0000898822-01-500737.txt : 20011101
0000898822-01-500737.hdr.sgml : 20011101
ACCESSION NUMBER: 0000898822-01-500737
CONFORMED SUBMISSION TYPE: SC 13D/A
PUBLIC DOCUMENT COUNT: 5
FILED AS OF DATE: 20011030
GROUP MEMBERS: APOLLO ADVISORS IV, L.P.
GROUP MEMBERS: APOLLO OVERSEAS PARTNERS IV, L.P.
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: UNITED RENTALS INC /DE
CENTRAL INDEX KEY: 0001067701
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359]
IRS NUMBER: 061522496
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-54791
FILM NUMBER: 1770376
BUSINESS ADDRESS:
STREET 1: FOUR GREENWICH OFFICE PARK
CITY: GREENWICH
STATE: CT
ZIP: 06830
BUSINESS PHONE: 2036223131
MAIL ADDRESS:
STREET 1: FOUR GREENWICH OFFICE PARK
CITY: GREENWICH
STATE: CT
ZIP: 06830
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: APOLLO INVESTMENT FUND IV LP
CENTRAL INDEX KEY: 0001068331
STANDARD INDUSTRIAL CLASSIFICATION: []
IRS NUMBER: 133985622
FILING VALUES:
FORM TYPE: SC 13D/A
BUSINESS ADDRESS:
STREET 1: TWO MANHATTANVILLE ROAD
CITY: PURCHASE
STATE: NY
ZIP: 10577
BUSINESS PHONE: 3102014100
MAIL ADDRESS:
STREET 1: TWO MANHATTANVILLE ROAD
CITY: PURCHASE
STATE: NY
ZIP: 10577
SC 13D/A
1
oct-29sc13da.txt
AMENDMENT NO. 1 TO SCHEDULE 13D/A
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)*
-------------
UNITED RENTALS, INC.
(NAME OF ISSUER)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
911 363 109
(CUSIP NUMBER)
-------------
MICHAEL D. WEINER
APOLLO MANAGEMENT IV, L.P.
TWO MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577
(914) 694-8000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES OF COMMUNICATION)
-------------
Copy to:
OCTOBER 29, 2001
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f),
240.13d-1(g), check the following box. |_|
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. Seess.240.13d-7 for
other parties to whom copies are to be sent.
(Continued on the following pages)
(Page 1 of 15 pages)
-----------------------------------
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
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 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)
================================================================================
----------------------------- -------------------------
CUSIP NO. 911 363 109 13D (Page 2 of 15)
----------------------------- -------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
Apollo Investment Fund IV, L.P.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) |_|
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 14,546,573
OWNED BY EACH
REPORTING
PERSON WITH
---------------------------------------------------------------
8 SHARED VOTING POWER
---------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
14,546,573
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
14,546,573
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |X|
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.4%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON REPORTING*
PN
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
----------------------------- -------------------------
CUSIP NO. 911 363 109 13D (Page 3 of 15)
----------------------------- -------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
Apollo Overseas Partners IV, L.P.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) |_|
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 786,760
OWNED BY EACH
REPORTING
PERSON WITH
---------------------------------------------------------------
8 SHARED VOTING POWER
---------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
786,760
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
786,760
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |X|
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.9%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON REPORTING*
PN
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
----------------------------- -------------------------
CUSIP NO. 911 363 109 13D (Page 4 of 15)
----------------------------- -------------------------
--------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
Apollo Advisors IV, L.P.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) |_|
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 15,333,333
OWNED BY EACH
REPORTING
PERSON WITH
---------------------------------------------------------------
8 SHARED VOTING POWER
---------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
15,333,333
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
15,333,333
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.3%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON REPORTING*
PN
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
This Amendment No. 1 filed on October 30, 2001 amends, supplements
and restates the following Items of the Statement on Schedule 13D (the
"Schedule 13D") of Apollo Investment Fund IV, L.P., a Delaware limited
partnership ("AIFIV"), Apollo Overseas Partners IV, L.P., an exempted
limited partnership registered in the Cayman Islands ("Overseas IV"), and
Apollo Advisors IV, L.P., a Delaware limited partnership ("Advisors IV",
and together with AIFIV and Overseas IV, the "Reporting Persons"), filed
on January 8, 1999 with respect to the shares of common stock, par value
$0.01 per share ("Common Stock") of United Rentals, Inc., a Delaware
corporation (the "Issuer"). Unless otherwise indicated, all capitalized
terms used but not defined herein have the meanings set forth in the
Schedule 13D.
Responses to each item below are incorporated by reference into each
other item, as applicable.
ITEM 3. SOURCE AND AMOUNT OF FUNDS AND OTHER CONSIDERATION.
Item 3 of the Schedule 13D is amended and restated in its entirety
as follows:
In January 1999, AIFIV and Overseas IV (collectively, the
"Purchasers") purchased an aggregate of 300,000 shares of Series A
Perpetual Convertible Preferred Stock, $.01 par value, of the Issuer (the
"Series A Preferred") for an aggregate purchase price of $300 million. The
purchase was financed with cash on hand.
In September 1999, the Purchasers purchased an aggregate of 100,000
shares of Series B Perpetual Convertible Preferred Stock, Class B-1, $.01
par value, of the Issuer (the "B-1 Preferred") for an aggregate purchase
price of $100 million. The purchase was financed with cash on hand.
In October 2001, the Purchasers exchanged an aggregate of 300,000
shares of Series A Preferred for an aggregate of 300,000 shares of Series
C Perpetual Convertible Preferred Stock, $.01 par value, of the Issuer
(the "Series C Preferred") and exchanged an aggregate of 100,000 shares of
B-1 Preferred for an aggregate of 100,000 shares of Series D Perpetual
Convertible Preferred Stock, Class D-1, $.01 par value, of the Issuer (the
"D-1 Preferred"). No additional consideration was provided in connection
with the exchange.
ITEM 4. PURPOSE OF THE TRANSACTION.
Item 4 of the Schedule 13D is amended and restated in its entirety
as follows:
Pursuant to the terms of the Preferred Stock Purchase Agreement,
dated as of December 28, 1998, among the Purchasers and the Issuer, on
January 7, 1999, AIFIV acquired 284,726 shares of Series A Preferred and
Overseas IV acquired 15,274 shares of Series A Preferred. The Purchasers
acquired such shares for investment purposes. Pursuant to the terms of the
Preferred Stock Purchase Agreement, dated as of June 28, 1999, among the
Purchasers and the Issuer, as amended July 16, 1999, on September 30,
1999, AIFIV acquired 94,726 shares of B-1 Preferred and Overseas IV
acquired 5,274 shares of B-1 Preferred. The Purchasers acquired such
shares for investment purposes.
Pursuant to an Agreement, dated as of September 28, 2001, among the
Issuer, the
Page 5 of 15
Purchasers and Chase Equity Associates, L.P. (the "Agreement"), on
October 29, 2001, the Purchasers exchanged their shares of Series A
Preferred and B-1 Preferred for shares of Series C Preferred and D-1
Preferred, respectively. The principal difference between the Series A
Preferred and the Series B-1 Preferred and the Series C Preferred and
Series D-1 Preferred for which they have been exchanged is that the Series
C Preferred and Series D-1 Preferred are not subject to mandatory
redemption on a Non-Approved Change of Control (as defined below under
"Additional Rights Upon Non-Approved Change in Control"). Under guidance
the Securities and Exchange Commission issued in July, 2001 to all public
companies, the Series A Preferred and the B-1 Preferred could not be
classified as permanent stockholders' equity because such stock was
subject to mandatory redemption on a change of control effected without
the approval of the Issuer's board of directors (the "Board"). The
principal reason for the exchange effected under the Agreement was to
enable the Issuer to continue to classify its preferred stock as permanent
stockholders' equity and to provide certain rights to the holders of the
Series C Preferred and the Series D Preferred in the event of a
Non-Approved Change of Control.
Pursuant to the Agreement, the powers, preferences and rights and
the qualifications, limitations and restrictions (the "Terms") of the
Series C Preferred and the D-1 Preferred are identical to the Terms of the
Series A Preferred and the B-1 Preferred for which they were exchanged,
except as described above and with respect to certain additional rights
that may vest on the occurrence of a Non-Approved Change in Control. These
exchanges did not alter the number of shares of Common Stock beneficially
owned by the Purchasers. The Terms of the Series C Preferred and the D-1
Preferred are summarized below. These summaries are qualified in their
entirety by reference to the Agreement and the Certificates of Designation
of the Series C Preferred and the Series D Preferred, copies of which have
been filed as exhibits to this Schedule and are incorporated herein by
reference.
SERIES C PREFERRED
Ranking. The Series C Preferred ranks (1) senior to the Common Stock
-------
with respect to distributions upon the liquidation, winding-up or
dissolution of the Issuer and (2) the same as the Series D Preferred
(described below) with respect to such distributions.
Conversion Rights. Each share of Series C Preferred is convertible at
-----------------
any time, at the option of the holder, into 40 shares of Common Stock
(based on a conversion price of $25 per share of Common Stock and the
liquidation preference of $1,000 per share of Series C Preferred). The
conversion price is subject to adjustment in certain events as set forth in
the Certificate of Designation.
Liquidation Preference. If a Liquidation Event occurs, the following
----------------------
applies:
o If the Liquidation Event was not preceded by a Non-Approved Change
in Control, then the holders of Series C Preferred are entitled to
payment out of the assets of the Issuer available for distribution
of an amount equal to $1,000 per share of Series C Preferred (the
"Series C Liquidation Preference"), plus accrued and unpaid
dividends, if any, to the date fixed for the Liquidation Event,
before any distribution is made on the
Page 6 of 15
Common Stock. After receiving such payment, the holders of the
Series C Preferred are not entitled to participate further in any
distribution of assets of the Issuer.
o If the Liquidation Event was preceded by a Non-Approved Change in
Control, then the holders of the Series C Preferred may have the
right to receive additional amounts and to participate further in
any distribution of assets of the Issuer, as described below under
"Additional Rights Upon Non-Approved Change in Control."
A "Liquidation Event" means (1) any voluntary or involuntary
liquidation, dissolution or winding-up of the Issuer or (2) any reduction
or decrease in the capital stock of the Issuer resulting in a distribution
of assets to the holders of any class or series of the Issuer's capital
stock.
Dividends. Unless and until a Non-Approved Change in Control occurs,
---------
the Series C Preferred does not bear any stated dividends. If a
Non-Approved Change in Control occurs, the Series C Preferred may begin to
accrue dividends as described below under "Additional Rights Upon
Non-Approved Change in Control."
Whether or not a Non-Approved Change in Control occurs, if the Issuer
declares or pays any dividends or other distributions upon the Common
Stock, the Issuer must (subject to certain exceptions) also declare and pay
to the holders of the Series C Preferred those dividends or distributions
which would have been declared and paid with respect to the Common Stock
issuable upon conversion of the Series C Preferred had all of the
outstanding shares of Series C Preferred been converted immediately prior
to the record date for such dividend or distribution, or if no record date
is fixed, the date as of which the record holders of Common Stock entitled
to such dividends or distributions are determined.
Voting. Unless and until a Non-Approved Change in Control occurs, for
------
so long as the Purchasers or their affiliates hold the equivalent of at
least 8 million shares of Common Stock that were issued, or are issuable,
upon conversion of the Series C Preferred, the holders of Series C
Preferred, voting separately as a single class, have the right to elect two
directors to serve on the Board. For so long as the Purchasers or their
affiliates hold the equivalent of less than 8 million but more than 4
million such shares of Common Stock, the holders of Series C Preferred,
voting separately as a single class, have the right to elect one director
to serve on the Board.
If the holders of Series C Preferred do not have the voting rights
described above, then such holders have the right to vote in elections of
directors together with the holders of Common Stock, as a single class,
with each share of Series C Preferred entitled to one vote for each share
of Common Stock issuable upon conversion of such share of Series C
Preferred.
If a Non-Approved Change in Control occurs, the holders of Series C
Preferred may have the right to elect additional directors as described
under "Additional Rights Upon Non-Approved Change in Control."
Except as described above with respect to the election of directors
and except as otherwise required by applicable law, the holders of Series C
Preferred are entitled to vote together with the holders of Common Stock as
a single class on all matters submitted to stockholders for a vote.
Page 7 of 15
Each share of Series C Preferred is entitled to one vote for each share of
Common Stock issuable upon conversion of such share of Series C Preferred.
In addition, the Issuer may not take certain actions specified in the
Certificate of Designation without the affirmative vote or consent of the
holders of at least a majority of the shares of Series C Preferred then
outstanding, voting or consenting as the case may be, as a separate class.
Redemption; Automatic Conversion. If a Change in Control, other than
--------------------------------
a Non-Approved Change in Control, occurs with respect to the Issuer (or the
Issuer enters into a binding agreement relating thereto), the Issuer must
offer to purchase within 10 business days after the Change in Control all
of the then outstanding shares of Series C Preferred at a purchase price
per share, in cash, equal to the Series C Liquidation Preference thereof
plus an amount equal to 6.25% of the Series C Liquidation Preference,
compounded annually from January 7, 1999 to the purchase date.
Redemption Relating to Certain Issuances of Securities. If the Issuer
------------------------------------------------------
issues for cash C
EX-10
3
exvsch13d.txt
EX. V-PREFERRED STOCK PURCHASE AGREEMENT
Exhibit V
UNITED RENTALS, INC.
SERIES B PERPETUAL CONVERTIBLE PREFERRED STOCK,
$.01 Par Value
PREFERRED STOCK PURCHASE AGREEMENT
June 28, 1999
United Rentals, Inc.
Four Greenwich Office Park,
Greenwich, CT 06830
June 28, 1999
To the Purchasers' listed on the signature page
Dear Sirs:
United Rentals, Inc., a Delaware corporation (the "Company"), agrees
with the entities who are signing this Agreement as Purchasers (together, the
"Purchasers") as follows:
1. Authorization of Stock. The Company will authorize the issue and sale of
100,000 shares (the "Shares", such term to include any such shares issued in
substitution therefor pursuant to section 8) of its Series B Perpetual
Convertible Preferred Stock, $.01 par value, to be designated as its "Series B
Perpetual Convertible Preferred Stock" (the "Stock"). The relative rights,
preferences and limitations of the Stock, including, without limitation, the
right to convert Shares into shares of the Company's common stock, par value
$.01 per share (the "Common Stock"), will be as set forth in the form of the
Certificate of Designation of the Stock of the Company attached as Exhibit A
hereto (the "Certificate of Designation"). Certain capitalized terms used in
this Agreement are defined in Section 9; references to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached
to this Agreement and references to a "section" are, unless otherwise specified,
to one of the sections of this Agreement.
2. Sale and Purchase of Stock. The Company will issue and sell to the
Purchasers and, subject to the terms and conditions of this Agreement, the
Purchasers will purchase from the Company, at the Closing provided for in
section 3, the Shares at a purchase price of $1,000 per share.
3. Closing; Payment of Purchase Price. The sale of the Shares to be purchased
by the Purchasers shall take place at the offices of Skadden, Arps, Slate,
Meagher & Flom LLP at 10:00 a.m., New York City time, at a closing (the
"Closing") on the later of (a) the first Business Day after the conditions to
closing set forth in
2
Section 4 (other than those to be satisfied at the Closing, which shall be
satisfied or waived at the Closing) have been satisfied or waived by the party
entitled to waive such condition) or (b) the first to occur of (i) the 181st day
after the date of this Agreement, (ii) the 10th Business Day after the Company
gives notice to Purchasers that the Company's Debt to Total Capitalization Ratio
first equals or exceeds 0.6 , and (iii) the 10th Business Day after the Company
gives notice to Purchasers that the volume-weighted average of the closing price
of the Company's Common Stock on the New York Stock Exchange for the preceding
20 trading days shall have exceeded $30.00 per share, or on such other Business
Day thereafter or prior to such date as may be agreed upon by the Company and
the Purchasers. The Company's Debt to Total Capitalization Ratio shall mean an
amount determined by dividing (A) the sum of the Company's and its subsidiaries'
funded debt, consisting of notes, capital leases, debentures (other than those
issued to subsidiaries) and bank debt, less cash and cash equivalents, by (B)
the total capitalization (funded debt, preferred stock of a subsidiary trust and
stockholders' equity, less cash and cash equivalents) of the Company and its
subsidiaries, all as set forth on a month end consolidated balance sheet of the
Company prepared in accordance with generally accepted accounting principles.
The names in which the Company will register the shares of the Stock to be
purchased at the Closing are as set forth in Exhibit 1. At the Closing, the
Company will deliver to the Purchasers the Shares to be purchased by the
Purchasers in the form of a single certificate (or such greater number of
certificates representing such Shares as the Purchasers may request) dated the
date of the Closing and registered in the names aforesaid, and the Purchasers
jointly and severally shall deliver to the Company or its order immediately
available funds in the amount of the purchase price for such Shares. If at the
Closing the Company shall fail to tender to the Purchasers the Shares to be
purchased by the Purchasers, as provided above in this Section 3, or any of the
conditions specified in Section 4 shall not have been fulfilled to the
Purchasers' reasonable satisfaction, the Purchasers shall, at their election, be
relieved of all further obligations under this Agreement, without thereby
waiving any other rights the Purchasers may have by reason of such failure or
such nonfulfillment. If at the Closing, Purchasers shall fail to tender to the
Company the purchase price for the Shares, as provided above in this Section 3,
other than on account of any of the conditions specified in section 4 not having
been fulfilled to the Purchasers' satisfaction or on account of the breach by
the Company of any of its obligations under this Agreement, the Company shall,
at its election, be relieved of all further obligations under this Agreement,
without thereby waiving any other rights the Company may have by reason of such
failure.
3
4. Conditions to Closing. The Purchasers' obligation to purchase and pay for
the Shares to be sold to the Purchasers at the Closing is subject to the
fulfillment to their reasonable satisfaction, prior to or concurrently with the
Closing, of the following conditions:
4.1. Representations and Warranties. The representations and warranties of the
Company contained in this Agreement shall be in all material respects correct
when made and at the time of the Closing, except as affected by the consummation
of the transactions contemplated by this Agreement.
4.2. Performance; No Default. The Company shall have performed and complied in
all material respects with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or at the
Closing.
4.3. Compliance Certificates. The Company shall have delivered to the
Purchasers an Officers' Certificate, dated the date of the Closing, certifying
that the conditions specified in sections 4.1 and 4.2 have been fulfilled.
4.4. Opinion of Counsel. The Purchasers shall have received the favorable
opinions, dated the date of the Closing and reasonably satisfactory in substance
and form to the Purchasers from Weil, Gotshal & Manges, counsel for the Company
and , if necessary, local counsel for the Company, substantially in the form set
forth in Exhibits B and C and covering such other matters incident to the
transactions contemplated by this Agreement as the Purchasers or their counsel
may reasonably request.
4.5. Certificate of Designation. The Certificate of Designation shall have
been duly filed under the laws of the State of Delaware, and the Restated
Certificate of Incorporation of the Company, as amended by the Certificate of
Designation, shall be in full force and effect, and shall not have been
otherwise amended or modified.
4.6. Registration Rights Agreement. The Purchasers shall have received a fully
executed counterpart of the Registration Rights Agreement substantially in the
form set out in Exhibit D (the "Registration Rights Agreement"), such agreement
shall be in full force and effect and no term or condition thereof shall have
been amended, modified or waived.
4.7. No Actions Pending. There shall be no suit, action, investigation,
inquiry or other proceeding by any Governmental Authority or any other Person or
any other legal or administrative proceeding pending or to the knowledge of
4
the Company threatened which questions the validity or legality of the
transactions contemplated by this Agreement, or seeks damages in connection
therewith.
4.8. Compliance with Securities Laws. The offering and sale by the Company, at
or prior to the Closing, of the Shares pursuant to this Agreement shall have
been made in compliance with all applicable requirements of federal and state
securities laws and the Purchasers shall have received evidence thereof in form
and substance reasonably satisfactory to the Purchasers.
4.9. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory to the Purchasers and their counsel, and the Purchasers and their
counsel shall have received all such counterpart originals or certified or other
copies of such documents as the Purchasers or their counsel may reasonably
request.
4.10. Reservation of Common Stock. The shares of Common Stock initially
issuable upon conversion of the Stock shall have been duly authorized and
reserved for issuance upon conversion of the Stock.
4.11. Payment of Fees and Expenses. The Company shall have paid the
Purchasers on or before the Closing (a) a fee equal to 1% of the purchase price
of the Stock and (b) the costs and expenses provided for in Section 10 hereof,
provided that the Purchasers shall have provided to the Company a statement of
its estimated costs and expenses at least one Business Day prior to the
Closing.
4.12. HSR Act. Any waiting period (and any extension thereof) under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended, applicable to this
Agreement and the transactions contemplated hereby shall have expired or been
terminated.
4.13. Shareholder Approval. If required under the rules of the New York Stock
Exchange, the shareholders of the Company shall have approved the transactions
contemplated hereby.
4.14. Proxies. Within 30 days of the date of this agreement, the Company shall
have delivered to the Purchasers irrevocable proxies from Bradley Jacobs,
Richard Colburn, John Milne, Robert Miner, John McKinney, Wayland Hicks, Michael
Nolan, and William Berry voting for ratification of this Agreement and the
issuance of the Series B Preferred Stock to Purchaser in accordance with the
terms hereof.
5
5. Representations and Warranties. Except as disclosed in Exhibit E, the
Company represents and warrants that:
5.1. Organization, Standing, etc. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into and perform all of its obligations under this Agreement
and each of the Collateral Agreements to which it is a party, to issue and sell
the Shares to be issued and sold at the Closing and to carry out the
transactions contemplated hereby or thereby.
5.2. Subsidiaries. Exhibit E correctly lists as to each Subsidiary of the
Company on the date of this Agreement (a) its name, (b) the jurisdiction of its
incorporation and (c) the percentage of its issued and outstanding shares owned
by the Company or by another Subsidiary of the Company (specifying such other
Subsidiary), as the case may be. Each Subsidiary of the Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to own and operate its properties and to carry on its business as
now conducted and as proposed to be conducted. All the outstanding shares of
capital stock of each Subsidiary of the Company are validly issued, fully paid
and nonassessable, and all such shares indicated in Exhibit E as owned by the
Company or by a Subsidiary of the Company are so owned beneficially and of
record by the Company or by such Subsidiary, as the case may be, free and clear
of any Lien except as indicated in Exhibit E.
5.3. Qualification. Each of the Company and its Subsidiaries is duly qualified
and in good standing as a foreign corporation authorized to do business in each
jurisdiction (other than the jurisdiction of its incorporation) in which the
nature of its activities or the character of the properties it owns or leases
makes such qualification necessary and in which the failure so to qualify would
have a Material Adverse Effect. A "Material Adverse Effect" shall mean any
effect that is materially adverse to the properties, business, results of
operations or financial condition of the Company and its Subsidiaries taken as a
whole.
5.4. Business; Financial Statements. The Company has delivered to the
Purchasers complete and correct copies of the audited consolidated balance
sheets of the Company and its Subsidiaries as of December 31, 1998 and December
31, 1997, and the related audited supplemental consolidated statements of
operations, stockholders' equity and cash flows of the Company and its
Subsidiaries for the years ended December 31, 1998, 1997 and 1996. Such audited
financial statements are hereinafter referred to as the "Financial Statements."
The Financial Statements are accompanied
6
by the report of Ernst & Young LLP, which state that the Financial Statements
have been prepared in accordance with GAAP consistently applied throughout the
periods involved (except as otherwise specified therein) and present fairly the
financial position of the corporations to which they relate as of the respective
dates specified and the results of their operations and changes in financial
position for the respective periods specified, and that the audit by such
accountants of the Financial Statements has been made in accordance with
generally accepted auditing standards. The Company has also delivered to the
Purchasers complete and correct copies of the unaudited consolidated balance
sheet of the Company and its Subsidiaries as of March 31, 1999, and the related
unaudited consolidated statement of operations, stockholders' equity and cash
flows of the Company and its Subsidiaries for the three month period ended on
such date. Such unaudited financial statements are hereinafter referred to as
the "Unaudited Statements." The Unaudited Statements have been prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as otherwise specified therein) and present fairly the financial
position of the Company and its Subsidiaries as of the respective dates
specified, and the results of their operations and changes in cash flows for the
respective periods specified. As of the date of this Agreement, the Purchasers
are not aware that this representation is incorrect in any material respect.
5.5. Changes, etc. Since March 31, 1999, neither the Company nor any of the
Subsidiaries has sustained any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree which would
be material to the Company and the Subsidiaries taken as a whole, otherwise than
as reserved for as disclosed in the Company's financials statements; and there
has not been any change in the capital stock of the Company or increase in the
long-term debt (other than accretion or scheduled repayments thereof) of the
Company and the Subsidiaries taken as a whole, or any material adverse change
which has had a Material Adverse Effect, in each case otherwise than as set
forth on Exhibit E.
5.6. Capital Stock and Related Matters. At the time of the Closing and after
giving effect to the transactions contemplated by this Agreement, the authorized
capital stock of the Company will consist of (a) 500,000,000 shares of Common
Stock, of which approximately 71,500,000 shares will be outstanding, (b) 300,000
shares of Series A Perpetual Convertible Preferred Stock, of which 300,000
shares are outstanding, (c) 100,000 shares of Series B Perpetual Convertible
Preferred Stock, of which 100,000 shares will be outstanding and (d) 4,600,000
shares of preferred stock, undesignated as to terms, none of which are
outstanding. The Company is obligated to issue Common Stock on conversion of
debentures held by United Rentals Trust I, a business trust organized under
Delaware law. The Common Stock and the Stock are hereinafter collectively
referred to as "Capital Stock". All of the outstanding shares of
7
Capital Stock are, and at the Closing will be, validly issued and outstanding,
fully paid and non-assessable. Except as set forth above and on Exhibit E, the
Company has no outstanding stock or securities convertible into or exchangeable
for any shares of its Capital Stock, or any outstanding rights (either
preemptive or other) to subscribe for or to purchase, or any outstanding options
for the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any outstanding calls, commitments or claims of any character
relating to, any Capital Stock or any stock or securities convertible into or
exchangeable for any Capital Stock of the Company. Except as set forth on
Exhibit E, the Company is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
Capital Stock or any convertible securities, rights or options of the type
described in the preceding sentence. Neither the Company nor any of its
Subsidiaries is a party to, or has knowledge of, any agreement (except as set
forth on Exhibit E) restricting the transfer of any shares of the Company's
Capital Stock which would affect the transferability of the Common Stock
issuable upon conversion of the Stock.
5.7. Tax Returns and Payments. The Company and each of the Subsidiaries have
filed all necessary federal, state, local and foreign income, payroll, franchise
and other tax returns (after giving effect to extensions) and have paid all
taxes shown as due thereon (except where the failure to so file or pay would
not, singly or in the aggregate, have a Material Adverse Effect), and there is
no tax deficiency that has been, or to the knowledge of the Company is likely to
be, asserted against the Company, any of the Subsidiaries or any of their
properties or assets that would result in a Material Adverse Effect, except for
taxes that are being contested in good faith by appropriate proceedings and with
respect to which the Company has established adequate reserves in accordance
with United States generally accepted accounting principles.
5.8. Indebtedness of the Company. Exhibit F correctly describes all secured
and unsecured Indebtedness of the Company and its Subsidiaries (other than
intercompany items) outstanding, or for which the Company or one of its
Subsidiaries has commitments, which is individually in excess of $5,000,000
("Significant Indebtedness") (excluding operating leases), on the date of this
Agreement. The secured and unsecured Indebtedness of the Company and its
Subsidiaries (other than intercompany items, and other than Significant
Indebtedness) outstanding, or for which the Company or one of its Subsidiaries
has commitments does not in the aggregate exceed $1,600,000,000 on the date of
this agreement. Neither the Company nor any of its Subsidiaries is in default
with respect to any Indebtedness or any instrument or agreement relating
thereto, except for such defaults as would not, either in any case or in the
aggregate, have a Material Adverse Effect.
8
5.9. Title to Properties; Liens. The Company and each of the Subsidiaries have
good and marketable title to all real property (other than property which is
leased) material to the conduct of the business of the Company and the
Subsidiaries, taken as a whole, and good and marketable title to all personal
property (other than property which is leased) material to the conduct of the
business of the Company and the Subsidiaries, taken as a whole, in each case
free and clear of all liens, encumbrances and defects except such as are
described on Exhibit E or such as do not in the aggregate have a Material
Adverse Effect; and any real property and buildings held under lease by the
Company and the Subsidiaries, material to the conduct of the business of the
Company and the Subsidiaries, taken as a whole, are held by them under valid,
subsisting and enforceable leases with such exceptions as are described on
Exhibit E and except for such other exceptions as do not have a Material Adverse
Effect.
5.10. Litigation, etc. There is no action, proceeding or investigation pending
or (to the knowledge of the Company) threatened (or any basis therefor known to
the Company) which questions the validity of this Agreement, the Shares or any
action taken or to be taken pursuant to this Agreement, the Shares or the
Collateral Agreements. Other than as set forth on Exhibit E, there are no legal
or governmental proceedings pending to which the Company or any of the
Subsidiaries is a party or of which any property of the Company or the
Subsidiaries is the subject, which if determined adversely to the Company or any
of the Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect; and, to the Company's knowledge, no such proceedings which would
in the aggregate have a Material Adverse Effect are threatened or contemplated
by governmental authorities or threatened by others.
5.11. Compliance with Other Instruments, etc. Neither the Company nor any of
its Subsidiaries is in violation of any term of its certificate or articles of
incorporation or by-laws, and neither the Company nor any of its Subsidiaries is
in violation of any term of any agreement or instrument to which it is a party
or by which it is bound or any term of any applicable law, ordinance, rule or
regulation of any Governmental Authority or any term of any applicable order,
judgment or decree of any court, arbitrator or Governmental Authority, the
consequences of which violation could reasonably be expected to have a Material
Adverse Effect. The compliance by the Company with all of the provisions of
this Agreement and the Registration Rights Agreement, the execution, delivery
and performance by the Company of this Agreement and the Registration Rights
Agreement, the issuance by the Company of the Common Stock upon the conversion
of the Shares, and the compliance with the terms of the Certificate of
Designation will not conflict with or result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement (provided the consent of the Company's
lending banks must be obtained before the Company makes an offer to
9
purchase under Section 5 of the Certificate of Designation) or other agreement
or instrument to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries is bound or to which any of the
property or assets of the Company or any of the Subsidiaries is subject, or
constitute a Repayment Event thereunder, nor will such actions result in any
violation of the provisions of the certificate of incorporation or bylaws of the
Company or any of the Subsidiaries or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of the Subsidiaries or any of their properties except in each
case as would not, individually or in the aggregate have a Material Adverse
Effect. Except as set forth on Exhibit E, the execution, delivery and
performance by the Company of this Agreement and the transactions contemplated
hereby will not subject the Company to or accelerate any obligation to make
payments to any Person.
5.12. Governmental Consents, etc. Except as required under the HSR Act, no
consent, approval or authorization of, or declaration or filing with, any
Governmental Authority on the part of the Company is required for the valid
execution and delivery of this Agreement, the valid offer, issue, sale and
delivery of the Shares pursuant to this Agreement or the valid issue and
delivery of shares of Common Stock issuable upon conversion of the Stock.
Except for (a) the requirements of the HSR Act and applicable state securities
or blue sky laws, and (b) consents, approvals, filings or notices that will be
given or made at or prior to the time of the Closing, neither the Company nor
any of its Subsidiaries is required to obtain any consent, approval or
authorization of, or to make any declaration or filing with, any Governmental
Authority as a condition to the valid execution, delivery or performance of any
of the Collateral Agreements or the consummation of the transactions
contemplated thereby.
5.13. Offering of Securities. Neither the Company nor any Person acting on its
behalf has offered the Stock or any similar securities of the Company to, or
solicited any offers to buy any thereof from, or otherwise approached or
negotiated with respect thereto with, any Person or Persons other than the
Purchasers in such manner as would subject the offering, issuance or sale of any
of the Stock to the provisions of Section 5 of the Securities Act. Neither the
Company nor any Person acting on behalf of the Company has taken or will take
any action which would subject the offering, issuance or sale of any of the
Stock to the provisions of Section 5 of the Securities Act.
5.14. Certain Fees. Except for the fee payable by the Company to Goldman Sachs
& Co., the amount of which will be disclosed to the Purchasers in writing prior
to the Closing, no broker's or finder's fees or commissions will be payable by
the Company with respect to the transactions contemplated by this Agreement
10
and the Collateral Agreements, and the Company hereby indemnifies the Purchasers
against and agrees that it will hold the Purchasers harmless from any claim,
demand or liability for broker's or finder's fees alleged to have been incurred
at the instance of the Company or any Person acting on behalf of or at the
request of the Company or any agent of the Company in connection with any of the
transactions contemplated by this Agreement and the Collateral Agreements, and
from any expenses, including reasonable legal fees, arising in connection with
any such claim, demand or liability.
5.15. Investment Company Act. The Company is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
5.16. Disclosure. None of this Agreement, the Financial Statements, the Annual
Report on Form 10K for the year ended December 31, 1998, any document filed by
the Company with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 (the "Exchange Act") since the Annual Report on
Form 10K for the year ended December 31, 1998, or the Unaudited Statements,
contains (in each case, as of its date) any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they are
made, not misleading.
5.17. Enforceability. This Agreement and the Registration Rights Agreement
have been duly authorized and when validly executed and delivered by the Company
(assuming the due authorization, execution and delivery thereof by the other
parties thereto) will constitute the valid and binding obligations of the
Company, enforceable in accordance with their respective terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws relating to or affecting enforcement of
creditors' rights generally, or by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
5.18. Integration. Neither the Company nor any affiliate (as such term is
defined in Rule 501(b) under the Securities Act) has, directly or through any
agent, sold, offered for sale, solicited offers to buy or otherwise negotiated
in respect of, any security (as defined in the Securities Act) which is or will
be integrated with the sale of the Shares, in a manner that would require the
registration of the Securities under the Securities Act.
5.19. Manipulation. Prior to the date hereof, neither the Company nor any of
its affiliates has taken any action which is designed to or which has
constituted
11
or which might have been expected to cause or result in stabilization or
manipulation of the price of any security of the Company in connection with the
sale of the Shares.
5.20. Acquired Companies. To the best knowledge of the Company, the
representations and warranties made by each of the Acquired Companies (as
defined in Section 9) and the selling stockholders in the respective agreements
pursuant to which the Company or another Subsidiary acquired the Acquired
Companies did not as of the respective dates thereof contain any inaccuracies
that would, singly or in the aggregate, have a Material Adverse Effect.
5.21. Intellectual Property. The Company and the Subsidiaries own or possess,
or can acquire on reasonable terms, adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on the
business now operated by them, and neither the Company nor any of the
Subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company or any of
the Subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly
or in the aggregate, would result in a Material Adverse Effect.
5.22. Government Licenses. The Company and the Subsidiaries possess such
permits, licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state, local or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by them, except where the failure to so possess such Government
Licenses would not, singly or in the aggregate, have a Material Adverse Effect;
the Company and the Subsidiaries are in compliance with the terms and conditions
of all such Governmental Licenses, except where the failure so to comply would
not, singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when the
invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not have, singly or in the
aggregate, a Material Adverse Effect; and neither the Company nor any of the
Subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in a Material Adverse Effect.
12
5.23. Environmental Laws. Except as described on Exhibit E or except as would
not, singly or in the aggregate, result in a Material Adverse Effect: (a)
neither the Company nor any of the Subsidiaries is in violation of any federal,
state, local or foreign statute, law, rule, regulation, ordinance, code, policy
or rule of common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or judgment,
relating to pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), (b) neither the Company nor any of the Subsidiaries is lacking any
permits, authorizations and approvals required under any applicable
Environmental Laws or are in violation of the requirements of such Environmental
Laws, (c) there are no pending or, to the best knowledge of the Company,
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of the Subsidiaries and (d) to the knowledge of the Company there
are no events or circumstances that might reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit or proceeding
by any private party or governmental body or agency, against or affecting the
Company or any of the Subsidiaries relating to Hazardous Materials or any
Environmental Laws.
5.24. Insurance. Neither the Company nor any Subsidiary has received notice
from any insurer providing insurance coverage for the Company and the
Subsidiaries or agent of such insurer that capital improvements or other
expenditures will have to be made in order to continue present insurance
coverage, except such as could not reasonably be expected, singularly or in the
aggregate, to have a Material Adverse Effect.
5.25. Internal Controls. The Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with management's general or
specific authorization; (b) transactions are recorded as necessary (i) to permit
preparation of financial statements in conformity with generally accepted
accounting principles and (ii) to maintain accountability for assets; (c) access
to assets is permitted only in accordance with management's general or specific
authorization; and (d) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any material differences. Any exceptions to
13
this representation would not render the representation in Section 5.4 incorrect
in any material respect or have a Material Adverse Effect.
5.26. ERISA. Neither the Company nor any of the Subsidiaries has violated any
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the rules and regulations promulgated thereunder, except for such
violations which, singly or in the aggregate, would not have a Material Adverse
Effect. If any plan subject to ERISA is adopted, the execution and delivery of
this Agreement and the sale of the Securities will not involve any non-exempt
prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Internal Revenue Code of 1986, as amended.
5.27. Year 2000 Compliance. With such exceptions as would not have a Material
Adverse Effect, the Company has been advised by its vendors (and has no reason
to believe that such advice is not correct) that as of the date of this
Agreement, all Date Data and Date-Sensitive Systems used by the Company and its
Subsidiaries are Year 2000 Compliant. "Date-Sensitive System" means any
software, microcode or hardware system or component, including any electronic or
electronically controlled system or component, that uses or processes any Date
Data and that is installed, in development or on order by the Company or any of
its subsidiaries for their internal use or for the use of third parties, or
which the Company or any of its subsidiaries sell, lease, license, assign or
otherwise provide to any third party. "Year 2000 Compliant" means (i) with
respect to Date Data, that such data is in proper format and accurate for all
dates, including for those before, on and after December 31, 1999 and (ii) with
respect to Date-Sensitive Systems, that each such system accurately processes
all Date Data, including for dates before, on and after December 31, 1999,
without loss of any functionality or performance, including but not limited to
calculating, comparing, sequencing, storing and displaying such Date Data
(including all leap year considerations), when used as a stand-alone system or
in combination with other software or hardware.
6. Investment Representations. The Purchasers understand that neither the
Shares nor any Common Stock issuable upon conversion, if any, of the Shares has
been registered under the Securities Act and that the certificates for the
Shares and such Common Stock will bear a legend to that effect. The Purchasers
also understand that the Shares are being offered and sold pursuant to an
exemption from registration contained in the Securities Act, based in part upon
their representations contained in this Agreement. The Purchasers hereby
represent and warrant as follows:
6.1. Acquisition for Own Account. The Purchasers are acquiring the Shares for
their own account for investment and not with a view toward distribution in a
manner which would violate the Securities Act.
14
6.2. Ability to Protect Own Interests. The Purchasers represent that by reason
of their business or financial experience, or the business and financial
experience of their management, the Purchasers have the capacity to protect
their own interests in connection with the transaction contemplated in this
Agreement. The Purchasers are not a corporation formed for the specific purpose
of consummating this transaction.
6.2. Accredited Investor. The Purchasers represent that they are an
"accredited investor" as that term is defined in Regulation D promulgated under
the Securities Act.
6.3. Access to Information. The Purchasers have been given access to all
Company documents, records, and other information, have received physical
delivery of all those which the Purchasers have requested, and have had adequate
opportunity to ask questions of, and receive answers from, the Company's
officers, employees, agents, accountants, and representatives concerning the
Company's business, operations, financial condition, assets, liabilities, and
all other matters relevant to its investment in the Shares.
6.4. No Brokers. Purchasers represent and warrant to the Company that no
broker's or finder's fees or commissions will be payable by the Purchasers with
respect to the transactions contemplated by this Agreement and the Collateral
Agreements, and the Purchasers hereby jointly and severally indemnify and hold
the Company harmless from any claim, demand or liability for broker's or
finder's fees alleged to have been incurred at the instance of the Purchasers,
their affiliates or agents or any Person acting on behalf of or at the request
of the Purchasers, their affiliates or agents.
6.5. Compliance with Laws. Purchasers and their transferees will comply with
all filing and other reporting obligations under all Requirements of Law which
shall be applicable to Purchasers with respect to the Shares and to the Common
Stock issuable or issued on conversion of the Shares.
7. Affirmative Covenants. The Company covenants that from and after the date
of this Agreement through the Closing and thereafter (provided that the
covenants in Sections 7.1 and 7.2 shall continue only so long as the Purchasers
own at least 25,000 Shares or 1,000,000 shares of Common Stock which have been
acquired upon conversion of any Shares):
7.1. Exchange Act and Securities Act Filings. The Company will deliver to the
Purchasers, within three Business Days of their filing with the Securities and
Exchange Commission, all documents filed by it with the Securities and Exchange
15
Commission pursuant to the Securities Act or the Exchange Act, including
exhibits thereto.
7.2. Certificates; Other Information. The Company will deliver to the
Purchasers: (a) promptly upon receipt thereof, copies of all final reports
submitted to the Company or any of its Subsidiaries by independent certified
public accountants in connection with each annual or interim audit of the books
of the Company or any of its Subsidiaries made by such accountants, including,
without limitation, any final comment letter submitted by such accountants to
management in connection with their annual audit; and (b) promptly upon their
becoming available, copies of all financial statements, reports, notices and
proxy statements sent or made available generally by the Company to all of its
security holders in their capacity as such or by any Subsidiary of the Company
to its security holders.
7.3. Books and Records. The Company will, and will cause each of its
Subsidiaries to keep proper books of record and account in which entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities
7.4. Notices. The Company will, within 48 hours of occurrence, give notice to
the Purchasers: (a) of any (i) default or event of default under any instrument
or other agreement of the Company or any of its Subsidiaries which default or
event of default would have a Material Adverse Effect or (ii) litigation,
investigation or proceeding which may exist at any time between the Company or
any of its Subsidiaries and any Governmental Authority, which in any such case,
if adversely determined, could reasonably be expected to have a Material Adverse
Effect; and (b) of any litigation or proceeding affecting the Company or any of
its Subsidiaries (i) in which the amount claimed is $2,000,000 or more and not
covered by insurance or covered by reserves on the Company's balance sheet, or
(ii) in which injunctive or similar relief is sought which if obtained could
reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this section 7.4 shall be accompanied by a
statement of the chief executive officer or chief financial officer of the
Company setting forth details of the occurrence referred to therein and stating
what action the Company proposes to take with respect thereto.
7.5. Reservation of Common Stock. The Company will at all times reserve and
keep available, solely for issuance and delivery upon conversion of the Stock,
the number of shares of Common Stock from time to time issuable upon conversion
of all shares of the Stock at the time outstanding. All shares of Common Stock
issuable upon conversion of the Stock shall be duly authorized and, when issued
upon such conversion, shall be validly issued, fully paid and non-assessable.
16
7.6. Availability of Information. The Company will comply with the reporting
requirements of Sections 13 and 15(d) of the Exchange Act and will comply with
all other public information reporting requirements of the Securities and
Exchange Commission (including Rule 144 promulgated by the Securities and
Exchange Commission under the Securities Act) from time to time in effect and
relating to the availability of an exemption from the Securities Act for the
sale of any Restricted Securities. The Company will also reasonably cooperate
with each holder of any Restricted Securities in supplying such information as
may be necessary for such holder to complete and file any information reporting
forms presently or hereafter required by the Securities and Exchange Commission
as a condition to the availability of an exemption from the Securities Act for
the sale of any Restricted Securities.
7.7. Public Announcements. Attached hereto is the text of the press releases
which the parties shall issue publicly to announce the execution of this
Agreement.
7.8. Shareholder Vote. As soon as practicable following the execution and
delivery of this Agreement, the Company will hold a special meeting of
shareholders to approve the issuance of the Preferred Stock to the Purchasers
and shall use its best efforts to cause the approval of such issuance, including
the recommendation of the Board of Directors to vote in favor of approval.
8. Registration, Transfer and Substitution of Certificates for Stock.
8.1. Stock Register; Ownership of Stock. (a) The Company will keep at its
principal office a register in which the Company will provide for the
registration of the stock and the registration of transfers or conversion of the
Stock. The Company may treat the Person in whose name any of the Shares or
shares issued upon conversion of any of the Stock are registered on such
register as the owner thereof and the Company shall not be affected by any
notice to the contrary. All references in this Agreement to a "holder" of any
Shares or shares issued upon conversion of any of the Stock shall mean the
Person in whose name such Shares or shares issued upon conversion of any of the
Stock are at the time registered on such register.
(b) Upon the surrender of any certificate for Stock, properly
endorsed, for registration of transfer or for conversion at the office of the
Company maintained pursuant to subdivision (a) of this section 8.1, the Company
at its expense will (subject to compliance with section 8.2 hereof, if
applicable) execute and deliver to or upon the order of the holder thereof (i) a
new certificate or certificates for the same aggregate number of shares of Stock
less the number of shares of Stock being
17
converted, if any, in the name of such holder or as such holder (upon payment by
such holder of any applicable transfer taxes) may direct, and (ii) a certificate
or certificates for the number of shares of Common Stock to be issued upon
conversion of the shares of Stock so surrendered.
8.2. Replacement of Certificates. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
certificate representing shares of Stock or Common Stock issued upon the
conversion of shares of Stock and, in the case of any such loss, theft or
destruction of any certificate representing shares of Stock or Common Stock
issued upon the conversion of shares of Stock held by a Person other than the
Purchasers, upon delivery of indemnity reasonably satisfactory to the Company in
form and amount or, in the case of any such mutilation, upon surrender of such
certificate representing shares of Stock or Common Stock issued upon the
conversion of shares of Stock for cancellation at the office of the Company
maintained pursuant to subdivision (a) of section 8.1 hereof, the Company at its
expense will execute and deliver, in lieu thereof, a new certificate
representing shares of Stock or Common Stock of like tenor.
8.3. Restrictive Legends. Except as otherwise permitted by this section 8,
each certificate for Stock (including each certificate for Stock issued upon the
transfer of any certificate for Stock) shall be stamped or otherwise imprinted
with a legend in substantially the following form:
"The shares represented by this Certificate and any shares of Common
Stock issuable upon conversion of any such shares have not been registered
under the Securities Act of 1933 and may not be transferred in the absence
of such registration or an exemption therefrom under such Act. Such shares
and any such shares of Common Stock may be transferred only in compliance
with the conditions specified in the Preferred Stock Purchase Agreement
dated __________, 1999 between United Rentals, Inc. (the "Company") and the
purchasers identified therein. A complete and correct copy of such
Agreement is available for inspection at the principal office of the
Company and will be furnished without charge to the holder of such shares
upon written request."
Except as otherwise permitted by this section 8, each certificate for Common
Stock issued upon the conversion of any of the Stock, and each certificate
issued upon the transfer of any such Common Stock, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
18
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and may not be transferred in the absence
of such registration or an exemption therefrom under such Act. Such shares
may be transferred only in compliance with the conditions specified in the
Preferred Stock Purchase Agreement dated _________ 1999 between United
Rentals, Inc. (the "Company") and the purchasers identified therein. A
complete and correct copy of such Agreement is available for inspection at
the principal office of the Company and will be furnished without charge to
the holder of such shares upon written request."
8.4. Notice of Proposed Transfer; Opinions of Counsel. Prior to any transfer
of any Restricted Securities which are not registered under an effective
registration statement under the Securities Act, the holder thereof will give
written notice to the Company of such holder's intention to effect such transfer
and to comply in all other respects with this section 8.4. Each such notice
shall describe the manner and circumstances of the proposed transfer and shall
be accompanied by an opinion of counsel for such holder, which counsel and
opinion shall each be reasonably satisfactory to the Company, that the proposed
transfer may be effected without registration of such shares of Restricted
Securities under the Securities Act. Such holder shall thereupon be entitled to
transfer such shares in accordance with the terms of the notice delivered by
such holder to the Company. Each certificate representing such shares issued
upon or in connection with such transfer shall bear the restrictive legends
required by section 8.3, unless the related restrictions on transfer shall have
ceased and terminated as to such shares pursuant to section 8.5 hereof.
8.5. Termination of Restrictions. The restrictions imposed by this section 8
upon the transferability of Restricted Securities shall cease and terminate as
to any particular Restricted Securities when such restrictions are no longer
required in order to insure compliance with the Securities Act. Whenever such
restrictions shall cease and terminate as to any Restricted Securities, the
holder thereof shall be entitled to receive from the Company, without expense
(other than applicable transfer taxes, if any), new certificates for such
securities of like tenor not bearing the applicable legends required by section
8.3 hereof.
9. Definitions.
9.1. Certain Defined Terms. As used in this Agreement the following terms have
the following respective meanings:
Acquired Companies: The companies United Rentals, Inc. has acquired
since its formation in September 1997.
19
Affiliate: With reference to any Person, a spouse of such Person, any
relative (by blood, adoption or marriage) of such Person within the second
degree, any director, officer or employee of such Person, any other Person of
which such Person is a member, director, officer or employee, and any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person.
Business Day: Any day except a Saturday, a Sunday, or any day on
which banking institutions in New York, New York are required or authorized by
law or other governmental action to be closed.
Capital Stock: As defined in section 5.6 of this Agreement.
Certificate of Designation: As defined in section 1 of this
Agreement.
Closing: As defined in section 3 of this Agreement.
Closing Date: The date of the Closing.
Code: The Internal Revenue Code of 1986, as amended from time to
time.
Collateral Agreements: The Registration Rights Agreement and the
Certificate of Designation.
Common Stock: As defined in section 1 of this Agreement.
Company: As defined in the introduction to this Agreement.
Exchange Act: At any time, the Securities Exchange Act of 1934 as then
in effect or any similar federal statute then in effect, and any reference to a
particular section of such Act shall be deemed to include a reference to the
comparable section, if any, in any such similar federal statute.
Financial Statements: As defined in section 5.4 of this Agreement.
GAAP: Generally accepted accounting principles set forth in the
Opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants and in statements by the Financial Accounting
Standards Board or in such other statement by such other entity as may be
approved by a significant segment of the accounting profession; and the
requisite that such principles be applied
20
on a consistent basis shall mean that the accounting principles observed in a
current period are comparable in all material respects to those applied in a
preceding period.
Governmental Authority: Any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
Indebtedness: With respect to any Person, at a particular time (a)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property, (b) the face amount of all letters of credit issued for the
account of such Person and, without duplication, all drafts drawn thereunder,
(c) all liabilities secured by any Lien on any property owned by such Person, to
the extent attributable to such Person's interest in such property, even though
such Person has not assumed or become liable for the payment thereof, and (d)
lease obligations of such Person which, in accordance with GAAP, should be
capitalized; but excluding trade and other accounts payable in the ordinary
course of business in accordance with customary trade terms and which are not
overdue for a period of more than 60 days or, if overdue for more than 60 days,
as to which a dispute exists and adequate reserves in conformity with GAAP have
been established on the books of such Person. The term "Indebtedness" shall not
include amounts which have not been drawn under credit facilities,
notwithstanding that such amounts when drawn will automatically be secured by an
existing Lien.
Lien: Any mortgage, pledge, hypothecation, assignment, security
interest, lien, charge or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effects as
any of the foregoing, and the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction). For the purposes of this Agreement, the Company or one of its
Subsidiaries shall be deemed to be the owner of any property which it has placed
in trust for the benefit of the holders of Indebtedness of the Company or its
Subsidiaries which Indebtedness is deemed to be extinguished under GAAP but for
which the Company or its Subsidiaries remain legally liable, and such trust
shall be deemed to be a Lien.
Majority in Interest: At any time, the holders of a majority, by
number of shares, of the outstanding Shares and the outstanding shares of Common
Stock issued upon conversion of any Shares, such majority to be determined by
reference to the number of shares of Common Stock into which all outstanding
Shares are at the time convertible.
21
Officers' Certificate: As to the Company, a certificate executed on
behalf of the Company by its Chief Executive Officer, and any one of its Vice
Chairman, Chief Acquisition Officer, or Chief Financial Officer.
Person: An individual, a partnership, a joint venture, a corporation,
a limited liability company, a trust, an unincorporated organization or a
government or any department or agency thereof.
Registration Rights Agreement: As defined in section 4.6 of this
Agreement.
Repayment Event: Any event or condition which gives the holder of any
note, debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any of the Subsidiaries.
Requirement of Law: As to any Person, the Certificate of
Incorporation and by-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
Restricted Securities: All of the following: (a) any certificates for
Stock bearing the applicable legend or legends referred to in section 8.3
hereof, (b) any shares of Common Stock which have been issued upon the
conversion of any of the Stock and which are evidenced by a certificate or
certificates bearing the applicable legend or legends referred to in such
section and (c) unless the context otherwise requires, any shares of Common
Stock which are at the time issuable upon the conversion of Stock and which,
when so issued, will be evidenced by a certificate or certificates bearing the
applicable legend or legends referred to in such section.
Securities Act: At any time, the Securities Act of 1933 as then in
effect or any similar federal statute then in effect, and any reference to a
particular section of such Act shall be deemed to include a reference to the
comparable section, if any, in any such similar federal statute.
Securities and Exchange Commission: The U.S. Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act or the Exchange Act, whichever is the relevant statute for the particular
purpose.
Shares: As defined in section 1 of this Agreement.
22
Stock: As defined in section 1 of this Agreement.
Subsidiaries: With respect to any Person, any corporation with respect
to which more than 50% of the outstanding shares of stock of each class having
ordinary voting power (other than stock having such power only by reason of the
happening of a contingency) is at the time owned by such Person or by one or
more Subsidiaries of such Person or by such Person and one or more Subsidiaries
of such Person.
Any of the above-defined terms may, unless the context otherwise
requires, be used in the singular or plural depending on the reference.
9.2. Accounting Terms. As used in this Agreement, and in any certificate,
report or other document made or delivered pursuant to this Agreement,
accounting terms not defined in section 9.1 and accounting terms partly defined
in said section 9.1 to the extent not defined, shall have the respective
meanings given to them under GAAP.
9.1. Other Provisions Regarding Definitions: (1) Unless otherwise defined
therein, all terms defined in this Agreement shall have the defined meanings
when used in any certificate, report or other document made or delivered
pursuant to this Agreement.
(1) The words "hereof", "herein", and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement.
10. Expenses, etc. Whether or not the transactions contemplated by this
Agreement shall be consummated, the Company will pay all of its expenses in
connection with such transactions and in connection with any amendments or
waivers (whether or not the same become effective) under or in respect of this
Agreement or the Shares purchased by the Purchasers hereunder, including,
without limitation: (a) the cost and expenses of reproducing this Agreement and
the Shares purchased by the Purchasers, of furnishing all opinions of counsel
for the Company (including any opinions requested by the Purchasers' special
counsel as to any legal matter arising hereunder) and all certificates on behalf
of the Company, and of the Company's performance of and compliance with all
agreements and conditions contained herein to be performed or complied with by
it; and (b) the cost (other than any applicable stock transfer taxes) of
delivering to their principal office, insured to their satisfaction, the Shares
sold to the Purchasers hereunder and any Shares delivered to the Purchasers upon
any substitution of Shares pursuant to section 8 and of the Purchasers
delivering
23
any Shares, insured to their satisfaction, upon any such substitution. In
addition, if the transactions contemplated hereby have been consummated, the
Company shall pay 50% of the reasonably itemized out-of-pocket expenses incurred
by the Purchasers in connection with such transactions (including the fees and
disbursements of their counsel), provided that the Company's liability under
this sentence shall not exceed $200,000. Reference is made to Section 5 of this
Agreement for certain agreements among the parties regarding the fees, if any,
of brokers and finders.
11. Adjustment of Terms. Notwithstanding the provisions of this Agreement and
the Certificate of Designation for the Series B Preferred Stock, if the Company
shall agree, on or before December 15, 1999, to issue to any person or persons
(other than (a) in connection with the acquisition of a business or the
acquisition of assets to be used in its business or (b) in a bona fide
underwritten public offering) more than $50 million aggregate liquidation
preference of a series of convertible preferred stock, then the Company shall
give to Purchasers not less than 15 business days' prior notice of such proposed
issuance, and the Purchasers shall be entitled at the closing of such issuance
to exchange their shares of Series B Preferred Stock for shares of the newly
issued convertible preferred stock, with the Series B Preferred Stock valued at
its liquidation amount.
12. Survival of Representations and Warranties and Indemnification; Certain
Limitations. The Company's indemnification obligations and all representations
and warranties contained in this Agreemen
EX-10
4
exhibitvi.txt
EX. VI-AGREEMENT DATED SEPTEMBER 28, 2001
Exhibit VI
----------
AGREEMENT
---------
AGREEMENT, dated as of September 28, 2001, among UNITED
RENTALS, INC. (the "Company"), APOLLO INVESTMENT FUND IV, L.P.,
-------
APOLLO OVERSEAS PARTNERS IV, L.P. and CHASE EQUITY ASSOCIATES, L.P.
(each, a "Holder" and, collectively, the "Holders").
------ -------
WHEREAS, the Company has issued (i) 300,000 shares of Perpetual
Convertible Preferred Stock, Series A, par value $.01 per share ("Series A
--------
Preferred"), having the powers, preferences and relative, participating,
---------
optional and other special rights, and qualifications, limitations and
restrictions ("Terms") set forth in the Certificate of Designation of the Series
-----
A Preferred, as amended (the "Series A Designations"), filed with the Secretary
---------------------
of State of the State of Delaware (the "Delaware Secretary") pursuant to the
------------------
General Corporation Law of the State of Delaware (the "DGCL"), and (ii)
----
Perpetual Convertible Preferred Stock, Series B, par value $.01 per share
("Series B Preferred" and, collectively with the Series A Preferred, the
------------------
"Preferred Shares"), having the Terms set forth in the Certificate of
----------------
Designation of the Series B Preferred filed with the Delaware Secretary pursuant
to the DGCL (the "Series B Designations") and consisting of 500,000 shares, of
---------------------
which 450,000 shares were designated as Class B-1 Perpetual Convertible
Preferred Stock (the "B-1 Preferred") and 50,000 shares were designated as Class
-------------
B-2 Perpetual Convertible Preferred Stock (the "B-2 Preferred"); and
-------------
WHEREAS, there are outstanding 300,000 shares of Series A
Preferred, of which Apollo Investment Fund IV, L.P. owns 284,726
shares and Apollo Overseas Partners IV, L.P. owns 15,274 shares; and
WHEREAS, there are outstanding 105,252 shares of B-1
Preferred, of which Apollo Investment Fund IV, L.P. owns 94,726
shares, Apollo Overseas Partners IV, L.P. owns 5,274 shares and
Chase Equity Associates, L.P. owns 5,252 shares; and
WHEREAS, there are outstanding 44,748 shares of B-2
Preferred, all of which are owned by Chase Equity Associates, L.P.;
and
WHEREAS, the respective owners of the shares of Series A Preferred wish to
exchange such shares for the same number of shares of Perpetual Convertible
Preferred Stock, Series C, par value $.01 per share ("Series C Preferred"),
------------------
having the Terms to be set forth in the Certificate of Designation of the Series
C Preferred (the "Series C Designations") described in this Agreement; and
---------------------
WHEREAS, the respective owners of the shares of B-1 Preferred wish to
exchange such shares for the same number of shares of Perpetual Convertible
Preferred Stock, Series D ("Series D Preferred"), Class D-1 ("D-1 Preferred"),
------------------ -------------
par value $.01 per
share, having the Terms to be set forth in the Certificate of
Designation of the Series D Preferred (the "Series D Designations") described in
---------------------
this Agreement; and
WHEREAS, the owner of the shares of B-2 Preferred Stock wishes to exchange
such shares for the same number of shares of Series D Preferred, Class D-2 ("D-2
---
Preferred"), having the Terms to be set forth in the Series D Designations.
---------
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements set forth herein, and for other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Filing of Designations
----------------------------
(a) On or prior to the date hereof, the Company has entered into
a Rights Agreement dated as of the date hereof, a true
and complete copy of which has been initialed by the
Company and one or more Holders (the "Rights Agreement"),
----------------
and has declared a distribution of one Right (a "Right")
-----
to purchase one one-thousandth of a share of Series E
Junior Participating Preferred Stock of the Company in
respect of each share of common stock of the Company, par
value $.01 per share ("Common Stock") which is issued and
------------
outstanding on a record date of October 19, 2001 and with
a payment date of October 19, 2001.
(b) As soon as practicable after the date hereof, the Company shall file
the Series C Designations and the Series D Designations with the
Delaware Secretary pursuant to the DGCL.
(c) Forthwith on such filings, the Company and the respective
owners of shares of Series A Preferred shall exchange
such shares for the same number of shares of Series C
Preferred; the Company and the respective owners of
shares of B-1 Preferred Stock shall exchange such shares
for the same number of shares of D-1 Preferred; and the
Company and the owner of the shares of B-2 Preferred
Stock shall exchange such shares for the same number of
shares of D-2 Preferred.
(d) All references in any registration rights or other agreements with
the Company to the Preferred Shares that are owned by Holders shall
from and after the exchange aforesaid be deemed to refer to the
shares of Preferred Stock into which the exchanges aforesaid are
made.
(e) On the date of the exchanges provided for in paragraphs (b),
(c) and (d) of this Section 1, the Company shall issue,
with respect to each share of Preferred Stock which is
issued by the Company pursuant to the aforesaid
paragraphs (b), (c) and (d) of this Section 1, a number
of Rights which equals the number of shares of Common
Stock into which each share of Preferred Stock is then
convertible. Such Rights shall have the terms
-2-
(including, without limitation, the terms relating to the redemption
thereof), shall be entitled to the benefits of, and be subject to
the conditions of the Rights Agreement, as if such Rights initially
were issued pursuant thereto. Such Rights shall be evidenced by the
certificates representing the Preferred Shares issued pursuant to
paragraphs (b), (c) and (d) of this Section 1 until the Distribution
Date, or by Right Certificates in substantially the form of Exhibit
A to the Rights Agreement subsequent to the Distribution Date. Upon
conversion of any Preferred Share prior to the Distribution Date,
the Rights issued in respect of such Preferred Share shall cease to
exist and the holder of the shares of Common Stock received upon
conversion of such Preferred Shares shall be issued Rights in
accordance with the provisions of the Rights Agreement. The number
of Rights issued in respect of each Preferred Share, the Exercise
Price and the number and kinds of shares of capital stock issuable
upon exercise of the Rights shall be subject to adjustment from time
to time only in accordance with the terms of the Rights Agreement.
In the event that the Rights shall be redeemed by the Board of
Directors of the Company in accordance with their terms while any
Preferred Shares are outstanding, the holder of any Preferred Share
then outstanding shall have the right to receive the Redemption
Price with respect to each Right then held by such holder.
2. The Terms of the Designations
-----------------------------------
(a) Except as set forth below, the Terms of the Series C Designations
shall be identical to the Terms of the Series A Designations, and the
Terms of the Series D Designations shall be identical to the Terms of
the Series B Designations.
(b) Where the Series A Designations and Series B Designations
refer to the Series A Preferred, or to the Series B
Preferred, or to the B-1 Preferred or to the B-2
Preferred, the Series C and Series D Designations shall
instead respectively refer to Series C Preferred, Series
D Preferred, D-1 Preferred and D-2 Preferred. The Series
C Preferred, Series D Preferred, D-1 Preferred and D-2
Preferred are hereinafter sometimes collectively referred
to as the "Preferred Stock").
---------------
(c) Section 2 of each of the Series C and Series D Designations shall contain
the following paragraphs immediately following the existing text:
Dividends in the event of a Non-Approved Change in Control.
----------------------------------------------------------
Certain Definitions.
"Non-Approved Change in Control" means the occurrence of the
following events: (a) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the
-3-
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has the
right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of more
than 50% of the total voting capital stock of the Company (a "50%
--
Condition"); and (b) as of the time of occurrence of such 50%
--------- --
Condition, (i) no Pre-Change in Control Grant Date shall have
---------
occurred and (ii) the Company and the Board (which term shall
include any committee of the Board) shall have disapproved (and
recommended against, if applicable) such person or group becoming
such a beneficial owner of more than 50% of the total voting capital
stock of the Company; provided, however, that if the Company or the
-------- -------
Board shall have, without the prior written consent of the holders
of a majority of the shares of Preferred Stock then outstanding (a
"Majority of the Holders"), (1) failed to maintain in force and
-----------------------
effect at all times, without lapse, the Rights Agreement and the
Rights, with only such amendments or modifications thereto as shall
be approved by a Majority of the Holders, or (2) amended the Rights
Agreement in any manner that reduces the rights it affords to the
Company's shareholders or reduces the exercise price of Rights under
the Rights Agreement, or (3) waived any provision of the Rights or
the Rights Agreement with respect to any person or group that is or
becomes the person or group described in clause (a), exempted any
person or group that is or becomes the person or group described in
clause (a) in whole or in part from the operation or effect of the
Rights or the Rights Agreement, or exempted any person or group that
is or becomes the person or group described in clause (a) from the
applicability of Section 203 of the Delaware General Corporation Law
or any successor provision, or entered into any agreement,
arrangement or understanding with respect to any of the foregoing,
or (4) facilitated or suffered to exist any mitigation or
circumvention of the intended effects of the Rights or the Rights
Agreement, or (5) failed, within 20 days after receipt of a written
request therefor by a Majority of the Holders, to increase the
exercise price of Rights under the Rights Agreement to the extent
necessary so that immediately after such increase the ratio of such
exercise price to the average of the closing prices of the Common
Stock, as reported by the principal securities exchange upon which
the Common Stock is listed, for the 30 trading days immediately
preceding the date of such request is not less than three-to-one,
then the occurrence of a 50% Condition shall be deemed to constitute
a Change in Control unless a Pre-Change in Control Grant Date shall
have occurred.
The "Pre-Change in Control Grant Date" shall be the date, if any,
--------------------------------
before the occurrence of a 50% Condition, on which the Company
grants to all holders of shares of Preferred Stock the immediately
exercisable right to require the Company to redeem their shares of
Preferred Stock at the
-4-
price and terms which would then apply in respect of a Change in
Control; provided, however, that the holders of shares of Preferred
-------- -------
Stock may exercise such rights at any time during the
five-Business-Day period following the occurrence of the 50%
Condition; and provided, further, that the holders shall have
-------- -------
received an opinion of counsel to the Company that such right to
require the Company to redeem their shares is a valid and
enforceable obligation of the Company and is not limited by any law
or other obligation to which the Company is subject.
"Start Date" means the date and time upon which a Non-Approved
----------
Change in Control shall have occurred, provided that unless and
--------
until Bradley S. Jacobs shall have sold, transferred or otherwise
disposed of more than 6 million shares of Common Stock after
September 24, 2001, no Start Date shall be deemed to have occurred
unless a 50% Condition shall have occurred without taking into
account for the purposes of such defined term any shares of Common
Stock beneficially owned by Apollo Investment Fund IV, L.P., or
Apollo Overseas Partners IV, L.P. or their respective successors.
"Determination Date" means each March 15, June 15, September 15 and
------------------
December 15 (unless such day is not a Business Day, in which event
the Determination Date shall mean the first succeeding Business
Day), commencing on the first Determination Date succeeding the
Start Date.
If any shares of Preferred Stock are outstanding as of the close of
business on the day in which the Start Date occurs, then the holders shall
be entitled, if, as and when unanimously declared by all directors of the
Company then in office, to a per share cumulative cash dividend in an
amount equal to 10% per annum of the Liquidation Preference, accruing
daily commencing from the Start Date, computed on the basis of a 365-day
year, compounded annually. If, on or prior to any Determination Date, the
Company shall not have declared and paid to a holder of Preferred Stock
the full cumulative cash dividends accruing as aforesaid for such shares
for the quarterly (or other, as the case may be) period ending on such
Determination Date (a "Missed Payment"), each Missed Payment shall be
--------------
added to the Liquidation Preference until paid in full in cash in
accordance with Section 4.
From and after the date of any one or more Missed Payments, the holders
shall additionally be entitled, if, as and when unanimously declared by
all directors then in office, to a penalty dividend at a rate of 8% per
annum of the Liquidation Preference, accruing daily commencing from the
date of such Missed Payment, computed on the basis of a 365-day year,
compounded annually, until all Missed Payments are paid in cash in full
(the "Penalty Dividend"). Each Penalty Dividend not declared and paid in
----------------
cash when due will be added to the Liquidation Preference until paid in
full in cash in accordance with Section 4.
-5-
Whenever quarterly dividends payable on shares of Preferred Stock are in
arrears (or any Penalty Dividend is owed), thereafter and until all
accrued and unpaid dividends (including Penalty Dividends), whether or not
declared, on the outstanding shares of Preferred Stock shall have been
paid in full, or whenever the Company shall not have redeemed shares of
Preferred Stock at a time required by the Designations, thereafter and
until all redemption obligations which have come due shall have been
satisfied, the Company shall not: (i) declare or pay dividends, or make
any other distributions, on any shares of capital stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to
the Preferred Stock; (ii) declare or pay dividends, or make any other
distributions, on any shares of capital stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up) with the
Preferred Stock, except dividends paid ratably on the Preferred Stock and
all capital stock ranking on a parity with the Preferred Stock and on
which dividends are payable or in arrears, in proportion to the total
amounts to which the holders of all such shares are then entitled; or
(iii) redeem or purchase or otherwise acquire for consideration any shares
of capital stock ranking (either as to dividends or upon liquidation,
dissolution or winding up) junior to, or on a parity with the Preferred
Stock. The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of capital
stock of the Company unless the Company could, pursuant to this paragraph,
purchase such shares at such time and in such manner.
The dividends that would be due as a result of a Start Date under this
Section 2 (for clarity, that refers to the 10% dividends accruing from the
Start Date and any Penalty Dividends) shall cease to accrue from and after
the Repurchase Grant Date (as hereinafter defined). The "Repurchase Grant
----------------
Date" shall be the earliest date, if any, on which the Company by,
----
unanimous approval of all directors then in office, grants to all holders
of shares of Preferred Stock the right to require the Company to redeem
their shares of Preferred Stock at the price and terms which would then
apply in respect of a Change in Control; provided, however, that the
-------- -------
holders of shares of Preferred Stock may exercise such rights at any time
during the two-year period following the Repurchase Grant Date , and (for
the avoidance of doubt and without duplication) the repurchase price shall
be increased by the dividends (including any Penalty Dividends owed) which
shall have accrued from the Start Date through and including the
Repurchase Grant Date, whether or not declared; and provided, further,
-------- -------
that the holders shall have received an opinion of counsel to the Company
that such right to require the Company to redeem their shares is a valid
and enforceable obligation of the Company and is not limited by any law or
other obligation to which the Company is subject.
(d) Section 3 of the Series C Designations shall contain the following new
Section (xxi) and Section 3(d) of the Series D Designations shall contain the
following new Section (xx):
-6-
No adjustment to the Conversion Price shall be made as a result of the
issuance by the Company of the rights (the "Rights") to acquire Series E
------
Junior Participating Preferred Stock of the Company to be issued pursuant
to the Rights Agreement, dated as of September 28, 2001, between the
Company and American Stock Transfer & Trust Co. (the "Rights Agreement")
----------------
to holders of Common Stock and Preferred Stock. Any such adjustment to the
Conversion Price, if applicable, will be made only upon the Rights
becoming exercisable.
(e) Section 4 of each Designation shall read as follows:
Liquidation Preference. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Company or reduction or decrease in its
capital stock resulting in a distribution of assets to the holders of any
class or series of the Company's capital stock, each holder of shares of
the Preferred Stock will be entitled to payment out of the assets of the
Company available for distribution of an amount equal to the Liquidation
Preference per share of Preferred Stock held by such holder, plus accrued
and unpaid dividends thereon, whether or not declared (including Penalty
Dividends), if any, to the date fixed for liquidation, dissolution,
winding-up or reduction or decrease in capital stock, plus if a Start Date
shall have occurred, an additional amount equal to 6.25% of the
Liquidation Preference, compounded annually from the date of issuance up
to (and ending on) the Start Date, before any distribution is made on any
Junior Securities, including, without limitation, Common Stock of the
Company. After payment in full of the Liquidation Preference and all other
amounts aforesaid to which holders of Preferred Stock are entitled in
preference to holders of Common Stock, such holders will not be entitled
to any further participation in any distribution of assets of the Company;
provided, however, that, if a Non-Approved Change in Control shall have
-------- -------
occurred, after payment in full of the Liquidation Preference and all
other amounts aforesaid to which holders of Preferred Stock are entitled
in preference to holders of Common Stock, such holders will be entitled to
participate with the holders of Common Stock on an as-converted basis in
any distribution of assets of the Company, but only after the holders of
Common Stock have received a distribution per share equal to the
distribution per as-converted share that the holders of Preferred Stock
received as payment in full of such Liquidation Preference and all other
amounts aforesaid. If, upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Company, the amounts payable with respect
to the Preferred Stock and all other Parity Securities are not paid in
full, the holders of the Preferred Stock and the Parity Securities will
share equally and ratably in any distribution of assets of the Company in
proportion to the full liquidation preference and accumulated and unpaid
dividends, if any, and other amounts payable in such event, to which each
is entitled. However, neither the voluntary sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other consideration) of
all or substantially all of the property or assets of the Company nor the
consolidation or merger of the Company with or into one or more Persons
will be deemed to be a voluntary or
-7-
involuntary liquidation, dissolution or winding-up of the Company or
reduction or decrease in capital stock, unless such sale, conveyance,
exchange or transfer shall be in connection with a liquidation,
dissolution or winding-up of the business of the Company or reduction or
decrease in capital stock.
(f) The first two paragraphs of Section 5 of each Designation shall read as
follows:
If a Change in Control has occurred or the Company enters into a binding
agreement to effect a Change in Control, the Company shall give prompt
written notice of such Change in Control describing in reasonable detail
the material terms and date or anticipated date of consummation thereof to
each holder of Preferred Stock, and the Company shall give each holder of
Preferred Stock prompt written notice of any material change in the terms
or timing of such transaction. In respect of an actual or proposed Change
in Control that is not an acquisition which is accounted for under the
"pooling-of-interests" method of generally accepted accounting principles,
the Company shall be obligated, by notice given at any time before the
Change in Control or not more than 10 Business Days after the Change in
Control, to offer to purchase within 10 Business Days after the Change in
Control all of the then outstanding Preferred Stock tendered under this
paragraph at a purchase price in cash per Share equal to the Liquidation
Preference thereof plus an amount equal to 6.25% of the Liquidation
Preference, compounded annually from the date of issuance to the purchase
date, plus all accrued and unpaid dividends (including Penalty Dividends),
if any, thereon (whether or not declared) to the purchase date (the "Call
----
Price"). The Company shall in its Change in Control offer afford to the
-----
Holders of Preferred Stock at least five Business Days after the mailing
or delivery of the Change in Control offer in which to accept such offer
by written notice to the Company; the failure by any Holder to accept such
offer shall be deemed a rejection of such offer. Upon the occurrence of a
Change in Control that is an acquisition which is accounted for as a
"pooling-of-interests" method of accounting under generally accepted
accounting principles, all of the outstanding Preferred Stock on the date
of the Change in Control will be automatically converted into Common Stock
having a market value equal to 109.5% of the Call Price, valued at the
closing price of business on the Business Day prior to the date of the
Change in Control. The Company shall not consummate any such transaction
until the Common Stock to be issued to the Preferred Stockholders has been
registered under the Securities Act of 1933, as amended (the "Securities
----------
Act"). Notwithstanding anything to the contrary herein, offers by the
---
Company under this paragraph 5 shall comply with all procedural and other
requirements of federal and state securities laws then in effect, but no
such provisions shall negate the obligation of the Company to purchase
Shares under this paragraph 5 which are validly tendered and not withdrawn
at the price set forth herein.
"Change in Control" means the occurrence of any of the following events:
-----------------
(a) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act), is or becomes the "beneficial owner" (as
defined in Rules 13d-3
-8-
and 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 50% of
the total voting capital stock of the Company, and such event is not a
Non-Approved Change in Control; or (b) the Company consolidates with, or
merges with or into, another Person or sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of its assets to
any Person, or any Person consolidates with, or merges with or into, the
Company, in any such event in a transaction in which the outstanding
voting capital stock of the Company is converted into or exchanged for
cash, securities or other property, provided that following such
transaction the holders of voting stock of the Company immediately prior
to such transaction do not own more than 50% of the voting stock of the
company surviving such transaction or to which such assets are
transferred.
(g) The Series C Designations shall contain the following new
Section 6(ii)A:
If there shall have been a Start Date, and as of the Start Date there are
outstanding shares of Series C and Series D Preferred having a Liquidation
Preference of not less than $25 million), the Board of Directors shall
automatically be increased by the Applicable Number (as hereinafter
defined), and the holders of the Series C Preferred shall, automatically,
and without any further action by the Board or any stockholder or
stockholders of the Company, in addition to any other voting rights, have
the right, voting separately as a class on a one vote per share basis (pro
rated for fractional shares), in person, by proxy or by written consent in
lieu of a meeting, to elect the Applicable Number of additional directors.
Whenever such right of the holders of the Series C Preferred shall have
vested, such right may be exercised initially either by written consent or
at a special meeting of such holders or at any annual meeting of
stockholders held for the purpose of electing directors, and thereafter at
such annual meetings. The Company shall comply with Section 14(f) of the
Securities and Exchange Act and Rule 14f-1 promulgated thereunder. The
"Applicable Number" means at any time that number of directors, which when
-----------------
added to the number of directors, if any, that were elected by the holders
of the Series C Preferred pursuant to Section 6(ii) and that are then in
office, shall equal the minimum number that will constitute a majority of
the entire Board after the Applicable Number of additional directors are
appointed. Such additional directors (and any replacement or successor
directors from time to time elected by the holders of the Series C
Preferred) shall serve until the later of (i) the first to occur of (A)
the Repurchase Grant Date, if any, and (B) the third anniversary of the
Start Date, or (ii) the date on which the Company by unanimous approval of
the Board has declared and paid in full all accrued dividends (including
Penalty Dividends) on all shares of Preferred Stock.
The directors elected by the holders of the Series C Preferred shall be
appointed to and shall constitute a majority of directors of each
committee of the Board, and from and after the Start Date any action by
any committee of the Board shall
-9-
require therefor the affirmative vote of a majority of the members
thereof, after giving effect to the appointments to be made pursuant to
this sentence.
So long as the designees of the Series C Preferred are entitled to serve
on the Board under this Section 6(ii)A, (i) the Company will not without
the unanimous approval of each director then in office grant to any holder
of Preferred Stock the right, directly or indirectly, to cause such
holder's Preferred Stock (or any stock for which such Preferred Stock is
exchanged) to be redeemed, or to declare, or pay, or change the accrual
rate of, any dividends (including Penalty Dividends) on any Preferred
Stock (or any stock for which such Preferred Stock is exchanged), (ii) the
size of the Board shall be subject to increase or decrease only by
approval of the Board and the holders of the Series C Preferred, and any
action by the Board of Directors shall require therefor the affirmative
vote of the Applicable Number of directors (irrespective of whether
elected by the Series C Preferred or otherwise), (iii) directors elected
by the holders of Series C Preferred may only be removed from office by
the Series C Preferred, and (iv) the directors (other than directors
elected pursuant to Section 6(ii)) who shall be in office at the time of
the Non-Approved Change in Control (and their successors) shall act as a
nominating committee with the exclusive authority to nominate their
successors.
At any time when the right of the holders of Series C Preferred to elect
directors as provided in this paragraph shall have vested, and if such
right shall not already have been initially exercised within 20 days of
the Start Date by the holders of the Series C Preferred, a proper officer
of the Company may call a special meeting of such holders for the purpose
of electing directors. Such meeting shall be held at the earliest
practicable date upon the same form of notice as is required for annual
meeting of stockholders of the Company at such suitable place in the City
of New York as is designated by such officer.
At any meeting held for the purpose of electing directors at which holders
of Series C Preferred shall have the right, voting together as a class to
elect directors as provided herein, the presence, in person or by proxy,
of the holders of a majority of the aggregate number of shares of Series C
Preferred at the time outstanding shall be required and be sufficient to
constitute a quorum of such class for the election of directors pursuant
hereto. At any such meeting or adjournment thereof, in the absence of a
quorum, a majority of the holders of Series C Preferred, present in person
or by proxy, shall have the power to adjourn the meeting for the election
of directors whom they are entitled to elect, from time to time without
notice other than announcement at the meeting or as otherwise required by
law, until a quorum shall be present.
During any period when the holders of Series C Preferred shall have the
right to vote together as a class for directors as provided herein, the
directors so elected by such holders shall continue in office until their
successors shall have been elected by such holders or until termination of
the rights of such holders to vote as a class for directors. Immediately
upon termination of the right of holders of Series C
-10-
Preferred to vote as a class for directors as provided herein, (i) the
term of office of the directors so elected shall terminate, and (ii) the
number of directors shall be such number as may be provided for in the
by-laws of the Company irrespective of any increase pursuant to the
provisions of this paragraph.
Notwithstanding the foregoing, nothing herein or otherwise in the
Company's Certificate of Incorporation or bylaws shall limit or prevent
the right of the holders of Series C Preferred from, to the fullest extent
allowed by law, exercising the voting rights provided in this paragraph by
written consent of a majority of the outstanding shares of Series C
Preferred.
3. Representations and Warranties.
------------------------------
(a) Each Holder, severally and not jointly, represents and
warrants to the Company that such Holder (a) is an
"accredited investor" (as defined in Regulation D under the
Securities Act of 1933, as amended) and has, by reason of its
or its management's business and financial experience, the
ability to protect its own interests and evaluate any risks
in connection with the matters contemplated by this
Agreement, and (b) owns, beneficially and of record, all
Preferred Shares referred to above as owned by such Holder,
free and clear of all liens, encumbrances, pledges or rights
of others (including, without limitation, any option,
warrant, right of first offer or right of first refusal).
(b) The Company represents and warrants to Holders as follows:
(i) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and as proposed
to be conducted, to enter into and perform all of its obligations under
this Agreement.
(ii) This Agreement has been duly authorized and constitutes the valid and
binding obligation of the Company, enforceable in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other similar laws
relating to or affecting enforcement of creditors' rights generally, or
by general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(iii) The compliance by the Company with all of the provisions of this
Agreement, the execution, delivery and performance by the Company of
this Agreement, and the issuance by the Company of the Preferred Stock
as provided herein, will not conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
(provided the consent of the
-11-
Company's lending banks must be obtained before the Company redeems or
repurchases Preferred Stock) or other agreement or instrument to which
the Company is a party or by which the Company is bound or to which any
of the property or assets of the Company are subject, nor will such
actions result in any violation of the provisions of the certificate of
incorporation or bylaws of the Company or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of their properties except in each
case as would not, individually or in the aggregate have a effect that
is materially adverse to the properties, business, results of
operations or financial condition of the Company and its subsidiaries
taken as a whole or to the rights of the Holders.
(iv) The Preferred Stock will be validly issued and outstanding, fully
paid and non-assessable when issued pursuant to Section 1.
4. Expenses. The Company shall reimburse the Holders upon request in respect of
-------- -
the fees and expenses charged to the Holders by one firm of legal counsel and
one accounting firm in connection with this Agreement, provided that such
--------
amount reimbursed shall not exceed $75,000 in the aggregate.
5. Binding Effect. A Holder may assign its rights under this Agreement in
--------------
respect of Preferred Shares, but only to a transferee of such Preferred
Shares; any purported assignment not in compliance with this Agreement shall
be void and of no effect. Subject to the foregoing, the provisions of this
Agreement shall be binding upon the parties hereto and their respective
successors and permitted assigns.
6. Applicable Law. The laws of the State of New York shallgovern the
--------------
interpretation and performance of the terms of this Agreement, regardless of
the law that might be applied under principles of conflicts of law.
7. Integration. This Agreement, together with the exhibits and schedules
-----------
hereto, contains the entire understanding of the parties with respect to the
subject matter hereof.
8. Descriptive Headings. The headings in this Agreement are for convenience of
--------------------
reference only and shall not limit or otherwiseaffect the meaning of terms
contained herein.
9. Counterparts. This Agreement may be executed in multiple counterparts, each
------------
of which shall be deemed an original, but all of which shall constitute one
and the same instrument. A facsimile copy of a signature page shall be
deemed to be an original signature page.
-12-
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to
be executed by one of its duly authorized officers as of the date first above
written.
UNITED RENTALS, INC.
By: /s/ Bradley S. Jacobs
--------------------------------
Name: Bradley S. Jacobs
Title: Chairman & Chief Executive
Officer
APOLLO INVESTMENT FUND IV, L.P.
By: Apollo Advisors, IV, L.P.,
its general partner
By: Apollo Capital Management IV,
Inc.,
its General Partner
By: /s/ Michael S. Gross
--------------------------------
Name: Michael S. Gross
Title: Vice President
APOLLO OVERSEAS PARTNERS IV, L.P.
By: Apollo Advisors, IV, L.P.,
its general partner
By: Apollo Capital Management IV,
Inc.,
its General Partner
By: /s/ Michael S. Gross
--------------------------------
Name: Michael S. Gross
Title: Vice President
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners,
its General Partner
By: /s/ Mitchell Blutt
--------------------------------
Name: Mitchell Blutt
Title: Executive Partner
[SIGNATURE PAGE FOR AGREEMENT DATED AS OF SEPTEMBER 28, 2001]
-13-
EX-3
5
certc.txt
EX. VII-CERT. OF DESIGNATION, SERIES C PREFERRED
Exhibit VII
CERTIFICATE OF DESIGNATION
OF
PERPETUAL CONVERTIBLE
PREFERRED STOCK, SERIES C
OF
UNITED RENTALS, INC.
------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-----------------------------
United Rentals, Inc., a Delaware corporation (the "Company"),
certifies that pursuant to the authority contained in its Restated Certificate
of Incorporation, as amended (the "Certificate of Incorporation"), and in
accordance with the provisions of Section 151 of the General Corporation Law of
the State of Delaware, the Board of Directors of the Company at a meeting duly
called and held on September 28, 2001, duly approved and adopted the following
resolution, which resolution remains in full force and effect on the date
hereof:
RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation, the Board of Directors does
hereby designate, create, authorize and provide for the issue of a series of
preferred stock having a par value of $.01 per share, with a liquidation
preference of $1,000 per share (the "Liquidation Preference"), which shall be
designated as Series C Perpetual Convertible Preferred Stock (the "Preferred
Stock"), consisting of 300,000 shares having the following voting powers,
preferences and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions:
1. Ranking. The Preferred Stock shall, with respect to distributions
-------
upon the liquidation, winding-up and dissolution of the Company, rank
(i) senior to all classes of Common Stock of the Company and to each other class
of capital stock
or series of preferred stock established after December 21,1998, by the Board of
Directors, the terms of which do not expressly provide that it ranks senior to
or on a parity with the Preferred Stock as to dividend distributions and
distributions upon the liquidation, winding-up and dissolution of the Company
(collectively referred to with the Common Stock of the Company as "Junior
Securities"); (ii) on a parity with any additional shares of Preferred Stock
issued by the Company in the future and any other class of capital stock or
series of preferred stock issued by the Company established after December 21,
1998, by the Board of Directors, the terms of which expressly provide that such
class or series will rank on a parity with the Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up and dissolution
of the Company (collectively referred to as "Parity Securities"); and (iii)
junior to each class of capital stock or series of preferred stock issued by the
Company established after December 21, 1998, by the Board of Directors, the
terms of which expressly provide that such class or series will rank senior to
the Preferred Stock as to dividend distributions and/or distributions upon the
liquidation, winding-up and dissolution of the Company (collectively referred to
as "Senior Securities"). Notwithstanding the foregoing, a security shall not be
deemed to be a "Senior Security" solely because such security has a stated
dividend or interest coupon.
2. Participating Dividends. In the event that the Company declares
-----------------------
or pays any dividends or other distributions upon the Common Stock, (whether
payable in cash, securities or other property) other than (i) dividends and
distributions referred to in paragraph 3(vi), (ii) rights, options or warrants
referred to in paragraph 3(viii) and (iii) tender or exchange offers referred to
in paragraph 3(x), the Company shall also declare and pay to the holders of the
Preferred Stock at the same time that it declares and pays such dividends or
other distributions to the holders of the Common Stock (and with the same record
date), the dividends or distributions which would have been declared and paid
with respect to the Common Stock issuable upon conversion of the Preferred Stock
had all of the outstanding Preferred Stock been converted immediately prior to
the record date for such dividend or distribution, or if no record date is
fixed, the date as of which the record holders of Common Stock entitled to such
dividends or distributions are determined.
Dividends in the event of a Non-Approved Change in Control.
----------------------------------------------------------
Certain Definitions.
"Non-Approved Change in Control" means the occurrence of the
following events: (a) any "person" or "group" (as such terms are used in
Sections
2
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person
shall be deemed to have "beneficial ownership" of all securities that such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of more than 50% of
the total voting capital stock of the Company (a "50% Condition"); and (b) as of
the time of occurrence of such 50% Condition, (i) no Pre-Change in Control Grant
-------------
Date shall have occurred and (ii) the Company and the Board (which term shall
include any committee of the Board) shall have disapproved (and recommended
against, if applicable) such person or group becoming such a beneficial owner of
more than 50% of the total voting capital stock of the Company; provided,
--------
however, that if the Company or the Board shall have, without the prior written
-------
consent of the holders of a majority of the shares of Preferred Stock then
outstanding (a "Majority of the Holders"), (1) failed to maintain in force and
effect at all times, without lapse, the Rights Agreement and the Rights, with
only such amendments or modifications thereto as shall be approved by a Majority
of the Holders, or (2) amended the Rights Agreement in any manner that reduces
the rights it affords to the Company's shareholders or reduces the exercise
price of Rights under the Rights Agreement, or (3) waived any provision of the
Rights or the Rights Agreement with respect to any person or group that is or
becomes the person or group described in clause (a), exempted any person or
group that is or becomes the person or group described in clause (a) in whole or
in part from the operation or effect of the Rights or the Rights Agreement, or
exempted any person or group that is or becomes the person or group described in
clause (a) from the applicability of Section 203 of the Delaware General
Corporation Law or any successor provision, or entered into any agreement,
arrangement or understanding with respect to any of the foregoing, or (4)
facilitated or suffered to exist any mitigation or circumvention of the intended
effects of the Rights or the Rights Agreement, or (5) failed, within 20 days
after receipt of a written request therefor by a Majority of the Holders, to
increase the exercise price of Rights under the Rights Agreement to the extent
necessary so that immediately after such increase the ratio of such exercise
price to the average of the closing prices of the Common Stock, as reported by
the principal securities exchange upon which the Common Stock is listed, for the
30 trading days immediately preceding the date of such request is not less than
three-to-one, then the occurrence of a 50% Condition shall be deemed to
constitute a Change in Control unless a Pre-Change in Control Grant Date shall
have occurred.
The "Pre-Change in Control Grant Date" shall be the date, if any,
before the occurrence of a 50% Condition, on which the Company grants to all
holders of shares of Preferred Stock and the "Series D Preferred the immediately
exercisable right to require the Company to redeem their shares of Preferred
Stock
3
and Series D Preferred at the price and terms which would then apply in respect
of a Change in Control; provided, however, that the holders of shares of
-------- -------
Preferred Stock and Series D Preferred may exercise such rights at any time
during the five-Business-Day period following the occurrence of the 50%
Condition; and provided, further, that the holders shall have received an
-------- -------
opinion of counsel to the Company that such right to require the Company to
redeem their shares is a valid and enforceable obligation of the Company and is
not limited by any law or other obligation to which the Company is subject.
"Start Date" means the date and time upon which a Non-Approved
Change in Control shall have occurred, provided that unless and until Bradley S.
--------
Jacobs shall have sold, transferred or otherwise disposed of more than 6 million
shares of Common Stock after September 24, 2001, no Start Date shall be deemed
to have occurred unless a 50% Condition shall have occurred without taking into
account for the purposes of such defined term any shares of Common Stock
beneficially owned by Apollo Investment Fund IV, L.P., or Apollo Overseas
Partners IV, L.P. or their respective successors.
"Determination Date" means each March 15, June 15, September 15 and
December 15 (unless such day is not a Business Day, in which event the
Determination Date shall mean the first succeeding Business Day), commencing on
the first Determination Date succeeding the Start Date.
If any shares of Preferred Stock are outstanding as of the close of
business on the day in which the Start Date occurs, then the holders shall be
entitled, if, as and when unanimously declared by all directors of the Company
then in office, to a per share cumulative cash dividend in an amount equal to
10% per annum of the Liquidation Preference, accruing daily commencing from the
Start Date, computed on the basis of a 365-day year, compounded annually. If, on
or prior to any Determination Date, the Company shall not have declared and paid
to a holder of Preferred Stock the full cumulative cash dividends accruing as
aforesaid for such shares for the quarterly (or other, as the case may be)
period ending on such Determination Date (a "Missed Payment"), each Missed
Payment shall be added to the Liquidation Preference until paid in full in cash
in accordance with Section 4.
From and after the date of any one or more Missed Payments, the
holders shall additionally be entitled, if, as and when unanimously declared by
all directors then in office, to a penalty dividend at a rate of 8% per annum of
the Liquidation Preference, accruing daily commencing from the date of such
Missed Payment, computed on the basis of a 365-day year, compounded annually,
until all Missed Payments are paid in cash in full (the "Penalty Dividend").
Each Penalty
4
Dividend not declared and paid in cash when due will be added to the Liquidation
Preference until paid in full in cash in accordance with Section 4.
Whenever quarterly dividends payable on shares of Preferred Stock
are in arrears (or any Penalty Dividend is owed), thereafter and until all
accrued and unpaid dividends (including Penalty Dividends), whether or not
declared, on the outstanding shares of Preferred Stock shall have been paid in
full, or whenever the Company shall not have redeemed shares of Preferred Stock
at a time required by this Certificate of Designations, thereafter and until all
redemption obligations which have come due shall have been satisfied, the
Company shall not: (i) declare or pay dividends, or make any other
distributions, on any shares of capital stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Preferred
Stock; (ii) declare or pay dividends, or make any other distributions, on any
shares of capital stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Preferred Stock, except
dividends paid ratably on the Preferred Stock and all capital stock ranking on a
parity with the Preferred Stock and on which dividends are payable or in
arrears, in proportion to the total amounts to which the holders of all such
shares are then entitled; or (iii) redeem or purchase or otherwise acquire for
consideration any shares of capital stock ranking (either as to dividends or
upon liquidation, dissolution or winding up) junior to, or on a parity with the
Preferred Stock. The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of capital stock of
the Company unless the Company could, pursuant to this paragraph, purchase such
shares at such time and in such manner.
The dividends that would be due as a result of a Start Date under
this Section 2 (for clarity, that refers to the 10% dividends accruing from the
Start Date and any Penalty Dividends) shall cease to accrue from and after the
Repurchase Grant Date (as hereinafter defined). The "Repurchase Grant Date"
shall be the earliest date, if any, on which the Company by, unanimous approval
of all directors then in office, grants to all holders of shares of Preferred
Stock the right to require the Company to redeem their shares of Preferred Stock
at the price and terms which would then apply in respect of a Change in Control;
provided, however, that the holders of shares of Preferred Stock may exercise
-------- -------
such rights at any time during the two-year period following the Repurchase
Grant Date , and (for the avoidance of doubt and without duplication) the
repurchase price shall be increased by the dividends (including any Penalty
Dividends owed) which shall have accrued from the Start Date through and
including the Repurchase Grant Date, whether or not declared; and provided,
--------
further, that the holders shall have received an opinion of counsel to the
-------
Company that such right to require the Company to redeem their
5
shares is a valid and enforceable obligation of the Company and is not
limited by any law or other obligation to which the Company is subject.
3. Conversion Rights.
-----------------
(a) A holder of shares of Preferred Stock may convert such shares
into Common Stock at any time, unless previously redeemed, at the option of the
holder thereof. For the purposes of conversion, each share of Preferred Stock
shall be valued at the Liquidation Preference, which shall be divided by the
Conversion Price in effect on the Conversion Date to determine the number of
shares issuable upon conversion. Immediately following such conversion, the
rights of the holders of converted Preferred Stock shall cease and the persons
entitled to receive the Common Stock upon the conversion of Preferred Stock
shall be treated for all purposes as having become the owners of such Common
Stock.
(b) To convert Preferred Stock, a holder must (A) surrender the
certificate or certificates evidencing the shares of Preferred Stock to be
converted, duly endorsed in a form satisfactory to the Company, at the office of
the Company or Transfer Agent for the Preferred Stock, (B) notify the Company at
such office that he elects to convert Preferred Stock and the number of shares
he wishes to convert, (C) state in writing the name or names in which he wishes
the certificate or certificates for shares of Common Stock to be issued, and (D)
pay any transfer or similar tax if required by clause (iv) below. In the event
that a holder fails to notify the Company of the number of shares of Preferred
Stock which he wishes to convert, he shall be deemed to have elected to convert
all shares represented by the certificate or certificates surrendered for
conversion. The date on which the holder satisfies all those requirements is the
"Conversion Date." As soon as practical, the Company shall deliver a certificate
for the number of full shares of Common Stock issuable upon the conversion, and
a new certificate representing the unconverted portion, if any, of the shares of
Preferred Stock represented by the certificate or certificates surrendered for
conversion. The person in whose name the Common Stock certificate is registered
shall be treated as the stockholder of record on and after the Conversion Date.
No payment or adjustment will be made for accrued and unpaid dividends on
converted shares of Preferred Stock or for dividends on any Common Stock issued
upon such conversion. The holder of record of a share of Preferred Stock at the
close of business on a record date with respect to the payment of dividends on
the Preferred Stock in accordance with paragraph 2 hereof will be entitled to
receive such dividends with respect to such share of Preferred Stock on the
corresponding dividend payment date, notwithstanding the conversion of such
6
share after such record date and prior to such dividend payment date. If a
holder of Preferred Stock converts more than one share at a time, the number of
full shares of Common Stock issuable upon conversion shall be based on the total
Liquidation Preferences of all shares of Preferred Stock converted.
(c) The Company shall not issue any fractional shares of Common
Stock upon conversion of Preferred Stock. Instead the Company shall pay a cash
adjustment based upon the closing price of the Common Stock on the principal
securities exchange on which the Common Stock is then listed on the Business Day
prior to the Conversion Date.
(d) If a holder converts shares of Preferred Stock, the Company
shall pay any documentary, stamp or similar issue or transfer tax due on the
issue of shares of Common Stock upon the conversion. However, the holder shall
pay any such tax that is due because the shares are issued in a name other than
the holder's name.
(e) The Company has reserved and shall continue to reserve out of
its authorized but unissued Common Stock or its Common Stock held in treasury
enough shares of Common Stock to permit the conversion of the Preferred Stock in
full. All shares of Common Stock that may be issued upon conversion of Preferred
Stock shall be fully paid and nonassessable. The Company shall endeavor to
comply with all securities laws regulating the offer and delivery of shares of
Common Stock upon conversion of Preferred Stock and shall endeavor to list such
shares on each national securities exchange or automated quotation system on
which the Common Stock is listed.
(f) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company in Common Stock, the
Conversion Price in effect at the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such Conversion
Price by a fraction the numerator of which shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator of which shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day following the date fixed for
7
such determination of the holders entitled to such dividends and distributions.
For the purposes of this paragraph 3(vi), the number of shares of Common Stock
at any time outstanding shall not include shares held in the treasury of the
Company. The Company will not pay any dividend or make any distribution on
shares of Common Stock held in the treasury of the Company.
(g) In case any person other than the Company or a subsidiary of the
Company, purchases in a tender offer not opposed by the Company more than 20%
but less than 50% of the Company's outstanding Common Stock, and such tender
offer price is less than the Conversion Price in effect at the opening of
business on the day the tender offer is concluded, then the Conversion Price
shall be adjusted by multiplying it by a fraction, the numerator of which shall
be one and the denominator of which shall be 1.0625 to the power of x, where x
is the number of years (expressed to the nearest one hundredth) which have
passed since the issuance of the Company's Perpetual Convertible Preferred
Stock, Series A, but x shall not be greater than five.
(h) In case the Company shall issue rights, options or warrants to
all holders of its Common Stock entitling them (for a period not exceeding 45
days) to subscribe for, purchase or acquire shares of Common Stock at a price
per share less than the current market price per share (determined as provided
below) of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights, options or warrants, the
Conversion Price in effect at the opening of business on the day following the
date fixed for such determination shall be reduced by multiplying such
Conversion Price by a fraction the numerator of which shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock so
offered for subscription, purchase or acquisition would purchase at such current
market price and the denominator of which shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription, purchase or acquisition, such reduction to become effective
immediately after the opening of business on the day following the date fixed
for such determination of the holders entitled to such rights, options or
warrants. However, upon the expiration of any right, option or warrant to
purchase Common Stock, the issuance of which resulted in an adjustment in the
Conversion Price pursuant to this paragraph 3(viii), if any such right, option
or warrant shall expire and shall not have been exercised, the Conversion Price
shall be recomputed
8
immediately upon such expiration and effective immediately upon such expiration
shall be increased to the price it would have been (but reflecting any other
adjustments to the Conversion Price made pursuant to the provisions of this
paragraph 3 after the issuance of such rights, options or warrants) had the
adjustment of the Conversion Price made upon the issuance of such rights,
options or warrants been made on the basis of offering for subscription or
purchase only that number of shares of Common Stock actually purchased upon the
exercise of such rights, options or warrants. No further adjustment shall be
made upon exercise of any right, option or warrant if any adjustment shall be
made upon the issuance of such security. For purposes of this paragraph 3(viii),
the current market price per share of Common Stock on any day shall be deemed to
be the average of the closing prices of the Common Stock for the 20 consecutive
Trading Days ending the day before the day in question. For the purposes of this
paragraph 3(viii), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company. The Company will
not issue any rights, options or warrants in respect of shares of Common Stock
held in the treasury of the Company.
(i) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion Price
in effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be reduced, and, conversely, in case
the outstanding shares of Common Stock shall each be combined into a smaller
number of shares of Common Stock, the Conversion Price in effect at the opening
of business on the day following the day upon which such combination becomes
effective shall be increased to equal the product of the Conversion Price in
effect on such date and a fraction the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such subdivision or
combination, as the case may be, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after such subdivision
or combination, as the case may be. Such reduction or increase, as the case may
be, shall become effective immediately after the opening of business on the day
following the day upon which such subdivision or combination becomes effective.
(j) In case a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer shall involve the payment by the
Company or such subsidiary of consideration per share of Common Stock having a
fair market value (as determined by the Board of Directors or, to the extent
permitted by applicable law, a duly authorized committee thereof, whose
determination shall be
9
conclusive and described in a resolution of the Board of Directors or such duly
authorized committee thereof, as the case may be) at the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it shall have been amended) that exceeds the current market
price per share of the Common Stock on the Trading Day next succeeding the
Expiration Time, the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to the Expiration Time by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding (including any
tendered or exchanged shares) on the Expiration Time multiplied by the current
market price per share of the Common Stock on the Trading Day next succeeding
the Expiration Time and the denominator shall be the sum of (x) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or exchanged and
not withdrawn as of the Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any Purchased
Shares) on the Expiration Time and the current market price per share of the
Common Stock on the Trading Day next succeeding the Expiration Time, such
reduction to become effective immediately prior to the opening of business on
the day following the Expiration Time. For purposes of this paragraph 3(x), the
current market price per share of Common Stock on any day shall be deemed to be
the average of the closing prices of the Common Stock for the 20 consecutive
Trading Days ending the day before the day in question. For the purposes of this
paragraph 3(x), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company.
(k) In case the Company shall issue to one or more Affiliates (other
than (a) persons or entities who become Affiliates only as a result of such
issuance, (b) directors, officers or employees of the Company under bona fide
compensation or benefit arrangements or (c) upon the exercise of options or
warrants or the conversion of convertible securities, issued for fair value at
the time of any such issuance of options, warrants or convertible securities)
Common Stock at a price per share less than the current market price per share
(determined as provided below) of the Common Stock on the date of such issuance
(the "Issue Date"), the Conversion Price in effect at the opening of business on
the day following the Issue Date shall be reduced by multiplying such Conversion
Price by a fraction the numerator of which shall be the number of shares of
Common Stock outstanding at the close of business on the Issue Date plus the
number of shares of Common Stock which the aggregate of the offering price of
the total number of shares of Common
10
Stock so issued would purchase at such current market price and the denominator
of which shall be the number of shares of Common Stock outstanding at the close
of business on the Issue Date plus the number of shares of Common Stock so
issued, such reduction to become effective immediately after the opening of
business on the day following the Issue Date. For purposes of this paragraph
3(xi), the current market price per share of Common Stock on any day shall be
deemed to be the average of the closing prices of the Common Stock for the 20
consecutive Trading Days ending the day before the day in question. For the
purposes of this paragraph 3(xi), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the Company.
The Company will not pay any dividend or make any distribution on shares of
Common Stock held in the treasury of the Company.
(l) The reclassification or change of Common Stock into securities,
including securities other than Common Stock (other than any reclassification
upon a consolidation or merger to which paragraph 3(xix) below shall apply)
shall be deemed to involve (A) a distribution of such securities other than
Common Stock to all holders of Common Stock, and (B) a subdivision or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of Common
Shares outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such subdivision
becomes effective" or "the day upon which such combination becomes effective,"
as the case may be, and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph 3(ix) above).
(m) No adjustment in the Conversion Price need be made until all
cumulative adjustments amount to 1% or more of the Conversion Price as last
adjusted. Any adjustments that are not made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this paragraph
3 shall be made to the nearest 1/10,000th of a cent or to the nearest 1/10,000th
of a share, as the case may be.
(n) For purposes of this paragraph 3, "Common Stock" includes any
stock of any class of the Company which has no preference in respect of
dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Company and which is not subject
to redemption by the Company. However, subject to the provisions of paragraph
3(xix)
11
below, shares issuable on conversion of shares of Preferred Stock shall include
only shares of the class designated as Common Stock of the Company on the
Preferred Stock Issue Date or shares of any class or classes resulting from any
reclassification thereof and which have no preferences in respect of dividends
or amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company and which are not subject to redemption
by the Company; provided that, if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.
(o) No adjustment in the Conversion Price shall reduce the
Conversion Price below the then par value of the Common Stock.
(p) Whenever the Conversion Price is adjusted, the Company shall
promptly mail to holders of Preferred Stock, first class, postage prepaid, a
notice of the adjustment. The Company shall file with the Transfer Agent for the
Preferred Stock, if any, a certificate from the Company's chief financial
officer briefly stating the facts requiring the adjustment and the manner of
computing it. In the event of any dispute thereon, the opinion of the Company's
independent public accountants, if accepted by the Board of Directors of the
Company, shall be conclusive and binding on the holders of the Preferred Stock
absent manifest error.
(q) The Company from time to time may reduce the Conversion Price if
it considers such reductions to be advisable in order that any event treated for
federal income tax purposes as a dividend of stock or stock rights will not be
taxable to the holders of Common Stock by any amount.
(r) If:
(A) the Company takes any action which
would require an adjustment in the Conversion Price pursuant to
paragraph 3(x) above;
(B) the Company consolidates or merges
with, or transfers all or substantially all of its assets to,
another corporation, and stockholders of the Company must approve
the transaction; or
12
(C) there is a dissolution or liquidation
of the Company;
the Company shall mail to holders of the Preferred Stock, first class, postage
prepaid, a notice stating the proposed record or effective date, as the case may
be. The Company shall mail the notice at least 10 days before such date.
However, failure to mail the notice or any defect in it shall not affect the
validity of any transaction referred to in clause (A), (B) or (C) of this
paragraph 3(xviii).
(s) In the case of any consolidation of the Company or the merger of
the Company with or into any other entity or the sale or transfer of all or
substantially all the assets of the Company pursuant to which the Company's
Common Stock is converted into other securities, cash or assets, then, except
with respect to shares the Company shall become obligated to purchase upon due
acceptance of an offer made by the Company pursuant to paragraph 5(i) or unless
the Preferred Stock shall be automatically converted into Common Stock pursuant
to paragraph 5(i), upon consummation of such transaction, each share of
Preferred Stock shall automatically become convertible into the kind and amount
of securities, cash or other assets receivable upon the consolidation, merger,
sale or transfer by a holder of the number of shares of Common Stock into which
such share of Preferred Stock might have been converted immediately prior to
such consolidation, merger, transfer or sale (assuming such holder of Common
Stock failed to exercise any rights of election and received per share the kind
and amount of consideration receivable per share by a plurality of non-electing
shares). Appropriate adjustment (as determined by the Board of Directors of the
Company) shall be made in the application of the provisions herein set forth
with respect to the rights and interests thereafter of the holders of Preferred
Stock, to the end that the provisions set forth herein (including provisions
with respect to changes in and other adjustment of the Conversion Price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other securities or property thereafter deliverable upon the
conversion of Preferred Stock. If this paragraph 3(xix) applies, paragraphs
3(vi), 3(ix) and 3(xii) do not apply.
(t) In any case in which this paragraph 3 shall require that an
adjustment as a result of any event becomes effective from and after a record
date, the Company may elect to defer until after the occurrence of such event
the issuance to the holder of any shares of Preferred Stock converted after such
record date and before the occurrence of such event of the additional shares of
Common Stock issuable upon such conversion over and above the shares issuable on
the basis of the
13
Conversion Price in effect immediately prior to adjustment; provided, however,
that if such event shall not have occurred and authorization of such event shall
be rescinded by the Company, the Conversion Price shall be recomputed
immediately upon such rescission to the price that would have been in effect had
such event not been authorized, provided that such rescission is permitted by
and effective under applicable laws.
(u) No adjustment to the Conversion Price shall be made as a result
of the issuance by the Company of the rights (the "Rights") to acquire Series E
Junior Participating Preferred Stock of the Company to be issued pursuant to the
Rights Agreement, dated as of September 28, 2001, between the Company and
American Stock Transfer & Trust Co. (the "Rights Agreement") to holders of
Common Stock and Preferred Stock. Any such adjustment to the Conversion Price,
if applicable, will be made only upon the Rights becoming exercisable.
4. Liquidation Preference. Upon any voluntary or involuntary
----------------------
liquidation, dissolution or winding-up of the Company or reduction or decrease
in its capital stock resulting in a distribution of assets to the holders of any
class or series of the Company's capital stock, each holder of shares of the
Preferred Stock will be entitled to payment out of the assets of the Company
available for distribution of an amount equal to the Liquidation Preference per
share of Preferred Stock held by such holder, plus accrued and unpaid dividends
thereon, whether or not declared (including Penalty Dividends), if any, to the
date fixed for liquidation, dissolution, winding-up or reduction or decrease in
capital stock, plus if a Start Date shall have occurred, an additional amount
equal to 6.25% of the Liquidation Preference, compounded annually from the date
of issuance of the Company's Perpetual Convertible Preferred Stock, Series A up
to (and ending on) the Start Date, before any distribution is made on any Junior
Securities, including, without limitation, Common Stock of the Company. After
payment in full of the Liquidation Preference and all other amounts aforesaid to
which holders of Preferred Stock are entitled in preference to holders of Common
Stock, such holders will not be entitled to any further participation in any
distribution of assets of the Company; provided, however, that, if a
-------- -------
Non-Approved Change in Control shall have occurred, after payment in full of the
Liquidation Preference and all other amounts aforesaid to which holders of
Preferred Stock and Series D Preferred are entitled in preference to holders of
Common Stock, such holders will be entitled to participate with the holders of
Common Stock on an as-converted basis in any distribution of assets of the
Company, but only after the holders of Common Stock have received a distribution
per share equal to the distribution per as-converted share that the holders
14
of Preferred Stock and the Series D Preferred received as payment in full of
such Liquidation Preference and all other amounts aforesaid. If, upon any
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
the amounts payable with respect to the Preferred Stock and all other Parity
Securities are not paid in full, the holders of the Preferred Stock and the
Parity Securities will share equally and ratably in any distribution of assets
of the Company in proportion to the full liquidation preference and accumulated
and unpaid dividends, if any, and other amounts payable in such event, to which
each is entitled. However, neither the voluntary sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other consideration) of all
or substantially all of the property or assets of the Company nor the
consolidation or merger of the Company with or into one or more Persons will be
deemed to be a voluntary or involuntary liquidation, dissolution or winding-up
of the Company or reduction or decrease in capital stock, unless such sale,
conveyance, exchange or transfer shall be in connection with a liquidation,
dissolution or winding-up of the business of the Company or reduction or
decrease in capital stock.
Redemptions.
-----------
(a) If a Change in Control has occurred or the Company enters into a
binding agreement to effect a Change in Control, the Company shall give prompt
written notice of such Change in Control describing in reasonable detail the
material terms and date or anticipated date of consummation thereof to each
holder of Preferred Stock, and the Company shall give each holder of Preferred
Stock prompt written notice of any material change in the terms or timing of
such transaction. In respect of an actual or proposed Change in Control that is
not an acquisition which is accounted for under the "pooling-of-interests"
method of generally accepted accounting principles, the Company shall be
obligated, by notice given at any time before the Change in Control or not more
than 10 Business Days after the Change in Control, to offer to purchase within
10 Business Days after the Change in Control all of the then outstanding
Preferred Stock tendered under this paragraph at a purchase price in cash per
Share equal to the Liquidation Preference thereof plus an amount equal to 6.25%
of the Liquidation Preference, compounded annually from the date of issuance of
the Company's Perpetual Convertible Preferred Stock, Series A to the purchase
date, plus all accrued and unpaid dividends (including Penalty Dividends), if
any, thereon (whether or not declared) to the purchase date (the "Call Price").
The Company shall in its Change in Control offer afford to the Holders of
Preferred Stock at least five Business Days after the mailing or delivery of the
Change in Control offer in which to accept such offer by written
15
notice to the Company; the failure by any Holder to accept such offer shall be
deemed a rejection of such offer. Upon the occurrence of a Change in Control
that is an acquisition which is accounted for as a "pooling-of-interests" method
of accounting under generally accepted accounting principles, all of the
outstanding Preferred Stock on the date of the Change in Control will be
automatically converted into Common Stock having a market value equal to 109.5%
of the Call Price, valued at the closing price of business on the Business Day
prior to the date of the Change in Control. The Company shall not consummate any
such transaction until the Common Stock to be issued to the Preferred
Stockholders has been registered under the Securities Act of 1933, as amended
(the "Securities Act"). Notwithstanding anything to the contrary herein, offers
by the Company under this paragraph 5 shall comply with all procedural and other
requirements of federal and state securities laws then in effect, but no such
provisions shall negate the obligation of the Company to purchase Shares under
this paragraph 5 which are validly tendered and not withdrawn at the price set
forth herein.
"Change in Control" means the occurrence of any of the
following events: (a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 50% of the total voting capital stock of the Company, and such event is not
a Non-Approved Change in Control; or (b) the Company consolidates with, or
merges with or into, another Person or sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of its assets to any
Person, or any Person consolidates with, or merges with or into, the Company, in
any such event in a transaction in which the outstanding voting capital stock of
the Company is converted into or exchanged for cash, securities or other
property, provided that following such transaction the holders of voting stock
of the Company immediately prior to such transaction do not own more than 50% of
the voting stock of the company surviving such transaction or to which such
assets are transferred.
(b) If, after 2-1/2 years following the date of issuance of the
Company's Perpetual Convertible Preferred Stock, Series A of the Preferred
Stock, the Company issues for cash common stock or a series of preferred stock
convertible into Common Stock, in either a public offering (a "Public Offering")
or a bona fide private financing (a "Private Offering"), for a price ("Sales
Price") for the Common Stock (including any amount payable upon conversion of
Preferred Stock) below the
16
Conversion Price (each such offering being referred to herein as a "Reduced
Price Offering"), then the Company shall be obligated to make an offer
("Purchase Offer") to apply towards the purchase of Preferred Stock at the Call
Price the Call Percentage (as hereinafter defined) of the amount by which the
net cash proceeds from any such Reduced Price Offering and for all other Reduced
Price Offerings consummated during the preceding 12 months (but excluding any
Reduced Price Offerings prior to June 30, 2001) exceeds an aggregate of $50
million, less a credit for all amounts theretofore paid to the holders of the
Preferred Stock and the Series D Preferred Stock for such purchases during such
12-month period. Net cash proceeds shall be computed after deducting all
discounts, underwriters' commissions and other reasonable expenses. The Purchase
Offer in respect of any Reduced Price Offering shall be made by notice from the
Company given at any time no earlier than ten Business Days before the Company
has received such proceeds and no later than 10 days after the receipt of the
net cash proceeds which require the making of such offer. The Purchase Offer
shall be an offer by the Company to purchase on a date no later than 10 Business
Days after the receipt of the net cash proceeds which require the making of such
offer Shares tendered by holders of Preferred Stock at a price equal to the Call
Price. If Shares are validly tendered with an aggregate purchase price in excess
of the amount of proceeds the Company is required to apply to such purchase, the
Shares shall be purchased on a pro rata basis. Holders shall have no less than
five Business Days from the date of receipt of the notice to accept such offer
by notice to the Company; the failure to accept such offer shall be deemed a
rejection thereof. Notwithstanding the foregoing, the issuance of shares to
employees under bona fide customary compensation or benefit arrangements to
directors, officers or employees of the Company shall not constitute a Reduced
Price Offering.
The term "Call Percentage" for any Reduced Price Offering (i) shall
mean 40%, if the Series D Preferred Stock shall not be entitled to a portion of
the cash proceeds of such Reduced Price Offering and (ii) for all other Reduced
Price Offerings, shall be determined by reference to the following table, in
which "Liquidation Amount" means the aggregate liquidation amount of all shares
of Preferred Stock and Series D Preferred Stock then outstanding:
AGGREGATE LIQUIDATION AMOUNT CALL PERCENTAGE
up to and including $500 million 40%
more than $500 to and including 550 million 43
more than $550 to and including 600 million 46
more than $600 to and including 650 million 50
17
more than $650 to and including 700 million 53
more than $700 to and including 750 million 56
more than $750 million 60
Notwithstanding the foregoing, in the event that the Series D Preferred Stock
shall also be entitled to a portion of the net cash proceeds of a Reduced Price
Offering, then the net cash proceeds of such Reduced Price Offering shall be
applied towards the purchase pro rata, based on their respective liquidation
amounts, between the Preferred Stock and up to $500,000,000 liquidation amount
of the Series D Preferred Stock, and no portion of such net cash proceeds shall
be applied to Series D Preferred Stock in excess of such $500,000,000
liquidation amount.
If the Company shall file a registration statement containing a
preliminary prospectus under the Securities Act with respect to a Reduced Price
Offering, then the Company shall not mail or deliver a Purchase Offer in respect
thereof prior to the tenth Business Day next preceding the date (the "Filing
Date") of such filing, and the closing price of the Common Stock on the third
Business Day next preceding the Filing Date on the principal securities exchange
on which the Common Stock is then listed shall be deemed to be the Sales Price
for such Reduced Price Offering. In such event, notwithstanding the provisions
of the prior paragraph, the Purchase Offer must be accepted by the holders of
Preferred Stock no later than the second Business Day prior to the Filing Date,
provided that Holders shall in all events have no less than three Business Days
from the date of receipt of the notice to accept such offer.
5. Voting Rights.
-------------
(a) The holders of Preferred Stock shall be entitled to notice of
all stockholders meetings in accordance with the Company's bylaws and the
Delaware General Corporation Law (the "DGCL"), and except as set forth in
paragraph 6(ii) below and as otherwise required by applicable law, the holders
of the Preferred Stock shall be entitled to vote on all matters submitted to the
stockholders for a vote, voting together with the holders of the Common Stock as
a single class, with each share of Common Stock entitled to one vote per share
and each share of Preferred Stock entitled to one vote for each share of Common
Stock issuable upon conversion of the Preferred Stock as of the record date for
such vote or, if no record date is specified, as of the date of such vote.
18
(b) In the election of directors of the Company, the holders of the
Preferred Stock, voting separately as a single class to the exclusion of all
other classes of the Company's capital stock and with each share of Preferred
Stock entitled to one vote, shall be entitled to elect: (i) two directors to
serve on the Company's Board of Directors until such directors' successors are
duly elected by the holders of the Preferred Stock or such directors are removed
from office, provided that on the record date for such vote Apollo Management
IV, L.P., Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P. or
their respective Affiliates (collectively, "Apollo") hold the equivalent of at
least 8 million shares of Common Stock which were issued, or are issuable, upon
conversion of the Preferred Stock as presently constituted), and provided
further that the initial two directors so elected shall be Leon Black and
Michael Gross; or (ii) one director to serve on the Company's Board of Directors
until such directors' successors are duly elected by the holders of the
Preferred Stock or such directors are removed from office, provided that on the
record date for such vote, Apollo holds the equivalent of at least 4 million
shares of Common Stock but less than 8 million shares of Common Stock which were
issued, or are issuable, upon conversion of the Preferred Stock as presently
constituted. If on the record date relating to the election of directors, Apollo
holds less than the equivalent of 4 million shares of Common Stock (including
Common Stock and shares of Common Stock issuable upon conversion of the
Preferred Stock as presently constituted), the holders of Preferred Stock shall
be entitled to vote for the election of directors on the basis set forth in
paragraph 6(i). A person may be a director nominee or a successor director
nominee of the holders of Preferred Stock only if he or she is acceptable to the
Company, provided, however, that Leon Black and Michael Gross shall always be
deemed acceptable to the Company.
(ii)(A) If there shall have been a Start Date, and as of the Start
Date there are outstanding shares of Preferred Stock and Series D Preferred
collectively having a Liquidation Preference of not less than $25 million, the
Board of Directors shall automatically be increased by the Applicable Number (as
hereinafter defined), and the holders of the Preferred Stock shall,
automatically, and without any further action by the Board or any stockholder or
stockholders of the Company, in addition to any other voting rights, have the
right, voting separately as a class on a one vote per share basis (pro rated for
fractional shares), in person, by proxy or by written consent in lieu of a
meeting, to elect the Applicable Number of additional directors. Whenever such
right of the holders of the Preferred Stock shall have vested, such right may be
exercised initially either by written consent or at a special meeting of such
holders or at any annual meeting of stockholders held for the purpose of
electing directors, and thereafter at such annual meetings. The Company
19
shall comply with Section 14(f) of the Securities and Exchange Act and Rule
14f-1 promulgated thereunder. The "Applicable Number" means at any time that
number of directors, which when added to the number of directors, if any, that
were elected by the holders of the Preferred Stock pursuant to Section 6(ii) and
that are then in office, shall equal the minimum number that will constitute a
majority of the entire Board after the Applicable Number of additional directors
are appointed. Such additional directors (and any replacement or successor
directors from time to time elected by the holders of the Preferred Stock) shall
serve until the later of (i) the first to occur of (A) the Repurchase Grant
Date, if any, and (B) the third anniversary of the Start Date, or (ii) the date
on which the Company by unanimous approval of the Board has declared and paid in
full all accrued dividends (including Penalty Dividends) on all shares of
Preferred Stock and Series D Preferred.
The directors elected by the holders of the Preferred
Stock shall be appointed to and shall constitute a majority of directors of each
committee of the Board, and from and after the Start Date any action by any
committee of the Board shall require therefor the affirmative vote of a majority
of the members thereof, after giving effect to the appointments to be made
pursuant to this sentence.
So long as the designees of the Preferred Stock are
entitled to serve on the Board under this Section 6(ii)A, (i) the Company will
not without the unanimous approval of each director then in office grant to any
holder of Preferred Stock or Series D Preferred the right, directly or
indirectly, to cause such holder's Preferred Stock or Series D Preferred, as
applicable (or any stock for which such preferred stock is exchanged) to be
redeemed, or to declare, or pay, or change the accrual rate of, any dividends
(including Penalty Dividends) on any Preferred Stock or Series D Preferred, as
applicable (or any stock for which such preferred stock is exchanged), (ii) the
size of the Board shall be subject to increase or decrease only by approval of
the Board and the holders of the Preferred Stock, and any action by the Board of
Directors shall require therefor the affirmative vote of the Applicable Number
of directors (irrespective of whether elected by the Preferred Stock or
otherwise), (iii) directors elected by the holders of Preferred Stock may only
be removed from office by the Preferred Stock, and (iv) the directors (other
than directors elected pursuant to Section 6(ii)) who shall be in office at the
time of the Non-Approved Change in Control (and their successors) shall act as a
nominating committee with the exclusive authority to nominate their successors.
At any time when the right of the holders of the
Preferred Stock to elect directors as provided in this paragraph shall have
vested, and if such right shall not already have been initially exercised within
20 days of the Start
20
Date by the holders of the Preferred Stock, a proper officer of the Company may
call a special meeting of such holders for the purpose of electing directors.
Such meeting shall be held at the earliest practicable date upon the same form
of notice as is required for annual meeting of stockholders of the Company at
such suitable place in the City of New York as is designated by such officer.
At any meeting held for the purpose of electing directors
at which holders of the Preferred Stock shall have the right, voting together as
a class to elect directors as provided herein, the presence, in person or by
proxy, of the holders of a majority of the aggregate number of shares of the
Preferred Stock at the time outstanding shall be required and be sufficient to
constitute a quorum of such class for the election of directors pursuant hereto.
At any such meeting or adjournment thereof, in the absence of a quorum, a
majority of the holders of the Preferred Stock, present in person or by proxy,
shall have the power to adjourn the meeting for the election of directors whom
they are entitled to elect, from time to time without notice other than
announcement at the meeting or as otherwise required by law, until a quorum
shall be present.
During any period when the holders of the Preferred Stock
shall have the right to vote together as a class for directors as provided
herein, the directors so elected by such holders shall continue in office until
their successors shall have been elected by such holders or until termination of
the rights of such holders to vote as a class for directors. Immediately upon
termination of the right of holders of the Preferred Stock to vote as a class
for directors as provided herein, (i) the term of office of the directors so
elected shall terminate, and (ii) the number of directors shall be such number
as may be provided for in the by-laws of the Company irrespective of any
increase pursuant to the provisions of this paragraph.
Notwithstanding the foregoing, nothing herein or
otherwise in the Company's Certificate of Incorporation or bylaws shall limit or
prevent the right of the holders of the Preferred Stock from, to the fullest
extent allowed by law, exercising the voting rights provided in this paragraph
by written consent of a majority of the outstanding shares of the Preferred
Stock.
(c) The Company shall not, without the affirmative vote or consent
of the holders of at least a majority of the shares of Preferred Stock then
outstanding voting or consenting as the case may be, as one class:
21
(i) authorize, create (by way of reclassification or
otherwise) or issue any Senior Securities or any obligation or
security convertible or exchangeable into or evidencing the right
to purchase, shares of any class or series of Senior Securities;
(ii) authorize, create (by way of reclassification
or otherwise) or issue any class of capital stock or series of
preferred stock, or any obligation or security convertible or
exchangeable into or evidencing the right to purchase shares of
any class of capital or series of preferred stock, that must be
redeemed or may be redeemed at the option of the holder thereof,
in whole or from time to time in part, prior to December 31,
2013;
(iii) amend or otherwise alter this Certificate of
Designation or the Certificate of Incorporation in any manner
that under the Delaware General Corporation Law requires the
prior vote as a separate class of the holders of Preferred Stock;
(iv) take any action which detracts from the voting
powers, preferences and relative, participating, optional and
other special rights, and qualifications, limitations, and
restrictions of the Preferred Stock;
(v) authorize the issuance of any additional shares
of the Series C Perpetual Convertible Preferred Stock;
(vi) waive compliance with any provision of this
Certificate of Designation; or
(vii) declare, pay or make any Extraordinary
Dividend.
(d) Without the consent of each holder affected, an amendment or
waiver of the Company's Certificate of Incorporation or of this Certificate of
22
Designation may not (with respect to any shares of Preferred Stock held by a
non-consenting holder):
(i) alter the voting rights with respect to the
Preferred Stock or reduce the number of shares of Preferred Stock
whose holders must consent to an amendment, supplement or waiver;
(ii) reduce the Liquidation Preference or alter the
provisions with respect to the redemption of the Preferred Stock;
(iii) alter in any manner the conversion rights of
the holders of Preferred Stock set forth in paragraph 3 hereof;
(iv) reduce the rate of or change the time for
payment of dividends on any share of Preferred Stock;
(v) waive the consequences of any failure to pay
dividends on the Preferred Stock;
(vi) make any share of Preferred Stock payable in
any form other than that stated in this Certificate of
Designation;
(vii) make any change in the provisions of this
Certificate of Designation relating to waivers of the rights of
holders of Preferred Stock to receive the Liquidation Preference
and dividends on the Preferred Stock;
(viii) waive a redemption payment with respect to
any share of Preferred Stock; or
(ix) make any change in the foregoing amendment and
waiver provisions.
23
(e) The Company in its sole discretion may without the vote or
consent of any holders of the Preferred Stock amend or supplement this
Certificate of Designation:
(i) to cure any ambiguity, defect or inconsistency
in any manner that does not adversely affect the holders of
Preferred Stock;
(ii) to provide for uncertificated Preferred Stock
in addition to or in place of certificated Preferred Stock; or
(iii) to make any change that would provide any
additional rights or benefits to the holders of the Preferred
Stock or that does not adversely affect the rights under this
Certificate of Designation of any such holder.
6. Certain Transactions. The Company shall not enter into any
--------------------
transaction that would give rise to the redemption rights set forth in paragraph
5 hereof, unless the execution, delivery and performance of the agreements
relating to such transaction, and compliance with paragraph 5 in connection
therewith, will not conflict with or result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound.
7. Merger, Consolidation and Sale of Assets. Except for transactions
----------------------------------------
which pursuant to paragraph 5 would result in the automatic conversion of the
Preferred Stock into Common Stock, without the vote or consent of the holders of
a majority of the then outstanding shares of Preferred Stock, the Company may
not consolidate or merge with or into, or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its assets to, any person
unless, if the Company is not the resulting entity, the Preferred Stock is
converted into or exchanged for and becomes shares of such resulting entity,
having in respect of such resulting entity the same (or more favorable) powers,
preferences and relative, participating, optional or other special rights
thereof that the Preferred Stock had immediately prior to such
24
transaction. The resulting entity of such transaction shall thereafter be deemed
to be the "Company" for all purposes of this Certificate of Designation.
8. Reports. The Company will, within three Business Days after their
-------
filing with the Commission, deliver to the holders of the Preferred Stock all
documents filed by it with the Commission pursuant to the Securities Act or the
Exchange Act, including exhibits thereto. The Company will also deliver to such
holders: (a) promptly upon receipt thereof, copies of all final reports
submitted to the Company or any of its subsidiaries by independent certified
public accountants in connection with each annual, interim or (but only if the
holders of the Preferred Stock are then entitled under this Certificate of
Designation to elect as a class a member of the Company's Board of Directors)
special audit of the books of the Company made by such accountants, including,
without limitation, any final comment letter submitted by such accountants to
management in connection with their annual audit; and (b) promptly upon their
becoming available, copies of all financial statements, reports, notices and
proxy statements sent or made available generally by the Company to its security
holders in their capacity as such or by any subsidiary of the Company to the
Company's security holders.
9. Amendment. This Certificate of Designation shall not be amended,
---------
either directly or indirectly, or through merger or consolidation with another
entity, in any manner that would alter or change the powers, preferences or
special rights of the Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding
Preferred Stock, voting separately as a class.
10. Exclusion of Other Rights. Except as may otherwise be required
-------------------------
by law, the shares of Preferred Stock shall not have any voting powers,
preferences and relative, participating, optional or other special rights, other
than those specifically set forth in this resolution (as such resolution may be
amended from time to time) and in the Certificate of Incorporation. The shares
of Preferred Stock shall have no preemptive or subscription rights.
11. Headings of Subdivisions. The headings of the various
------------------------
subdivisions hereof are for convenience of reference only and shall not affect
the interpretation of any of the provisions hereof.
25
12. Severability of Provisions. If any voting powers, preferences
--------------------------
and relative, participating, optional and other special rights of the Preferred
Stock and qualifications, limitations and restrictions thereof set forth in this
resolution (as such resolution may be amended from time to time) is invalid,
unlawful or incapable of being enforced by reason of any rule of law or public
policy, all other voting powers, preferences and relative, participating,
optional and other special rights of Preferred Stock and qualifications,
limitations and restrictions thereof set forth in this resolution (as so
amended) which can be given effect without the invalid, unlawful or
unenforceable voting powers, preferences and relative, participating, optional
or other special rights of Preferred Stock and qualifications, limitations and
restrictions thereof shall, nevertheless, remain in full force and effect and no
voting powers, preferences and relative, participating, optional or other
special rights of Preferred Stock and qualifications, limitations and
restrictions thereof herein set forth shall be deemed dependent upon any other
such voting powers, preferences and relative, participating, optional or other
special rights of Preferred Stock and qualifications, limitations and
restrictions thereof unless so expressed herein.
13. Re-issuance of Preferred Stock. Shares of Preferred Stock that
------------------------------
have been issued and reacquired in any manner, including shares purchased or
redeemed or exchanged or converted, shall (upon compliance with any applicable
provisions of the laws of Delaware) have the status of authorized but unissued
shares of preferred stock of the Company undesignated as to series and may be
designated or re-designated and issued or reissued, as the case may be, as part
of any series of preferred stock of the Company, provided that any issuance of
such shares as Preferred Stock must be in compliance with the terms hereof.
14. Mutilated or Missing Preferred Stock Certificates. If any of the
-------------------------------------------------
Preferred Stock certificates shall be mutilated, lost, stolen or destroyed, the
Company shall issue, in exchange and in substitution for and upon cancellation
of the mutilated Preferred Stock certificate, or in lieu of and substitution for
the Preferred Stock certificate lost, stolen or destroyed, a new Preferred Stock
certificate of like tenor and representing an equivalent amount of shares of
Preferred Stock, but only upon receipt of evidence of such loss, theft or
destruction of such Preferred Stock certificate and indemnity, if requested,
satisfactory to the Company and the Transfer Agent (if other than the Company).
26
15. Certain Definitions. As used in this Certificate of
-------------------
Designation, the following terms shall have the following meanings (with terms
defined in the singular having comparable meanings when used in the plural and
vice versa), unless the context otherwise requires:
"Affiliate" shall have the meaning attributed thereto under Rule 12b-2
under the Securities Exchange Act of 1934, as amended.
"Business Day" means any day except a Saturday, a Sunday, or any day on
which banking institutions in New York, New York are required or authorized by
law or other governmental action to be closed.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company as presently constituted.
"Conversion Price" shall initially mean $25.00 per share and thereafter
shall be subject to adjustment from time to time pursuant to the terms of
paragraph 3 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Extraordinary Dividend" means (i) all dividends and other distributions
made on, (whether payable in cash, securities or other property), optional
redemptions of, and tender offers for, the capital stock of the Company
(collectively, "Dividend Transactions") made within the preceding 12 months, the
aggregate fair market value of which (when added to the amount of any
repurchases of capital stock of the Company made during such 12-month period)
exceeds 5% of the Company's market capitalization (being the product of the
then-current market price per share of the Common Stock (determined as provided
below) times the aggregate number of shares of Common Stock then outstanding)
and (ii) repurchases of capital stock of the Company made within the preceding
12 months (but before the 15th anniversary of the date of issuance of the
Company's Perpetual Convertible Preferred Stock, Series A), the aggregate fair
market value of which (when added to the amount of any Dividend Transactions
made during such 12-month period) exceeds the following percentages of the
Company's market capitalization: 5% during the first five years after the date
of issuance of the Company's Perpetual Convertible Preferred Stock, Series A,
7.5% during the second five years after the date of issuance of the Company's
Perpetual Convertible Preferred Stock, Series A
27
and 10% during the third five years after the date of issuance of the Company's
Perpetual Convertible Preferred Stock, Series A. The current market price per
share of Common Stock on any day shall be deemed to be the average of the
closing prices of the Common Stock on the principal securities exchange on which
the Common Stock is then traded for the 20 consecutive Trading Days ending the
day before the day in question.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any Agency or political subdivision thereof or any other entity.
"Preferred Stock Issue Date" means the date on which the Preferred Stock
is originally issued by the Company under this Certificate of Designation.
"Series D Preferred" or "Series D Preferred Stock" shall mean the
Perpetual Convertible Preferred Stock, Series D, par value $.01 per share, of
the Corporation.
"Trading Day" means any day on which the New York Stock Exchange or other
applicable stock exchange or market is open for business.
"Transfer Agent" shall be American Stock Transfer Company unless and until
a successor is selected by the Company.
28
IN WITNESS WHEREOF, the Company has caused this certificate to be
duly executed by Bradley S. Jacobs, Chairman and Chief Executive Officer of the
Company and attested by Michael J. Nolan, Assistant Secretary of the Company,
this September 28, 2001.
UNITED RENTALS, INC.
By: /s/ Bradley S. Jacobs
--------------------------
Name: Bradley S. Jacobs
Title: Chairman and Chief Executive
Officer
ATTEST:
By: /s/ Michael J. Nolan
---------------------------
Name: Michael J. Nolan
Title: Assistant Secretary
29
EX-3
6
certifd.txt
EX. VIII-CERT. OF DESIGNATION, SERIES D PREFERRED
Exhibit VIII
CERTIFICATE OF DESIGNATION
OF
PERPETUAL CONVERTIBLE
PREFERRED STOCK, SERIES D
OF
UNITED RENTALS, INC.
------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
------------------------
United Rentals, Inc., a Delaware corporation (the "Company"), certifies that
pursuant to the authority contained in its Restated Certificate of
Incorporation, as amended (the "Certificate of Incorporation"), and in
accordance with the provisions of Section 151 of the General Corporation Law of
the State of Delaware, the Board of Directors of the Company at a meeting duly
called and held on September 28, 2001 duly approved and adopted the following
resolution, which resolution remains in full force and effect on the date
hereof:
RESOLVED, that pursuant to the authority vested in the Board of Directors by the
Certificate of Incorporation, the Board of Directors does hereby designate,
create, authorize and provide for the issue of a series of preferred stock
having a par value of $.01 per share, with a liquidation preference of $1,000
per share (the "Liquidation Preference"), which shall be designated as Series D
Perpetual Convertible Preferred Stock (the "Preferred Stock" or the "Series D
Preferred Stock"), consisting of 500,000 shares, of which 450,000 shares are
designated as Class D-1 Perpetual Convertible Preferred Stock (the "D-1
Preferred Stock") and 50,000 shares are designated as Class D-2 Perpetual
Convertible Preferred Stock (the "D-2 Preferred Stock"), having the following
voting powers, preferences and relative, participating, optional and other
special rights, and qualifications, limitations and restrictions:
1. Ranking.
The Preferred Stock shall, with respect to distributions upon the liquidation,
winding-up and dissolution of the Company, rank (i) senior to all classes of
Common Stock of the Company and to each other class of capital stock or series
of preferred stock established after June 28, 1999, by the Board of Directors,
the terms of which do not expressly provide that it ranks senior to or on a
parity with the Preferred Stock as to dividend distributions and distributions
upon the liquidation, winding-up and dissolution of the Company (collectively
referred to with the Common Stock of the Company as "Junior Securities"); (ii)
on a parity with the Series C Perpetual Convertible Preferred Stock, par value
$.01 per share (the "Series C Preferred Stock") and any additional shares of
Preferred Stock issued by the Company in the future and any other class of
capital stock or series of preferred stock issued by the Company established
after June 28, 1999, by the Board of Directors, the terms of which expressly
provide that such class or series will rank on a parity with the Preferred Stock
as to dividend distributions and distributions upon the liquidation, winding-up
and dissolution of the Company (collectively referred to as "Parity
Securities"); and (iii) junior to each class of capital stock or series of
preferred stock issued by the Company established after June 28, 1999, by the
Board of Directors, the terms of which expressly provide that such class or
series will rank senior to the Preferred Stock as to dividend distributions
and/or distributions upon the liquidation, winding-up and dissolution of the
Company (collectively referred to as "Senior Securities"). Notwithstanding the
foregoing, a security shall not be deemed to be a "Senior Security" solely
because such security has a stated dividend or interest coupon. The D-1
Preferred Stock shall rank on a parity with the D-2 Preferred Stock with respect
to distributions upon the liquidation, winding-up and dissolution of the
Company.
2. Participating Dividends.
In the event that the Company declares or pays any dividends or other
distributions upon the Common Stock, (whether payable in cash, securities or
other property) other than (i) dividends and distributions referred to in
paragraph 3(d)(v), (ii) rights, options or warrants referred to in paragraph
3(d)(vii) and (iii) tender or exchange offers referred to in paragraph 3(d)(ix),
the Company shall also declare and pay to the holders of the Preferred Stock at
the same time that it declares and pays such dividends or other distributions to
the holders of the Common Stock (and with the same record date), the dividends
or distributions which would have been declared and paid with respect to the
Common Stock issuable upon conversion of the Preferred Stock had all of the
outstanding Preferred Stock been converted immediately prior to the record date
for such dividend or distribution, or if no record date is fixed, the date as of
which the record holders of Common Stock entitled to such dividends or
distributions are determined.
Dividends in the event of a Non-Approved Change in Control.
----------------------------------------------------------
Certain Definitions.
2
"Non-Approved Change in Control" means the occurrence of the
following events: (a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 50% of the total voting capital stock of the Company (a "50% Condition");
and (b) as of the time of occurrence of such 50% Condition, (i) no Pre-Change in
-------------
Control Grant Date shall have occurred and (ii) the Company and the Board (which
term shall include any committee of the Board) shall have disapproved (and
recommended against, if applicable) such person or group becoming such a
beneficial owner of more than 50% of the total voting capital stock of the
Company; provided, however, that if the Company or the Board shall have, without
-------- --------
the prior written consent of the holders of a majority of the shares of
Preferred Stock then outstanding (a "Majority of the Holders"), (1) failed to
maintain in force and effect at all times, without lapse, the Rights Agreement
and the Rights, with only such amendments or modifications thereto as shall be
approved by a Majority of the Holders, or (2) amended the Rights Agreement in
any manner that reduces the rights it affords to the Company's shareholders or
reduces the exercise price of Rights under the Rights Agreement, or (3) waived
any provision of the Rights or the Rights Agreement with respect to any person
or group that is or becomes the person or group described in clause (a),
exempted any person or group that is or becomes the person or group described in
clause (a) in whole or in part from the operation or effect of the Rights or the
Rights Agreement, or exempted any person or group that is or becomes the person
or group described in clause (a) from the applicability of Section 203 of the
Delaware General Corporation Law or any successor provision, or entered into any
agreement, arrangement or understanding with respect to any of the foregoing, or
(4) facilitated or suffered to exist any mitigation or circumvention of the
intended effects of the Rights or the Rights Agreement, or (5) failed, within 20
days after receipt of a written request therefor by a Majority of the Holders,
to increase the exercise price of Rights under the Rights Agreement to the
extent necessary so that immediately after such increase the ratio of such
exercise price to the average of the closing prices of the Common Stock, as
reported by the principal securities exchange upon which the Common Stock is
listed, for the 30 trading days immediately preceding the date of such request
is not less than three-to-one, then the occurrence of a 50% Condition shall be
deemed to constitute a Change in Control unless a Pre-Change in Control Grant
Date shall have occurred.
The "Pre-Change in Control Grant Date" shall be the date, if any,
before the occurrence of a 50% Condition, on which the Company grants to all
holders of shares of Preferred Stock and Series C Preferred Stock the
immediately exercisable right to require the Company to redeem their shares of
Preferred Stock and Series C Preferred Stock at the price and terms which would
then apply in respect of a Change in Control; provided, however, that the
-------- -------
holders of shares of Preferred Stock and Series C Preferred Stock may exercise
such rights at any time during the five-Business-Day period following the
occurrence of the 50% Condition; and provided, further, that the holders shall
-------- -------
have received an opinion of counsel to the Company that such right to require
the Company to redeem their shares is a valid and
3
enforceable obligation of the Company and is not limited by any law or other
obligation to which the Company is subject.
"Start Date" means the date and time upon which a Non-Approved
Change in Control shall have occurred, provided that unless and until Bradley S.
--------
Jacobs shall have sold, transferred or otherwise disposed of more than 6 million
shares of Common Stock after September 24, 2001, no Start Date shall be deemed
to have occurred unless a 50% Condition shall have occurred without taking into
account for the purposes of such defined term any shares of Common Stock
beneficially owned by Apollo Investment Fund IV, L.P., or Apollo Overseas
Partners IV, L.P. or their respective successors.
"Determination Date" means each March 15, June 15, September 15 and
December 15 (unless such day is not a Business Day, in which event the
Determination Date shall mean the first succeeding Business Day), commencing on
the first Determination Date succeeding the Start Date.
If any shares of Preferred Stock are outstanding as of the close of
business on the day in which the Start Date occurs, then the holders shall be
entitled, if, as and when unanimously declared by all directors of the Company
then in office, to a per share cumulative cash dividend in an amount equal to
10% per annum of the Liquidation Preference, accruing daily commencing from the
Start Date, computed on the basis of a 365-day year, compounded annually. If,
on or prior to any Determination Date, the Company shall not have declared and
paid to a holder of Preferred Stock the full cumulative cash dividends accruing
as aforesaid for such shares for the quarterly (or other, as the case may be)
period ending on such Determination Date (a "Missed Payment"), each Missed
Payment shall be added to the Liquidation Preference until paid in full in cash
in accordance with Section 4.
From and after the date of any one or more Missed Payments, the
holders shall additionally be entitled, if, as and when unanimously declared by
all directors then in office, to a penalty dividend at a rate of 8% per annum
of the Liquidation Preference, accruing daily commencing from the date of such
Missed Payment, computed on the basis of a 365-day year, compounded annually,
until all Missed Payments are paid in cash in full (the "Penalty Dividend").
Each Penalty Dividend not declared and paid in cash when due will be added to
the Liquidation Preference until paid in full in cash in accordance with
Section 4.
Whenever quarterly dividends payable on shares of Preferred Stock
are in arrears (or any Penalty Dividend is owed), thereafter and until all
accrued and unpaid dividends (including Penalty Dividends), whether or not
declared, on the outstanding shares of Preferred Stock shall have been paid in
full, or whenever the Company shall not have redeemed shares of Preferred Stock
at a time required by the Designations, thereafter and until all redemption
obligations which have come due shall have been satisfied, the Company shall
not: (i) declare or pay dividends, or make any other distributions, on any
shares of capital stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Preferred Stock; (ii)
4
declare or pay dividends, or make any other distributions, on any shares of
capital stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Preferred Stock, except dividends paid
ratably on the Preferred Stock and all capital stock ranking on a parity with
the Preferred Stock and on which dividends are payable or in arrears, in
proportion to the total amounts to which the holders of all such shares are then
entitled; or (iii) redeem or purchase or otherwise acquire for consideration any
shares of capital stock ranking (either as to dividends or upon liquidation,
dissolution or winding up) junior to, or on a parity with the Preferred Stock.
The Company shall not permit any subsidiary of the Company to purchase or
otherwise acquire for consideration any shares of capital stock of the Company
unless the Company could, pursuant to this paragraph, purchase such shares at
such time and in such manner.
The dividends that would be due as a result of a Start Date under
this Section 2 (for clarity, that refers to the 10% dividends accruing from the
Start Date and any Penalty Dividends) shall cease to accrue from and after the
Repurchase Grant Date (as hereinafter defined). The "Repurchase Grant Date"
shall be the earliest date, if any, on which the Company by, unanimous approval
of all directors then in office, grants to all holders of shares of Preferred
Stock the right to require the Company to redeem their shares of Preferred Stock
at the price and terms which would then apply in respect of a Change in Control;
provided, however, that the holders of shares of Preferred Stock may exercise
-------- -------
such rights at any time during the two-year period following the Repurchase
Grant Date , and (for the avoidance of doubt and without duplication) the
repurchase price shall be increased by the dividends (including any Penalty
Dividends owed) which shall have accrued from the Start Date through and
including the Repurchase Grant Date, whether or not declared; and provided,
--------
further, that the holders shall have received an opinion of counsel to the
-------
Company that such right to require the Company to redeem their shares is a valid
and enforceable obligation of the Company and is not limited by any law or other
obligation to which the Company is subject.
3. Conversion Rights.
(a) Conversion of D-1 Preferred Stock into D-2 Preferred Stock.
Subject to and in compliance with the applicable provisions of this Section 3,
any Regulated Stockholder shall be entitled, without the payment of any
additional consideration, to convert at any time and from time to time any or
all shares of D-1 Preferred Stock held by such Regulated Stockholder into the
same number of fully paid and nonassessable shares of D-2 Preferred Stock.
In addition, if at any time any Regulated Stockholder owns more than 4.99% of
the then outstanding D-1 Preferred Stock (or such other maximum percentage
ownership of voting securities permitted under Regulation Y) (such amount of
shares in excess of such percentage being the "Excess Shares"), then, without
the payment of any additional consideration or any other action by such
Regulated Stockholder, the Excess Shares shall be automatically converted into
the same number of fully paid and nonassessable shares of D-2 Preferred Stock.
The
5
Company shall notify any Regulated Stockholder that becomes the owner or
more than 4.99% of the then outstanding D-1 Preferred Stock (or such other
maximum percentage ownership of voting securities permitted under Regulation Y),
within 15 days of the Company's having knowledge of such event. Such Regulated
Stockholder shall surrender the certificates representing the Excess Shares
thereafter promptly in accordance with the procedures in 3(d)(i). Failure to
give such notice to the Regulated Stockholder shall in no way affect the
automatic conversion of such shares of D-1 Preferred Stock into shares of D-2
Preferred Stock.
(b) Conversion of D-2 Preferred Stock into D-1 Preferred Stock.
(i) Subject to and in compliance with the applicable provisions of
this Section 3, any holder of shares of D-2 Preferred Stock shall be entitled,
without the payment of any additional consideration, to convert at any time and
from time to time any or all shares of D-2 Preferred Stock held by such holder
into the same number of fully paid and nonassessable shares of D-1 Preferred
Stock; provided, however, that any holder of D-2 Preferred Stock that is a
Regulated Stockholder may only convert such amount of D-2 Preferred Stock such
that after such conversion, such holder will own no more than 4.99% of the then
outstanding D-1 Preferred Stock (or such other maximum percentage ownership of
voting securities permitted under Regulation Y).
(ii) Subject to and in compliance with the applicable provisions of
this Section 3, upon the transfer of any D-2 Preferred Stock to any transferee,
pursuant to or in conjunction with a Conversion Event, such transferred shares
of D-2 Preferred Stock shall be automatically converted into the same number of
fully paid and nonassessable shares of D-1 Preferred Stock, without any further
action on the part of the transferor or the transferee. Certificates
representing such transferred shares of D-2 Preferred Stock shall be surrendered
in accordance with the procedures in 3(d)(i), and the transferee shall be issued
certificates representing shares of D-1 Preferred Stock.
(c) Optional Conversion of Preferred Stock into Common Stock.
A holder of shares of Preferred Stock may convert such shares into Common Stock
at any time, unless previously redeemed, at the option of the holder thereof.
For the purposes of conversion, each share of Preferred Stock shall be valued at
the Liquidation Preference, which shall be divided by the Conversion Price in
effect on the Conversion Date (as defined in subparagraph (d)(i) below) to
determine the number of shares issuable upon conversion. Immediately following
such conversion, the rights of the holders of converted Preferred Stock shall
cease and the persons entitled to receive the Common Stock upon the conversion
of Preferred Stock shall be treated for all purposes as having become the owners
of such Common Stock.
(d) Mechanics; Transfer Tax; Conversion Price
6
(i) To convert Preferred Stock (other than Preferred Stock which is
automatically converted pursuant to paragraphs 3(a) and 3(b)(ii)), a holder must
(A) surrender the certificate or certificates evidencing the shares of Preferred
Stock to be converted, duly endorsed in a form satisfactory to the Company, at
the office of the Company or Transfer Agent for the Preferred Stock, (B) notify
the Company at such office that he elects to convert Preferred Stock and the
number of shares he wishes to convert, (C) state in writing the name or names in
which he wishes the certificate or certificates for shares of Common Stock or
Preferred Stock, as the case may be, to be issued, and (D) pay any transfer or
similar tax if required by clause (iii) below. In the event that a holder fails
to notify the Company of the number of shares of Preferred Stock which he wishes
to convert, he shall be deemed to have elected to convert all shares represented
by the certificate or certificates surrendered for conversion. The date on which
the holder satisfies all those requirements is the "Conversion Date." As soon as
practical, the Company shall deliver a certificate for the number of full shares
of Common Stock or Preferred Stock, as the case may be, issuable upon the
conversion, and a new certificate representing the unconverted portion, if any,
of the shares of Preferred Stock represented by the certificate or certificates
surrendered for conversion. The person in whose name the Common Stock
certificate is registered shall be treated as the stockholder of record on and
after the Conversion Date. No payment or adjustment will be made for accrued and
unpaid dividends on converted shares of Preferred Stock or for dividends on any
Common Stock issued upon such conversion. The holder of record of a share of
Preferred Stock at the close of business on a record date with respect to the
payment of dividends on the Preferred Stock in accordance with paragraph 2
hereof will be entitled to receive such dividends with respect to such share of
Preferred Stock on the corresponding dividend payment date, notwithstanding the
conversion of such share after such record date and prior to such dividend
payment date. If a holder of Preferred Stock converts more than one share at a
time, the number of full shares of Common Stock issuable upon conversion shall
be based on the total Liquidation Preferences of all shares of Preferred Stock
converted.
(ii) The Company shall not issue any fractional shares of Common
Stock upon conversion of Preferred Stock. Instead the Company shall pay a cash
adjustment based upon the closing price of the Common Stock on the principal
securities exchange on which the Common Stock is then listed on the Business Day
prior to the Conversion Date.
(iii) If a holder converts shares of Preferred Stock, the Company
shall pay any documentary, stamp or similar issue or transfer tax due on the
issue of shares of Common Stock upon the conversion. However, the holder shall
pay any such tax that is due because the shares are issued in a name other than
the holder's name.
(iv) The Company has reserved and shall continue to reserve (A) out
of its authorized but unissued Common Stock or its Common Stock held in treasury
enough shares of Common Stock to permit the conversion, in full, of the
Preferred Stock to Common Stock, and (B) out of its authorized but unissued
Preferred Stock or its Preferred Stock held in treasury enough shares of Class
D-1 Preferred Stock and Class D-2 Preferred Stock to permit the
7
conversion, in full, of the Preferred Stock held by Regulated Stockholders. All
shares of Common Stock or Preferred Stock, as the case may be, that may be
issued upon conversion of Preferred Stock shall be fully paid and nonassessable.
The Company shall endeavor to comply with all securities laws regulating the
offer and delivery of shares of Common Stock or Preferred Stock, as the case may
be, upon conversion of Preferred Stock and shall endeavor to list such shares on
each national securities exchange or automated quotation system on which the
Common Stock or Preferred Stock, as the case may be, is listed.
(v) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company in Common Stock, the
Conversion Price in effect at the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such Conversion
Price by a fraction the numerator of which shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator of which shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day following the date fixed for such determination of the
holders entitled to such dividends and distributions. For the purposes of this
paragraph 3(d)(v), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company. The Company will
not pay any dividend or make any distribution on shares of Common Stock held in
the treasury of the Company.
(vi) In case any person other than the Company or a subsidiary of
the Company, purchases in a tender offer not opposed by the Company more than
20% but less than 50% of the Company's outstanding Common Stock, and such tender
offer price is less than the Conversion Price in effect at the opening of
business on the day the tender offer is concluded, then the Conversion Price
shall be adjusted by multiplying it by a fraction, the numerator of which shall
be one and the denominator of which shall be 1.0625 to the power of x, where x
is the number of years (expressed to the nearest one hundredth) which have
passed since the issuance of the Company's Perpetual Convertible Preferred
Stock, Series B, but x shall not be greater than five.
(vii) In case the Company shall issue rights, options or warrants to
all holders of its Common Stock entitling them (for a period not exceeding 45
days) to subscribe for, purchase or acquire shares of Common Stock at a price
per share less than the current market price per share (determined as provided
below) of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights, options or warrants, the
Conversion Price in effect at the opening of business on the day following the
date fixed for such determination shall be reduced by multiplying such
Conversion Price by a fraction the numerator of which shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock so
offered for subscription, purchase or acquisition would purchase at such current
market price and the
8
denominator of which shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination plus the
number of shares of Common Stock so offered for subscription, purchase or
acquisition, such reduction to become effective immediately after the opening of
business on the day following the date fixed for such determination of the
holders entitled to such rights, options or warrants. However, upon the
expiration of any right, option or warrant to purchase Common Stock, the
issuance of which resulted in an adjustment in the Conversion Price pursuant to
this paragraph 3(d)(vii), if any such right, option or warrant shall expire and
shall not have been exercised, the Conversion Price shall be recomputed
immediately upon such expiration and effective immediately upon such expiration
shall be increased to the price it would have been (but reflecting any other
adjustments to the Conversion Price made pursuant to the provisions of this
paragraph 3 after the issuance of such rights, options or warrants) had the
adjustment of the Conversion Price made upon the issuance of such rights,
options or warrants been made on the basis of offering for subscription or
purchase only that number of shares of Common Stock actually purchased upon the
exercise of such rights, options or warrants. No further adjustment shall be
made upon exercise of any right, option or warrant if any adjustment shall be
made upon the issuance of such security. For purposes of this paragraph
3(d)(vii), the current market price per share of Common Stock on any day shall
be deemed to be the average of the closing prices of the Common Stock for the 20
consecutive Trading Days ending the day before the day in question. For the
purposes of this paragraph 3(d)(vii), the number of shares of Common Stock at
any time outstanding shall not include shares held in the treasury of the
Company. The Company will not issue any rights, options or warrants in respect
of shares of Common Stock held in the treasury of the Company.
(viii) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion Price
in effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be reduced, and, conversely, in case
the outstanding shares of Common Stock shall each be combined into a smaller
number of shares of Common Stock, the Conversion Price in effect at the opening
of business on the day following the day upon which such combination becomes
effective shall be increased to equal the product of the Conversion Price in
effect on such date and a fraction the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such subdivision or
combination, as the case may be, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after such subdivision
or combination, as the case may be. Such reduction or increase, as the case may
be, shall become effective immediately after the opening of business on the day
following the day upon which such subdivision or combination becomes effective.
(ix) In case a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer shall involve the payment by the
Company or such subsidiary of consideration per share of Common Stock having a
fair market value (as determined by the Board of Directors or, to the extent
permitted by applicable law, a duly authorized committee thereof, whose
determination shall be conclusive and described in a resolution of the Board of
Directors or such
9
duly authorized committee thereof, as the case may be) at the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it shall have been amended) that exceeds the current market
price per share of the Common Stock on the Trading Day next succeeding the
Expiration Time, the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Con-version Price in effect
immediately prior to the Expiration Time by a fraction of which the numerator
shall be the number of shares of Common Stock out-standing (including any
tendered or exchanged shares) on the Expiration Time multiplied by the current
market price per share of the Common Stock on the Trading Day next succeeding
the Expiration Time and the denominator shall be the sum of (x) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or ex-changed
and not withdrawn as of the Expiration Time (the shares deemed so accepted, up
to any such maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any Purchased
Shares) on the Expiration Time and the current market price per share of the
Common Stock on the Trading Day next succeeding the Expiration Time, such
reduction to become effective immediately prior to the opening of business on
the day following the Expiration Time. For purposes of this paragraph 3(d)(ix),
the current market price per share of Common Stock on any day shall be deemed to
be the average of the closing prices of the Common Stock for the 20 consecutive
Trading Days ending the day before the day in question. For the purposes of this
paragraph 3(d)(ix), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company.
(x) In case the Company shall issue to one or more Affiliates (other
than (a) persons or entities who become Affiliates only as a result of such
issuance, (b) directors, officers or employees of the Company under bona fide
compensation or benefit arrangements or (c) upon the exercise of options or
warrants or the conversion of convertible securities, issued for fair value at
the time of any such issuance of options, warrants or convertible securities)
Common Stock at a price per share less than the current market price per share
(determined as provided below) of the Common Stock on the date of such issuance
(the "Issue Date"), the Conversion Price in effect at the opening of business on
the day following the Issue Date shall be reduced by multiplying such Conversion
Price by a fraction the numerator of which shall be the number of shares of
Common Stock outstanding at the close of business on the Issue Date plus the
number of shares of Common Stock which the aggregate of the offering price of
the total number of shares of Common Stock so issued would purchase at such
current market price and the denominator of which shall be the number of shares
of Common Stock outstanding at the close of business on the Issue Date plus the
number of shares of Common Stock so issued, such reduction to become effective
immediately after the opening of business on the day following the Issue Date.
For purposes of this paragraph 3(d)(x), the current market price per share of
Common Stock on any day shall be deemed to be the average of the closing prices
of the Common Stock for the 20 consecutive Trading Days ending the day before
the day in question. For the purposes of this paragraph 3(d)(x), the number of
shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company. The Company will not
10
pay any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.
(xi) The reclassification or change of Common Stock into securities,
including securities other than Common Stock (other than any reclassification
upon a consolidation or merger to which paragraph 3(d)(viii) below shall apply)
shall be deemed to involve (A) a distribution of such securities other than
Common Stock to all holders of Common Stock, and (B) a subdivision or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of Common
Shares outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such subdivision
becomes effective" or "the day upon which such combination becomes effective,"
as the case may be, and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph 3(D)(viii) above).
(xii) No adjustment in the Conversion Price need be made until all
cumulative adjustments amount to 1% or more of the Conversion Price as last
adjusted. Any adjustments that are not made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this paragraph
3 shall be made to the nearest 1/10,000th of a cent or to the nearest 1/10,000th
of a share, as the case may be.
(xiii) For purposes of this paragraph 3, "Common Stock" includes any
stock of any class of the Company which has no preference in respect of
dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Company and which is not subject
to redemption by the Company. However, subject to the provisions of paragraph
3(d)(xviii) below, shares issuable on conversion of shares of Preferred Stock
shall include only shares of the class designated as Common Stock of the Company
on the Preferred Stock Issue Date or shares of any class or classes resulting
from any reclassification thereof and which have no preferences in respect of
dividends or amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Company and which are not subject
to redemption by the Company; provided that, if at any time there shall be more
than one such resulting class, the shares of each such class then so issuable
shall be substantially in the proportion which the total number of shares of
such class resulting from all such reclassifications bears to the total number
of shares of all such classes resulting from all such reclassifications.
(xiv) No adjustment in the Conversion Price shall reduce the
Conversion Price below the then par value of the Common Stock.
(xv) Whenever the Conversion Price is adjusted, the Company shall
promptly mail to holders of Preferred Stock, first class, postage prepaid, a
notice of the adjustment. The Company shall file with the Transfer Agent for the
Preferred Stock, if any, a certificate from the Company's chief financial
officer briefly stating the facts requiring the adjustment and the
11
manner of computing it. In the event of any dispute thereon, the opinion of the
Company's independent public accountants, if accepted by the Board of Directors
of the Company, shall be conclusive and binding on the holders of the Preferred
Stock absent manifest error.
(xvi) The Company from time to time may reduce the Conversion Price
if it considers such reductions to be advisable in order that any event treated
for federal income tax purposes as a dividend of stock or stock rights will not
be taxable to the holders of Common Stock by any amount.
(xvii) If:
(A) the Company takes any action which would require an
adjustment in the Conversion Price pursuant to paragraph 3(d)(ix)
above;
(B) the Company consolidates or merges with, or transfers all or
substantially all of its assets to, another corporation, and
stockholders of the Company must approve the transaction; or
(C) there is a dissolution or liquidation of the Company;
the Company shall mail to holders of the Preferred Stock, first class, postage
prepaid, a notice stating the proposed record or effective date, as the case may
be. The Company shall mail the notice at least 10 days before such date.
However, failure to mail the notice or any defect in it shall not affect the
validity of any transaction referred to in clause (A), (B) or (C) of this
paragraph 3(d)(xvii).
(xviii) In the case of any consolidation of the Company or the
merger of the Company with or into any other entity or the sale or transfer of
all or substantially all the assets of the Company pursuant to which the
Company's Common Stock is converted into other securities, cash or assets, then,
except with respect to shares the Company shall become obligated to purchase
upon due acceptance of an offer made by the Company pursuant to paragraph 5(i)
or unless the Preferred Stock shall be automatically converted into Common Stock
pursuant to paragraph 5(i), upon consummation of such transaction, each share of
Preferred Stock shall automatically become convertible into the kind and amount
of securities, cash or other assets receivable upon the consolidation, merger,
sale or transfer by a holder of the number of shares of Common Stock into which
such share of Preferred Stock might have been converted immediately prior to
such consolidation, merger, transfer or sale (assuming such holder of Common
Stock failed to exercise any rights of election and received per share the kind
and amount of consideration receivable per share by a plurality of non-electing
shares). Appropriate adjustment (as determined by the Board of Directors of the
Company) shall be made in the application of the provisions herein set forth
with respect to the rights and interests thereafter of the holders of Preferred
Stock, to the end that the provisions set forth herein (including provisions
with respect to changes in and other adjustment of the Conversion Price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock
12
or other securities or property thereafter deliverable upon the conversion of
Preferred Stock. If this paragraph 3(d)(xviii) applies, paragraphs 3(d)(v),
3(d)(viii) and 3(d)(xi) do not apply.
(xix) In any case in which this paragraph 3 shall require that an
adjustment as a result of any event becomes effective from and after a record
date, the Company may elect to defer until after the occurrence of such event
the issuance to the holder of any shares of Preferred Stock converted after such
record date and before the occurrence of such event of the additional shares of
Common Stock issuable upon such conversion over and above the shares issuable on
the basis of the Conversion Price in effect immediately prior to adjustment;
provided, however, that if such event shall not have occurred and authorization
of such event shall be rescinded by the Company, the Conversion Price shall be
recomputed immediately upon such rescission to the price that would have been in
effect had such event not been authorized, provided that such rescission is
permitted by and effective under applicable laws.
(xx) No adjustment to the Conversion Price shall be made as a result
of the issuance by the Company of the rights (the "Rights") to acquire Series E
Junior Participating Preferred Stock of the Company to be issued pursuant to the
Rights Agreement, dated as of September 28, 2001, between the Company and
American Stock Transfer & Trust Co. (the "Rights Agreement") to holders of
Common Stock and Preferred Stock. Any such adjustment to the Conversion Price,
if applicable, will be made only upon the Rights becoming exercisable.
4. Liquidation Preference.
Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Company or reduction or decrease in its capital stock
resulting in a distribution of assets to the holders of any class or series of
the Company's capital stock, each holder of shares of the Preferred Stock will
be entitled to payment out of the assets of the Company available for
distribution of an amount equal to the Liquidation Preference per share of
Preferred Stock held by such holder, plus accrued and unpaid dividends thereon,
whether or not declared (including Penalty Dividends), if any, to the date fixed
for liquidation, dissolution, winding-up or reduction or decrease in capital
stock, plus if a Start Date shall have occurred, an additional amount equal to
6.25% of the Liquidation Preference, compounded annually from the date of
issuance of the Perpetual Convertible Preferred Stock, Series B up to (and
ending on) the Start Date, before any distribution is made on any Junior
Securities, including, without limitation, Common Stock of the Company. After
payment in full of the Liquidation Preference and all other amounts aforesaid to
which holders of Preferred Stock and Series C Preferred Stock are entitled in
preference to holders of Common Stock, such holders will not be entitled to any
further participation in any distribution of assets of the Company; provided,
--------
however, that, if a Non-Approved Change in Control shall have occurred, after
-------
payment in full of the Liquidation Preference and all other amounts aforesaid to
which holders of Preferred Stock and Series C Preferred Stock are entitled in
preference to holders of Common Stock, such holders will be entitled to
participate with the holders of Common Stock on an as-converted basis in any
distribution of assets of the Company, but only after the holders of Common
Stock have received
13
a distribution per share equal to the distribution per as-converted share that
the holders of Preferred Stock received as payment in full of such Liquidation
Preference and all other amounts aforesaid. If, upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Company, the amounts
payable with respect to the Preferred Stock and all other Parity Securities are
not paid in full, the holders of the Preferred Stock and the Parity Securities
will share equally and ratably in any distribution of assets of the Company in
proportion to the full liquidation preference and accumulated and unpaid
dividends, if any, and other amounts payable in such event, to which each is
entitled. However, neither the voluntary sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Company nor the consolidation
or merger of the Company with or into one or more Persons will be deemed to be a
voluntary or involuntary liquidation, dissolution or winding-up of the Company
or reduction or decrease in capital stock, unless such sale, conveyance,
exchange or transfer shall be in connection with a liquidation, dissolution or
winding-up of the business of the Company or reduction or decrease in capital
stock.
5. Redemptions.
(i) If a Change in Control has occurred or the Company enters into a
binding agreement to effect a Change in Control, the Company shall give prompt
written notice of such Change in Control describing in reasonable detail the
material terms and date or anticipated date of consummation thereof to each
holder of Preferred Stock, and the Company shall give each holder of Preferred
Stock prompt written notice of any material change in the terms or timing of
such transaction. In respect of an actual or proposed Change in Control that is
not an acquisition which is accounted for under the "pooling-of-interests"
method of generally accepted accounting principles, the Company shall be
obligated, by notice given at any time before the Change in Control or not more
than 10 Business Days after the Change in Control, to offer to purchase within
10 Business Days after the Change in Control all of the then outstanding
Preferred Stock tendered under this paragraph at a purchase price in cash per
Share equal to the Liquidation Preference thereof plus an amount equal to 6.25%
of the Liquidation Preference, compounded annually from the date of issuance of
the Perpetual Convertible Preferred Stock, Series B to the purchase date, plus
all accrued and unpaid dividends (including Penalty Dividends), if any, thereon
(whether or not declared) to the purchase date (the "Call Price"). The Company
shall in its Change in Control offer afford to the Holders of Preferred Stock at
least five Business Days after the mailing or delivery of the Change in Control
offer in which to accept such offer by written notice to the Company; the
failure by any Holder to accept such offer shall be deemed a rejection of such
offer. Upon the occurrence of a Change in Control that is an acquisition which
is accounted for as a "pooling-of-interests" method of accounting under
generally accepted accounting principles, all of the outstanding Preferred Stock
on the date of the Change in Control will be automatically converted into Common
Stock having a market value equal to 109.5% of the Call Price, valued at the
closing price of business on the Business Day prior to the date of the Change in
Control. The Company shall not consummate any such transaction until the Common
Stock to be issued to the Preferred Stockholders has been registered under the
Securities Act of 1933, as amended (the "Securities Act"). Notwithstanding
anything to the contrary herein, offers
14
by the Company under this paragraph 5 shall comply with all procedural and other
requirements of federal and state securities laws then in effect, but no such
provisions shall negate the obligation of the Company to purchase Shares under
this paragraph 5 which are validly tendered and not withdrawn at the price set
forth herein.
"Change in Control" means the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), is or becomes the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 50% of the total
voting capital stock of the Company, and such event is not a Non-Approved Change
in Control; or (b) the Company consolidates with, or merges with or into,
another Person or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any Person, or any Person
consolidates with, or merges with or into, the Company, in any such event in a
transaction in which the outstanding voting capital stock of the Company is
converted into or exchanged for cash, securities or other property, provided
that following such transaction the holders of voting stock of the Company
immediately prior to such transaction do not own more than 50% of the voting
stock of the company surviving such transaction or to which such assets are
transferred.
(ii) If, after 2-1/2 years following the date of issuance of the first
class of the Perpetual Convertible Preferred Stock, Series B, the Company issues
for cash common stock or a series of preferred stock convertible into Common
Stock, in either a public offering (a "Public Offering") or a bona fide private
financing (a "Private Offering"), for a price ("Sales Price") for the Common
Stock (including any amount payable upon conversion of Preferred Stock) below
the Conversion Price (each such offering being referred to herein as a "Reduced
Price Offering"), then the Company shall be obligated to make an offer
("Purchase Offer") to apply towards the purchase of Preferred Stock at the Call
Price the Call Percentage (as hereinafter defined) of the amount by which the
net cash proceeds from any such Reduced Price Offering and for all other Reduced
Price Offerings consummated during the preceding 12 months (but excluding any
Reduced Price Offerings prior to December 31, 2001) exceeds an aggregate of $50
million, less a credit for all amounts theretofore paid to the holders of the
Series C Preferred Stock and the Series D Preferred Stock for such purchases
during such 12-month period.
The term "Call Percentage" for any Reduced Price Offering (i) shall
mean 40%, if the Series C Preferred Stock shall not be entitled to a portion of
the cash proceeds of such Reduced Price Offering and (ii), for all other Reduced
Price Offerings, shall be determined by reference to the following table, in
which "Liquidation Amount" means the aggregate liquidation amount of all shares
of Series C Preferred Sock and Series D Preferred Stock then outstanding:
AGGREGATE LIQUIDATION AMOUNT CALL PERCENTAGE
up to and including $500 million 40%
more than $500 to and including 550 million 43
15
AGGREGATE LIQUIDATION AMOUNT CALL PERCENTAGE
more than $550 to and including 600 million 46
more than $600 to and including 650 million 50
more than $650 to and including 700 million 53
more than $700 to and including 750 million 56
more than $750 million 60
Notwithstanding the foregoing, in the event that the Series C
Preferred Stock shall also be entitled to a portion of the net cash proceeds of
a Reduced Price Offering, then the net cash proceeds of such Reduced Price
Offering shall be applied towards the purchase pro rata, based on their
respective liquidation amounts, between the Series C Preferred Stock and up to
$500,000,000 liquidation amount of the Series D Preferred Stock, and no portion
of such net cash proceeds shall be applied to Series D Preferred Stock in excess
of such $500,000,000 liquidation amount.
Net cash proceeds shall be computed after deducting all discounts,
underwriters' commissions and other reasonable expenses. The Purchase Offer in
respect of any Reduced Price Offering shall be made by notice from the Company
given at any time no earlier than ten Business Days before the Company has
received such proceeds and no later than 10 days after the receipt of the net
cash proceeds which require the making of such offer. The Purchase Offer shall
be an offer by the Company to purchase on a date no later than 10 Business Days
after the receipt of the net cash proceeds which require the making of such
offer Shares tendered by holders of Preferred Stock at a price equal to the Call
Price. If Shares are validly tendered with an aggregate purchase price in excess
of the amount of proceeds the Company is required to apply to such purchase, the
Shares shall be purchased on a pro rata basis. Holders shall have no less than
five Business Days from the date of receipt of the notice to accept such offer
by notice to the Company; the failure to accept such offer shall be deemed a
rejection thereof. Notwithstanding the foregoing, the issuance of shares to
employees under bona fide customary compensation or benefit arrangements to
directors, officers or employees of the Company shall not constitute a Reduced
Price Offering.
If the Company shall file a registration statement containing a
preliminary prospectus under the Securities Act with respect to a Reduced Price
Offering, then the Company shall not mail or deliver a Purchase Offer in respect
thereof prior to the tenth Business Day next preceding the date (the "Filing
Date") of such filing, and the closing price of the Common Stock on the third
Business Day next preceding the Filing Date on the principal securities exchange
on which the Common Stock is then listed shall be deemed to be the Sales Price
for such Reduced Price Offering. In such event, notwithstanding the provisions
of the prior paragraph, the Purchase Offer must be accepted by the holders of
Preferred Stock no later than the second Business Day prior to the Filing Date,
provided that Holders shall in all events have no less than three Business Days
from the date of receipt of the notice to accept such offer.
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(iii) The Company shall not redeem, purchase, acquire or take any
other action affecting outstanding shares of any D-1 Preferred Stock if, after
giving effect to such redemption, purchase, acquisition or other action, a
Regulated Stockholder would own more than 24.99% (or such other maximum
percentage of equity ownership permitted under Regulation Y) of the total equity
of the Company or more than 24.99% (or such other maximum percentage of capital
stock and subordinated debt ownership permitted under Regulation Y) of the total
value of all capital stock and subordinated debt of the Company (in each case
determined by assuming such Regulated Stockholder (but no other holder) has
exercised, converted or exchanged all of its options, warrants and other
convertible or exchangeable securities), unless the Company allows such
Regulated Stockholder to sell to the Company, and the Company shall repurchase
from such Regulated Stockholder, that minimum number or amount of Securities
which would result in such Regulated Stockholder holding less than 24.99% (or
such other maximum percentage of equity ownership permitted under Regulation Y)
of the total equity of the Company and less than 24.99% (or such other maximum
percentage of capital stock and subordinated debt ownership permitted under
Regulation Y) of the total value of all capital stock and subordinated debt of
the Company (in each case determined by assuming such Regulated Stockholder (but
no other holder) has exercised, converted or exchanged all of its options,
warrants and other convertible or exchangeable securities) after giving effect
to such purchase, at a purchase price equal to the liquidation value of such
Securities to be so purchased payable in cash at the closing of such purchase.
6. Voting Rights.
(i) The holders of Preferred Stock shall be entitled to notice of
all stockholders meetings in accordance with the Company's bylaws and the
Delaware General Corporation Law (the "DGCL"), and except as otherwise required
by applicable law, the holders of the D-1 Preferred Stock shall be entitled to
vote on all matters submitted to the stockholders for a vote, voting together
with the holders of the Common Stock as a single class, with each share of
Common Stock entitled to one vote per share and each share of D-1 Preferred
Stock entitled to one vote for each share of Common Stock issuable upon
conversion of the D-1 Preferred Stock as of the record date for such vote or, if
no record date is specified, as of the date of such vote. Except as otherwise
provided below, the holders of the D-2 Preferred Stock shall not be entitled to
vote on any matter to be voted on by the stockholders of the Company, including
any vote to elect directors of the Company.
(ii) The Company shall not, without the affirmative vote or consent
of the holders of at least a majority of the shares of D-1 Preferred Stock and
D-2 Preferred Stock then outstanding voting or consenting, as the case may be,
as one class:
(a) authorize, create (by way of reclassification or otherwise)
or issue any Senior Securities or any obligation or security convertible or
exchangeable into or evidencing the right to purchase, shares of any class or
series of Senior Securities;
17
(b) authorize, create (by way of reclassification or otherwise)
or issue any class of capital stock or series of preferred stock, or any
obligation or security convertible or exchangeable into or evidencing the right
to purchase shares of any class of capital or series of preferred stock, that
must be redeemed or may be redeemed at the option of the holder thereof, in
whole or from time to time in part, prior to December 31, 2013;
(c) amend or otherwise alter this Certificate of Designation or
the Certificate of Incorporation in any manner that under the Delaware General
Corporation Law requires the prior vote as a separate class of the holders of
Preferred Stock;
(d) take any action which detracts from the voting powers,
preferences and relative, participating, optional and other special rights, and
qualifications, limitations, and restrictions of the Preferred Stock;
(e) authorize the issuance of any shares of Series D Perpetual
Convertible Preferred Stock in excess of the 500,000 shares originally
authorized;
(f) waive compliance with any provision of this Certificate
of Designation; or
(g) declare, pay or make any Extraordinary Dividend.
(iii) Without the consent of each holder affected, an amendment or
waiver of the Company's Certificate of Incorporation or of this Certificate of
Designation may not (with respect to any shares of Preferred Stock held by a
non-consenting holder):
(a) alter the voting rights with respect to the Preferred Stock
or reduce the number of shares of Preferred Stock whose holders must consent to
an amendment, supplement or waiver;
(b) reduce the Liquidation Preference or alter the provisions
with respect to the redemption of the Preferred Stock;
(c) alter in any manner the conversion rights of the holders
of Preferred Stock set forth in paragraph 3 hereof;
(d) reduce the rate of or change the time for payment of
dividends on any share of Preferred Stock;
(e) waive the consequences of any failure to pay dividends on
the Preferred Stock;
(f) make any share of Preferred Stock payable in any form
other than that stated in this Certificate of Designation;
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(g) make any change in the provisions of this Certificate of
Designation relating to waivers of the rights of holders of Preferred Stock to
receive the Liquidation Preference and dividends on the Preferred Stock;
(h) waive a redemption payment with respect to any share of
Preferred Stock; or
(i) make any change in the foregoing amendment and waiver
provisions.
(iv) The Company in its sole discretion may without the vote or
consent of any holders of the Preferred Stock amend or supplement this
Certificate of Designation:
(a) to cure any ambiguity, defect or inconsistency in any
manner that does not adversely affect the holders of Preferred Stock;
(b) to provide for uncertificated Preferred Stock in addition
to or in place of certificated Preferred Stock; or
(c) to make any change that would provide any additional rights
or benefits to the holders of the Preferred Stock or that does not adversely
affect the rights under this Certificate of Designation of any such holder.
7. Certain Transactions.
The Company shall not enter into any transaction that would give
rise to the redemption rights set forth in paragraph 5 hereof, unless the
execution, delivery and performance of the agreements relating to such
transaction, and compliance with paragraph 5 in connection therewith, will not
conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound.
8. Merger, Consolidation and Sale of Assets.
Except for transactions which pursuant to paragraph 5 would result
in the automatic conversion of the Preferred Stock into Common Stock, without
the vote or consent of the holders of a majority of the then outstanding shares
of Preferred Stock voting as a class, the Company may not consolidate or merge
with or into, or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its assets to, any person unless, if the Company is
not the resulting entity, the Preferred Stock is converted into or exchanged for
and becomes shares of such resulting entity, having in respect of such resulting
entity the same (or more favorable) powers, preferences and relative,
participating, optional or other special rights thereof that the Preferred Stock
had immediately prior to such transaction. The resulting entity of such
19
transaction shall thereafter be deemed to be the "Company" for all purposes of
this Certificate of Designation.
9. Reports.
The Company will, within three Business Days after their filing with
the Commission, deliver to the holders of the Preferred Stock all documents
filed by it with the Commission pursuant to the Securities Act or the Exchange
Act, including exhibits thereto. The Company will also deliver to such holders:
(a) promptly upon receipt thereof, copies of all final reports submitted to the
Company or any of its subsidiaries by independent certified public accountants
in connection with each annual, interim or (but only if the holders of the
Preferred Stock are then entitled under this Certificate of Designation to elect
as a class a member of the Company's Board of Directors) special audit of the
books of the Company made by such accountants, including, without limitation,
any final comment letter submitted by such accountants to management in
connection with their annual audit; and (b) promptly upon their becoming
avail-able, copies of all financial statements, reports, notices and proxy
statements sent or made available generally by the Company to its security
holders in their capacity as such or by any subsidiary of the Company to the
Company's security holders.
10. Amendment.
This Certificate of Designation shall not be amended, either
directly or indirectly, or through merger or consolidation with another entity,
in any manner that would alter or change the powers, preferences or special
rights of the Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding
Preferred Stock, voting separately as a class.
11. Exclusion of Other Rights.
Except as may otherwise be required by law, the shares of Preferred
Stock shall not have any voting powers, preferences and relative, participating,
optional or other special rights, other than those specifically set forth in
this resolution (as such resolution may be amended from time to time) and in the
Certificate of Incorporation. The shares of Preferred Stock shall have no
preemptive or subscription rights.
12. Headings of Subdivisions.
The headings of the various subdivisions hereof are for convenience
of reference only and shall not affect the interpretation of any of the
provisions hereof.
13. Severability of Provisions.
If any voting powers, preferences and relative, participating,
optional and other special rights of the Preferred Stock and qualifications,
limitations and restrictions thereof set
20
forth in this resolution (as such resolution may be amended from time to time)
is invalid, unlawful or incapable of being enforced by reason of any rule of law
or public policy, all other voting powers, preferences and relative,
participating, optional and other special rights of Preferred Stock and
qualifications, limitations and restrictions thereof set forth in this
resolution (as so amended) which can be given effect without the invalid,
unlawful or unenforceable voting powers, preferences and relative,
participating, optional or other special rights of Preferred Stock and
qualifications, limitations and restrictions thereof shall, nevertheless, remain
in full force and effect and no voting powers, preferences and relative,
participating, optional or other special rights of Preferred Stock and
qualifications, limitations and restrictions thereof herein set forth shall be
deemed dependent upon any other such voting powers, preferences and relative,
participating, optional or other special rights of Preferred Stock and
qualifications, limitations and restrictions thereof unless so expressed herein.
14. Re-issuance of Preferred Stock.
Shares of Preferred Stock that have been issued and reacquired in
any manner, including shares purchased or redeemed or exchanged or converted,
shall (upon compliance with any applicable provisions of the laws of Delaware)
have the status of authorized but unissued shares of preferred stock of the
Company undesignated as to series and may be designated or re-designated and
issued or reissued, as the case may be, as part of any series of preferred stock
of the Company, provided that any issuance of such shares as Preferred Stock
must be in compliance with the terms hereof.
15. Mutilated or Missing Preferred Stock Certificates.
If any of the Preferred Stock certificates shall be mutilated, lost,
stolen or destroyed, the Company shall issue, in exchange and in substitution
for and upon cancellation of the mutilated Preferred Stock certificate, or in
lieu of and substitution for the Preferred Stock certificate lost, stolen or
destroyed, a new Preferred Stock certificate of like tenor and representing an
equivalent amount of shares of Preferred Stock, but only upon receipt of
evidence of such loss, theft or destruction of such Preferred Stock certificate
and indemnity, if requested, satisfactory to the Company and the Transfer Agent
(if other than the Company).
16. Certain Definitions.
As used in this Certificate of Designation, the following terms
shall have the following meanings (with terms defined in the singular having
comparable meanings when used in the plural and vice versa), unless the context
otherwise requires:
"Affiliate" shall have the meaning attributed thereto under Rule
12b-2 under the Securities Exchange Act of 1934, as amended.
21
"Business Day" means any day except a Saturday, a Sunday, or any day
on which banking institutions in New York, New York are required or authorized
by law or other governmental action to be closed.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, par value $.01 per share, of
the Company as presently constituted.
"Conversion Event" shall mean (a) any public offering or public sale
of securities of the Company (including a public offering registered under the
Securities Act of 1933 and a public sale pursuant to Rule 144 of the Securities
and Exchange Commission or any similar rule then in force), (b) any sale of
securities of the Company to a person or group of persons (within the meaning of
the Exchange Act), if, after such sale, such person or group of persons in the
aggregate would own or control securities which possess in the aggregate the
ordinary voting power to elect a majority of the Company's directors (provided
that such sale has been approved by the Company's Board of Directors or a
committee thereof), (c) any sale of securities of the Company to a person or
group of persons (within the meaning of the Exchange Act) if, after such sale,
such person or group of persons in the aggregate would own or control securities
of the Company (excluding any D-2 Preferred Stock being converted and disposed
of in connection with such Conversion Event) which possess in the aggregate the
ordinary voting power to elect a majority of the Company's directors, (d) any
sale of securities of the Company to a person or group of persons (within the
meaning of the Exchange Act) if, after such sale, such person or group of
persons would not, in the aggregate, own, control or have the right to acquire
more than two percent (2%) of the outstanding securities of any class of voting
securities of the Company and, (e) a merger, consolidation or similar
transaction involving the Company if, after such transaction, a person or group
of persons (within the meaning of the Exchange Act) in the aggregate would own
or control securities which possess in the aggregate the ordinary voting power
to elect a majority of the surviving Company's directors (provided that the
transaction has been approved by the Company's Board of Directors or a committee
thereof).
"Conversion Price" shall initially mean $30.00 per share and
thereafter shall be subject to adjustment from time to time pursuant to the
terms of paragraph 3 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "Extraordinary Dividend" means (i) all dividends and other
distributions made on, (whether payable in cash, securities or other property),
optional redemptions of, and tender offers for, the capital stock of the Company
(collectively, "Dividend Transactions") made within the preceding 12 months, the
aggregate fair market value of which (when added to the amount of any
repurchases of capital stock of the Company made during such 12-month period)
exceeds 5% of the Company's market capitalization (being the product of the
then-current market price per share of the Common Stock (determined as provided
below) times the aggregate
22
number of shares of Common Stock then outstanding) and (ii) repurchases of
capital stock of the Company made within the preceding 12 months (but before the
15th anniversary of the date of issuance of the Perpetual Convertible Preferred
Stock, Series B), the aggregate fair market value of which (when added to the
amount of any Dividend Transactions made during such 12-month period) exceeds
the following percentages of the Company's market capitalization: 5% during the
first five years after the date of issuance of the Perpetual Convertible
Preferred Stock, Series B, 7.5% during the second five years after the date of
issuance of the Perpetual Convertible Preferred Stock, Series B, and 10% during
the third five years after the date of issuance of the Perpetual Convertible
Preferred Stock, Series B. The current market price per share of Common Stock on
any day shall be deemed to be the average of the closing prices of the Common
Stock on the principal securities exchange on which the Common Stock is then
traded for the 20 consecutive Trading Days ending the day before the day in
question.
"Person" shall be construed broadly and shall include without
limitation an individual, a partnership, a Company, an association, a joint
stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization and a Governmental Authority.
"Preferred Stock Issue Date" means the date on which the Preferred
Stock is originally issued by the Company under this Certificate of Designation.
"Regulated Stockholder" means Chase Equity Associates, L.P., its
affiliates, and any other Person (i) that is subject to the provisions of
Regulation Y, (ii) that holds equity Securities of the Company and (iii) has
given written notice to the Company that such Person is a Regulated Stockholder.
"Regulation Y" means Regulation Y of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Part 225 (or any successor to such
Regulation).
"Securities" means "securities" as defined in Section 2(1) of the
Securities Act.
"Trading Day" means any day on which the New York Stock Exchange or
other applicable stock exchange or market is open for business.
"Transfer Agent" shall be American Stock Transfer Company unless and
until a successor is selected by the Company.
23
IN WITNESS WHEREOF, the Company has caused this certificate to be duly
executed by Bradley S. Jacobs, Chairman and Chief Executive Officer of the
Company and attested by Michael J. Nolan, Assistant Secretary of the Company,
this September 28, 2001.
UNITED RENTALS, INC.
By: /s/ Bradley S. Jacobs
-------------------------
Name: Bradley S. Jacobs
Title: Chairman and Chief
Executive Officer
ATTEST:
By: /s/ Michael J. Nolan
-----------------------------
Name: Michael J. Nolan
Title: Assistant Secretary