GEVITY HR, INC.

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KX+89ctMjLKBZdUnxcJnkvQskhGXLeqRf4FlzsH5Z6xRSEF4iAg4vHstREgyejro NAYNbUU2lyWf11rrRtt4OA== 0000950144-03-007780.txt : 20030723 0000950144-03-007780.hdr.sgml : 20030723 20030616171658 ACCESSION NUMBER: 0000950144-03-007780 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20030616 GROUP MEMBERS: FRONTENAC MASTERS VIII LIMITED PARTNERSHIP GROUP MEMBERS: FRONTENAC VIII LIMITED PARTNERSHIP GROUP MEMBERS: FRONTENAC VIII PARTNERS, L.P. FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FRONTENAC CO VIII LLC CENTRAL INDEX KEY: 0001242296 IRS NUMBER: 364343639 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 135 S LASALLE ST CITY: CHICAGO STATE: IL ZIP: 60603 MAIL ADDRESS: STREET 1: 135 SOUTH LASALLE STREET STREET 2: SUITE 3800 CITY: CHICAGO STATE: IL ZIP: 60603 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GEVITY HR CENTRAL INDEX KEY: 0001035185 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 650735612 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-53043 FILM NUMBER: 03746114 BUSINESS ADDRESS: STREET 1: 600 301 BLVD W STREET 2: STE 202 CITY: BRADENTON STATE: FL ZIP: 34205 BUSINESS PHONE: 9417484340 MAIL ADDRESS: STREET 1: 600 301 BLVD W STREET 2: STE 202 CITY: BRADENTON STATE: FL ZIP: 34205 FORMER COMPANY: FORMER CONFORMED NAME: STAFF LEASING INC DATE OF NAME CHANGE: 19970306 SC 13D 1 g83404sc13d.htm GEVITY HR, INC. GEVITY HR, INC.


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

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. )

Gevity HR, Inc.

(Name of Issuer)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

374393106

(CUSIP Number)

Karen C. Fanelli
Frontenac Company, L.L.C.
135 South LaSalle Street, Suite 3800
Chicago, Illinois 60603
(312) 368-0044

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

COPY TO:
Margaret A. Gibson, P.C.
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
(312) 861-2000

June 6, 2003

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240. 13d-7 for other parties to whom copies are to be sent.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

Page 1 of 16 Pages


CUSIP No. 374393106		13D	Page 2 of 16 Pages

1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).

Frontenac VIII Limited Partnership

2. Check the Appropriate Box if a Member of a Group (See Instructions)

(a) o

(b) x

3. SEC Use Only

4. Source of Funds (See Instructions)

5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

6. Citizenship or Place of Organization

Delaware

7. Sole Voting Power

Number of      -0-

Shares 8. Shared Voting Power

Beneficially      4,779,412 (See Item 5)

Owned by Each 9. Sole Dispositive Power

Reporting      -0-

Person 10. Shared Dispositive Power

With      3,722,426 (See Item 5)

11. Aggregate Amount Beneficially Owned by Each Reporting Person

4,779,412 (See Item 5)

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

13. Percent of Class Represented by Amount in Row (11)

18.48% (See Item 5)

14. Type of Reporting Person (See Instructions)


CUSIP No. 374393106		13D	Page 3 of 16 Pages

1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).

Frontenac Masters VIII Limited Partnership

2. Check the Appropriate Box if a Member of a Group (See Instructions)

(a) o

(b) x

3. SEC Use Only

4. Source of Funds (See Instructions)

5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

6. Citizenship or Place of Organization

Delaware

4,779,412 (See Item 5)

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

13. Percent of Class Represented by Amount in Row (11)

18.48% (See Item 5)

14. Type of Reporting Person (See Instructions)


CUSIP No. 374393106		13D	Page 4 of 16 Pages

1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).

Frontenac VIII Partners, L.P.

2. Check the Appropriate Box if a Member of a Group (See Instructions)

(a) o

(b) x

3. SEC Use Only

4. Source of Funds (See Instructions)

5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

6. Citizenship or Place of Organization

Delaware

7. Sole Voting Power

Number of      -0-

Shares 8. Shared Voting Power

Beneficially      4,779,412 (See Item 5)

Owned by Each 9. Sole Dispositive Power

Reporting      -0-

Person 10. Shared Dispositive Power

With      4,779,412 (See Item 5)

11. Aggregate Amount Beneficially Owned by Each Reporting Person

4,779,412 (See Item 5)

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

13. Percent of Class Represented by Amount in Row (11)

18.48% (See Item 5)

14. Type of Reporting Person (See Instructions)


CUSIP No.		13D	Page 5 of 16 Pages

1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).

Frontenac Company VIII, L.L.C.

2. Check the Appropriate Box if a Member of a Group (See Instructions)

(a) o

(b) x

3. SEC Use Only

4. Source of Funds (See Instructions)

5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

6. Citizenship or Place of Organization

Delaware

7. Sole Voting Power

Number of      -0-

Shares 8. Shared Voting Power

Beneficially      4,779,412 (See Item 5)

Owned by Each 9. Sole Dispositive Power

Reporting      -0-

Person 10. Shared Dispositive Power

With      4,779,412 (See Item 5)

11. Aggregate Amount Beneficially Owned by Each Reporting Person

4,779,412 (See Item 5)

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

13. Percent of Class Represented by Amount in Row (11)

18.48% (See Item 5)

14. Type of Reporting Person (See Instructions)


CUSIP No. 374393106		13D		Page 6 of 16 Pages

Item 1. Security and Issuer.

The class of equity security to which this statement relates is the common stock, par value $.01 per share (the “Common Stock”), of Gevity HR, Inc., a Florida corporation (the “Issuer”). The name and address of the principal executive offices of the Issuer are 600 301 Boulevard West, Suite 202, Bradenton, Florida 34205.

Item 2. Identity and Background.

(a) Names of Reporting Persons: This statement on Schedule 13D (this “Statement”) is being jointly filed by each of the following persons pursuant to Rule 13d-1(k) promulgated by the Securities and Exchange Commission (the “Commission”) pursuant to Section 13 of the Securities Exchange Act of 1934 as amended (the “Exchange Act”):

Frontenac VIII Limited Partnership (“Frontenac VIII”), a Delaware limited partnership, by virtue of its deemed beneficial ownership of 3,563,419 shares of Common Stock;

Frontenac Masters VIII Limited Partnership (“Frontenac Masters VIII”), a Delaware limited partnership, by virtue of its deemed beneficial ownership of 159,007 shares of Common Stock;

Frontenac VIII Partners, L.P. (“Frontenac VIII LP”), a Delaware limited partnership, by virtue of its being the general partner of each of Frontenac VIII and Frontenac Masters VIII;

Frontenac Company VIII, L.L.C. (“Frontenac VIII LLC”), a Delaware limited liability company, by virtue of it being the general partner of Frontenac VIII LP;

all of whom are collectively referred to as the “Reporting Persons.” The Reporting Persons have entered into a Joint Filing Agreement, dated the date hereof, a copy of which is filed with this Statement as Exhibit A (which is hereby incorporated by reference) pursuant to which the Reporting Persons have agreed to file this statement jointly in accordance with the provisions of Rule 13d-1(k)(1) under the Act.

Pursuant to Rule 13d-4 of the Act, the Reporting Persons expressly declare that the filing of this statement shall not be construed as an admission that any such person is, for the purposes of Section 13(d) and/or Section 13(g) of the Act or otherwise, the beneficial owner of any securities covered by this Statement held by any other person.

Certain information required by this Item 2 concerning the executive officers and the directors of Frontenac VIII LLC is set forth on Schedule A attached hereto, which is incorporated herein by reference.

(b) Business Address: The address of the principal business office of each of the Reporting Persons is: 135 South LaSalle Street, Suite 3800, Chicago, Illinois 60603.

(c) Principal Occupation and the Name, Principal Business and Address of any Corporation or Organization: Each of the Reporting Persons is a private equity investment fund or a member of a private equity fund. Frontenac VIII and Frontenac Masters VIII are principally engaged in the business of investing in securities. Frontenac VIII LP is engaged primarily in the business of serving as the general partner for each of Frontenac VIII and Frontenac Masters VIII. Frontenac VIII LLC is engaged primarily in the business of serving as the general partner of Frontenac VIII LP. Dispositive and voting power of the securities owned by Frontenac VIII and Frontenac Masters VIII are shared by Frontenac VIII LP and Frontenac VIII LLC.

Page 6 of 16 Pages


CUSIP No. 374393106		13D		Page 7 of 16 Pages

(d)-(e) Information with respect to each Reporting Person is given solely by such Reporting Person, and no Reporting Person assumes responsibility for the accuracy or completeness of the information furnished by another Reporting Person. The Reporting Persons expressly disclaim that they have agreed to act as a group other than as described in this Statement.

None of the Reporting Persons nor, to the best of their knowledge, the Reporting Persons’ executive officers, managing directors or general partners (as applicable) has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceedings was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) Citizenship: The information set forth in Item 2(a) of this Statement is hereby incorporated herein by reference.

Item 3. Source and Amount of Funds or Other Consideration.

On June 6, 2003, Frontenac VIII acquired 19,385 shares of Preferred Stock for an aggregate purchase price of $19,385,000 and Frontenac Masters VIII acquired 865 shares of Preferred Stock for $865,000. Each share of Preferred Stock is convertible at any time, at Frontenac VIII’s and Frontenac Masters VIII’s (respectively) option, into a number of shares of Common Stock equal to (i) the number of shares of Preferred Stock to be converted times $1,000, and (ii) divided by the conversion price then in effect. The terms upon which the Preferred Stock may be converted into Common Stock are set forth in the Articles of Amendment filed by the Issuer with the Secretary of State of the State of Florida on June 5, 2003 (the “Articles of Amendment”), which is attached hereto as Exhibit D and is incorporated herein by reference. At this time, the conversion price at which the shares of Preferred Stock may be converted into Common Stock is $5.44. As of June 6, 2003, the Preferred Stock owned by Frontenac VIII was convertible into 3,563,419 shares of Common Stock and the Preferred Stock owned by Frontenac Masters VIII was convertible into 159,007 shares of Common Stock. Frontenac VIII’s and Frontenac Masters VIII’s source of funds for these acquisitions of shares was capital contributions from each of their respective investors.

The information set forth in Item 4 of this Statement is hereby incorporated herein by reference.

Item 4. Purpose of Transaction.

On June 6, 2003, the Issuer completed the issuance and sale of 30,000 shares of Preferred Stock to Frontenac VIII, Frontenac Masters VIII, SunTrust Equity Funding, LLC (“SunTrust”), BVCF IV, L.P. (“BVCF IV”) and C&B Capital, L.P. (“C&B,” and together with Frontenac VIII, Frontenac Masters VIII, SunTrust and BVCF IV, the “Investors,” and individually, an “Investor”) for an aggregate purchase price of $30 million. Pursuant to the terms of the Purchase Agreement, the Issuer intends to use a portion of the net proceeds to purchase from Charles S. Craig, one of the Issuer’s directors and founders, a sufficient number of Mr. Craig’s shares of Common Stock to reduce his beneficial ownership of the Issuer’s Common Stock below 10%, with the remainder of the net proceeds to be added to the Issuer’s unrestricted cash and available for general corporate purposes, which may include acquisitions.

Purchase Agreement

On April 24, 2003, the Issuer entered into a Preferred Stock Purchase Agreement with Frontenac VIII, Frontenac Masters VIII, SunTrust and BVCF IV, in the form attached hereto as Exhibit B (the “Purchase Agreement”). The Purchase Agreement was subsequently amended on June 3, 2003, pursuant

Page 7 of 16 Pages


CUSIP No. 374393106		13D		Page 8 of 16 Pages

to the First Amendment to the Purchase Agreement (the “First Amendment”) pursuant to which C&B was added as a party to the Purchase Agreement. A copy of the Purchase Agreement and the First Amendment are attached hereto as Exhibit B and Exhibit C, respectively, and incorporated herein by reference.

Pursuant to the Purchase Agreement (as amended), the Investors agreed to purchase an aggregate of 30,000 shares of Preferred Stock for a purchase price of $1,000 per share of Preferred Stock, or $30.0 million in the aggregate. Except as otherwise required by law and the Voting Rights Letter Agreement (the “Voting Rights Letter Agreement”) (which is attached hereto as Exhibit G and incorporated herein by reference), the Preferred Stock will vote with the holders of the Issuer’s Common Stock on an as-if-converted basis on all matters. The terms of the Articles of Amendment provide that so long as Frontenac VIII and Frontenac Masters VIII (together, “Frontenac”), are the Majority Holders, the Issuer must obtain the approval of the Majority Holders prior to taking certain actions and corporate transactions, as set forth in the Articles of Amendment which is attached hereto as Exhibit D and incorporated herein by reference. Prior to transferring any shares of Preferred Stock, the transferring shareholder must give the Issuer the opportunity to make an offer for the shares of Preferred Stock. Generally, the term “Majority Holders” is defined to mean the holders of a majority of the then outstanding Preferred Stock, excluding any shares of Preferred Stock held by a holder or group of affiliated holders of less than 10% of the then outstanding Preferred Stock.

The Articles of Amendment further provides that so long as Frontenac is the Majority Holder, the holders of the Preferred Stock, voting separately by one vote for each share of Preferred Stock, will be entitled to elect two directors (the “Series A Directors”) to serve as members of the Issuer’s board. The Series A Directors will not be divided into classes and will be in addition to the maximum number of directors who may be elected by the holders of the Issuer’s Common Stock. Additionally, the Articles of Amendment provides, in the event of certain circumstances, the holders of the Preferred Stock the right to elect an additional Series A Director.

The right of holders of the Preferred Stock to elect the Series A Directors shall terminate on the earlier to occur of the date when Frontenac is no longer the Majority Holder and the date on which there are no shares of Preferred Stock outstanding. The preceding summary of the terms of the Purchase Agreement (as amended) and the Articles of Amendment is qualified in its entirety by reference to the detailed provisions of the Purchase Agreement, a copy of which is attached as Exhibit B; the First Amendment, a copy of which is attached as Exhibit C and the Articles of Amendment, a copy of which is attached as Exhibit D, and each are, respectively, incorporated herein by reference.

Registration Rights Agreement

On June 6, 2003, the Issuer entered into a Registration Rights Agreement in the form attached hereto as Exhibit E (the “Registration Rights Agreement”) with the Investors.

The Registration Rights Agreement provides that the holders of at least a majority of the shares of Common Stock issued upon conversion of the Preferred Stock (the “Conversion Shares”) then outstanding may request up to three registrations under the Securities Act of all or any portion of their Conversion Shares on Form S-1 and the holders of at least 25% of the Conversion Shares then outstanding may request an unlimited number of registrations under the Securities Act of all or any portion of their Conversion Shares on Form S-3; provided, however, that the aggregate offering value of the Conversion Shares requested to be registered in any demand registration must equal at least $10 million for a registration on Form S-1 and at least $2 million for a registration on Form S-3. In addition, the Investors will have unlimited “piggyback” registration rights under which they will have the right to request that the Issuer register their Conversion Shares whenever the Issuer registers any of the Issuer’s

Page 8 of 16 Pages


CUSIP No. 374393106		13D		Page 9 of 16 Pages

securities under the Securities Act and the registration form to be used may be used for the registration of their Conversion Shares. Such “piggyback” registration rights will not be available if the piggyback registration is in connection with an underwritten registration and the managing underwriter concludes that including Conversion Shares owned by holders of “piggyback” registration rights would have an adverse impact on the marketing of the securities to be sold in the underwritten offering or for registrations undertaken because of a demand registration. The preceding summary of the terms of the Registration Rights Agreement is qualified in its entirety by reference to the detailed provisions of the Registration Rights Agreement, a copy of which is attached as Exhibit E and incorporated herein by reference.

Co-Investment Agreement

Pursuant to the terms of the Co-Investment Agreement, dated as of June 6, 2003 (the “Co-Investment Agreement”), by and among Frontenac VIII, Frontenac Masters VIII, SunTrust, BVCF IV and C&B, the Investors (other than BVCF IV) agreed to vote all of their respective shares of Preferred Stock on matters relating to (i) the designation, election and removal of the directors to be elected by the holders of the Preferred Stock (as described above) and (ii) the making of all other decisions and exercise of all other rights expressly granted to the Majority Holders, pursuant to the Purchase Agreement (as amended) or the Articles of Amendment, as directed by Frontenac. Additionally, Frontenac has agreed not to transfer any shares of Preferred Stock without providing “tag along” rights to the Co-Investors, and the Co-Investors must, in connection with a Change in Ownership, Fundamental Change or Organic Change (as such terms are defined in the Articles of Amendment attached hereto as Exhibit D and incorporated herein by reference) either convert their Preferred Stock or participate in and facilitate such transaction. The preceding summary of the Co-Investment Agreement is qualified in its entirety by reference to the detailed provisions of the Co-Investment Agreement, a copy of which is attached as Exhibit F and incorporated herein by reference.

Except as set forth in this Item 4 and in Item 5 below, as of the date hereof, the Reporting Persons do not have any plan or proposal that relates to or would result in:

(a) The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer;

(b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries;

(c) A sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries;

(d) Any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board;

(e) Any material change in the present capitalization or dividend policy of the Issuer;

(f) Any other material change in the Issuer’s business or corporate structure;

(g) Changes in the Issuer’s charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person;

(h) Causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association;

Page 9 of 16 Pages


CUSIP No. 374393106		13D		Page 10 of 16 Pages

(i) A class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or

(j) Any action similar to any of those enumerated above.

Notwithstanding the foregoing, the Reporting Persons reserve the right to effect any such actions as any of them may deem necessary or appropriate in the future. In determining whether to sell their shares of the Issuer’s Common Stock or Preferred Stock (and in what amounts) or to retain such shares, the Reporting Persons will take into consideration such factors as they deem relevant, including the business and prospects of the Issuer, anticipated future developments concerning the Issuer, existing and anticipated market conditions from time to time, general economic conditions, regulatory matters, and other opportunities available to the Reporting Persons. The Reporting Persons reserve the right to acquire additional securities of the Issuer in the open market, in privately negotiated transactions (which may be with the Issuer, with any Investor or with third parties) or otherwise, to dispose of all or a portion of their holdings of securities of the Issuer or to change their intention with respect to any or all of the matters referred to in this Item 4.

The information set forth in Item 3 of this Statement is hereby incorporated herein by reference.

Item 5. Interest in Securities of the Issuer.

(a) Amount Beneficially Owned: As of June 6, 2003, Frontenac VIII beneficially owned 3,563,419 shares of Common Stock (on an as-if converted basis as described in Item 3 above), constituting approximately 14.5% of the outstanding Common Stock of the Issuer. Also as of such date, Frontenac Masters VIII beneficially owned 159,007 shares of Common Stock (on an as-converted basis as described in Item 3), constituting approximately 0.75% of the outstanding Common Stock of the Issuer. Frontenac VIII LP, as the general partner of each of Frontenac VIII and Frontenac Masters VIII, and Frontenac VIII LLC, as the general partner of Frontenac VIII LP, may be deemed to beneficially own the 3,722,426 shares of Common Stock, the aggregate number of shares of Common Stock held by Frontenac VIII and Frontenac Masters VIII, constituting approximately 15.0% of the outstanding Common Stock of the Issuer.

As a result of certain of the provisions contained in the Co-Investment Agreement, the Reporting Persons may be deemed to be the beneficial owner of the shares of Preferred Stock held by SunTrust and C&B (C&B, together with SunTrust, the “Co-Investors”). As of the date hereof, each of the Reporting Persons may be deemed to be the beneficial owner, within the meaning of Rule 13d-3 of the Exchange Act, of an aggregate of 4,779,412 shares of Common Stock, which is the aggregate number of shares of Common Stock held by Frontenac VIII, Frontenac Masters VIII, SunTrust and C&B, constituting approximately 18.48% of the Common Stock outstanding on an as-if converted basis. The Reporting Persons expressly disclaim that they have agreed to act as a group with the Co-Investors. The paragraph below lists the names of each of the Co-Investors and the number of shares beneficially owned by each Co-Investor in which the Reporting Persons may be deemed to have beneficial ownership because of the Co-Investment Agreement.

As of June 6, 2003, SunTrust beneficially owned 919,118 shares of Common Stock (on an as-if converted basis as described in Item 3 above), constituting approximately 4.18% of the outstanding Common Stock of the Issuer, and C&B beneficially owned 137,868 shares of Common Stock (on an as-if converted basis as described in Item 3 above), constituting approximately 0.65% of the outstanding Common Stock of the Issuer.

(b) Number of shares of Common Stock of the Issuer as to which such person has:

Page 10 of 16 Pages


CUSIP No. 374393106		13D		Page 11 of 16 Pages

(i) Sole power to vote or to direct the vote:

N/A

(ii) Shared power to vote or to direct the vote:


		Frontenac VIII		4,779,412 Shares
		Frontenac Masters VIII		4,779,412 Shares
		Frontenac VIII LP		4,779,412 Shares
		Frontenac VIII LLC		4,779,412 Shares

(iii) Sole power to dispose or to direct the disposition of:

N/A

(iv) Shared power to dispose of or to direct the disposition of:


		Frontenac VIII		3,727,426 Shares
		Frontenac Masters VIII		3,727,426 Shares
		Frontenac VIII LP		4,779,412 Shares
		Frontenac VIII LLC		4,779,412 Shares

The filing of this Statement by Frontenac VIII, Frontenac Masters VIII, Frontenac VIII LP and Frontenac VIII LLC shall not be considered an admission that such Reporting Persons, for the purpose of Section 13(d), 13(g) or any other Section of the Exchange Act, are the beneficial owners of any shares in which such Reporting Persons do not have a pecuniary interest.

All of the percentages calculated in this Statement are based upon an aggregate of 21,086,736 shares outstanding as of May 9, 2003 as disclosed in the Issuer’s Quarterly Report on Form 10-Q filed with the Commission on May 15, 2003.

(c) Transactions Within the Past 60 Days: Except for the transactions described herein, there have been no other transactions in the securities of the Issuer effected by the Reporting Persons in the last 60 days.

(d) Right to Receive or Power to Direct: Except as stated within this Item 5, to the knowledge of the Reporting Persons, only the Reporting Persons have the right to receive or the power to direct the receipt of dividends from, or proceeds from the sale of, the shares of Common Stock owned beneficially by any of the Reporting Persons.

(e) Date Reporting Person Ceased to be 5% Beneficial Owner: Inapplicable.

Page 11 of 16 Pages


CUSIP No. 374393106		13D		Page 12 of 16 Pages

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

Except for the agreements described above or in response to Items 3, 4 and 5 of this Statement, which are hereby incorporated by reference, to the best knowledge of the Reporting Persons, there are no contracts, arrangements, understandings or relationships (legal or otherwise) between the persons enumerated in Item 2 of this Statement and any other person, with respect to any securities of the Issuer, including, but not limited to, transfer or voting of the securities, finder’s fees, joint ventures, loan or option agreements, puts or calls, guarantees of profits, divisions of profits or loss, or the giving or withholdings of proxies.

Item 7. Material to be filed as Exhibits.


		Exhibit A —		Joint Filing Agreement among the Reporting Person pursuant to Rule 13d-1(f) under the Exchange Act relating to the filing of this Statement.

		Exhibit B —		Purchase Agreement (incorporated by reference from the Issuer’s Form 8-K filed on June 10, 2003)

		Exhibit C —		First Amendment (incorporated by reference from the Issuer’s Form 8-K filed on June 10, 2003)

		Exhibit D —		Articles of Amendment (incorporated by reference from the Issuer’s Form 8-K filed on June 10, 2003)

		Exhibit E —		Registration Rights Agreement (incorporated by reference from the Issuer’s Form 8-K filed on June 10, 2003)

		Exhibit F —		Co-Investment Agreement

		Exhibit G —		Voting Rights Letter Agreement (incorporated by reference from the Issuer’s Form 8-K filed on June 10, 2003)

Page 12 of 16 Pages


CUSIP No. 374393106		13D		Page 13 of 16 Pages

SIGNATURES

After reasonable inquiry and to the best of each of the undersigned’s knowledge and belief, each of the undersigned certify that the information set forth in this statement is true, complete and correct.


Date: June 16, 2003

	FRONTENAC VIII LIMITED PARTNERSHIP

	By: Its:	Frontenac VIII Partners, L.P. General Partner

	By: Its:	Frontenac Company VIII, L.L.C. General Partner

	By:	/s/ Karen C. Fanelli

		/s/ Karen C. Fanelli, under Power of Attorney for Frontenac Company VIII, L.L.C.

	FRONTENAC MASTERS VIII LIMITED PARTNERSHIP

	By: Its:	Frontenac VIII Partners, L.P. General Partner

	By: Its:	Frontenac Company VIII, L.L.C. General Partner

	By:	/s/ Karen C. Fanelli

		/s/ Karen C. Fanelli, under Power of Attorney for Frontenac Company VIII, L.L.C.

	FRONTENAC VIII PARTNERS, L.P.

	By: Its:	Frontenac Company VIII, L.L.C. General Partner

	By:	/s/ Karen C. Fanelli

		/s/ Karen C. Fanelli, under Power of Attorney for Frontenac Company VIII, L.L.C.

	FRONTENAC COMPANY VIII, L.L.C

	By:	/s/ Karen C. Fanelli

		/s/ Karen C. Fanelli, under Power of Attorney for Frontenac Company VIII, L.L.C.

Page 13 of 16 Pages


CUSIP No. 374393106		13D		Page 14 of 16 Pages

Schedule A

Name of Person Filing; Citizenship:

The following individuals are members of Frontenac Company VIII, L.L.C., the general partner of Frontenac VIII Partners, L.P., which is the general partner of each of Frontenac VIII Limited Partnership and Frontenac Masters VIII Limited Partnership:

     Paul D. Carbery, member of Frontenac Company VIII, L.L.C., citizen of the United States

     James E. Cowie, member of Frontenac Company VIII, L.L.C., citizen of the United States

     James E. Crawford III, member of Frontenac Company VIII, L.L.C., citizen of the United States

     Rodney L. Goldstein, member of Frontenac Company VIII, L.L.C., citizen of the United States

     David S. Katz, member of Frontenac Company VIII, L.L.C., citizen of the United States

     Martin J. Koldyke, member of Frontenac Company, VIII L.L.C., citizen of the United States

     Martin Laird Koldyke, member of Frontenac Company VIII, L.L.C., citizen of the United States

     Laura P. Pearl, member of Frontenac Company VIII, L.L.C., citizen of the United States

     Jeremy H. Silverman, member of Frontenac Company VIII, L.L.C., citizen of the United Kingdom

     Address of Principal Business Office:

     135 S. LaSalle Street, Suite 3800
     Chicago, IL 60603

Page 14 of 16 Pages


CUSIP No. 374393106		13D		Page 15 of 16 Pages

EXHIBIT A

SCHEDULE 13D JOINT FILING AGREEMENT

In accordance with the requirements of Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, and subject to the limitations set forth therein, the undersigned hereby agree as follows:

(i) Each of the is individually eligible to use the Schedule 13D to which this Exhibit is attached, and such Schedule 13D is filed on behalf of each of them; and

(ii) Each of them is responsible for the timely filing of such Schedule 13D and any amendments thereto, and for the completeness and accuracy of the information concerning such person contained therein; but none of them is responsible for the completeness or accuracy of the information concerning the other persons making the filing, unless such person knows or has reason to believe that such information is inaccurate.


Date: June 16, 2003

	FRONTENAC VIII LIMITED PARTNERSHIP

	By: Its:	Frontenac VIII Partners, L.P. General Partner

	By: Its:	Frontenac Company VIII, L.L.C. General Partner

	By:	/s/ Karen C. Fanelli

		/s/ Karen C. Fanelli, under Power of Attorney for Frontenac Company VIII, L.L.C.

	FRONTENAC MASTERS VIII LIMITED PARTNERSHIP

	By: Its:	Frontenac VIII Partners, L.P. General Partner

	By: Its:	Frontenac Company VIII, L.L.C. General Partner

	By:	/s/ Karen C. Fanelli

		/s/ Karen C. Fanelli, under Power of Attorney for Frontenac Company VIII, L.L.C.

Page 15 of 16 Pages


CUSIP No. 374393106		13D		Page 16 of 16 Pages


		FRONTENAC VIII PARTNERS, L.P.

		By: Its:		Frontenac Company VIII, L.L.C. General Partner

		By:		/s/ Karen C. Fanelli

				/s/ Karen C. Fanelli, under Power of Attorney for Frontenac Company VIII, L.L.C.

		FRONTENAC COMPANY VIII, L.L.C

		By:		/s/ Karen C. Fanelli

				/s/ Karen C. Fanelli, under Power of Attorney for Frontenac Company VIII, L.L.C.

Page 16 of 16 Pages EX-99.F 3 g83404exv99wf.txt EX-99.F CO-INVESTMENT AGREEMENT EXHIBIT F CO-INVESTMENT AGREEMENT THIS CO-INVESTMENT AGREEMENT (this "Agreement") is made as of June 6, 2003, by and among Frontenac VIII Limited Partnership, a Delaware limited partnership ("Frontenac VIII"), Frontenac Masters VIII Limited Partnership, a Delaware limited partnership ("Frontenac Masters VIII," and together with Frontenac VIII, "Frontenac"), Suntrust Equity Funding, LLC (d/b/a Suntrust Equity Partners), a Delaware limited liability company ("Suntrust"), BVCF IV, L.P., a Delaware limited partnership ("BVCF"), and C&B Capital, L.P., a Delaware limited partnership ("C&B," and together with Suntrust and BVCF, the "Co-Investors"). Frontenac and the Co-Investors are referred to collectively as the "Investors" and individually as an "Investor." Capitalized terms used herein are defined in Section 7 hereof. The Investors are parties to a Preferred Stock Purchase Agreement dated as of April 24, 2003 (as amended or modified from time to time, the "Purchase Agreement") with Gevity HR, Inc., a Florida corporation (the "Company"), pursuant to which, subject to the terms and conditions set forth therein, the Investors agreed to purchase from the Company shares of its Series A Preferred Stock, par value $.01 per share (the "Series A Preferred"). The Investors desire to enter into this Agreement for the purposes, among others, of (i) governing certain aspects of their co-investment in the Company, and (ii) limiting the manner and terms by which their Series A Preferred may be transferred. NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows: 1. Voting of Co-Investor Shares. (a) From and after the date of this Agreement, subject to Section 1(b) hereof, each holder of Co-Investor Shares (other than BVCF) shall vote all of the Co-Investor Shares owned by such holder or over which such holder has control and shall take all other necessary or desirable actions within such holder's control (whether in such holder's capacity as a stockholder or otherwise, and including, without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings and the execution and delivery of other agreements, documents or instruments to give effect to or confirm the making of any decision, the exercise of any right or the taking of any action pursuant hereto) on matters relating to (i) the designation, election and removal of the Series A Directors or the termination of the term of office of the Series A Directors or the designation of representatives to attend Board meetings as non-voting observers pursuant to Section 4A of the Certificate of Designation and (ii) the making of all other decisions and exercise of all other rights expressly granted to the Majority Holders, and the taking of all other actions expressly within the power of the Majority Holders, pursuant to the Purchase Agreement or the Certificate of Designation, in each case as directed by Frontenac. (b) Notwithstanding the foregoing, for so long as Suntrust continues to hold at least 50% of the Co-Investor Shares held by it as of immediately after the Closing (as appropriately adjusted for stock splits, stock dividends, combinations of shares and other recapitalizations), Frontenac shall not, without the prior written consent of Suntrust, (i) consent to the Company's use of proceeds from the sale of the Series A Preferred pursuant to the Purchase Agreement other than as permitted in Section 4E of the Purchase Agreement or agree with the Company to amend such section, or (ii) agree with the Company to amend Section 2C, Section 3A, Section 3B, Section 3J or Section 4B of the Certificate of Designation. Frontenac agrees that if at any time it seeks the consent of Suntrust under the preceding sentence, at the time it first seeks such a consent it will provide to each Co-Investor reasonably detailed notice of the matter with respect to which it is seeking such consent. 2. Exercise of Rights. (a) For so long as Frontenac is the Majority Holder under the Certificate of Designation, upon the request of any holder of at least 5% of the shares of Series A Preferred then outstanding, Frontenac shall exercise the rights of the Majority Holders with respect to at least one share of Series A Preferred then held by Frontenac pursuant to Section 3A of the Certificate of Designation, Section 3B of the Certificate of Designation and either Section 2C or Section 3J of the Certificate of Designation when and as such rights may be exercised, thus allowing such holder to exercise its rights as a holder of the Series A Preferred thereunder; provided that Frontenac shall not be required to exercise any such rights with respect to more than one share of Series A Preferred then held by Frontenac. (b) For so long as Frontenac holds at least 25% of the Registrable Securities then outstanding, upon the request of any Co-Investor, Frontenac shall request a Short-Form Registration with respect to at least one share of Registrable Securities then held by Frontenac pursuant to Section 1(a) of the Registration Agreement when and as such right may be exercised, thus allowing such Co-Investor to exercise its rights as a holder of Registrable Securities thereunder, provided that the aggregate offering value of the Registrable Securities requested to be registered by such Co-Investor, together with the aggregate offering value of the Registrable Securities requested to be registered by other holders of Registrable Securities in such registration, equals at least $2 million; provided that Frontenac shall not be required to exercise any such rights with respect to more than one share of Registrable Securities then held by Frontenac. 3. Representations and Warranties; Covenants. Each party hereto represents and warrants that (i) such party is the record owner of the number of Investor Shares set forth opposite such party's name on the Schedule of Investors attached hereto, (ii) this Agreement has been duly authorized, executed and delivered by such party and constitutes the valid and binding obligation of such party, enforceable in accordance with its terms, and (iii) such party has not granted and is not a party to any proxy, voting trust or other agreement which is inconsistent with, conflicts with or violates any provision of this Agreement. No holder of Investor Shares shall grant any proxy or become party to any voting trust or other agreement which is inconsistent with, conflicts with or violates any provision of this Agreement applicable to such holder. -2- 4. Participation Rights. (a) At least 30 days prior to any Transfer of any Investor Shares by Frontenac (other than one or more Transfers (x) pursuant to a Public Sale, (y) to one or more Affiliates, or (z) in an aggregate amount not to exceed than 10% of the Investor Shares held by Frontenac as of immediately after the Closing (as appropriately adjusted for stock splits, stock dividends, combinations of shares and other recapitalizations)), Frontenac shall deliver a written notice (the "Sale Notice") to the Co-Investors, specifying in reasonable detail the identity of the prospective transferee(s), the number and type of Investor Shares and the terms and conditions of the Transfer. The Co-Investors may elect to participate in the contemplated Transfer by delivering written notice to Frontenac within 20 days after delivery of the Sale Notice. If any Co-Investor elects to participate in such Transfer, such Co-Investor shall be entitled to sell in the contemplated Transfer, at the same price and on the same terms as Frontenac, a number of Investor Shares of the type being transferred by Frontenac equal to the product of (i) the quotient determined by dividing (A) the number of Investor Shares of such type held by such Co-Investor, by (B) the aggregate number of (I) Investor Shares of such type held by Frontenac and all of the Co-Investors at such time and (II) other securities of such type owned by any other Person(s) having the right to participate in such Transfer, and (ii) the aggregate number of Investor Shares of such type to be sold in the contemplated Transfer. For example, if (1) the Sale Notice contemplated a sale of 100 Investor Shares by Frontenac and at such time Frontenac owns 220 Investor Shares of such type, (2) there are two Co-Investors and at such time such Co-Investors own an aggregate of 160 Investor Shares of such type and one Co-Investor elects to participate and such Co-Investor owns 100 Investor Shares of such type and (3) another Person having the right to participate in such Transfer owns 20 securities of such type, then the Co-Investor electing to participate would be entitled to sell 25 shares (100 / 400 x 100 shares), the other Person would be entitled to sell 5 shares (20 / 400 x 100 shares), and Frontenac would be entitled to sell the remaining 70 shares. If the Co-Investors have not elected to participate in the contemplated Transfer (through notice to such effect or expiration of the 20-day period after delivery of the Sale Notice), then Frontenac may Transfer the Investor Shares specified in the Sale Notice at a price and on terms no more favorable to the transferee(s) thereof than specified in the Sale Notice during the 120-day period immediately following the date of the delivery of the Sale Notice. Any Investor Shares not Transferred within such 120-day period shall be subject to the provisions of this Section 4 upon subsequent Transfer. (b) Each Co-Investor transferring Investor Shares pursuant to this Section 4 shall pay (i) the expenses incurred by such Co-Investor in connection with the Transfer, and (ii) its pro rata share (based on the number of Investor Shares and other securities of such type to be transferred) of the reasonable out-of-pocket expenses (including reasonable attorney's fees) incurred by Frontenac in connection with such Transfer that are not otherwise reimbursed by the Company. Each Co-Investor transferring Investor Shares pursuant to this Section 4 shall be -3- obligated to join on a pro rata basis (based on the number of Investor Shares and other securities of such type to be transferred) in any indemnification or other obligations that Frontenac agrees to provide in connection with such Transfer (other than any such obligations that relate solely to a particular holder of securities, such as indemnification with respect to representations and warranties given by a holder of Investor Shares regarding such holder's title to and ownership of Investor Shares, in respect of which only such holder shall be liable); provided that no Co-Investor shall be obligated in connection with such Transfer to agree to indemnify or hold harmless the transferees with respect to an amount in excess of the net cash proceeds paid to such Co-Investor in connection with such Transfer. 5. Transfer. Prior to the Transfer of any Co-Investor Shares to any Person, the transferring holder of Co-Investor Shares shall (i) deliver a written notice to Frontenac at least 10 business days prior to such Transfer specifying in reasonable detail the identity of the prospective transferee and the number and type of Co-Investor Shares being transferred, (ii) supply, and cause the prospective transferee to supply, any other information reasonably requested by Frontenac regarding such prospective transferee and the Transfer, and (iii) cause the prospective transferee to be bound by the provisions of this Agreement and applicable to holders of Co-Investor Shares, Investor Shares and Series A Preferred and to execute and deliver to Frontenac a joinder to or counterpart of this Agreement in a form acceptable to Frontenac. 6. Sale of the Company. (a) If Frontenac requests, seeks or approves a Change in Ownership, Fundamental Change or Organic Change (in each case, an "Approved Transaction"), each holder of Investor Shares will, in such holder's sole discretion, either (i) vote for, consent to and raise no objections against, or otherwise impede, such Approved Transaction and participate in the consummation of such Approved Transaction and, without limiting the foregoing, if the Approved Transaction is structured as (A) a merger or consolidation, each holder of Investor Shares shall vote its Investor Shares to approve such merger or consolidation, whether by written consent or at a stockholders meeting (as requested by Frontenac), and waive all dissenter's rights, appraisal rights and similar rights in connection with such merger or consolidation and tender its Investor Shares pursuant to such merger or consolidation; (B) a Transfer of stock (including by recapitalization, consolidation, reorganization, combination or otherwise), each holder of Investor Shares shall agree to Transfer, and shall Transfer, all of its Investor Shares and rights to acquire Investor Shares on the terms and conditions approved by Frontenac; or (C) a sale of assets, each holder of Investor Shares shall vote its Investor Shares to approve such sale and any subsequent liquidation of the Company or other distribution of the proceeds therefrom, whether by written consent or at a stockholders meeting (as requested by Frontenac); or (ii) if such holder does not participate in the Approved Transaction in accordance with this Section 6 for any reason, convert all of its Investor Shares that are Series A Preferred into shares of Common Stock in accordance with Section 5A of the Certificate of Designation effective upon consummation of such Approved Transaction. (b) Each holder of Investor Shares that participates in the Approved Transaction pursuant to Section 1(a)(i) shall be obligated to join on a pro rata basis (based upon the proceeds to be received by the holders of Investor Shares in such Approved Transaction) in any indemnification or other obligations Frontenac agrees to provide in connection with the -4- Approved Transaction (other than any such obligations that relate solely to a particular holder of Investor Shares, such as indemnification with respect to representations and warranties given by a holder of Investor Shares regarding such holder's title to and ownership of Investor Shares, in respect of which only such holder shall be liable); provided that no holder shall be obligated in connection with such indemnification or other obligations with respect to an amount in excess of the consideration received by such holder in connection with such Transfer. (c) Each holder of Investor Shares that participates in the Approved Transaction pursuant to Section 1(a)(i) will cooperate in and take all necessary or desirable actions in connection with the consummation of the Approved Transaction as requested by Frontenac (which actions may include, executing the applicable transaction documents and continuing arrangements amongst the stockholders of the Company substantially similar to the terms of this Agreement). (d) The obligations of the holders of Investor Shares that participate in the Approved Transaction pursuant to Section 1(a)(i) with respect to an Approved Transaction are subject to the satisfaction of the following conditions: (i) upon consummation of the Approved Transaction, each holder of a type of Investor Shares will be given the same form and amount of consideration per Investor Share of such type, and (ii) if any holders of a type of Investor Shares are given an option as to the form and amount of consideration to be received per Investor Share of such type, each holder of Investor Share of such type will be given the same option with respect to its Investor Shares of such type. (e) Holders of Investor Shares that participate in the Approved Transaction pursuant to Section 1(a)(i) will bear their pro-rata share (based upon the proceeds to be received by the stockholders of the Company) of the costs of any Approved Transaction to the extent such costs are incurred for the benefit of all holders of Investor Shares (whether or not other stockholders of the Company are benefited) and are not otherwise paid by the Company or the acquiring party. For purposes of this Section 4(e), costs incurred in exercising reasonable efforts to take all necessary actions for the consummation of an Approved Transaction in accordance with Section 4(a) shall be deemed to be for the benefit of all stockholders of the Company. Costs incurred by a holder of Investor Shares on its own behalf will not be considered costs of the transaction hereunder and will be the responsibility of such holder of Investor Shares. 7. Definitions. "Affiliate" of any particular Person means (i) any other Person controlling, controlled by or under common control with such particular Person, where "control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise or (ii) if such Person is a partnership or limited liability company, the partners or members thereof. "Board" means the board of directors of the Company. "Certificate of Designation" has the meaning set forth in the Purchase Agreement and shall include subsequent Certificates of Designation or amended Articles of Incorporation of the Company containing the rights and preferences of the Series A Preferred (in which case each -5- section reference to the Certificate of Designation contained herein shall be deemed to refer to the section of such Certificate of Designation or Articles of Incorporation containing the provision found in such section of the Certificate of Designation attached to the Purchase Agreement as Exhibit A). "Change in Ownership" has the meaning set forth in the Certificate of Designation. "Closing" has the meaning set forth in the Purchase Agreement. "Co-Investor Shares" means any Investor Shares purchased or otherwise acquired by any of the Co-Investors, whether or not held by a Co-Investor as of the date in question. "Common Stock" means the Company's common stock, par value $0.01 per share. "Fundamental Change" has the meaning set forth in the Certificate of Designation. "Investor Shares" means (i) any Series A Preferred now owned or hereafter purchased or acquired by any of the Investors, whether or not held by an Investor as of the date in question and (ii) any securities issued directly or indirectly with respect to the securities referred to in clause (i) above by way of a stock split, stock dividend or other division of securities, or in connection with a combination of securities, recapitalization, merger, consolidation or other reorganization, other than shares of Common Stock issued upon conversion of the Series A Preferred. "Majority Holder" has the meaning set forth in the Purchase Agreement or the Certificate of Designation, as applicable. "Organic Change" has the meaning set forth in the Certificate of Designation. "Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. "Public Sale" means any sale of Investor Shares to the public pursuant to an offering registered under the Securities Act or to the public through a broker, dealer or market maker pursuant to the provisions of Rule 144 adopted under the Securities Act. "Registrable Securities" has the meaning set forth in the Registration Agreement. "Registration Agreement" means the Registration Rights Agreement, dated as of June 6, 2003, by and among the Company and certain stockholders of the Company, as amended or modified from time to time. "Securities Act" means the Securities Act of 1933, as amended from time to time. -6- "Series A Directors" means the directors that the holders of Series A Preferred are entitled to elect pursuant to the Certificate of Designation. "Transfer" means, a sale, transfer, assignment, pledge or other disposition of (whether with or without consideration and whether voluntarily or involuntarily or by operation of law) any interest in Investor Shares. "Voting Rights Letter Agreement" means the letter agreement, dated as of June 6, 2003, by and among the Investors, as amended or modified from time to time. 8. Voting Rights Letter Agreement. Prior to the Transfer of any Investor Shares to any Person, the transferring holder of Investor Shares shall cause the prospective transferee to agree in writing in a form acceptable to Frontenac to be bound by the provisions of the Voting Rights Letter Agreement and applicable to holders of Series A Preferred and to promptly provide the Company and the other holders of Investor Shares with a copy thereof. 9. Exculpation. Each holder of Investor Shares acknowledges and agrees that Frontenac shall have no fiduciary (or other express or implied) duties hereunder or otherwise with respect to the other holders of Investor Shares or their investment in the Investor Shares and that Frontenac and its Affiliates and their respective directors, officers, employees, representatives, agents and successors and assigns (collectively, the "Frontenac Parties") shall not be liable to any other holder of Investor Shares or such holder's Affiliates or its directors, officers, employees, representatives, agents and successors or assigns for any actions taken or omitted to be taken by any such Frontenac Party with respect to this Agreement, their investment in the Investor Shares or their rights under the Purchase Agreement, Certificate of Designation, the Voting Rights Letter Agreement, the Registration Agreement or any of the agreements or transactions contemplated thereby, in each case, regardless of any favorable or unfavorable result that such action or omission may have on the other holders of Investor Shares or their investment in the Investor Shares (except to the extent Frontenac breaches the express provisions of this Agreement). 10. Amendment and Waiver. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement shall be effective unless such modification, amendment or waiver is approved in writing by (i) Frontenac, (ii) the holders of a majority of the Co-Investor Shares, (iii) Suntrust (for so long as it continues to hold at least 50% of the Co-Investor Shares held by it as of immediately after the Closing (as appropriately adjusted for stock splits, stock dividends, combinations of shares and other recapitalizations)), and (iv) BVCF (for so long as it continues to hold at least 50% of the Co-Investor Shares held by it as of immediately after the Closing (as appropriately adjusted for stock splits, stock dividends, combinations of shares and other recapitalizations)); provided that the Schedule of Investors may be amended by Frontenac (without any vote or consent of the holders of Investor Shares) to reflect the addition of a Person as a party to this Agreement and to reflect Transfers made in accordance with the terms hereof and Frontenac shall deliver copies of such Schedule of Investors after any amendment thereof. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. Each party acknowledges and agrees that any amendment or waiver -7- effected in accordance with this section shall be binding upon such party whether or not such party in fact consented to such amendment or waiver. 11. No Partnership or Joint Venture. The holders of Investor Shares intend that the arrangement contemplated pursuant to this Agreement not be a partnership (including, without limitation, a limited partnership) or joint venture, and that no holder of Investor Share be a partner or joint venturer of the other holder of Investor Shares by virtue of this Agreement, for any purposes, and this Agreement shall not be construed to suggest otherwise. 12. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision of this Agreement in such jurisdiction or affect the validity, legality or enforceability of any provision in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. 13. Entire Agreement. Except as otherwise expressly set forth herein, this Agreement embodies the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way, including without limitation that certain letter agreement dated April 24, 2003, by and among Frontenac and certain of the Co-Investors. 14. Successors and Assigns. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by the Company and its successors and assigns and the Investors and any subsequent holders of Investor Shares and the respective successors and assigns of each of them, so long as they hold Investor Shares (it being understood that provisions binding on or inuring to the benefit of or enforceable by the Co-Investors are not intended to be binding on or inure to the benefit of or be enforceable by a subsequent holder of Co-Investor Shares unless otherwise expressly stated). For the avoidance of doubt, Section 1(a) shall be binding on any subsequent holders of Co-Investor Shares transferred by BVCF. 15. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be an original and all of which taken together shall constitute one and the same agreement. Any Person may, if required by the terms hereof, at any time after the date hereof become a party to this Agreement by executing a counterpart of or joinder to this Agreement agreeing to be bound by the provisions hereof. 16. Remedies. The parties hereto shall be entitled to enforce their rights under this Agreement specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that money damages would not be an adequate remedy for any breach of the provisions of this Agreement and that any of the parties hereto may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive -8- relief (without posting a bond or other security or to allege or prove actual damages) in order to enforce or prevent any violation of the provisions of this Agreement. 17. Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, or mailed first class mail (postage prepaid) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address indicated on the schedules hereto, or at such address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party. Notices shall be deemed to have been given hereunder when delivered personally, three days after deposit in the U.S. mail and one day after deposit with a reputable overnight courier service. 18. Governing Law. All issues and questions concerning the construction, validity, interpretation and enforceability of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. In furtherance of the foregoing, the internal law of the State of Delaware shall control the interpretation and construction of this Agreement (and all schedules and exhibits hereto), even though under that jurisdiction's choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply. 19. Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or legal holiday in the state in which the Company's chief-executive office is located, the time period shall automatically be extended to the business day immediately following such Saturday, Sunday or legal holiday. 20. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a substantive part of this Agreement. **** -9- IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. FRONTENAC VIII LIMITED PARTNERSHIP By: FRONTENAC VIII PARTNERS, L.P. Its: General Partner By: FRONTENAC COMPANY VIII, L.L.C. Its: General Partner By: /s/ David S. Katz --------------------------------------- Its: Member FRONTENAC MASTERS VIII LIMITED PARTNERSHIP By: FRONTENAC VIII PARTNERS, L.P. Its: General Partner By: FRONTENAC COMPANY VIII, L.L.C. Its: General Partner By: /s/ David S. Katz --------------------------------------- Its: Member SUNTRUST EQUITY FUNDING, LLC D/B/A SUNTRUST EQUITY PARTNERS By: Kenneth T. Millar --------------------------------------- Its: Manager BVCF IV, L.P. By: J.W. PUTH ASSOCIATES, LLC Its: General Partner By: BRINSON VENTURE MANAGEMENT, LLC Its: Attorney-in-fact By: ADAMS STREET PARTNERS, LLC Its: Administrative Member By: /s/ David J. Timson --------------------------------------- Its: Partner C&B CAPITAL, L.P. By: C&B CAPITAL GP, LLC Its: General Partner By: /s/ Edward S. Croft, III --------------------------------------- Its: Manager SCHEDULE OF INVESTORS
NAME AND ADDRESS NUMBER OF INVESTOR SHARES - ---------------------------------------------- --------------------------------------------- Frontenac VIII Limited Partnership 19,385 135 S. LaSalle Street, Suite 3800 Chicago, IL 60603 Attention: David Katz Telephone: (312) 368-0044 Telecopy: (312) 759-0864 Frontenac Masters VIII Limited Partnership 865 135 S. LaSalle Street, Suite 3800 Chicago, IL 60603 Attention: David Katz Telephone: (312) 368-0044 Telecopy: (312) 759-0864 SunTrust Equity Funding, LLC 5,000 SunTrust Equity Partners 303 Peachtree Street, 25th Floor Atlanta, GA 30308 Attention: Kenneth T. Millar Telephone: (404) 827-6361 Telecopy: (404) 588-7501 BVCF IV, L.P. 4,000 c/o Adams Street Partners One North Wacker Suite 200 Chicago, IL 60606 Attention: Jeffrey T. Diehl Telephone: (312) 553-7869 Telecopy: (312) 553-7870 C&B Capital, L.P. 750 4200 Northside Parkway, N.W. Building One, Suite 100 Atlanta, GA 30327 Attention: Edward S. Croft, III Telephone: (404) 841-3131 Telecopy: (404) 841-3135 TOTAL: 30,000
-----END PRIVACY-ENHANCED MESSAGE-----


	If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

	Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240. 13d-7 for other parties to whom copies are to be sent.

	The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

	7.	Sole Voting Power
Number of		-0-

Shares	8.	Shared Voting Power

Beneficially		4,779,412 (See Item 5)

Owned by Each	9.	Sole Dispositive Power

Reporting		-0-

Person	10.	Shared Dispositive Power

With		3,722,426 (See Item 5)


	Frontenac VIII Limited Partnership (“Frontenac VIII”), a Delaware limited partnership, by virtue of its deemed beneficial ownership of 3,563,419 shares of Common Stock;

	Frontenac Masters VIII Limited Partnership (“Frontenac Masters VIII”), a Delaware limited partnership, by virtue of its deemed beneficial ownership of 159,007 shares of Common Stock;

	Frontenac VIII Partners, L.P. (“Frontenac VIII LP”), a Delaware limited partnership, by virtue of its being the general partner of each of Frontenac VIII and Frontenac Masters VIII;

	Frontenac Company VIII, L.L.C. (“Frontenac VIII LLC”), a Delaware limited liability company, by virtue of it being the general partner of Frontenac VIII LP;

	(a)		The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer;

	(b)		An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries;

	(c)		A sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries;

	(d)		Any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board;

	(e)		Any material change in the present capitalization or dividend policy of the Issuer;

	(f)		Any other material change in the Issuer’s business or corporate structure;

	(g)		Changes in the Issuer’s charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person;

	(h)		Causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association;

	(i)		A class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or

	(j)		Any action similar to any of those enumerated above.

	(i)		Sole power to vote or to direct the vote:

			N/A

	(ii)		Shared power to vote or to direct the vote:

	(iii)		Sole power to dispose or to direct the disposition of:

			N/A

	(iv)		Shared power to dispose of or to direct the disposition of:

	(c)		Transactions Within the Past 60 Days: Except for the transactions described herein, there have been no other transactions in the securities of the Issuer effected by the Reporting Persons in the last 60 days.

	(d)		Right to Receive or Power to Direct: Except as stated within this Item 5, to the knowledge of the Reporting Persons, only the Reporting Persons have the right to receive or the power to direct the receipt of dividends from, or proceeds from the sale of, the shares of Common Stock owned beneficially by any of the Reporting Persons.

	(e)		Date Reporting Person Ceased to be 5% Beneficial Owner: Inapplicable.


	Paul D. Carbery, member of Frontenac Company VIII, L.L.C., citizen of the United States

	James E. Cowie, member of Frontenac Company VIII, L.L.C., citizen of the United States

	James E. Crawford III, member of Frontenac Company VIII, L.L.C., citizen of the United States

	Rodney L. Goldstein, member of Frontenac Company VIII, L.L.C., citizen of the United States

	David S. Katz, member of Frontenac Company VIII, L.L.C., citizen of the United States

	Martin J. Koldyke, member of Frontenac Company, VIII L.L.C., citizen of the United States

	Martin Laird Koldyke, member of Frontenac Company VIII, L.L.C., citizen of the United States

	Laura P. Pearl, member of Frontenac Company VIII, L.L.C., citizen of the United States

	Jeremy H. Silverman, member of Frontenac Company VIII, L.L.C., citizen of the United Kingdom

	Address of Principal Business Office:

	135 S. LaSalle Street, Suite 3800 Chicago, IL 60603