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. 16 (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; 18 (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