.
The CD&R Stockholders acknowledge that no limited partner of an investment fund
managed by Clayton, Dubilier & Rice, LLC or any portfolio company thereof
(excluding the Company and its subsidiaries) will be deemed to be a CD&R
Stockholder for purposes of this Agreement. Notwithstanding the foregoing, any
notice (or Demand Request, as applicable) of a CD&R Stockholder to register
Registrable Securities pursuant to a registration statement under the Securities
Act pursuant to, and in accordance with, Section 2(b), Section 2(e)

 

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or Section 3(a) shall be deemed to include, and the Company shall register
(subject to the limitations and conditions otherwise applicable to the CD&R
Stockholder), any portion of such Registrable Securities that are transferred to
a Permitted Rights Transferee prior to the execution of an underwriting
agreement in connection with an Underwritten Offering, provided that the notice
(or Demand Request, as applicable) described in Section 2(b), Section 2(e) or
Section 3(a), as applicable, includes the identity of such Permitted Rights
Transferee, the relationship (if any) of such Permitted Rights Transferee with
the Company, their beneficial ownership of Common Stock, the Registrable
Securities held by such Permitted Rights Transferee to be included in such
registration and the intended method of distribution thereof, and any other
information reasonably requested by the Company and/or the managing
underwriter(s) for inclusion in the applicable Registration Statement,
Prospectus, Free Writing Prospectus or any amendment thereof or supplement
thereto.

(e) Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile transmission) and shall be
given:

or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto.

All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a
Business Day in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed to have been received on the next succeeding
Business Day in the place of receipt.

(f) Further Assurances. At any time or from time to time after the date hereof,
the parties agree to cooperate with each other, and at the request of any other
party, to execute and deliver any further instruments or documents and to take
all such further action as the other party may reasonably request in order to
evidence or effectuate the consummation of the transactions contemplated hereby
and to otherwise carry out the intent of the parties hereunder.

(g) No Inconsistent Agreements. The Company shall not hereafter enter into any
agreement with respect to its securities which is inconsistent with or violates
the rights granted to the holders of Registrable Securities in this Agreement.

(h) Entire Agreement; No Third Party Beneficiaries. This Agreement (i)
constitutes the entire agreement among the parties with respect to the subject
matter of this Agreement and supersede any prior discussions, correspondence,
negotiation, proposed term sheet, agreement, understanding or agreement and
there are no agreements, understandings, representations or warranties between
the parties other than those set forth or referred to in this

If to the Company, to:

Beacon Roofing Supply, Inc.

6701 Democracy Blvd., Suite 200

Bethesda, Maryland 20817

Attention: Ross D. Cooper, Executive Vice

                 President, General Counsel & Secretary

Fax: (301) 272-2125

Email: rcooper@becn.com

with a copy (which shall not constitute notice) to:

Sidley Austin LLP

One South Dearborn

Chicago IL 60603

Attention: Jeffery N. Smith; Michael P. Heinz

Fax: (312) 853-7036

Email: jnsmith@sidley.com; mheinz@sidley.com

if to a CD&R Stockholder, to:

c/o Clayton, Dubilier & Rice, LLC

375 Park Avenue

18th Floor

New York, New York 10152

Attention: Nate Sleeper; JL Zrebiec

Fax: (212) 407-5252

Email: nsleeper@cdr-inc.com; jzrebiec@cdr-inc.com

with a copy (which shall not constitute notice) to:

Debevoise & Plimpton LLP

919 Third Avenue

New York, NY 10022

Attention: Paul S. Bird; Uri Herzberg

Email: psbird@debevoise.com; uherzberg@debevoise.com

 

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Agreement and (ii) except as provided in Section 5 with respect to an
Indemnified Party, is not intended to confer in or on behalf of any Person not a
party to this Agreement (and their successors and assigns) any rights, benefits,
causes of action or remedies with respect to the subject matter or any provision
hereof.

(i) Governing Law; Jurisdiction and Forum; Waiver of Jury Trial.

(i) This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts executed and to be
performed wholly within such State and without reference to the choice-of-law
principles that would result in the application of the laws of a different
jurisdiction.

(ii) Each party to this Agreement irrevocably submits to the jurisdiction of the
United States District Court for the Southern District of New York or any court
of the State of New York located in such district any suit, action or other
proceeding arising out of or relating to this Agreement, and hereby irrevocably
agrees that all claims in respect of such suit, action or proceeding may be
heard and determined in such court. Each party to this Agreement hereby
irrevocably waives, to the fullest extent that it may effectively do so, the
defense of an inconvenient forum to the maintenance of such suit, action or
other proceeding. The parties further agree, to the extent permitted by law,
that final and unappealable judgment against any of them in any suit, action or
other proceeding contemplated above shall be conclusive and may be enforced in
any other jurisdiction within or outside the United States by suit on the
judgment, a certified copy of which shall be conclusive evidence of the fact and
amount of such judgment.

(iii) EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

(j) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party hereto. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.

(k) Enforcement. Each party hereto acknowledges that money damages would not be
an adequate remedy in the event that any of the covenants or agreements in this
Agreement are not performed in accordance with its terms, and it is therefore
agreed that in addition to and without limiting any other remedy or right it may
have, the non-breaching party will have the right to an injunction, temporary
restraining order or other equitable relief in any court of competent
jurisdiction enjoining any such breach and enforcing specifically the terms and
provisions hereof. In any action or proceeding brought to enforce any provision
of this Agreement, the successful party shall be entitled to recover reasonable
attorneys’ fees in addition to its costs and expenses and other available
remedies.

 

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(l) Titles and Subtitles. The titles of the sections and subsections of this
Agreement are for convenience of reference only and will not affect the meaning
or interpretation of this Agreement.

(m) No Recourse. Notwithstanding anything that may be expressed or implied in
this Agreement, the Company and each CD&R Stockholder covenant, agree and
acknowledge that no recourse under this Agreement or any documents or
instruments delivered in connection with this Agreement shall be had against any
current or future director, officer, employee, shareholder, general or limited
partner or member of any CD&R Stockholder or of any Affiliate or assignee
thereof, whether by the enforcement of any assessment or by any legal or
equitable proceeding, or by virtue of any statute, regulation or other
applicable law, it being expressly agreed and acknowledged that no personal
liability whatsoever shall attach to, be imposed on or otherwise be incurred by
any current or future director, officer, employee, shareholder, general or
limited partner or member of any CD&R Stockholder or of any Affiliate or
assignee thereof, as such for any obligation of any CD&R Stockholder under this
Agreement or any documents or instruments delivered in connection with this
Agreement for any claim based on, in respect of or by reason of such obligations
or their creation.

(n) Counterparts; Facsimile Signatures. This Agreement may be executed in any
number of counterparts (including via facsimile and electronic transmission),
each of which shall be an original, but all of which together shall constitute
one instrument. This Agreement may be executed by facsimile signature(s).

[Remainder of page left intentionally blank]

 

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IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or
caused this Agreement to be duly executed on its behalf as of the date first
written above.

 

BEACON ROOFING SUPPLY, INC. By:  

 

  Name:   Title: CD&R BOULDER HOLDINGS, L.P. By:  

 

  Name:   Title:

[Signature Page to Registration Rights Agreement]

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Exhibit A

Form of Certificate of Designations, Preferences and Rights of Series A
Cumulative

Convertible Participating Preferred Stock

[attached]