STANDBY PURCHASE AGREEMENT
This STANDBY PURCHASE AGREEMENT (this “Agreement”) dated as of September 17, 2007, by and among Patrick Industries, Inc., an Indiana corporation (the “Company”), Tontine Capital Partners, L.P., a Delaware limited partnership (“TCP”), and Tontine Capital Overseas Master Fund, L.P., a Cayman Islands limited partnership (“TCO” and collectively with TCP, the “Standby Purchasers”).
W I T N E S S E T H:
WHEREAS, the Company proposes, as soon as practicable after the Rights Offering Registration Statement (as defined herein) becomes effective, to distribute to holders of its common stock (the “Common Stock”) of record as of the close of business on the record date of the Rights Offering (the “Record Date”), non-transferable rights (the “Rights”) to subscribe for and purchase additional shares of Common Stock (the “New Shares”) at a subscription price (the “Subscription Price”) in accordance with the term sheet attached hereto as Annex A and incorporated herein by reference (such term sheet, the “Term Sheet” and such offering, the “Rights Offering”); and
WHEREAS, pursuant to the Rights Offering, shareholders of record will receive a fraction of a Right, as determined in accordance with the Term Sheet, for each share of Common Stock held by them as of the Record Date, and each whole Right will entitle the holder to purchase one New Share, at the Subscription Price (the “Basic Subscription Privilege”); and
WHEREAS, the Company has requested the Standby Purchasers to agree to purchase from the Company upon expiration of the Rights Offering, and the Standby Purchasers are willing to so purchase, New Shares, at the Subscription Price, to the extent such New Shares are not purchased by shareholders pursuant to the exercise of Rights;
WHEREAS, the Company and the Standby Purchasers entered into an Amended and Restated Registration Rights Agreement, dated May 18, 2007 (the “Registration Rights Agreement”) pursuant to which the Company has agreed under certain circumstances to register the resale of shares of Common Stock held by the Standby Purchasers and whereby the Securities (as defined herein) purchased by the Standby Purchasers pursuant to this Agreement would also be eligible to be registered for resale under the Registration Rights Agreement; and
WHEREAS, the Company also intends to sell up to 130,000 shares of Common Stock at $11.25 per share to certain management employees of the Company (the “Management Purchase”);
NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, the parties hereto hereby agree as follows:
Section 1. Certain Other Definitions. The following terms used herein shall have the meanings set forth below:
“Action” shall mean any action, suit claim, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation against or affecting the Company, any of its Subsidiaries or any of their respective properties before or by any court, arbitrator, governmental or administrative agency, regulatory authority (federal, state, county, local or foreign), public board, stock market, stock exchange or trading facility.
“Affiliate” shall have the meaning set forth in Rule 12b-2 under the Exchange Act.
“Agreement” shall have the meaning set forth in the preamble hereof.
“Basic Subscription Privilege” shall have the meaning set forth in the recitals hereof.
“Board” shall mean the board of directors of the Company.
“Business Day” shall mean any day that is not a Saturday, a Sunday or a day on which banks are required or permitted to be closed in the State of Indiana.
“Closing” shall mean the closing of the purchases described in Section 2 hereof, which shall be held at 10:00 a.m. (Chicago time) on the Closing Date at the offices of Barack Ferrazzano Kirschbaum and Nagelberg located at 200 West Madison Street, Suite 3900, Chicago, Illinois 60606, or such other time and place as may be agreed to by the parties hereto.
“Closing Date” shall mean the date that is three (3) Business Days after the Rights Offering Expiration Date, or such other date as may be agreed to by the parties hereto.
“Code” shall have the meaning set forth in Section 3(q) hereof.
“Commission” shall mean the United States Securities and Exchange Commission, or any successor agency thereto.
“Common Stock” shall have the meaning set forth in the recitals hereof.
“Company” shall have the meaning set forth in the preamble hereof.
“Company Indemnified Persons” shall have the meaning set forth in Section 9(b) hereof.
“Company Shareholder Approval” shall have the meaning set forth in Section 3(h) hereof.
“Environmental Laws” shall have the meaning set forth in Section 3(o) hereof.
“ERISA” shall have the meaning set forth in Section 3(y) hereof.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission thereunder.
“Expenses” shall have the meaning set forth in Section 6(b) hereof.
“Hazardous Materials” shall have the meaning set forth in Section 3(o) hereof.
“GAAP” shall have the meaning set forth in Section 3(e) hereof.
“IBCL” shall mean the Indiana Business Corporation Law; as amended.
“Indemnified Persons” shall have the meaning set forth in Section 9(b) hereof.
“Intellectual Property” shall have the meaning set forth in Section 3(l) hereof.
“Investment Company” shall have the meaning set forth in Section 3(q) hereof.
“Legal Requirement” means any federal, state, local, municipal, foreign, international, multinational or other law, rule, regulation, order, judgment, decree, ordinance, policy or directive,
including those entered, issued, made, rendered or required by any court, administrative or other governmental body, agency or authority, or any arbitrator.
“Management Purchase” shall have the meaning set forth in the recitals hereof.
“Market Adverse Effect” shall have the meaning set forth in Section 7(a)(iii) hereof.
“Material Adverse Effect” shall mean a material adverse effect on the financial condition, or on the earnings, financial position, operations, assets, results of operation, business or prospects of the Company and its Subsidiaries taken as a whole.
“New Shares” shall have the meaning set forth in the recitals hereof.
“Permits” shall have the meaning set forth in Section 3(n) hereof.
“Person” shall mean an individual, corporation, partnership, association, joint stock company, limited liability company, joint venture, trust, governmental entity, unincorporated organization or other legal entity.