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Section 1: S-3 (S-3)


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As filed with the Securities and Exchange Commission on May 7, 2019

Registration No. 333-            


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



GMS INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  46-2931287
(I.R.S. Employer
Identification No.)

100 Crescent Centre Parkway, Suite 800
Tucker, Georgia 30084
(800) 392-4619

(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)



G. Michael Callahan, Jr.
Chief Executive Officer
GMS Inc.
100 Crescent Centre Parkway, Suite 800
Tucker, Georgia 30084
(800) 392-4619

(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies to:

William S. Ortwein
Kyle G. Healy
Alston & Bird LLP
One Atlantic Center
Atlanta, Georgia 30309
(404) 881-7000

Approximate date of commencement of proposed sale to the public:
From time to time on or after the effective date of this Registration Statement

           If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. o

           If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. ý

           If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

           If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

           If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. o

           If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. o

           Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o   Smaller reporting company o

Emerging growth company o

           If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. o

CALCULATION OF REGISTRATION FEE

               
 
Title of Each Class of Securities
to be Registered

  Amount to be
Registered(1)

  Proposed Maximum
Aggregate Offering
Price Per Share(2)

  Proposed Maximum
Aggregate Offering
Price

  Amount of
Registration Fee(3)

 

Common Stock, par value $0.01 per share

  1,129,033   $18.07   $20,401,626   $2,472.68

 

(1)
Pursuant to Rule 416 under the Securities Act of 1933, as amended (the "Securities Act"), the common stock being registered hereunder includes such indeterminate number of shares of common stock as may be issuable with respect to the shares being registered hereunder as a result of any stock splits, stock dividends or similar transactions for which no consideration will be received by the registrant.

(2)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act and based upon the average of the high and low prices as reported on the New York Stock Exchange on May 1, 2019.

(3)
Calculated under Rule 457(o) of the rules and regulations under the Securities Act

           The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that the Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

   


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The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject To Completion, Dated May 7, 2019

Prospectus

LOGO

GMS Inc.

Common Stock

        This prospectus relates to resale by the selling stockholders named herein of up to 1,129,033 shares of our common stock issuable upon exchange of non-voting exchangeable shares (the "Exchangeable Shares") of our indirect subsidiary Canada Gypsum Management and Supply, Inc. The Exchangeable Shares were issued to the selling stockholders in connection with our acquisition of WSB Titan ("Titan"), a distributer of drywall, lumber, commercial and residential building materials, on June 1, 2018. We are not selling any shares of our common stock, and we will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholders.

        The common stock may be offered or sold by the selling stockholders at fixed prices, at prevailing market prices at the time of sale or at prices related to prevailing market prices or at prices negotiated with purchasers, to or through underwriters, broker-dealers, agents, or through any other means described in this prospectus under "Plan of Distribution" and in supplements to this prospectus in connection with a particular offering of our common stock by the selling stockholders. The selling stockholders will bear all underwriting commissions and discounts, if any, attributable to the sales of shares. We will bear other costs, expenses and fees in connection with the registration of the shares.

        This prospectus describes the general manner in which common stock may be offered and sold by the selling stockholders. When the selling stockholders sell common stock under this prospectus, we will provide a prospectus supplement that will contain more specific information about the terms of that offering. Any prospectus supplement may also add to, update, modify or replace information contained in this prospectus. This prospectus may not be used to sell securities without a prospectus supplement identifying the selling stockholders and describing the method and terms of the offering. We urge you to read carefully this prospectus, any accompanying prospectus supplement and any documents we incorporate by reference into this prospectus and any accompanying prospectus supplement before you make your investment decision.

        Our common stock is listed on the New York Stock Exchange under the symbol "GMS". The last reported sale price of our common stock on May 6, 2019 was $19.76 per share.

        Investing in our common stock involves risk. You should carefully consider all of the information set forth in this prospectus, including the risk factors set forth under "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended April 30, 2018 filed with the Securities and Exchange Commission on June 28, 2018 (which document is incorporated by reference herein), as well as the risk factors and other information contained in any accompanying prospectus supplement and any related free writing prospectus and any documents we incorporate by reference into this prospectus and any accompanying prospectus supplement, before deciding to invest in our common stock. See "Incorporation by Reference".

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is                        , 2019.


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ABOUT THIS PROSPECTUS

    1  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

    2  

OUR COMPANY

    4  

RISK FACTORS

    5  

USE OF PROCEEDS

    6  

SELLING STOCKHOLDERS

    7  

DESCRIPTION OF CAPITAL STOCK

    9  

PLAN OF DISTRIBUTION

    13  

LEGAL MATTERS

    16  

EXPERTS

    16  

INCORPORATION BY REFERENCE

    16  

WHERE YOU CAN FIND MORE INFORMATION

    17  

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ABOUT THIS PROSPECTUS

        This prospectus is part of a registration statement on Form S-3 that we filed with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "Securities Act"), using the SEC's "shelf" registration rules. Pursuant to this prospectus, the selling stockholders may, from time to time, sell shares of our common stock in one or more offerings.

        This prospectus has been filed on behalf of the selling stockholders identified herein and to be identified in supplements to this prospectus using a continuous offering process. Under the continuous offering process, the selling stockholders may, from time to time until the registration statement is withdrawn by us or expires, sell the common stock offered pursuant to this prospectus in one or more offerings. When the selling stockholders offer common stock under this prospectus, we will provide a prospectus supplement that will contain specific information about the terms of that offering. That prospectus supplement may include a discussion of any risk factors or other special considerations that apply to that offering. Any prospectus supplement may also add to, update, modify or replace information contained in this prospectus. If there is any inconsistency between the information in this prospectus and any prospectus supplement, you should rely on the information in that prospectus supplement. You should carefully read both this prospectus and any prospectus supplement together with the additional information described under the heading "Incorporation by Reference".

        This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is hereby made to the actual documents for complete information. All of the summaries are qualified in their entirety by reference to the actual documents. Copies of some of the documents referred to herein have been filed or will be filed or incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below in the section entitled "Where You Can Find More Information".

        You should rely only on the information provided in this prospectus, including information incorporated by reference in this prospectus as described above, or any prospectus supplement or free writing prospectus that we have specifically referred you to. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. The selling stockholders will not make an offer to sell securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information in this prospectus, any accompanying prospectus supplement or any documents we incorporate by reference into this prospectus and any prospectus supplement is accurate as of any date other than the date on the front of those documents. Our business, financial condition, results of operations and prospects may have changed since those dates. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this prospectus.

        No action is being taken in any jurisdiction outside the United States to permit a public offering of common stock or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restriction as to this offering and the distribution of this prospectus applicable to those jurisdictions.

        References in this prospectus to the "Company," "GMS," "we," "us" and "our" and similar terms refer to GMS Inc. and its consolidated subsidiaries.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus and the documents incorporated by reference herein contain forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). You can generally identify forward-looking statements by our use of forward-looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "seek," or "should," or the negative thereof or other variations thereon or comparable terminology. In particular, statements about the markets in which we operate, including growth of our various markets, and statements about our expectations, beliefs, plans, strategies, objectives, prospects, assumptions or future events or performance contained or incorporated by reference in this prospectus are forward-looking statements.

        We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed or incorporated by reference in this prospectus may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include:

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        Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained or incorporated by reference in this prospectus are not guarantees of future performance and our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from the forward-looking statements contained or incorporated by reference in this prospectus. In addition, even if our results of operations, financial condition and liquidity, and events in the industry in which we operate, are consistent with the forward-looking statements contained or incorporated by reference in this prospectus, they may not be predictive of results or developments in future periods.

        Any forward-looking statement included or incorporated by reference in this prospectus speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this prospectus.

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OUR COMPANY

        Founded in 1971, GMS Inc. is the leading North American distributor of wallboard and suspended ceilings systems, or ceilings. Our core customer is the interior contractor, who typically installs wallboard, ceilings and our other interior construction products in commercial and residential buildings. As a leading specialty distributor, we serve as a critical link between our suppliers and a highly fragmented customer base of over 20,000 contractors. Our operating model combines a national platform with a local go-to-market strategy through over 245 branches across the United States and Canada. We believe this combination enables us to generate economies of scale while maintaining the high service levels, entrepreneurial culture and customer intimacy of a local business.

        GMS Inc. is a Delaware corporation. Our principal executive office is located at 100 Crescent Centre Parkway, Suite 800, Tucker, Georgia 30084, and our telephone number at that address is (800) 392-4619. We maintain a website at www.gms.com. The information contained on, or that can be accessed through, our website is not a part of, and should not be considered as being incorporated by reference in, this prospectus.

        On June 1, 2018, we acquired all of the outstanding equity interests of WSB Titan ("Titan"), a distributer of drywall, lumber, commercial and residential building materials. Titan is a gypsum specialty dealer with 30 locations across five provinces in Canada. The stated purchase price was $627.0 million (C$800.0 million), subject to a working capital and certain other adjustments as set forth in the securities purchase agreement.

        In connection with the acquisition of Titan, we issued 1,129,033 shares of non-voting exchangeable shares (the "Exchangeable Shares") of our indirect subsidiary Canada Gypsum Management and Supply, Inc. to the selling stockholders. The holders of the Exchangeable Shares are entitled to receive dividends or distributions that are equal to any dividends or distributions on our common stock. The holders of the Exchangeable Shares do not have voting rights. The Exchangeable Shares contain rights that allow the holders to exchange their Exchangeable Shares for our common stock at any time on a one-for-one basis. If exchanged, the holders are prevented from transferring our common stock for one year from the Titan acquisition date. The Exchangeable Shares also contain rights that allow us, through our indirect wholly-owned subsidiary, to convert the Exchangeable Shares into our common stock on or after the fifth anniversary of the initial issuance of the Exchangeable Shares or upon certain events, as defined in the agreement.

        In connection with the Titan acquisition, we agreed to use commercially reasonable efforts to register the resale by the selling stockholders from time-to-time of the shares of our common stock that they receive upon exchange of the Exchangeable Shares. This prospectus is part of the registration statement registering the resale of such shares of our common stock by the selling stockholders.

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RISK FACTORS

        Investing in our common stock involves a high degree of risk. Before deciding to invest in shares of our common stock, you should carefully consider the risks set forth under "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended April 30, 2018, filed with the SEC on June 28, 2018 (which document is incorporated by reference herein), as well as other risk factors described under the caption "Risk Factors" in any accompanying prospectus supplement and any documents we incorporate by reference into this prospectus, including all future filings we make with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act. See "Incorporation by Reference" and "Where You Can Find More Information." See also the information contained under the heading "Cautionary Note Regarding Forward-Looking Statements" above. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment in our common stock.

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USE OF PROCEEDS

        The selling stockholders will receive all of the net proceeds from any sales pursuant to this prospectus.

        We will not receive any proceeds from the sale of shares of our common stock offered by the selling stockholders. We will, however, bear the costs associated with the sale of shares by the selling stockholders, other than any underwriting discounts and commissions, which will be borne by the selling stockholders.

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SELLING STOCKHOLDERS

        Selling stockholders may from time to time offer and sell the shares of common stock offered by this prospectus. On June 1, 2018, we acquired all of the outstanding equity interests of Titan. As part of the consideration, certain members of Titan's management received the Exchangeable Shares, which are exchangeable for shares of the Company's common stock on a one-for-one basis. The common stock being offered by the selling stockholders is constituted of 1,129,033 shares of our common stock issuable upon exchange of the Exchangeable Shares. We are registering the common stock issuable upon exchange of the Exchangeable Shares in order to permit the selling stockholders to offer the shares for resale from time to time. The selling stockholders may sell all, some or none of their shares in this offering. See "Plan of Distribution." Other than as described in the footnote to the table below, none of the selling stockholders has, or within the past three years has had, any position, office or other material relationship with us or any of our predecessors or affiliates.

        The following tables set forth certain information as of April 30, 2019 (unless otherwise noted) concerning, among other things, the number of shares of common stock that may be offered from time to time by each selling stockholder pursuant to this prospectus. As of April 30, 2019, we had 40,374,750 shares of common stock issued and outstanding, treating as common stock equivalents the outstanding Exchangeable Shares that may be exchanged for 1,129,033 shares of common stock. The second column lists the number of shares of common stock beneficially owned by each selling stockholder, assuming exchange of the Exchangeable Shares held by the selling stockholders on that date, taking into account any limitations on exercise contained therein. The third column lists the common stock being offered by this prospectus by the selling stockholders. The fourth column assumes the sale of all of the shares offered by the selling stockholders pursuant to this prospectus, and represents shares beneficially owned by the selling stockholders that are not being offered pursuant to this prospectus. The fifth column is based on 40,374,750 shares of common stock outstanding as of April 30, 2019, and assumes all shares underlying the Exchangeable Shares held by the selling stockholders included in the second column have been sold as of that date. The information is based on information provided by or on behalf of the selling stockholders. We have assumed for purposes of the table below that the selling stockholders will sell all of their shares of common stock that may be sold under this prospectus, and that any other shares of our common stock beneficially owned by the selling stockholders will continue to be beneficially owned.

        Under some circumstances, the respective donees, pledgees and transferees or other successors in interest of the selling stockholders may also sell the shares listed below as being held by the selling stockholders. The term "selling stockholder" includes donees, pledgees, transferees, or other successors in interest selling securities received from the named selling stockholders as a gift, pledge, shareholder distribution, or other non-sale related transfer after the date of this prospectus.

Name of Selling Stockholder
  Number of Shares of
Common Stock
Beneficially Owned
Prior to the Offering
  Number of
Shares of
Common Stock
Offered
  Number of Shares of
Common Stock
Beneficially Owned
After the Offering
(Assuming the Sale of
all Shares Offered)
  Common Stock
Ownership Percentage
Following the
Offering
 

2515682 Ontario Inc.(1)

    677,421     677,421     0     0 %

Slegg Building Materials Ltd.(2)

    225,806     225,806     0     0 %

Shoefam Holdings Inc.(3)

    225,806     225,806     0     0 %

(1)
Douglas Skrepnek is the President and directly or indirectly owns and beneficially holds the voting equity of 2515684 Ontario Inc. Mr. Skrepnek served as the chief executive officer of Titan prior to our acquisition of Titan and currently serves as our President, GMS Canada. Mr. Skrepnek has investment power and voting control over the shares held by 2515684 Ontario Inc.

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(2)
Gordon Coutts is the President and directly or indirectly owns and beneficially holds the voting equity of Slegg Building Materials Ltd. Mr. Coutts served as the Chief Operating Officer of Titan prior to our acquisition of Titan and currently serves as our Chief Operating Officer, GMS Canada. Mr. Coutts has investment power and voting control over the shares held by Slegg Building Materials Ltd.

(3)
Ryan Shoemaker is the President and directly or indirectly owns and beneficially holds the equity of Shoefam Holdings Inc. Mr. Shoemaker served as the President, Shoemaker Limited Partnership, a subsidiary of Titan prior to our acquisition of Titan and currently serves as our President, Shoemaker Divisions. Mr. Shoemaker has investment power and voting control over the shares held by Shoefam Holdings Inc.

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DESCRIPTION OF CAPITAL STOCK

        The following summary of the terms of our common stock is qualified in its entirety by reference to our second amended and restated certificate of incorporation and our amended and restated bylaws, copies of which are filed as exhibits to the registration statement of which this prospectus forms apart, and the Delaware General Corporation Law, or the DGCL. See "Where You Can Find More Information".

General

        Our authorized capital stock consists of 500,000,000 shares of common stock, par value $0.01 per share, and 50,000,000 shares of preferred stock, par value $0.01 per share. As of April 30, 2019, there were 40,374,750 outstanding shares of common stock (excluding 2,080,207 shares of our common stock issuable upon exercise of outstanding stock options and 193,205 shares of our common stock issuable upon the settlement of restricted stock units), treating as common stock equivalents the outstanding Exchangeable Shares that may be exchanged for 1,129,033 shares of common stock, and no outstanding shares of preferred stock. As of April 30, 2019, we had 20 stockholders of record.

        The following descriptions of our capital stock, second amended and restated certificate of incorporation and amended and restated bylaws are intended as summaries only and are qualified in their entirety by reference to our second amended and restated certificate of incorporation and amended and restated bylaws, which are filed as exhibits to the registration statement of which this prospectus forms a part, and to the applicable provisions of the DGCL.

Common Stock

        The holders of our common stock are entitled to the following rights, preferences and privileges:

        Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. An election of directors by our stockholders shall be determined by a plurality of the votes cast by the stockholders present in person or represented by proxy at the meeting and entitled to vote on the election. There will be no cumulative voting in the election of directors, which means that holders of a majority of the outstanding shares of common stock will be able to elect all of the directors, and holders of less than a majority of such shares will be unable to elect any director. Holders of common stock are entitled to be paid ratably any dividends as may be declared by our board of directors (in its sole discretion), subject to any preferential dividend rights of outstanding preferred stock (if any).

        In the event of our liquidation or dissolution, the holders of our common stock are entitled to receive ratably, in proportion to the number of shares held by them, the assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights (if any) of any outstanding preferred stock. Holders of our common stock have no preemptive or other rights to subscribe for additional shares. The shares of our outstanding common stock are not subject to further calls or assessments by us. There are no conversion or redemption rights or sinking fund provisions applicable to the shares of our common stock. The rights, preferences and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.

Preferred Stock

        Our preferred stock, if issued, may have priority over our common stock with respect to dividends and other distributions, including the distribution of our assets upon liquidation. To the extent permitted by law, our board of directors will have the authority, without further stockholder authorization, to issue from time to time shares of authorized preferred stock in one or more series and to fix the terms, powers (including voting powers), rights and preferences, variations and the

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restrictions and limitations thereof of each series. Although we have no present plans to issue any shares of preferred stock, the issuance of shares of preferred stock, or the issuance of rights to purchase such shares, could adversely affect the rights and powers, including voting rights, of the common stock, and could have the effect of delaying, deterring or preventing a change in control of us or an unsolicited acquisition proposal.

Limitations on Directors' Liability

        Our second amended and restated certificate of incorporation and amended and restated bylaws contain provisions indemnifying our directors and officers to the fullest extent permitted by law. In connection with our initial public offering, we entered into indemnification agreements with each of our directors which, in certain cases, are broader than the specific indemnification provisions provided for under Delaware law.

        In addition, to the fullest extent permitted by Delaware law, our second amended and restated certificate of incorporation provides that no director will be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director. The effect of this provision is to restrict our rights and the rights of our stockholders in derivative suits to recover monetary damages from a director for breach of fiduciary duty as a director, except that a director will be personally liable for:

        To the extent that our directors, officers and controlling persons are indemnified under the provisions of our second amended and restated certificate of incorporation, the DGCL or contractual arrangements against liabilities arising under the Securities Act, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Provisions of Our Second Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws and Delaware Law that May Have an Anti-Takeover Effect

        The DGCL, our second amended and restated certificate of incorporation and our amended and restated bylaws contain provisions that could have the effect of delaying, deferring or discouraging another party from acquiring control of us. These provisions, which are summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors.

Staggered Board; Removal of Directors

        Our second amended and restated certificate of incorporation and our amended and restated bylaws divide our board of directors into three classes with staggered three-year terms. In addition, a director will be subject to removal by our stockholders only for cause and only by the affirmative vote of the holders of at least two-thirds in voting power of all of our then outstanding common stock. Any vacancy on our board of directors, including a vacancy resulting from an increase in the number of

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directors, may only be filled by vote of a majority of our directors then in office (subject to the rights of holders of any series of preferred stock or rights granted pursuant to our stockholders' agreement).

        Furthermore, our second amended and restated certificate of incorporation provides that the total number of directors may be changed only by the resolution of our board of directors (subject to the rights of holders of any series of preferred stock to elect additional directors). The classification of our board of directors and the limitations on the removal of directors, changes to the total numbers of directors and filling of vacancies could make it more difficult for a third party to acquire, or discourage a third party from seeking to acquire, control of our Company.

Stockholder Action by Written Consent; Special Meetings

        Our second amended and restated certificate of incorporation provides that any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of the stockholders and may not be effected by written consent. Our second amended and restated certificate of incorporation and our amended and restated bylaws also provide that, except as otherwise required by law, special meetings of our stockholders can be called only by our chairman of the board or our board of directors.

Advance Notice Requirements for Stockholder Proposals

        Our amended and restated bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of stockholders, including proposed nominations of persons for election to our board of directors. Stockholders at an annual meeting may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of our board of directors or by a stockholder of record who is entitled to vote at the meeting and who has delivered timely written notice in proper form to our secretary of the stockholder's intention to bring such business before the meeting. These provisions could have the effect of delaying stockholder actions that are favored by the holders of a majority of our outstanding voting securities until the next stockholder meeting.

Section 203 of the Delaware General Corporation Law

        While we have opted out of Section 203 of the DGCL, our second amended and restated certificate of incorporation contains similar provisions providing that we may not engage in certain "business combinations" with any "interested stockholder" for a three-year period following the time that the stockholder became an interested stockholder, unless:

        Generally, a "business combination" includes a merger, asset or stock sale or other transaction provided for or through our Company resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an "interested stockholder" is a person who owns 15% or more of our outstanding voting stock and the affiliates and associates of such person. For purposes of this provision, "voting stock" means any class or series of stock entitled to vote generally in the election of directors.

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        Under certain circumstances, this provision will make it more difficult for a person who qualifies as an "interested stockholder" to effect certain business combinations with our Company for a three-year period. This provision may encourage companies interested in acquiring us to negotiate in advance with our board of directors in order to avoid the stockholder approval requirement if our board of directors approves either the business combination or the transaction that results in the stockholder becoming an interested stockholder. These provisions also may have the effect of preventing changes in our board of directors and may make it more difficult to accomplish transactions that our stockholders may otherwise deem to be in their best interests.

        Our second amended and restated certificate of incorporation provides that certain affiliates of AEA Investors LP, their respective affiliates and any of their direct or indirect designated transferees (other than in certain market transfers and gifts) and any group of which such persons are a party do not constitute "interested stockholders" for purposes of this provision.

Amendments to Our Bylaws

        The DGCL provides generally that the affirmative vote of a majority of the shares presents at any meeting and entitled to vote on a matter is required to amend a corporation's bylaws, unless a corporation's bylaws require a greater percentage. Our amended and restated bylaws may be amended or repealed by the affirmative vote of the holders of at least two-thirds of the voting power of all outstanding stock entitled to vote thereon, voting together as a single class.

Exclusive Forum

        Our second amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed to us or our stockholders by any of our directors, officers or employees, (iii) any action asserting a claim against us arising under the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of claims to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers and may limit our stockholders' ability to obtain a favorable judicial forum for disputes with us.

Stock Exchange Listing

        Our common stock is listed on the New York Stock Exchange under the symbol "GMS".

Transfer Agent and Registrar

        The transfer agent and registrar for our common stock is Broadridge Financial Solutions, Inc.

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PLAN OF DISTRIBUTION

        The selling stockholders and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities offered hereby on any stock exchange, market, or trading facility (including, without limitation, the New York Stock Exchange and the over-the-counter market) on which the securities are traded or in private transactions, subject to applicable law. These sales may be public or private at prices prevailing in such market, fixed prices, or prices negotiated at the time of sale. The securities may be sold by the selling stockholders directly to one or more purchasers, through agents designated from time to time, or to or through broker-dealers designated from time to time. In the event the securities are publicly offered through broker-dealers or agents, the selling stockholders may enter into agreements with respect thereto. The selling stockholders may, subject to applicable law, also use any one or more of the following methods when selling the securities offered hereby:

        The selling stockholders may also sell the securities offered hereby under Rule 144 under the Securities Act of 1933, as amended, if available, rather than under this prospectus. Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated.

        The selling stockholders may from time to time pledge or grant a security interest in some or all of the securities offered hereby owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the securities offered hereby from time to time under this prospectus, or under an amendment to this prospectus, amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

        The selling stockholders also may transfer the securities offered hereby in other circumstances, in which case the transferees, pledgees, or other successors in interest will be the selling beneficial owners for purposes of this prospectus. The selling stockholders and the broker-dealers or agents that participate in the distribution of the securities may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any discounts and any commissions received by such broker-dealers or agents and any profit on the sale of such securities purchased by them and any discounts or commissions might be deemed to be underwriting discounts or commissions under the Securities Act. Any such broker-dealers and agents may engage in transactions with, and

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perform services for, us. At the time a particular offer of the securities offered hereby is made by the selling stockholders, to the extent required, a prospectus will be distributed which will set forth the aggregate amount of securities being offered and the terms of the offering, including the public offering price thereof, the name or names of any broker-dealers or agents, and any discounts, commissions and other items constituting compensation from, and the resulting net proceeds to, the selling stockholders.

        In order to comply with the securities laws of certain states, sales of securities offered hereby to the public in such states may be made only through broker-dealers who are registered or licensed in such states. Sales of securities offered hereby must also be made by the selling stockholders in compliance with other applicable state securities laws and regulations. We are required to pay all fees and expenses incident to the registration of the securities; provided, that the selling stockholders are required, severally and not jointly, to pay all underwriting fees and discounts, selling commissions, brokerage fees, and stock transfer taxes applicable to securities sold by such selling stockholders hereby. We have agreed to indemnify the selling stockholders against certain losses, claims, damages, and liabilities, including liabilities under the Securities Act.

        In effecting sales, brokers or dealers engaged by us and the selling stockholders may arrange for other brokers or dealers to participate. Broker-dealers may receive discounts, concessions or commissions from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. Such compensation may be in excess of customary discounts, concessions or commissions. If dealers are utilized in the sale of common stock, the names of the dealers and the terms of the transaction will be set forth in a prospectus supplement, if required.

        The selling stockholders may also sell our common stock from time to time through agents. The applicable prospectus supplement will name any agent involved in the offer or sale of such common stock and will list commissions payable to these agents if required. These agents will be acting on a best efforts basis to solicit purchases for the period of their appointment, unless otherwise stated in any required prospectus supplement.

        The selling stockholders may sell shares of our common stock directly to purchasers. In this case, the selling stockholders may not engage underwriters or agents in the offer and sale of such shares.

        Any selling stockholder may enter into hedging transactions with broker-dealers and the broker-dealers may engage in short sales of our common stock in the course of hedging the positions they assume with such selling stockholder, including, without limitation, in connection with distributions of common stock by those broker-dealers. Any selling stockholder may enter into option or other transactions with broker-dealers that involve the delivery of common stock offered hereby to the broker-dealers, who may then resell or otherwise transfer such shares of common stock.

        A selling stockholder that is an entity may elect to make a pro rata in-kind distribution of common stock to its members, partners or stockholders pursuant to the registration statement of which this prospectus is a part by delivering a prospectus with a plan of distribution. Such members, partners or stockholders would thereby receive freely tradeable shares of common stock pursuant to the distribution through a registration statement. To the extent a distributee is an affiliate of ours (or to the extent otherwise required by law), we may file a prospectus supplement in order to permit the distributees to use the prospectus to resell the common stock acquired in the distribution. A selling stockholder that is an individual may make gifts of common stock covered hereby. Such donees may use the prospectus to resell the common stock or, if required by law, we may file a prospectus supplement naming such donees.

        We are not aware of any plans, arrangements or understandings between any stockholder and any underwriter, broker-dealer or agent regarding the sale of our common stock by any stockholder. There can be no assurance that the selling stockholders will sell any or all of the shares of our common stock

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registered pursuant to the registration statement of which this prospectus or any applicable prospectus supplement forms a part. In addition, we cannot assure you that any selling stockholder will not transfer, devise or gift our common stock by other means not described in this prospectus. Moreover, the selling stockholders may also sell shares pursuant to Rule 144 under the Securities Act or other available exemptions from the registration requirements of the Securities Act rather than pursuant to this prospectus or any applicable prospectus supplement.

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LEGAL MATTERS

        The validity of the shares of common stock offered hereby will be passed upon for us by Alston & Bird LLP, Atlanta, Georgia. Any underwriters will be advised about legal matters by their own counsel, which will be named in a prospectus supplement to the extent required by law.


EXPERTS

        The consolidated financial statements of GMS Inc. at April 30, 2018, and for the year then ended, incorporated by reference in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon incorporated by reference elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

        The financial statements as of April 30, 2017 and for each of the two years in the period ended April 30, 2017 incorporated in this Prospectus by reference to the Annual Report on Form 10-K for the year ended April 30, 2018 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.


INCORPORATION BY REFERENCE

        We "incorporate by reference" certain documents we have filed with the SEC, which means that we are disclosing important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus, and any information contained in any document incorporated by reference in this prospectus will be deemed to be modified or superseded to the extent that a statement contained in this prospectus or in any other subsequently filed document that also is incorporated by reference in this prospectus modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to be a part of this prospectus.

        You should read the information incorporated by reference because it is an important part of this prospectus. We incorporate by reference the documents listed below and any future filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, other than any portions of the respective filings that are furnished under either Item 2.02 or Item 7.01 of any Current Report on Form 8-K (including exhibits related thereto) or other applicable SEC rules, rather than filed, prior to the termination of the offering under this prospectus:

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        We hereby undertake to provide without charge to each person, including any beneficial owner, to whom a copy of this prospectus is delivered, upon written or oral request of any such person, a copy of any and all of the information that has been incorporated by reference in this prospectus, other than exhibits to such documents, unless such exhibits have been specifically incorporated by reference thereto. Requests for such copies should be directed to our Investor Relations department, at the following address:

GMS Inc.
100 Crescent Centre Parkway, Suite 800
Tucker, Georgia 30084
Attention: Investor Relations
(678) 353-2883


WHERE YOU CAN FIND MORE INFORMATION

        We have filed with the SEC a registration statement on Form S-3, including exhibits and schedules, under the Securities Act with respect to the common stock offered hereby. As allowed by SEC rules, this prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules that are part of the registration statement. For further information about us and our common stock, you should refer to the registration statement, including all amendments, supplements, schedules and exhibits thereto.

        Statements contained or incorporated by reference in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement.

        We are subject to the information and reporting requirements of the Exchange Act and, in accordance therewith, file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read, without charge, and copy, at prescribed rates, all or any portion of the registration statement or any reports, statements or other information we file with or furnish to the SEC at the SEC's Public Reference Room located at 100 F Street, N.E., Washington, DC 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC. Please call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room. In addition, the SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Such reports and other information filed by us with the SEC are available free of charge on our website at investor.gms.com when such reports are made available on the SEC's website at www.sec.gov. Information on our website does not constitute part of this prospectus. You may also request copies of those documents, at no cost to you, by contacting us at the following address:

GMS Inc.
100 Crescent Centre Parkway, Suite 800
Tucker, Georgia 30084
Attention: Investor Relations
(678) 353-2883

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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.    Other Expenses of Issuance and Distribution

        The expenses in connection with the issuance and distribution of the securities being registered hereby will be borne by the Company and are set forth in the following table (all amounts except the registration fee are estimates):

 
  Amount  

SEC registration fee

  $ 2,473  

Legal fees and expenses

    40,000  

Accounting fees and expenses

    60,000  

Total

  $ 102,473  

Item 15.    Indemnification of Directors and Officers

        Section 102 of the DGCL allows a corporation to eliminate the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except in cases where the director breached his or her duty of loyalty to the corporation or its stockholders, failed to act in good faith, engaged in intentional misconduct or a knowing violation of the law, willfully or negligently authorized the unlawful payment of a dividend or approved an unlawful stock redemption or repurchase or obtained an improper personal benefit. The registrant's certificate of incorporation contains a provision which eliminates directors' personal liability as set forth above.

        The registrant's certificate of incorporation and bylaws provide in effect that the registrant shall indemnify its directors and officers to the extent permitted by the DGCL. Section 145 of the DGCL provides that a Delaware corporation has the power to indemnify its directors, officers, employees and agents in certain circumstances. Subsection (a) of Section 145 of the DGCL empowers a corporation to indemnify any director, officer, employee or agent, or former director, officer, employee or agent, who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding provided that such director, officer, employee or agent acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, provided that such director, officer, employee or agent had no reasonable cause to believe that his or her conduct was unlawful.

        Subsection (b) of Section 145 of the DGCL empowers a corporation to indemnify any director, officer, employee or agent, or former director, officer, employee or agent, who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses (including attorneys' fees) actually and reasonably incurred in connection with the defense or settlement of such action or suit provided that such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification may be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery shall determine that despite the adjudication of liability such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.

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        Section 145 further provides that to the extent that a director or officer or employee of a corporation has been successful in the defense of any action, suit or proceeding referred to in subsections (a) and (b) or in the defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection therewith; that indemnification provided by Section 145 shall not be deemed exclusive of any other rights to which the party seeking indemnification may be entitled; and the corporation is empowered to purchase and maintain insurance on behalf of a director, officer, employee or agent of the corporation against any liability asserted against him or her or incurred by him or her in any such capacity or arising out of his or her status as such whether or not the corporation would have the power to indemnify him or her against such liabilities under Section 145; and that, unless indemnification is ordered by a court, the determination that indemnification under subsections (a) and (b) of Section 145 is proper because the director, officer, employee or agent has met the applicable standard of conduct under such subsections shall be made (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, (2) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (3) by the stockholders.

        The registrant has in effect insurance policies for general officers' and directors' liability insurance covering all of its officers and directors. In addition, the registrant has entered into indemnification agreements with its directors and officers. These indemnification agreements may require the registrant, among other things, to indemnify each such director or officer for certain expenses, including attorneys' fees, judgments, fines and settlement amounts incurred by such director or officer in any action or proceeding arising out of his or her service as one of the registrant's directors or officers.

Item 16.    Exhibits and Financial Statement Schedules

        See the Exhibit Index attached to this registration statement, which is incorporated by reference herein.

Item 17.    Undertakings

        (a)   The undersigned registrant hereby undertakes:

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        (b)   The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof.

        (c)   Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

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INDEX TO EXHIBITS

Exhibit No.   Exhibit Description
  3.1   Second Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to Amendment No. 5 to the Registrant's Registration Statement on Form S-1 filed on May 16, 2016 (File No. 333-205902)).

 

3.2

 

Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to Amendment No. 5 to the Registrant's Registration Statement on Form S-1 filed on May 16, 2016 (File No. 333-205902)).

 

4.1

 

Specimen Common Stock Certificate of the Company (incorporated by reference to Exhibit 4.1 to Amendment No. 5 to the Registrant's Registration Statement on Form S-1 filed on May 16, 2016 (File No. 333-205902)).

 

4.2

 

Securities Purchase Agreement dated April 4, 2018 among GMS Inc. the Sellers therein, the Sellers' Agents and the Acquired entities (in each case as named herein) (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K dated April 5, 2018 (File No. 001-37784)).

 

4.3

*

Exchange Rights Agreement dated June 1, 2018 among GMS Inc. and the other parties named therein.

 

4.4

*

Support Agreement dated June 1, 2018 among GMS Inc. and the other parties named therein.

 

5.1

*

Opinion of Alston & Bird LLP.

 

23.1

*

Consent of Ernst & Young LLP, independent registered public accounting firm.

 

23.2

*

Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm.

 

23.3

*

Consent of Alston & Bird LLP (included in Exhibit 5.1).

 

24.1

*

Power of Attorney (included on signature page to this registration statement).

*
Filed herewith.

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SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Tucker, State of Georgia, on this 7th day of May, 2019.

  GMS INC.

 

By:

 

/s/ G. MICHAEL CALLAHAN, JR.



POWER OF ATTORNEY

        KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and officers of GMS Inc. constitutes and appoints each of G. Michael Callahan, Jr., Craig D. Apolinsky, and Lynn Ross, or either of them, each acting alone, his or her true and lawful attorney-in-fact and agent, with full powers of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, with full power of each to act alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, and hereby ratifying and confirming all that either of the said attorneys-in-fact and agents, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature
 
Title
 
Date

 

 

 

 

 
/s/ G. MICHAEL CALLAHAN, JR.

G. Michael Callahan, Jr.
  Chief Executive Officer and Director (Principal Executive Officer)   May 7, 2019

/s/ LYNN ROSS

Lynn Ross

 

Corporate Controller and Chief Accounting Officer (Interim Principal Financial Officer and Principal Accounting Officer)

 

May 7, 2019

/s/ RICHARD K. MUELLER

Richard K. Mueller

 

Chairman of the Board

 

May 7, 2019

/s/ PETER C. BROWNING

Peter C. Browning

 

Director

 

May 7, 2019

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Signature
 
Title
 
Date

 

 

 

 

 
/s/ JOHN J. GAVIN

John J. Gavin
  Director   May 7, 2019

/s/ THERON I. GILLIAM

Theron I. Gilliam

 

Director

 

May 7, 2019

/s/ BRIAN R. HOESTEREY

Brian R. Hoesterey

 

Director

 

May 7, 2019

/s/ TERI P. MCCLURE

Teri P. McClure

 

Director

 

May 7, 2019

/s/ RONALD R. ROSS

Ronald R. Ross

 

Director

 

May 7, 2019

/s/ J. LOUIS SHARPE

J. Louis Sharpe

 

Director

 

May 7, 2019

/s/ J. DAVID SMITH

J. David Smith

 

Director

 

May 7, 2019

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Section 2: EX-4.3 (EX-4.3)


Exhibit 4.3

 

EXCHANGE RIGHTS AGREEMENT

 

THIS EXCHANGE RIGHTS AGREEMENT (the “Agreement”) is made this 1st day of June, 2018,

 

BETWEEN:

 

GMS INC., a corporation existing under the laws of the State of Delaware (“GMS”)

 

- and -

 

CANADA GYPSUM MANAGEMENT AND SUPPLY, INC., a corporation incorporated under the laws of the Province of British Columbia (“Exchangeco”)

 

- and -

 

GYP CANADA HOLDINGS III CORP., a corporation incorporated under the laws of the Province of British Columbia (“Callco”)

 

- and -

 

THE PERSONS IDENTIFIED ON SCHEDULE A HERETO (the “Initial Exchangeable Shareholders”)

 

WHEREAS pursuant to the terms of a securities purchase agreement dated April 4, 2018 (the “Purchase Agreement”) among, inter alia, GMS, TorQuest Partners Fund III, L.P., TorQuest Capital Fund III, L.P., and the individual sellers identified on Schedule B to the Purchase Agreement, on the date hereof, Exchangeco acquired all of the outstanding partnership interests and shares of the Acquired Entities (as defined in the Purchase Agreement) in exchange for, among other consideration, the issuance on the date hereof of non-voting exchangeable shares of Exchangeco (the “Exchangeable Shares”) to the Initial Exchangeable Shareholders;

 

AND WHEREAS in accordance with the terms of the Purchase Agreement, the Parties agreed to enter into, on the date hereof: (i) this exchange rights agreement which sets out certain rights and obligations of the Parties in respect of the Exchangeable Shares; and (ii) a support agreement (the “Support Agreement”) between GMS, Exchangeco, Callco and the Initial Exchangeable Shareholders setting out certain additional covenants of the Parties pertaining to the facilitation of the retraction, redemption, call, put and other exchange rights contemplated in this Agreement and the Exchangeable Share Provisions (as defined below);

 

NOW, THEREFORE, IN CONSIDERATION of the premises and the respective covenants and agreements contained herein and in the Purchase Agreement and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Parties hereby agree as follows:

 


 

ARTICLE 1

DEFINITIONS AND INTERPRETATION

 

1.1                                                                               Defined Terms. In this Agreement, each term capitalized herein and not otherwise defined herein shall have the meaning ascribed thereto in the rights, privileges, restrictions and conditions attaching to the Exchangeable Shares set forth in the articles of Exchangeco (the “Exchangeable Share Provisions”) unless something in the subject matter or context is inconsistent therewith.

 

1.2                                                                               Definitions. In this Agreement, the following terms shall have the following meanings:

 

Affiliate” has the meaning ascribed thereto in the BCBCA (as defined below).

 

Agreement” has the meaning ascribed thereto in the Introduction.

 

Automatic Exchange Rights” means the benefit to the Exchangeable Shareholder of the obligation of GMS to effect the automatic exchange of Exchangeable Shares for GMS Common Shares pursuant to Section 2.9.

 

BCBCA” means the Business Corporations Act (British Columbia), as amended.

 

Callco” has the meaning ascribed thereto in the Introduction.

 

Callco Call Notice” has the meaning ascribed thereto in Section 5.2.

 

Constating Documents” means the certificate of incorporation, notice of articles and articles of Exchangeco, as amended.

 

Exchangeable Shares” has the meaning ascribed thereto in the Recitals.

 

Exchangeable Share Consideration” has the meaning ascribed thereto in Section 2.2(1).

 

Exchangeable Share Provisions” the meaning ascribed thereto in Section 1.1.

 

Exchangeable Shareholders” means initially the Initial Exchangeable Shareholders, and after the date hereof, those Persons shown from time to time in the register maintained by or on behalf of Exchangeco in respect of the Exchangeable Shares as holders of Exchangeable Shares.

 

Exchangeable Shareholders’ Put Event” has the meaning ascribed thereto in Section 2.1.

 

Exchangeable Shareholders’ Put Right” has the meaning ascribed thereto in Section 2.1.

 

Exchangeco” has the meaning ascribed thereto in the Introduction.

 

Exchanged Shares” has the meaning ascribed thereto in Section 2.1.

 

GMS” has the meaning ascribed thereto in the Introduction.

 

GMS Common Shares” means the shares of common stock of GMS, par value $0.01 per share, and any other securities into which such shares may be exchanged.

 

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GMS Stockholders Agreement” means the stockholders agreement dated May 29, 2015 amongst the stockholders of GMS, as may be amended.

 

GMS Successor” has the meaning ascribed thereto in Section 6.1.

 

Initial Exchangeable Shareholders” has the meaning ascribed thereto in the Recitals.

 

Insolvency Event” means the institution by Exchangeco of any proceeding to be adjudicated a bankrupt or insolvent or to be liquidated, dissolved or wound-up, or the consent of Exchangeco to the institution of bankruptcy, insolvency, liquidation, dissolution or winding up proceedings against it, or the filing of a petition, answer or consent seeking liquidation, dissolution or winding up under any bankruptcy, insolvency or analogous laws, including without limitation the Companies Creditors’ Arrangement Act (Canada) or the Bankruptcy and Insolvency Act (Canada), and the failure by Exchangeco to contest in good faith any such proceedings instituted by any Person other than Exchangeco commenced in respect of Exchangeco within thirty (30) days of becoming aware thereof, or the consent by Exchangeco to the filing of any such petition or to the appointment of a receiver, or the making by Exchangeco of a general assignment for the benefit of creditors, or the admission in writing by Exchangeco of its inability to pay its debts generally as they become due, or Exchangeco not being permitted, pursuant to solvency requirements of applicable law, to purchase any Retracted Shares pursuant to the Exchangeable Share Provisions.

 

Later Redemption Date” has the meaning ascribed thereto in Section 4.1.

 

Liquidation Call Purchase Price” has the meaning ascribed thereto in Section 3.1.

 

Liquidation Call Right” has the meaning ascribed thereto in Section 3.1.

 

Liquidation Event” has the meaning ascribed thereto in Subsection 2.9(1).

 

Liquidation Event Effective Date” has the meaning ascribed thereto in Subsection 2.9(2).

 

Liquidation Event Purchase Price” has the meaning ascribed thereto in Subsection 2.9(2).

 

Notice of Exercise” has the meaning ascribed thereto in Section 2.3(2).

 

Officer’s Certificate” means, with respect to GMS, Exchangeco or any Affiliate thereof, as the case may be, a certificate signed by any officer or director of GMS, Exchangeco or any Affiliate thereof, as the case may be.

 

Party” means a party to this Agreement and any reference to a Party includes its successors and permitted assigns; and “Parties” means every Party.

 

Purchase Agreement” has the meaning ascribed thereto in the Recitals.

 

Redemption Call Event” means the receipt by Callco of a Redemption Notice pursuant to Article 8 of the Exchangeable Share Provisions.

 

Redemption Call Right” has the meaning ascribed thereto in Section 4.1.

 

Redemption Call Purchase Price” has the meaning ascribed thereto in Section 4.1.

 

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Retracted Shares” has the meaning ascribed thereto in Section 2.5.

 

Retraction Call Notice” has the meaning ascribed thereto in Section 5.1.

 

Retraction Call Purchase Price” has the meaning ascribed thereto in Section 5.1.

 

Retraction Call Right” has the meaning ascribed thereto in Section 5.1.

 

US Securities Act” has the meaning ascribed thereto in Section 2.3.

 

1.3                                                                               Headings; Article and Section References. The division of this Agreement into Articles, Sections, Subsections and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. Unless otherwise indicated, all references to an “Article”, “Section” or “Subsection” followed by a number and/or a letter refer to the specified Article, Section or Subsection of this Agreement. The terms “this Agreement”, “hereof”, “herein” and “hereunder” and similar expressions refer to this Agreement and not to any particular Article, Section, Subsection or other portion hereof and include any agreement or instrument supplementary or ancillary hereto.

 

1.4                                                                               Number and Gender. Unless the context requires otherwise, words importing the singular shall include the plural and vice versa and words importing gender shall include all genders.

 

1.5                                                                               Date for Action. If any date on which any action is required to be taken under this Agreement is not a Business Day, then such action shall be required to be taken on the next succeeding Business Day.

 

1.6                                                                               Payments. All payments to be made hereunder will be made without interest and less any tax required or permitted (to the extent that absent such permitted withholding, the payor would be liable for taxes, interest and/or penalties in connection with the payment) by applicable law to be deducted and withheld therefrom.

 

ARTICLE 2

EXCHANGE RIGHT

 

2.1                                                                               Grant of Put Right. Subject to Callco’s call rights under this Agreement, Callco hereby grants to each of the Exchangeable Shareholders the right, exercisable upon the occurrence and during the continuance of: (i) an Insolvency Event, or (ii) subject to the Liquidation Call Right and Redemption Call Right, any event causing the automatic exchange of the Exchangeable Shares for GMS Common Shares or requiring the Exchangeable Shareholders to exchange their Exchangeable Shares for GMS Common Shares (each an “Exchangeable Shareholder Put Event”), to require Callco to purchase from such Exchangeable Shareholder all or any part of the Exchangeable Shares held by such Exchangeable Shareholder (the “Exchanged Shares”), all in accordance with the provisions of this Agreement and the Exchangeable Share Provisions (the “Exchangeable Shareholders’ Put Right”).

 

2.2                                                                               Purchase Price.

 

(1)                                 The purchase price payable by Callco for each Exchangeable Share to be purchased by Callco upon the exercise of the Exchangeable Shareholders’ Put Right shall be an amount per Exchangeable Share equal to the sum of: (i) the closing price on the New York Stock Exchange of a GMS Common Share on the last Business Day (that is a trading day) prior to the day of closing of the purchase and sale of such Exchangeable Share under the

 

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Exchangeable Shareholders’ Put Right; and (ii) the Additional Amount (if any) (together, the “Exchangeable Share Consideration”).

 

(2)                                 In connection with each exercise by an Exchangeable Shareholder of the Exchangeable Shareholders’ Put Right, Callco will provide to the Exchangeable Shareholders exercising such rights an Officer’s Certificate setting forth the calculation of the Exchangeable Share Consideration.

 

(3)                                 Payment of the Exchangeable Share Consideration (other than any Additional Amount) in respect of each Exchangeable Share so purchased shall be satisfied by Callco by causing to be issued or transferred to each holder of such Exchangeable Share one GMS Common Share in accordance with Article 5 of the Exchangeable Share Provisions (which shares shall be fully paid and shall be free and clear of any lien, claims or encumbrance other than restrictions on transfer under applicable securities laws and pursuant to any agreements entered into by the Exchangeable Shareholder) plus the payment of the Additional Amount in accordance with subsection 2.2(4) below, if any, and in all cases less any amounts on account of tax required or permitted (to the extent that absent such permitted withholding, the payor would be liable for taxes, interest and/or penalties in connection with the payment) to be deducted and withheld therefrom.

 

(4)                                 Payment of the Additional Amount shall be satisfied in cash by delivery of a cheque of Callco to the Exchangeable Shareholder or, at the option of the applicable Exchangeable Shareholder, be satisfied by the issuance and delivery of additional GMS Common Shares (rounded down to the nearest whole number) having a value equal to the Additional Amount as calculated by the board of directors of Callco in good faith.

 

2.3                                                                               Exercise Instructions.

 

(1)                                 Subject to the terms and conditions herein, an Exchangeable Shareholder shall be entitled upon the occurrence of an Exchangeable Shareholder Put Event, to exercise the Exchangeable Shareholders’ Put Right with respect to all or any part of the Exchangeable Shares registered in the name of such Exchangeable Shareholder on the books of Exchangeco.

 

(2)                                 To exercise the Exchangeable Shareholders’ Put Right, the Exchangeable Shareholder shall deliver to Callco, in person or by certified or registered mail, at its principal corporate office in the Province of British Columbia or at such other place as Callco may from time to time designate by written notice to the Exchangeable Shareholders, the certificates (if any) representing the Exchangeable Shares which such Exchangeable Shareholder desires Callco to purchase, duly endorsed in blank, and such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under applicable law and the Constating Documents, together with (a) a duly completed notice of exercise (the “Notice of Exercise”) of the Exchangeable Shareholders’ Put Right, in the form attached hereto as Schedule “B”, stating: (i) that the Exchangeable Shareholder thereby exercises the Exchangeable Shareholders’ Put Rights, as applicable, so as to require Callco to purchase from such Exchangeable Shareholder the number of Exchangeable Shares specified therein; (ii) that such Exchangeable Shareholder has good title to and owns all such Exchangeable Shares to be acquired by Callco free and clear of all liens, claims and encumbrances; (iii) that such Exchangeable Shareholder is not a non-resident of Canada for purposes of the Income Tax Act (Canada); (iv) the name(s) in which the GMS Common Shares issuable in connection

 

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with the exercise of the Exchangeable Shareholders’ Put Rights are to be issued; (v) that it will provide Callco or any of its Affiliates with such representations or certificates as are reasonably requested by Callco or any of its Affiliates in order to comply with the U.S. Securities Act of 1933, as amended (the “US Securities Act”) and all other applicable securities legislation; and (vi) whether payment of any Additional Amount is to be satisfied by delivery of GMS Common Shares or in cash, and (b) payment (or evidence of payment satisfactory to Exchangeco and GMS) of the taxes, if any, payable as contemplated by Section 8.5.

 

(3)                                 To the extent that any certificates representing the Exchangeable Shares are issued, if only a part of the Exchangeable Shares represented by any such certificate or certificates delivered to Callco are to be purchased by Callco or an Affiliate of Callco under the Exchangeable Shareholders’ Put Right, then a new certificate for the balance of such Exchangeable Shares shall be issued to such Exchangeable Shareholder by Exchangeco.

 

2.4                                                                               Delivery of GMS Common Shares; Effect of Exercise. Promptly after receipt of the documents and instruments of transfer in respect of the Exchangeable Shares which the Exchangeable Shareholder desires Callco to purchase under the Exchangeable Shareholders’ Put Rights, together with a duly completed form of Notice of Exercise of the Exchangeable Shareholders’ Put Right (and payment of taxes, if any, or evidence thereof) and the certificates (if any) representing such Exchangeable Shares, Callco shall deliver or cause to be delivered to the holder of such Exchangeable Shares (or to such other Persons, if any, properly designated by such Exchangeable Shareholder), the Exchangeable Share Consideration deliverable in connection with the exercise of the Exchangeable Shareholders’ Put Right. At the close of business on the second Business Day after the receipt by Callco of the Notice of Exercise in respect of the Exchangeable Shareholders’ Put Right as provided in this Section 2.4, the closing of the transaction of purchase and sale contemplated shall be deemed to have occurred, and the holder of such Exchangeable Shares shall be deemed to have transferred to Callco all of its right, title and interest in and to such Exchangeable Shares, and the Exchangeable Shareholders’ Put Rights and the Automatic Exchange Rights attaching thereto shall be extinguished, and the Exchangeable Shareholder shall cease to be a holder of such Exchangeable Shares, and shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive its proportionate part of the total purchase price therefor, unless the requisite Exchangeable Share Consideration is not delivered by Callco to such Exchangeable Shareholder (or to such other Persons, if any, properly designated by such Exchangeable Shareholder), within five (5) Business Days of the date of the Notice of Exercise, in which case the rights of the Exchangeable Shareholder shall remain unaffected until such Exchangeable Share Consideration is so delivered and any cheque included therein is delivered and paid. Concurrently with such Exchangeable Shareholder ceasing to be a holder of Exchangeable Shares, such Exchangeable Shareholder shall be considered and deemed for all purposes to be the holder of the GMS Common Shares delivered to such Exchangeable Shareholder pursuant to the Exchangeable Shareholders’ Put Right.

 

2.5                                                                               Exercise of Exchangeable Shareholders’ Put Right Subsequent to Retraction. In the event that an Exchangeable Shareholder has exercised its right under the Exchangeable Share Provisions to require Exchangeco to redeem any or all of the Exchangeable Shares held by such Exchangeable Shareholder (the “Retracted Shares”) and is notified by Exchangeco pursuant to the Exchangeable Share Provisions that Exchangeco will not be permitted as a result of solvency requirements of applicable law to redeem all such Retracted Shares, and provided that Callco shall not have exercised the Retraction Call Right with respect to the Retracted Shares and that the Exchangeable Shareholder has not revoked the Retraction Request delivered by the Exchangeable Shareholder to Exchangeco pursuant to the Exchangeable Share Provisions, the Retraction Request will constitute and will be deemed to constitute notice from the Exchangeable Shareholder to Callco to exercise the Exchangeable Shareholders’ Put Right with respect to those Retracted Shares which Exchangeco is unable to redeem. In any such event,

 

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Exchangeco hereby agrees with the Exchangeable Shareholder to promptly notify the Exchangeable Shareholder of such prohibition against Exchangeco redeeming all of the Retracted Shares and to promptly forward or cause to be forwarded to Callco all relevant materials delivered by the Exchangeable Shareholder to Exchangeco in connection with such proposed redemption of the Retracted Shares (including, without limitation, a copy of the Retraction Request delivered pursuant to the Exchangeable Share Provisions) and Callco will thereupon purchase such shares in accordance with this Article 2.

 

2.6                                                                               Notice of Insolvency Event. As soon as practicable following the occurrence of an Insolvency Event or any event which with the giving of notice or the passage of time or both would be an Insolvency Event, each of GMS and Exchangeco shall give written notice thereof to each Exchangeable Shareholder, which notice shall contain a brief statement of the right of the Exchangeable Shareholders with respect to the Exchangeable Shareholders’ Put Right.

 

2.7                                                                               Call Rights. The Liquidation Call Right, the Retraction Call Right and the Redemption Call Right are hereby acknowledged and confirmed by the Parties, and it is agreed and acknowledged that such rights are granted as part of the consideration for the obligations of GMS and Callco under this Agreement.

 

2.8                                                                               Grant and Ownership of Automatic Exchange Rights. GMS hereby grants the Automatic Exchange Rights to the Exchangeable Shareholders.

 

2.9                                                                               Automatic Exchange on Liquidation of GMS.

 

(1)                                 GMS will give each Exchangeable Shareholder written notice of each of the following events (each a “Liquidation Event”) at the time set forth below:

 

(a)                                 in the event of any determination by the board of directors of GMS to institute voluntary liquidation, dissolution or winding-up proceedings with respect to GMS or to affect any other distribution of assets of GMS among its stockholders for the purpose of winding up it affairs, at least thirty (30) days prior to the proposed effective date of such liquidation, dissolution, winding-up or other distribution; and

 

(b)                                 as soon as practicable following the earlier of:

 

(i)           receipt by GMS of notice of; and

 

(ii)          GMS’s otherwise becoming aware,

 

of any instituted claim, suit, petition or other proceedings with respect to the involuntary liquidation, dissolution or winding-up of GMS or to affect any other distribution of assets of GMS among its stockholders for the purpose of winding up its affairs, in each case where GMS has failed to contest in good faith any such proceeding commenced in respect of GMS within thirty (30) days of becoming aware thereof.

 

Such notice shall include a brief description of the Automatic Exchange Rights.

 

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(2)                                 In order that the Exchangeable Shareholders will be able to participate on a pro rata basis with the holders of GMS Common Shares in the distribution of assets of GMS in connection with a Liquidation Event, immediately prior to the effective date of a Liquidation Event (the “Liquidation Event Effective Date”), subject to each of the Liquidation Call Right and Exchangeable Shareholders’ Put Right not having been exercised, each of the then outstanding Exchangeable Shares shall be automatically exchanged for GMS Common Shares. To effect such automatic exchange, GMS shall be deemed to have purchased each Exchangeable Share outstanding on the Liquidation Event Effective Date held by Exchangeable Shareholders, and each Exchangeable Shareholder shall be deemed to have sold the Exchangeable Shares held by it at such time to GMS, for an amount per share equal to the Exchangeable Share Consideration applicable on the last Business Day prior to the Liquidation Event Effective Date (collectively, the “Liquidation Event Purchase Price”). In connection with each exercise of the Automatic Exchange Rights, GMS will provide to the Exchangeable Shareholders exercising such rights an Officer’s Certificate setting forth the calculation of the Exchangeable Share Consideration. The purchase price for each Exchangeable Share so purchased may only be satisfied by GMS delivering or causing to be delivered to an Exchangeable Shareholder such number of GMS Common Shares determined in accordance with Section 2.2 in satisfaction of the Exchangeable Share Consideration less any amounts on account of tax required to be deducted or withheld under applicable law and in the manner provided in section 13.3 of the Exchangeable Share Provisions. For greater certainty, GMS Common Shares shall be delivered in satisfaction of the Additional Amount, if any.

 

(3)                                 On the Liquidation Event Effective Date, the closing of the transaction of purchase and sale contemplated by the automatic exchange of Exchangeable Shares shall be deemed to have occurred, and each Exchangeable Shareholder shall be deemed to have transferred to GMS all of such Exchangeable Shareholder’s right, title and interest in and to such Exchangeable Shares and the Exchangeable Shareholders’ Put Right and the Automatic Exchange Rights attaching thereto, except that each Exchangeable Shareholder shall have the right to receive such holder’s proportionate part of the total Liquidation Event Purchase Price payable to such Exchangeable Shareholder by GMS (less any amounts on account of tax required or permitted (to the extent that absent such permitted withholding, the payor would be liable for taxes, interest and/or penalties in connection with the payment) to be deducted and withheld therefrom) upon presentation and surrender by such Exchangeable Shareholder of Exchangeable Share certificates (if any), duly endorsed in blank, and such instruments of transfer as GMS may reasonably require including, without limitation, a representation and warranty that the Exchangeable Shareholder is not a non-resident of Canada for purposes of the Income Tax Act (Canada). Concurrently with such Exchangeable Shareholders ceasing to be an Exchangeable Shareholder, such Exchangeable Shareholders shall be considered and deemed for all purposes to be the holders of the GMS Common Shares issued to them as the Exchangeable Share Consideration pursuant to the automatic exchange of Exchangeable Shares and GMS shall promptly cause the issuance of such GMS Common Shares.

 

2.10                                                                        GMS Common Shares. GMS hereby represents, warrants and covenants that the GMS Common Shares issuable as required herein will be duly authorized and validly issued as fully paid and non-assessable and shall be free and clear of any lien, claim or encumbrance other than restrictions on transfer under applicable securities laws and pursuant to any agreements entered into by the Exchangeable Shareholder.

 

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2.11                                                                        Restricted Securities.

 

(1)                                 Each holder of Exchangeable Shares acknowledges and agrees that (a) the Exchangeable Shares acquired by such holder (including any GMS Common Shares issued to such holder in exchange for such Exchangeable Shares) are being acquired for investment purposes only and not with a view to any public distribution thereof, and (b) such holder shall not offer to sell or otherwise dispose of its Exchangeable Shares (or any GMS Common Shares issued to such holder in exchange for such Exchangeable Shares) in violation of any of the registration requirements of the US Securities Act.

 

(2)                                 Each holder of Exchangeable Shares acknowledges that it is able to fend for itself, can bear the economic risk of its investment in the Exchangeable Shares (including any GMS Common Shares issued to such holder in exchange for such Exchangeable Shares), and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in all of the Exchangeable Shares to be acquired by it (including any GMS Common Shares issued to such holder in exchange for such Exchangeable Shares).

 

(3)                                 Each holder of Exchangeable Shares confirms that, as of the date of the Purchase Agreement and as of the time immediately prior to such holder’s acquisition of the Exchangeable Shares, such holder was an “accredited investor” as such term is defined in Regulation D under the US Securities Act, and agrees to provide any information, documentation, representation or warranty reasonably requested in connection with confirming such holder’s “accredited investor” status.

 

(4)                                 Each holder of Exchangeable Shares confirms that it understands and agrees that if the registrations contemplated in Section 8.10 of the Purchase Agreement are not complete, the Exchangeable Shares and any GMS Common Shares issued in exchange therefor shall not be registered pursuant to the US Securities Act and that, as a result, all of the Exchangeable Shares and all GMS Common Shares issued in exchange therefor shall constitute “restricted securities” under US federal and state securities laws.

 

2.12                                                                        No Transfers of Exchangeable Share. No transfer of Exchangeable Shares shall be permitted by any Exchangeable Shareholder and Exchangeco shall not register any such purported transfer on the securities register of Exchangeco.

 

2.13                                                                        Required Hold Period. Subject to Section 2.12, the Exchangeable Shareholders hereby agree that until the date that is the first anniversary of the date hereof, without the prior written consent of GMS, the Exchangeable Shareholders will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any GMS Common Shares or securities convertible from or exchangeable or exercisable for any Exchangeable Shares or GMS Common Shares, whether now owned or hereafter acquired by the Exchangeable Shareholders, or with respect to which any Exchangeable Shareholder now has or hereafter acquires the power of disposition, enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the GMS Common Shares, whether any such aforementioned transaction is to be settled by delivery of the GMS Common Shares or such other securities, in cash or otherwise.

 

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ARTICLE 3

LIQUIDATION CALL RIGHT

 

3.1                                                                               Liquidation Call Right. Subject to the requirements of Section 3.2, Callco shall have the overriding right (the “Liquidation Call Right”), in the event of and notwithstanding the proposed liquidation, dissolution or winding-up of Exchangeco and notwithstanding Article 6 of the Exchangeable Share Provisions, to purchase from all, but not less than all, of the Exchangeable Shareholders (other than any Exchangeable Shareholder which is an Affiliate of GMS) on the Liquidation Date all, but not less than all, of the Exchangeable Shares held by each such Exchangeable Shareholder on payment by Callco to each such Exchangeable Shareholder an amount per Exchangeable Share equal to the Exchangeable Share Consideration applicable on the Business Day prior to the Liquidation Date (the “Liquidation Call Purchase Price”). In the event of the exercise of the Liquidation Call Right by Callco, each Exchangeable Shareholder (other than any Exchangeable Shareholder which is an Affiliate of GMS) shall be obligated to sell all the Exchangeable Shares held by such Exchangeable Shareholder to Callco on the Liquidation Date on payment by Callco to the Exchangeable Shareholder of the Liquidation Call Purchase Price less any amounts on account of tax required or permitted (to the extent that absent such permitted withholding, the payor would be liable for taxes, interest and/or penalties in connection with the payment) to be deducted and withheld therefrom under applicable law for each such Exchangeable Share and Exchangeco shall have no obligation to pay the Liquidation Amount to the holders of such Exchangeable Shares so purchased by Callco.

 

3.2                                                                               Notice of Exercise of Liquidation Call Right. To exercise the Liquidation Call Right, Callco must notify the Exchangeable Shareholders and Exchangeco of Callco’s intention to exercise such right at least thirty (30) days before the Liquidation Date in the case of a voluntary liquidation, dissolution or winding-up of Exchangeco and at least five (5) Business Days before the Liquidation Date in the case of an involuntary liquidation, dissolution or winding-up of Exchangeco. If Callco duly exercises the Liquidation Call Right in accordance with Sections 3.1, 3.2 and 3.3, on the Liquidation Date, Callco will purchase and the Exchangeable Shareholders (other than any Exchangeable Shareholder which is an Affiliate of GMS) will sell all of the Exchangeable Shares then outstanding for a price per Exchangeable Share equal to the Liquidation Call Purchase Price which price shall be satisfied in the manner set forth in Section 3.3, and Exchangeco will not redeem the Exchangeable Shares held by such Exchangeable Shareholders in accordance with Article 6 of the Exchangeable Share Provisions.

 

3.3                                                                               Exercise of Liquidation Call Right. For the purposes of completing the purchase of the Exchangeable Shares pursuant to the exercise of the Liquidation Call Right, Callco shall deliver or cause to be delivered to the holders of the Exchangeable Shares the Liquidation Call Purchase Price for each Exchangeable Share, on or before the Liquidation Date, upon presentation and surrender at the registered office of Exchangeco of the certificates (if any) representing such Exchangeable Shares and such documents and instruments as may be required to effect a transfer of Exchangeable Shares under applicable law and the Constating Documents, including a representation and warranty by each holder of Exchangeable Shares to be redeemed that such Exchangeable Shareholder is not a non-resident of Canada for purposes of the Income Tax Act (Canada). Payment of the Liquidation Call Purchase Price shall be made by delivery to each Exchangeable Shareholder (other than any Exchangeable Shareholder which is an Affiliate of GMS), at the address of the holder recorded in the register of shareholders of Exchangeco or by holding for pick-up by the holder at the registered office of Exchangeco, of the Exchangeable Share Consideration (satisfied in accordance with Sections 2.2(3) and 2.2(4)) less any amounts properly withheld in accordance with applicable law and Section 13.3 of the Exchangeable Share Provisions. Upon such payment of the total Liquidation Call Purchase Price, the Exchangeable Shareholders (other than any Exchangeable Shareholder which is an Affiliate of GMS) shall thereafter be considered and deemed for all purposes to be the holders of GMS Common Shares delivered to them as part or all of the

 

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Exchangeable Share Consideration notwithstanding that the certificate or certificates (if any) representing such Exchangeable Shares have not been delivered by the holder or holders thereof to Callco.

 

ARTICLE 4

REDEMPTION CALL RIGHT

 

4.1                                                                               Redemption Call Right. Upon the occurrence of a Redemption Call Event, Callco shall have the overriding right (the “Redemption Call Right”), notwithstanding the proposed redemption of the Exchangeable Shares by Exchangeco pursuant to Article 8 of the Exchangeable Share Provisions, to purchase from all but not less than all of the Exchangeable Shareholders (other than any Exchangeable Shareholder which is an Affiliate of GMS) on the Redemption Date or, if the Exchangeable Shares have not otherwise been redeemed or retracted by such date, any date following the Redemption Date (the “Later Redemption Date”), all but not less than all of the Exchangeable Shares held by each such holder on payment by Callco to each such Exchangeable Shareholder of an amount per Exchangeable Share (the “Redemption Call Purchase Price”) equal to the Exchangeable Share Consideration on the last Business Day prior to the Redemption Date or the Later Redemption Date, as applicable. In the event of the exercise of the Redemption Call Right by Callco, each Exchangeable Shareholder shall be obligated to sell all the Exchangeable Shares held by the Exchangeable Shareholder to Callco on the Redemption Date or the Later Redemption Date, as applicable, on payment by Callco to the Exchangeable Shareholder of the Redemption Call Purchase Price for each such Exchangeable Share, and Exchangeco shall have no obligation to redeem such Exchangeable Shares so purchased by Callco.

 

4.2                                                                               Notice of Exercise of Redemption Call Right. To exercise the Redemption Call Right, Callco must notify (i) Exchangeco of Callco’s intention to exercise such right within five (5) Business Days of receiving the Redemption Notice from Exchangeco in accordance with Section 8.2(a) of the Exchangeable Share Provisions and (ii) the Exchangeable Shareholders in accordance with Subsection 8.2(b) of the Exchangeable Share Provisions as if references to Exchangeco therein were to Callco. If Callco exercises the Redemption Call Right then, on the Redemption Date or the Later Redemption Date, as applicable, Callco will purchase and the Exchangeable Shareholders (other than any Exchangeable Shareholder which is an Affiliate of GMS) will sell all of the Exchangeable Shares then outstanding on the Redemption Date or the Later Redemption Date, as applicable, for a price per Exchangeable Share equal to the Redemption Call Purchase Price.

 

4.3                                                                               Exercise of Redemption Call Right. For the purposes of completing the purchase of the Exchangeable Shares pursuant to the exercise of the Redemption Call Right, Callco shall, on or before the Redemption Date or the Later Redemption Date, as applicable, deliver or cause to be delivered to the holders of the Exchangeable Shares the Redemption Call Purchase Price for each Exchangeable Share to be purchased, upon presentation and surrender at the registered office of Exchangeco of the certificates (if any) representing such Exchangeable Shares and such documents and instruments as may be required to effect a transfer of Exchangeable Shares under applicable law and the Constating Documents, including a representation and warranty by each holder of Exchangeable Shares to be purchased that such Exchangeable Shareholder is not a non-resident of Canada for purposes of the Income Tax Act (Canada) and such additional documents and instruments as Callco or its Affiliates may reasonably require. Payment of the total Redemption Call Purchase Price for such Exchangeable Shares shall be made by delivery to each Exchangeable Shareholder (other than any Exchangeable Shareholder which is an Affiliate of GMS), at the address of the holder recorded in the register of shareholders of Exchangeco or by holding for pick-up by the holder at the registered office of Exchangeco, of the Exchangeable Share Consideration (satisfied in accordance with Sections 2.2(3) and 2.2(4)) less any amounts properly withheld in accordance with applicable law and Section 13.3 of the Exchangeable Share Provisions. Provided that the total Redemption Call Purchase Price is delivered or paid on the Redemption Date or the Later Redemption Date, as applicable, the Exchangeable Shareholders (other than any Exchangeable

 

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Shareholder which is an Affiliate of GMS) shall thereafter be considered and deemed for all purposes to be the holders of GMS Common Shares delivered to them. If Callco does not exercise the Redemption Call Right in the manner described above, on the Redemption Date or the Later Redemption Date, as applicable, the holders of the Exchangeable Shares so redeemed by Exchangeco will be entitled to receive in exchange therefor the Redemption Price otherwise payable by Exchangeco pursuant to Article 8 of the Exchangeable Share Provisions.

 

ARTICLE 5

RETRACTION CALL RIGHT

 

5.1                               Retraction Call Right. Upon receipt by Exchangeco of a Retraction Request, Exchangeco shall immediately notify GMS and Callco in writing thereof (a “Retraction Call Notice”) and shall provide to GMS and Callco a copy of the Retraction Request. Upon receipt by Callco of a Retraction Call Notice, Callco shall have the overriding right (the “Retraction Call Right”), notwithstanding Article 7 of the Exchangeable Share Provisions, to purchase from each such Exchangeable Shareholder that has delivered a Retraction Request on the Retraction Date all but not less than all of the Exchangeable Shares held by each such Exchangeable Shareholder on payment by Callco to each such Exchangeable Shareholder of an amount per Exchangeable Share (the “Retraction Call Purchase Price”) equal to the Exchangeable Share Consideration on the last Business Day prior to the Retraction Date.

 

5.2                               Notice of Exercise of Retraction Call Right. In order to exercise the Retraction Call Right, Callco must notify in writing Exchangeco and the holders of Exchangeable Shares of its determination to exercise the Retraction Call Right (the “Callco Call Notice”) within five (5) Business Days of receiving a Retraction Call Notice. If Callco delivers the Callco Call Notice within such five (5) Business Day period, and provided that the Retraction Request is not revoked by the holder in the manner specified in Section 7.6 of the Exchangeable Share Provisions, the Retraction Request shall thereupon be considered to be an offer by the holder to sell the Retracted Shares to Callco in accordance with the Retraction Call Right. In such event, Exchangeco shall not redeem the Retracted Shares and Callco shall purchase from such holder and such holder shall sell to Callco on the Retraction Date the Retracted Shares for a purchase price per Exchangeable Share equal to the Retraction Call Purchase Price. The closing of the purchase and sale of the Retracted Shares pursuant to the Retraction Call Right shall be deemed to have occurred as at the close of business on the Retraction Date and, for greater certainty, no redemption by Exchangeco of such Retracted Shares shall take place on the Retraction Date. In the event that Callco does not deliver a Callco Call Notice within such five (5) Business Day period, and provided that the Retraction Request is not revoked by the holder in the manner specified in Section 7.6 of the Exchangeable Share Provisions, Exchangeco shall redeem the Retracted Shares on the Retraction Date and in the manner otherwise contemplated in Article 7 of the Exchangeable Share Provisions.

 

5.3                                                                               Exercise of Retraction Call Right. For the purposes of completing the purchase of the Exchangeable Shares pursuant to the exercise of the Retraction Call Right, Callco shall, on or before the Retraction Date, deliver or cause to be delivered to the holders of the Exchangeable Shares the Retraction Call Purchase Price for each Exchangeable Share to be purchased, upon presentation and surrender at the registered office of Exchangeco of the certificates (if any) representing such Exchangeable Shares and such documents and instruments as may be required to effect a transfer of Exchangeable Shares under applicable law and the Constating Documents, including a representation and warranty by each holder of Exchangeable Shares to be purchased that such Exchangeable Shareholder is not a non-resident of Canada for purposes of the Income Tax Act (Canada) and such additional documents and instruments as Callco or its Affiliates may reasonably require. Payment of the total Retraction Call Purchase Price for such Exchangeable Shares shall be made by delivery to each such Exchangeable Shareholder that has delivered a Retraction Request, at the address of the holder recorded in the register of shareholders of Exchangeco

 

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or by holding for pick-up by the holder at the registered office of Exchangeco, of the Exchangeable Share Consideration (satisfied in accordance with Sections 2.2(3) and 2.2(4)) less any amounts properly withheld in accordance with applicable law and Section 13.3 of the Exchangeable Share Provisions. Provided that the total Retraction Call Purchase Price is delivered or paid on the Retraction Date, such Exchangeable Shareholders shall thereafter be considered and deemed for all purposes to be the holders of GMS Common Shares delivered to them.

 

ARTICLE 6

GMS SUCCESSORS

 

6.1                                                                               GMS Reorganizations. GMS shall not consummate any transaction (whether by way of reorganization, consolidation, merger, transfer, sale, lease or otherwise) whereby all or substantially all of its assets would become the property of any other person or, in the case of a merger, of the continuing corporation resulting therefrom unless (i) such other person or continuing corporation (the “GMS Successor”) by operation of law becomes, without an additional act on its part, bound by the terms and provisions of this Agreement or, if not so bound, executes, prior to or contemporaneously with the consummation of such transaction an agreement evidencing the assumption by the GMS Successor of all obligations of GMS under this Agreement; and (ii) in the event that GMS Common Shares are reclassified or otherwise changed as part of such transaction, the same or an economically equivalent change is simultaneously made to, or in the rights of the holders of, the Exchangeable Shares.

 

6.2                                                                               Vesting of Powers in Successor. Whenever the conditions of Section 6.1 have been duly observed and performed, the GMS Successor, Callco and Exchangeco shall execute any supplemental agreement as is reasonably required or reasonably deemed to be advisable to enable the parties to comply with Section 6.1 (and give notice thereof to the Exchangeable Shareholders), and thereupon the GMS Successor shall possess and from time to time may exercise each and every right and power of GMS under this Agreement in the name of GMS or otherwise and any act or proceeding by any provision of this Agreement required to be done or performed by the board of directors of GMS or any officers of GMS may be done and performed with like force and effect by the directors or officers of such GMS Successor.

 

6.3                                                                               Wholly-Owned Subsidiaries. Nothing herein shall be construed as preventing the amalgamation or merger of any wholly-owned direct or indirect subsidiary of GMS with or into GMS or the winding-up, liquidation or dissolution of any wholly-owned direct or indirect subsidiary of GMS provided that all the assets of such subsidiary are transferred to GMS or another wholly-owned direct or indirect subsidiary of GMS and any such transactions are expressly permitted by this Article 6.

 

ARTICLE 7

SHAREHOLDER PROTECTIVE RIGHTS

 

7.1                                                                               GMS Stockholder Rights. Each Exchangeable Shareholder acknowledges and agrees that until its Exchangeable Shares are exchanged for GMS Common Shares pursuant to this Agreement or the Exchangeable Share Provisions, it has no rights to vote at any meetings of stockholders of GMS at which holders of GMS Common Shares are entitled to vote or with respect to any written consents sought by GMS from its stockholders including the holders of GMS Common Shares, including those matters which, under applicable law, require the holders of GMS Common Shares to vote on and/or approve as a separate class.

 

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7.2                                                                               GMS Stockholder Information.

 

(1)                                 Notwithstanding the fact that the Exchangeable Shareholders do not have the right to vote as holders of GMS Common Shares, GMS, its Affiliates or its representatives shall promptly mail or cause to be mailed (or otherwise communicate in the same manner as GMS utilizes in communications to holders of GMS Common Shares subject to applicable regulatory requirements) to each of the Exchangeable Shareholders copies of all mailings and communications that it sends to holders of GMS Common Shares, such mailing or communication to commence on the same day as the mailing or notice (or other communication) with respect thereto is commenced by GMS to the holders of GMS Common Shares.

 

(2)                                 Any written materials distributed by GMS pursuant to this Section 7.2 shall be sent by mail (or otherwise communicated in the same manner as GMS utilizes in communications to holders of GMS Common Shares subject to applicable regulatory requirements) to each Exchangeable Shareholder at its address as shown on the books of Exchangeco.

 

(3)                                 Notwithstanding anything to the contrary herein, GMS may satisfy the requirements of this Section 7.2 by making any such mailings and communications generally available on its website or by electronically filing such information with the Securities and Exchange Commission.

 

ARTICLE 8
GENERAL

 

8.1                                                                               Term. This Agreement shall come into force and be effective as of the date hereof and shall terminate and be of no further force and effect at such time as no Exchangeable Shares (or securities or rights convertible into or exchangeable for or carrying rights to acquire Exchangeable Shares) are held by any Person other than GMS or any of its Affiliates.

 

8.2                                                                               Severability. If any provision of this Agreement is held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remainder of this Agreement shall not in any way be affected or impaired thereby and this Agreement shall be carried out as nearly as possible in accordance with its original terms and conditions.

 

8.3                                                                               Amendments, Modifications. This Agreement may not be amended or modified except by an agreement in writing executed by GMS, Callco and Exchangeco and approved by the Exchangeable Shareholders in accordance with Article 11 of the Exchangeable Share Provisions. At all times upon the occurrence of any event contemplated pursuant to Sections 2.1, 2.6 or 2.7 or any other provision of the Support Agreement, as a result of which either the GMS Common Shares or the Exchangeable Shares or both are in any way to be changed, this Agreement shall prior to or simultaneously with the change be amended and modified as necessary in order that it will apply with full force and effect, mutatis mutandis, to all new securities into which GMS Common Shares or Exchangeable Shares or both are so to be changed and, upon request by any of the Parties, the Parties shall execute and deliver an agreement in writing evidencing such necessary amendments and modifications.

 

8.4                                                                               Meeting to Consider Amendments. Exchangeco, at the request of GMS, shall call a meeting or meetings of the Exchangeable Shareholders for the purpose of considering any proposed amendment or modification requiring approval pursuant to Section 8.3. Any such meeting or meetings

 

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shall be called and held in accordance with the Constating Documents, the Exchangeable Share Provisions and all applicable laws.

 

8.5                                                                               Taxation. For purposes of this Agreement, upon any sale of Exchangeable Shares to Callco pursuant to the Exchangeable Shareholders’ Put Right, the Liquidation Call Right, the Redemption Call Right or the Retraction Call Right, the GMS Common Shares to be issued in connection with the payment of the total purchase price therefor shall be issued in the name of the Exchangeable Shareholder or in such names as such Exchangeable Shareholder may otherwise direct in writing, without charge to the Exchangeable Shareholder; provided, however, that such Exchangeable Shareholder: (a) shall pay (and neither Callco nor any of its Affiliates shall be required to pay) any documentary, stamp, transfer, or other similar taxes that may be payable in respect of any transfer involved in the issuance or delivery of such shares to a person other than such Exchangeable Shareholder; or (b) shall have established, to the satisfaction of GMS and Exchangeco, that such taxes, if any, have been paid. The Exchangeable Shareholders acknowledge that Section 13.3 of the Exchangeable Share Provisions gives GMS, Callco, Exchangeco and their Affiliates rights of withholding in respect of applicable taxes which may be required to be deducted or withheld upon the payment of a dividend or any other amounts payable to any Exchangeable Shareholder, and that Section 13.3 of the Exchangeable Share Provisions shall apply in respect of any amount of tax required to be withheld from a payment to an Exchangeable Shareholder hereunder.

 

8.6                                                                               Enurement. This Agreement shall be binding upon and enure to the benefit of the Parties and their respective heirs, representatives, successors and permitted assigns.

 

8.7                                                                               Notices to Parties. All notices and other communications between the Parties shall be in writing and shall be deemed to have been given if delivered personally or by confirmed facsimile or electronic transmission.

 

If to the Exchangeable Shareholders, to the address listed in the Exchangeco share register for each Shareholder, with a copy to:

 

Torys LLP

79 Wellington St. W.

Box 270, TD South Tower

Toronto, Ontario, M5K 1N2

Canada

 

Attention: Guy Berman

Email:       gberman@torys.com

 

If to GMS, Callco and/or Exchangeco at the following address (or at such other address for any such Party as shall be specified in like notice):

 

GMS Inc.

100 Crescent Centre Pkwy #800

Tucker, GA 30084

USA

 

Attention: General Counsel

Email:       craig.apolinsky@gms.com

 

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

 

Fried, Frank, Harris, Shriver & Jacobson LLP

One New York Plaza

New York, NY 10004

 

Attention: Christopher Ewan

Email:       christopher.ewan@friedfrank.com

 

Any notice or other communication given personally shall be deemed to have been given and received upon delivery thereof and if given by telecopy shall be deemed to have been given and received on the date of confirmed receipt thereof unless such day is not a Business Day in which case it shall be deemed to have been given and received upon the immediately following Business Day.

 

8.8                                                                               Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument. The transmission by facsimile or pdf of a copy of the execution page hereof reflecting the execution of this Agreement by any Party shall be effective to evidence that Party’s intention to be bound by this Agreement and that Party’s agreement to the terms, provisions and conditions hereof, all without the necessity of having to produce an original copy of such execution page.

 

8.9                                                                               Governing Law. This Agreement shall be governed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

 

8.10                                                                        Undertaking of GMS. GMS hereby acknowledges the provisions of this Agreement and undertakes to: (i) maintain the solvency of Exchangeco while any Exchangeable Shares are held by Exchangeable Shareholders, and (ii) cause Exchangeco and Callco to each take all actions necessary in order for it to comply with its respective obligations hereunder.

 

8.11                                                                        Attornment. Each Party agrees that any action or proceeding arising out of or relating to this Agreement may be instituted in the courts of British Columbia, waives any objection which it may have now or hereafter, irrevocably submits to the jurisdiction of the courts of British Columbia in any such action or proceeding, agrees to be bound by any judgment of the said courts, and hereby waives any review of the merits of any such judgment by the courts of any other jurisdiction. Service of process may be made to each Party at the address set forth in Section 8.7, with the exception of GMS, which hereby appoints Exchangeco at its registered office in the Province of British Columbia as attorney for service of process.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF the Parties have caused this Agreement to be duly executed as of the date first above written.

 

 

GMS INC.

 

 

 

By:

/s/ H. Douglas Goforth

 

 

Name:

H. Douglas Goforth

 

 

Title:

Vice President, Chief Financial Officer and Treasurer

 

 

 

 

 

 

 

CANADA GYPSUM MANAGEMENT

 

AND SUPPLY, INC.

 

 

 

By:

/s/ H. Douglas Goforth

 

 

Name:

H. Douglas Goforth

 

 

Title:

Assistant Treasurer

 

 

 

 

 

 

 

GYP CANADA HOLDINGS III CORP.

 

 

 

By:

/s/ H. Douglas Goforth

 

 

Name:

H. Douglas Goforth

 

 

Title:

Assistant Treasurer

 

[Signature Page  Exchange Rights Agreement]

 


 

 

2515684 ONTARIO INC.

 

 

 

By:

/s/ Douglas Skrepnek

 

 

Name:

Douglas Skrepnek

 

 

Title:

President

 

 

 

SLEGG BUILDING MATERIALS LTD.

 

 

 

By:

/s/ Gordon Coutts

 

 

Name:

Gordon Coutts

 

 

Title:

President

 

[Signature Page — Exchange Rights Agreement]

 


 

 

SHOEFAM HOLDINGS INC.

 

 

 

By:

/s/ Ryan Shoemaker

 

 

Name:

Ryan Shoemaker

 

 

Title:

 

[Signature Page — Exchange Rights Agreement]

 


SCHEDULE A

 

EXCHANGEABLE SHAREHOLDERS

 

Exchangeable Shareholder

 

Exchangeable Shares

2515684 Ontario Inc.

 

677,421

Slegg Building Materials Ltd.

 

225,806

Shoefam Holdings Inc. (formerly Vega Enterprises Inc.)

 

225,806

 


 

SCHEDULE B

 

NOTICE OF EXERCISE

 

To:                                                                             GMS Inc. (“GMS”)

 

And To:                                                   GYP Canada Holdings III Corp. (“Callco”)

 

And To:                                                   Canada Gypsum Management and Supply, Inc. (“Exchangeco”)

 

Re:                                                                             Exchangeable Shares of Exchangeco

 

THE UNDERSIGNED holder of exchangeable shares in the capital of Exchangeco (the “Exchangeable Shares”) hereby exercises the Exchangeable Shareholders’ Put Right so as to require Callco to purchase                                                                 Exchangeable Shares (the “Exchanged Shares”) registered in the name of the undersigned, subject to the rights, privileges, restrictions and conditions attached to the Exchangeable Shares (the “Exchangeable Share Provisions”). All capitalized words used in this notice have the respective meanings assigned thereto in the Exchangeable Share Provisions. The undersigned presents and surrenders with this notice of exercise any and all certificates that have been issued representing the Exchanged Shares. The undersigned hereby acknowledges that, to the extent any certificates have been issued representing the Exchanged Shares, a failure to present and surrender to Callco such certificates shall invalidate this notice of exercise.

 

THE UNDERSIGNED hereby represents and warrants that the undersigned:

 

(a)                                 has good title to and owns all of the Exchanged Shares free and clear of all liens, claims and encumbrances;

 

(b)                                 is not a non-resident of Canada for purposes of the Income Tax Act (Canada); and

 

(c)                                  shall, if requested, provide GMS, Callco and/or Exchangeco with such representations or certificates as are reasonably requested by GMS in order to comply with the U.S. Securities Act of 1933, as amended and all other applicable securities legislation.

 

DATED this        day of                                     , 20  .

 

 

 

(signed by holder of Exchanged Shares)

 

 

 

(print name of holder)

 


 

 

 

 

 

 

 

 

 

 

 

 

 

(print the name in which
the GMS Common Shares are to be
issued)

 

(print the name and address in which the certificate (if any), representing Exchangeable Shares not forming part of the Exchanged Shares, if any, is to be registered)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(print the address at which the certificate (if any) representing Exchangeable Shares not forming part of the Exchanged Shares, if any, is to be delivered - if left blank, such certificate shall be held for pick-up by the Exchangeable Shareholder of the registered office of Exchangeco)

 

B - 2



(Back To Top)

Section 3: EX-4.4 (EX-4.4)


Exhibit 4.4

 

SUPPORT AGREEMENT

 

THIS SUPPORT AGREEMENT (the “Agreement”) is made this 1st day of June, 2018,

 

BETWEEN:

 

GMS INC., a corporation existing under the laws of the State of Delaware (“GMS”)

 

- and -

 

CANADA GYPSUM MANAGEMENT AND SUPPLY, INC., a corporation incorporated under the laws of the Province of British Columbia (“Exchangeco”)

 

- and -

 

GYP CANADA HOLDINGS III CORP., a corporation incorporated under the laws of the Province of British Columbia (“Callco”)

 

- and -

 

THE PERSONS IDENTIFIED ON SCHEDULE A HERETO (the “Initial Exchangeable Shareholders”)

 

WHEREAS pursuant to the terms of a securities purchase agreement dated April 4, 2018 (the “Purchase Agreement”) among, inter alia, GMS, TorQuest Partners Fund III, L.P., TorQuest Capital Fund III, L.P., and the individual sellers identified on Schedule B to the Purchase Agreement, on the date hereof, Exchangeco acquired all of the outstanding partnership interests and shares of the Acquired Entities (as defined in the Purchase Agreement) in exchange for, among other consideration, the issuance on the date hereof of non-voting exchangeable shares of Exchangeco (the “Exchangeable Shares”) to the Initial Exchangeable Shareholders;

 

AND WHEREAS in accordance with the terms of the Purchase Agreement, the Parties agreed to enter into, on the date hereof: (i) an exchange rights agreement (the “Exchange Rights Agreement”) setting out certain rights and obligations of GMS, its Affiliates and the Initial Exchangeable Shareholders in respect of the Exchangeable Shares; and (ii) this support agreement which sets out certain additional covenants of the Parties pertaining to the facilitation of the retraction, redemption, call, put and other exchange rights contemplated in the Exchange Rights Agreement and the Exchangeable Share Provisions (as defined below);

 

NOW, THEREFORE, IN CONSIDERATION of the premises and the respective covenants and agreements contained herein, in the Purchase Agreement and the Exchange Rights Agreement and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Parties hereby agree as follows:

 


 

ARTICLE 1

INTERPRETATION

 

1.1                                                                               Definitions. In this Agreement, each capitalized term used herein and not otherwise defined herein shall have the meaning ascribed thereto in the rights, privileges, restrictions and conditions attaching to the Exchangeable Shares set forth in the articles of Exchangeco (the “Exchangeable Share Provisions”), or the Exchange Rights Agreement, as applicable, unless something in the subject matter or context is inconsistent therewith.

 

1.2                                                                               Headings; Article and Section References. The division of this Agreement into Articles, Sections, Subsections and other portions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. Unless otherwise indicated, all references to an “Article”, “Section” or “Subsection” followed by a number and/or a letter refer to the specified Article, Section or Subsection of this Agreement. The terms “this Agreement”, “hereof”, “herein” and “hereunder” and similar expressions refer to this Agreement and not to any particular Article, Section, Subsection or other portion hereof and include any agreement or instrument supplementary or ancillary hereto.

 

1.3                                                                               Number and Gender. Unless the context requires otherwise, words importing the singular shall include the plural and vice versa and words importing gender shall include all genders.

 

1.4                                                                               Business Days. If any date on which any action is required to be taken under this Agreement is not a Business Day, then such action shall be required to be taken on the next Business Day.

 

1.5                                                                               Currency and Currency Conversion. The provisions of the Exchangeable Share Provisions respecting currency matters and currency conversion are incorporated by reference into this Agreement.

 

ARTICLE 2

COVENANTS OF GMS AND EXCHANGECO

 

2.1                                                                               Covenants regarding the Exchangeable Shares. So long as any Exchangeable Shares not owned by GMS or its Affiliates are outstanding, GMS will:

 

(a)                                 not declare or pay any dividend on the GMS Common Shares unless Exchangeco shall (i) simultaneously declare or pay, as the case may be, an economically equivalent dividend (as provided for in the Exchangeable Share Provisions) on the Exchangeable Shares and (ii) have sufficient money or other assets or authorized but unissued securities available to enable the due declaration and the due and punctual payment, in accordance with applicable law, of an economically equivalent dividend on the Exchangeable Shares;

 

(b)                                 advise Exchangeco sufficiently in advance of the declaration by GMS of any dividend on GMS Common Shares and take all such other actions as are reasonably necessary, in cooperation with Exchangeco, to ensure that the respective declaration date, record date and payment date for a dividend on the Exchangeable Shares shall be the same as the declaration date, record date and payment date for the corresponding dividend on GMS Common Shares;

 

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(c)                                  not permit Exchangeco to issue any further Exchangeable Shares, or any other shares of Exchangeco having an attribute which permits the holders thereof to exchange or convert such shares into shares of GMS or any Affiliate, except for the issuance of Exchangeable Shares to existing Exchangeable Shareholders in accordance with the Exchangeable Share Provisions or the Exchange Rights Agreement;

 

(d)                                 take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Exchangeco, in accordance with applicable law, to pay and otherwise perform its obligations with respect to the satisfaction of the Liquidation Amount, the Retraction Price or the Redemption Price, as the case may be, in respect of each issued and outstanding Exchangeable Share upon, as the case may be, the liquidation, dissolution or winding-up of Exchangeco, the delivery of a Retraction Request by an Exchangeable Shareholder or a redemption of Exchangeable Shares by Exchangeco, including without limitation all such actions and all such things as are reasonably necessary or desirable to enable and permit Exchangeco to cause the Exchangeable Share Consideration to be delivered to the Exchangeable Shareholders in accordance with the provisions of Article 5 of the Exchangeable Share Provisions;

 

(e)                                  take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Callco, in accordance with applicable law, to perform its obligations arising upon the exercise by the Exchangeable Shareholders of the Exchangeable Shareholders’ Put Right or by Callco of the Liquidation Call Right, the Retraction Call Right or the Redemption Call Right, including without limitation all such actions and all such things as are reasonably necessary or desirable to enable and permit Callco to cause the Exchangeable Share Consideration to be delivered to the Exchangeable Shareholders, in accordance with the provisions of the Liquidation Call Right, the Retraction Call Right or the Redemption Call Right, as the case may be; and

 

(f)                                   except in connection with any event, circumstance or action which causes the occurrence of a Redemption Event, not exercise its voting rights as an indirect beneficial owner of the shares of Exchangeco to initiate the voluntary liquidation, dissolution or winding-up of Exchangeco or any other distribution of the assets of Exchangeco among its shareholders for the purpose of winding-up its affairs nor take any action or omit to take any action that is designed to result in the liquidation, dissolution or winding-up of Exchangeco or any other distribution of the assets of Exchangeco among its shareholders for the purpose of winding-up its affairs.

 

2.2                                                                               Segregation of Funds. GMS will take reasonable measures to cause Exchangeco and Callco to have available a sufficient amount of funds as is necessary to enable Exchangeco and Callco to pay or otherwise satisfy any amounts payable hereunder or under the Exchange Rights Agreement.

 

2.3                                                                               Reservation of GMS Common Shares. GMS hereby represents, warrants and covenants in favour of the Exchangeable Shareholders and Exchangeco that GMS has reserved for issuance and will, at all times while any Exchangeable Shares (other than Exchangeable Shares held by GMS and its Affiliates) are outstanding, keep available, free from pre-emptive and other rights, out of its authorized and unissued capital stock such number of GMS Common Shares as is now and may reasonably be expected to hereafter be required to enable and permit GMS to meet its obligations under this Agreement and the Exchange Rights Agreement, to enable and permit Callco to meet its obligations under each of the Exchangeable Shareholders’ Put Right, the Liquidation Call Right, the Retraction Call Right and the Redemption Call Right, and to enable and permit Exchangeco to meet its obligations hereunder and under the Exchangeable Share Provisions.

 

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2.4                                                                               Notification of Certain Events. In order to assist GMS to comply with its obligations hereunder and under the Exchange Rights Agreement, and to permit Callco to exercise and/or comply with the Liquidation Call Right, the Retraction Call Right, the Redemption Call Right and the Exchangeable Shareholder Put Right, Exchangeco will notify GMS and Callco of each of the following events at the time set forth below:

 

(a)                                 in the event of any determination by the Board of Directors to institute voluntary liquidation, dissolution or winding-up proceedings with respect to Exchangeco or to effect any other distribution of the assets of Exchangeco among its shareholders for the purpose of winding-up its affairs, at least 30 days prior to the proposed effective date of such liquidation, dissolution, winding-up or other distribution;

 

(b)                                 promptly, upon the earlier of (i) receipt by Exchangeco of notice of, and (ii) Exchangeco otherwise becoming aware of any threatened or instituted claim, suit, petition or other proceeding with respect to the involuntary liquidation, dissolution or winding-up of Exchangeco or to affect any other distribution of the assets of Exchangeco among its shareholders for the purpose of winding-up its affairs;

 

(c)                                  immediately, upon receipt by Exchangeco of a Retraction Request;

 

(d)                                 on the same date on which notice of redemption is given to Exchangeable Shareholders, upon the determination of a Redemption Date in accordance with the Exchangeable Share Provisions; and

 

(e)                                  as soon as practicable upon the issuance by Exchangeco of any Exchangeable Shares or rights to acquire Exchangeable Shares.

 

2.5                                                                               Delivery of GMS Common Shares. In furtherance of its obligations under Subsections 2.1(d) and (e), upon notice from Exchangeco or Callco of any event that requires Exchangeco or Callco to cause to be delivered GMS Common Shares to any Exchangeable Shareholders in satisfaction of all or part of the Exchangeable Share Consideration, GMS shall forthwith issue and deliver or cause to be delivered to Exchangeco or Callco, as the case may be, the requisite number of GMS Common Shares to be received by, and issued to or to the order of, the former Exchangeable Shareholders of the surrendered Exchangeable Shares, as Exchangeco or Callco, as the case may be, shall direct. All such GMS Common Shares shall be duly authorized and validly issued as fully paid and non-assessable, free of pre-emptive rights and shall be free and clear of any lien, claim, encumbrance, security interest or adverse claim other than restrictions on transfer under applicable securities laws and pursuant to any agreements entered into by the holder.

 

2.6                                                                               Economic Equivalence. So long as any Exchangeable Shares not owned by GMS or its Affiliates are outstanding:

 

(a)                                 Except in accordance with the terms of the 2014 GMS Inc. Stock Option Plan, the GMS Inc. Employee Stock Purchase Plan, the GMS Inc. Equity Incentive Plan and any other equity or equity-based incentive plan sponsored by GMS, GMS shall not without the prior approval of Exchangeco and the Exchangeable Shareholders given in accordance with Article 11 of the Exchangeable Share Provisions:

 

(i)                                     issue or distribute GMS Common Shares (or securities exchangeable for or convertible into or carrying rights to acquire GMS Common Shares) to the holders of the then outstanding GMS Common Shares by way of stock dividend

 

4


 

or other distribution, other than an issue of GMS Common Shares (or securities exchangeable for or convertible into or carrying rights to acquire GMS Common Shares) to holders of GMS Common Shares who exercise an option to receive dividends in GMS Common Shares (or securities exchangeable for or convertible into or carrying rights to acquire GMS Common Shares) in lieu of receiving cash dividends or pursuant to any dividend reinvestment plan or similar arrangement;

 

(ii)                                  issue or distribute rights, options or warrants to the holders of the then outstanding GMS Common Shares entitling them to subscribe for or to purchase GMS Common Shares (or securities exchangeable for or convertible into or carrying rights to acquire GMS Common Shares); or

 

(iii)                               issue or distribute to the holders of the then outstanding GMS Common Shares (A) shares or securities of GMS of any class other than GMS Common Shares, (B) rights, options or warrants other than those referred to in Paragraph 2.6(a)(ii) above, (C) evidence of indebtedness of GMS or (D) assets of GMS,

 

unless the economic equivalent on a per share basis of such rights, options, securities, shares, evidences of indebtedness or other assets is issued or distributed simultaneously to the Exchangeable Shareholders.

 

(b)                                 GMS shall not without the prior approval of Exchangeco and the Exchangeable Shareholders given in accordance with Article 11 of the Exchangeable Share Provisions:

 

(i)                                     subdivide, redivide or change the then outstanding GMS Common Shares into a greater number of GMS Common Shares;

 

(ii)                                  reduce, combine, consolidate or change the then outstanding GMS Common Shares into a lesser number of GMS Common Shares; or

 

(iii)                               reclassify or otherwise change GMS Common Shares or effect an amalgamation, merger, reorganization or other transaction affecting GMS Common Shares,

 

unless the same or an economically equivalent change shall simultaneously be made to, or in the rights of the holders of, the Exchangeable Shares.

 

(c)                                  GMS will take all steps as may be reasonably necessary for the purposes of ensuring that appropriate dividends are paid or other distributions are made by Exchangeco, or subdivisions, redivisions or changes are made to the Exchangeable Shares, in order to implement the required economic equivalent with respect to the GMS Common Shares and Exchangeable Shares as provided for in this Section 2.6.

 

2.7                                                                               Ownership of Outstanding Shares. Except in respect of a Control Transaction, without the prior approval of Exchangeco and the Exchangeable Shareholders given in accordance with Article 11 of the Exchangeable Share Provisions, GMS covenants and agrees in favour of Exchangeco that, as long as any outstanding Exchangeable Shares are owned by any Person other than GMS or any of its Affiliates, GMS will be and remain the direct or indirect beneficial owner of all of the issued and outstanding voting shares in the capital of Exchangeco and Callco .

 

5


 

2.8                                                                               Rule 10b-18 Purchases. For certainty, nothing contained in this Agreement, including without limitation the obligations of GMS contained in Section 2.6, shall limit the ability of GMS, or Exchangeco to make a “Rule 10b-18 purchase” of GMS Common Shares pursuant to Rule 10b-18 of the United States Securities Exchange Act of 1934, as amended.

 

ARTICLE 3

GMS REORGANIZATIONS

 

3.1                                                                               GMS Reorganizations. GMS shall not consummate any transaction (whether by way of reorganization, consolidation, merger, transfer, sale, lease or otherwise) whereby all or substantially all of its assets would become the property of any other Person or, in the case of a merger, of the continuing corporation resulting therefrom unless (i) such other Person or continuing corporation (the “GMS Successor”) by operation of law becomes, without an additional act on its part, bound by the terms and provisions of this Agreement and the Exchange Rights Agreement or, if not so bound, executes, prior to or contemporaneously with the consummation of such transaction an agreement evidencing the assumption by the GMS Successor of all obligations of GMS under this Agreement and the Exchange Rights Agreement; and (ii) in the event that GMS Common Shares are reclassified or otherwise changed as part of such transaction, the same or an economically equivalent change is simultaneously made to, or in the rights of the holders of, the Exchangeable Shares.

 

3.2                                                                               Vesting of Powers in Successor. Whenever the conditions of Section 3.1 have been duly observed and performed, the GMS Successor, Callco and Exchangeco shall execute any supplemental agreement as is reasonably required or reasonably deemed to be advisable to enable the parties to comply with Section 3.1 (and give notice thereof to the Exchangeable Shareholders), and thereupon the GMS Successor shall possess and from time to time may exercise each and every right and power of GMS under this Agreement in the name of GMS or otherwise and any act or proceeding by any provision of this Agreement required to be done or performed by the board of directors of GMS or any officers of GMS may be done and performed with like force and effect by the directors or officers of such GMS Successor.

 

3.3                                                                               Wholly-Owned Subsidiaries. Nothing herein shall be construed as preventing the amalgamation or merger of any wholly-owned direct or indirect subsidiary of GMS with or into GMS or the winding-up, liquidation or dissolution of any wholly-owned direct or indirect subsidiary of GMS provided that all the assets of such subsidiary are transferred to GMS or another wholly-owned direct or indirect subsidiary of GMS and any such transactions are expressly permitted by this Article 3. GMS shall refrain from taking any action which would result in the winding-up or amalgamation of Callco or Exchangeco (other than any amalgamation of Exchangeco or Callco with one or more of their respective subsidiaries or with any other wholly-owned direct or indirect subsidiary of GMS) for so long as any Exchangeable Shares remain outstanding (other than Exchangeable Shares owned by GMS or its Affiliates).

 

6


 

ARTICLE 4
GENERAL

 

4.1                                                                               Term. This Agreement shall come into force and be effective as of the date hereof and shall terminate and be of no further force and effect at such time as no Exchangeable Shares (or securities or rights convertible into or exchangeable for or carrying rights to acquire Exchangeable Shares) are held by any Person other than GMS and any of its Affiliates.

 

4.2                                                                               Severability. If any provision of this Agreement is held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remainder of this Agreement shall not in any way be affected or impaired thereby and this Agreement shall be carried out as nearly as possible in accordance with its original terms and conditions.

 

4.3                                                                               Amendments, Modifications. This Agreement may not be amended or modified except by an agreement in writing executed by GMS, Callco and Exchangeco and approved by the then Exchangeable Shareholders in accordance with Article 11 of the Exchangeable Share Provisions. At all times upon the occurrence of any event contemplated pursuant to Sections 2.1, 2.6, or 2.7 or otherwise, as a result of which either GMS Common Shares or Exchangeable Shares or both are in any way to be changed, this Agreement shall simultaneously with or promptly thereafter such change be amended and modified as necessary in order that it shall apply with full force and effect, mutatis mutandis, to all new securities into which GMS Common Shares or Exchangeable Shares or both are to be so changed and the Parties shall execute and deliver an agreement in writing giving effect to and evidencing such necessary amendments and modifications

 

4.4                                                                               Meeting to Consider Amendments. Exchangeco, at the request of GMS, shall call a meeting or meetings of the Exchangeable Shareholders for the purpose of considering any proposed amendment or modification requiring approval pursuant to Section 4.4. Any such meeting or meetings shall be called and held in accordance with the Constating Documents, the Exchangeable Share Provisions and all applicable laws.

 

4.5                                                                               Enurement. This Agreement shall be binding upon and enure to the benefit of the Parties and their respective representatives, successors and permitted assigns.

 

4.6                                                                               Notices to Parties. All notices and other communications between the Parties shall be in writing and shall be deemed to have been given if delivered personally or by confirmed facsimile or electronic transmission.

 

If to the Exchangeable Shareholders, to the address listed in the Exchangeco share register for each Shareholder, with a copy to:

 

Torys LLP

79 Wellington St. W.

Box 270, TD South Tower

Toronto, Ontario, M5K 1N2

Canada

 

Attention: Guy Berman
Email: gberman@torys.com

 

If to GMS, Callco and/or Exchangeco at the following address (or at such other address for any such Party as shall be specified in like notice):

 

7


 

GMS Inc.

100 Crescent Centre Pkwy #800

Tucker, GA 30084

USA

 

Attention: General Counsel

Email:                               craig.apolinsky@gms.com

 

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

 

Fried, Frank, Harris, Shriver & Jacobson LLP

One New York Plaza

New York, NY 10004

 

Attention: Christopher Ewan

Email:                               christopher.ewan@friedfrank.com

 

Any notice or other communication given personally shall be deemed to have been given and received upon delivery thereof and if given by telecopy shall be deemed to have been given and received on the date of confirmed receipt thereof unless such day is not a Business Day in which case it shall be deemed to have been given and received upon the immediately following Business Day.

 

4.7                                                                               Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument. The transmission by facsimile or pdf of a copy of the execution page hereof reflecting the execution of this Agreement by any Party shall be effective to evidence that Party’s intention to be bound by this Agreement and that Party’s agreement to the terms, provisions and conditions hereof, all without the necessity of having to produce an original copy of such execution page.

 

4.8                                                                               Governing Law. This Agreement shall be governed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

 

4.9                                                                               Attornment. Each Party agrees that any action or proceeding arising out of or relating to this Agreement may be instituted in the courts of British Columbia, waives any objection which it may have now or hereafter, irrevocably submits to the jurisdiction of the courts of British Columbia in any such action or proceeding, agrees to be bound by any judgment of the said courts, and hereby waives any review of the merits of any such judgment by the courts of any other jurisdiction. Service of process may be made to each Party at the address set forth in Section 4.6, with the exception of GMS which hereby appoints Exchangeco at its registered office in the Province of British Columbia as attorney for service of process.

 

[Signature Page Follows]

 

8


 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first above written.

 

 

GMS INC.

 

 

 

 

 

By:

/s/ H. Douglas Goforth

 

 

Name:

H. Douglas Goforth

 

 

Title:

Vice President, Chief Financial Officer and Treasurer

 

 

 

 

 

CANADA GYPSUM MANAGEMENT AND SUPPLY, INC.

 

 

 

 

 

By:

/s/ H. Douglas Goforth

 

 

Name:

H. Douglas Goforth

 

 

Title:

Assistant Treasurer

 

 

 

 

 

GYP CANADA HOLDINGS III CORP.

 

 

 

 

 

By:

/s/ H. Douglas Goforth

 

 

Name:

H. Douglas Goforth

 

 

Title:

Assistant Treasurer

 

[Signature Page Support Agreement]

 


 

 

2515684 ONTARIO INC.

 

 

 

 

 

By:

/s/ Douglas Skrepnek

 

 

Name:

Douglas Skrepnek

 

 

Title:

President

 

 

 

 

 

SLEGG BUILDING MATERIALS LTD.

 

 

 

 

 

By:

/s/ Gordon Coutts

 

 

Name:

Gordon Coutts

 

 

Title:

President

 

[Signature Page – Support Agreement]

 


 

 

SHOEFAM HOLDINGS INC.

 

 

 

 

 

By:

/s/ Ryan Shoemaker

 

 

Name:

Ryan Shoemaker

 

 

Title:

 

 

[Signature Page – Support Agreement]

 


 

SCHEDULE A

 

EXCHANGEABLE SHAREHOLDERS

 

Exchangeable Shareholder

 

Exchangeable Shares

2515684 Ontario Inc.

 

677,421

Slegg Building Materials Ltd.

 

225,806

Shoefam Holdings Inc. (formerly Vega Enterprises Inc.)

 

225,806

 



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Section 4: EX-5.1 (EX-5.1)


Exhibit 5.1

 

May 7, 2019

 

GMS Inc.

100 Crescent Center Parkway, Suite 800

Tucker, Georgia 30084

 

Re:          Registration Statement on Form S-3 (No. 333-           )

 

Ladies and Gentlemen:

 

We have acted as counsel to GMS Inc., a Delaware corporation (the “Company”), in connection with the filing of the above-referenced Registration Statement on Form S-3 (the “Registration Statement”) to be filed on the date hereof by the Company with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”).

 

This opinion is being furnished pursuant to Item 16 of Form S-3 and Item 601(b)(5) of Regulation S-K under the Securities Act.

 

The Registration Statement relates to the registration of the proposed resale from time to time of 1,129,033 shares of the Company’s common stock, par value $0.01 per share (the “Shares”), proposed to be offered and sold by the selling stockholders identified in the Registration Statement. Pursuant to the Securities Purchase Agreement dated April 4, 2018 among the Company and the other parties named therein, the selling stockholders acquired non-voting exchangeable shares (the “Exchangeable Shares”) of the Company’s indirect subsidiary Canada Gypsum Management and Supply, Inc., each of which is exchangeable, at the option of the holder thereof, for Shares at any time on a one-for-one basis.

 

We have examined the Second Amended and Restated Certificate of Incorporation of the Company; the Second Amended and Restated Bylaws of the Company; records of proceedings of the Board of Directors of the Company deemed by us to be relevant to this opinion letter; and the Registration Statement. We also have made such further legal and factual examinations and investigations as we deemed necessary for purposes of expressing the opinions set forth herein. In our examination, we have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us as original documents and the conformity to original documents submitted to us as certified, conformed, facsimile, electronic or photostatic copies.

 

As to certain factual matters relevant to this opinion letter, we have relied conclusively upon originals or copies, certified or otherwise identified to our satisfaction, of such records, agreements, documents and instruments, including certificates or

 


 

comparable documents of officers of the Company and of public officials, as we have deemed appropriate as a basis for the opinions hereinafter set forth.

 

Our opinions set forth below are limited to the General Corporation Law of the State of Delaware and applicable provisions of the Constitution of the State of Delaware. We do not express any opinion herein concerning any other laws.

 

This opinion letter is provided for your use solely in connection with the filing of the Registration Statement and may not be used, circulated, quoted or otherwise relied upon for any other purpose without our express written consent. No opinion may be implied or inferred beyond the opinions expressly stated in the numbered paragraphs below. Our opinions expressed herein are as of the date hereof, and we undertake no obligation to advise you of any changes in applicable law or any other matters that may come to our attention after the date hereof that may affect our opinions expressed herein.

 

Based upon the foregoing and subject to the limitations, qualifications, exceptions and assumptions set forth herein, it is our opinion that, upon the exchange of Exchangeable Shares for Shares, pursuant to the terms of the Exchangeable Shares such Shares shall have been duly authorized, validly issued and fully paid and are nonassessable.

 

We consent to the filing of this opinion letter as an exhibit to the Registration Statement and to the use of our name under the heading “Legal Matters” in the Prospectus constituting a part thereof. In giving such consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.

 

 

ALSTON & BIRD LLP

 

 

 

 

 

By:

/s/William S. Ortwein

 

 

William S. Ortwein

 

 

A Partner

 



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Section 5: EX-23.1 (EX-23.1)


Exhibit 23.1

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We consent to the reference to our firm under the caption “Experts” in the Registration Statement (Form S-3) and related Prospectus of GMS Inc. for the registration of 1,129,033 shares of its common stock and to the incorporation by reference therein of our reports dated June 28, 2018, with respect to the consolidated financial statements of GMS Inc., and the effectiveness of internal control over financial reporting of GMS Inc. included in its Annual Report (Form 10-K) for the year ended April 30, 2018, filed with the Securities and Exchange Commission.

 

/s/ Ernst & Young LLP

 

Atlanta, Georgia

May 7, 2019

 



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Section 6: EX-23.2 (EX-23.2)


Exhibit 23.2

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of GMS Inc. of our report dated June 30, 2017 relating to the financial statements, which appears in GMS Inc.’s Annual Report on Form 10-K for the year ended April 30, 2018.  We also consent to the reference to us under the heading “Experts” in such Registration Statement.

 

 

/s/ PricewaterhouseCoopers LLP

 

 

 

Atlanta, GA

 

May 7, 2019

 

 



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