<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Wilmar Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
WILMAR INDUSTRIES, INC.
303 Harper Drive
Moorestown, New Jersey 08057
-------------------------------
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
MAY 6, 1997
-------------------------------
TO THE SHAREHOLDERS OF
WILMAR INDUSTRIES, INC.:
Notice is hereby given that the 1997 annual meeting of shareholders (the
"Annual Meeting") of Wilmar Industries, Inc. (the "Company" or "Wilmar") will be
held at The Radisson Hotel, 915 Route 73, Mount Laurel, New Jersey 08054 on May
6, 1997, at 10:00 a.m., local time, for the following purposes:
1. To elect three directors;
2. To consider approval of the Wilmar Industries, Inc. 1996 Director Plan;
and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Only shareholders of record as of the close of business on April 4, 1997
will be entitled to notice of the Annual Meeting and to vote at the Annual
Meeting and any adjournments thereof. A list of shareholders of the Company as
of the close of business on April 4, 1997 will be available for inspection
during normal business hours for ten days prior to the Annual Meeting at the
Company's executive offices at 303 Harper Drive, Moorestown, New Jersey.
By order of the board of directors,
Fred B. Gross
Secretary
Moorestown, New Jersey
April 10, 1997
================================================================================
EACH SHAREHOLDER IS URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD
IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. IF A SHAREHOLDER DECIDES TO ATTEND THE MEETING, HE OR SHE MAY, IF SO
DESIRED, REVOKE THE PROXY AND VOTE THE SHARES IN PERSON.
================================================================================
<PAGE>
WILMAR INDUSTRIES, INC.
303 Harper Drive
Moorestown, New Jersey 08057
-------------------------------
PROXY STATEMENT
FOR
1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
MAY 6, 1997
-------------------------------
This proxy statement and the accompanying form of proxy are being mailed on
or about April 10, 1997, to the shareholders of Wilmar Industries, Inc. (the
"Company" or "Wilmar"). These materials are being furnished in connection with
the solicitation by the Board of Directors of the Company of proxies to be voted
at the 1997 Annual Meeting of Shareholders (the "Annual Meeting") to be held at
The Radisson Hotel, 915 Route 73, Mount Laurel, New Jersey 08054 on May 6,
1997, at 10:00 a.m., local time, and at any adjournments thereof.
The entire cost of soliciting proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by telephone by
officers and directors and a small number of regular employees of the Company
who will not be specially compensated for such services. The Company also will
request banks and brokers to solicit proxies from their customers, where
appropriate, and will reimburse such persons for reasonable expenses incurred in
that regard.
VOTING AT THE MEETING
Only shareholders of record at the close of business on April 4, 1997 are
entitled to notice of, and to vote at, the Annual Meeting. As of April 4, 1997,
there were 13,048,371 shares of the Company's common stock, no par value (the
"Common Stock") outstanding. Each shareholder entitled to vote shall have the
right to one vote for each share of Common Stock outstanding in such
shareholder's name.
The Company presently has no other class of stock outstanding and entitled
to be voted at the Annual Meeting. The presence in person or by proxy of
shareholders entitled to cast a majority of all votes entitled to be cast at the
Annual Meeting will constitute a quorum.
Shares cannot be voted at the Annual Meeting unless the holder of record is
present in person or by proxy. The enclosed form of proxy is a means by which a
shareholder may authorize the voting of his or her shares at the Annual Meeting.
Directors are to be elected at the Annual Meeting by a plurality of the votes
cast by holders of Common Stock present in person or represented by proxy at the
Annual Meeting and entitled to vote. In the case of shares that are present at
the Annual Meeting for quorum purposes, not voting those shares for a particular
nominee for director (including by withholding authority on the proxy) will not
operate to prevent the election of that nominee if he otherwise receives
affirmative votes; an abstention on any other item will operate to prevent
approval of the item to the same extent as a vote against approval of such item
and a broker "non-vote" on any item (which results when a broker holding shares
for a beneficial owner has not received timely voting instructions on certain
matters from such beneficial owner and those matters are matters with respect to
which the broker has no discretion to vote) will have no effect on the outcome
of the vote on such item. The shares of Common Stock represented by each
properly executed proxy will be voted at the Annual Meeting in accordance with
each shareholder's directions. Shareholders are urged to specify their choices
by marking the appropriate boxes on the enclosed proxy card. If no choice has
been specified and the enclosed proxy card is properly executed and returned,
the shares will be voted
2
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for all nominees listed herein under "Election of Directors" and for approval of
the adoption of the Wilmar Industries, Inc. 1996 Director Plan. If any other
matters are properly presented to the Annual Meeting for action, the proxy
holders will vote the proxies (which confer discretionary authority to vote on
such matters) in accordance with their best judgment.
Execution of the accompanying proxy will not affect a shareholder's right
to attend the Annual Meeting and vote in person. Any shareholder giving a proxy
has the right to revoke it by giving written or oral notice of revocation to the
Secretary of the Company, or by delivering a subsequently executed proxy, at any
time before the proxy is voted.
Your proxy vote is important. Accordingly, you are asked to complete, sign
and return the accompanying proxy card whether or not you plan to attend the
Annual Meeting. If you plan to attend the Annual Meeting to vote in person and
your shares are registered with the Company's transfer agent in the name of a
broker or bank, you must secure a proxy from your broker or bank assigning
voting rights to you for your shares of Common Stock.
3
<PAGE>
WILMAR INDUSTRIES, INC. SECURITY OWNERSHIP
The following table sets forth certain information (as of March 1, 1997,
except as otherwise noted), with respect to shares of Common Stock beneficially
owned by owners of more than five percent of the outstanding Common Stock, by
all current directors, by the executive officers of the Company named in the
Summary Compensation Table included elsewhere in this proxy statement and by all
current directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Number
of Shares Percent
Beneficially of
Beneficial Owner Owned/1/ Class/2/
---------------- ------------ --------
<S> <C> <C>
William S. Green............................... 2,412,545/3/ 18.5%
Summit Partners................................ 1,580,000/4/ 12.1
Ernest K. Jacquet.............................. 1,580,000/5/ 12.1
Denver Investment Advisors LLC................. 1,026,390/6/ 7.9
The Kaufman Fund............................... 1,000,000/7/ 7.7
Pilgrim, Baxter & Associates................... 900,900/8/ 6.9
Fred B. Gross.................................. 39,145/9/ *
Martin E. Hanaka............................... 2,500/10/ *
Michael T. Toomey.............................. 35,245/11/ *
Donald M. Wilson............................... 2,500/12/ *
All current directors and executive officers of
the Company as a group (6 persons)............. 4,071,935 31.2
</TABLE>
- --------------
(1) In accordance with Securities and Exchange Commission regulations, the table
lists all shares as to which such persons have or share the power to vote or
to direct disposition. The number of shares indicated includes shares
issuable upon the exercise of outstanding stock options held by each
individual or group to the extent exercisable at March 1, 1997 or within 60
days thereafter. Unless otherwise indicated, each person has the sole power
to vote and to direct disposition of the shares listed as beneficially owned
by such person.
(2) Percentage calculated with reference to an aggregate of 13,048,371 shares of
Common Stock outstanding at March 1, 1997. Percentages of less than 1% have
not been indicated.
(3) The amount shown includes 283,509 shares held in trust for the benefit of
Mr. Green's children, for which Mr. Green disclaims beneficial ownership.
(4) The amount shown consists of 1,488,801, 59,599 and 31,600 shares held of
record by Summit Ventures III, L.P., Summit Investors II, L.P. and Summit
Subordinated Debt Fund, L.P., respectively, and are located at 600 Atlantic
Avenue, Boston Massachusetts 02210. Summit Partners SD, L.P. is a General
Partner of Summit
4
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Subordinated Debt Fund, L.P. and Summit Partners III, L.P. is a General
Partner of Summit Ventures III, L.P. Stamps, Woodsum & Co. III is a General
Partner of Summit Partners SD, L.P. and Summit Partners III, L.P. and
Ernest K. Jacquet, a director of the Company, is a General Partner of
Stamps, Woodsum & Co. III and Summit Investors II, L.P. See Note (5).
(5) The amount includes shares in Note (4) above. Mr. Jacquet, a director of
the Company, is a general partner of affiliates of Summit Partners, L.P.
Mr. Jacquet exercises shared investment and voting power with respect to
such shares, but disclaims beneficial ownership of such shares.
(6) This information is as of December 31, 1996 and is based upon Schedule 13G,
filed February 13, 1997, with the Securities and Exchange Commission by
Denver Investment Advisors LLC, which is located at 1225 17th Street, 26th
Floor, Denver, Colorado 80202.
(7) This information is as of December 31, 1996 and is based upon Schedule 13G
filed with the Securities and Exchange Commission by The Kaufman Fund,
which is located at 140 E. 45th Street, 43rd Floor, New York, New York
10017.
(8) This information is as of December 31, 1996 and is based upon Amendment No.
22 to Schedule 13G, filed March 12, 1997, with the Securities and Exchange
Commission by Pilgrim Baxter & Associates, which is located at 1255
Drummers Lane, Suite 300, Wayne, Pennsylvania 19087. The PBHG Emerging
Growth Fund owns 794,200 of these shares.
(9) The amount shown includes currently exercisable options to purchase 33,145
shares of Common Stock, of which options to purchase 16,100 shares of
Common Stock become exercisable on March 8, 1997.
(10) The amount shown includes options to purchase 2,500 shares of Common Stock
granted under the Wilmar Industries, Inc. 1996 Director Plan. These
options will be exercisable upon shareholder approval of such plan at the
Annual Meeting.
(11) The amount shown includes currently exercisable options to purchase 35,245
shares of Common Stock, of which options to purchase 18,200 shares of
Common Stock become exercisable on March 8, 1997.
(12) The amount shown includes options to purchase 2,500 shares of Common Stock
granted under the Wilmar Industries, Inc. 1996 Director Plan. These
options will be exercisable upon shareholder approval of such plan at the
Annual Meeting.
5
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of five members
and is divided into three classes, two classes each consisting of two directors
and one class consisting of one director. One director from each class is
elected each year to hold office for a three year term and until the election
and qualification of the director's successor or until the director's death,
removal or resignation. At the Annual Meeting, one director is to be elected
for the current class, whose term of office will expire at the 2000 annual
meeting of shareholders, and two directors who were chosen by the Board of
Directors in the past year to fill vacancies until the next annual meeting are
to be elected at the Annual Meeting to permanently fill the respective vacancy.
William S. Green, who is a current member of the Board of Directors, has
been nominated by the Board of Directors for election as a Class I director at
the Annual Meeting.
Martin E. Hanaka and Donald W. Wilson, who were chosen by the Board of
Directors in the past year to fill vacancies until the next annual meeting of
shareholders, have been nominated by the Board of Directors for election as a
Class II and Class III director, respectively, at the Annual Meeting.
All nominees have consented to be named and to serve if elected. Unless
otherwise instructed by the shareholders, the persons named in the proxies will
vote the shares represented thereby for the election of such nominees. The
Board of Directors believes that all nominees will be able to serve as
directors; if this should not be the case, however, the proxies may be voted for
one or more substitute nominees to be designated by the Board of Directors or
the board may decide to reduce the number of directors. The Board of Directors
unanimously recommends a vote FOR each of the nominees.
------------------------------------------------------------
NOMINEES FOR ELECTION
------------------------------------------------------------
Year First Became Director, Principal
Occupations During
Name of Director Age Past Five Years and Certain Directorships
- ---------------- --- ---------------------------------------------
William S. Green 38 Mr. Green co-founded the Company in 1978 with
(Class I) his father and has been its Chairman,
President and Chief Executive Officer since
1986. From 1978 until 1986, he served as the
Company's Vice President. Mr. Green is
currently a member of the Compensation
Committee of the Board of Directors.
Martin E. Hanaka 47 Mr. Hanaka has been a director of the Company
(Class II) since December 1996. He has served as
President and Chief Operating Officer of
Staples, Inc. since August 1994. From
October 1992 to August 1994 Mr. Hanaka held
the positions of President and Chief
Operating Officer of Lechmere, Inc., and
earlier as Executive Vice President -
Marketing. Prior to joining Lechmere, Inc.,
Mr. Hanaka was with Sears Roebuck and Co.
where, commencing 1990, he served in various
capacities, including Vice President - Brand
Central. Mr. Hanaka currently serves as a
director of Staples, Inc., as well as a
various number of community organizations.
6
<PAGE>
Year First Became Director,
Principal Past Occupations During
Name of Director Age Five Years and Certain Directorships
- ---------------- --- ---------------------------------------------
Donald M. Wilson 57 Mr. Wilson has been a director of the Company
(Class III) since July 1996. Mr. Wilson was employed by
Viking Office Products from December 1979
until his retirement in December 1995. From
January 1991, until his retirement, Mr.
Wilson served as Viking's Vice President -
Operations. Mr. Wilson is currently a member
of the Compensation, Stock Option and Audit
Committees of the Board of Directors.
----------------------------------------------------------------------
Class II Directors Continuing in Office with Term Expiring in 1998
----------------------------------------------------------------------
Fred B. Gross 59 Mr. Gross has been a Vice President and
Secretary of the Company since March 1994 and
Vice President - Corporate Development since
November 1995. He was elected a director of
the Company in July 1995. From 1989 until
February 1994, Mr. Gross was Regional Vice
President of Angelo Brothers Company, a
supplier of electrical products, while also
maintaining a private law practice. Before
attending law school, Mr. Gross worked for 22
years in the plumbing supply industry.
----------------------------------------------------------------------
Class III Directors Continuing in Office with Term Expiring in 1999
----------------------------------------------------------------------
Ernest K. Jacquet 49 Mr. Jacquet has been a director of the
Company since March 1995. Since April 1990,
he has been a general partner of Summit
Partners, a venture capital partnership that
is the general partner of Summit Ventures
III, L.P., Summit Investors II, L.P. and
Summit Subordinated Debt Fund, L.P.
(collectively, the "Summit Investors"). Mr.
Jacquet also serves as a director of CIDCO
Incorporated. Mr. Jacquet is currently a
member of the Compensation, Stock Option and
Audit Committees of the Board of Directors.
General Information Concerning the Board of Directors and its Committees
The Board of Directors is divided into three classes. Each class holds
office until the third annual meeting for the election of directors following
the election of such class, except that the initial terms of the Class I, Class
II and Class III directors expire in 1997, 1998 and 1999, respectively. Mr.
Green is a Class I director, Messrs. Gross and Hanaka are Class II directors,
and Messrs. Jacquet and Wilson are Class III directors.
The Board of Directors of the Company met on six occasions during
1996. Each director attended at least 75% of the aggregate of the meetings of
the Board of Directors held during the period for which he was a director, and
the meetings of the committee or committees on which he served during such
period. The New Jersey Business Corporation Act provides that the board of
directors, by resolution adopted by a majority of the entire board, may
designate one or more committees, each of which shall consist of one or more
directors. The Board of Directors
7
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annually elects from its members a Compensation Committee, a Stock Option
Committee and an Audit Committee, each of which were first formed in 1996.
Compensation Committee. The Compensation Committee, consisting of
Messrs. Green, Jacquet and Wilson, has the authority to approve salaries and
bonuses and other compensation matters for officers of the Company and to
approve employee health and benefit plans. The Compensation Committee met once
during 1996.
Stock Option Committee. The Stock Option Committee, consisting of
the members of the Compensation Committee other than Mr. Green, administers the
Company's Stock Option Plan. The Stock Option Committee met once during 1996.
Audit Committee. The Audit Committee, consisting of Messrs. Jacquet
and Wilson, has the authority to recommend the appointment of the Company's
independent auditors and review the results and scope of audits, internal
accounting controls and tax and other accounting related matters. The Audit
Committee met once during 1996.
Certain Business Relationships with Directors and Nominees
Mt. Laurel Lease. On April 29, 1996, the Company entered into an
operating lease agreement with 804 Eastgate Associates, LLC, a company owned by
William S. Green, Fred B. Gross and an unrelated third party, pursuant to which
the Company leases approximately 70,000 square feet for a warehouse and customer
service center in Mount Laurel, New Jersey for a minimum monthly rent of
$24,050 from January 1, 1997 through May 31, 2001 and an increased rent from
June 1, 2001 through the end of the lease term based on the Consumer Price
Index. The Company pays, as additional rent, all real estate taxes and
assessments, all utilities and insurance premiums for casualty insurance and any
other public liability insurance relating to the premises. Under the terms of
the lease, the Company is solely responsible for the costs of maintenance,
operation and repair of the leased property. The Company believes that the
terms of the lease are no less favorable to it then could be obtained from an
unaffiliated party. The lease term commenced on June 1, 1996 and will expire
May 31, 2006. The Company paid rent under this lease in the amount of $74,000
in fiscal 1996.
Headquarters Lease. The Company's headquarters at 303 Harper Drive,
Moorestown, New Jersey is leased to the Company by William Green. Under the
lease dated March 1, 1994 and amended March 7, 1995, the Company rents
approximately 12,500 square feet at an annual minimum rent of approximately
$137,500. The Company pays, as additional rent, all real estate taxes and
assessments, all utilities and insurance premiums for casualty insurance and any
other public liability insurance relating to the premises. Under the terms of
the lease, the Company is solely responsible for the costs of maintenance,
operation and repair of the headquarters property. The Company paid rent to Mr.
Green in the amount of $137,500 during fiscal 1996. The lease expires on
February 28, 2004 and does not contain any renewal terms. The Company believes
that the terms of the lease are no less favorable to it than could be obtained
from an unaffiliated party.
Preferred Stock and Debentures. In March 1995, the Company effected a
recapitalization (the "1995 Recapitalization"). As an integral part of the 1995
Recapitalization, the Company made a dividend distribution to William Green, the
sole shareholder of the Company at that time, in the form of 105,914 shares of
Series B Junior Preferred Stock with a redemption value of $10.6 million, to be
amended as described below. The Company issued 129,450 shares of its Series A
Senior Preferred Stock to Summit Ventures III, L.P., Summit Investors II, L.P.
and Summit Subordinated Debt Fund, L.P. (collectively, the "Summit Investors")
for a purchase price of $12.9 million. All of the outstanding Series A Senior
Preferred Stock was redeemed, by its terms, for $12.9 million (plus accrued
dividends estimated at $900,000) upon consummation of the Company's initial
public offering in January 1996. The Company used the proceeds of the
investment by Summit to redeem 3,584,000 shares of Common Stock held by William
Green for $15.1 million. As deferred consideration for the redemption of Mr
Green's Common Stock in connection with the 1995 Recapitalization, the Company
issued a $2.0 million note to Mr. Green on November 22, 1995, payable only if
the Company satisfies certain earnings targets in 1995 and 1996, or upon the
earlier consummation of a qualified liquidity event, including the initial
public offering. The Company paid the note with a portion of the
8
<PAGE>
proceeds of its initial public offering in January 1996. In connection with the
1995 Recapitalization, the Company issued 3,080,000 shares of its Common Stock
to the Summit Investors for an aggregate purchase price of $55,000. As a
result of the 1995 Recapitalization, the Company has incurred significant
interest expense and been required to accrue preferred dividends since March 9,
1995 through the initial public offering. In connection with the initial public
offering, William Green agreed to convert $5.0 million of his Series B Junior
Preferred Stock into Common Stock at the offering price $11.00. Simultaneously
with the initial public offering, the terms of the Series B Junior Preferred
Stock were amended to provide that $5.0 million of Mr Green's Series B Junior
Preferred Stock would be converted into 454,545 shares of Common Stock, and the
balance would be redeemed for $5.6 million (plus accrued dividends estimated at
$700,000).
Martin and Florence Green Stock Redemption. In January, 1996, the
Company used a portion of the proceeds of its initial public offering to prepay
in full the Company's remaining obligations of $1.0 million under a note to
Martin and Florence Green, issued on July 8, 1993 and amended on November 28,
1994.
Certain Payments for Collection Services. In 1996, the Company made
payments in the aggregate amount of $12,400 to a law firm for paralegal services
in collecting delinquent accounts receivable on behalf of the Company. This
firm, which is owned by Mr. Gross, collects delinquent accounts receivable for a
number of businesses, including the Company. The day-to-day services of the
firm are performed by Mr. Gross's spouse and an unrelated lawyer. The Company
believes that the terms of the engagement are no less favorable than could be
obtained by an unaffiliated firm.
PROPOSAL NO. 2
APPROVAL OF THE WILMAR INDUSTRIES, INC. 1996 DIRECTOR PLAN
At the Annual Meeting, there will be presented to the shareholders a
proposal to approve the adoption of the Wilmar Industries, Inc. 1996 Director
Plan (the "Plan"). The Plan was adopted by the Board of Directors on August 1,
1996, subject to shareholder approval. The purpose of the Plan is to provide
non-employee members of the Board of Directors of the Company with the
opportunity to receive grants of nonqualified stock options. The Company
believes that the Plan will cause the participants to contribute materially to
the growth of the Company, thereby benefitting the Company's shareholders, and
will align the economic interests of the participants with those of the
shareholders.
Approval of the proposal to adopt the Plan requires the affirmative
vote of the holders of a majority of shares present in person or represented by
proxy at the Annual Meeting. Abstentions may be specified on the proposal and
will be considered present at the Annual Meeting, but will not be counted as
affirmative votes. Abstentions, therefore will have the practical effect of
voting against the proposal. Broker non-votes are considered not present at the
Annual Meeting with respect to this matter and, therefore, will not be voted or
have any effect on the proposal.
The Board of Directors unanimously recommends a vote FOR the proposal.
Description of the Plan
The Plan authorizes up to 100,000 shares of Common Stock to be
available for option grants. The shares may be authorized but unissued shares
of Common Stock or reacquired shares of Common Stock, including shares purchased
by the Company on the open market for purposes of the Plan. If and to the
extent grants or options under the Plan terminate, expire, or are canceled,
forfeited, exchanged or surrendered without having been exercised, the shares
subject to such grants will again be available for purposes of the Plan.
Eligibility for Participation
All members of the Board who are not employees ("Non-Employee
Directors") are eligible to participate in the Plan. There are currently three
directors eligible to participate under the Plan.
9
<PAGE>
As of the date hereof, options to purchase 5,000 shares of Common
Stock have been granted under the Plan, subject to shareholder approval of the
Plan.
Grants of Stock Options
All stock options granted under the Plan ("Options") consist of so
called "nonqualified stock options" that are not intended to qualify as
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). Two types of Options may be
granted under the Plan - Discretionary Options and Formula Options.
An Option may only be exercised while the grantee is a member of the
Board of Directors, except in certain circumstances described below. In the
event that a grantee ceases to be a member of the Board of Directors for any
reason other than a death, any Option which is otherwise exercisable by the
grantee will terminate unless exercised within 90 days of the date on which the
grantee ceases to be a member of the Board of Directors (or within such other
period of time as may be specified by the Board of Directors), but in any event
no later than the date of expiration of the term of the Option. Any of the
grantee's Options that are not otherwise exercisable as of the date on which the
grantee ceases to be a member of the Board of Directors will terminate as of
such date. If the grantee dies while a member of the Board of Directors or
within 90 days after the date on which the grantee ceases to be a member of the
Board of Directors (or within such other period of time as may be specified by
the Board of Directors), any Option that is otherwise exercisable by the grantee
will terminate unless exercised within one year after the date on which the
grantee ceases to be a member of the Board of Directors (or within such other
period of time as may be specified by the Board of Directors), but in any event
no later than the date of expiration of the term of the Option. Any of the
grantee's Options that are not otherwise exercisable as of the date on which the
grantee ceases to be a member of the Board of Directors will terminate as of
such date.
A grantee may exercise an Option that has become exercisable, in whole
or in part, by delivering a notice of exercise to the Company along with payment
of the exercise price. The grantee must pay the exercise price for an Option as
specified by the Board of Directors (x) in cash, (y) with the approval of the
Board of Directors, by delivering shares of Company Stock owned by the grantee
(including Common Stock acquired in connection with the exercise of an Option,
subject to such restrictions as the Board of Directors deems appropriate) and
having a fair market value on the date of exercise equal to the Exercise Price
or (z) by such other method as the Board or Directors may approve.
For purposes of the Plan, the currently applicable definition of "fair
market value" of shares of Common Stock is the last reported sale price of a
share of Common Stock on the NASDAQ National Market on the relevant date or, if
there were no trades on that date, the latest preceding date upon which a sale
was reported. On April 4, 1997, the fair market value of a share of Common
Stock, as represented by the closing price on the NASDAQ National Market on such
date, was $15.50 per share.
Discretionary Options. Except in the case of Formula Options
(described below), the Board of Directors will determine the number of shares of
Common Stock that will be subject to each grant of options to Non-Employee
Directors (each such option, a "Discretionary Option"). The exercise price per
share of Common Stock subject to a Discretionary Option will be determined by
the Board of Directors and may be equal to, greater than or less than the fair
market value of a share of Common Stock on the date the Discretionary Option is
granted.
The Board of Directors will determine the term of each Discretionary
Option, which may not exceed ten years from the date of grant. Discretionary
Options will become exercisable in accordance with such terms and conditions,
consistent with the Plan, as may be determined by the Board of Directors and
specified in the terms of the option grant or an amendment to such grant. The
Board may accelerate the exercisability of any or all outstanding Discretionary
Options at any time for any reason.
10
<PAGE>
Formula Options. Each Non-Employee Director who is not employed by
or otherwise affiliated with the Summit Investors (each, an "Eligible Non-
Employee Director") who is in office immediately after the annual election of
directors (other than a director who is first elected to the Board at such
meeting) will receive an automatic grant of options to purchase 2,500 shares of
Common Stock (each, a "Formula Option"). If at any time there are not
sufficient shares available under the Plan to permit an automatic grant of
Formula Options, the grant will be reduced pro rata (to zero, if necessary) so
as not to exceed the number of shares then available under the Plan. Formula
Options are fully exercisable as of the date of grant. The term of each Formula
Option is ten years.
The exercise price per share of Common Stock subject to a Formula
Option will be equal to the fair market value of a share of Common Stock on the
date of grant. The fair market value for Formula Options is calculated in the
same manner as for Discretionary Options.
Transferability of Options
Only a grantee or his or her authorized representative may exercise
rights under an Option grant. Such persons may not transfer those rights except
by will or by the laws of descent and distribution or, if permitted under Rule
16b-3 of the Exchange Act (to the extent applicable) and if permitted in any
specific case by the Board of Directors in its sole discretion, pursuant to a
qualified domestic relations order (as defined under the Internal Revenue Code
of 1986, as amended or Title I of the Employee Retirement Income Savings Act of
1974, as amended, or the regulations thereunder). When a grantee dies, the
representative or other person entitled to succeed to the rights of the grantee
may exercise such rights.
Notwithstanding the foregoing, the Board of Directors may provide, in
a grant document, that a grantee may transfer Options to his or her children,
grandchildren or spouse or to one or more trusts for the benefit of such family
members or to partnerships in which such family members are the only partners,
provided that the grantee receives no consideration for the transfer and the
Options transferred continue to be subject to the same terms and conditions that
were applicable to the Options immediately prior to the transfer.
Administration of the Plan
The Plan is administered and interpreted by the Board of Directors.
Except with respect to Formula Grants, the Board of Directors has the sole
authority to (i) determine the individuals to whom grants are made under the
Plan, (ii) determine the type, size and terms of the grants to be made to each
such individual and (iii) determine the time when the grants will be made and
the duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability. The Board
has full power and authority to administer and interpret the Plan, to make
factual determinations and to adopt or amend such rules, regulations, agreements
and instruments for implementing the Plan and for the conduct of its business as
it deems necessary or advisable, in its sole discretion.
Amendment and Termination
The Board of Directors may amend or terminate the Plan at any time.
Otherwise, the Plan will terminate on the day immediately preceding the tenth
anniversary of its effective date unless extended by the Board or Directors.
However, a termination or amendment of the Plan that occurs after a grant is
made may not materially impair the rights of a grantee unless the grantee
consents or unless the Board of Directors acts to modify or terminate a grant
which does not comply with applicable laws. The termination of the Plan will
not impair the power and authority of the Board of Directors with respect to an
outstanding grant.
Federal Income Tax Consequences
The following discussion is intended to point out the general
principles of current federal income tax law applicable to Options granted under
the Plan. Grantees should contact their own tax advisors concerning the tax
consequences, if any, of the grant and exercise of Options and the disposition
of any shares of Common Stock
11
<PAGE>
underlying Options acquired upon exercise, since federal income tax laws may
change subsequent to the date hereof, individual financial situations vary and
state and local taxation may also be significant.
For Federal income tax purposes, the holder of an Option will not
recognize taxable income at the time of grant, and the Company will not be
allowed a deduction by reason of the grant. Except as described below, the
grantee will recognize ordinary compensation income upon exercise of the Option,
in an amount equal to the difference between the fair market value of the shares
of Common Stock received at the time of exercise and the exercise price of the
Option. The Company will generally be entitled to a deduction equal to the
amount of ordinary compensation income recognized by the grantee.
For the purpose of computing gain or loss on the subsequent sale or
taxable exchange of share of Common Stock purchased upon the exercise of an
Option, a grantee's tax basis in such shares will be the fair market value of
the shares of Common Stock on the date the grantee recognized ordinary
compensation income. Upon the subsequent sale or taxable exchange by the
grantee of such shares of Common stock acquired by exercise of an Option,
assuming the shares are held as capital assets, the grantee will realize capital
gain or loss (long-term or short-term, depending upon the length of the holding
period of the shares) in an amount equal to the difference between the grantee's
tax basis in such shares and the selling price.
If a grantee exercises an Option by transferring to the Company shares
of Common Stock having a market value equal to the exercise price of the shares
to be purchased, no income will be recognized on the receipt of a corresponding
number of shares, and the grantee's basis and holding period in the transferred
shares will carry over to the corresponding number of shares received upon the
exercise. The grantee will recognize ordinary income on the receipt of any
additional shares in an amount equal to their fair market value at the time of
exercise. The grantee's basis in such additional shares received will equal the
amount includable in the grantee's income and his or her holding period will
begin on the date of transfer.
NEW PLAN BENEFITS
The following table set forth certain benefits related to the Plan.
Future awards under the Plan are not determinable because Discretionary Options
are granted at the discretion of the Board of Directors, depending upon a
variety of factors. No Discretionary Options have been granted as of the date
hereof under the plan. The following table sets forth information with respect
to Formula Options granted under the Plan during 1996.
Wilmar Industries, Inc. 1996 Director Plan
Name and Position Number of Shares Subject to Options
- ----------------- -----------------------------------
Non-Employee Directors 5,000
12
<PAGE>
EXECUTIVE OFFICERS OF WILMAR
Set forth below is certain information regarding each of the current
executive officers of the Company.
Executive Officers Age Position
------------------ --- --------
William S. Green (1) .... 38 Chairman, President, Chief Executive
Officer and Director
Fred B. Gross (1) ...... 59 Vice President--Corporate Development,
Secretary and Director
Michael T. Toomey (2) .. 32 Chief Financial Officer and Treasurer
(1) See "Directors" for biographical information.
(2) Mr. Toomey has been Chief Financial Officer and Treasurer of the
Company since October 1992. Mr. Toomey is a certified public
accountant and, from October 1986 until October 1992, was an
accountant with the public accounting firm of Fishbein & Company,
P.C.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 as amended,
requires that directors and certain officers of the Company, and persons who own
more than ten percent of the Company's Common Stock, file with the Securities
and Exchange Commission initial reports of ownership and reports of changes of
ownership of such Common Stock.
To the Company's knowledge, all fiscal year 1996 Section 16(a) filing
requirements applicable to its directors, officers and more than ten percent
shareholders were complied with, except that Donald M. Wilson, a director, filed
a Form 3 on December 20, 1996 where the deadline for filing such Form 3 was in
July 1996.
13
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth for the years ended December 27, 1996
and December 29, 1995 certain compensation paid by the Company to its Chief
Executive Officer and the two other most highly paid executive officers of the
Company.
Summary Compensation Table
--------------------------
<TABLE>
<CAPTION>
Annual Long Term All Other
Compensation Compensation Compensation (1)
----------------------- ---------------- ----------------
Name and Principal Position(2) Year Salary Bonus Securities
------------------------------ ---- ------ ----- Underlying
Options
-------
<S> <C> <C> <C> <C> <C>
William S. Green.............................. 1996 $ 218,186 $ -0- -0- $2,805
Chairman, President and Chief Executive Officer 1995 200,000 $ 50,000 -0- 2,938
-----------------------------------------------------------------------------------
Fred B. Gross................................. 1996 $ 107,536 $ -0- 17,045 $2,805
Vice President -- Corporate Development and 1995 $ 107,726 40,000 64,400 1,790
Secretary
-----------------------------------------------------------------------------------
Michael T. Toomey............................. 1996 $ 80,600 $ -0- 17,045 $2,255
Chief Financial Officer 1995 69,700 40,000 72,800 1,693
- ---------------------------------------------------------------------------------
</TABLE>
(1) All other compensation consists of amounts matched by the Company under its
401 (k) with respect to Messrs. Green, Gross and Toomey. The amount shown
for Mr. Gross does not include legal fees paid to his spouse for paralegal
services of $12,400 and $12,000 for the years ended December 27, 1996 and
December 29, 1995, respectively.
(2) No individual named above received perquisites or non-cash compensation
during the years indicated exceeding the lesser of $50,000 or an amount
equal to 10% of such person's salary and bonus.
14
<PAGE>
The following table summarizes stock options granted during 1996 to the
persons named in the Summary Compensation Table.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value At Assumed
Annual Rates of Stock
Price Appreciation For
Individual Grants (2) Option Term(1)
-------------------------------- -------------------------
Percent of
Total Options
Granted to
Options Employees in Exercise Expiration
Name Granted 1996 Price Date 5% 10%
---- ------- ---- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
William S. Green.... -0- --- --- --- --- ---
--------------------------------------------------------------------------------------
Fred B. Gross....... 17,045 14% $11.00 1/24/2006 $117,915 $ 298,819
--------------------------------------------------------------------------------------
Michael T. Toomey... 17,045 14% $11.00 1/24/2006 $117,915 $ 298,819
--------------------------------------------------------------------------------------
All employees as a 116,000 100% $11.00 - $23.13 (3) $874,949 $2,217,294
group (3)..........
- -------------------------------------------------------------
</TABLE>
(1) Potential Realizable Values are based on an assumption that the stock price
of the Common Stock starts equal to the exercise price shown for each
particular option grant and appreciates at the annual rate shown
(compounded annually) from the date of grant until the end of the term of
the option. These amounts are reported net of the option exercise price,
but before any taxes associated with exercise or subsequent sale of the
underlying stock. The actual value, if any, an option holder may realize
will be a function of the extent to which the stock price exceeds the
exercise price on the date the option is exercised and also will depend on
the option holder's continued employment through the vesting period. The
actual value to be realized by the option holder may be greater or less
than the values estimated in this table.
(2) Except as otherwise indicated, this column relates to options granted under
the 1995 Stock Option Plan (the "1995 Plan"). The options granted vest in
25% increments on the second through fifth anniversaries of the date of
grant. The options expire on the tenth anniversary of the date of grant.
In general, options terminate (a) at any time the optionee's employment is
terminated by the Company for cause or a voluntary termination of
employment by the employee, or (b) one year following death or disability
of the employee. Options granted under the 1995 Plan are not assignable or
otherwise transferable except by will or the laws of descent and
distribution. Shares subject to options granted under the 1995 Plan which
have elapsed or terminated may again by subject to options granted under
the 1995 Plan.
(3) Options were granted between January and September 1996. Options expire 10
years from the date of grant.
15
<PAGE>
The following table summarizes option exercises during 1996 and the value
of vested and unvested options for the persons named in the Summary Compensation
Table at December 27, 1996. Year-end values are based upon a price of $21.75 per
share, which was the closing market price of a share of the Company's Common
Stock on December 27, 1996.
Aggregated Option Exercises in Last Year and
Year-End Option Values
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money Options at
Options at December 27, 1996 December 27, 1996
------------------------------ ---------------------------
Shares Acquired
Name on Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William S. Green....... -0- -- -0- -0- $-0- $ -0-
-------------------------------------------------------------------------------------------------
Fred B. Gross.......... -0- -- -0- 81,445 $-0- $1,311,522
-------------------------------------------------------------------------------------------------
Michael T. Toomey...... -0- -- -0- 89,845 $-0- $1,458,690
-------------------------------------------------------------------------------------------------
</TABLE>
The Company does not currently grant any long-term incentives, other than
stock options, to its executives or other employees. Similarly, the Company does
not sponsor any defined benefit or actuarial plans at this time.
Employment Agreements
In connection with the 1995 Recapitalization, William Green entered into an
employment agreement with the Company. Under the provisions of the employment
agreement, Mr. Green will serve as President and Chief Executive Officer of the
Company until March 1, 2000, unless earlier terminated by the Company, at an
annual base salary of $200,000, subject to adjustment, and an annual bonus upon
achieving specified financial targets set by the Compensation Committee. The
employment agreement also contains certain non-competition and related
provisions.
In March 1996, the Company entered into an employment agreement with Fred
B. Gross. The term of the agreement expires in April 1998 but will be renewed
automatically for successive one-year terms unless terminated by either party.
The agreement provides that Mr. Gross will receive an annual base salary of not
less than $107,500. The employment agreement also contains certain non-
competition and related provisions.
Compensation of Directors
Prior to the Company's initial public offering in January 1996, directors
did not receive compensation for acting as such. Independent directors are now
paid directors' fees of $1,500 for each board meeting attended. In addition,
directors are reimbursed for expenses incurred in connection with attendance at
Board of Directors and Committee meetings and are eligible to participate in the
Plan.
16
<PAGE>
The following Compensation Committee Report and the Comparative Stock
Performance Graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended, or under the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
JOINT REPORT OF THE COMPENSATION COMMITTEE AND
STOCK OPTION COMMITTEE ON EXECUTIVE COMPENSATION
The Board of Directors created the Compensation Committee and the Stock
Option Committee (the "Committees") to have the responsibility for implementing
and administrating the Company's compensation policies and programs for its
executive officers.
The Compensation Committee is responsible for setting the base salaries and
the total compensation levels of the Chief Executive Officer (the "CEO") and the
other executive officers of the Company. Mr. Green does not participate in the
approval of his compensation. The Stock Option Committee is responsible for
determining which executives, including the CEO, will be granted stock options
and the size of such grants.
Compensation Policies
The Company's compensation policies for executive officers are designed to
(a) provide competitive compensation packages that will attract and retain
superior executive talent, (b) link a significant portion of compensation to
financial results, so as to reward successful performance, and (c) provide long-
term equity compensation, to further align the interests of executive officers
with those of shareholders and further reward successful performance. The
principal components of the Company's executive officer compensation program are
base salary, annual cash incentive awards, and grants of stock options.
Base salary levels for the Company's executive officers are reviewed on an
annual basis by the Compensation Committee and are set generally to be
competitive with other companies of comparable size and geographic location,
taking into consideration the positions complexity, responsibility and need for
special expertise. Individual salaries also take into account individual
experience and performance.
Compensation for 1995 included a discretionary bonus relating to the
Company's initial public offering. The bonus program in 1996 was based on
exceeding certain earnings targets established by the Board of Directors. While
the Company had exemplary performance in 1996, that performance did not exceed
the established earnings goal.
Long-Term Compensation
The Stock Option Committee annually considers the desirability of granting
to officers and other employees of the Company Stock Options Plan. The objective
of the 1995 Plan is to align senior management and shareholder long-term
interest by creating a strong and direct link between the executive's
accumulation of wealth and shareholder return and to enable executives to
develop and maintain a significant, long-term stock ownership position in the
Company's common stock. Individual grants of stock options under the 1995 Plan
are based upon individual performance. The Stock Option Committee believes that
its past grants of stock options have successfully focused the Company's
executive officers and other members of senior management on building
profitability and shareholder value.
17
<PAGE>
Compensation of Chief Executive Officer
In determining the compensation of Mr. Green, the Compensation Committee
has taken into consideration pay levels of chief executive officers of other
companies, his contributions to the profitable growth and increased return on
equity of the Company over the past several years and Mr. Greens overall
management strengths and business acumen. It noted that the fully diluted
earnings per share of the Company's Common Stock increased 42% over last year
and the return to shareholders, as measured by the December 27, 1996 closing
price of the Company's Common Stock, has increased 98% from the IPO price of
$11.00 per share. Mr. Green's total annual compensation decreased 14.5% over
the same period. The Compensation Committee and the Stock Option Committee has
determined that because of Mr. Green's large equity stake of 2,412,545 shares
representing 18.5% of the total outstanding Common Stock that he is adequately
motivated to lead the Company's continued growth and profitability. Therefore,
Mr. Green was not granted any stock options in 1996.
Compensation Committee of Stock Option Committee of
the Board of Directors the Board of Directors
William S. Green Ernest K. Jacquet
Ernest K. Jacquet Donald M. Wilson
Donald M. Wilson
18
<PAGE>
COMPARATIVE STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Company's Common Stock with the cumulative total shareholder return of (i) the
NASDAQ Stock Market (U.S.) Index (the "NASDAQ Index"), and (ii) the Russell 2000
Index, assuming an investment of $100 on January 24, 1996 in each of the Common
Stock of the Company, the stocks comprising the NASDAQ Index and the stocks
comprising the Russell 2000 Index, and further assuming reinvestment of
dividends, if any. The graph commences as of January 24, 1996, the date the
Common Stock became publicly-traded. The Company has chosen the Russell 2000
Index as an index of issuers with similar market capitalizations because the
Company does not believe it can reasonably identify a peer group or applicable
published industry or line-of-business index. Such industry or line-of -
business indices are comprised primarily of either retailers or manufacturers
whose business is not substantially similar to the Company's business and are of
substantially greater market capitalization than the Company. In addition, most
of the Company's competitors are smaller, privately held companies.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
NASDAQ
Measurement Date Wilmar Industries, Inc. Stock Market - US Russell 2000
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
1/24/96 100 100 100
12/27/96 198 123 116
</TABLE>
19
<PAGE>
OTHER MATTERS
The Board of Directors is not aware of any matters not set forth herein
that may come before the meeting. If, however, further business properly comes
before the meeting, the persons named in the proxies will vote the shares
represented thereby in accordance with their judgment.
The accounting firm of Deloitte & Touche, LLP has been selected as the
Company's independent auditors for the 1997 fiscal year. A representative of
Deloitte & Touche, LLP is expected to be present at the Annual Meeting. Such
representative will have an opportunity to make a statement if such
representative desires to do so and will be available to respond to appropriate
questions from shareholders of the Company.
SHAREHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Shareholders may submit proposals on matters appropriate for shareholder
action at annual meetings in accordance with regulations adopted by the SEC. To
be considered for inclusion in the proxy statement and form of proxy relating to
the 1998 annual meeting, such proposals must be received by the Company no later
than December 12, 1997. Proposals should be directed to the attention of the
Secretary of the Company.
ANNUAL REPORT ON FORM 10-K
The Company will furnish without charge to each person whose proxy is being
solicited, upon the written request of such person, a copy of the Company's
annual report on Form 10-K for the year ended December 27, 1996, including the
financial statements, but excluding exhibits. Requests for copies of such report
should be directed to the Company, Attention: Fred B. Gross.
By order of the board of directors,
Fred B. Gross
Secretary
April 10, 1997
20
<PAGE>
WILMAR INDUSTRIES, INC.
1996 DIRECTOR PLAN
------------------
The purpose of the Wilmar Industries, Inc. 1996 Director Plan (the "Plan")
is to provide non-employee members of the Board of Directors of Wilmar
Industries, Inc. (the "Company") with the opportunity to receive grants of
nonqualified stock options. The Company believes that the Plan will cause the
participants to contribute materially to the growth of the Company, thereby
benefitting the Company's shareholders, and will align the economic interests of
the participants with those of the shareholders.
1. Administration
--------------
(a) Plan Administrator. The Plan shall be administered and interpreted by
------------------
the Board of Directors of the Company (the "Board").
(b) Authority. Except as provided in Section 6, the Board shall have the
---------
sole authority to (i) determine the individuals to whom grants shall be made
under the Plan, (ii) determine the type, size and terms of the grants to be made
to each such individual, and (iii) determine the time when the grants will be
made and the duration of any applicable exercise or restriction period,
including the criteria for exercisability and the acceleration of
exercisability. In addition, the Board shall have sole authority to deal with
any other matters arising under the Plan.
(c) Plan Interpretation. The Board shall have full power and authority to
--------------------
administer and interpret the Plan, to make factual determinations and to adopt
or amend such rules, regulations, agreements and instruments for implementing
the Plan and for the conduct of its business as it deems necessary or advisable,
in its sole discretion. The Board's interpretations of the Plan and all
determinations made by the Board pursuant to the powers vested in it hereunder
shall be conclusive and binding on all persons having any interest in the Plan
or in any awards granted hereunder. All powers of the Board shall be executed
in its sole discretion, in the best interest of the Company, not as a fiduciary,
and in keeping with the objectives of the Plan and need not be uniform as to
similarly situated individuals.
2. Grants
------
(a) Grant Instrument. Awards under the Plan may consist of grants of
----------------
options as described in Section 5 and Section 6 ("Options") (hereinafter
collectively referred to as "Grants"). All Grants shall be subject to the terms
and conditions set forth herein and to such other terms and conditions
consistent with this Plan as the Board deems appropriate and as are specified in
writing by the Board to the individual in a grant instrument (the "Grant
Instrument") or an amendment to the Grant Instrument. The Board shall approve
or ratify the form and provisions of each Grant. Grants under a particular
Section of the Plan need not be uniform as among the Optionees.
(b) Nonqualified Stock Options. All Options granted under the Plan shall
--------------------------
be nonqualified stock options that are not intended to qualify as "incentive
stock options" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
3. Shares Subject to the Plan
--------------------------
(a) Authorized Number of Shares. Subject to the adjustment specified
---------------------------
below, the aggregate number of shares of stock of the Company ("Company Stock")
that may be issued under the Plan is 100,000 shares. The shares may be
authorized but unissued shares of Company Stock or reacquired shares of Company
Stock, including shares purchased by the Company on the open market for purposes
of the Plan. If and to the extent Grants under the Plan terminate, expire, or
are cancelled, forfeited, exchanged or surrendered without having been
exercised, the shares subject to such Grants shall again be available for
purposes of the Plan.
<PAGE>
(b) Changes in Capitalization. If there is any change in the number or
-------------------------
kind of shares of Company Stock outstanding (i) by reason of a stock dividend,
spin off, recapitalization, stock split, or combination or exchange of shares,
(ii) by reason of a merger, reorganization or consolidation in which the Company
is the surviving corporation, (iii) by reason of a reclassification or change in
par value, or (iv) by reason of any other extraordinary or unusual event
affecting the outstanding Company Stock as a class without the Company's receipt
of consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spinoff or the Company's payment of an
extraordinary dividend or distribution, then the maximum number of shares of
Company Stock available for Grants, the number of shares covered by outstanding
Grants, the kind of shares issued under the Plan, and the price per share or the
applicable market value of such Grants may be appropriately adjusted by the
Board to reflect any increase or decrease in the number of, or change in the
kind or value of, issued shares of Company Stock to preclude the enlargement or
dilution of rights and benefits under such Grants; provided, however, that any
fractional shares resulting from such adjustment shall be eliminated. Any
adjustments determined by the Board shall be final, binding and conclusive.
4. Eligibility for Participation
-----------------------------
All members of the Board who are not employees ("Non-Employee Directors")
shall be eligible to participate in the Plan. Non-Employee Directors who
receive Grants under this Plan shall hereinafter be referred to as "Optionees".
5. Discretionary Option Grants to Non-Employee Directors
-----------------------------------------------------
(a) Number of Shares. The Board shall determine the number of shares of
----------------
Company Stock that will be subject to each Grant of Options to Non-Employee
Directors under this Section 5 ("Discretionary Options").
(b) Type of Option and Price. The purchase price (the "Exercise Price") of
------------------------
Company Stock subject to a Discretionary Option shall be determined by the Board
and may be equal to, greater than or less than the Fair Market Value (as defined
in Section 6(d)(ii) of a share of such Company Stock on the date the
Discretionary Option is granted.
(c) Option Term. The Board shall determine the term of each Discretionary
-----------
Option. The term of any Discretionary Option shall not exceed ten years from
the date of grant.
(d) Exercisability of Options. Discretionary Options shall become
-------------------------
exercisable in accordance with such terms and conditions, consistent with the
Plan, as may be determined by the Board and specified in the Grant Instrument or
an amendment to the Grant Instrument. The Board may accelerate the
exercisability of any or all outstanding Discretionary Options at any time for
any reason.
6. Formula Option Grants to Non-Employee Directors
-----------------------------------------------
(a) Eligible Non-Employee Directors. Any Non-Employee Director who is not
-------------------------------
employed by or otherwise affiliated with Summit Partners, L.P. or any of its
affiliates (an "Eligible Non-Employee Director") shall automatically be entitled
to receive Options in accordance with this Section 6 ("Formula Options").
(b) Initial Grant. Each Eligible Non-Employee Director who first becomes a
-------------
member of the Board after the effective date of this Plan (as specified in
Section 17) shall receive an initial Grant of a Formula Option to purchase 2,500
shares of Company Stock on the date as of which he or she first becomes a member
of the Board.
(c) Annual Grants. On each date that the Company holds its annual meeting
-------------
of shareholders, commencing with the 1997 annual meeting, each Eligible Non-
Employee Director who is in office immediately after the annual election of
directors (other than a director who is first elected to the Board at such
meeting) shall receive an automatic Grant of a Formula Option to purchase 2,500
shares of Company Stock. The date of grant of each such annual Grant shall be
the date of the annual meeting of the Company's shareholders.
-2-
<PAGE>
(d) Exercise Price.
--------------
(i) The Exercise Price per share of Company Stock subject to a Formula
Option granted under this Section 6 shall be equal to the Fair Market Value of a
share of Company Stock on the date of grant.
(ii) "Fair Market Value" shall mean (A) if the Company Stock is traded
in a public market, then the Fair Market Value per share shall be determined as
follows: (x) if the principal trading market for the Company Stock is a national
securities exchange or the Nasdaq National Market, the last reported sale price
thereof on the relevant date or (if there were no trades on that date) the
latest preceding date upon which a sale was reported, or (y) if the Company
Stock is not principally traded on such exchange or market, the mean between the
last reported "bid" and "asked" prices of Company Stock on the relevant date, as
reported on Nasdaq or, if not so reported, as reported by the National Daily
Quotation Bureau, Inc. or as reported in a customary financial reporting
service, as applicable and as the Board determines; and (A) if the Company Stock
is not traded in a public market or subject to reported transactions or "bid" or
"asked" quotations as set forth above, the Fair Market Value per share shall be
as determined by the Board.
(e) Option Term and Exercisability. The term of each Option granted
------------------------------
pursuant to this Section 6 shall be ten years. Options granted under this
Section 6 shall be fully exercisable as of the date of grant.
(f) Insufficient Shares. If at any time there are not sufficient shares
-------------------
available under the Plan to permit an automatic Grant as described in this
Section 6, the Grant shall be reduced pro rata (to zero, if necessary) so as not
to exceed the number of shares then available under the Plan.
7. Termination of Directorship or Death
------------------------------------
(a) Termination other than Death. Except as provided below, an Option may
----------------------------
only be exercised while the Optionee is a member of the Board. In the event
that an Optionee ceases to be a member of the Board for any reason other than a
death, any Option which is otherwise exercisable by the Optionee shall terminate
unless exercised within 90 days of the date on which the Optionee ceases to be a
member of the Board (or within such other period of time as may be specified by
the Board), but in any event no later than the date of expiration of the Option
term. Any of the Optionee's Options that are not otherwise exercisable as of
the date on which the Optionee ceases to be a member of the Board shall
terminate as of such date.
(b) Death. If the Optionee dies while a member of the Board or within 90
-----
days after the date on which the Optionee ceases to be a member of the Board (or
within such other period of time as may be specified by the Board), any Option
that is otherwise exercisable by the Optionee shall terminate unless exercised
within one year after the date on which the Optionee ceases to be a member of
the Board (or within such other period of time as may be specified by the
Board), but in any event no later than the date of expiration of the Option
term. Any of the Optionee's Options that are not otherwise exercisable as of
the date on which the Optionee ceases to be a member of the Board shall
terminate as of such date.
8. Exercise of Options
-------------------
An Optionee may exercise an Option that has become exercisable, in whole or
in part, by delivering a notice of exercise to the Company with payment of the
Exercise Price. The Optionee shall pay the Exercise Price for an Option as
specified by the Board (x) in cash, (y) with the approval of the Board, by
delivering shares of Company Stock owned by the Optionee (including Company
Stock acquired in connection with the exercise of an Option, subject to such
restrictions as the Board deems appropriate) and having a Fair Market Value on
the date of exercise equal to the Exercise Price or (z) by such other method as
the Board may approve, including payment through a broker in accordance with
procedures permitted by Regulation T of the Federal Reserve Board or any
successor regulation of the agency than responsible for administering margin
regulations pertaining to securities brokers. The Optionee shall pay the
Exercise
-3-
<PAGE>
Price at the time of exercise. Shares of Company Stock shall not be issued upon
exercise of an Option until the Exercise Price is fully paid and any required
withholding is made.
9. Transferability of Grants
-------------------------
(a) Successor Optionees. Only the Optionee or his or her authorized
-------------------
representative may exercise rights under a Grant. Such persons may not transfer
those rights except by will or by the laws of descent and distribution or, if
permitted under Rule 16b-3 of the Securities Exchange Act of 1934 (the "Exchange
Act") (to the extent applicable) and if permitted in any specific case by the
Board in its sole discretion, pursuant to a qualified domestic relations order
(as defined under the Code or Title I of the ERISA or the regulations
thereunder). When an Optionee dies, the representative or other person entitled
to succeed to the rights of the Optionee ("Successor Optionee") may exercise
such rights. A Successor Optionee must furnish proof satisfactory to the
Company of his or her right to receive the Grant under the Optionee's will or
under the applicable laws of descent and distribution.
(b) Family Transfers. Notwithstanding the foregoing, the Board may
----------------
provide, in a Grant Instrument, that an Optionee may transfer Options to his or
her children, grandchildren or spouse or to one or more trusts for the benefit
of such family members or to partnerships in which such family members are the
only partners (a "Family Transfer"), provided that the Optionee receives no
consideration for a Family Transfer and the Options transferred in a Family
Transfer continue to be subject to the same terms and conditions that were
applicable to such Options immediately prior to the Family Transfer.
10. Certain Corporate Changes
-------------------------
(a) Sale or Exchange of Assets, Dissolution or Liquidation, or Merger or
--------------------------------------------------------------------
Consolidation Where the Company Survives. If all or substantially all of the
- ----------------------------------------
assets of the Company are to be sold or exchanged, the Company is to be
dissolved or liquidated, or the Company is a party to a merger or consolidation
with another corporation in which the Company will be the surviving corporation,
then, each Optionee with any outstanding Options shall have the right to
exercise in full any installments of such Options not previously exercised
(whether or not the right to exercise such installments has accrued pursuant to
such Options), unless the Board, in its sole discretion, determines not to
accelerate such Options upon such transaction. In the event that options are
accelerated pursuant to this Section, if a termination of such Options would not
affect the accounting treatment of any such transaction, any options not
exercised shall thereafter terminate and cease to remain outstanding. In
addition, if a cashout of such Options would not affect the accounting treatment
of any such transaction, the Board may, in its sole discretion, require that the
Company purchase such Options for a cash payment equal to the excess over the
purchase price of the then fair market value of the shares of Company Stock
subject to the Optionee's outstanding Options.
(b) Merger or Consolidation Where the Company Does Not Survive. If the
----------------------------------------------------------
Company is a party to a merger or consolidation in which the Company will not be
the surviving corporation, then any Optionee with any outstanding Options shall
have the right to exercise in full any installments of such Options not
previously exercised (whether or not the right to exercise such installments has
accrued pursuant to such Options) unless the Board, in its sole discretion,
determines not to accelerate such Options upon such transaction. In the event
that Options are accelerated pursuant to this Section, if a termination of such
Options would not affect the accounting treatment of any such transaction, any
Options not exercised shall thereafter terminate and cease to remain
outstanding. In addition, if a cashout or substitution of such Options would
not affect the accounting treatment of any such transaction, the Board may, in
its sole discretion, require (i) that the Company purchase such Options for a
cash payment equal to the excess over the purchase price of the then fair market
value of the shares of Company Stock subject to the Optionee's outstanding
Options or (ii) that the surviving company replace the Options with options to
purchase common stock of the surviving company having comparable value and terms
as determined, in its sole discretion, by the Board.
-4-
<PAGE>
11. Amendment and Termination of the Plan
-------------------------------------
(a) Amendment. The Board may amend or terminate the Plan at any time.
---------
(b) Termination of Plan. The Plan shall terminate on the day immediately
-------------------
preceding the tenth anniversary of its effective date unless terminated earlier
by the Board or unless extended by the Board.
(c) Termination and Amendment of Outstanding Grants. A termination or
-----------------------------------------------
amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of an Optionee unless the Optionee consents or unless the
Board acts under Section 18(b). The termination of the Plan shall not impair
the power and authority of the Board with respect to an outstanding Grant.
Whether or not the Plan has terminated, an outstanding Grant may be terminated
or amended under Section 18(b) or may be amended by agreement of the Company and
the Optionee consistent with the Plan.
(d) Governing Document. The Plan shall be the controlling document. No
------------------
other statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company and its successors and assigns.
12. Funding of the Plan
-------------------
This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.
13. Rights of Participants
----------------------
Nothing in this Plan shall entitle any Non-Employee Director, or other
person to any claim or right to be granted a Grant under this Plan. Neither
this Plan nor any action taken hereunder shall be construed as giving any
individual any rights to be retained by or in the employ of the Company or any
other employment rights.
14. No Fractional Shares
--------------------
No fractional shares of Company Stock shall be issued or delivered pursuant
to the Plan or any Grant. The Board shall determine whether cash, other awards
or other property shall be issued or paid in lieu of such fractional shares or
whether such fractional shares or any rights thereto shall be forfeited or
otherwise eliminated.
15. Requirements for Issuance of Shares
-----------------------------------
No Company Stock shall be issued or transferred in connection with any
Grant hereunder unless and until all legal requirements applicable to the
issuance or transfer of such Company Stock have been complied with to the
satisfaction of the Board. The Board shall have the right to condition any
Grant made to any Optionee hereunder on such Optionee's undertaking in writing
to comply with such restrictions on his or her subsequent disposition of such
shares of Company Stock as the Board shall deem necessary or advisable as a
result of any applicable law, regulation or official interpretation thereof and
certificates representing such shares may be legended to reflect any such
restrictions. Certificates representing shares of Company Stock issued under
the Plan will be subject to such stop-transfer orders and other restrictions as
may be applicable under such laws, regulations and other obligations of the
Company, including any requirement that a legend or legends be placed thereon.
-5-
<PAGE>
16. Headings
--------
Section headings are for reference only. In the event of a conflict
between a title and the content of a Section, the content of the Section shall
control.
17. Effective Date of the Plan
--------------------------
Subject to the approval of the Company's shareholders at the Company's 1997
Annual Meeting of Stockholders, this Plan shall be effective on August 1, 1996.
18. Miscellaneous
-------------
(a) Grants in Connection with Corporate Transactions and Otherwise.
--------------------------------------------------------------
Nothing contained in this Plan shall be construed to (i) limit the right of the
Board to make Grants under this Plan in connection with the acquisition, by
purchase, lease, merger, consolidation or otherwise, of the business or assets
of any corporation, firm or association, or for other proper corporate purpose,
or (ii) limit the right of the Company to grant stock options or make other
awards outside of this Plan.
(b) Compliance with Law. The Plan, the exercise of Options and the
-------------------
obligations of the Company to issue or transfer shares of Company Stock under
Grants shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. With respect to persons
subject to Section 16 of the Exchange Act, it is the intent of the Company that
the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act. The Board
may revoke any Grant if it is contrary to law or modify a Grant to bring it into
compliance with any valid and mandatory government regulation. The Board may
also adopt rules regarding the withholding of taxes on payments to Optionees.
The Board may, in its sole discretion, agree to limit its authority under this
Section.
(c) Ownership of Stock. An Optionee or Successor Optionee shall have no
------------------
rights as a shareholder with respect to any shares of Company Stock covered by a
Grant until the shares are issued or transferred to the Optionee or Successor
Optionee on the stock transfer records of the Company.
(d) Governing Law. The validity, construction, interpretation and effect
-------------
of the Plan and Grant Instruments issued under the Plan shall exclusively be
governed by and determined in accordance with the law of the State of New
Jersey.
-6-
<PAGE>
WILMAR INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS MAY 6, 1997
The undersigned hereby appoints William S. Green and Fred B. Gross as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them, to represent and vote, as designated on the reverse, all shares of Common
Stock of Wilmar Industries, Inc. (the "Company") held of record by the
undersigned on April 4, 1997, at the Annual Meeting of Stockholders to be held
on May 6, 1997 or any adjournment thereof.
(TO BE SIGNED ON REVERSE SIDE.)
<PAGE>
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
WILMAR INDUSTRIES, INC.
MAY 6, 1997
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
FOR WITHHOLD AUTHORITY
TO VOTE FOR ALL NOMINEES
LISTED AT RIGHT
1. ELECTION OF DIRECTORS [_] [_]
NOMINEES: William S. Green
Martin E. Hanaka
Donald M. Wilson
For all nominees listed (except as marked to the contrary below)
FOR AGAINST ABSTAIN
2. Proposal to approve the Company's
1996 Stock Option Plan for Non-Employee [_] [_] [_]
Directors, including the reservation of
100,000 shares of Common Stock for
issuance thereunder.
3. In their discretion, upon such other business as may properly come before the
Annual Meeting or any postponement or adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY, WHEN
PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSAL 2.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO MARK, SIGN, DATE
AND RETURN THE PROXY CARD PROMPTLY IN THE ENCLOSED PRE-ADDRESSED ENVELOPE.
SIGNATURE:______________________________________ DATE:________________________
NOTE: PLEASE SIGN EXACTLY AS NAME OR NAMES APPEARS ON STOCK CERTIFICATE HEREON
