CERTIFICATE OF POWERS, DESIGNATIONS, PREFERENCES AND RIGHTS
OF
THE SERIES A
PARTICIPATING CONVERTIBLE PREFERRED STOCK,
PAR VALUE, $0.001 PER SHARE
OF
UNITED ROAD SERVICES, INC.
---------------
Pursuant to Section 151 of
the General Corporation Law of the State of Delaware
We, the undersigned, Gerald Riordan, Chief Executive Officer of United
Road Services, Inc., a Delaware corporation (the "Corporation"), and Donald J.
Marr, Chief Financial Officer of the Corporation, pursuant to the provisions of
Section 151 of the General Corporation Law of the State of Delaware, do hereby
make this Certificate of Powers, Designations, Preferences and Rights (the
"Certificate of Designations") and do hereby state and certify that the
Corporation's Board of Directors duly adopted the following resolutions on April
14 and May 22, 2000.
RESOLVED, that the Board of Directors hereby authorizes the issuance of
a new series of preferred stock of the Corporation and hereby fixes the powers,
designations, preferences and other rights thereof, and the qualifications,
limitations and restrictions thereon as follows:
1. Number and Designation. A total of 662,119.13 shares of the
Corporation's preferred stock shall be designated as Series A Participating
Convertible Preferred Stock, par value $0.001 per share (the "Series A Preferred
Stock").
(a) The Series A Preferred Stock shall, as to dividends,
distributions or redemptions, or as to distribution of assets and rights upon
and following a Liquidation Event (as defined in Section 4(a)), rank senior to
all other existing and future classes and series of capital stock of the
Corporation.
(b) Notwithstanding anything to the contrary contained in the
Certificate of Incorporation of the Corporation, the vote of the holders of a
majority of the shares of Series A Preferred Stock (the "Majority Holders"),
shall be a prerequisite to the designation or issuance of any shares of capital
stock ranking pari passu with or senior
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to the Series A Preferred Stock as to dividends, distributions or redemptions,
or as to distribution of assets and rights upon or following a Liquidation
Event.
2. Voting Power.
(a) Subject to the following proviso and the last sentence of
this Section 2(a), the holder of each share of Series A Preferred Stock shall be
entitled to the number of votes equal to the number of full shares of the
Corporation's common stock, par value $0.01 per share (the "Common Stock"), into
which such share of Series A Preferred Stock could be converted pursuant to
Section 5 hereof (the "Number of Convertible Equivalent Shares") on the record
date for the vote or for written consent of stockholders, as applicable;
provided, however, that except as provided in Sections 2(b) and 2(c) and the
following proviso of this sentence, the holders of Series A Preferred Stock
shall not be entitled to vote in elections of directors; provided further, that
if at anytime (i) the Majority Holders are not entitled to designate at least
three members of the Board of Directors under Section 2(c) or (ii) if any Person
is soliciting proxies or consents in support of or seeking the election of any
director who has not been nominated by the Board of Directors, then the holders
of Series A Preferred Stock shall be entitled to vote in the election of the
directors of the Company with the holders of the Common Stock and all other
shareholders entitled to vote thereon (so long as, in the case of clause (ii) of
this proviso such vote is in favor of the Board of Directors' nominees). The
holder of each share of Series A Preferred Stock shall be entitled to notice of
any stockholders' meeting in accordance with the by-laws of the Corporation and
shall vote with holders of the Common Stock (and all other shareholders entitled
to vote thereon), voting together as a single class, upon all matters, other
than elections of directors (except as set forth in Section 2(b) and the second
proviso of the prior sentence), submitted to a vote of stockholders, excluding
those matters required to be submitted to a class or series vote pursuant to the
General Corporation Law of the State of Delaware and the terms of the
Corporation's Certificate of Incorporation or by-laws. Fractional votes shall
not, however, be permitted and any fractional voting rights resulting from the
above formula (after aggregating all shares of Common Stock into which shares of
Series A Preferred Stock held by each holder could be converted) shall be
rounded to the nearest whole number (with one-half rounded up to one).
(b) For so long as the Original Holders own (as reflected in
the stock ledger of the Corporation on the record date for determining
shareholders who are entitled to vote for the election of directors (the "Record
Date")) at least 50% of the Adjusted Number of Shares Purchased (as defined
below), the total number of directors shall be either 9 or 11, and in the event
that the number of directors is 11, the Majority Holders shall be entitled to
elect and designate 6 directors and in the event that the total number of
directors is 9, the Majority Holders shall be entitled to elect and designate 5
of the directors of the Corporation; and
(c) If the Original Holders ever own (as reflected in the
stock ledger of the Corporation on the relevant Record Date) less than 50% of
the Adjusted Number of Shares Purchased, for so long as the Original Holders own
at least 25% of the Adjusted Number of Shares Purchased (and regardless of
whether the Original Holders subsequently regain ownership of 50% or more of the
Adjusted Number of Shares
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Purchased), then the total number of directors shall be either 9 or 11, and the
Majority Holders shall be entitled to elect and designate three directors of the
Corporation (regardless of whether the number of directors is 9 or 11). If the
Original Holders ever own (as reflected in the stock ledger of the Corporation
on the relevant Record Date) less than 25% of the Adjusted Number of Shares
Purchased, for so long as the Original Holders own at least 10% of the Adjusted
Number of Shares Purchased (and regardless of whether the Original Holders
subsequently regain ownership of 25% or more of the Adjusted Number of Shares
Purchased), then the total number of directors shall be either 9 or 11, and the
Majority Holders shall be entitled to elect and designate one director of the
Corporation (regardless of whether the number of directors is 9 or 11). If the
Original Holders shall ever fail to own (as reflected in the stock ledger of the
Company on the relevant Record Date) at least 10% of the Adjusted Number of
Shares Purchased (and regardless of whether the Original Holders subsequently
regain ownership of 10% or more of the Adjusted Number of Shares Purchased),
then the total number of directors shall be designated in accordance with the
Corporation's by-laws and the holders of Series A Preferred Stock shall no
longer be entitled, as a class, to elect any particular number of directors of
the Corporation. The "Adjusted Number of Shares Purchased" means the Number of
Convertible Equivalent Shares purchased by the Original Holders (as increased,
from time to time, by the number of shares of capital stock of the Corporation
(as converted into Common Stock, if applicable) that the Original Holders
purchase directly from the Corporation after the date hereof and as equitably
adjusted, from time to time, in connection with any event requiring adjustment
under Section 5(f) (an "Adjustment Event"), such adjustment to be made in a
manner consistent with such adjustment of the Conversion Price under Section
5(f)). The Majority Holders may remove, with or without cause, any or all of the
directors elected by the holders of Series A Preferred Stock pursuant to this
Section 2, and such directors may not be removed by vote of the outstanding
shares as a whole, for cause or otherwise. In the event a vacancy is created on
the Corporation's Board of Directors by reason of the incapacity, death, removal
or resignation of any or all of the directors elected by the holders of Series A
Preferred Stock pursuant to this Section 2, such vacancy shall be filled only by
vote of the Majority Holders.
Notwithstanding anything to the contrary, in any event where (x) this
Certificate of Designations provides that the total number of directors may be
either 9 or 11 and (y) the terms of that certain Amended and Restated Investors
Agreement, dated as of April 14, 2000 (the "Charterhouse Investors Agreement"),
between the Corporation and Charter URS LLC ("Charterhouse") provide that
Charterhouse or its Permitted Transferees (as such term is defined in the
Charterhouse Investors Agreement) may nominate two directors to the board of
directors, the board of directors shall consist of 11 members.
"Original Holders" shall mean Blue Truck Acquisition, LLC
("Blue Truck"), its respective Affiliates, partners, members or stockholders and
the respective Affiliates, partners, members or stockholders of such Persons.
"Affiliates" shall mean with respect to any Person, any other
Person controlling, controlled by or under common control with such Person.
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"Person" means an individual, corporation, limited liability
company, partnership, association, trust or any other entity or organization.
3. Dividends.
(a) Mandatory Dividends. For the period prior to July 20,
2008, the holders of each outstanding share of Series A Preferred Stock shall be
entitled to receive cumulative dividends on the Series A Preferred Stock, at the
rate per annum of (x) five and one half percent (5 1/2%) prior to July 20, 2006
and (y) five percent (5%) on and after July 20, 2006, of the Series A Preferred
Base Liquidation Amount (as defined in Section 4(a) below) (a "Series A
Preferred Cumulative Dividend"), with such dividends to be paid in cash as set
forth below. Series A Preferred Cumulative Dividends shall accrue on a daily
basis commencing as of the date of issuance of the Series A Preferred Stock and
shall be mandatorily paid immediately prior to a Liquidation Event (as defined
in Section 4 below) (the date of such payment of the Series A Preferred
Cumulative Dividend is referred to herein as the "Liquidation Dividend Payment
Date"). Series A Preferred Cumulative Dividends shall (i) be computed on the
basis of actual number of days elapsed in a year of 360 days (consisting of
twelve 30 day months), (ii) be paid either quarterly at the end of each calendar
quarter (a "Quarterly Dividend Payment Date") if the Board of Directors of the
Corporation, in its sole and absolute discretion, elects to declare and pay the
dividend for such quarter on or before the Quarterly Dividend Payment Date on
which it is due, or cumulate on a quarterly basis to the extent unpaid by such
Quarterly Dividend Payment Date, whether or not they have been declared and
whether or not there are profits, surplus or other funds of the Corporation
legally available for the payment of dividends (it being understood that if the
dividend for a quarter is not paid by the Quarterly Dividend Payment Date on
which a particular payment is due, then such dividend may not thereafter be paid
in cash except upon liquidation as provided in Section 3(b)), and (iii) accrue
and include dividends on arrearages, calculated at the end of each calendar
quarter, at the rate of (x) five and one half percent (5 1/2%) per annum prior
to July 20, 2006 and (y) five percent (5%) per annum on and after July 20, 2006
and prior to July 20, 2008. Series A Preferred Cumulative Dividends shall not
accrue for the period on and after (i) July 20, 2008, or (ii) the Quarterly
Dividend Payment Date next following the date on or after July 20, 2005 upon
which the average of the closing prices of the Common Stock on the NASDAQ
National Market (or such other national market system or exchange on which such
shares are then listed, traded or quoted) exceeds, for a period of 30
consecutive trading days, 313% of the Conversion Price (as defined in Section
5(e)(i) below).
(b) On a Liquidation Dividend Payment Date, all accrued
dividends shall be paid in cash, unless the Liquidation Event is an Organic
Change in which the only consideration received is securities of the acquiring
company or an Affiliate thereof which are freely tradeable except for any
transfer restrictions imposed by the acquiring company or any limitations on
resale imposed by Rule 144 or 145 of the Securities Act of 1933, as amended
("Marketable Securities"), so long as the holders of the Series A Preferred
Stock (or any securities into which Series A Preferred Stock may be exchanged in
an Organic Change) have a right to require registration of such securities upon
demand, in which case the accrued dividends may be paid, at the option of the
Corporation, in such Marketable Securities. In addition, upon an optional
conversion, or an automatic conversion triggered by an Organic Change, all
dividends that have accrued
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since the next preceding Quarterly Dividend Payment Date (or the date of
issuance in the case of such conversion prior to the first Quarterly Dividend
Payment Date) and (without duplication) all dividends that have accrued from and
after July 20, 2005 shall be paid in shares of Common Stock or in cash, at the
option of the Majority Holders. If dividends are to be paid in shares of Common
Stock pursuant to the preceding sentence, the value of such shares shall be
determined, (A) in the case of an Organic Change (other than as set forth in
clause (B), below), by the Net Per Share Price paid for shares of Common Stock
on such Organic Change, (B) in the case of an Organic Change in which no per
share price is paid for shares of Common Stock, mutually by the Board of
Directors and the Majority Holders or, if the Board of Directors and the
Majority Holders shall fail to agree, at the Corporation's expense by an
appraiser chosen by the Board of Directors and reasonably acceptable to the
Majority Holders or (C) in the case of a voluntary conversion, by the Current
Market Price (as defined in Section 5(f)(iv) below).
"Net Per Share Price" shall mean an amount equal to a quotient
expressed as a fraction (a) the numerator of which shall be the aggregate dollar
amount (whether in cash or the fair market value of the consideration received)
paid to the stockholders of the Corporation as consideration in an Organic
Change plus the amount payable to any Person upon the exercise of Common Stock
Equivalents (exclusive of Common Stock Equivalents that are not "in the money"
at the price to be paid in the transaction constituting the Organic Change (or
if there is no price to be paid, at the Current Market Price of the Common
Stock)) and (b) the denominator of which shall be the number of shares of Common
Stock outstanding on a fully diluted basis (assuming the conversion of the
Series A Preferred Stock and exclusive of Common Stock Equivalents that are not
"in the money") at the price to be paid in the transaction constituting the
Organic Change (or if there is no price to be paid, at the Current Market Price
of the Common Stock).
"Common Stock Equivalent" shall mean any security or
obligation which is by its terms convertible or exchangeable into shares of
Common Stock or another Common Stock Equivalent, and any option, warrant or
other subscription or purchase right with respect to Common Stock.
(c) Participating Dividends. In addition to the mandatory
dividends described in Section 3(a) above, the holders of the Series A Preferred
Stock shall be entitled to receive out of funds legally available therefor,
dividends (other than dividends paid in additional shares of Common Stock with
respect to which an adjustment of the Conversion Price has been made in
accordance with Section 5(f)(ii)) at the same rate as dividends are paid with
respect to the Common Stock (treating each share of Series A Preferred Stock as
being equal to the number of shares of Common Stock into which each such share
of Series A Preferred Stock could be converted pursuant to the provisions of
Section 5(a) on the record date for determining the holders of Common Stock
entitled to such dividend).
4. Liquidation.
(a) Liquidation Preference. Upon any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary (a
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"Liquidation Event"), holders of each outstanding share of Series A Preferred
Stock shall be entitled to be paid out of the assets of the Corporation
available for distribution to stockholders, whether such assets are capital,
surplus or earnings, and before any amount shall be paid or distributed to the
holders of any other capital stock of the Corporation, an amount per share of
Series A Preferred Stock in cash equal to the sum of (i) $38.832 per share,
adjusted appropriately for stock splits, reverse stock splits, stock dividends,
recapitalizations and the like in the same manner as the Conversion Price is
adjusted in accordance with Section 5(f) (the "Series A Preferred Base
Liquidation Amount"), plus (ii) the amount of any and all unpaid Series A
Preferred Cumulative Dividends (together with the Series A Preferred Base
Liquidation Amount, the "Series A Preferred Liquidation Preference Amount");
provided, however, that if, upon any Liquidation Event, the amounts payable with
respect to the Series A Preferred Stock are not paid in full, the holders of the
Series A Preferred Stock shall share ratably in any distribution of assets in
proportion to the amounts that would be payable to such holders if such assets
were sufficient to permit payment in full. If and to the extent that the holders
of the outstanding shares of Series A Preferred Stock have received all the
Series A Preferred Liquidation Preference Amount, the holders of Series A
Preferred Stock shall thereafter share ratably with the holders of Common Stock
in the value received for the remaining assets and properties of the
Corporation, if any, with distributions and payments, as the case may be, to be
made to the holders of Series A Preferred Stock as if each share of Series A
Preferred Stock had been converted into the number of shares of Common Stock
into which each such share of Series A Preferred Stock could be converted
pursuant to the provisions of Section 5(a) immediately prior to any such
Liquidation Event.
(b) Non-Cash Distributions. In the event of a Liquidation
Event resulting in the availability of assets other than cash for distribution
to the holders of the Series A Preferred Stock, the holders of the Series A
Preferred Stock shall be entitled to a distribution of cash and/or assets equal
in value to the Series A Preferred Liquidation Preference Amount and other
distribution rights stated in Section 4(a). In the event that such distribution
to the holders of the Series A Preferred Stock shall include any assets other
than cash, the following provisions shall govern: The Board of Directors shall
first determine the value of such assets for such purpose and shall notify all
holders of shares of Series A Preferred Stock of such determination. The value
of such assets for purposes of the distribution under this Section 4(c) shall be
the value as determined by the Board of Directors in good faith and with due
care, unless the Majority Holders shall object thereto in writing within 15 days
after the date of such notice (the "Objecting Stockholders"). In the event of
such objection, the valuation of such assets for purposes of such distribution
shall be determined by an arbitrator mutually selected by a majority of the
Objecting Stockholders (based on the number of shares of Series A Preferred
Stock) and the Board of Directors, or in the event a single arbitrator cannot be
agreed upon within 10 days after the written objection sent by the Objecting
Stockholders, in accordance with the previous sentence, the valuation of such
assets shall be determined by an arbitration in which (i) the Objecting
Stockholders shall have named in their notice of objection one arbitrator, (ii)
the Board of Directors shall name a second arbitrator within 15 days from the
receipt of such notice, (iii) the arbitrators selected by the Objecting
Stockholders and the Board of Directors shall together select a third arbitrator
within 15 days thereafter, and (iv) the three arbitrators thus selected shall
determine the valuation of such assets within 15 days
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thereafter for purposes of such distribution by majority vote. The costs of such
arbitration shall be borne equally by the Corporation and by the holders of the
Series A Preferred Stock, pro rata based on the number of shares of Series A
Preferred Stock held by the holders of the Series A Preferred Stock. Such
determination of value and the sharing of costs by the holders of the Series A
Preferred Stock shall be binding on all holders of Series A Preferred Stock.
(c) Organic Change. "Organic Change" shall mean (a) (i) the
merger or consolidation of the Corporation into or with one or more Persons, or
(ii) the merger or consolidation of one or more Persons into or with the
Corporation if, in the case of (i) or (ii) the stockholders of the Corporation
prior to such merger or consolidation do not retain at least a majority of the
voting power of the surviving Person, (b) the voluntary sale, conveyance,
exchange or transfer to another Person of (i) the voting capital stock of the
Corporation if, after such sale, conveyance, exchange or transfer, the
stockholders of the Corporation prior to such sale, conveyance, exchange or
transfer do not retain at least a majority of the voting power of the
Corporation or (ii) all or substantially all of the assets of the Corporation or
(c) a capital reorganization of the Corporation (other than by way of stock
split, reverse stock split or combination of shares or stock dividends or
distributions provided for in Sections 5(f)(i) or 5(f)(ii)). Notwithstanding
anything to the contrary contained herein, any transaction that is consummated
at a time when the Majority Holders have the right to designate a majority of
the directors of the Corporation shall be an Organic Change if the Majority
Holders do not have the right to designate a majority of the Board of Directors
of the Corporation or its successor following such transaction on terms no less
favorable than are set forth in Section 2(b) hereof. At the election of the
Majority Holders, the results of which are conveyed to the Corporation at least
five (5) business days prior to the closing of the Organic Change, an Organic
Change shall be deemed to be a liquidation, dissolution or winding up of the
Corporation for purposes of this Section 4.
(d) Notice. Not less than 15 days prior to the occurrence of
any Liquidation Event, the Corporation will furnish each holder of Series A
Preferred Stock notice in accordance with Section 6(a) hereof, together with a
certificate prepared by the chief financial officer of the Corporation
describing in detail the facts of such Liquidation Event, stating in detail the
amount(s) per share of Series A Preferred Stock each holder of Series A
Preferred Stock would receive pursuant to the provisions of Section 4(a) hereof
and stating in detail the facts upon which such amount was determined.
5. Conversion. The Series A Preferred Stock may be converted as
follows:
(a) Voluntary Conversion. At any time, the holder of any
shares of Series A Preferred Stock may, at such holder's option, elect to
convert (a "Voluntary Conversion") all or any portion of the shares of Series A
Preferred Stock held by such Person as follows: for each share of Series A
Preferred Stock being converted, into the number of fully paid and nonassessable
shares of Common Stock equal to the sum of (i) the quotient obtained by dividing
(x) the Series A Preferred Base Liquidation Amount by (y) the Conversion Price
(as defined in Section 5(e)(i) below) plus (ii) the quotient obtained by
dividing (x) the amount, if any, by which the Series A Preferred Liquidation
Preference Amount that has accrued at any time prior to July 20, 2005 exceeds
the Series A Preferred Base Liquidation Amount by (y) the product of the
Conversion Price and 0.85.
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Such sum is referred to as the "Series A Conversion Rate" and shall be computed
as of the date of delivery by the holder of its notice of election to convert or
immediately prior to a mandatory conversion in accordance with Section 5(c).
(b) Mechanics of Voluntary Conversion. The Voluntary
Conversion of Series A Preferred Stock shall be conducted in the following
manner:
(i) Holder's Delivery Requirements. To convert Series
A Preferred Stock into full shares of Common Stock on any date (the
"Voluntary Conversion Date"), the holder thereof shall (A) transmit by
facsimile (or otherwise deliver), for receipt on or prior to 11:59
p.m., New York Time on such date, a copy of a fully executed notice of
conversion (the "Conversion Notice"), to the Chief Financial Officer of
the Corporation, and (B) surrender to a common carrier for delivery to
the Corporation as soon as practicable following such date, the
original certificates representing the shares of Series A Preferred
Stock being converted (or an indemnification undertaking with respect
to such shares in the case of their loss, theft or destruction) (the
"Series A Stock Certificates") and the originally executed Conversion
Notice.
(ii) Corporation's Response. Upon receipt by the
Corporation of the Conversion Notice, the Corporation shall immediately
send, via facsimile, a confirmation of receipt of such Conversion
Notice to such holder. Upon receipt by the Corporation of the Series A
Stock Certificates to be converted pursuant to a Conversion Notice,
together with the originally executed Conversion Notice, the
Corporation or its designated transfer agent (the "Transfer Agent") (as
applicable) shall issue and surrender to a common carrier for overnight
delivery to the address as specified in the Conversion Notice, (A) a
certificate, registered in the name of the holder or its designee, for
the number of full shares of Common Stock to which the holder shall be
entitled and, (B) in lieu of any fractional shares to which the holder
would otherwise be entitled, a check for the amount of cash equal to
the product of such fraction multiplied by the average of the closing
trade prices of the Common Stock for the five consecutive trading days
immediately preceding the Voluntary Conversion Date. If the number of
shares of Series A Preferred Stock represented by the Series A Stock
Certificate(s) submitted for conversion is greater than the number of
shares of Series A Preferred Stock being converted, then the
Corporation shall at its own expense, issue and deliver to the holder a
new Series A Stock Certificate representing the number of shares of
Series A Preferred Stock not converted under Section 5(a).
(c) Mandatory Conversion.
(i) Automatic Conversion. Immediately prior to the
occurrence of an Organic Change, each outstanding share of Series A
Preferred Stock shall, automatically and without any action on the part
of the holder thereof, convert, as of and subject to the closing of the
Organic Change, into the number of fully paid and nonassessable shares
of Common Stock at the Series A Conversion Rate. Notwithstanding the
foregoing, mandatory conversion shall not occur with respect to any
Series A Preferred Stock pursuant to this Section 5(c)(i) in the event
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that a liquidation election has been made in accordance with the
provisions of Section 4(c).
(ii) Mandatory Conversion Mechanics. The date of the
closing of the Organic Change referred to in Section 5(c)(i) is
referred to herein as the "Mandatory Conversion Date." On the Mandatory
Conversion Date, the outstanding shares of Series A Preferred Stock
shall be converted automatically into Common Stock as provided in
Section 5(c)(i) or 5(c)(ii) above, as appropriate, without any further
action by the holders of such shares and whether or not the Series A
Stock Certificates representing such shares are surrendered to the
Corporation or its transfer agent; provided, however, that the
Corporation shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon conversion of any shares of Series
A Preferred Stock unless the Series A Stock Certificates evidencing
such shares of Series A Preferred Stock are either delivered to the
Corporation or the holder notifies the Corporation that such Series A
Stock Certificates have been lost, stolen, or destroyed, and executes
an agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection therewith. Upon
the occurrence of the Mandatory Conversion of the Series A Preferred
Stock pursuant to this Section 5(c), the holders of the Series A
Preferred Stock who have not made the Liquidation Election in
accordance with Section 4(c) shall surrender the Series A Stock
Certificates representing the Series A Preferred Stock for which the
Mandatory Conversion Date has occurred to the Corporation and the
Corporation shall deliver the shares of Common Stock and the cash in
lieu of fractional shares which are deliverable upon such conversion
(in the same manner set forth in Section 5(b)(ii)) to the holder within
three (3) business days of the holder's delivery of the applicable
Series A Stock Certificates.
(d) Record Holder. The conversion of the Series A Preferred
Stock shall be deemed for all purposes to have been effected on the Voluntary
Conversion Date or Mandatory Conversion Date, as applicable. The Person or
Persons entitled to receive the shares of Common Stock issuable upon a
conversion of the Series A Preferred Stock shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on the Voluntary
Conversion Date or Mandatory Conversion Date, as applicable.
(e) Conversion Price.
(i) The term "Conversion Price" shall mean the lesser
of (A) $20.00 and (B) an amount equal to the Thirty Day Average Share
Price; provided, that if the Thirty Day Average Share Price is (A)
greater than or equal to $8.40 per share but less than or equal to
$10.00 per share then the Conversion Price shall be $10.00, or (B) less
than $8.40 per share then the Conversion Price shall be 120% of the
Thirty Day Average Share Price, in each case subject to adjustment from
time to time as provided in Section 5(f).
(ii) The term "Thirty Day Average Share Price" shall
mean the average of the last reported sale prices per share of the
Common
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Stock on the Nasdaq National Market (or on such other United States
stock exchange or public trading market on which the shares of Common
Stock are listed or trade at the time of the calculation) or, if such
shares of Common Stock are not so reported or listed, the average of
the last reported bid prices per share of the Common Stock, for the
thirty consecutive trading days immediately preceding the date on which
the Corporation first issues any shares of Series A Preferred Stock, as
equitably adjusted for any reverse stock split of the Common Stock of
the Company occurring during such 30 consecutive trading day period. If
a reverse stock split is effected during such measurement period, then
the sale price on all days prior to such effective date shall be
adjusted by multiplying such price by the number of shares converted
into one share of Common Stock in the reverse stock split.
(f) Adjustments of Conversion Price.
(i) Adjustments for Stock Splits and Combinations. If
the Corporation shall at any time or from time to time after the
issuance of Series A Preferred Stock effect a stock split of the
outstanding Common Stock, the applicable Conversion Price in effect
immediately prior to the stock split shall be proportionately
decreased. If the Corporation shall at any time or from time to time
after the issuance of Series A Preferred Stock effect a reverse stock
split or otherwise combine the outstanding shares of Common Stock, the
applicable Conversion Price in effect immediately prior to the reverse
stock split or combination shall be proportionately increased. Any
adjustments under this Section 5(f)(i) shall be effective at the close
of business on the date the stock split, reverse stock split or
combination occurs.
(ii) Adjustments for Certain Dividends and
Distributions. If the Corporation shall at any time or from time to
time after the issuance of Series A Preferred Stock, make or issue or
set a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in shares
of Common Stock, then, and in each event, the applicable Conversion
Price in effect immediately prior to such event shall be decreased as
of the time of such issuance or, in the event such record date shall
have been fixed, as of the close of business on such record date, by
multiplying, as applicable, the applicable Conversion Price then in
effect by a fraction: the numerator of which shall be the total number
of shares of Common Stock issued and outstanding immediately prior to
the time of such issuance or the close of business on such record date;
and the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the
number of shares of Common Stock issuable in payment of such dividend
or distribution.
(iii) Adjustments for Reclassification, Exchange or
Substitution. If the Common Stock issuable upon conversion of the
Series A Preferred Stock at any time or from time to time after the
issuance of Series A Preferred Stock shall be changed to the same or
different number of shares of any
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<PAGE>
class or classes of stock, whether by reclassification, exchange,
substitution or otherwise (other than by way of a stock split, reverse
stock split or combination of shares or stock dividends provided for in
Sections 5(f)(i) and (ii), or an Organic Change, then, and in each
event, an appropriate revision to the Conversion Price shall be made
and provision shall be made (by adjustments of the Conversion Price or
otherwise)) so that the holder of each share of Series A Preferred
Stock shall have the right thereafter to convert such share of Series A
Preferred Stock into the kind and amount of shares of stock and other
securities receivable upon reclassification, exchange, substitution or
other change, by holders of the number of shares of Common Stock into
which such share of Series A Preferred Stock might have been converted
immediately prior to such reclassification, exchange, substitution or
other change, all subject to further adjustment as provided herein.
(iv) Issuance of Common Stock or Common Stock
Equivalent below Current Market Price. If at any time after the
issuance of the Series A Preferred Stock the Corporation shall (i)
issue Common Stock without consideration or for consideration per share
of less than 90% of the Current Market Price per share of the Common
Stock on the date of such issue, or (ii) issue Common Stock Equivalents
with an exercise or conversion price that is less than both the
Conversion Price then in effect and 90% of the Current Market Price per
share of Common Stock on the date of such issue, then and in such event
the Conversion Price shall be reduced, concurrently with such issue, to
a new Conversion Price determined by multiplying the then current
Conversion Price by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such
issue plus the number of shares of Common Stock which the aggregate
consideration received by the Corporation for the total number of
shares of Common Stock so issued, or issuable upon exercise or
conversion of such Common Stock Equivalents, would purchase at the
Current Market Price; and the denominator of which shall be the number
of shares of Common Stock outstanding immediately prior to such issue
plus the number of shares of such Common Stock so issued, or issuable
upon exercise or conversion of such Common Stock Equivalents. In any
such case in which the Conversion Price is adjusted as a result of
issuance of Common Stock Equivalents, no further adjustment in the
Conversion Price shall be made upon the subsequent issue of Common
Stock upon the exercise or conversion of such Common Stock Equivalents.
"Current Market Price" shall mean the average of the
last reported sales prices per share of the Common Stock on the Nasdaq
National Market (or on such other United States stock exchange or
public trading market on which the shares of Common Stock are listed or
trade at the time of the calculation) or, if such shares of Common
Stock are not so reported or listed, the average of the last reported
bid prices per share of the Common Stock, in each case, for the thirty
consecutive trading days immediately preceding the date of
determination or if no such bid prices are available, then the fair
market value as determined at the Corporation's expense by an appraiser
chosen by the Board of Directors and reasonably acceptable to the
Majority Holders.
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<PAGE>
(v) Adjustments for an Organic Change. If at any
time, or from time to time, after the issuance of Series A Preferred
Stock, there shall be an Organic Change, then as a part of such Organic
Change an appropriate revision to the Conversion Price shall be made
and provision shall be made (by adjustments of the Conversion Price or
otherwise) so that the holder of each share of Series A Preferred Stock
shall have the right thereafter to convert such share of Series A
Preferred Stock into the kind and amount of shares of stock and other
securities or property of the Corporation or any successor corporation
resulting from the Organic Change to which such holder would have been
entitled upon consummation of the Organic Change if such holder(s) had
converted the Series A Preferred Stock immediately prior thereto. In
any such case, appropriate adjustment shall be made in the application
of the provisions of this Section 5(f)(v) with respect to the rights of
the holders of the Series A Preferred Stock after the Organic Change to
the end that the provisions of this Section 5(f)(v) (including any
adjustment in the applicable Conversion Price then in effect and the
number of shares of stock or other securities deliverable upon
conversion of the Series A Preferred Stock) shall be applied after that
event in as nearly an equivalent manner as may be practicable.
(vi) Certain Distributions. In case the Corporation
shall at any time, or from time to time, prior to conversion of the
Series A Preferred Stock, distribute to holders of shares of the Common
Stock (including any such distribution made in connection with a
merger, consolidation or other business combination which is not an
Organic Change) cash, evidences of indebtedness of the Corporation or
another issuer, securities of the Corporation or another issuer or
other assets (excluding dividends or distributions in which holders of
shares of Series A Preferred Stock participate, in the manner provided
in Section 3, and dividends payable in shares of Common Stock for which
adjustment is made under another paragraph of this Section 5(f)(vi)) or
rights or warrants to subscribe for or purchase securities of the
Corporation, the Conversion Price then in effect shall be adjusted (and
any other appropriate actions shall be taken by the Corporation) by
multiplying the Conversion Price in effect immediately prior to the
date of such distribution by a fraction (x) the numerator of which
shall be the Current Market Price of the Common Stock immediately prior
to the date of distribution less the then fair market value (as
determined in accordance with the provisions of Section 4(b)) of the
portion of the cash, evidences of indebtedness, securities or other
assets so distributed or of such rights or warrants applicable to one
share of Common Stock and (y) the denominator of which shall be the
Current Market Price of the Common Stock immediately prior to the date
of distribution (but such fraction shall not be greater than one);
provided, however, that no adjustment shall be made with respect to any
distribution of rights or warrants to subscribe for or purchase
securities of the Corporation if the holders of shares of Series A
Preferred Stock would otherwise be entitled to receive such rights or
warrants upon conversion at any time of shares of Series A Preferred
Stock into Common Stock. Such adjustment shall be made whenever any
such distribution is made and shall become effective retroactively to a
date immediately following the close of
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<PAGE>
business on the record date for the determination of stockholders
entitled to receive such distribution.
(g) Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Corporation shall not be required to make any adjustment of
the number of shares of Common Stock issuable upon conversion of (i) the Series
A Preferred Stock hereunder, (ii) options or warrants or rights to purchase
stock under any of the Corporation's employee or director stock option plans
approved by the Corporation's Board of Directors or (iii) the Corporation's 8%
Convertible Subordinated Debentures due 2008.
(h) No Impairment. The Corporation shall not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation, but
will at all times in good faith, assist in the carrying out of all the
provisions of this Section 5 and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion rights of the
holders of the Series A Preferred Stock against impairment.
(i) Issue Taxes. The Corporation shall pay any and all issue
and other taxes, excluding federal, state or local income taxes, that may be
payable in respect of any issue or delivery of shares of Common Stock on
conversion of shares of Series A Preferred Stock pursuant hereto; provided,
however, that the Corporation shall not be obligated to pay any transfer taxes
resulting from any transfer requested by any holder in connection with any such
conversion.
(j) Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of the Series A Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to the product of such fraction multiplied by
the average of the closing trade prices of the Common Stock for the five
consecutive trading days immediately preceding the Mandatory Conversion Date or
the Voluntary Conversion Date, as applicable.
(k) Reservation of Common Stock. The Corporation shall, so
long as any shares of Series A Preferred Stock are outstanding, reserve and keep
available out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Series A Preferred Stock, such number
of shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all of the Series A Preferred Stock then outstanding. The
Corporation shall, from time to time in accordance with applicable law, increase
the authorized number of shares of Common Stock if at any time the unissued
number of authorized shares shall not be sufficient to satisfy the Corporation's
obligations under this Section 5(k).
6. Notice.
(a) Liquidation Events, Etc. In the event (i) the Corporation
establishes a record date to determine the holders of any class of securities
who are entitled
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<PAGE>
to receive any dividend or other distribution or who are entitled to vote at a
meeting (or by written consent) in connection with any of the transactions
identified in clause (ii) hereof, (ii) that any Liquidation Event or Organic
Change, as applicable, becomes reasonably likely to occur, (iii) the Corporation
shall declare a dividend, redemption or other distribution with respect to its
Common Stock or (iv) of any Adjustment Event, the Corporation shall mail or
cause to be mailed by first class mail (postage prepaid) to each holder of
Series A Preferred Stock at least forty-five (45) days prior to such record date
specified therein or the expected effective date of any such transaction, a
notice specifying (A) the date of such record date for the purpose of such
dividend or distribution or meeting or consent and a description of such
dividend or distribution or the action to be taken at such meeting or by such
consent, (B) the date on which any such Liquidation Event, Organic Change or
Adjustment Event, as applicable, is expected to become effective, and (C) the
date on which the books of the Corporation shall close or a record shall be
taken with respect to any such event.
(b) Waiver of Notice. Any holder of Series A Preferred Stock
may as to itself, at any time upon written notice to the Corporation, waive any
notice provisions specified herein for the benefit of such holder.
7. Certain Remedies. Any registered holder of Series A Preferred Stock
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Certificate of Designations and to enforce specifically the
terms and provisions of this Certificate of Designations in any court of the
United States or any state thereof having jurisdiction, this being in addition
to any other remedy to which such holder may be entitled at law or in equity.
8. No Reissuance of Series A Preferred Stock. No shares of Series A
Preferred Stock acquired by the Corporation by reason of purchase, conversion or
otherwise shall be reissued, and all such shares shall be canceled, retired and
eliminated from the shares which the Corporation shall be authorized to issue.
[Signature page follows]
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<PAGE>
IN WITNESS WHEREOF, United Road Services, Inc. has caused this
Certificate of Designations to be signed and attested by the undersigned this
20th day of July, 2000.
UNITED ROAD SERVICES, INC.
By: /s/ Gerald Riordan
------------------------------
Name: Gerald Riordan
Title: Chief Executive Officer
ATTEST:
/s/ Donald J. Marr
------------------------------
Name: Donald J. Marr
Title: Chief Financial Officer
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