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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
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Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e) (2))
NATIONSRENT, INC.
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(Name of Registrant as Specified in Its Charter)
N/A
---
(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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(NATIONSRENT, INC. LOGO)
450 EAST LAS OLAS BOULEVARD
FORT LAUDERDALE, FLORIDA 33301
August 18, 1999
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders of
NationsRent, Inc. to be held on Tuesday, August 31, 1999 at 10:00 a.m., Eastern
Standard Time, at the Company's corporate headquarters at 450 East Las Olas
Boulevard, Fort Lauderdale, Florida 33301, and vote upon the matters set forth
in the accompanying Notice of Meeting and Proxy Statement.
The Notice of Special Meeting, Proxy Statement and proxy form are included
with this letter. The matters to be voted upon as listed in the Notice of
Meeting are more fully described in the Proxy Statement.
Whether or not you plan to attend in person, it is important that your
shares be represented at the Special Meeting. Please sign, date and return your
proxy card in the enclosed envelope as soon as possible. THE BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE MATTERS DESCRIBED IN THE PROXY
STATEMENT TO BE VOTED UPON AT THE SPECIAL MEETING. Thank you.
Sincerely,
/s/ James L. Kirk
James L. Kirk
Chairman of the Board and
Chief Executive Officer
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(NATIONSRENT, INC. LOGO)
450 EAST LAS OLAS BOULEVARD
FORT LAUDERDALE, FLORIDA 33301
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To the Stockholders of NationsRent, Inc.:
A Special Meeting of Stockholders, or any adjournment or postponement
thereof (the "Special Meeting"), of NationsRent, Inc., a Delaware corporation
(the "Company"), will be held on Tuesday, August 31, 1999 at 10:00 a.m., Eastern
Standard Time, at 450 East Las Olas Boulevard, Fort Lauderdale, Florida 33301,
to consider and vote upon the following matters, all of which are set forth more
completely in the accompanying Proxy Statement.
1. To approve: (a) the issuance, in a series of transactions, of 100,000
shares of Series A Convertible Preferred Stock (the "Preferred Stock")
to NR Holdings Limited and NR Investments Limited, 78,000 shares of
which have already been issued and 22,000 shares of which will be issued
after stockholder approval is obtained; and (b) the issuance of shares
of Common Stock upon the conversion of such Preferred Stock.
2. To approve the future issuance of Common Stock or securities convertible
into or exercisable for Common Stock to the holders of the Preferred
Stock from time to time pursuant to their exercise of the preemptive
rights to which they are entitled under the Certificate of Designation.
3. To approve an amendment to the Certificate of Designation for the
Preferred Stock.
The Board of Directors has fixed the close of business on August 2, 1999 as
the record date for determining those stockholders entitled to notice of, and to
vote at, the Special Meeting.
A FORM OF PROXY AND THE PROXY STATEMENT OF THE COMPANY RELATING TO THE
SPECIAL MEETING OF STOCKHOLDERS ARE ENCLOSED. IT IS IMPORTANT THAT PROXIES BE
RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT
THE SPECIAL MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN
THE ENCLOSED ENVELOPE WHICH DOES NOT REQUIRE POSTAGE IF MAILED IN THE UNITED
STATES.
By Order of the Board of Directors,
/s/ Joseph H. Izhakoff
Joseph H. Izhakoff
Vice President, General Counsel and
Secretary
Fort Lauderdale, Florida
August 18, 1999
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(NATIONSRENT, INC. LOGO)
450 EAST LAS OLAS BOULEVARD
FORT LAUDERDALE, FLORIDA 33301
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PROXY STATEMENT
---------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of NationsRent, Inc. (the "Company"), for use
at a Special Meeting of Stockholders of the Company, or any adjournment or
postponement thereof (the "Special Meeting"). The Special Meeting will be held
on Tuesday, August 31, 1999 at 10:00 a.m., Eastern Standard Time, at the
Company's corporate headquarters at 450 East Las Olas Boulevard, Fort
Lauderdale, Florida 33301.
It is anticipated that the Notice of Special Meeting, this Proxy Statement
and the proxy form will be mailed to stockholders of the Company on or about
August 18, 1999.
RECORD DATE
Only stockholders of record at the close of business on August 2, 1999 (the
"Record Date") are entitled to vote at the Special Meeting.
SHARES OUTSTANDING AND VOTING RIGHTS
As of the Record Date, there were 56,453,781 shares of the Company's Common
Stock, par value $.01 per share (the "Common Stock"), and 78,000 shares of the
Company's Series A Convertible Preferred Stock, par value $.01 per share (the
"Preferred Stock"), issued and outstanding, all of which are entitled to be
voted at the Special Meeting. As of the Record Date, the 78,000 shares of issued
and outstanding Preferred Stock were convertible into 11,142,857 shares of
Common Stock. Each share of Common Stock is entitled to one vote on each matter
submitted to stockholders for approval at the Special Meeting. Each share of
Preferred Stock is entitled to one vote per share of Common Stock issuable upon
conversion of the Preferred Stock as of the Record Date and votes together with
shares of Common Stock on all matters submitted to stockholders for a vote at
the Special Meeting, and with respect to the amendment to the Certificate of
Designation for the Preferred Stock the shares of Preferred Stock, in addition
to voting with the shares of Common Stock, will also vote as a separate class.
PROXY PROCEDURE
Proxies properly executed and returned in a timely manner will be voted at
the Special Meeting in accordance with the directions noted thereon. If no
direction is indicated, proxies will be voted for (i) approval of the issuance
of the shares of Preferred Stock to NR Holdings Limited and NR Investments
Limited and the issuance of shares of Common Stock upon the conversion of such
Preferred Stock, (ii) approval of the future issuance of Common Stock or
securities convertible into or exercisable for Common Stock to the holders of
the Preferred Stock pursuant to their exercise of the preemptive rights to which
they are entitled under the Certificate of Designation for the Preferred Stock
and (iii) approval of the amendment to the Certificate of Designation for the
Preferred Stock. Any stockholder giving a proxy has the power to revoke it at
any time before it is voted, either in person at the Special Meeting, by written
notice to the Secretary of the Company or by delivery of a later-dated proxy.
Votes cast by proxy or in person at the Special Meeting will be tabulated
by the inspectors of elections appointed for the Special Meeting and will be
counted in determining whether or not a quorum is present. A
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proxy submitted by a stockholder may indicate that all or a portion of the
shares represented by such proxy are not being voted by such stockholder with
respect to a particular matter ("non-voted shares"). This could occur, for
example, when a broker is not permitted to vote shares held in "street name" on
certain matters in the absence of instructions from the beneficial owner of the
shares. Non-voted shares with respect to a particular matter will not be
considered shares present and entitled to vote on such matter, although such
shares will be counted for purposes of determining the presence of a quorum.
Shares voting to abstain as to a particular matter will not be considered
non-voted shares and will be considered present and entitled to vote with
respect to such matter.
VOTING REQUIREMENTS
The presence, in person or by proxy, of the holders of a majority of the
voting power of the outstanding shares of Common Stock and Preferred Stock
entitled to vote on every matter that is to be voted on, without regard to class
or series, shall constitute a quorum at the Special Meeting. Provided that a
quorum is present, the affirmative vote of the holders of a majority of the
voting power of the shares of Common Stock and Preferred Stock present in person
or by proxy and entitled to vote at the Special Meeting is required for the
approval of the first and second proposals to be voted upon at the Special
Meeting. Provided a quorum is present at the Special Meeting, the affirmative
vote of (1) the holders of a majority of the outstanding shares of Common Stock
and Preferred Stock, voting together, and (2) the holders of a majority of the
outstanding shares of Preferred Stock, voting as a separate class, is required
for the approval of the amendment to the Certificate of Designation. Non-voted
shares will have no effect on the first and second proposals brought to vote at
the Special Meeting but will have the effect of votes against the third proposal
brought to a vote at the Special Meeting. Abstentions from voting on any of the
matters brought to a vote at the Special Meeting will have the effect of votes
against that particular matter.
Current stockholders who owned 29,778,949 shares of Common Stock as of the
Record Date, representing 44.1% of the voting power of the outstanding shares of
Common Stock and Preferred stock entitled to vote on the first and second
proposals to be acted upon at the Special Meeting, have entered into agreements
to vote in favor of the first and second proposals. In addition, stockholders
who owned shares of Preferred Stock convertible into 11,142,857 shares of Common
Stock as of the Record Date, representing 16.5% of the voting power of the
outstanding shares of Common Stock and Preferred Stock entitled to vote on the
first and second proposals, have agreed to vote in favor of the first and second
proposals. Accordingly, approval of the first and second proposals is assured.
COSTS OF SOLICITATION
All costs of solicitation will be borne by the Company. The solicitation is
to be principally conducted by mail and may be supplemented by telephone and
personal contacts by directors, executive officers and employees of the Company,
without additional remuneration. Arrangements will be made with brokerage
houses, banks and custodians, nominees and other fiduciaries to forward
solicitation materials to the beneficial owners of stock held of record. The
Company will reimburse such persons for their reasonable out-of-pocket expenses
incurred in connection with the distribution of proxy materials.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company recommends that the stockholders vote
"for" the approval of the issuance of the Preferred Stock, the approval of the
issuance of securities to holders of the Preferred Stock upon the future
exercise of their preemptive rights and the approval of the amendment to the
Certificate of Designation for the Preferred Stock.
INTEREST OF CERTAIN DIRECTORS IN THE TRANSACTION
NR Holdings Limited and NR Investments Limited currently own all the
outstanding Preferred Stock issued by the Company. The holders of the Preferred
Stock have the right, voting separately as a class, to elect
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two directors of the Company. Pursuant to the Preferred Stock Purchase
Agreement, dated July 20, 1999, among the Company, NR Holdings Limited and NR
Investments Limited, on July 21, 1999 the Company's Board of Directors increased
the size of the Board from six to eight members and appointed two designees of
NR Holdings Limited and NR Investments Limited, Christopher J. O'Brien and
Charles J. Philippin, as directors of the Company.
PROPOSAL NO. 1
APPROVAL OF THE ISSUANCE OF PREFERRED STOCK
AND THE ISSUANCE OF COMMON STOCK
UPON THE CONVERSION OF SUCH PREFERRED STOCK
The Company is seeking stockholder approval, pursuant to Paragraphs
312.03(b) and (c) of The New York Stock Exchange Listed Company Manual, of:
(a) the issuance, in a series of transactions, of 100,000 shares of Series
A Convertible Preferred Stock (the "Preferred Stock") to NR Holdings
Limited and NR Investments Limited, 78,000 shares of which have already
been issued and 22,000 shares of which will be issued after stockholder
approval is obtained; and
(b) the issuance of shares of Common Stock upon the conversion of such
Preferred Stock.
Paragraph 312.03(b) requires stockholder approval prior to the issuance of
securities convertible into common stock to a substantial security holder of an
issuer if the number of shares of common stock into which the securities may be
convertible exceeds either one percent of the number of shares of common stock
outstanding before the issuance or five percent of the number of shares of
common stock outstanding before issuance if the issuance to the substantial
security holder relates to a sale of stock for cash at a price at least as great
as each of the book and market value of the issuer's common stock. Paragraph
312.03(c) requires stockholder approval prior to the issuance in a transaction
or series of transactions of securities convertible into common stock if the
number of shares of common stock issuable will upon issuance be equal to or in
excess of 20 percent of the number of shares of common stock outstanding before
the issuance of the convertible securities. On July 20, 1999, pursuant to the
Preferred Stock Purchase Agreement described below, the Company issued an
aggregate of 78,000 shares of Preferred Stock to NR Holdings Limited and NR
Investments Limited, which are affiliates of Investcorp S.A. The 78,000 shares
of Preferred Stock are convertible into 11,142,857 shares of Common Stock
representing 19.7% of the outstanding Common Stock immediately prior to
issuance. At that time, the Company agreed to issue an additional 22,000 shares
of Preferred Stock to the same purchasers subject to obtaining stockholder
approval of such issuance pursuant to The New York Stock Exchange rules. Even if
stockholder approval of the issuance of the additional 22,000 shares of
Preferred Stock were not obtained, the initial 78,000 shares of Preferred Stock
would remain outstanding.
The following summary of the provisions of the Preferred Stock Purchase
Agreement, dated July 20, 1999 (the "Purchase Agreement"), by and among the
Company, NR Holdings Limited, a Cayman Islands corporation, and NR Investments
Limited, a Cayman Islands corporation, the Certificate of Designation of Series
A Convertible Preferred Stock (the "Certificate of Designation") and the
Registration Rights Agreement dated July 20, 1999 (the "Registration Rights
Agreement"), by and between the Company, NR Holdings Limited, NR Investments
Limited, James L. Kirk and H. Wayne Huizenga, is qualified in its entirety by
reference to such documents which are incorporated herein by reference. The
Amended and Restated Certificate of Designation is attached hereto as Exhibit
"A." The Purchase Agreement and the Registration Rights Agreement have been
included as exhibits to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999, which has been filed with the Securities and
Exchange Commission and a copy of such documents and the original Certificate of
Designation can be obtained by writing or calling Joseph H. Izhakoff, Vice
President, General Counsel and Secretary, NationsRent, Inc., 450 East Las Olas
Boulevard, Fort Lauderdale, Florida 33301, telephone: 954-760-6550.
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GENERAL DESCRIPTION OF THE TRANSACTION
Pursuant to the Purchase Agreement the Company agreed to issue 100,000
shares of Preferred Stock to NR Holdings Limited and NR Investments Limited
(together, the "Purchasers"), for an aggregate purchase price of $100,000,000
(the "Transaction") at two separate closings. On July 20, 1999, the Company
issued 78,000 shares of Preferred Stock to the Purchasers ("First Closing")
consisting of 61,620 shares of Preferred Stock to NR Holdings Limited and 16,380
shares of Preferred Stock to NR Investments Limited (collectively, the "First
Preferred Shares") for a cash purchase price of an aggregate of $78,000,000
consisting of $61,620,000 from NR Holdings Limited and $16,380,000 from NR
Investments Limited (collectively, the "First Purchase Price"). At the second
closing, the Company will issue an aggregate of 22,000 additional shares of
Preferred Stock to the Purchasers ("Second Closing") consisting of 17,380 shares
of Preferred Stock to NR Holdings Limited and 4,620 shares of Preferred Stock to
NR Investments Limited (collectively, the "Second Preferred Shares") for a cash
purchase price of an aggregate of $22,000,000 consisting of $17,380,000 from NR
Holdings Limited and $4,620,000 from NR Investments Limited (collectively, the
"Second Purchase Price").
The purchase and issuance of the Second Preferred Shares will take place at
the Second Closing to be held on the third business day after the conditions to
the Second Closing have been satisfied or waived or on such other date as the
parties may agree (the "Second Closing Date"). At the Second Closing, subject to
the terms and conditions set forth in the Purchase Agreement, the Company will
deliver to each Purchaser the Second Preferred Shares to be purchased by it in
exchange for the Second Purchase Price.
The shares of Preferred Stock issued or to be issued in the Transaction are
unregistered and are subject to transfer restrictions imposed by the Securities
Act of 1933, as amended (the "Securities Act"). Pursuant to the Registration
Rights Agreement, the Purchasers have been granted certain rights to require the
Company to register their shares of Preferred Stock for resale in the future.
See "-- The Registration Rights Agreement."
Consummation of the Second Closing is conditioned on the approval of the
issuance of the Second Preferred Shares by the Company's stockholders at the
Special Meeting. Based on its evaluation of the Transaction, the Board of
Directors has recommended that the Company's stockholders vote in favor of the
issuance to NR Holdings Limited and NR Investments Limited of the shares of
Preferred Stock and the issuance of shares of Common Stock upon the conversion
of such Preferred Stock. In the event that the Company does not obtain such
stockholder approval, the Company is not required to, and will not, consummate
the Second Closing.
The Company has used the net proceeds from the sale of the 78,000 shares of
Preferred Stock to pay down a portion of its outstanding senior credit
facilities. The Company anticipates using the net proceeds from the sale of the
22,000 shares of Preferred Stock to pay off certain indebtedness, for capital
expenditures, for general corporate purposes (including, without limitation,
advertising and branding of its stores) and for acquisitions, although no
specific acquisition is probable at this time.
VOTING AGREEMENTS
James L. Kirk, H. Wayne Huizenga, and Don R. O'Neal, each of whom is an
officer or director of the Company, and H. Family Investments, Inc., a founding
stockholder of the Company, have agreed with the Purchasers to vote all the
shares of Common Stock beneficially owned by them in favor of the first and
second proposals to be brought before the Special Meeting. These parties
beneficially own an aggregate of 29,778,949 shares of the Company's issued and
outstanding Common Stock. In addition, the holders of the Preferred Stock have
agreed to vote all of the First Preferred Shares in favor of the first and
second proposals to be brought before the Special Meeting. The shares of Common
Stock beneficially owned by Messrs. Kirk, Huizenga, and O'Neal and H. Family
Investments together with the shares of Preferred Stock held by the Purchasers
represent approximately 60.5% of the total number of votes entitled to be cast
at the Special Meeting.
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TERMS OF THE PREFERRED STOCK
Set forth below is a summary of certain terms of the Preferred Stock. This
summary is not complete and is qualified in its entirety by reference to the
Certificate of Designation for the Preferred Stock.
Ranking
With respect to distributions upon the liquidation, winding-up and
dissolution of the Company, the Preferred Stock will rank (i) senior to all
classes of common stock of the Company, and each class of capital stock or
series of preferred stock established after July 20, 1999, the terms of which do
not expressly provide that such class or series ranks senior to or on parity
with the Preferred Stock as to dividend distributions and distributions upon the
liquidation, winding-up and dissolution of the Company, (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 established after
July 20, 1999 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,
and (iii) junior to each class of capital stock or series of preferred stock
issued by the Company established after July 20, 1999 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.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding-up of
the Company, each holder of Preferred Stock will be entitled to payment out of
the assets of the Company available for distribution of an amount equal to
$1,000 per share of Preferred Stock held by such holder (the "Liquidation
Preference"), plus accrued and unpaid dividends, if any, to the date fixed for
liquidation, dissolution or winding-up, before any distribution is made on the
Common Stock. After payment in full of the Liquidation Preference and such
dividends, if any, to which holders of Preferred Stock are entitled, such
holders will not be entitled to any further participation in any distribution of
assets of the Company.
Dividends
The Preferred Stock will not have a stated dividend. However, in the event
that the Company declares or pays any dividends or other distributions upon the
Common Stock other than dividends paid in shares of Common Stock, the Company
must 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, 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 shares of 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.
Conversion Rights
Subject to possible adjustment as described below, each share of Preferred
Stock is convertible into 142.85 shares of Common Stock (representing a
conversion price of $7.00 per share of Common Stock based on the Liquidation
Preference of $1,000 per share of Preferred Stock).
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The Certificate of Designation provides that the conversion price and the
number and kind of securities or rights into which the Preferred Stock is
convertible are subject to certain anti-dilution adjustments upon the occurrence
of any of the following events:
- a distribution in the form of Common Stock is made on any class of
capital stock of the Company (see subsection 3(vi) of the Certificate of
Designation);
- the outstanding shares of Common Stock are subdivided into a greater
number of shares of Common Stock or combined into a smaller number of
shares of Common Stock (see subsection 3(vii) of the Certificate of
Designation); or
- a consolidation or merger of the Company, the sale or transfer of all or
substantially all of the assets of the Company, or a capital
reorganization or reclassification, conversion or exchange of shares of
Common Stock (see subsection 3(xv) of the Certificate of Designation).
Redemption or Automatic Conversion
The Company has no obligation to redeem or repurchase the Preferred Stock,
other than upon a Change in Control as described below.
In the event of a Change in Control that is not in connection with an
acquisition that is accounted for under the "pooling-of-interests" method of
generally accepted accounting principles, the Company must offer to purchase,
within 20 business days after the Change in Control (or concurrently with the
effectiveness of the Change in Control if the Company is not the surviving
entity in such transaction), all of the then outstanding shares of Preferred
Stock at a purchase price per share, in cash, equal to the Liquidation
Preference thereof plus an amount equal to 8.00% of the Liquidation Preference,
compounded annually from the date of issuance of such share to the purchase date
(the "Call Price").
In the event of a Change in Control that is an acquisition that is
accounted for under the "pooling-of-interests" method of generally accepted
accounting principles, then, upon the occurrence of the Change in Control, all
of the then outstanding Preferred Stock will be automatically converted into
Common Stock having a market value equal to 110% of the Call Price, valued at
the closing price of the Common Stock at the close of business on the business
day prior to the effective date of the Change in Control.
The Certificate of Designation defines a Change in Control as the
occurrence of any of the following events:
- a person or group becomes the beneficial holder of more than 50% of the
total voting stock of the company. An acquisition of more than 50% of the
stock by Messrs. Kirk or Huizenga, H. Family Investments, Inc. or any
holder of Preferred Stock will not be a Change in Control, unless, in the
case of Messrs. Kirk and Huizenga and H. Family Investments, the event
causes the Common Stock to no longer be listed on a national securities
exchange or quoted on NASDAQ; or
- a merger of the Company or a sale or other disposition of all or
substantially all of the Company's assets where the holders of voting
stock of the Company prior to the transaction do not own more than 50% of
the voting power of the voting stock of the entity surviving the
transaction, or to which the assets were transferred.
Redemption at the Option of the Company
At any time after the first anniversary of the issuance of the Preferred
Stock, the Company may, at its election, redeem, in whole but not in part, the
shares of then outstanding Preferred Stock at a purchase price in cash per share
equal to $14.00 compounded annually at the rate of 20% per annum for the period
from the first anniversary of the issuance of the Preferred Stock up to and
including the date of redemption.
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Voting
General Voting Rights. The holders of Preferred Stock are entitled to vote
(or act by written consent) together with the holders of the Common Stock on all
matters submitted to stockholders of the Company for a vote (or for action)
except where holders of Preferred Stock are entitled to vote separately as a
class (as provided below) and except as otherwise required by applicable law.
Each share of Preferred Stock is entitled to one vote for each share of Common
Stock issuable upon conversion of such share of Preferred Stock. Except as
provided below under "-- Class Voting Rights," the holders of the Preferred
Stock are not entitled to vote as a separate class on any matter to be voted on
by stockholders of the Company.
Class Voting Rights. The Company may 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 a separate class,
take certain actions specified in the Certificate of Designation, including,
among others:
- authorize, create or issue any Senior Securities (as defined in the
Certificate of Designation) or any obligation or security convertible
into or evidencing a right to purchase any Senior Securities;
- authorize an amendment or waiver of the Certificate of Designation or the
Certificate of Incorporation which would (i) alter the voting rights of
Preferred Stock or reduce the number of shares of Preferred Stock that
must consent to an amendment, supplement or waiver of the Certificate of
Designation; (ii) reduce the Liquidation Preference or alter the
provisions relating to redemption of the Preferred Stock; (iii) alter the
conversion rights of the holders of Preferred Stock; (iv) reduce the rate
of or change the time for payment of dividends on the Preferred Stock;
(v) waive the consequences of any failure to pay dividends; (vi) make any
shares of Preferred Stock payable other than as stated in the Certificate
of Designation; (vii) change the provisions of the Certificate of
Designation relating to waivers of rights of holders of Preferred Stock
to receive the Liquidation Preference and dividends; (viii) waive a
redemption payment on Preferred Stock, (ix) change the foregoing
amendment and waiver provisions of the Certificate of Designation; or (x)
require the prior vote of the holders of Preferred Stock as a separate
class under the Delaware General Corporation Law;
- waive compliance with any provision of the Certificate of Designation;
- make repurchases of, optional redemptions of and/or tender offers for,
the capital stock of the Company the aggregate fair market value of which
exceeds 5% of the Company's market capitalization (determined as provided
in the Certificate of Designation) during any 12-month period that occurs
in whole or in part during the first five years after July 20, 1999; or
- except for a transaction constituting a Change in Control, merge with or
into, or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of the Company's assets to, any person unless,
if the Company is not the Surviving Person (as defined in the Certificate
of Designation), the Preferred Stock is converted into or exchanged for
and becomes shares of such Surviving Person, having the same (or more
favorable) powers, preferences and relative, participating, optional or
other special rights as the Preferred Stock had immediately prior to such
transaction.
Voting for Directors. 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 or series of the Company's capital stock, may:
- elect two members of the Company's board of directors provided that on
the record date for such vote Investcorp S.A. and its affiliates have
voting and dispositive power with respect to at least 66,666 shares of
Preferred Stock; or
- elect one member of the Company's board of directors provided that on the
record date for such vote, Investcorp S.A. and its affiliates have voting
and dispositive power with respect to at least 33,333 shares of Preferred
Stock (but less than 66,666 shares of Preferred Stock).
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If on the record date for a vote for directors, Investcorp, S.A. and its
affiliates do not have voting and dispositive power with respect to at least
33,333 shares of Preferred Stock, then the holders of Preferred Stock shall only
be entitled to vote for the election of directors 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.
Preemptive Rights. Provided the holders of Preferred Stock are entitled to
elect as a class at least one member of the Company's Board of Directors
pursuant to the Certificate of Designation, then the holders of Preferred Stock
shall have preemptive rights to purchase or subscribe to purchase any capital
stock of the Company, or any obligation or security convertible or exchangeable
into or evidencing the right to purchase any capital stock of the Company,
offered from time to time by the Company for cash in a public offering or
private placement (other than any such capital stock or obligation or security
issued or issuable as consideration in a business combination or as compensation
to an employee, consultant or otherwise).
BOARD REPRESENTATION
Pursuant to the Purchase Agreement, on July 21, 1999, the Company's Board
of Directors increased the size of the Board from six to eight members and
appointed two persons designated by the Purchasers, Christopher J. O'Brien and
Charles J. Philippin, as directors to serve until the next annual meeting of
stockholders.
TRANSFER RESTRICTIONS
The shares of Preferred Stock will not be registered under federal or state
securities laws and will bear a legend to such effect. Under such laws, the
shares of Preferred Stock may not be offered, sold or transferred except (i)
pursuant to an exemption from registration under the Securities Act and such
other applicable laws, or (ii) pursuant to an effective registration statement
under the Securities Act. The Purchasers will have certain rights to require the
Company to register the shares of Preferred Stock in the future in accordance
with the Registration Rights Agreement. See "-- The Registration Rights
Agreement."
INDEMNIFICATION
The Company has agreed to indemnify and hold harmless each Purchaser and
their respective affiliates, agents, partners, officers and employees from any
and all losses, liabilities, damages, judgments, settlements and expenses that
arise out of any breach by the Company of any of its representations, warranties
or covenants in the Purchase Agreement or in the Registration Rights Agreement.
CONDITIONS TO THE PURCHASERS' OBLIGATION TO CLOSE AT THE SECOND CLOSING
The obligation of each Purchaser to purchase the Second Preferred Shares at
the Second Closing is subject to the satisfaction or waiver of the following
conditions:
- The representations and warranties of the Company contained in the
Purchase Agreement shall be true and correct when made and at the time of
the Second Closing, except where the failure of such representations and
warranties to be so true and correct would not individually or in the
aggregate have a material adverse effect, and the Company shall have
delivered a certificate to such effect;
- The Company shall have performed and complied with all agreements and
conditions contained in the Purchase Agreement required to be performed
or complied with by it prior to or at the Second Closing and the Company
shall have delivered a certificate to such effect; and
8
<PAGE> 12
- The Company shall have obtained approval of its stockholders of the
transactions contemplated by the Purchase Agreement, in accordance with
the requirements of The New York Stock Exchange.
FEES AND EXPENSES
The Company paid to an affiliate of the Purchasers at the First Closing a
fee equal to 4% of the aggregate First Purchase Price and will pay to an
affiliate of the Purchasers at the Second Closing a fee equal to 4% of the
aggregate Second Purchase Price. The Company will also pay Bear, Stearns & Co.,
Inc. and Deutsche Bank Alex Brown each a financial advisory fee of approximately
2% of the aggregate First Purchase Price at the First Closing and approximately
2% of the aggregate Second Purchase Price at the Second Closing. In addition,
the Company reimbursed the Purchasers for $550,000 of out-of-pocket expenses
incurred by the Purchasers in connection with the transactions contemplated by
the Purchase Agreement.
THE REGISTRATION RIGHTS AGREEMENT
In connection with the Transaction, the Company, the Purchasers and certain
beneficial owners of shares of Common Stock entered into the Registration Rights
Agreement. Pursuant to the Registration Rights Agreement, the Purchasers are
entitled to certain demand and piggyback registration rights with respect to the
shares of Common Stock issuable upon conversion of the shares of Preferred
Stock. The holders of a majority (by number of shares) of Registrable Securities
(as defined in the Registration Rights Agreement) will generally be entitled to
request that a registration statement be filed with the Securities and Exchange
Commission for the resale of shares of Common Stock issuable upon the conversion
of the Preferred Stock. Such demand registrations will be limited to three
occasions. The Company will generally not be obligated to effect any such
registration during certain periods prior to or after underwritten public
offerings by the Company or if the Company determines in good faith that such
registration would require premature disclosure of certain material corporate
developments. The holders of Registrable Securities will also generally be
entitled to piggyback registration rights in connection with underwritten public
offerings by the Company or other selling stockholders.
In addition, for five years following the Second Closing, the Purchasers
will have "tag-along rights" entitling them to participate on a pro-rata basis
in certain sales of Common Stock by Mr. Kirk or Mr. Huizenga or members of their
immediate families. The tag-along rights only apply to sales of Common Stock
that exceed 2% of the shares of Common Stock on a fully diluted basis. The
tag-along rights do not apply to underwritten offerings, transfers for tax or
estate planning purposes or any pledge as security in a bona fide loan
transaction.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
PROXY CARDS EXECUTED AND RETURNED WILL BE VOTED FOR THIS PROPOSAL UNLESS
CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
9
<PAGE> 13
PROPOSAL NO. 2
TO APPROVE THE FUTURE ISSUANCE OF COMPANY SECURITIES
TO THE HOLDERS OF THE PREFERRED STOCK
PURSUANT TO THEIR PREEMPTIVE RIGHTS
The Company is seeking stockholder approval, pursuant to Paragraph
312.03(b) of The New York Stock Exchange Listed Company Manual, of the future
issuance of Common Stock or securities convertible into or exercisable for
Common Stock to the holders of the Preferred Stock from time to time pursuant to
their exercise of the preemptive rights to which the they are entitled under the
Certificate of Designation. Paragraph 312.03(b) requires stockholder approval
prior to the issuance of common stock, or securities convertible into or
exercisable for common stock, to a substantial security holder of an issuer if
the number of shares of common stock to be issued, or if the number of shares of
common stock into which the securities may be convertible or exercisable,
exceeds one percent of the number of shares of common stock outstanding before
the issuance or five percent of the number of shares of common stock outstanding
before issuance if the issuance to the substantial security holder relates to a
sale of stock for cash at a price at least as great as each of the book and
market value of the issuer's common stock. In the event the holders of the
Preferred Stock elect to exercise their preemptive rights, which are described
below, the issuance of securities to them by the Company pursuant to such
exercise may require prior stockholder approval pursuant to Paragraph 312.03(b).
The Company is hereby seeking advance stockholder approval of any such future
issuance or issuances that may require such approval.
The following summary of the preemptive rights is qualified in its entirety
by reference to the provisions of the Certificate of Designation which is
incorporated herein by reference. The Certificate of Designation for the
Preferred Stock provides that as long as holders of Preferred Stock are entitled
to elect at least one director of the Company, then such holders shall have
preemptive rights to purchase or subscribe to purchase any capital stock of the
Company, or any obligation or security convertible or exchangeable into or
evidencing the right to purchase any capital stock of the Company, offered from
time to time by the Company for cash in a public offering or private placement,
other than any such capital stock or obligation or security issued or issuable
as consideration in a business combination or as compensation to an employee,
consultant or otherwise. Each holder of Preferred Stock shall have the right to
purchase its proportionate share of such securities based on the ratio which the
Common Stock of the Company owned by or issuable to such holder upon conversion
of any Preferred Stock that it owns bears to all the issued and outstanding
shares of Common Stock of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
PROXY CARDS EXECUTED AND RETURNED WILL BE VOTED FOR THIS PROPOSAL UNLESS
CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
10
<PAGE> 14
PROPOSAL NO. 3
APPROVAL OF AMENDMENTS TO THE
CERTIFICATE OF DESIGNATION OF
SERIES A CONVERTIBLE PREFERRED STOCK
The Company has adopted several amendments to the Certificate of
Designation which amendments are subject to the approval of the stockholders of
the Company. The amendments are set forth in the Amended and Restated
Certificate of Designation ("Amended Certificate of Designation") which is
attached as Exhibit "A" hereto. A summary of the amendments is provided below
and is qualified in its entirety by the Amended Certificate of Designation which
is incorporated herein by reference.
Under the terms of the existing Certificate of Designation, upon the
occurrence of a Change in Control that is not an acquisition which is accounted
for under the "pooling-of-interests" method of generally accepted accounting
principals, the Company must offer to purchase all of the then outstanding
shares of Preferred Stock at a purchase price per share, in cash, equal to the
Liquidation Preference thereof plus an amount equal to 8% of the Liquidation
Preference compounded annually from the issue date of the Preferred Stock to the
purchase date, plus accrued dividends, if any, to the date of redemption (the
"Call Price"). The Amended Certificate of Designation provides that if such a
Change in Control occurs that is not approved or publicly recommended by the
Board of Directors of the Company, then the Company will not be obligated to
offer to purchase all of the then outstanding Preferred Stock for cash at the
Call Price, but instead the Company will have the option to do so.
However, if the Company elects not to make such a cash offer (which
election must be made, in the case of a tender offer, at least two business days
prior to the expiration of such tender offer), then the holders of the Preferred
Stock will have, as an alternative to their normal conversion rights, the right
to convert their shares of Preferred Stock that are outstanding immediately
prior to the Change in Control into a number of shares of Common Stock equal to
110% of the Call Price divided, in the case of a Change in Control resulting
from a tender offer, by the current market price per share of Common Stock as of
the expiration of the tender offer or, in the case of a Change in Control not
resulting from a tender offer, by the current market price per share of Common
Stock as of the effective time of the Change in Control.
In addition, if the Company elects not to make such a cash offer and a
holder elects not to convert its shares of Preferred Stock, then immediately
following the effective time of the Change in Control:
(1) the Liquidation Preference shall thereafter increase to an amount
equal to 110% of the Call Price; and
(2) the shares of Preferred Stock shall thereafter be entitled to
receive quarterly dividends payable in cash at a rate per annum
equal to 8% of the Liquidation Preference of each share of then
outstanding Preferred Stock. If dividends on the Preferred Stock
are in arrears and unpaid for 60 days, then an additional amount
of dividends shall accrue at the rate of 2% per annum until all
accrued dividends have been paid in full. The Amended Certificate
of Designation also limits the Company from declaring or paying
certain dividends or redeeming parity or junior securities unless
the accrued dividends on the Preferred Stock have been paid in
full.
These amendments provide the Company with additional flexibility upon a
Change in Control that is not approved by the Board of Directors, which may have
an anti-takeover effect. Presently, the Company has no reason to believe that
any person is contemplating a Change in Control without the approval of the
Board of Directors. However, in the event of such a Change in Control, the
Company does not currently intend to make a cash redemption offer to holders of
Preferred Stock.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
PROXY CARDS EXECUTED AND RETURNED WILL BE VOTED FOR THIS PROPOSAL UNLESS
CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
11
<PAGE> 15
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of July 22, 1999, information with
respect to the beneficial ownership of the Common Stock by (1) each person or
entity known to the Company to beneficially own more than 5% of the outstanding
shares of Common Stock, (2) each of the Company's directors and each executive
officer of the Company for whom executive compensation disclosure is required by
Item 402 of Regulation S-K, and (3) all of the Company's directors and executive
officers as a group. Unless otherwise indicated, each such stockholder has sole
voting and investment power with respect to the shares beneficially owned by
such stockholder. Percentages of shares beneficially owned are based upon
56,453,781 shares of Common Stock outstanding as of July 22, plus for each
person named below any shares of Common Stock that may be acquired by such
person within 60 days of such date upon exercise of outstanding options or other
rights.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME BENEFICIALLY OWNED COMMON STOCK
- ---- ------------------ ------------
<S> <C> <C>
Investcorp, S.A.
37 rue Notre-Dame
Luxembourg................................................ 14,285,714(1) 20.2%
Sipco Limited
West Wind Building
P.O. Box 1111
Harbour Drive
Grand Cayman, Cayman Islands, B.W.I....................... 14,285,714(2) 20.2
NR Holdings Limited
West Wind Building
P.O. Box 1111
Harbour Drive
Grand Cayman, Cayman Islands, B.W.I....................... 11,285,714(3) 16.7
H. Family Investments, Inc.(4)
450 East Las Olas Blvd.
Ft. Lauderdale, Florida 33301............................. 12,000,000(5) 21.3
James L. Kirk............................................... 12,062,600(5)(6) 21.3
Don R. O'Neal............................................... 4,024,302(5)(7) 7.1
Gene J. Ostrow.............................................. 1,025,000(8) 1.8
Philip V. Petrocelli........................................ 210,394(9) *
Kris Hansel................................................. 65,234(10) *
H. Wayne Huizenga........................................... 1,692,047(5)(11) 3.0
Harris W. Hudson............................................ 1,023,650(12) 1.8
Gary L. Gabriel............................................. 471,250(13) *
Thomas H. Bruinooge......................................... 97,092(14) *
Ivan W. Gorr................................................ 55,700(15) *
Christopher J. O'Brien...................................... 25,000 *
Charles J. Philippin........................................ -- --
All executive officers and directors as a group (14
persons).................................................. 20,911,875(16) 36.4
</TABLE>
- ---------------
* Less than 1%
(1) Investcorp S.A. ("Investcorp") does not directly own any shares of Common
Stock or Preferred Stock. The shares of Common Stock shown in the table as
beneficially owned by Investcorp result from the fact
12
<PAGE> 16
that Investcorp may be deemed to beneficially own shares of Preferred Stock
(which are convertible into shares of Common Stock) owned by NR Holdings
Limited ("NR Holdings") and NR Investments Limited ("NR Investments"), the
voting securities of which are owned by certain persons and/or entities
which indirectly are managed by affiliates of Investcorp (the "Managed
Entities") through revocable management services or similar agreements
between such persons and/or entities or their shareholders or principals
and an affiliate of Investcorp pursuant to which each such person or entity
indirectly has granted such affiliate of Investcorp the authority to direct
the voting of its voting securities of NR Holdings and/or NR Investments
(and thereby the power to vote and dispose of the Preferred Stock held by
NR Holdings and NR Investments) for so long as such agreement is in effect.
The number of shares shown in the table includes the 3,142,857 shares of
Common Stock issuable upon conversion of the shares of Preferred Stock that
NR Holdings and NR Investments have the right (and the obligation) to
acquire at the Second Closing pursuant to the Purchase Agreement, because
satisfaction of the only material condition to such acquisition, the
approval of the issuance of such shares by the Company's stockholders, is
assured. See "Proposal No. 1 -- Voting Agreements" above.
(2) Constitute the same shares as those disclosed in the table as beneficially
owned by Investcorp S.A. Sipco Limited ("Sipco") does not directly own any
shares of Common Stock or Preferred Stock. The shares of Common Stock
listed as beneficially owned by Sipco are the shares into which the
Preferred Stock that Investcorp may be deemed to beneficially own are
convertible. Sipco, which is a passive holding company entity without
operations or employees, may be deemed to control Investcorp through its
ownership of a majority of the stock of a company which indirectly owns a
majority of Investcorp's outstanding stock.
(3) Included in the shares disclosed in the table as beneficially owned by
Investcorp S.A. and Sipco Limited. Represent shares of Common Stock
issuable upon conversion of shares of Preferred Stock held by NR Holdings.
NR Holdings shares voting and dispositive power with respect to these
shares with Investcorp, Sipco and the Managed Entities. See footnotes (1)
and (2) above. Includes 2,482,857 shares of Common Stock issuable upon
conversion of the shares of Preferred Stock that NR Holdings has the right
(and the obligation) to acquire at the Second Closing pursuant to the
Purchase Agreement, because satisfaction of the only material condition to
such acquisition, the approval of the issuance of such shares by the
Company's stockholders, is assured. See "Proposal No. 1 -- Voting
Agreements" above.
(4) H. Family Investments, Inc. ("HFI") is a Florida corporation controlled by
H. Wayne Huizenga, Jr., the son of Mr. Huizenga.
(5) James L. Kirk, H. Wayne Huizenga, Don R. O'Neal and H. Family Investments,
Inc. have entered into voting agreements with Investcorp S.A. to vote their
shares for the first and second proposals to be acted upon at the Special
Meeting. Accordingly, pursuant to Rule 13d-3 of the Securities Exchange Act
of 1934, as amended, each may be deemed to beneficially own the aggregate
of each other's shares of Common Stock (29,778,949 shares of Common Stock)
prior to the Special Meeting.
(6) 12,000,000 of these shares are held by Kirk Holdings Limited Partnership.
Includes 62,500 shares of Common Stock issuable upon exercise of options,
which are exercisable within 60 days.
(7) Includes 621,392 shares of Common Stock owned by Don R. O'Neal's spouse, as
to which Mr. O'Neal disclaims beneficial ownership. Also includes 1,966,000
shares of Common Stock in the name of the 1997 Ray L. O'Neal and Ellen M.
O'Neal irrevocable trust for Don R. O'Neal of which Don R. O'Neal is a
trustee.
(8) Includes 25,000 shares of Common Stock issuable upon exercise of options,
which are exercisable within 60 days.
(9) Includes 86,618 shares of Common Stock issuable upon exercise of options,
which are immediately exercisable.
(10) Includes 28,142 shares of Common Stock issuable upon exercise of options,
which are immediately exercisable.
(11) 1,632,047 of these shares are held by Huizenga Investments Limited
Partnership ("HILP"). Includes 60,000 shares of Common Stock issuable upon
exercise of options, which are immediately exercisable. The number of
shares of Common Stock beneficially owned by Mr. Huizenga does not include
the
13
<PAGE> 17
12,000,000 shares of Common Stock held by H. Family Investments, Inc.
because Mr. Huizenga does not share voting or dispositive control of such
shares and disclaims beneficial ownership of such shares.
(12) Includes 250,000 shares of Common Stock owned by Mr. Hudson's spouse, as to
which Mr. Hudson disclaims beneficial ownership. Also includes 60,000
shares of Common Stock issuable upon exercise of options, which are
immediately exercisable.
(13) Includes 411,250 shares of Common Stock issuable upon conversion of
convertible promissory notes in an aggregate principal amount of $3.29
million, which are convertible at a price of $8.00 per share of Common
Stock. Also includes 60,000 shares of Common Stock issuable upon exercise
of options, which are immediately exercisable.
(14) Includes 60,000 shares of Common Stock issuable upon exercise of options,
which are immediately exercisable.
(15) Includes 50,000 shares of Common Stock issuable upon exercise of options,
which are immediately exercisable.
(16) Includes (a) an aggregate of 559,136 shares of Common Stock issuable upon
exercise of options held by certain executive officers and directors, which
are immediately exercisable or exercisable within 60 days and (b) 411,250
shares of Common Stock issuable upon conversion of convertible promissory
notes beneficially owned by Mr. Gabriel.
STOCKHOLDER PROPOSALS
In accordance with the rules promulgated by the Securities and Exchange
Commission, any stockholder who wishes to submit a proposal for inclusion in the
proxy material to be distributed by the Company in connection with the 2000
Annual Meeting of Stockholders must do so no later than December 31, 1999. Any
such proposal should be submitted in writing to the Secretary of the Company at
its principal executive offices, 450 East Las Olas Boulevard, Suite 1400, Fort
Lauderdale, Florida 33301, Attention: Joseph H. Izhakoff, Vice President,
General Counsel and Secretary.
14
<PAGE> 18
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF DESIGNATION
OF
CONVERTIBLE
PREFERRED STOCK, SERIES A
OF
NATIONSRENT, INC.
---------------------
PURSUANT TO SECTIONS 151 AND 242 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
---------------------
NationsRent, Inc., a Delaware corporation (the "Company"), certifies that
pursuant to the authority contained in its Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation"), and in accordance with the
provisions of Sections 151 and 242 of the General Corporation Law of the State
of Delaware, the Board of Directors of the Company on August 6, 1999, duly
approved and adopted the following resolution, which resolution remains in full
force and effect on the date hereof, and which resolution sets forth amendments
to the Certificate of Incorporation which were approved by the stockholders of
the Company on August 31, 1999:
WHEREAS, pursuant to the authority vested in the Board of Directors by the
Certificate of Incorporation, the Board of Directors, by resolution duly adopted
on July 20, 1999 (the "Adoption Date"), did 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"), designated as Series A Convertible Preferred Stock (the "Preferred
Stock"), consisting of 100,000 shares having the powers, designations,
preferences and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions set forth in such resolution; and
WHEREAS, a Certificate of Designation of Convertible Preferred Stock,
Series A, setting forth such resolution, was duly filed by the Company with the
Secretary of State of Delaware on that date; and
WHEREAS, the Company and the holders of the Preferred Stock have agreed to
modify the rights of the holders of the Preferred Stock in the event of a change
in control of the Company that is not approved or recommended by the Board of
Directors of the Company, and to amend and restate the statement of the powers,
designations, preferences and relative, participating, optional and other
special rights, and qualifications, limitations and restrictions of the
Preferred Stock in its entirety in order to reflect such modification;
NOW THEREFORE, BE IT RESOLVED, that the Board hereby declares that such
amended and restated statement of the powers, designations, preferences and
relative, participating, optional and other special rights, and qualifications,
limitations and restrictions of the Preferred Stock, the text of which is set
forth below in the following resolution, and the amendments set forth therein,
are advisable, and shall be considered by the stockholders of the Company at the
upcoming special meeting previously called by the Board by written consent dated
July 20, 1999; and be it
FURTHER RESOLVED, that subject to approval of such amendments by the
stockholders of the Company at such special meeting, the Preferred Stock shall
continue to have a par value of $.01 per share, a liquidation preference of
$1,000 per share, to be designated as Series A Convertible Preferred Stock and
to consist of 100,000 shares, and the other powers, designations, preferences
and relative, participating, optional
A-1
<PAGE> 19
and other special rights, and qualifications, limitations and restrictions of
the Preferred Stock shall be as follows (rather than as set forth in the
resolution adopted by the Board of Directors on July 20, 1999):
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 the Adoption Date, 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 the
Adoption Date, 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 the Adoption Date, 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. Dividends.
(i) In the event that the Company declares, makes or pays any dividends or
other distributions upon the Common Stock (whether payable in cash, securities,
rights or other property) other than dividends and distributions referred to in
paragraph 3(vi), the Company shall also declare and pay to the holders of the
Preferred Stock, in addition to any dividends payable to them pursuant to the
other provisions of this paragraph 2, 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.
(ii) From and after the date on which the provisions of this paragraph
become applicable pursuant to paragraph 5(iii), if any (the "Dividend
Commencement Date"), the holders of shares of Preferred Stock shall be entitled
to receive on each Dividend Payment Date thereafter in respect of the Dividend
Period ending on such Dividend Payment Date (but excluding such Dividend Payment
Date), cumulative dividends payable in cash at a rate per annum equal to 8% of
the Liquidation Preference of each share of the then outstanding Preferred
Stock. If dividends on the Preferred Stock are in arrears and unpaid for a
period of 60 days or more, then an additional amount of dividends shall accrue
at a rate per annum equal to 2% of the Liquidation Preference of each share of
then outstanding Preferred Stock (the "Default Rate") from 60 days after the
first Dividend Payment Date on which dividends were not paid in full until such
time as all dividends in arrears have been paid in full, such additional
dividends to be cumulative and payable in cash. Dividends shall be fully
cumulative and shall accumulate and accrue on a daily basis (computed on the
basis of a 360-day year of twelve 30-day months) and compound annually at the
rate indicated above (the "Dividend Rate") and in the manner set forth herein,
whether or not they have been declared and whether or not there are profits,
surplus or other funds of the Company legally available for the payment of
dividends.
(iii) From and after the Dividend Commencement Date, so long as any shares
of Preferred Stock are outstanding, the Company shall not pay or set apart for
payment any full dividend on any of the Parity Securities or any dividend on any
of the Junior Securities (other than dividends in Parity Securities to the
holders of Parity Securities or dividends in Junior Securities to the holders of
Junior Securities), or make any payment on account of, or set apart for payment
money for a sinking or other similar fund for, the purchase, redemption or other
retirement of any of the Parity Securities or any of the Junior Securities or
any warrants,
A-2
<PAGE> 20
rights, calls or options exercisable for or convertible into any of the Parity
Securities or any of the Junior Securities, and shall not permit any Person
directly or indirectly controlled by the Company to purchase or redeem any of
the Parity Securities or any of the Junior Securities or any such warrants,
rights, calls or options, unless the Accrued Dividends on the Preferred Stock
for all Dividend Periods ended on or prior to the date of such payment in
respect of Parity Securities or Junior Securities have been or contemporaneously
are paid in full.
(iv) If the Company desires to make a partial dividend payment with respect
to any Parity Securities at a time when any Accrued Dividends on the Preferred
Stock have not been paid, it may do so as long as dividends upon shares of the
Preferred Stock and upon such Parity Securities are paid pro rata so that the
amount of dividends paid per share on the Preferred Stock and such Parity
Securities shall in all cases bear to each other the same ratio that the Accrued
Dividends per share on the Preferred Stock and the accrued dividends on such
Parity Securities bear to each other.
3. Conversion Rights.
(i) 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. In the event of a Change in Control that is not an acquisition
which is accounted for under the "pooling-of-interests" method of generally
accepted accounting principles, shares of Preferred Stock may be converted at
any time whether before or after the effective time of the Change in Control,
but not after the time that the holder of shares has accepted a redemption offer
by the Company pursuant to paragraph 5. In the case of a Change in Control that
is an acquisition which is accounted for under the "pooling-of-interests" method
of generally accepted accounting principles, such shares may be converted at any
time up to the effective time of the Change in Control. In the case of a
redemption of shares of Preferred Stock pursuant to paragraph 6, such shares may
be converted at any time up to the time of redemption. Except as set forth in
paragraph 5(iii) and in the next sentence, 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. If a holder of shares
of Preferred Stock gives written notice (a "Dividend Conversion Notice") to the
Company at least two Business Days but not more than 60 days prior to giving a
notice of conversion pursuant to paragraph 3(ii)(B) that it will be electing to
convert a specified number of shares of Preferred Stock and that it elects to
have any Accrued Dividends thereon that are payable prior to the Conversion Date
but remain unpaid as of the Conversion Date converted into Common Stock on the
Conversion Date (thereby affording the Company the opportunity to pay such
Accrued Dividends in cash prior to the Conversion Date so that they will not be
converted into Common Stock), then for the purposes of conversion, each share of
Preferred Stock shall be valued at the Liquidation Preference plus the amount of
Accrued Dividends thereon that are payable prior to the Conversion Date but
remain unpaid as of the Conversion Date, if any, 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 any 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.
(ii) 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 following the Conversion Date, the
Company shall deliver a certificate representing the number of full shares of
Common Stock issuable upon the conversion, and a new certificate representing
the unconverted portion, if
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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. Except as expressly set forth in paragraph 3(i)
or in the following provisions of this paragraph 3(ii), no adjustment will be
made for accrued and unpaid dividends on shares of Preferred Stock which have
been converted. 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(i) 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. Accrued
Dividends under paragraph 2(ii) with respect to the Dividend Period in which
conversion of shares of Preferred Stock occurs, and all other Accrued Dividends
under paragraph 2(ii) that are not converted into Common Stock on the Conversion
Date pursuant to a Dividend Conversion Notice, shall be paid by the Company in
cash within five Business Days after the Conversion 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 Preference of all shares of Preferred Stock converted.
(iii) 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.
(iv) 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.
(v) 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.
The Company further covenants that it will list and keep listed on the New York
Stock Exchange, so long as the Common Stock shall be listed on the New York
Stock Exchange, all Common Stock issuable upon conversion of the Preferred
Stock. 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.
(vi) 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 the 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.
(vii) 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, in either case 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
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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.
(viii) The capital reorganization, reclassification, conversion or exchange
of Common Stock into securities, including securities other than Common Stock
(other than a reclassification, conversion or exchange in connection with a
business combination to which paragraph 3(xv) 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, conversion or exchange into the number of shares
of Common Stock outstanding immediately thereafter (and the effective date of
such reclassification, conversion or exchange 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(vii) above).
(ix) 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. Any adjustment to the Conversion
Price carried forward and not theretofore made shall be made immediately prior
to the conversion of any shares of Preferred Stock pursuant hereto.
(x) 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(xv) 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, conversion or exchange 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, conversions or
exchanges bears to the total number of shares of all such classes resulting from
all such reclassifications, conversions or exchanges.
(xi) No adjustment in the Conversion Price shall reduce the Conversion
Price below the then par value of the Common Stock.
(xii) 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.
(xiii) Upon a determination by the Board of Directors of the Company, the
Company from time to time may reduce the Conversion Price if the Board of
Directors of the Company 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.
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(xiv) If:
(A) the Company enters an agreement to consolidate or merge with, or
transfer all or substantially all of its assets to, another Person, and
stockholders of the Company must approve the transaction; or
(B) the Company adopts a plan of 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) or (B) of this paragraph
3(xiv).
(xv) In the case of any
(A) consolidation or merger of the Company with or into any other
Person in which the Common Stock is converted into securities of another
Person, or the right to receive cash or assets,
(B) transaction consisting of a sale or transfer of all or
substantially all the assets of the Company in exchange for securities of
another Person, cash or assets followed by a liquidation, or
(C) capital reorganization or reclassification, conversion or exchange
of outstanding shares of Common Stock other than in connection with a
business combination,
then, except with respect to shares of Preferred Stock that the Company shall
become obligated to purchase upon due acceptance of an offer made by the Company
pursuant to paragraph 5 or unless the Preferred Stock shall be automatically
converted into Common Stock pursuant to paragraph 5, upon consummation of such
transaction, each share of Preferred Stock shall automatically become
convertible into the kind and amount of securities, or the right to receive cash
or other assets, receivable upon the consolidation, merger, liquidation, capital
reorganization, conversion, reclassification or exchange 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,
liquidation, capital reorganization, conversion, reclassification or exchange
(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(xv) applies, paragraphs 3(vi), 3(vii) and 3(viii) shall be deemed not to
apply. Notwithstanding anything contained herein to the contrary, the Company
will not effect any transaction of the type referred to in clause (A), (B) or
(C) of this paragraph unless, prior to the consummation thereof, the Surviving
Person (as defined in paragraph 17) thereof, if it is not the Company, shall
assume, by written instrument mailed to each record holder of Preferred Stock,
at such holder's address as it appears on the transfer books of the Company, the
obligation to deliver to such holder such securities, cash or assets to which,
in accordance with the foregoing provisions, such holder is entitled upon
conversion. Nothing contained in this paragraph (xv) shall limit the rights of
holders of the Preferred Stock to convert the Preferred Stock in connection with
the transaction or limit the rights of holders under paragraph 5.
(xvi) 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
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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.
4. Liquidation Preference. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Company, 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 Dividends, if any, to the date
fixed for liquidation, dissolution or winding-up, 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 Accrued
Dividends, if any, to which holders of Preferred Stock are entitled, such
holders will not be entitled to any further participation in any distribution of
assets of the Company. 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 accrued dividends, if any, 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, unless such
sale, conveyance, exchange or transfer shall be in connection with a
liquidation, dissolution or winding-up of the business of the Company.
5. Change in Control Provisions.
(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 (or a proposed 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.
(ii) In the case 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 and that has been approved or publicly
recommended by the Board of Directors of the Company, the Company shall be
obligated, by notice given at any time before the effective date of such Change
in Control or not more than 10 Business Days after the effective date of such
Change in Control, to offer to purchase within 20 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 8% of the Liquidation Preference,
compounded annually from the Preferred Stock Issue Date to the purchase date,
plus Accrued Dividends, if any, to the date of redemption (the "Call Price");
provided, however, that in the case of a merger or consolidation where the
Company is not the surviving corporation or a sale or other disposition of
substantially all of the Company's assets, such notice shall be given at least
10 Business Days before the effective date of such Change in Control and such
offer shall be to purchase concurrently with the effectiveness of such Change in
Control. The Company shall in its Change in Control redemption offer afford to
the holders of Preferred Stock at least five Business Days after the mailing or
delivery of the Change in Control redemption offer in which to accept such
redemption offer by written notice to the Company; the failure by any holder to
accept such redemption offer within such time period shall be deemed a rejection
of such redemption offer.
(iii) In the case of a Change in Control that is not an acquisition which
is accounted for under the "pooling-of-interests" method of generally accepted
accounting principles and that has not been approved or publicly recommended by
the Board of Directors of the Company, the Company may, at its option, make a
redemption offer (which may be contingent upon consummation of such Change in
Control) to the holders of the Preferred Stock in accordance with paragraph
5(ii), in which case all provisions of paragraph 5(ii) shall be applicable
except that if the Change in Control results from a tender offer, the Company
shall give written notice of such redemption offer at least two Business Days
prior to the expiration of the tender offer, provided
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that if the tender offer is subsequently extended, any such notice given
previously shall be deemed to be rescinded and the Company shall have until two
Business Days prior to the new expiration date of the tender offer to give
notice of a redemption offer. If the Company does not give written notice of
such redemption offer by the date required by this paragraph 5(iii) or by
paragraph 5(ii), as applicable (the"Notice Deadline"), then (A) commencing on
the day after the Notice Deadline, and ending upon effectiveness of such Change
in Control if it results from a tender offer or on the 20th Business Day after
the holder receives written notice from the Company of the occurrence of such
Change in Control if it does not result from a tender offer, each holder of
shares of Preferred Stock shall have the right to convert each such share into a
number of shares of Common Stock equal to 110% of the Call Price per share of
Preferred Stock divided, in the case of a Change in Control resulting from a
tender offer, by the current market price per share of Common Stock as of the
expiration of the tender offer (determined as provided below), or, in the case
of a Change in Control not resulting from a tender offer, by the current market
price per share of Common Stock as of the effective time of the Change in
Control (determined a provided below), and (B) immediately following the
effective time of the Change in Control, the Liquidation Preference of all
shares of Preferred Stock that were not converted at or prior to the effective
time of the Change in Control shall automatically increase to an amount equal to
110% of the Call Price and the provisions of paragraph 2(ii) entitling the
holders of Preferred Stock to receive dividends thereafter at the rate of 8% per
annum shall automatically become applicable with respect to such shares. For
purposes of this paragraph 5(iii), the current market price per share of a
security on any day shall be deemed to be the closing price of such security on
the principal securities exchange or association or other market on which it is
then traded on the Trading Day preceding the day in question. Any conversion of
shares of Preferred Stock pursuant to the rights set forth in this paragraph
5(iii) shall be made in accordance with the provisions of paragraph 3, except
the provisions of paragraph 3(i) specifying the number of shares of Common Stock
into which the shares of Preferred Stock are to be converted. The rights of a
holder of shares of Preferred Stock under this paragraph 5(iii) shall not limit
such holder's right to convert such shares at any time in accordance with
paragraph 3 into the number of shares of Common Stock determined pursuant to the
provisions of paragraph 3(i).
(iv) Upon the occurrence of a Change in Control that is an acquisition
which is accounted for under the "pooling-of-interests" method of generally
accepted accounting principles, each then outstanding share of Preferred Stock
at the effective time of the Change in Control will be automatically converted
into a number of shares of Common Stock equal to 110% of the Call Price per
share of Preferred Stock divided by the closing price of a share of Common Stock
on the principal securities exchange or association or other market on which it
is then traded on the Trading Day preceding the effective date of the Change in
Control.
(v) 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 of
such securities laws shall negate the obligation of the Company to purchase
shares of the Preferred Stock under this paragraph 5 which are validly tendered
and not withdrawn at the price set forth herein.
(vi) "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), directly or indirectly, of
more than 50% of the total voting capital stock of the Company; except that, in
the event that James L. Kirk, H. Wayne Huizenga, H. Family Investments, Inc. or
any holder of Preferred Stock or any Affiliate of such holder, either
individually or as part of a group shall become the beneficial owner of more
than 50% of the total voting capital stock of the Company, then such event shall
not constitute a Change in Control hereunder, unless, in the case of James L.
Kirk, H. Wayne Huizenga and H. Family Investments, Inc., the effect of such
event is that the Common Stock of the Company shall no longer be listed on a
national securities exchange or quoted on NASDAQ or another national securities
association, or (b) any Person consolidates with, or merges with or into, the
Company, or the Company consolidates with, or merges with or into, another
Person (other than a wholly-owned subsidiary of the Company) or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets to any Person, in any such event in a transaction in which the
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outstanding voting capital stock of the Company is converted into or exchanged
for cash, securities or other property, provided that following any transaction
described in this subpart (b) the holders of voting stock of the Company
immediately prior to such transaction do not own more than 50% of the voting
power of the voting stock of the Person surviving such transaction or to which
such assets are transferred.
(vii) In connection with any tender offer (including any exchange offer)
for shares or Common Stock, holders of Preferred Stock shall have the right to
tender (or submit for exchange) shares of Preferred Stock in such a manner so as
to preserve the status of such shares as Preferred Stock until immediately prior
to such time as shares of Common Stock are to be purchased (or exchanged)
pursuant to such tender offer, at which time that portion of the shares of
Preferred Stock so tendered (or submitted) which is convertible into the number
of shares of Common Stock to be purchased (or exchanged) pursuant to the tender
offer shall be deemed converted into the appropriate number of shares of Common
Stack. Any shares of Preferred Stock not so converted shall be returned to the
holder as Preferred Stock.
6. Redemption at the Option of the Company. At any time after the first
anniversary of the Preferred Stock Issue Date, the Company may, at its election,
redeem, in whole but not in part, the shares of the then outstanding Preferred
Stock at a purchase price in cash per share equal to $14.00 compounded annually
at the rate of 20% per annum for the period from the first anniversary of the
Preferred Stock Issue Date up to and including the date of redemption, plus
Accrued Dividends, if any, to the date of redemption. The Company will mail or
cause to be delivered to each holder of the Preferred Stock a written notice of
the Company's election to redeem shares of Preferred Stock not less than thirty
(30) days prior to the date set for the redemption. The notice will state (i)
the total number of shares of the Preferred Stock being redeemed; (ii) the
number of shares of the Preferred Stock held by the holder that the Company
intends to redeem; (iii) the aggregate purchase price for the shares of
Preferred Stock being redeemed; (iv) the redemption date; and (v) that the
holder is to surrender to the Company, at the office of the Company or the
transfer agent for the Preferred Stock, the certificate or certificates
representing the Preferred Stock to be redeemed. Such notice shall be
accompanied by a representation by the Company to the effect that the
consummation of the redemption will not render the Company insolvent or unable
to pay its debts as they become due, as well as an opinion of counsel to the
Company in form and substance reasonably satisfactory to the holders of the
Preferred Stock to the effect that the consummation of the redemption will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default (or an event that with the giving of
notice or the lapse of time or both would constitute a default) under, or give
rise to a right of termination, amendment, cancellation or acceleration of any
right or obligation of the Company or any of its subsidiaries under, or give
rise to a loss of any material benefit to which the Company or any of its
subsidiaries is entitled under, or require any consent, approval or
authorization under, any indenture, credit agreement or other material agreement
to which the Company or any of the subsidiaries is a party or by which any of
them are bound or to which any of their property is subject, or give the holder
of any note, debenture or other evidence of indebtedness the right to require
the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company or any of its subsidiaries. As soon as practical following the
redemption date and receipt of the certificate or certificates representing the
shares of Preferred Stock so redeemed, the Company shall deliver to the holder
the aggregate price payable in respect of the redeemed shares and a new
certificate representing the unredeemed portion of the shares, if any. At the
effective date of the redemption the redeemed shares shall no longer be deemed
outstanding shares of Preferred Stock for any purpose and shall thereafter only
be deemed to entitle the holder to receive the redemption price upon surrender
of the certificates formerly representing such shares of Preferred Stock.
7. 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 set forth in paragraphs
7(ii) and (iii) below and as otherwise required by applicable law, the holders
of the Preferred Stock shall be entitled to vote (or act by written consent) on
all matters submitted to the stockholders for a vote (or for action), 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
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one vote for each share of Common Stock issuable upon conversion of the
Preferred Stock as of the record date for such vote (or action) or, if no record
date is specified, as of the date of such vote (or action).
(ii) 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 or series of the Company's capital stock and with each share of
Preferred Stock entitled to one vote, shall be entitled to elect (i) two members
of the Company's Board of Directors; provided that on the record date for such
vote, Investcorp S.A. ("Investcorp") and its Affiliates have voting and
dispositive power with respect to at least 66,666 shares of Preferred Stock or
(ii) one member of the Company's Board of Directors, provided that on the record
date for such vote, Investcorp and its Affiliates have voting and dispositive
power with respect to at least 33,333 shares of Preferred Stock; provided,
however, that nothing herein shall be construed as a limitation on the right of
the Board of Directors of the Company to increase the size of the Board of
Directors. If on the record date relating to a meeting of stockholders for the
election of directors, Investcorp and its Affiliates fail to have voting and
dispositive power with respect to at least 33,333 shares of Preferred Stock, the
holders of Preferred Stock shall only be entitled to vote for the election of
directors on the basis set forth in paragraph 7(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 that the Company's
acceptance shall not be unreasonably withheld.
(iii) In addition to any other vote required by law, 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,
shall be required to:
(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;
(B) amend or otherwise alter the Certificate of Designation setting
forth this resolution 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;
(C) waive compliance with any provision of this Certificate of
Designation; or
(D) make repurchases of, optional redemptions of and/or tender offers
for, the capital stock of the Company, the aggregate fair market value of
which exceeds 5% of the Company's market capitalization (determined as
provided below) during any 12-month period that occurs in whole or in part
during the first five years after the Preferred Stock Issue Date. For
purposes of this clause (D), the Company's market capitalization shall be
the product of the then-current market price per share of the Common Stock
(determined as provided below) times the sum of the aggregate number of
shares of Common Stock then outstanding. For purposes of this clause (D),
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.
(E) authorize an amendment (including, but not limited to, an
amendment resulting from a merger or consolidation unless it constitutes a
Change in Control under paragraph 5) or waiver of the Company's Certificate
of Incorporation or of the Certificate of Designation setting forth this
resolution which would:
(1) 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;
(2) reduce the Liquidation Preference or alter the provisions with
respect to the redemption of the Preferred Stock;
(3) alter in any manner the conversion rights of the holders of
Preferred Stock set forth in paragraph 3 hereof;
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(4) reduce the rate of or change the time for payment of dividends
on any share of Preferred Stock;
(5) waive the consequences of any failure to pay dividends on the
Preferred Stock;
(6) make any share of Preferred Stock payable in any form other
than that stated in the Certificate of Designation setting forth this
resolution;
(7) make any change in the provisions of the Certificate of
Designation setting forth this resolution relating to waivers of the
rights of holders of Preferred Stock to receive the Liquidation
Preference and dividends on the Preferred Stock;
(8) waive a redemption payment with respect to any share of
Preferred Stock; or
(9) make any change in the foregoing amendment and waiver
provisions.
(iv) Notwithstanding any other provision hereof, the Company in its sole
discretion may in accordance with the provisions of applicable law 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.
8. Merger, Consolidation and Sale of Assets. Except for transactions which
pursuant to paragraph 5 constitute a Change in Control, 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 Surviving Person, the
Preferred Stock is converted into or exchanged for and becomes shares of such
Surviving Person, having in respect of such Surviving Person 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 Surviving Person of such transaction shall thereafter be deemed
to be the "Company" for all purposes of this Certificate of Designation.
9. Reports. Provided the holders of the Preferred Stock are then entitled
under the Certificate of Designation setting forth this resolution to elect as a
class at least one member of the Company's Board of Directors pursuant to
paragraph 7(ii) then, (a) 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; and (b) 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 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. The
Company will also deliver to such holders, 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.
10. Amendment. Except as specifically set forth herein, amendments to the
Certificate of Designation setting forth this resolution may be made by the
Company with the consent of the holders of a majority of the outstanding shares
of Preferred Stock and any other approvals required by Delaware law.
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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. Except as provided
in paragraph 12, the shares of Preferred Stock shall have no preemptive or
subscription rights.
12. Preemptive Rights. Provided holders of Preferred Stock are entitled
under the Certificate of Designation setting forth this resolution to elect as a
class at least one member of the Company's Board of Directors pursuant to
paragraph 7(ii), then the holders of Preferred Stock shall have preemptive
rights to purchase or subscribe to purchase any capital stock of the Company, or
any obligation or security convertible or exchangeable into or evidencing the
right to purchase any capital stock of the Company, offered from time to time by
the Company for cash in a public offering or private placement (other than any
shares of capital stock of the Company, or any obligation or security
convertible or exchangeable into or evidencing the right to purchase any capital
stock of the Company, including shares of capital stock of the Company issuable
upon conversion or exchange of any such right or obligation, issued or issuable
as consideration in a business combination or as compensation to an employee,
consultant or otherwise). In any case in which the rights of the holders of the
Preferred Stock under this paragraph 12 are applicable, the Company shall submit
a written offer to each holder of Preferred Stock identifying the stock,
obligations or securities proposed to be sold, the terms of the proposed sale
including but not limited to the price or the basis upon which the price is to
be calculated (provided that, in connection with any proposed sale intended to
be substantially at market price, the sales price disclosed can be substantially
at market) and, to the extent practicable under the circumstances, the identity
of the buyer or buyers, and offering to such holder the opportunity to purchase
its proportionate share of such securities on terms and conditions, including
price, not less favorable to the holder than those on which the Company proposes
to sell such securities to any other purchaser. Each holder shall have the right
to purchase its proportionate share of such securities based on the ratio which
the Common Stock of the Company owned by or issuable to such holder upon
conversion of any Preferred Stock that it owns bears to all the issued and
outstanding shares of Common Stock of the Company. Any holder may transfer its
right to be offered any such opportunity to any transferee that is an Affiliate
of such holder, a holder of Preferred Stock or an Affiliate of a holder of
Preferred Stock. The Company's offer to the holders of Preferred Stock shall
remain open and irrevocable for 5 Business Days. Any shares so offered to the
holders which they do not elect to purchase pursuant to such offer may be sold
by the Company in accordance with the terms of the proposed offering at any time
within 180 days following the date of such offer, but may not be sold after such
180 day period without renewed compliance with this paragraph 12.
13. 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.
14. Severability of Provisions. If any voting or other powers, preferences
and relative, participating, optional and other special rights of the Preferred
Stock and qualifications, limitations and restrictions thereof set forth in the
Certificate of Designation setting forth this resolution (as such Certificate of
Designation setting forth this 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 or other powers, preferences and relative,
participating, optional and other special rights of Preferred Stock and
qualifications, limitations and restrictions thereof set forth in the
Certificate of Designation setting forth this resolution (as so amended) which
can be given effect without the invalid, unlawful or unenforceable voting or
other 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 or
other 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 or
other powers, preferences and relative, participating, optional or other special
rights of Preferred Stock and qualifications, limitations and restrictions
thereof unless so expressed herein.
15. 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
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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.
16. 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).
17. Certain Definitions. As used in the Certificate of Designation setting
forth this resolution, 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.
"Accrued Dividends" to a particular date (the "Applicable Date") means (i)
all dividends accrued but not paid on the Preferred Stock pursuant to Section
2(ii), whether or not declared, prior to the Applicable Date, plus (ii) all
dividends or distributions payable pursuant to Section 2(i) which were not paid
or made, and the record date for which occurred, on or prior to the Applicable
Date.
"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.
"Closing price" shall mean the closing price of a share of Common Stock, as
reported in the Wall Street Journal, on the New York Stock Exchange or other
national securities exchange or other national quotation system on which the
Common Stock is then traded or quoted.
"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 $7.00 per share and thereafter
shall be subject to adjustment from time to time pursuant to the terms of
paragraph 3 hereof.
"Dividend Payment Date" means each January 1, April 1, July 1 and October
1.
"Dividend Period" means each quarterly period from a Dividend Payment Date
to the next following Dividend Payment Date (but without including such later
Dividend Payment Date), provided that the first Dividend Period shall be the
period from the Dividend Commencement Date to the next following Dividend
Payment Date (but without including such later Dividend Payment Date).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"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 the Certificate of Designation setting
forth this resolution.
"Surviving Person" shall mean the continuing or surviving Person of a
merger, consolidation or other corporate combination, the Person receiving a
transfer of all or substantially all of the assets of the Company,
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<PAGE> 31
or the Person consolidating with or merging into the Company in a merger,
consolidation or other corporate combination in which the Company is the
continuing or surviving Person, in connection with which the Common Stock of the
Company is exchanged, converted or reinstated into the securities of any other
Person or cash or any other property; provided, however, if such Surviving
Person is a direct or indirect subsidiary of a Person, the parent entity also
shall be deemed to be a Surviving Person.
"Trading Day" means any day on which the New York Stock Exchange or other
applicable stock exchange or market is open for business.
IN WITNESS WHEREOF, the Company has caused this certificate to be duly
executed by James L. Kirk, Chairman of the Board and Chief Executive Officer of
the Company, on this day of , 1999.
NATIONSRENT, INC.
By:
------------------------------------
James L. Kirk
Chairman of the Board and Chief
Executive Officer
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<PAGE> 32
1797-PS-spec99
<PAGE> 33
Exhibit B
[LOGO]
NATIONSRENT, INC.
450 EAST LAS OLAS BOULEVARD
FORT LAUDERDALE, FLORIDA 33301
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of NATIONSRENT, INC., a Delaware
corporation (the "Company"), hereby appoints James L. Kirk and Gene J. Ostrow,
or either of them, the proxy or proxies of the undersigned, each with full power
of substitution, to vote all shares of Common Stock and Series A Convertible
Preferred Stock of the Company which the undersigned would be entitled to vote
at the Special Meeting of Stockholders to be held on Tuesday, August 31, 1999 at
10:00 a.m., Eastern Standard Time at the Company's corporate headquarters, at
450 East Las Olas Boulevard, Fort Lauderdale, Florida 33301, or any adjournment
thereof, according to the number of votes that the undersigned would be entitled
to if personally present upon the matters referred to in this proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS.
1. PROPOSAL 1--Approval of: (a) the issuance, in a series of transactions,
of 100,000 shares of Series A Convertible Preferred Stock to NR
Holdings Limited and NR Investments Limited, 78,000 shares of which
have already been issued and 22,000 shares of which will be issued
after stockholder approval is obtained; and (b) the issuance of shares
of Common Stock upon the conversion of such Preferred Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. PROPOSAL 2--To approve the future issuance of Common Stock or
securities convertible into or exercisable for Common Stock to the
holders of the Series A Convertible Preferred Stock from time to time
pursuant to the exercise of their preemptive rights.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL 3-- Approval of amendments to the Certificate of Designation
of the Series A Convertible Preferred Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
<PAGE> 34
(CONTINUED FROM OTHER SIDE)
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR the proposals set forth herein.
The undersigned acknowledges receipt of Notice of Special Meeting of
Stockholders dated August 18, 1999, and the accompanying Proxy Statement.
Date: , 1999.
-------------------------
-------------------------------------------
Signature
-------------------------------------------
Name(s) (typed or printed)
-------------------------------------------
-------------------------------------------
Address(es)
Please sign exactly as name appears on this
Proxy. When shares are held by joint
tenants, both should sign. When signing as
attorney, executor, administrator, trustee
or guardian, please give full title as such.
If a corporation, please sign in full
corporate name by the President or other
authorized officer. If a partnership, please
sign in partnership name by authorized
person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
