-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R4gQFr50M3FCwWd8DvuvzrYKpMaI1/47C7Zawa7cxTcX1U15X9ZLKY28Idi9SNO1 EmV1UDPGiHOUwvqdwdZXDA== 0000950123-96-006978.txt : 19961126 0000950123-96-006978.hdr.sgml : 19961126 ACCESSION NUMBER: 0000950123-96-006978 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19961125 SROS: NONE GROUP MEMBERS: GERALD W. SCHWARTZ GROUP MEMBERS: ONEX CORP GROUP MEMBERS: ONEX DHC LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PROSOURCE INC CENTRAL INDEX KEY: 0000946763 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & GENERAL LINE [5141] IRS NUMBER: 650335019 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-47469 FILM NUMBER: 96671728 BUSINESS ADDRESS: STREET 1: 550 BILTMORE WAY STREET 2: 10TH FL CITY: CORAL GABLES STATE: FL ZIP: 33134 BUSINESS PHONE: 3055292502 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ONEX CORP CENTRAL INDEX KEY: 0000937226 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 161 BAY STREET STREET 2: P O BOX 700 CITY: TORONTO ONTARIO CANA STATE: A6 MAIL ADDRESS: STREET 1: 161 BAY STREET STREET 2: P O BOX 700 CITY: TORONTO ONTARIO CANA STATE: A6 FORMER COMPANY: FORMER CONFORMED NAME: ONEX CORP ET AL DATE OF NAME CHANGE: 19950209 SC 13D 1 SCHEDULE 13D 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 PROSOURCE, INC. (Name of Issuer) CLASS A COMMON STOCK (Title of Class of Securities) 743479 10 7 (CUSIP Number) ONEX CORPORATION CANADA TRUST TOWER 161 BAY STREET - 49TH FLOOR TORONTO, ONTARIO M5J 2S1 CANADA ATTENTION: EWOUT R. HEERSINK (416) 362-7711 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) COPIES TO: JOEL I. GREENBERG, ESQ. KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP 425 PARK AVENUE NEW YORK, NEW YORK 10022 (212) 836-8000 NOVEMBER 15, 1996 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Page 1 of 37 pages. Exhibit Index on page 16. 2 SCHEDULE 13D - --------------------------------- ----------------------------------- CUSIP No. 743479 10 7 Page 2 of 37 Pages ----------------------- ------- ----- - --------------------------------- ----------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Onex DHC LLC - ----------------------------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - ----------------------------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Wyoming - ----------------------------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF - 0 - SHARES ------------------------------------------------------------------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 5,072,000 shares of Class A Common Stock, including [i] 500,000 shares of Class A Common Stock acquired on November 15, 1996, requiring filing of this Statement (the "Class A Shares"), and (ii) 4,572,000 OWNED BY shares of Class A Common Stock issuable upon conversion of Class B Common Stock of the Issuer; each share of Class B Common Stock is presently convertible into a share of Class A Common Stock. ------------------------------------------------------------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING - 0 - ------------------------------------------------------------------------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER 5,072,000 shares of Class A Common Stock, including [i] the 500,000 Class A Shares, and [ii] 4,572,000 WITH shares of Class A Common Stock issuable upon conversion of Class B Common Stock of the Issuer; each share of Class B Common Stock is presently convertible into a share of Class A Common Stock. - ----------------------------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,072,000 shares of Class A Common Stock, including [i] the 500,000 Class A Shares, and [ii] 4,572,000 shares of Class A Common Stock issuable upon conversion of Class B Common Stock of the Issuer; each share of Class B Common Stock is presently convertible into a share of Class A Common Stock. - ----------------------------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 63.6% of the Issuer's shares of Class A Common Stock, assuming conversion of all of the Reporting Person's shares of Class B Common Stock into Class A Common Stock. 73.6% of the combined voting power of the Issuer's shares of Class A Common Stock and Class B Common Stock; each share of Class A Common Stock is entitled to one vote and each share of Class B Common Stock is entitled to ten votes. - ----------------------------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* 00 - -----------------------------------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. 2 of 37 3 Schedule 13D - --------------------------------- ----------------------------------- CUSIP No. 743479 10 7 Page 3 of 37 Pages ----------------------- ------- ----- - --------------------------------- ----------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Onex Corporation - ----------------------------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF WC - ----------------------------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Ontario, Canada - ----------------------------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF - 0 - SHARES ------------------------------------------------------------------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 5,736,956 shares of Class A Common Stock, including [i] the 500,000 Class A Shares, and [ii] 5,236,956 OWNED BY shares of Class A Common Stock issuable upon conversion of Class B Common Stock of the Issuer; each share of Class B Common Stock is presently convertible into a share of Class A Common Stock. ------------------------------------------------------------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING - 0 - ------------------------------------------------------------------------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER WITH 5,736,956 shares of Class A Common Stock, including [i] the 500,000 Class A Shares, and [ii] 5,236,956 shares of Class A Common Stock issuable upon conversion of Class B Common Stock of the Issuer; each share of Class B Common Stock is presently convertible into a share of Class A Common Stock. - ----------------------------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,736,956 shares of Class A Common Stock, including [i] the 500,000 Class A Shares, and [ii] 5,236,956 shares of Class A Common Stock issuable upon conversion of Class B Common Stock of the Issuer; each share of Class B Common Stock is presently convertible into a share of Class A Common Stock. - ----------------------------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 66.4% of the Issuer's shares of Class A Common Stock, assuming conversion of all of the Reporting Person's shares of Class B Common Stock into Class A Common Stock. 83.8% of the combined voting power of the Issuer's shares of Class A Common Stock and Class B Common Stock; each share of Class A Common Stock is entitled to one vote and each share of Class B Common Stock is entitled to ten votes. - ----------------------------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -----------------------------------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. 3 of 37 4 SCHEDULE 13D - --------------------------------- ----------------------------------- CUSIP No. 743479 10 7 Page 4 of 37 Pages ----------------------- ------- ------ - --------------------------------- ----------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Gerald W. Schwartz - ----------------------------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF WC - ----------------------------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Ontario, Canada - ----------------------------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF - 0 - SHARES ------------------------------------------------------------------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 5,736,956 shares of Class A Common Stock, including [i] the 500,000 Class A Shares, and (ii) 5,236,956 OWNED BY shares of Class A Common Stock issuable upon conversion of Class B Common Stock of the Issuer; each share of Class B Common Stock is presently convertible into a share of Class A Common Stock. ------------------------------------------------------------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING - 0 - ------------------------------------------------------------------------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER 5,736,956 shares of Class A Common Stock, including [i] the 500,000 Class A Shares, and [ii] 5,236,956 WITH shares of Class A Common Stock issuable upon conversion of Class B Common Stock of the Issuer; each share of Class B Common Stock is presently convertible into a share of Class A Common Stock. - ----------------------------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5,736,956 shares of Class A Common Stock, including (i) the 500,000 Class A Shares, and (ii) 5,236,956 shares of Class A Common Stock issuable upon conversion of Class B Common Stock of the Issuer; each share of Class B Common Stock is presently convertible into a share of Class A Common Stock. - ----------------------------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 66.4% of the Issuer's Class A Common Stock, assuming conversion of all of the Reporting Person's shares of Class B Common Stock into Class A Common Stock. 83.8% of the combined voting power of the Issuer's shares of Class A Common Stock and Class B Common Stock; each share of Class A Common Stock is entitled to one vote and each share of Class B Common Stock is entitled to ten votes. - ----------------------------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -----------------------------------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. 4 of 37 5 Item 1. Security and Issuer. The securities to which this Statement on Schedule 13D relates are the shares of Class A Common Stock, par value $.01 per share ("Class A Common Stock"), of ProSource, Inc., a Delaware corporation (the "Issuer"). The principal executive office of the Issuer is located at 550 Biltmore Avenue, 10th Floor, Coral Gables, Florida 33134. Item 2. Identity and Background. (a), (b), (c) and (f). This Statement on Schedule 13D is being filed by Onex DHC LLC, a Wyoming limited liability company ("DHC"), Onex Corporation, an Ontario, Canada corporation ("Onex"), and Mr. Gerald W. Schwartz ("Mr. Schwartz"). DHC, Onex and Mr. Schwartz (together, the "Reporting Persons") are filing the statement jointly, pursuant to the provisions of Rule 13d-l(f)(l) under the Securities Exchange Act of 1934, as amended, as separate persons and not as members of a group. See Exhibit 1 for their Joint Filing Agreement. DHC DHC is a Wyoming limited liability company. DHC is a holding company through which Onex holds certain interests in its businesses. The address of the principal business and principal offices of DHC is 421 Leader Street, Marion, Ohio 43302. Information relating to the directors and executive officers of DHC is set forth on Schedule A hereto which is incorporated herein by reference. Onex Onex is an Ontario, Canada corporation. It is a diversified company that operates through autonomous subsidiaries, associated companies and strategic partnerships. The address of the principal business and principal offices of Onex is 161 Bay Street, P.O. Box 700, Toronto, Page 5 of 37 pages. 6 Ontario, CANADA M5J 2S1. Information relating to the directors and executive officers of Onex is set forth on Schedule B hereto which is incorporated herein by reference. Onex is the direct and indirect beneficial owner of approximately 99% of the equity of DHC. Mr. Schwartz The principal occupation of Mr. Schwartz is the Chairman of the Board, President and Chief Executive Officer of Onex. The business address of Mr. Schwartz is 161 Bay Street, P.O. Box 700, Toronto, Ontario, CANADA M5J 2S1. Mr. Schwartz is a citizen of Canada. Mr. Schwartz is the indirect holder of all the issued and outstanding shares of Multiple Voting Shares of Onex, ownership which entitles Mr. Schwartz to elect sixty percent (60%) of the members of Onex's Board of Directors. (d) and (e). No Reporting Person, nor to the best knowledge of each Reporting Person, any of the persons identified in this Item 2 has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of which any such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration. DHC purchased the 500,000 Class A Shares on November 15, 1996 for an aggregate purchase price of $7,000,000. DHC purchased 4,572,000 shares of Class B Common Stock, par value $.01 per share ("Class B Common Stock"), of the Issuer in several transactions between June 10, 1992 and February 1, 1996 for an aggregate purchase price of $45,720,000. Certain of such purchases were effected through affiliates and the shares purchased subsequently transferred to DHC. The source of funds for such purchases was the cash resources of DHC or such affiliates. Onex acquired 379,242 shares of Class B Common Stock on November 7, 1996 pursuant to conversion in full of approximately $3.8 million in outstanding convertible indebtedness owed to it by the Issuer. OMI Partnership Holdings, Ltd. ("OMI"), a Page 6 of 37 pages. 7 wholly-owned subsidiary of Onex, acquired 285,714 shares of Class B Common Stock on November 15, 1996 for an aggregate purchase price of $4 million representing consideration for the agreement of OMI to relinquish its right to receive for an indefinite period an annual fee of approximately $800,000 for management services rendered to the Issuer. Item 4. Purpose of Transaction. DHC acquired the Class A Shares for investment purposes. The Reporting Persons may from time to time acquire additional shares of Class A Common Stock or Class B Common Stock in the open market or in privately negotiated transactions, subject to availability of such shares at prices deemed favorable, the Issuer's business or financial condition and to other factors and conditions the Reporting Persons deem appropriate. Alternatively, the Reporting Persons may sell all or a portion of their shares of Class A Common Stock or Class B Common Stock in the open market or in privately negotiated transactions subject to the restrictions referred to in Item 6. Except as set forth above in the immediately preceding paragraph, no Reporting Person has any present plans or proposals that relate to or would result in: (a) the acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of the Issuer or of any of its subsidiaries; (d) any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of such directors or to fill any existing vacancies on such board; (e) any material change in the present capitalization or dividend policy of the Issuer; (f) any other material change in the Issuer's Page 7 of 37 pages. 8 business or corporate structure; (g) changes in the Issuer's charter, by-laws or instruments corresponding thereto or other actions that may impede the acquisition of control of the Issuer by any person; (h) causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934; or (j) any action similar to any of those enumerated above. Item 5. Interest in Securities of the Issuer. (a) and (b). As of the date hereof, DHC beneficially owns 5,072,000 shares of Class A Common Stock, including (i) the 500,000 Class A Shares, and (ii) 4,572,000 shares of Class A Common Stock issuable upon conversion of Class B Common Stock of the Issuer; each share of Class B Common Stock is presently convertible into a share of Class A Common Stock. Such shares represent approximately 63.6% of the Issuer's shares of Class A Common Stock, assuming conversion of all of such Reporting Person's shares of Class B Common Stock into Class A Common Stock, and 73.6% of the combined voting power of the outstanding shares of Class A Common Stock and Class B Common Stock.(1) Onex, as the direct and indirect beneficial owner of approximately 99% of the equity of DHC, may be deemed to own beneficially 5,072,000 shares of Class A Common Stock, including the 500,000 Class A Shares and 4,572,000 shares of Class A Common Stock issuable upon conversion of Class B Common Stock referred to in the preceding paragraph. In addition, Onex beneficially owns (i) 379,242 shares of Class A Common Stock issuable upon conversion of Class B Common Stock acquired on November 7, 1996 pursuant to conversion in full of approximately $3.8 million in outstanding convertible indebtedness owed to it by the Issuer, and (ii) 285,714 shares of Class A Common Stock issuable upon conversion of Class B Common Stock acquired by OMI on November 15, 1996. Each share of Class B Common Stock is presently convertible into a share __________________________________ (1) Each share of Class A Common Stock is entitled to one vote and each share of Class B Common Stock is entitled to ten votes. Page 8 of 37 pages. 9 of Class A Common Stock. Such shares represent, in the aggregate, approximately 66.4% of the Issuer's shares of Class A Common Stock, assuming conversion of all of such Reporting Person's shares of Class B Common Stock into Class A Common Stock, and 83.8% of the combined voting power of outstanding shares of Class A Common Stock and Class B Common Stock. Mr. Schwartz is the Chairman of the Board, President and Chief Executive Officer of Onex and the indirect holder of all the issued and outstanding shares of Multiple Voting Shares of Onex, ownership which entitles Mr. Schwartz to elect sixty percent (60%) of the members of Onex's Board of Directors, and therefore may also be deemed to own beneficially such shares of Class A Common Stock and Class B Common Stock. (c) Except as described herein, no Reporting Person nor, to the best knowledge of each Reporting Person, any person identified in Item 2, has effected any transaction in shares of Class A Common Stock or Class B Common Stock during the preceding 60 days. (d) To the best knowledge of the Reporting Persons, no person other than the Reporting Persons has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, shares of Class A Common Stock or Class B Common Stock representing more than 5% of such classes of common stock. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to the Securities of the Issuer. Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Smith Barney Inc., as representatives of the several underwriters of the Issuer's initial public offering, entered into an Agreement, dated as of November 15, 1996 (the "Lock-up Agreements"), with each of DHC and Onex, see Exhibits 2 and 3, respectively, with respect to the shares of Class A Common Stock and Class B Common Stock (including any securities convertible into or exercisable or Page 9 of 37 pages. 10 exchangeable for such shares) held by the Reporting Persons. Pursuant to the Lock-up Agreements, DHC and Onex agreed, subject to certain exceptions described therein, not to transfer or dispose of such shares on or prior to May 10, 1997. Certain persons named in Item 2 are subject to a shareholders agreement restricting transfer of the shares of Class A Common Stock and Class B Common Stock held by them. See Schedule B. Item 7. Material to Be Filed as Exhibits. 1. Joint Filing Agreement, dated November 22, 1996, between DHC, Onex and Mr. Schwartz. 2. Agreement, dated as of November 15, 1996, among Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Smith Barney Inc., as Representatives of the Several Underwriters, and DHC. 3. Agreement, dated as of November 15, 1996, among Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Smith Barney Inc., as Representatives of the Several Underwriters, and Onex. 4. Amended and Restated Director Shareholders Agreement, dated as of November 15, 1996, among the Issuer, DHC and the individuals party thereto from time to time. 5. Power of Attorney incorporated by reference to the Amendment to Form 4 relating to Dura Automotive Systems, Inc., filed with the Securities and Exchange Commission by Onex on September 10, 1996. 6. Power of Attorney incorporated by reference to the Amendment to Form 4 relating to Dura Automotive Systems, Inc. filed with the Securities and Exchange Commission by Mr. Schwartz on September 10, 1996. Page 10 of 37 pages. 11 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I hereby certify that the information set forth in this statement is true, complete and correct. Dated: November 25, 1996 ONEX DHC LLC By: /s/ Donald F. West ---------------------------------- Name: Donald F. West Title: Authorized Signatory ONEX CORPORATION By: /s/ Anthony Munk ---------------------------------- Name: Anthony Munk Title: Authorized Signatory /s/ Anthony Munk ------------------------------------------- Authorized Signatory for GERALD W. SCHWARTZ Page 11 of 37 pages. 12 SCHEDULE A Directors and Executive Officers of Onex DHC LLC ("DHC")
PRESENT PRINCIPAL NAME BUSINESS ADDRESS OCCUPATION OR EMPLOYMENT - ---- ---------------- ------------------------ Donald F. West 421 Leader Street Representative, and President of Marion, Ohio 43302 Skyaire, Inc. John D. Kelly 421 Leader Street Representative, and President of Marion, Ohio 43302 Na-Churs Plant Food Company Ewout R. Heersink 161 Bay Street Representative, and Vice President P.O. Box 700 of Onex Corporation Toronto, Ontario Canada M5J 2S1
Page 12 of 37 pages. 13 SCHEDULE B 1. Directors and Executive Officers of Onex Corporation ("Onex")
PRESENT PRINCIPAL NAME BUSINESS ADDRESS OCCUPATION OR EMPLOYMENT ---- ---------------- ------------------------ Gerald W. Schwartz 161 Bay Street Chairman of the Board, P.O. Box 700 President, Chief Executive Toronto, Ontario Officer and Director Canada M5J 2S1 Ewout R. Heersink 161 Bay Street Vice President and Chief P.O. Box 700 Financial Officer Toronto, Ontario Canada M5J 2S1 Mark L. Hilson 161 Bay Street Vice President P.O. Box 700 Toronto, Ontario Canada M5J 2S1 Anthony R. Melman 161 Bay Street Vice President P.O. Box 700 Toronto, Ontario Canada M5J 2S1 Anthony Munk 161 Bay Street Vice President P.O. Box 700 Toronto, Ontario Canada M5J 2S1 John S. Elder, Q.C. 161 Bay Street Secretary P.O. Box 700 Toronto, Ontario Canada M5J 2S1 Dan C. Casey Creson Corporation Director, Chairman and Chief 5255 Yonge Street Executive Officer of Creson Suite 804 Corporation, an Ontario real North York, Ontario estate company Canada M2N 6P4 Donald H. Gales Ellesmere Britannia Director, Corporate Director P.O. Box 1698GT, Villa 639 Grand Cayman Island British West Indies
Page 13 of 37 pages. 14
PRESENT PRINCIPAL NAME BUSINESS ADDRESS OCCUPATION OR EMPLOYMENT ---- ---------------- ------------------------ Serge Gouin Le Groupe Videotron Ltee Director, President and Chief 300, ave Viger est Operating Officer of Le Groupe Montreal, Quebec Videotron Ltee, a Canadian Canada H2V 2T6 television company Brian M. King 69 Sherwood Avenue Director, Corporate Director Scarborough, Ontario Canada M1R 1N6 J. William E. Mingo, Q.C. Stewart McKelvey Director, Partner at Stewart Stirling Scales McKelvey Stirling Scales, a law 1959 Upper Water St. firm in Halifax, Nova Scotia 10th Floor Halifax, Nova Scotia Canada B3J 2X2 J. Robert S. Prichard, O.C. University of Toronto Director, President of the Kings College Circle University of Toronto Simcoe Hall, Room 206 Toronto, Ontario Canada M5S 1A1 R. Geoffrey P. Styles* Royal Bank Plaza Director, Corporate Director Suite 3115, South Tower Toronto, Ontario Canada M5J 2J5 Arni C. Thorsteinson Shelter Canadian Properties Director, President of Shelter Limited Canadian Properties Limited 2600-7 Evergreen Place Winnipeg, Manitoba Canada R3L 2T3
__________________________________ * Shares of Class B Common Stock held by Mr. Styles are subject to restrictions on transfer set forth in a Director Shareholders Agreement described in Part 2 of this Schedule B. Page 14 of 37 pages. 15 2. Director Shareholders Agreement. The following is a summary of certain provisions of the Amended and Restated Director Shareholders Agreement among the Issuer, DHC and certain directors ("Director Holders") of the Issuer (the "Director Shareholders Agreement"). The Director Shareholders Agreement governs, among other things, the manner and means by which Class B Common Stock (and Class A Common Stock issuable upon conversion of such shares of Class B Common Stock) held by the Director Holders at any time may be transferred. Pursuant to such Agreement, the transfer of such shares, including shares received upon the conversion of options, by Director Holders is prohibited except (i) to immediate family members (or to trusts for the exclusive benefit of the transferor or his immediate family members), or (ii) through the facilities of any securities exchange, provided that such sales do not occur within 180 days of any public offering of common stock of the Issuer. The Director Shareholders Agreement terminates if Onex and its affiliates cease to hold in the aggregate 20% of the outstanding voting capital stock of the Issuer or if another person or group holds in the aggregate a greater percentage of the outstanding voting capital stock of the Issuer than Onex and its affiliates. Page 15 of 37 pages. 16 Index to Exhibits
PAGE NO. IN SEQUENTIAL EXHIBIT NUMBERING SYSTEM ------- ---------------- 1. Joint Filing Agreement, dated November 22, 1996 between 17 DHC, Onex and Mr. Schwartz. 2. Agreement, dated as of November 15, 1996, among Morgan 18 Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Smith Barney Inc., as Representatives of the Several Underwriters, and DHC 3. Agreement, dated as of November 15, 1996, among Morgan 21 Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Smith Barney Inc., as Representatives of the Several Underwriters, and Onex. 4. Amended and Restated Director Shareholders Agreement, dated 24 as of November 15, 1996, among the Issuer, DHC and the individuals party thereto from time to time.
Page 16 of 37 pages. EX-99.1 2 JOINT FILING AGREEMENT 1 Exhibit 1 AGREEMENT JOINT FILING OF SCHEDULE 13D The undersigned hereby agree to file jointly the Statement on Schedule 13D (the "Statement") relating to the Class A Common Stock, $.01 par value per share, of ProSource, Inc., and any amendments thereto which may be deemed necessary pursuant to Regulation 13D or G promulgated under Section 13 of the Securities Exchange Act of 1934, as amended. It is understood and agreed that a copy of this Agreement shall be attached as an exhibit to the Statement, filed on behalf of each of the parties hereto. This Agreement may be executed in multiple counterparts, each of which shall constitute an original, one and the same instrument. IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as of the 22nd day of November, 1996. ONEX DHC LLC By: /s/ Donald F. West --------------------------------------- Name: Donald F. West Title: Authorized Signatory ONEX CORPORATION By: /s/ Anthony Munk --------------------------------------- Name: Anthony Munk Title: Authorized Signatory /s/ Anthony Munk ------------------------------------------ Authorized Signatory for GERALD SCHWARTZ Page 17 of 37 pages. EX-99.2 3 NOVEMBER 15, 1996 AGREEMENT 1 Exhibit 2 November 15, 1996 Morgan Stanley & Co. Incorporated Merrill Lynch, Pierce, Fenner & Smith Incorporated Smith Barney Inc. c/o Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Dear Sirs and Mesdames: The undersigned understands that you, as Representatives of the several Underwriters, propose to enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") with ProSource, Inc., a Delaware corporation (the "COMPANY") providing for the public offering (the "PUBLIC OFFERING") by the several Underwriters, including yourselves, of 3,400,000 shares (the "SHARES") of Class A Common Stock, par value $.01 per share of the Company (collectively with the Class B Common Stock, par value $.01 per share of the Company, the "COMMON STOCK"). To induce the Underwriters that may participate in the Public Offering to continue their efforts in connection with the Public Offering, the undersigned hereby agrees that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not, during the period commencing on the date hereof and ending 180 days after the date of the final prospectus relating to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or Page 18 of 37 pages. 2 indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock (whether such shares or any such securities are now owned by the undersigned or are hereafter acquired), (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing sentence shall not apply to the sale of any Shares to the Underwriters pursuant to the Underwriting Agreement or to any Permitted Transferee (as defined below). In addition, the undersigned agrees that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not, during the period commencing on the date hereof and ending 180 days after the date of the Prospectus, make any demand for or exercise any right with respect to, the registration of any shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock. "PERMITTED TRANSFEREE" shall mean (i) any pledgee of Common Stock as security for indebtedness existing on the date hereof incurred in connection with financing the purchase of such Common Stock, and any pledgee of such Common Stock in connection with any refinancing of such indebtedness and (ii) any entity controlling, controlled by or under common control with Onex Corporation provided that such entity agrees to be bound by the terms of this agreement. Whether or not the Public Offering actually occurs depends on a number of factors, including market conditions. Any Public Offering will only be made pursuant to an Page 19 of 37 pages. 3 Underwriting Agreement, the terms of which are subject to negotiation between the Company and the Underwriters. Very truly yours, By: /s/ Donald F. West ------------------------------ Name: Donald F. West Title: Representative By: /s/ John D. Kelly ----------------------------- Name: John D. Kelly Title: Representative Accepted as of the date first set forth above: MORGAN STANLEY & CO. INCORPORATED By: /s/ Kent P. Hitchcock ----------------------------------------- Name: Kent P. Hitchcock Title: Vice President Page 20 of 37 pages. EX-99.3 4 NOEMBER 15, 1996 AGREEMENT RE: ONEX UNDERWRITERS 1 Exhibit 3 November 15, 1996 Morgan Stanley & Co. Incorporated Merrill Lynch, Pierce, Fenner & Smith Incorporated Smith Barney Inc. c/o Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Dear Sirs and Mesdames: The undersigned understands that you, as Representatives of the several Underwriters, propose to enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") with ProSource, Inc., a Delaware corporation (the "COMPANY") providing for the public offering (the "PUBLIC OFFERING") by the several Underwriters, including yourselves, of 3,400,000 shares (the "SHARES") of Class A Common Stock, par value $.01 per share of the Company (collectively with the Class B Common Stock, par value $.01 per share of the Company, the "COMMON STOCK"). To induce the Underwriters that may participate in the Public Offering to continue their efforts in connection with the Public Offering, the undersigned hereby agrees that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not, during the period commencing on the date hereof and ending 180 days after the date of the final prospectus relating to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or Page 21 of 37 pages. 2 indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock (whether such shares or any such securities are now owned by the undersigned or are hereafter acquired), (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise or (3) cause or permit any of its affiliates to do any of the foregoing. The foregoing sentence shall not apply to the sale of any Shares to the Underwriters pursuant to the Underwriting Agreement or to any Permitted Transferee (as defined below). In addition, the undersigned agrees that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not, during the period commencing on the date hereof and ending 180 days after the date of the Prospectus, make any demand for or exercise any right with respect to, the registration of any shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock. "PERMITTED TRANSFEREE" shall mean (i) any pledgee of Common Stock as security for indebtedness existing on the date hereof incurred in connection with financing the purchase of such Common Stock, and any pledgee of such Common Stock in connection with any refinancing of such indebtedness and (ii) any entity controlling, controlled by or under common control with Onex Corporation provided that such entity agrees to be bound by the terms of this agreement. Whether or not the Public Offering actually occurs depends on a number of factors, including market conditions. Any Public Offering will only be made pursuant to an Page 22 of 37 pages. 3 Underwriting Agreement, the terms of which are subject to negotiation between the Company and the Underwriters. Very truly yours, ONEX CORPORATION By: /s/ Ewout R. Heersink -------------------------------------- Name: Ewout R. Heersink Title: Vice President & Chief Financial Officer By: /s/ Anthony R. Melman ------------------------------------ Name: Anthony R. Melman Title: Vice President Accepted as of the date first set forth above: MORGAN STANLEY & CO. INCORPORATED By: /s/ Kent P. Hitchcock -------------------------------------------- Name: Kent P. Hitchcock Title: Vice President Page 23 of 37 pages. EX-99.4 5 AMENDED & RESTATED DIRECTOR SHAREHOLDERS AGREEMENT 1 Exhibit 4 AMENDED AND RESTATED DIRECTOR SHAREHOLDERS AGREEMENT THIS DIRECTOR SHAREHOLDERS AGREEMENT dated as of November 15, 1996 amends and restates in its entirety the Director Shareholders Agreement dated as of May 31, 1995 (the "Original Agreement"), among ProSource, Inc., a Delaware corporation (the "Corporation"), Onex DHC LLC, a Wyoming limited liability company ("Onex"), and the individuals named from time to time on Schedule I to this Agreement (each a "Director Holder" and collectively the "Director Holders"). RECITALS A. The parties desire to amend and restate the Original Agreement in contemplation of the proposed initial public offering (the "Offering") of shares of the Corporation's Class A Common Stock (as hereinafter defined). B. Prior to commencement of the Offering, (i) the Corporation intends to file a restated certificate of incorporation (the "Restated Certificate of Incorporation"), providing for, among other things, two classes of authorized common stock, Class A Common Stock, par value $.01 per share ("Class A Common Stock"), and Class B Common Stock, par value $.01 per share ("Class B Common Stock"), and (ii) all of the Corporation's outstanding shares of common stock, par value $.01 per share ("Common Stock"), will be converted into shares of Class B Common Stock. C. The powers, preferences, rights, limitations and restrictions of the Class B Common Stock, including certain provisions with respect to transfer thereof and conversion into shares of Class A Common Stock, are set forth in the Restated Certificate of Incorporation. D. Each of the Director Holders is a member of the Board of Directors of the Corporation and purchased shares of Common Stock from the Corporation prior to the date of this Agreement. As used herein, the term "Shares" shall mean such shares of Common Stock, the shares of Class B Common Stock issued or to be issued upon conversion of Common Stock, and any shares of Class A Common Stock issued upon conversion of Class B Common Stock. The parties hereby agree as follows: Page 24 of 37 pages. 2 8. RESTRICTIONS ON TRANSFER OF SHARES 1.1 REPRESENTATION. Each of the Director Holders represents and agrees that the Director Shares owned by him were acquired for his own account and will not be transferred in violation of this Agreement, the securities laws of the United States, or any other applicable law. 1.2 RESTRICTIONS. A Director Holder may transfer Director Shares as a whole or in part only if such transfer is permitted by and made in accordance with the terms of this Agreement. Any purported transfer in any manner contrary to the terms of this Agreement shall be null and void. For purposes of this Agreement, the term "transfer" shall mean any sale, exchange, assignment, gift, bequest, pledge, creation of a lien or security interest or other disposition or encumbrance of any kind, whether voluntary or involuntary or by operation of law, affecting title to or possession of the Director Shares. The Corporation may refuse to register any transfer of Shares that would violate this Agreement, the securities laws of the United States, or any other applicable law, and may, as a condition to registration of such transfer, require the transferor to furnish to the Corporation an opinion of counsel reasonably acceptable to the Corporation as to compliance with the foregoing. 1.3 PLEDGE OF SHARES AS SECURITY. Each of the Director Holders may finance up to 66 2/3% of the purchase price of such Director Holder's Shares and may pledge such Shares to the lender to secure the financing or to any affiliate of the Corporation that guarantees repayment of any loan made to finance the purchase of Shares if the lender or guarantor agrees in writing to be bound by this Agreement. 1.4 SALES FREE OF ENCUMBRANCES. Upon the transfer of Director Shares pursuant to this Agreement, the Director Holder shall discharge any indebtedness permitted by Section 1.3 and deliver to the purchaser the share certificates representing such Director Shares free and clear of any pledge, lien, security interest or other encumbrance of any kind. If the Director Holder fails to comply with the preceding sentence, the purchaser may withhold from the purchase price an amount equal to the indebtedness secured by any such pledge, lien, security interest or other encumbrance or, if the amount of such indebtedness is not known by the purchaser, an amount equal to the purchaser's good faith estimate thereof (no limitation of any other remedy available to the purchaser being intended) and apply such withheld amount to extinguish such debt. Any such payment of such withheld amount shall discharge the purchaser's obligation to make payment for the purchased shares to the extent of such withheld amount. If a selling Director Holder fails to deliver certificates representing Director Shares being sold as required at the closing of such sale, the purchaser may deposit the purchase price therefor with the Corporation and, upon such deposit, those certificates shall be deemed canceled and of no effect (no limitation of any other remedy available to the purchaser being intended). Page 25 of 37 pages. 3 9. SALE OR TRANSFER OF DIRECTOR SHARES 2.1 TRANSFER TO DIRECTOR HOLDER'S FAMILY. A Director Holder may transfer Director Shares to his parents, siblings, spouse, or issue or to a trust or custodianship for the exclusive benefit of himself or any of them (each a "Family Group Member"); provided that any such transferee agrees in writing to be bound by the provisions of this Agreement that bind the transferor Director Holder. 2.2 SALE: CORPORATION IS A PUBLIC COMPANY. If the Corporation is a Public Company, a Director Holder may sell any or all of his Shares through the facilities of any securities exchange on which the Director Shares may then be listed in a manner that complies with applicable securities law and regulations, except that no such sales shall be made within 180 days after any offering of securities registered under the 1933 Act that involves shares of the same class as Director Shares. 2.3 SALE UPON CEASING TO BE A DIRECTOR; CORPORATION IS NOT A PUBLIC COMPANY. (a) If a Director Holder ceases to be a member of the Board of Directors of the Corporation at any time when the Corporation is not a Public Company and elects, by notice to the Corporation within 10 days after ceasing to be a member of the Board of Directors, to sell his Director Shares to the Corporation, the Corporation shall purchase, and the Director Holder shall sell, all of the Director Shares owned by such Director Holder for a purchase price equal to Book Value Per Share multiplied by the number of Director Shares owned by such Director Holder (the "Initial Section 2.3(a) Payment"). If the Corporation purchased a Director Holder's Director Shares pursuant to the preceding sentence and effects any offering of securities registered under the 1933 Act that involves an offering of shares of the same class as Director Shares within four months after that Director Holder ceases to be a member of the Board of Directors of the Corporation, the purchase price per Share shall be increased by an amount equal to the excess, if any, of the public offering price per Share (after deduction of any applicable underwriter's commissions or discounts) over the Book Value Per Share used in calculating the original purchase price, less interest at the Prime Rate on the portion of the purchase price previously paid in cash (the "Additional Section 2.3(a) Payment"). Subject to the limitations set forth in Section 2.3(b), the Initial Section 2.3(a) Payments shall be paid in cash at the closing of the purchase and sale and Additional Section 2.3(a) Payments shall be paid in cash within 60 days of the closing of the registered offering. (b) The amount of the purchase price payable by the Corporation to any Director Holder pursuant to Section 2.3(a) shall be reduced by any amount paid by the Corporation or any affiliate of the Corporation to NCNB National Bank (or any successor bank) to discharge the principal portion of any indebtedness incurred by such Director Shareholder to purchase the Director Shares. If, as a result of restrictions in its loan agreement with NationsBank of Georgia, N.A., ProSource Services Corporation ("PSC"), is unable to pay sufficient dividends to the Corporation to enable the Corporation to pay the amount of the purchase price required to be paid by it in cash either at the closing of the sale or at any time thereafter in accordance with the terms set forth in Sections 2.3(a), the Corporation shall be entitled to pay any unpaid portion of Page 26 of 37 pages. 4 the payments required to be made under Sections 2.3(a), together with interest thereon at the Prime Rate, at such time as it has received from PSC sufficient dividends to enable it to do so. 2.4 SALE UPON DEFAULT ON INDEBTEDNESS. If a Director Holder defaults on any indebtedness referred to in Section 1.3, the Corporation shall have the option, exercisable upon notice to the Director Holder at any time following a default, to purchase all or any portion of the Director Shares with respect to which such debt was incurred at a purchase price equal to (i) 85% of Book Value Per Share, if the Corporation is not a Public Company at the time of the closing of the purchase or (ii) 85% of Market Price Per Share, if the Corporation is a Public Company at the time of the closing of the purchase. 2.5 CLOSING OF SALE. The closing of any purchase and sale of Director Shares pursuant to the exercise of a right under this Section 2 (other than transfers made pursuant to Section 2.1 or sales made through the facilities of any securities exchange pursuant to Sections 2.2 and 5) shall be held at the principal offices of the Corporation on a date designated by the purchaser but in any event not later than the last day upon which a purchase is permitted or required to be made. At the closing, the Director Holder selling Shares shall deliver to the purchaser the stock certificates and other instruments representing such Shares, together with stock powers and other instruments transferring such Shares, duly endorsed for transfer and free and clear of all claims, liens, encumbrances and security interests, and the purchaser shall deliver to the Director Holder the consideration payable upon closing. 10. OPTIONS TO PURCHASE SHARES 3.1 Shares received by a Director Holder upon the exercise or conversion of any options, warrants, rights to purchase shares or securities convertible into Shares, shall be subject to the terms and conditions of this Agreement and may not be transferred except as permitted by this Agreement. 11. SALE OF SHARES BY ONEX AND THE CORPORATION 4.1 TAG ALONG. (a) If at any time any member of the Onex Group proposes to sell any Shares except for (i) sales to another member of the Onex Group that becomes bound by the terms of this Agreement (an "Onex Group Member"), (ii) sales to a Director Holder or other management employee or director of the Corporation or a subsidiary of the Corporation, (iii) sales of the 500 Shares purchased by Onex on June 30, 1992 for later disposition to persons providing services to the Corporation or any of the Corporation's subsidiaries (the "500 Shares"), (iv) sales effected on a national securities exchange in the regular way or in the over-the-counter market, or (v) sales made pursuant to an offering of securities registered under the 1933 Act (a "Tag Along Disposition"), each of the Director Holders shall have the right to sell to the proposed purchaser a number of his Director Shares equal to the total number of his Director Shares multiplied by a ratio, the numerator of which is the number of Shares to be sold by the Onex Group Member to the proposed purchaser and the denominator of which is the total number of Shares then owned by the Onex Group. Such ratio is referred to herein as the "Share Page 27 of 37 pages. 5 Ratio." A sale of Director Shares pursuant to this Section shall be made at the same price, upon the same terms, and at the same time as the sale by the Onex Group Member of its Shares. (b) The Onex Group Member shall give notice (the "Tag Along Notice") to each Director Holder of the proposed Tag Along Disposition at least 20 days prior to the same. The Tag Along Notice shall be in writing and shall describe the terms of the Tag Along Disposition in reasonable detail, the identity of the proposed purchaser, the proposed date of sale, the purchase price per Share, and the Share Ratio and shall state that (i) the Director Holder has the option to sell to the proposed purchaser a number of Director Shares equal to the total number of Director Shares then owned by such Holder multiplied by the Share Ratio, (ii) the sale, if made, shall be made at the same price per share, upon the same terms, and at the same time as the sale by the Onex Group Member of its Shares to the proposed purchaser, and (iii) the sale by Director Holders will be conditioned upon a sale of Shares by the Onex Group Member pursuant to this Section. (c) A Director Holder may exercise his sale option pursuant to Section 4.1 by delivering to the Onex Group Member, within ten days after such Director Holder receives the Tag Along Notice, written notice of his offer to sell Director Shares pursuant to this Section and indicating the number of Director Shares offered for sale. If a Director Holder gives notice of his election to sell, he shall be obligated to do so, but the sale and his obligation to sell shall be conditioned upon the closing of the Tag Along Disposition. If the purchaser specifies a limited number of Shares that it is willing to purchase in the aggregate, each Director Holder and the Onex Group Member shall have the right to sell its or his proportion of the number of Shares that the purchaser is purchasing, i.e., the proportion that the number of Shares owned by such Person bears to the aggregate number of Shares owned by the shareholders who are selling Shares. For purposes of this Section 4.1, the number of Shares owned by any Onex Group Member shall not be deemed to include any portion of the 500 Shares then owned by any Onex Group Member. (d) If a transferee of Onex Shares pursuant to this Section 4.1 acquires such Shares free of this Agreement, then such transferee shall also take the Director Shares being sold by a Director Holder free of this Agreement. If, however, any Onex Group Member is required to transfer any Onex Shares subject to this Agreement, then the Director Holder shall also transfer his Director Shares subject to this Agreement. 4.2 DRAG ALONG. Notwithstanding anything herein to the contrary, if any Onex Group Member proposes to sell any Shares to any Person, except for (i) sales of the 500 Shares, (ii) sales effected on a national securities exchange in the regular way or in the over-the-counter market, and (iii) sales to any other Onex Group Member (a "Drag Along Disposition"), it may, upon giving notice to each Director Holder at least 20 days prior to the Drag Along Disposition (the "Drag Along Notice") require the Director Holders to sell a number of Director Shares equal to the total number of Director Shares then owned by such Holder multiplied by the Share Ratio. The Drag Along Notice shall be in writing and shall contain the same information as is required to be set forth in the Tag Along Notice. A sale of Director Shares pursuant to this Section shall be made at the same price, upon the same terms, and at the same time as the sale by the Onex Page 28 of 37 pages. 6 Group Member of its Shares pursuant to this Section. Any transferee of Shares owned by any Onex Group Member or of the Director Holders pursuant to this Section 4.2 shall acquire such Shares free of this Agreement, unless the agreement between the Onex Group Member and such transferee provides otherwise. 4.3 REPRESENTATIONS AND WARRANTIES ON A DISPOSITION. In connection with any transfer described in this Section 4 in which Director Shares are to be sold by a Director Holder, Onex and the selling Onex Group Member may require the Director Holder to enter into agreements with the purchaser representing and warranting that, except as specifically disclosed to the purchaser in writing, such Director Holder at the time of the closing of such transfer, does not have actual knowledge that any representation or warranty made by the Corporation or any other shareholder in connection with the disposition was untrue in any material respect when made or is untrue in any material respect as of the closing; the liability of the selling Director Holder under such representation and warranty shall be limited to the amount which he receives from the sale of his Director Shares in connection with such transfer and shall be pro rata in accordance with the number of Shares sold by the Director Holder in relation to the Shares being sold by all holders. 4.4 PRE-EMPTIVE RIGHTS. If, prior to the time when the Corporation becomes a Public Company, the Corporation intends to sell shares of its capital stock or options, warrants, rights to purchase, or securities convertible into, or exchangeable for, shares of its capital stock to any member of the Onex Group for cash, the Corporation shall give notice thereof (the "Sale Notice") to each of the Director Holders. The Sale Notice shall be in writing, shall describe the securities to be offered, the price of such securities, and other terms of the offer in reasonable detail. Each Director Holder shall have the right, subject to applicable law and exercisable by notice to the Corporation within 45 days after his receipt of the Sale Notice, to purchase his Pro Rata Share (as defined in this Section 4.4) of the securities offered for the same price per unit and on the same terms as the securities are offered to Onex and as are described in the Sale Notice. As used in this Section 4.4, the term "Pro Rata Share" shall mean the product of (x) the total number of securities referred to in the Sale Notice as proposed to be sold to members of the Onex Group and (y) a fraction, the numerator of which is the number of Director Shares of all classes held by the Director Holder on the date the Sale Notice is given and the denominator of which is the sum of the number of Shares of all classes of the Corporation's stock of the same class or classes as Director Shares outstanding on such date (including the Director Shares). Any securities acquired by a Director Holder pursuant to this Section 4.4 shall be subject to the terms of this Agreement. The provisions of this Section 4.4 shall not apply to the issuance of securities, with or without consideration, to officers and employees of the Corporation and its subsidiaries or plans for the benefit of such employees, by the Corporation from time to time and shall not require the Corporation to offer securities under circumstances that could require registration under the 1933 Act. 12. PIGGY-BACK REGISTRATION RIGHTS Page 29 of 37 pages. 7 5.1 If the Corporation proposes to effect a registration under the 1933 Act involving an offering of securities of the same class as the Director Shares, it shall give written notice of its intention to do so (the "Public Offering Notice") to each Director Holder. 5.2 Upon the written request of a Director Holder (the "Director Holder's Request") delivered to the Corporation within ten days after such Holder's receipt of the Public Offering Notice, the Corporation shall use its best efforts to cause the registration under the 1933 Act of the number of Director Shares stated in the Director Holder's Request for disposition in accordance with the intended method of disposition as stated in the Director Holder's Request; provided, that: (a) if, the number of Director Shares stated in the Director Holder's request represents a greater proportion of the total number of Director Shares owned by such Director Holder than the number of Shares proposed to be sold and distributed by the Onex Group pursuant to the public offering bears to the total number of Shares owned by the Onex Group, the Corporation shall not be obligated to effect the registration of such excess number of Director Shares of such Director Holder; (b) if, at any time after giving such written notice of its intention to register any of its securities and prior to the effective date of the registration statement filed in connection with such registration, the Corporation determines for any reason not to effect such registration or to delay such registration, it may, at its election, give written notice of such determination to each Director Holder and thereupon the Corporation (i) in the case of a determination not to effect registration, shall be relieved of its obligation to register any Director Shares in connection with such registration or (ii) in the case of a determination to delay registration, shall be entitled to delay the registration of the Director Shares for the same period as the delay in the registration of its securities; (c) if (i) the registration involves an underwritten offering of the securities being registered (in which case the Director Holder shall be required to make its offering through the underwriters selected by the Corporation and to sign the same underwriting agreement), whether or not for sale for the account of the Corporation and (ii) the managing underwriter of such underwritten offering advises the Corporation that the number of Shares that members of the Onex Group, the Director Holders and other selling stockholders wish to sell exceeds the number thereof that, in the sole discretion of the underwriter, is the maximum number thereof that may be included in the offering without adversely affecting the offering, then the Corporation shall not be required to include in the offering the excess number of Shares requested to be sold by the members of the Onex Group and each Director Holder above such maximum number (the Shares so included to be apportioned pro rata among the members of the Onex Group, each Director Holder and other selling stockholders so that each member of the Onex Group, each Director Holder and each other selling stockholder shall be entitled to have included in the offering a number of Shares that is proportionate to his or its respective ownership of Shares); and Page 30 of 37 pages. 8 (d) the Corporation shall not be obligated to effect any registration of Director Holder's Shares under this Section 5 incidental to the registration of any of its securities in connection with mergers, acquisitions, exchange offers, dividend reinvestment plans or stock options or other employee benefit plans or incidental to the registration of any nonequity securities not convertible into equity securities. 5.3 Except as otherwise prohibited by applicable law or regulations, the Corporation shall pay all expenses incurred in connection with the registration of Director Holder's Shares pursuant to this Section 5, including all registration and filing fees, printing expenses, blue sky fees and expenses and accountant expenses to the extent permitted by law, but not including commissions and expenses payable to underwriters in respect of Director Shares and the fees of any counsel or other advisers retained by Director Holders. 13. LEGEND All certificates representing Director Shares held by any Director Holder (and held by a transferee of Director Shares, except (i) as set forth in Section 4, (ii) with respect to Shares transferred to Onex, and (iii) with respect to a transferee pursuant to Section 2.2 or pursuant to a registration statement in accordance with Section 5) shall bear the following legend: "The shares represented by this certificate have not been registered under the Securities Act of 1933 and the transfer and voting of such shares is subject to conditions specified in the Amended and Restated Director Shareholders Agreement, dated as of November 15, 1996, between the Corporation, Onex DHC LLC and the holder hereof, among others, and no transfer of such shares shall be valid or effective until such conditions have been fulfilled with respect to such transfer. A copy of such Agreement will be furnished by the Corporation to the holder of this Certificate upon written request and without charge." 14. INTENTIONALLY OMITTED 15. CERTAIN PROHIBITED TRANSACTIONS AND REQUIRED ACTIONS The Corporation shall not merge, consolidate, or amalgamate with another corporation, or sell all or substantially all of its assets to another Person, if pursuant thereto any member of the Onex Group is to receive equity securities as full or partial consideration for its Shares unless all Director Holders have the right to receive the same securities in proportion to their respective holdings of Shares. Page 31 of 37 pages. 9 16. INTENTIONALLY OMITTED 17. CERTAIN DEFINITIONS 10.1 The term "BOOK VALUE PER SHARE" as of any date shall mean the quotient obtained by dividing (X) consolidated stockholders' equity of the Corporation and its subsidiaries as at the end of the fiscal quarter immediately preceding the date of the event that entitled the Director Holder to require the purchase and sale pursuant to Section 2.3 determined in accordance with generally accepted accounting principles in effect in the United States on June 30, 1992 by (Y) the number of shares of common stock of the Corporation outstanding on such date; in making calculations for purposes of clauses (X) and (Y), (i) the number of Shares into which the Subordinated Note are convertible shall be excluded and (ii) it shall be assumed that all Options (as defined in this Section 10.1) outstanding on the date as of which the calculation is being made had been exercised to the extent that the exercise price does not exceed Book Value Per Share (determined without regard to this clause) and any purchase price for Shares payable upon such exercise had been paid. The determination of Book Value Per Share shall be based upon the audited (in the case of the end of the last quarter of a fiscal year) or unaudited (in the case of the end of any of the first three quarters of a fiscal year) balance sheet of the Corporation as at the end of the fiscal quarter in question. Notwithstanding the foregoing, Book Value Per Share shall be equitably adjusted by the Board of Directors of the Corporation if a stock dividend, recapitalization or other material event occurs outside of the ordinary course of business after the end of such fiscal quarter and before the closing of the sale in respect of which the determination is being made. As used in this Section 10.1, the term "Options" shall mean those options that, in accordance with the terms of the Corporation's Option Plans, have become exercisable as of the date of the closing of the sale. 10.2 The term "1933 ACT" shall mean the Securities Act of 1933, as in force on the date in question, or any similar federal statute then in force. 10.3 The term "DIRECTOR SHARES" shall mean the Shares owned at any time by any Director Holder. 10.4 The term "MARKET PRICE PER SHARE" shall mean the average closing price per Share on the principal securities exchange on which the Shares are listed (or, if the Shares are not then listed on a securities exchange, the mean between the closing bid and asked prices in the over-the-counter market) for the ten trading days thereon immediately preceding the closing of the sale pursuant to Section 2.4. 10.5 The term "ONEX GROUP" shall mean Onex Corporation, an Ontario Corporation, and any Person controlled by, controlling or under common control with, or a shareholder of, Onex Corporation. A Person ("Parent") controls another Person if Persons controlled by it (within the meaning of this sentence) own or have the right (by contract or otherwise) to vote or direct the vote of securities or other interests having the power to elect a majority of that Person's board of directors or similar governing body (other than securities or interests having that power Page 32 of 37 pages. 10 only upon the happening of a contingency that has not occurred) or to otherwise direct the management of such Person. 10.6 The term "ONEX SHARES" shall mean the Shares owned at any time by the Onex Group. 10.7 The term "OPTION PLANS" shall mean the Corporation's Amended and Restated Management Option Plan (1995) and the Corporation's 1996 Stock Option Plan, as each may be amended, restated or modified from time to time. 10.8 The term "PERSON" shall mean an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization, and a government or any department or agency thereof. 10.9 The term "PRIME RATE" shall mean the prime rate announced from time to time by NationsBank of Georgia, N.A. 10.10 The Corporation is a "PUBLIC COMPANY" if shares of its capital stock are registered under Section 12 or if the Corporation is subject to reporting requirements under Section 15(d) of the Securities Exchange Act of 1934 or any similar federal statute in force. 10.11 The term "SUBORDINATED NOTE" shall mean the convertible subordinated note, dated March 31, 1995, evidencing the Corporation's indebtedness to Onex Ohio Holdings, Inc. in the principal amount of $3,500,000. 18. TERMINATION This Agreement shall terminate when the Onex Group ceases to hold in the aggregate 20% of the outstanding voting capital stock of the Corporation or when another Person (as defined in Rule 144 of the 1933 Act) holds in the aggregate a greater percentage of the outstanding voting capital stock of the Corporation than the Onex Group (excluding the Corporation) owns, whichever is earlier. This Agreement shall terminate as to any Director Holder when that Director Holder no longer owns any Shares. 19. EFFECTIVE DATE This Agreement shall become effective upon the consummation of the Offering. Page 33 of 37 pages. 11 20. MISCELLANEOUS 13.1 NOTICES All notices, consents and other communications under this Agreement shall be in writing and shall be deemed to have been duly given when (a) delivered by hand, (b) sent by telex or telecopier (with receipt confirmed), provided that a copy is mailed by registered mail, return receipt requested, or (c) when received by the addressee, if sent by Express Mail, Federal Express or other express delivery service (receipt requested), in each case to the appropriate addresses, telex numbers and telecopier numbers set forth below (or to such other addresses, telex numbers and telecopier numbers as a party may designate as to itself by notice to the other parties): 1. if to the Corporation: ProSource, Inc. 530 Biltmore Way, 10th Floor Coral Gables, Florida 33134 Attention: President Telecopy: (305) 529-2573 with a copy to: Kaye, Scholer, Fierman, Hays & Handler, LLP 425 Park Avenue New York, New York 10022 Attention: Joel I. Greenberg, Esq. Telecopy: (212) 836-7149 2. if to Onex or any member of the Onex Group: Onex Corporation 161 Bay Street, 49th Floor P.O. Box 700 Toronto, Ontario M5J 2S1 Canada Attention: President and Chief Executive Officer Telephone: (416) 362-7911 Telecopy: (416) 362-5765 3. if to any Director Holder, to him at his address as it appears on Schedule I attached hereto or as shown on the records of the Corporation. Page 34 of 37 pages. 12 13.2 ASSIGNMENT No party may assign any rights or delegate any of its duties under this Agreement, but this Agreement shall be binding upon and inure to the benefit of the successors to the business and assets of the Corporation, Onex and the Director Holders. 13.3 NO WAIVER The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. Any waiver must be in writing. 13.4 EXCLUSIVE AGREEMENT AND AMENDMENT This Agreement supersedes all prior agreements among the parties with respect to its subject matter, is intended as a complete and exclusive statement of the terms of the Agreement among the parties with respect thereto and cannot be changed or terminated orally. This Agreement may only be amended or altered by the mutual agreement of the parties hereto, such amendments or alterations to become effective when reduced to writing and signed by Onex, the Corporation and the holders of at least 75% of the Director Shares. 13.5 GOVERNING LAW This Agreement and all amendments hereof and waivers and consents hereunder shall be governed by the internal law of the State of Delaware without regard to the conflicts of law principles thereof. 13.6 CAPTIONS The captions in this Agreement are for convenience of reference only and shall not be given any effect in the interpretation of this Agreement. 13.7 JURISDICTION Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may be brought against any of the parties in the courts of the State of Delaware, or, if it has or can acquire jurisdiction, in the United States District Court for Delaware, and each of the parties hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding, and waives any objection to venue laid therein. Process in any such action or proceeding may be served anywhere in the world, whether within or without the State of Delaware. Page 35 of 37 pages. 13 13.8 COUNTERPARTS This Agreement may be executed in counterparts, each of which shall be considered an original, but all of which together shall constitute one and the same instrument. 13.9 SEVERABILITY The provisions of this Agreement are intended to be and shall be deemed severable. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted. ONEX DHC LLC By: /s/ Donald F. West ------------------------------------- Name: Donald F. West Title: Representative PROSOURCE, INC. By: /s/ David R. Parker -------------------------------------- Name: David R. Parker Title: Chairman of the Board DIRECTOR HOLDERS /s/ Michael Carpenter ------------------------------------------- Michael Carpenter /s/ C. Lee Johnson ------------------------------------------- C. Lee Johnson /s/ R. Geoffrey P. Styles ------------------------------------------- R. Geoffrey P. Styles /s/ Michael Treacy ------------------------------------------- Michael Treacy Page 36 of 37 pages. 14 Schedule I List of Director Holders
Name Addresses Shares - ---- --------- ------ Michael Carpenter 134 Otter Rock Drive 18,200 Greenwich, CT 06830 Advest, Inc., Custodian f/b/o 7384 Brandshire Lane 4,500 C. Lee Johnson Dublin, Ohio 43017 R. Geoffrey P. Styles 8 York Ridge Road 7,300 Willowdale, Canada M2P IR7 Michael Treacy 3 West Cedar Street 30,000 Boston, MA 02108
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