SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
(RULE 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED
PURSUANT TO RULE 13D-1(a) AND AMENDMENTS THERETO
FILED PURSUANT TO RULE 13D-2(a)
UNITED RENTALS, INC.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
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(Title of Class of Securities)
911 363 109
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(CUSIP Number)
APOLLO MANAGEMENT IV, L.P.
1999 AVENUE OF THE STARS
SUITE 1900
Los Angeles, California 90067
(310) 201-4100
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
JANUARY 7, 1999
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box /_/.
NOTE: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7(b)
for other parties to whom copies are to be sent.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
CUSIP No. 911 363 109 13D
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
APOLLO INVESTMENT FUND IV, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7 SOLE VOTING POWER
NUMBER OF 11,389,040 SHARES OF COMMON STOCK
SHARES ---------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING ---------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
11,389,040 SHARES OF COMMON STOCK
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,389,040 shares of Common Stock
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |X|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.2%
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14 TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 911 363 109 13D
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
APOLLO OVERSEAS PARTNERS IV, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
CAYMAN ISLANDS
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7 SOLE VOTING POWER
NUMBER OF 610,960 SHARES OF COMMON STOCK
SHARES ---------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING ---------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
610,960 SHARES OF COMMON STOCK
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
610,960 shares of Common Stock
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |X|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.8%
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14 TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 911 363 109 13D
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
APOLLO ADVISORS IV, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7 SOLE VOTING POWER
NUMBER OF 12,000,000 SHARES OF COMMON STOCK
SHARES ---------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING ---------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
12,000,000 SHARES OF COMMON STOCK
---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ----------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,000,000 shares of Common Stock
- ----------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
- ----------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.9%
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14 TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
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Responses to each item below are incorporated by reference into each
other item, as applicable.
Item 1. Security and Issuer.
This Statement on Schedule 13D relates to the Common Stock, par value
$0.01 per share ("Common Stock"), of United Rentals, Inc., a Delaware
corporation ("United Rentals" or the "Issuer"). The principal executive
offices of the Issuer are located at Four Greenwich Office Park, Greenwich,
Connecticut 06830.
Item 2. Identity and Background.
This Statement is filed by Apollo Investment Fund IV, L.P., a Delaware
limited partnership ("AIFIV"), and Apollo Overseas Partners IV, L.P., an
exempted limited partnership registered in the Cayman Islands ("Overseas
IV"), and Apollo Advisors IV, L.P. a Delaware limited partnership
("Advisors IV"). AIFIV, Overseas IV and Advisors IV are referred to
collectively as the "Reporting Persons."
AIFIV and Overseas IV are principally engaged in the business of
investment in securities. Advisors IV is principally engaged in the
business of serving as general partner of AIFIV and managing general
partner of Overseas IV and other investment funds. The principal business
and principal office address of each of the Reporting Persons is c/o Apollo
Advisors IV, L.P., Two Manhattanville Road, Purchase, New York 10577.
Apollo Capital Management IV, Inc., a Delaware corporation ("Capital
Management IV"), is the general partner of Advisors IV. Capital
Management IV is principally engaged in the business of serving as general
partner to Advisors IV.
Apollo Management IV, L.P., a Delaware limited partnership ("Apollo
Management IV"), serves as manager of the Reporting Persons and manages
their day-to-day operations.
AIF IV Management, Inc., a Delaware corporation ("AIMIV"), is the
general partner of Apollo Management IV. AIMIV is principally engaged in
the business of serving as general partner to Apollo Management IV.
The respective principal business and principal office address of
Advisors IV, Capital Management IV, Apollo Management IV and AIMIV are c/o
Apollo Advisors IV, L.P., Two Manhattanville Road, Purchase, New York
10577.
Apollo Fund Administration IV LLC, a Delaware limited liability
company ("Administration"), is the administrative general partner of
Overseas IV. Administration is principally engaged in the business of
serving as administrative general partner of Overseas IV. The principal
business and principal office address of Administration is c/o Apollo
Advisors IV, L.P., Two Manhattanville Road, Purchase, New York 10577.
Attached as Appendix A to Item 2 is information concerning the
principals, executive officers, directors and principal shareholders of the
Reporting Persons and other entities as to which such information is
required to be disclosed in response to Item 2 and General Instruction C to
Schedule 13D.
None of the Reporting Persons nor any of the persons or entities
referred to in Appendix A to Item 2 has, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree, or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, Federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
AIFIV and Overseas IV (collectively, the "Purchasers") have purchased
an aggregate of 300,000 shares of Series A Perpetual Convertible Preferred
Stock, $.01 par value, of United Rentals (the "Preferred Stock") for an
aggregate purchase price of $300 million. The purchase was financed with
cash on hand.
Item 4. Purpose of Transaction.
On December 21, 1998, the Purchasers entered into a Preferred Stock
Purchase Agreement with United Rentals (the "Stock Purchase Agreement").
The Purchasers have acquired the Preferred Stock for investment purposes.
Pursuant to the terms of the Stock Purchase Agreement, on January 7, 1999,
AIFIV acquired 284,726 shares of Preferred Stock and Overseas IV acquired
15,274 shares of Preferred Stock for an aggregate purchase price of $300
million.
The following is a summary of certain terms of the Preferred Stock:
Each share of Preferred Stock may be converted at any time, unless
previously redeemed, at the option of the holder thereof into shares of
Common Stock of United Rentals at the initial conversion rate of 40 shares
of Common Stock for every share of Preferred Stock, to be adjusted in
certain circumstances as provided for in Section 3 of the Certificate of
Designation of Perpetual Convertible Preferred Stock, Series A of United
Rentals (the "Certificate of Designation").
The Preferred Stock, with respect to distributions upon the
liquidation, winding-up and dissolution of United Rentals, ranks (i) senior
to all classes of Common Stock and to each other class of capital stock or
series of preferred stock established after December 21, 1998 that by its
terms ranks junior to the Preferred Stock; (ii) on a parity with any
additional shares of Preferred Stock issued in the future and any other
class of capital stock or series of preferred stock issued by United
Rentals after December 21, 1998 that by its terms ranks on parity with the
Preferred Stock; and (iii) junior to each class of capital stock or series
of preferred stock issued by United Rentals after December 21, 1998 that by
its terms ranks senior to the Preferred Stock.
In the event that United Rentals declares or pays any dividends or
other distributions upon the Common Stock, other than in certain
circumstances as described in the Certificate of Designation, United
Rentals will also declare and pay to the holders of the Preferred Stock at
the same time that it declares and pays such dividends or other
distributions to the holders of the Common Stock (and with the same record
date), the dividends or distributions which would have been declared and
paid with respect to the Common Stock issuable upon conversion of the
Preferred Stock had all of the outstanding Preferred Stock been converted
immediately prior to the record date for such dividend or distribution, or
if no record date is fixed, the date as of which the record holders of
Common Stock entitled to such dividends or distributions are determined.
In the event of any voluntary or involuntary liquidation, dissolution
or winding-up of United Rentals or reduction or decrease in its capital
stock resulting in a distribution of assets to the holders of any class or
series of United Rental's capital stock, each holder of shares of the
Preferred Stock will be entitled to payment out of the assets of the
Company available for distribution of an amount equal to $1,000 per share
of Preferred Stock held by such holder (the "Liquidation Preference"), plus
accrued and unpaid dividends, if any, to the payment date.
In respect of an actual or proposed Change in Control (as defined in
the Certificate of Designation) that is not an acquisition which is
accounted for under the "pooling-of-interests" method of generally accepted
accounting principles, United Rentals shall be obligated, by notice given
at any time before the Change of Control or not more than 10 business days
after the Change of Control, to offer to purchase within 10 business days
after the Change of Control all of the then outstanding Preferred Stock at
a purchase price in cash per share equal to the Liquidation Preference
thereof plus an amount equal to 6.25% of the Liquidation Preference,
compounded annually from the date of issuance to the purchase date (the
"Call Price"). Upon the occurrence of a Change in Control that is an
acquisition which is accounted for as a "pooling-of-interests" method of
accounting under generally accepted accounting principles, all of the
outstanding Preferred Stock on the date of the Change in Control will be
automatically converted into Common Stock having a market value equal to
109.5% of the Call Price, valued at the closing price of business on the
business day prior to the date of the Change in Control. United Rentals
shall not consummate any such transaction until the Common Stock to be
issued to the Preferred Stockholders has been registered under the
Securities Act of 1933, as amended.
If, after 2-1/2 years following the date of issuance of the Preferred
Stock, United Rentals issues for cash common stock or a series of preferred
stock convertible into Common Stock, in either a public offering or a bona
fide private financing, for a price for the Common Stock (including any
amount payable upon conversion of Preferred Stock) below the Conversion
Price (as defined in the Certificate of Designation) (each such offering
being referred to herein as a "Reduced Price Offering"), then the Company
shall be obligated to make an offer to apply, towards the purchase of
Preferred Stock at the Call Price, 40% of the amount by which the net cash
proceeds from any such Reduced Price Offering and for all other Reduced
Price Offerings consummated during the preceding 12 months (but excluding
any Reduced Price Offerings prior to June 30, 2001) exceeds an aggregate of
$50 million, less a credit for all amounts theretofore paid for such
purchases during such 12-month period.
Holders of shares of Preferred Stock are entitled to vote together as
a single class with the holders of share of Common Stock on all matters as
to which holders of shares of Common Stock are entitled to vote. In such
instances, each share of Preferred Stock will be entitled to one vote for
each share of Common Stock issuable upon conversion of the Preferred Stock
as of the record date for such vote or, if no record date is specified, as
of the date of such vote. In addition, pursuant to Section 6 of the
Certificate of Designation, which is incorporated herein by reference, an
affirmative vote or consent of the holders of Preferred Stock may be
required in certain circumstances.
So long as Apollo Management IV, AIFIV, Overseas IV or their
respective affiliates hold the equivalent of at least 8 million shares of
Common Stock which were issued, or are issuable, upon conversion of the
Preferred Stock as presently constituted, the holders of the Preferred
Stock are entitled to elect two directors to serve on United Rentals Board
of Directors. If, however, Apollo Management IV, AIFIV, Overseas IV or
their respective affiliates holds the equivalent of at least 4 million
shares of Common Stock but less than 8 million shares of Common Stock which
were issued, or are issuable, upon conversion of the Preferred Stock as
presently constituted, the holders of the Preferred Stock are entitled to
elect one director to serve on United Rentals Board of Directors.
The foregoing descriptions do not purport to be complete and are
qualified in their entirety by reference to the Stock Purchase Agreement
and the Certificate of Designation, a copy of each which has been filed as
an exhibit to this Schedule 13D and is incorporated herein by reference.
The Stock Purchase Agreement and the Certificate of Designation are
attached hereto as Exhibit I and Exhibit II, respectively.
The Reporting Persons entered into the transactions described in this
statement as an investment in United Rentals. Notwithstanding the
foregoing, the Reporting Persons retain the right to change their
investment intent, to propose one or more possible transactions to the
Issuer's board, to acquire additional shares of preferred stock or common
stock from time to time or to sell or otherwise dispose of all or part of
the Preferred Stock beneficially owned by them (or any shares of Common
Stock into which such Preferred Stock are converted) in any manner
permitted by law. In the event of a material change in the present plans
or intentions of the Reporting Persons, the Reporting Persons will amend
this Schedule 13D to reflect such change.
Item 5. Interest in Securities of the Issuer.
(a) The Reporting Persons beneficially own an aggregate of 300,000
shares of the Preferred Stock. Each share of Preferred Stock is initially
convertible into 40 shares of Common Stock as described in Item 4, or an
aggregate of 12 million shares of Common Stock. Assuming the conversion of
all of the shares of Preferred Stock as of the date hereof, the Reporting
Persons would beneficially own in the aggregate 12 million shares of Common
Stock of United Rentals, representing approximately 14.9% of the
outstanding Common Stock of United Rentals. Beneficial ownership of such
shares was acquired as described in Item 3 and Item 4. See also the
information contained on the cover pages to this Schedule 13D which is
incorporated herein by reference.
(b) See the information contained on the cover pages to this
Schedule 13D which is incorporated herein by reference.
(c) There have been no reportable transactions with respect to the
Common Stock of the Issuer within the last 60 days by the Reporting
Persons.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to the Securities of the Issuer.
The response to Items 3 and 4 are hereby incorporated by reference
herein.
Pursuant to the Registration Rights Agreement, dated as of December
21, 1998, among United Rentals, Bradley S. Jacobs, AIFIV and Overseas IV
(the "Registration Rights Agreement"), United Rentals has granted certain
rights to the Reporting Persons with respect to the registration under the
Securities Act of 1933, as amended, of the Registrable Securities (as
defined in the Registration Rights Agreement) held by the Reporting Persons
or their transferees. Pursuant to the Registration Rights Agreement, the
Reporting Persons have certain rights to participate in sales of United
Rentals Common Stock made by Bradley S. Jacobs. The Registration Rights
Agreement relating to such rights is attached hereto as Exhibit III and is
incorporated herein by reference.
Except as provided for in the Stock Purchase Agreement, the
Certificate of Designation or the Registration Rights Agreement or as set
forth herein, to the best of the Reporting Persons' knowledge, there are no
contracts, arrangements, understandings or relationships (legal or
otherwise) among the persons named in Item 2 or between such persons and
any other person with respect to any securities of United Rentals,
including but not limited to transfer or voting of any such securities,
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit I - Preferred Stock Purchase Agreement, dated as of
December 21, 1998, among United Rentals, Inc.,
Apollo Investment Fund IV, L.P. and Apollo
Overseas Partners IV, L.P.
Exhibit II - Certificate of Designation of Perpetual
Convertible Preferred Stock, Series A of United
Rentals, Inc.
Exhibit III - Registration Rights Agreement, dated as of
December 21, 1998, among United Rentals, Inc.,
Bradley S. Jacobs, Apollo Investment Fund IV, L.P.
and Apollo Overseas Partners IV, L.P.
Exhibit IV - Agreement pursuant to Rule 13d-1(k) filed herewith
SIGNATURE
After reasonable inquiry and to the best of their knowledge and
belief, the undersigned certify that the information set forth in this
statement is true, complete and correct.
Dated: January 8, 1999
APOLLO INVESTMENT FUND IV, L.P.
By: Apollo Advisors IV, L.P.,
its General Partner
By: Apollo Capital Management IV, Inc.,
its General Partner
By: /s/ Michael D. Weiner
-------------------------------------
Name: Michael D. Weiner
Title: Vice President, Apollo Capital
Management IV, Inc.
APOLLO OVERSEAS PARTNERS IV, L.P.
By: Apollo Advisors IV, L.P.,
its Managing General Partner
By: Apollo Capital Management IV, Inc.,
its General Partner
By: /s/ Michael D. Weiner
-------------------------------------
Name: Michael D. Weiner
Title: Vice President, Apollo Capital
Management IV, Inc.
APOLLO ADVISORS IV, L.P.
By: Apollo Capital Management IV, Inc.,
its General Partner
By: /s/ Michael D. Weiner
-------------------------------------
Name: Michael D. Weiner
Title: Vice President, Apollo Capital
Management IV, Inc.
APPENDIX A TO ITEM 2
The following sets forth information with respect to the general
partners, executive officers, directors and principal shareholders of
Advisors IV, Capital Management IV, and Administration. Capitalized terms
used herein without definition have the meanings assigned thereto in the
Schedule 13D to which this Appendix A relates. Except as otherwise
indicated in this Appendix A or in the Schedule 13D to which this Appendix
A relates, the principal business address of each person or entity set
forth below is c/o Apollo Advisors IV, L.P., Two Manhattanville Road,
Purchase, New York 10577, and each such person or entity is a citizen of
the United States of America.
The principal business of Advisors IV is to provide advice
regarding investments by, and serving as general partner to, the Reporting
Persons, and the principal business of Capital Management IV is that of
serving as general partner of Advisors IV.
The directors and principal executive officers of Capital
Management IV are Messrs. Leon D. Black and John J. Hannan. The principal
occupation of each of Messrs. Black and Hannan is to act as an executive
officer and director of Capital Management IV. Messrs. Black and Hannan
are also limited partners of Advisors IV. Mr. Black is the President and
director of AIMIV, the general partner of Apollo Management IV. Mr. Hannan
is a Vice President and director of AIMIV. AIMIV is principally engaged in
the business of serving as general partner of Apollo Management IV.
Messrs. Black and Hannan are also founding principals of Apollo
Advisors, L.P. ("Advisors"), Apollo Advisors II, L.P. ("Advisors II"), Lion
Advisors, L.P. ("Lion"), Apollo Real Estate Advisors, L.P. ("AREA"), Apollo
Real Estate Advisors II, L.P. ("AREAII") and Apollo Real Estate
Advisors III, L.P. ("AREAIII"). The principal business of Advisors,
Advisors II and Lion is to provide advice regarding investments in
securities and the principal business of AREA, AREA II and AREA III is to
provide advice regarding investments in real estate and real estate-related
investments. The business address of each of Messrs. Black and Hannan is
c/o Apollo Management, L.P., 1301 Avenue of the Americas, New York, New
York 10019.
UNITED RENTALS, INC.
SERIES A PERPETUAL CONVERTIBLE PREFERRED STOCK,
$.01 Par Value
PREFERRED STOCK PURCHASE AGREEMENT
December 21, 1998
United Rentals, Inc.
Four Greenwich Office Park,
Greenwich, CT 06830
December 21, 1998
Apollo Investment Fund IV, L.P.
Apollo Overseas Partners IV, L.P.
c/o Apollo Management IV, L.P.
1301 Avenue of the Americas, 38th Floor
New York, NY 10019
Dear Sirs:
United Rentals, Inc., a Delaware corporation (the "Company"),
agrees with Apollo Investment Fund IV, L.P. and Apollo Overseas Partners
IV, L.P. (together, the "Purchasers") as follows:
1. Authorization of Stock. The Company will authorize the
issue and sale of 300,000 shares (the "Shares", such term to include any
such shares issued in substitution therefor pursuant to section 8) of
its Series A Perpetual Convertible Preferred Stock, $.01 par value, to be
designated as its "Series A Perpetual Convertible Preferred Stock" (the
"Stock"). The relative rights, preferences and limitations of the Stock,
including, without limitation, the right to convert Shares into shares of
the Company's common stock, par value $.01 per share (the "Common Stock"),
will be as set forth in the form of the Certificate of Designation of the
Stock of the Company attached as Exhibit A hereto (the "Certificate of
Designation"). Certain capitalized terms used in this Agreement are
defined in Section 9; references to a "Schedule" or an "Exhibit" are,
unless otherwise specified, to a Schedule or an Exhibit attached to this
Agreement and references to a "section" are, unless otherwise specified, to
one of the sections of this Agreement.
2. Sale and Purchase of Stock. The Company will issue and sell
to the Purchasers and, subject to the terms and conditions of this
Agreement, the Purchasers will purchase from the Company, at the Closing
provided for in section 3, the Shares at a purchase price of $1,000 per
share.
3. Closing; Payment of Purchase Price. The sale of the Shares
to be purchased by the Purchasers shall take place at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New
York 10022, at 10:00 a.m., New York City time, at a closing (the "Closing")
on the first Business Day after the conditions to closing set forth in
Section 4 (other than those to be satisfied at the Closing, which shall be
satisfied or waived at the Closing) have been satisfied or waived by the
party entitled to waive such condition or on such other Business Day
thereafter or prior to such date as may be agreed upon by the Company and
the Purchasers, provided that in no event shall the Closing occur earlier
than the 11th Business Day following the date of this Agreement.
The names in which the Company will register the shares of the
Stock to be purchased at the Closing are as set forth in Exhibit 1. At the
Closing, the Company will deliver to the Purchasers the Shares to be
purchased by the Purchasers in the form of a single certificate (or such
greater number of certificates representing such Shares as the Purchasers
may request) dated the date of the Closing and registered in the names
aforesaid, and the Purchasers jointly and severally shall deliver to the
Company or its order immediately available funds in the amount of the
purchase price for such Shares. If at the Closing the Company shall fail
to tender to the Purchasers the Shares to be purchased by the Purchasers,
as provided above in this Section 3, or any of the conditions specified in
Section 4 shall not have been fulfilled to the Purchasers' reasonable
satisfaction, the Purchasers shall, at their election, be relieved of all
further obligations under this Agreement, without thereby waiving any other
rights the Purchasers may have by reason of such failure or such
nonfulfillment. If at the Closing, Purchasers shall fail to tender to the
Company the purchase price for the Shares, as provided above in this
Section 3, other than on account of any of the conditions specified in
section 4 not having been fulfilled to the Purchasers' satisfaction or on
account of the breach by the Company of any of its obligations under this
Agreement, the Company shall, at its election, be relieved of all further
obligations under this Agreement, without thereby waiving any other rights
the Company may have by reason of such failure.
4. Conditions to Closing. The Purchasers' obligation to
purchase and pay for the Shares to be sold to the Purchasers at the Closing
is subject to the fulfillment to their reasonable satisfaction, prior to or
concurrently with the Closing, of the following conditions:
4.1 Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be in all
material respects correct when made and at the time of the Closing, except
as affected by the consummation of the transactions contemplated by this
Agreement.
4.2 Performance; No Default. The Company shall have performed
and complied in all material respects with all agreements and conditions
contained in this Agreement required to be performed or complied with by it
prior to or at the Closing.
4.3 Compliance Certificates. The Company shall have delivered
to the Purchasers an Officers' Certificate, dated the date of the Closing,
certifying that the conditions specified in sections 4.1 and 4.2 have been
fulfilled.
4.4 Opinion of Counsel. The Purchasers shall have received the
favorable opinions, dated the date of the Closing and reasonably
satisfactory in substance and form to the Purchasers from Ehrenreich,
Eilenberg Krause & Zivian LLP and Weil, Gotshal & Manges LLP, counsel for
the Company, substantially in the form set forth in Exhibits B and C and
covering such other matters incident to the transactions contemplated by
this Agreement as the Purchasers or their counsel may reasonably request.
4.5 Certificate of Designation. The Certificate of Designation
shall have been duly filed under the laws of the State of Delaware, and the
Restated Certificate of Incorporation of the Company, as amended by the
Certificate of Designation, shall be in full force and effect, and shall
not have been otherwise amended or modified.
4.6 Registration Rights Agreement. The Purchasers shall have
received a fully executed counterpart of the Registration Rights Agreement
substantially in the form set out in Exhibit D (the "Registration Rights
Agreement"), such agreement shall be in full force and effect and no term
or condition thereof shall have been amended, modified or waived.
4.7 [omitted]
4.8 [omitted]
4.9 No Actions Pending. There shall be no suit, action,
investigation, inquiry or other proceeding by any Governmental Authority or
any other Person or any other legal or administrative proceeding pending or
to the knowledge of the Company threatened which questions the validity or
legality of the transactions contemplated by this Agreement, or seeks
damages in connection therewith.
4.10 Compliance with Securities Laws. The offering and sale by
the Company, at or prior to the Closing, of the Shares pursuant to this
Agreement shall have been made in compliance with all applicable
requirements of federal and state securities laws and the Purchasers shall
have received evidence thereof in form and substance reasonably
satisfactory to the Purchasers.
4.11 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this
Agreement and all documents and instruments incident to such transactions
shall be reasonably satisfactory to the Purchasers and their counsel, and
the Purchasers and their counsel shall have received all such counterpart
originals or certified or other copies of such documents as the Purchasers
or their counsel may reasonably request.
4.12 Reservation of Common Stock. The shares of Common Stock
initially issuable upon conversion of the Stock shall have been duly
authorized and reserved for issuance upon conversion of the Stock.
4.13 Payment of Fees and Expenses. The Company shall have paid
the Purchasers on or before the Closing (a) a fee equal to 1% of the
purchase price of the Stock and (b) the costs and expenses provided for in
Section 10 hereof, provided that the Purchasers shall have provided to the
Company a statement of its estimated costs and expenses at least one
Business Day prior to the Closing.
4.14 HSR Act. Any waiting period (and any extension thereof)
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
applicable to this Agreement and the transactions contemplated hereby shall
have expired or been terminated.
5. Representations and Warranties. Except as disclosed in
Exhibit E, the Company represents and warrants that:
5.1 Organization, Standing, etc. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to
own and operate its properties, to carry on its business as now conducted
and as proposed to be conducted, to enter into and perform all of its
obligations under this Agreement and each of the Collateral Agreements to
which it is a party, to issue and sell the Shares to be issued and sold at
the Closing and to carry out the transactions contemplated hereby or
thereby.
5.2 Subsidiaries. Exhibit E correctly lists as to each
Subsidiary of the Company on the date of this Agreement (a) its name, (b)
the jurisdiction of its incorporation and (c) the percentage of its issued
and outstanding shares owned by the Company or by another Subsidiary of the
Company (specifying such other Subsidiary), as the case may be. Each
Subsidiary of the Company is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own
and operate its properties and to carry on its business as now conducted
and as proposed to be conducted. All the outstanding shares of capital
stock of each Subsidiary of the Company are validly issued, fully paid and
nonassessable, and all such shares indicated in Exhibit E as owned by the
Company or by a Subsidiary of the Company are so owned beneficially and of
record by the Company or by such Subsidiary, as the case may be, free and
clear of any Lien except as indicated in Exhibit E.
5.3 Qualification. Each of the Company and its Subsidiaries is
duly qualified and in good standing as a foreign corporation authorized to
do business in each jurisdiction (other than the jurisdiction of its
incorporation) in which the nature of its activities or the character of
the properties it owns or leases makes such qualification necessary and in
which the failure so to qualify would have a Material Adverse Effect. A
"Material Adverse Effect" shall mean any effect that is materially adverse
to the properties, business, results of operations or financial condition
of the Company and its Subsidiaries taken as a whole.
5.4 Business; Financial Statements. The Company has delivered to
the Purchasers complete and correct copies of the audited supplemental
consolidated balance sheets of the Company and its Subsidiaries as of
December 31, 1997 and December 31, 1996, and the related audited
supplemental consolidated statements of operations, stockholders' equity
and cash flows of the Company and its Subsidiaries for the years ended
December 31, 1997, 1996 and 1995. Such audited financial statements are
hereinafter referred to as the "Financial Statements." The Financial
Statements are accompanied by the report of Ernst & Young LLP 1997 and 1996
and by the report of Price Waterhouse Coopers for 1995, which state that
the Financial Statements have been prepared in accordance with GAAP
consistently applied throughout the periods involved (except as otherwise
specified therein) and present fairly the financial position of the
corporations to which they relate as of the respective dates specified and
the results of their operations and changes in financial position for the
respective periods specified, and that the audit by such accountants of the
Financial Statements has been made in accordance with generally accepted
auditing standards. The Company has also delivered to the Purchasers
complete and correct copies of the unaudited consolidated balance sheet of
the Company and its Subsidiaries as of September 30, 1998, and the related
unaudited consolidated statement of operations, stockholders' equity and
cash flows of the Company and its Subsidiaries for the three month period
ended on such date. Such unaudited financial statements are hereinafter
referred to as the "Unaudited Statements." The Unaudited Statements have
been prepared in accordance with GAAP consistently applied throughout the
periods involved (except as otherwise specified therein) and present fairly
the financial position of the Company and its Subsidiaries as of the
respective dates specified, and the results of their operations and changes
in cash flows for the respective periods specified. As of the date of this
Agreement, the Purchasers are not aware that this representation is
incorrect in any material respect.
5.5 Changes, etc. Since September 30, 1998, neither the Company
nor any of the Subsidiaries has sustained any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree which would be material to the Company and the
Subsidiaries taken as a whole, otherwise than as reserved for as disclosed
in the Company's financials statements; and there has not been any change
in the capital stock of the Company or increase in the long-term debt
(other than accretion or scheduled repayments thereof) of the Company and
the Subsidiaries taken as a whole, or any material adverse change which has
had a Material Adverse Effect, in each case otherwise than as set forth on
Exhibit E.
5.6 Capital Stock and Related Matters. At the time of the
Closing and after giving effect to the transactions contemplated by this
Agreement, the authorized capital stock of the Company will consist of (a)
500,000,000 shares of Common Stock, of which approximately 68,500,000
shares will be outstanding, (b) 300,000 shares of Series A Perpetual
Convertible Preferred Stock, of which 300,000 shares will be outstanding,
and (c) 4,700,000 shares of preferred stock, undesignated as to terms, none
of which are outstanding. The Company is obligated to issue Common Stock on
conversion of debentures held by United Rentals Trust I, a business trust
organized under Delaware law. The Common Stock and the Stock are
hereinafter collectively referred to as "Capital Stock". All of the
outstanding shares of Capital Stock are, and at the Closing will be,
validly issued and outstanding, fully paid and non-assessable. Except as
set forth above and on Exhibit E, the Company has no outstanding stock or
securities convertible into or exchangeable for any shares of its Capital
Stock, or any outstanding rights (either preemptive or other) to subscribe
for or to purchase, or any outstanding options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
outstanding calls, commitments or claims of any character relating to, any
Capital Stock or any stock or securities convertible into or exchangeable
for any Capital Stock of the Company. Except as set forth on Exhibit E,
the Company is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its Capital Stock
or any convertible securities, rights or options of the type described in
the preceding sentence. Neither the Company nor any of its Subsidiaries is
a party to, or has knowledge of, any agreement (except as set forth on
Exhibit E) restricting the transfer of any shares of the Company's Capital
Stock which would affect the transferability of the Common Stock issuable
upon conversion of the Stock.
5.7 Tax Returns and Payments. The Company and each of the
Subsidiaries have filed all necessary federal, state, local and foreign
income, payroll, franchise and other tax returns (after giving effect to
extensions) and have paid all taxes shown as due thereon (except where the
failure to so file or pay would not, singly or in the aggregate, have a
Material Adverse Effect), and there is no tax deficiency that has been, or
to the knowledge of the Company is likely to be, asserted against the
Company, any of the Subsidiaries or any of their properties or assets that
would result in a Material Adverse Effect, except for taxes that are being
contested in good faith by appropriate proceedings and with respect to
which the Company has established adequate reserves in accordance with
United States generally accepted accounting principles.
5.8 Indebtedness of the Company. Exhibit F correctly describes
all secured and unsecured Indebtedness of the Company and its Subsidiaries
(other than intercompany items) outstanding, or for which the Company or
one of its Subsidiaries has commitments, which is individually in excess of
$5,000,000 ("Significant Indebtedness") (excluding operating leases), on
the date of this Agreement. The secured and unsecured Indebtedness of the
Company and its Subsidiaries (other than intercompany items, and other
than Significant Indebtedness) outstanding, or for which the Company or one
of its Subsidiaries has commitments does not in the aggregate exceed
$1,600,000,000 on the date of this agreement. Neither the Company nor any
of its Subsidiaries is in default with respect to any Indebtedness or any
instrument or agreement relating thereto, except for such defaults as would
not, either in any case or in the aggregate, have a Material Adverse
Effect.
5.9 Title to Properties; Liens. The Company and each of the
Subsidiaries have good and marketable title to all real property (other
than property which is leased) material to the conduct of the business of
the Company and the Subsidiaries, taken as a whole, and good and marketable
title to all personal property (other than property which is leased)
material to the conduct of the business of the Company and the
Subsidiaries, taken as a whole, in each case free and clear of all liens,
encumbrances and defects except such as are described on Exhibit E or such
as do not in the aggregate have a Material Adverse Effect; and any real
property and buildings held under lease by the Company and the
Subsidiaries, material to the conduct of the business of the Company and
the Subsidiaries, taken as a whole, are held by them under valid,
subsisting and enforceable leases with such exceptions as are described on
Exhibit E and except for such other exceptions as do not have a Material
Adverse Effect.
5.10 Litigation, etc. There is no action, proceeding or
investigation pending or (to the knowledge of the Company) threatened (or
any basis therefor known to the Company) which questions the validity of
this Agreement, the Shares or any action taken or to be taken pursuant to
this Agreement, the Shares or the Collateral Agreements. Other than as set
forth on Exhibit E, there are no legal or governmental proceedings pending
to which the Company or any of the Subsidiaries is a party or of which any
property of the Company or the Subsidiaries is the subject, which if
determined adversely to the Company or any of the Subsidiaries, would
individually or in the aggregate have a Material Adverse Effect; and, to
the Company's knowledge, no such proceedings which would in the aggregate
have a Material Adverse Effect are threatened or contemplated by
governmental authorities or threatened by others.
5.11 Compliance with Other Instruments, etc. Neither the Company
nor any of its Subsidiaries is in violation of any term of its certificate
or articles of incorporation or by-laws, and neither the Company nor any of
its Subsidiaries is in violation of any term of any agreement or instrument
to which it is a party or by which it is bound or any term of any
applicable law, ordinance, rule or regulation of any Governmental Authority
or any term of any applicable order, judgment or decree of any court,
arbitrator or Governmental Authority, the consequences of which violation
could reasonably be expected to have a Material Adverse Effect. The
compliance by the Company with all of the provisions of this Agreement and
the Registration Rights Agreement, the execution, delivery and performance
by the Company of this Agreement and the Registration Rights Agreement, the
issuance by the Company of the Common Stock upon the conversion of the
Shares, and the compliance with the terms of the Certificate of Designation
will not conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement (provided the consent of the
Company's lending banks must be obtained before the Company makes an offer
to purchase under Section 5 of the Certificate of Designation) or other
agreement or instrument to which the Company or any of the Subsidiaries is
a party or by which the Company or any of the Subsidiaries is bound or to
which any of the property or assets of the Company or any of the
Subsidiaries is subject, or constitute a Repayment Event thereunder, nor
will such actions result in any violation of the provisions of the
certificate of incorporation or bylaws of the Company or any of the
Subsidiaries or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or any
of the Subsidiaries or any of their properties except in each case as would
not, individually or in the aggregate have a Material Adverse Effect.
Except as set forth on Exhibit E, the execution, delivery and performance
by the Company of this Agreement and the transactions contemplated hereby
will not subject the Company to or accelerate any obligation to make
payments to any Person.
5.12 Governmental Consents, etc. Except as required under the
HSR Act, no consent, approval or authorization of, or declaration or filing
with, any Governmental Authority on the part of the Company is required for
the valid execution and delivery of this Agreement, the valid offer, issue,
sale and delivery of the Shares pursuant to this Agreement or the valid
issue and delivery of shares of Common Stock issuable upon conversion of
the Stock. Except for (a) the requirements of the HSR Act and applicable
state securities or blue sky laws, and (b) consents, approvals, filings or
notices that will be given or made at or prior to the time of the Closing,
neither the Company nor any of its Subsidiaries is required to obtain any
consent, approval or authorization of, or to make any declaration or filing
with, any Governmental Authority as a condition to the valid execution,
delivery or performance of any of the Collateral Agreements or the
consummation of the transactions contemplated thereby.
5.13 Offering of Securities. Neither the Company nor any Person
acting on its behalf has offered the Stock or any similar securities of the
Company to, or solicited any offers to buy any thereof from, or otherwise
approached or negotiated with respect thereto with, any Person or Persons
other than the Purchasers in such manner as would subject the offering,
issuance or sale of any of the Stock to the provisions of Section 5 of the
Securities Act. Neither the Company nor any Person acting on behalf of
the Company has taken or will take any action which would subject the
offering, issuance or sale of any of the Stock to the provisions of Section
5 of the Securities Act.
5.14 Certain Fees. Except for the fee payable by the Company to
Goldman Sachs & Co., the amount of which will be disclosed to the
Purchasers in writing prior to the Closing, no broker's or finder's fees or
commissions will be payable by the Company with respect to the transactions
contemplated by this Agreement and the Collateral Agreements, and the
Company hereby indemnifies the Purchasers against and agrees that it will
hold the Purchasers harmless from any claim, demand or liability for
broker's or finder's fees alleged to have been incurred at the instance of
the Company or any Person acting on behalf of or at the request of the
Company or any agent of the Company in connection with any of the
transactions contemplated by this Agreement and the Collateral Agreements,
and from any expenses, including reasonable legal fees, arising in
connection with any such claim, demand or liability.
5.15 Investment Company Act. The Company is not an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
5.16 Disclosure. None of this Agreement, the Financial
Statements, the Annual Report on Form 10K for the year ended December 31,
1997, any document filed by the Company with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934 (the "Exchange
Act") since the Annual Report on Form 10K for the year ended December 31,
1997, the Unaudited Statements, or the Company's Offering Circular dated
December 8, 1998 in respect of its 9-1/4% Senior Subordinated Notes due
2009, contains (in each case, as of its date, and, in the case of the
Offering Circular, also as of the date of this Agreement) any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which they are made, not misleading.
5.17 Enforceability. This Agreement and the Registration Rights
Agreement have been duly authorized and when validly executed and delivered
by the Company (assuming the due authorization, execution and delivery
thereof by the other parties thereto) will constitute the valid and binding
obligations of the Company, enforceable in accordance with their respective
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to or
affecting enforcement of creditors' rights generally, or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
5.18 [omitted]
5.19 Integration. Neither the Company nor any affiliate (as such
term is defined in Rule 501(b) under the Securities Act) has, directly or
through any agent, sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sale of the Shares,
in a manner that would require the registration of the Securities under the
Securities Act.
5.20 Manipulation. Prior to the date hereof, neither the Company
nor any of its affiliates has taken any action which is designed to or
which has constituted or which might have been expected to cause or result
in stabilization or manipulation of the price of any security of the
Company in connection with the sale of the Shares.
5.21 Acquired Companies. To the best knowledge of the Company,
the representations and warranties made by each of the Acquired Companies
(as defined in Section 9) and the selling stockholders in the respective
agreements pursuant to which the Company or another Subsidiary acquired the
Acquired Companies did not as of the respective dates thereof contain any
inaccuracies that would, singly or in the aggregate, have a Material
Adverse Effect.
5.22 Intellectual Property. The Company and the Subsidiaries own
or possess, or can acquire on reasonable terms, adequate patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade names
or other intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by them, and neither the
Company nor any of the Subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others
with respect to any Intellectual Property or of any facts or circumstances
which would render any Intellectual Property invalid or inadequate to
protect the interest of the Company or any of the Subsidiaries therein, and
which infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the aggregate,
would result in a Material Adverse Effect.
5.23 Government Licenses. The Company and the Subsidiaries
possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, except where the
failure to so possess such Government Licenses would not, singly or in the
aggregate, have a Material Adverse Effect; the Company and the Subsidiaries
are in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in the
aggregate, have a Material Adverse Effect; all of the Governmental Licenses
are valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not have, singly or in the aggregate, a
Material Adverse Effect; and neither the Company nor any of the
Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
5.24 Environmental Laws. Except as described on Exhibit E or
except as would not, singly or in the aggregate, result in a Material
Adverse Effect: (a) neither the Company nor any of the Subsidiaries is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata)
or wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), (b) neither the Company nor any of the Subsidiaries is lacking any
permits, authorizations and approvals required under any applicable
Environmental Laws or are in violation of the requirements of such
Environmental Laws, (c) there are no pending or, to the best knowledge of
the Company, threatened administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law
against the Company or any of the Subsidiaries and (d) to the knowledge of
the Company there are no events or circumstances that might reasonably be
expected to form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or governmental body or
agency, against or affecting the Company or any of the Subsidiaries
relating to Hazardous Materials or any Environmental Laws.
5.25 Insurance. Neither the Company nor any Subsidiary has
received notice from any insurer providing insurance coverage for the
Company and the Subsidiaries or agent of such insurer that capital
improvements or other expenditures will have to be made in order to
continue present insurance coverage, except such as could not reasonably be
expected, singularly or in the aggregate, to have a Material Adverse
Effect.
5.26 Internal Controls. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (a) transactions are executed in accordance with
management's general or specific authorization; (b) transactions are
recorded as necessary (i) to permit preparation of financial statements in
conformity with generally accepted accounting principles and (ii) to
maintain accountability for assets; (c) access to assets is permitted only
in accordance with management's general or specific authorization; and (d)
the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
material differences. Any exceptions to this representation would not
render the representation in Section 5.4 incorrect in any material respect
or have a Material Adverse Effect.
5.27 ERISA. Neither the Company nor any of the Subsidiaries has
violated any provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or the rules and regulations promulgated
thereunder, except for such violations which, singly or in the aggregate,
would not have a Material Adverse Effect. If any plan subject to ERISA is
adopted, the execution and delivery of this Agreement and the sale of the
Securities will not involve any non-exempt prohibited transaction within
the meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue
Code of 1986, as amended.
5.28 Year 2000 Compliance. With such exceptions as would not have
a Material Adverse Effect, the Company has been advised by its vendors (and
has no reason to believe that such advice is not correct) that as of the
date of this Agreement, all Date Data and Date-Sensitive Systems used by
the Company and its Subsidiaries are Year 2000 Compliant. "Date-Sensitive
System" means any software, microcode or hardware system or component,
including any electronic or electronically controlled system or component,
that uses or processes any Date Data and that is installed, in development
or on order by the Company or any of its subsidiaries for their internal
use or for the use of third parties, or which the Company or any of its
subsidiaries sell, lease, license, assign or otherwise provide to any third
party. "Year 2000 Compliant" means (i) with respect to Date Data, that
such data is in proper format and accurate for all dates, including for
those before, on and after December 31, 1999 and (ii) with respect to Date-
Sensitive Systems, that each such system accurately processes all Date
Data, including for dates before, on and after December 31, 1999, without
loss of any functionality or performance, including but not limited to
calculating, comparing, sequencing, storing and displaying such Date Data
(including all leap year considerations), when used as a stand-alone system
or in combination with other software or hardware.
6. Investment Representations. The Purchasers understand that
neither the Shares nor any Common Stock issuable upon conversion, if any,
of the Shares has been registered under the Securities Act and that the
certificates for the Shares and such Common Stock will bear a legend to
that effect. The Purchasers also understand that the Shares are being
offered and sold pursuant to an exemption from registration contained in
the Securities Act, based in part upon their representations contained in
this Agreement. The Purchasers hereby represent and warrant as follows:
6.1 Acquisition for Own Account. The Purchasers are acquiring
the Shares for their own account for investment and not with a view toward
distribution in a manner which would violate the Securities Act.
6.2 Ability to Protect Own Interests. The Purchasers represent
that by reason of their business or financial experience, or the business
and financial experience of their management, the Purchasers have the
capacity to protect their own interests in connection with the transaction
contemplated in this Agreement. The Purchasers are not a corporation
formed for the specific purpose of consummating this transaction.
6.3 Accredited Investor. The Purchasers represent that they are
an "accredited investor" as that term is defined in Regulation D
promulgated under the Securities Act.
6.4 Access to Information. The Purchasers have been given
access to all Company documents, records, and other information, have
received physical delivery of all those which the Purchasers have
requested, and have had adequate opportunity to ask questions of, and
receive answers from, the Company's officers, employees, agents,
accountants, and representatives concerning the Company's business,
operations, financial condition, assets, liabilities, and all other matters
relevant to its investment in the Shares.
6.5 No Brokers. Purchasers represent and warrant to the Company
that no broker's or finder's fees or commissions will be payable by the
Purchasers with respect to the transactions contemplated by this Agreement
and the Collateral Agreements, and the Purchasers hereby jointly and
severally indemnify and hold the Company harmless from any claim, demand or
liability for broker's or finder's fees alleged to have been incurred at
the instance of the Purchasers, their affiliates or agents or any Person
acting on behalf of or at the request of the Purchasers, their affiliates
or agents.
6.6 Compliance with Laws. Purchasers and their transferees will
comply with all filing and other reporting obligations under all
Requirements of Law which shall be applicable to Purchasers with respect to
the Shares and to the Common Stock issuable or issued on conversion of the
Shares.
7. Affirmative Covenants. The Company covenants that from and
after the date of this Agreement through the Closing and thereafter so long
as the Purchasers own at least 25,000 Shares or 1,000,000 shares of Common
Stock which have been acquired upon conversion of any Shares:
7.1 Exchange Act and Securities Act Filings. The Company will
deliver to the Purchasers, within three Business Days of their filing with
the Securities and Exchange Commission, all documents filed by it with the
Securities and Exchange Commission pursuant to the Securities Act or the
Exchange Act, including exhibits thereto.
7.2 Certificates; Other Information. The Company will deliver
to the Purchasers: (a) promptly upon receipt thereof, copies of all final
reports submitted to the Company or any of its Subsidiaries by independent
certified public accountants in connection with each annual, interim or
(but only if the holders of the Shares are then entitled under the
Certificate of Designation to elect as a class at least one member of the
Company's Board of Directors) special audit of the books of the Company or
any of its Subsidiaries made by such accountants, including, without
limitation, any final comment letter submitted by such accountants to
management in connection with their annual audit; and (b) promptly upon
their becoming available, copies of all financial statements, reports,
notices and proxy statements sent or made available generally by the
Company to all of its security holders in their capacity as such or by any
Subsidiary of the Company to its security holders.
7.3 [omitted]
7.4 [omitted]
7.5 Inspection of Property; Books and Records; Discussions. The
Company will, and will cause each of its Subsidiaries to keep proper books
of record and account in which entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and transactions in
relation to its business and activities
7.6 Notices. The Company will, within 48 hours of occurrence,
give notice to the Purchasers: (a) of any (i) default or event of default
under any instrument or other agreement of the Company or any of its
Subsidiaries which default or event of default would have a Material
Adverse Effect or (ii) litigation, investigation or proceeding which may
exist at any time between the Company or any of its Subsidiaries and any
Governmental Authority, which in any such case, if adversely determined,
could reasonably be expected to have a Material Adverse Effect; and (b) of
any litigation or proceeding affecting the Company or any of its
Subsidiaries (i) in which the amount claimed is $2,000,000 or more and not
covered by insurance or covered by reserves on the Company's balance sheet,
or (ii) in which injunctive or similar relief is sought which if obtained
could reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this section 7.6 shall be accompanied by
a statement of the chief executive officer or chief financial officer of
the Company setting forth details of the occurrence referred to therein and
stating what action the Company proposes to take with respect thereto.
7.7 Reservation of Common Stock. The Company will at all times
reserve and keep available, solely for issuance and delivery upon
conversion of the Stock, the number of shares of Common Stock from time to
time issuable upon conversion of all shares of the Stock at the time
outstanding. All shares of Common Stock issuable upon conversion of the
Stock shall be duly authorized and, when issued upon such conversion, shall
be validly issued, fully paid and non-assessable.
7.8 Availability of Information. The Company will comply with
the reporting requirements of Sections 13 and 15(d) of the Exchange Act and
will comply with all other public information reporting requirements of the
Securities and Exchange Commission (including Rule 144 promulgated by the
Securities and Exchange Commission under the Securities Act) from time to
time in effect and relating to the availability of an exemption from the
Securities Act for the sale of any Restricted Securities. The Company will
also reasonably cooperate with each holder of any Restricted Securities in
supplying such information as may be necessary for such holder to complete
and file any information reporting forms presently or hereafter required by
the Securities and Exchange Commission as a condition to the availability
of an exemption from the Securities Act for the sale of any Restricted
Securities.
7.9 Public Announcements. Attached hereto is the text of the
press releases which the parties shall issue publicly to announce the
execution of this Agreement.
8. Registration, Transfer and Substitution of Certificates for
Stock.
8.1 Stock Register; Ownership of Stock. (a) The Company will
keep at its principal office a register in which the Company will provide
for the registration of the stock and the registration of transfers or
conversion of the Stock. The Company may treat the Person in whose name
any of the Shares or shares issued upon conversion of any of the Stock are
registered on such register as the owner thereof and the Company shall not
be affected by any notice to the contrary. All references in this
Agreement to a "holder" of any Shares or shares issued upon conversion of
any of the Stock shall mean the Person in whose name such Shares or shares
issued upon conversion of any of the Stock are at the time registered on
such register.
(b) Upon the surrender of any certificate for Stock,
properly endorsed, for registration of transfer or for conversion at the
office of the Company maintained pursuant to subdivision (a) of this
section 8.1, the Company at its expense will (subject to compliance with
section 8.2 hereof, if applicable) execute and deliver to or upon the order
of the holder thereof (i) a new certificate or certificates for the same
aggregate number of shares of Stock less the number of shares of Stock
being converted, if any, in the name of such holder or as such holder
(upon payment by such holder of any applicable transfer taxes) may direct,
and (ii) a certificate or certificates for the number of shares of Common
Stock to be issued upon conversion of the shares of Stock so surrendered.
8.2 Replacement of Certificates. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any certificate representing shares of Stock or Common Stock
issued upon the conversion of shares of Stock and, in the case of any such
loss, theft or destruction of any certificate representing shares of Stock
or Common Stock issued upon the conversion of shares of Stock held by a
Person other than the Purchasers, upon delivery of indemnity reasonably
satisfactory to the Company in form and amount or, in the case of any such
mutilation, upon surrender of such certificate representing shares of Stock
or Common Stock issued upon the conversion of shares of Stock for
cancellation at the office of the Company maintained pursuant to
subdivision (a) of section 8.1 hereof, the Company at its expense will
execute and deliver, in lieu thereof, a new certificate representing shares
of Stock or Common Stock of like tenor.
8.3 Restrictive Legends. Except as otherwise permitted by this
section 8, each certificate for Stock (including each certificate for Stock
issued upon the transfer of any certificate for Stock) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"The shares represented by this Certificate and any shares
of Common Stock issuable upon conversion of any such shares have
not been registered under the Securities Act of 1933 and may not
be transferred in the absence of such registration or an
exemption therefrom under such Act. Such shares and any such
shares of Common Stock may be transferred only in compliance with
the conditions specified in the Preferred Stock Purchase
Agreement dated December __, 1998 between United Rentals, Inc.
(the "Company") and the purchasers identified therein. A
complete and correct copy of such Agreement is available for
inspection at the principal office of the Company and will be
furnished without charge to the holder of such shares upon
written request."
Except as otherwise permitted by this section 8, each certificate for
Common Stock issued upon the conversion of any of the Stock, and each
certificate issued upon the transfer of any such Common Stock, shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be
transferred in the absence of such registration or an exemption
therefrom under such Act. Such shares may be transferred only in
compliance with the conditions specified in the Preferred Stock
Purchase Agreement dated December , 1998 between United
Rentals, Inc. (the "Company") and the purchasers identified
therein. A complete and correct copy of such Agreement is
available for inspection at the principal office of the Company
and will be furnished without charge to the holder of such shares
upon written request."
8.4 Notice of Proposed Transfer; Opinions of Counsel. Prior to
any transfer of any Restricted Securities which are not registered under an
effective registration statement under the Securities Act, the holder
thereof will give written notice to the Company of such holder's intention
to effect such transfer and to comply in all other respects with this
section 8.4. Each such notice shall describe the manner and circumstances
of the proposed transfer and shall be accompanied by an opinion of counsel
for such holder, which counsel and opinion shall each be reasonably
satisfactory to the Company, that the proposed transfer may be effected
without registration of such shares of Restricted Securities under the
Securities Act. Such holder shall thereupon be entitled to transfer such
shares in accordance with the terms of the notice delivered by such holder
to the Company. Each certificate representing such shares issued upon or
in connection with such transfer shall bear the restrictive legends
required by section 8.3, unless the related restrictions on transfer shall
have ceased and terminated as to such shares pursuant to section 8.5
hereof.
8.5 Termination of Restrictions. The restrictions imposed by
this section 8 upon the transferability of Restricted Securities shall
cease and terminate as to any particular Restricted Securities when such
restrictions are no longer required in order to insure compliance with the
Securities Act. Whenever such restrictions shall cease and terminate as to
any Restricted Securities, the holder thereof shall be entitled to receive
from the Company, without expense (other than applicable transfer taxes, if
any), new certificates for such securities of like tenor not bearing the
applicable legends required by section 8.3 hereof.
9. Definitions.
9.1 Certain Defined Terms. As used in this Agreement the
following terms have the following respective meanings:
Acquired Companies: The companies United Rentals, Inc. has
acquired since its formation in September 1997.
Affiliate: With reference to any Person, a spouse of such
Person, any relative (by blood, adoption or marriage) of such Person within
the second degree, any director, officer or employee of such Person, any
other Person of which such Person is a member, director, officer or
employee, and any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such Person.
Business Day: Any day except a Saturday, a Sunday, or any day on
which banking institutions in New York, New York are required or authorized
by law or other governmental action to be closed.
Capital Stock: As defined in section 5.6 of this Agreement.
Certificate of Designation: As defined in section 1 of this
Agreement.
Closing: As defined in section 3 of this Agreement.
Closing Date: The date of the Closing.
Code: The Internal Revenue Code of 1986, as amended from time to
time.
Collateral Agreements: The Registration Rights Agreement and the
Certificate of Designation.
Common Stock: As defined in section 1 of this Agreement.
Company: As defined in the introduction to this Agreement.
Exchange Act: At any time, the Securities Exchange Act of 1934 as
then in effect or any similar federal statute then in effect, and any
reference to a particular section of such Act shall be deemed to include a
reference to the comparable section, if any, in any such similar federal
statute.
Financial Statements: As defined in section 5.4 of this
Agreement.
GAAP: Generally accepted accounting principles set forth in the
Opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants and in statements by the Financial Accounting
Standards Board or in such other statement by such other entity as may be
approved by a significant segment of the accounting profession; and the
requisite that such principles be applied on a consistent basis shall mean
that the accounting principles observed in a current period are comparable
in all material respects to those applied in a preceding period.
Governmental Authority: Any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
Indebtedness: With respect to any Person, at a particular time
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property, (b) the face amount of all letters of credit
issued for the account of such Person and, without duplication, all drafts
drawn thereunder, (c) all liabilities secured by any Lien on any property
owned by such Person, to the extent attributable to such Person's interest
in such property, even though such Person has not assumed or become liable
for the payment thereof, and (d) lease obligations of such Person which, in
accordance with GAAP, should be capitalized; but excluding trade and other
accounts payable in the ordinary course of business in accordance with
customary trade terms and which are not overdue for a period of more than
60 days or, if overdue for more than 60 days, as to which a dispute exists
and adequate reserves in conformity with GAAP have been established on the
books of such Person. The term "Indebtedness" shall not include amounts
which have not been drawn under credit facilities, notwithstanding that
such amounts when drawn will automatically be secured by an existing Lien.
Lien: Any mortgage, pledge, hypothecation, assignment, security
interest, lien, charge or encumbrance, or preference, priority or other
security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any financing lease having substantially the
same economic effects as any of the foregoing, and the filing of, or
agreement to give, any financing statement under the Uniform Commercial
Code or comparable law of any jurisdiction). For the purposes of this
Agreement, the Company or one of its Subsidiaries shall be deemed to be the
owner of any property which it has placed in trust for the benefit of the
holders of Indebtedness of the Company or its Subsidiaries which
Indebtedness is deemed to be extinguished under GAAP but for which the
Company or its Subsidiaries remain legally liable, and such trust shall be
deemed to be a Lien.
Majority in Interest: At any time, the holders of a majority, by
number of shares, of the outstanding Shares and the outstanding shares of
Common Stock issued upon conversion of any Shares, such majority to be
determined by reference to the number of shares of Common Stock into which
all outstanding Shares are at the time convertible.
Officers' Certificate: As to the Company, a certificate
executed on behalf of the Company by its Chief Executive Officer, and any
one of its Vice Chairman, Chief Acquisition Officer, or Chief Financial
Officer.
Person: An individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.
Registration Rights Agreement: As defined in section 4.6 of this
Agreement.
Repayment Event: Any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the
Company or any of the Subsidiaries.
Requirement of Law: As to any Person, the Certificate of
Incorporation and by-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation, or determination of
an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
Restricted Securities: All of the following: (a) any
certificates for Stock bearing the applicable legend or legends referred to
in section 8.3 hereof, (b) any shares of Common Stock which have been
issued upon the conversion of any of the Stock and which are evidenced by a
certificate or certificates bearing the applicable legend or legends
referred to in such section and (c) unless the context otherwise requires,
any shares of Common Stock which are at the time issuable upon the
conversion of Stock and which, when so issued, will be evidenced by a
certificate or certificates bearing the applicable legend or legends
referred to in such section.
Securities Act: At any time, the Securities Act of 1933 as then
in effect or any similar federal statute then in effect, and any reference
to a particular section of such Act shall be deemed to include a reference
to the comparable section, if any, in any such similar federal statute.
Securities and Exchange Commission: The U.S. Securities and
Exchange Commission, or any other federal agency at the time administering
the Securities Act or the Exchange Act, whichever is the relevant statute
for the particular purpose.
Shares: As defined in section 1 of this Agreement.
Stock: As defined in section 1 of this Agreement.
Subsidiaries: With respect to any Person, any corporation with
respect to which more than 50% of the outstanding shares of stock of each
class having ordinary voting power (other than stock having such power only
by reason of the happening of a contingency) is at the time owned by such
Person or by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries of such Person.
Any of the above-defined terms may, unless the context otherwise
requires, be used in the singular or plural depending on the reference.
9.2 Accounting Terms. As used in this Agreement, and in any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in section 9.1 and accounting terms
partly defined in said section 9.1 to the extent not defined, shall have
the respective meanings given to them under GAAP.
9.3 Other Provisions Regarding Definitions: (1) Unless
otherwise defined therein, all terms defined in this Agreement shall have
the defined meanings when used in any certificate, report or other document
made or delivered pursuant to this Agreement.
(2) The words "hereof", "herein", and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
10. Expenses, etc. Whether or not the transactions contemplated
by this Agreement shall be consummated, the Company will pay all of its
expenses in connection with such transactions and in connection with any
amendments or waivers (whether or not the same become effective) under or
in respect of this Agreement or the Shares purchased by the Purchasers
hereunder, including, without limitation: (a) the cost and expenses of
reproducing this Agreement and the Shares purchased by the Purchasers, of
furnishing all opinions of counsel for the Company (including any opinions
requested by the Purchasers' special counsel as to any legal matter arising
hereunder) and all certificates on behalf of the Company, and of the
Company's performance of and compliance with all agreements and conditions
contained herein to be performed or complied with by it; and (b) the cost
(other than any applicable stock transfer taxes) of delivering to their
principal office, insured to their satisfaction, the Shares sold to the
Purchasers hereunder and any Shares delivered to the Purchasers upon any
substitution of Shares pursuant to section 8 and of the Purchasers
delivering any Shares, insured to their satisfaction, upon any such
substitution. In addition, if the transactions contemplated hereby have
been consummated, the Company shall pay 50% of the reasonably itemized
out-of-pocket expenses incurred by the Purchasers in connection with such
transactions (including the fees and disbursements of their counsel),
provided that the Company's liability under this sentence shall not exceed
$500,000. Reference is made to Section 5 of this Agreement for certain
agreements among the parties regarding the fees, if any, of brokers and
finders.
11. Survival of Representations and Warranties and
Indemnification; Certain Limitations. The Company's indemnification
obligations and all representations and warranties contained in this
Agreement shall survive the execution and delivery of this Agreement, any
investigation at any time made by the Purchasers or on their behalf, and
the purchase of the Shares by the Purchasers under this Agreement and any
conversion of any of the Stock or any disposition of any shares of Common
Stock issued upon conversion of any of the Stock; provided that all such
representations and warranties (and the indemnities in respect thereof with
respect to claims not made prior to such date) shall expire on the later of
March 31, 1999 and 30 days after the date the Company's audited financial
statements for the year ended December 31, 1998, including a signed audit
report of the Company's independent accountants, are publicly filed with
the Commission or delivered to Purchasers. No written (except as
explicitly stated therein) or oral statements made by or on behalf of the
Company, other than in this Agreement, the Collateral Agreements and the
exhibits hereto and thereto, shall constitute representations or warranties
within the meaning of this Agreement. In no event shall Purchasers be
entitled to the remedy of rescission.
12. Amendments and Waivers. Any term of this Agreement may be
amended or modified and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the
Company and (a) in the case of any such action prior to the Closing, the
Purchasers; and (b) in the case of any other such action, a Majority in
Interest.
13. Notices, etc. Except as otherwise provided in this
Agreement, notices and other communications under this Agreement shall be
in writing and shall be delivered, or mailed by first-class mail, postage
pre-paid, addressed, (a) if to the Purchasers, at the address set forth at
the beginning of this Agreement, or at such other address as the Purchasers
shall have furnished to the Company in writing, or (b) if to any other
holder of any Shares or shares of Common Stock into which any of the Shares
have been converted, at such address as such other holder shall have
furnished to the Company in writing, or, until any such other holder so
furnishes to the Company an address, then to and at the address of the last
holder of such Shares or shares of Common Stock into which such Shares have
been converted who has furnished an address to the Company, or (c) if to
the Company at the address of the Company set forth at the beginning of
this Agreement, to the attention of its President, or at such other
address, or to the attention of such other officer, as the Company shall
have furnished to the Purchasers and each such other holder in writing.
14. Indemnification. (a) The Company shall indemnify, defend
and hold harmless the Purchasers, their affiliates, partners, officers,
employees and agents (each, an "Indemnified Person") from and against any
and all losses, liabilities, damages, judgments, settlements and expenses
(including interest and penalties recovered by a third party with respect
thereto and reasonable attorneys' fees and expenses and reasonable
accountants' fees and expenses incurred in the investigation or defense of
any of the same or in asserting, preserving or enforcing any of rights
hereunder), that arise out of:
(i) any breach by the Company of any of its
representations, warranties or covenants contained in this Agreement or in
the Registration Rights Agreement; or
(ii) any litigation, investigation or proceeding
instituted by any Governmental Agency or any other Person with respect to
this Agreement or the collateral Agreements or the transactions
contemplated hereby or thereby and requiring the Purchasers participation
or involvement, excluding, however, any such litigation, investigation or
proceeding which arises solely from the acts or omissions of Purchasers or
their affiliates.
(b) The Purchasers shall give the Company prompt notice of
any third-party claim that may give rise to any indemnification obligation
under this Section 14 and the Company shall (except as set forth below)
have the right to assume and control the defense (at its expense) and
settlement of any such claim through the Company's own counsel or through
other counsel reasonably acceptable to the Purchasers. The Purchasers may
retain additional counsel at their own expense. If, under applicable
standards of professional conduct, a conflict with respect to any
significant issue between the Purchasers and the Company exists in respect
of such third-party claim, the Company shall not assume the defense of such
claim and shall also pay the reasonable fees and expenses of one counsel
selected by Purchasers in respect of such claim. Notwithstanding the
foregoing, without the Purchasers' consent, the Company will not settle any
action or proceeding which does not provide the Purchasers a full,
unconditional release from all liability with respect to such claim by each
claimant or plaintiff in a form acceptable to the Purchasers' counsel, nor
will the Company consent to any injunctive or other non-monetary relief
affecting any Indemnified Person.
15. Termination. This Agreement may be terminated (a) by the
mutual written consent of the Purchasers and the Company at any time or (b)
by the Purchasers or the Company if the Closing shall not have been
consummated on or before January 31, 1999; provided, however, that the
right to terminate this Agreement pursuant to (b) of this Section 15 shall
not be available to any party whose failure to perform any of its
obligations under this Agreement results in the failure to consummate the
transactions by such time.
16. Miscellaneous. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns and affiliates of the parties hereto, whether so expressed or not,
and, in particular, shall inure to the benefit of and be enforceable by any
holder or holders at the time of the Shares or shares of Common Stock into
which any of the Shares have been converted; except as aforesaid, this
Agreement shall not inure to the benefit of any third party. This
Agreement embodies the entire agreement and understanding between the
Purchasers and the Company and supersedes all prior agreements and
understandings relating to the subject matter hereof. This Agreement shall
be construed and enforced in accordance with and governed by the law of the
State of New York without regard to the principles regarding conflicts of
laws. The headings in this Agreement are for purposes of reference only
and shall not limit or otherwise affect the meaning hereof. This Agreement
may be executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one instrument.
If the Purchasers are in agreement with the foregoing, please
sign the form of agreement on the accompanying counterparts of this letter
and return one of the same to the Company, whereupon this letter shall
become a binding agreement between the Purchasers and the Company.
Very truly yours,
UNITED RENTALS, INC.
By: /s/ Bradley S. Jacobs
-------------------------
Title: Chief Executive Officer
The foregoing Agreement is hereby
agreed to as of the date thereof.
APOLLO INVESTMENT FUND IV, L.P.
By: Apollo Advisors, IV, L.P.,
its general partner
By: Apollo Capital Management IV, Inc.,
its general partner
By: /s/ Andrew Africk
-----------------------
Title: Vice President
APOLLO OVERSEAS PARTNERS IV, L.P.
By: Apollo Advisors, IV, L.P.,
its general partner
By: Apollo Capital Management IV,
Inc., its general partner
By: /s/ Andrew Africk
------------------------
Title: Vice President
EXHIBIT 1
SHARES OF SERIES A
PERPETUAL CONVERTIBLE
PREFERRED STOCK
PURCHASER TO BE PURCHASED
--------- ---------------------
Apollo Investment Fund IV, L.P. . . . . . . . . . . . . . 284,726
Apollo Overseas Partners IV, L.P. . . . . . . . . . . . 15,274
--------
TOTAL 300,000
========
TABLE OF CONTENTS
Page
1. Authorization of Stock . . . . . . . . . . . . . . . . . . . . . . . 2
2. Sale and Purchase of Stock . . . . . . . . . . . . . . . . . . . . . 2
3. Closing; Payment of Purchase Price . . . . . . . . . . . . . . . . . 3
4. Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . 3
4.1 Representations and Warranties . . . . . . . . . . . . . . . . 4
4.2 Performance; No Default . . . . . . . . . . . . . . . . . . . . 4
4.3 Compliance Certificates . . . . . . . . . . . . . . . . . . . . 4
4.4 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . 4
4.5 Certificate of Designation . . . . . . . . . . . . . . . . . . 4
4.6 Registration Rights Agreement . . . . . . . . . . . . . . . . . 4
4.7 [omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.8 [omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.9 No Actions Pending . . . . . . . . . . . . . . . . . . . . . . 5
4.10 Compliance with Securities Laws . . . . . . . . . . . . . . . . 5
4.11 Proceedings and Documents . . . . . . . . . . . . . . . . . . . 5
4.12 Reservation of Common Stock . . . . . . . . . . . . . . . . . . 5
4.13 Payment of Fees and Expenses . . . . . . . . . . . . . . . . . 5
4.14 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. Representations and Warranties . . . . . . . . . . . . . . . . . . . 5
5.1 Organization, Standing, etc. . . . . . . . . . . . . . . . . . 6
5.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.3 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.4 Business; Financial Statements . . . . . . . . . . . . . . . . 6
5.5 Changes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.6 Capital Stock and Related Matters . . . . . . . . . . . . . . . 7
5.7 Tax Returns and Payments . . . . . . . . . . . . . . . . . . . 8
5.8 Indebtedness of the Company . . . . . . . . . . . . . . . . . . 8
5.9 Title to Properties; Liens . . . . . . . . . . . . . . . . . . 9
5.10 Litigation, etc. . . . . . . . . . . . . . . . . . . . . . . . 9
5.11 Compliance with Other Instruments, etc. . . . . . . . . . . . . 9
5.12 Governmental Consents, etc. . . . . . . . . . . . . . . . . . 10
5.13 Offering of Securities . . . . . . . . . . . . . . . . . . . 11
5.14 Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . 11
5.15 Investment Company Act . . . . . . . . . . . . . . . . . . . 11
5.16 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.17 Enforceability . . . . . . . . . . . . . . . . . . . . . . . 12
5.18 [omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.19 Integration . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.20 Manipulation . . . . . . . . . . . . . . . . . . . . . . . . 12
5.21 Acquired Companies . . . . . . . . . . . . . . . . . . . . . 12
5.22 Intellectual Property . . . . . . . . . . . . . . . . . . . . 12
5.23 Government Licenses . . . . . . . . . . . . . . . . . . . . . 13
5.24 Environmental Laws . . . . . . . . . . . . . . . . . . . . . 13
5.25 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.26 Internal Controls . . . . . . . . . . . . . . . . . . . . . . 14
5.27 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.28 Year 2000 Compliance . . . . . . . . . . . . . . . . . . . . 15
6. Investment Representations . . . . . . . . . . . . . . . . . . . . 15
6.1 Acquisition for Own Account . . . . . . . . . . . . . . . . . 15
6.2 Ability to Protect Own Interests . . . . . . . . . . . . . . 15
6.3 Accredited Investor . . . . . . . . . . . . . . . . . . . . . 16
6.4 Access to Information . . . . . . . . . . . . . . . . . . . . 16
6.5 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.6 Compliance with Laws . . . . . . . . . . . . . . . . . . . . 16
7. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . 16
7.1 Exchange Act and Securities Act Filings . . . . . . . . . . . 16
7.2 Certificates; Other Information . . . . . . . . . . . . . . . 17
7.3 [omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.4 [omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.5 Inspection of Property; Books and Records; Discussions . . . 17
7.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.7 Reservation of Common Stock . . . . . . . . . . . . . . . . . 18
7.8 Availability of Information . . . . . . . . . . . . . . . . . 18
7.9 Public Announcements . . . . . . . . . . . . . . . . . . . . 18
8. Registration, Transfer and Substitution of Certificates for Stock 18
8.1 Stock Register; Ownership of Stock . . . . . . . . . . . . . 18
8.2 Replacement of Certificates . . . . . . . . . . . . . . . . . 19
8.3 Restrictive Legends . . . . . . . . . . . . . . . . . . . . . 19
8.4 Notice of Proposed Transfer; Opinions of Counsel . . . . . . 20
8.5 Termination of Restrictions . . . . . . . . . . . . . . . . . 21
9. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . 21
9.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . 25
9.3 Other Provisions Regarding Definitions . . . . . . . . . . . 25
10. Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11. Survival of Representations and Warranties and
Indemnification; Certain Limitations . . . . . . . . . . . . . . . 26
12. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . 26
13. Notices, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
14. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 27
15. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Exhibit A Form of Restated Certificate of Incorporation
Exhibit B Form of Opinion of Counsel for the Company
Exhibit C Form of Opinion of Counsel for the Company
Exhibit D Form of Registration Rights Agreement
Exhibit E Subsidiaries of the Company; exceptions to representations and
warranties
Exhibit F Indebtedness of the Company and the Subsidiaries
CERTIFICATE OF DESIGNATION
OF
PERPETUAL CONVERTIBLE
PREFERRED STOCK, SERIES A
OF
UNITED RENTALS, INC.
------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
------------------------
United Rentals, Inc., a Delaware corporation (the "Company"),
certifies that pursuant to the authority contained in its Restated
Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), and in accordance with the provisions of Section 151 of
the General Corporation Law of the State of Delaware, the Board of
Directors of the Company at a meeting duly called and held on December 13,
1998, duly approved and adopted the following resolution, which resolution
remains in full force and effect on the date hereof:
RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation, the Board of Directors does
hereby designate, create, authorize and provide for the issue of a series
of preferred stock having a par value of $.01 per share, with a liquidation
preference of $1,000 per share (the "Liquidation Preference"), which shall
be designated as Series A Perpetual Convertible Preferred Stock (the
"Preferred Stock"), consisting of 300,000 shares having the following
voting powers, preferences and relative, participating, optional and other
special rights, and qualifications, limitations and restrictions:
1. Ranking. The Preferred Stock shall, with respect to
distributions upon the liquidation, winding-up and dissolution of the
Company, rank (i) senior to all classes of Common Stock of the Company and
to each other class of capital stock or series of preferred stock
established after December 21,1998, by the Board of Directors, the terms of
which do not expressly provide that it ranks senior to or on a parity with
the Preferred Stock as to dividend distributions and distributions upon the
liquidation, winding-up and dissolution of the Company (collectively
referred to with the Common Stock of the Company as "Junior Securities");
(ii) on a parity with any additional shares of Preferred Stock issued by
the Company in the future and any other class of capital stock or series of
preferred stock issued by the Company established after December 21, 1998,
by the Board of Directors, the terms of which expressly provide that such
class or series will rank on a parity with the Preferred Stock as to
dividend distributions and distributions upon the liquidation, winding-up
and dissolution of the Company (collectively referred to as "Parity
Securities"); and (iii) junior to each class of capital stock or series of
preferred stock issued by the Company established after December 21, 1998,
by the Board of Directors, the terms of which expressly provide that such
class or series will rank senior to the Preferred Stock as to dividend
distributions and/or distributions upon the liquidation, winding-up and
dissolution of the Company (collectively referred to as "Senior
Securities"). Notwithstanding the foregoing, a security shall not be deemed
to be a "Senior Security" solely because such security has a stated
dividend or interest coupon.
2. Participating Dividends. In the event that the Company
declares or pays any dividends or other distributions upon the Common
Stock, (whether payable in cash, securities or other property) other than
(i) dividends and distributions referred to in paragraph 3(vi), (ii)
rights, options or warrants referred to in paragraph 3(viii) and (iii)
tender or exchange offers referred to in paragraph 3(x), the Company shall
also declare and pay to the holders of the Preferred Stock at the same time
that it declares and pays such dividends or other distributions to the
holders of the Common Stock (and with the same record date), the dividends
or distributions which would have been declared and paid with respect to
the Common Stock issuable upon conversion of the Preferred Stock had all of
the outstanding Preferred Stock been converted immediately prior to the
record date for such dividend or distribution, or if no record date is
fixed, the date as of which the record holders of Common Stock entitled to
such dividends or distributions are determined.
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. For the purposes of conversion, each
share of Preferred Stock shall be valued at the Liquidation Preference,
which shall be divided by the Conversion Price in effect on the Conversion
Date to determine the number of shares issuable upon conversion.
Immediately following such conversion, the rights of the holders of
converted Preferred Stock shall cease and the persons entitled to receive
the Common Stock upon the conversion of Preferred Stock shall be treated
for all purposes as having become the owners of such Common Stock.
(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, the
Company shall deliver a certificate for the number of full shares of Common
Stock issuable upon the conversion, and a new certificate representing the
unconverted portion, if any, of the shares of Preferred Stock represented
by the certificate or certificates surrendered for conversion. The person
in whose name the Common Stock certificate is registered shall be treated
as the stockholder of record on and after the Conversion Date. No payment
or adjustment will be made for accrued and unpaid dividends on converted
shares of Preferred Stock or for dividends on any Common Stock issued upon
such conversion. The holder of record of a share of Preferred Stock at the
close of business on a record date with respect to the payment of dividends
on the Preferred Stock in accordance with paragraph 2 hereof will be
entitled to receive such dividends with respect to such share of Preferred
Stock on the corresponding dividend payment date, notwithstanding the
conversion of such share after such record date and prior to such dividend
payment date. If a holder of Preferred Stock converts more than one share
at a time, the number of full shares of Common Stock issuable upon
conversion shall be based on the total Liquidation Preferences of all
shares of Preferred Stock converted.
(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. All shares of Common Stock that may be issued
upon conversion of Preferred Stock shall be fully paid and nonassessable.
The Company shall endeavor to comply with all securities laws regulating
the offer and delivery of shares of Common Stock upon conversion of
Preferred Stock and shall endeavor to list such shares on each national
securities exchange or automated quotation system on which the Common Stock
is listed.
(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 such determination of the holders entitled to such
dividends and distributions. For the purposes of this paragraph 3(vi), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company. The Company will not pay any
dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.
(vii) In case any person other than the Company or a
subsidiary of the Company, purchases in a tender offer not opposed by the
Company more than 20% but less than 50% of the Company's outstanding Common
Stock, and such tender offer price is less than the Conversion Price in
effect at the opening of business on the day the tender offer is concluded,
then the Conversion Price shall be adjusted by multiplying it by a
fraction, the numerator of which shall be one and the denominator of which
shall be 1.0625 to the power of x, where x is the number of years
(expressed to the nearest one hundredth) which have passed since the
issuance of the Preferred Stock, but x shall not be greater than five.
(viii) In case the Company shall issue rights, options or
warrants to all holders of its Common Stock entitling them (for a period
not exceeding 45 days) to subscribe for, purchase or acquire shares of
Common Stock at a price per share less than the current market price per
share (determined as provided below) of the Common Stock on the date fixed
for the determination of stockholders entitled to receive such rights,
options or warrants, the Conversion Price in effect at the opening of
business on the day following the date fixed for such determination shall
be reduced by multiplying such Conversion Price by a fraction the numerator
of which shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination plus the number
of shares of Common Stock which the aggregate of the offering price of the
total number of shares of Common Stock so offered for subscription,
purchase or acquisition would purchase at such current market price and the
denominator of which shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription, purchase or acquisition, such reduction to become effective
immediately after the opening of business on the day following the date
fixed for such determination of the holders entitled to such rights,
options or warrants. However, upon the expiration of any right, option or
warrant to purchase Common Stock, the issuance of which resulted in an
adjustment in the Conversion Price pursuant to this paragraph 3(viii), if
any such right, option or warrant shall expire and shall not have been
exercised, the Conversion Price shall be recomputed immediately upon such
expiration and effective immediately upon such expiration shall be
increased to the price it would have been (but reflecting any other
adjustments to the Conversion Price made pursuant to the provisions of this
paragraph 3 after the issuance of such rights, options or warrants) had the
adjustment of the Conversion Price made upon the issuance of such rights,
options or warrants been made on the basis of offering for subscription or
purchase only that number of shares of Common Stock actually purchased upon
the exercise of such rights, options or warrants. No further adjustment
shall be made upon exercise of any right, option or warrant if any
adjustment shall be made upon the issuance of such security. For purposes
of this paragraph 3(viii), the current market price per share of Common
Stock on any day shall be deemed to be the average of the closing prices of
the Common Stock for the 20 consecutive Trading Days ending the day before
the day in question. For the purposes of this paragraph 3(viii), the number
of shares of Common Stock at any time outstanding shall not include shares
held in the treasury of the Company. The Company will not issue any rights,
options or warrants in respect of shares of Common Stock held in the
treasury of the Company.
(ix) In case the outstanding shares of Common Stock shall
be subdivided into a greater number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the day following
the day upon which such subdivision becomes effective shall be reduced,
and, conversely, in case the outstanding shares of Common Stock shall each
be combined into a smaller number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day
upon which such combination becomes effective shall be increased to equal
the product of the Conversion Price in effect on such date and a fraction
the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such subdivision or combination, as the
case may be, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such subdivision or combination,
as the case may be. Such reduction or increase, as the case may be, shall
become effective immediately after the opening of business on the day
following the day upon which such subdivision or combination becomes
effective.
(x) In case a tender or exchange offer made by the
Company or any subsidiary of the Company for all or any portion of the
Common Stock shall expire and such tender or exchange offer shall involve
the payment by the Company or such subsidiary of consideration per share of
Common Stock having a fair market value (as determined by the Board of
Directors or, to the extent permitted by applicable law, a duly authorized
committee thereof, whose determination shall be conclusive and described in
a resolution of the Board of Directors or such duly authorized committee
thereof, as the case may be) at the last time (the "Expiration Time")
tenders or exchanges may be made pursuant to such tender or exchange offer
(as it shall have been amended) that exceeds the current market price per
share of the Common Stock on the Trading Day next succeeding the Expiration
Time, the Conversion Price shall be reduced so that the same shall equal
the price determined by multiplying the Conversion Price in effect
immediately prior to the Expiration Time by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) on the Expiration Time
multiplied by the current market price per share of the Common Stock on the
Trading Day next succeeding the Expiration Time and the denominator shall
be the sum of (x) the fair market value (determined as aforesaid) of the
aggregate consideration payable to stockholders based on the acceptance (up
to any maximum specified in the terms of the tender or exchange offer) of
all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum,
being referred to as the "Purchased Shares") and (y) the product of the
number of shares of Common Stock outstanding (less any Purchased Shares) on
the Expiration Time and the current market price per share of the Common
Stock on the Trading Day next succeeding the Expiration Time, such
reduction to become effective immediately prior to the opening of business
on the day following the Expiration Time. For purposes of this paragraph
3(x), the current market price per share of Common Stock on any day shall
be deemed to be the average of the closing prices of the Common Stock for
the 20 consecutive Trading Days ending the day before the day in question.
For the purposes of this paragraph 3(x), the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury
of the Company.
(xi) In case the Company shall issue to one or more
Affiliates (other than persons or entities who become Affiliates only as a
result of such issuance, and other than to directors, officers or employees
of the Company under bona fide compensation or benefit arrangements) Common
Stock at a price per share less than the current market price per share
(determined as provided below) of the Common Stock on the date of such
issuance (the "Issue Date"), the Conversion Price in effect at the opening
of business on the day following the Issue Date shall be reduced by
multiplying such Conversion Price by a fraction the numerator of which
shall be the number of shares of Common Stock outstanding at the close of
business on the Issue Date plus the number of shares of Common Stock which
the aggregate of the offering price of the total number of shares of Common
Stock so issued would purchase at such current market price and the
denominator of which shall be the number of shares of Common Stock
outstanding at the close of business on the Issue Date plus the number of
shares of Common Stock so issued, such reduction to become effective
immediately after the opening of business on the day following the Issue
Date. For purposes of this paragraph 3(xi), the current market price per
share of Common Stock on any day shall be deemed to be the average of the
closing prices of the Common Stock for the 20 consecutive Trading Days
ending the day before the day in question. For the purposes of this
paragraph 3(xi), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company.
The Company will not pay any dividend or make any distribution on shares of
Common Stock held in the treasury of the Company.
(xii) The reclassification or change of Common Stock into
securities, including securities other than Common Stock (other than any
reclassification upon a consolidation or merger to which paragraph 3(xix)
below shall apply) shall be deemed to involve (A) a distribution of such
securities other than Common Stock to all holders of Common Stock, and (B)
a subdivision or combination, as the case may be, of the number of shares
of Common Stock outstanding immediately prior to such reclassification into
the number of Common Shares outstanding immediately thereafter (and the
effective date of such reclassification shall be deemed to be "the day upon
which such subdivision becomes effective" or "the day upon which such
combination becomes effective," as the case may be, and "the day upon which
such subdivision or combination becomes effective" within the meaning of
paragraph 3(ix) above).
(xiii) No adjustment in the Conversion Price need be
made until all cumulative adjustments amount to 1% or more of the
Conversion Price as last adjusted. Any adjustments that are not made shall
be carried forward and taken into account in any subsequent adjustment. All
calculations under this paragraph 3 shall be made to the nearest 1/10,000th
of a cent or to the nearest 1/10,000th of a share, as the case may be.
(xiv) For purposes of this paragraph 3, "Common Stock"
includes any stock of any class of the Company which has no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which
is not subject to redemption by the Company. However, subject to the
provisions of paragraph 3(xix) below, shares issuable on conversion of
shares of Preferred Stock shall include only shares of the class designated
as Common Stock of the Company on the Preferred Stock Issue Date or shares
of any class or classes resulting from any reclassification thereof and
which have no preferences in respect of dividends or amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or
winding-up of the Company and which are not subject to redemption by the
Company; provided that, if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such
class resulting from all such reclassifications bears to the total number
of shares of all such classes resulting from all such reclassifications.
(xv) No adjustment in the Conversion Price shall reduce
the Conversion Price below the then par value of the Common Stock.
(xvi) 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.
(xvii) The Company from time to time may reduce the
Conversion Price if it considers such reductions to be advisable in order
that any event treated for federal income tax purposes as a dividend of
stock or stock rights will not be taxable to the holders of Common Stock by
any amount.
(xviii) If:
(A) the Company takes any action which would
require an adjustment in the Conversion Price pursuant to paragraph 3(x)
above;
(B) the Company consolidates or merges with, or
transfers all or substantially all of its assets to, another corporation,
and stockholders of the Company must approve the transaction; or
(C) there is a dissolution or liquidation of the
Company;
the Company shall mail to holders of the Preferred Stock, first
class, postage prepaid, a notice stating the proposed record or effective
date, as the case may be. The Company shall mail the notice at least 10
days before such date. However, failure to mail the notice or any defect in
it shall not affect the validity of any transaction referred to in clause
(A), (B) or (C) of this paragraph 3(xviii).
(xix) In the case of any consolidation of the Company or
the merger of the Company with or into any other entity or the sale or
transfer of all or substantially all the assets of the Company pursuant to
which the Company's Common Stock is converted into other securities, cash
or assets, then, except with respect to shares the Company shall become
obligated to purchase upon due acceptance of an offer made by the Company
pursuant to paragraph 5(i) or unless the Preferred Stock shall be
automatically converted into Common Stock pursuant to paragraph 5(i), upon
consummation of such transaction, each share of Preferred Stock shall
automatically become convertible into the kind and amount of securities,
cash or other assets receivable upon the consolidation, merger, sale or
transfer by a holder of the number of shares of Common Stock into which
such share of Preferred Stock might have been converted immediately prior
to such consolidation, merger, transfer or sale (assuming such holder of
Common Stock failed to exercise any rights of election and received per
share the kind and amount of consideration receivable per share by a
plurality of non-electing shares). Appropriate adjustment (as determined by
the Board of Directors of the Company) shall be made in the application of
the provisions herein set forth with respect to the rights and interests
thereafter of the holders of Preferred Stock, to the end that the
provisions set forth herein (including provisions with respect to changes
in and other adjustment of the Conversion Price) shall thereafter be
applicable, as nearly as reasonably may be, in relation to any shares of
stock or other securities or property thereafter deliverable upon the
conversion of Preferred Stock. If this paragraph 3(xix) applies, paragraphs
3(vi), 3(ix) and 3(xii) do not apply.
(xx) In any case in which this paragraph 3 shall require
that an adjustment as a result of any event becomes effective from and
after a record date, the Company may elect to defer until after the
occurrence of such event the issuance to the holder of any shares of
Preferred Stock converted after such record date and before the occurrence
of such event of the additional shares of Common Stock issuable upon such
conversion over and above the shares issuable on the basis of the
Conversion Price in effect immediately prior to adjustment; provided,
however, that if such event shall not have occurred and authorization of
such event shall be rescinded by the Company, the Conversion Price shall be
recomputed immediately upon such rescission to the price that would have
been in effect had such event not been authorized, provided that such
rescission is permitted by and effective under applicable laws.
4. Liquidation Preference. Upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company or reduction or
decrease in its capital stock resulting in a distribution of assets to the
holders of any class or series of the Company's capital stock, each holder
of shares of the Preferred Stock will be entitled to payment out of the
assets of the Company available for distribution of an amount equal to the
Liquidation Preference per share of Preferred Stock held by such holder,
plus accrued and unpaid dividends, if any, to the date fixed for
liquidation, dissolution, winding-up or reduction or decrease in capital
stock, 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 accumulated and unpaid 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 or reduction or
decrease in capital stock, unless such sale, conveyance, exchange or
transfer shall be in connection with a liquidation, dissolution or
winding-up of the business of the Company or reduction or decrease in
capital stock.
5. Redemptions.
(i) If a Change in Control has occurred or the Company
enters into a binding agreement to effect a Change in Control, the Company
shall give prompt written notice of such Change in Control describing in
reasonable detail the material terms and date or anticipated date of
consummation thereof to each holder of Preferred Stock, and the Company
shall give each holder of Preferred Stock prompt written notice of any
material change in the terms or timing of such transaction. In respect of
an actual or proposed Change in Control that is not an acquisition which is
accounted for under the "pooling-of-interests" method of generally accepted
accounting principles, the Company shall be obligated, by notice given at
any time before the Change of Control or not more than 10 Business Days
after the Change of Control, to offer to purchase within 10 Business Days
after the Change of Control all of the then outstanding Preferred Stock
tendered under this paragraph at a purchase price in cash per Share equal
to the Liquidation Preference thereof plus an amount equal to 6.25% of the
Liquidation Preference, compounded annually from the date of issuance to
the purchase date (the "Call Price"). The Company shall in its Change of
Control offer afford to the Holders of Preferred Stock at least five
Business Days after the mailing or delivery of the Change of Control offer
in which to accept such offer by written notice to the Company; the failure
by any Holder to accept such offer shall be deemed a rejection of such
offer. Upon the occurrence of a Change in Control that is an acquisition
which is accounted for as a "pooling-of-interests" method of accounting
under generally accepted accounting principles, all of the outstanding
Preferred Stock on the date of the Change in Control will be automatically
converted into Common Stock having a market value equal to 109.5% of the
Call Price, valued at the closing price of business on the Business Day
prior to the date of the Change in Control. The Company shall not
consummate any such transaction until the Common Stock to be issued to the
Preferred Stockholders has been registered under the Securities Act of
1933, as amended (the "Securities Act"). Notwithstanding anything to the
contrary herein, offers by the Company under this paragraph 5 shall comply
with all procedural and other requirements of federal and state securities
laws then in effect, but no such provisions shall negate the obligation of
the Company to purchase Shares under this paragraph 5 which are validly
tendered and not withdrawn at the price set forth herein.
"Change in Control" means the occurrence of any of the
following events: (a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a person shall be deemed to have "beneficial ownership" of
all securities that such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total voting capital stock
of the Company ; or (b) the Company consolidates with, or merges with or
into, another Person or sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any Person,
or any Person consolidates with, or merges with or into, the Company, in
any such event in a transaction in which the outstanding voting capital
stock of the Company is converted into or exchanged for cash, securities or
other property, provided that following such transaction the holders of
voting stock of the Company immediately prior to such transaction do not
own more than 50% of the voting stock of the company surviving such
transaction or to which such assets are transferred.
(ii) If, after 2-1/2 years following the date of issuance
of the Preferred Stock, the Company issues for cash common stock or a
series of preferred stock convertible into Common Stock, in either a public
offering (a "Public Offering") or a bona fide private financing (a "Private
Offering"), for a price ("Sales Price") for the Common Stock (including any
amount payable upon conversion of Preferred Stock) below the Conversion
Price (each such offering being referred to herein as a "Reduced Price
Offering"), then the Company shall be obligated to make an offer ("Purchase
Offer") to apply towards the purchase of Preferred Stock at the Call Price
40% of the amount by which the net cash proceeds from any such Reduced
Price Offering and for all other Reduced Price Offerings consummated during
the preceding 12 months (but excluding any Reduced Price Offerings prior to
June 30, 2001) exceeds an aggregate of $50 million, less a credit for all
amounts theretofore paid for such purchases during such 12-month period.
Net cash proceeds shall be computed after deducting all discounts,
underwriters' commissions and other reasonable expenses. The Purchase Offer
in respect of any Reduced Price Offering shall be made by notice from the
Company given at any time no earlier than ten Business Days before the
Company has received such proceeds and no later than 10 days after the
receipt of the net cash proceeds which require the making of such offer.
The Purchase Offer shall be an offer by the Company to purchase on a date
no later than 10 Business Days after the receipt of the net cash proceeds
which require the making of such offer Shares tendered by holders of
Preferred Stock at a price equal to the Call Price. If Shares are validly
tendered with an aggregate purchase price in excess of the amount of
proceeds the Company is required to apply to such purchase, the Shares
shall be purchased on a pro rata basis. Holders shall have no less than
five Business Days from the date of receipt of the notice to accept such
offer by notice to the Company; the failure to accept such offer shall be
deemed a rejection thereof. Notwithstanding the foregoing, the issuance of
shares to employees under bona fide customary compensation or benefit
arrangements to directors, officers or employees of the Company shall not
constitute a Reduced Price Offering.
If the Company shall file a registration statement containing
a preliminary prospectus under the Securities Act with respect to a Reduced
Price Offering, then the Company shall not mail or deliver a Purchase Offer
in respect thereof prior to the tenth Business Day next preceding the date
(the "Filing Date") of such filing, and the closing price of the Common
Stock on the third Business Day next preceding the Filing Date on the
principal securities exchange on which the Common Stock is then listed
shall be deemed to be the Sales Price for such Reduced Price Offering. In
such event, notwithstanding the provisions of the prior paragraph, the
Purchase Offer must be accepted by the holders of Preferred Stock no later
than the second Business Day prior to the Filing Date, provided that
Holders shall in all events have no less than three Business Days from the
date of receipt of the notice to accept such offer.
6. Voting Rights.
(i) The holders of Preferred Stock shall be entitled to
notice of all stockholders meetings in accordance with the Company's bylaws
and the Delaware General Corporation Law (the "DGCL"), and except as set
forth in paragraph 6 (ii) below and as otherwise required by applicable
law, the holders of the Preferred Stock shall be entitled to vote on all
matters submitted to the stockholders for a vote, voting together with the
holders of the Common Stock as a single class, with each share of Common
Stock entitled to one vote per share and each share of Preferred Stock
entitled to one vote for each share of Common Stock issuable upon
conversion of the Preferred Stock as of the record date for such vote or,
if no record date is specified, as of the date of such vote.
(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 of the Company's capital stock and with each
share of Preferred Stock entitled to one vote, shall be entitled to elect:
(i) two directors to serve on the Company's Board of Directors until such
directors' successors are duly elected by the holders of the Preferred
Stock or such directors are removed from office, provided that on the
record date for such vote Apollo Management IV, L.P., Apollo Investment
Fund IV, L.P., Apollo Overseas Partners IV, L.P. or their respective
Affiliates (collectively, "Apollo") hold the equivalent of at least 8
million shares of Common Stock which were issued, or are issuable, upon
conversion of the Preferred Stock as presently constituted), and provided
further that the initial two directors so elected shall be Leon Black and
Michael Gross; or (ii) one director to serve on the Company's Board of
Directors until such directors' successors are duly elected by the holders
of the Preferred Stock or such directors are removed from office, provided
that on the record date for such vote, Apollo holds the equivalent of at
least 4 million shares of Common Stock but less than 8 million shares of
Common Stock which were issued, or are issuable, upon conversion of the
Preferred Stock as presently constituted. If on the record date relating to
the election of directors, Apollo holds less than the equivalent of 4
million shares of Common Stock (including Common Stock and shares of Common
Stock issuable upon conversion of the Preferred Stock as presently
constituted), the holders of Preferred Stock shall be entitled to vote for
the election of directors on the basis set forth in paragraph 6(i). A
person may be a director nominee or a successor director nominee of the
holders of Preferred Stock only if he or she is acceptable to the Company,
provided, however, that Leon Black and Michael Gross shall always be
deemed acceptable to the Company.
(iii) The Company shall not, without the affirmative vote
or consent of the holders of at least a majority of the shares of Preferred
Stock then outstanding voting or consenting as the case may be, as one
class:
(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) authorize, create (by way of reclassification
or otherwise) or issue any class of capital stock or series of
preferred stock, or any obligation or security convertible or
exchangeable into or evidencing the right to purchase shares of any
class of capital or series of preferred stock, that must be redeemed
or may be redeemed at the option of the holder thereof, in whole or
from time to time in part, prior to December 31, 2013;
(c) amend or otherwise alter this Certificate of
Designation or the Certificate of Incorporation in any manner that
under the Delaware General Corporation Law requires the prior vote as
a separate class of the holders of Preferred Stock;
(d) take any action which detracts from the voting
powers, preferences and relative, participating, optional and other
special rights, and qualifications, limitations, and restrictions of
the Preferred Stock;
(e) authorize the issuance of any additional shares
of the Series A Perpetual Convertible Preferred Stock;
(f) waive compliance with any provision of this
Certificate of Designation; or
(g) declare, pay or make any Extraordinary
Dividend.
(iv) Without the consent of each holder affected, an
amendment or waiver of the Company's Certificate of Incorporation or of
this Certificate of Designation may not (with respect to any shares of
Preferred Stock held by a nonconsenting holder):
(a) alter the voting rights with respect to the
Preferred Stock or reduce the number of shares of Preferred Stock
whose holders must consent to an amendment, supplement or waiver;
(b) reduce the Liquidation Preference or alter the
provisions with respect to the redemption of the Preferred Stock;
(c) alter in any manner the conversion rights of
the holders of Preferred Stock set forth in paragraph 3 hereof;
(d) reduce the rate of or change the time for
payment of dividends on any share of Preferred Stock;
(e) waive the consequences of any failure
to pay dividends on the Preferred Stock;
(f) make any share of Preferred Stock payable in
any form other than that stated in this Certificate of Designation;
(g) make any change in the provisions of this
Certificate of Designation relating to waivers of the rights of
holders of Preferred Stock to receive the Liquidation Preference and
dividends on the Preferred Stock;
(h) waive a redemption payment with respect to any
share of Preferred Stock; or
(i) make any change in the foregoing amendment and
waiver provisions.
(v) The Company in its sole discretion may without the
vote or consent of any holders of the Preferred Stock amend or supplement
this Certificate of Designation:
(a) to cure any ambiguity, defect or inconsistency
in any manner that does not adversely affect the holders of Preferred
Stock;
(b) to provide for uncertificated Preferred Stock
in addition to or in place of certificated Preferred Stock; or
(c) to make any change that would provide any
additional rights or benefits to the holders of the Preferred Stock
or that does not adversely affect the rights under this Certificate
of Designation of any such holder.
7. Certain Transactions. The Company shall not enter into any
transaction that would give rise to the redemption rights set forth in
paragraph 5 hereof, unless the execution, delivery and performance of the
agreements relating to such transaction, and compliance with paragraph 5 in
connection therewith, will not conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which the Company or any of its Subsidiaries is bound.
8. Merger, Consolidation and Sale of Assets. Except for
transactions which pursuant to paragraph 5 would result in the automatic
conversion of the Preferred Stock into Common Stock, without the vote or
consent of the holders of a majority of the then outstanding shares of
Preferred Stock, the Company may not consolidate or merge with or into, or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, any person unless, if the Company is
not the resulting entity, the Preferred Stock is converted into or
exchanged for and becomes shares of such resulting entity, having in
respect of such resulting entity the same (or more favorable) powers,
preferences and relative, participating, optional or other special rights
thereof that the Preferred Stock had immediately prior to such transaction.
The resulting entity of such transaction shall thereafter be deemed to be
the "Company" for all purposes of this Certificate of Designation.
9. Reports. The Company will, within three Business Days after
their filing with the Commission, deliver to the holders of the Preferred
Stock all documents filed by it with the Commission pursuant to the
Securities Act or the Exchange Act, including exhibits thereto. The Company
will also deliver to such holders: (a) promptly upon receipt thereof,
copies of all final reports submitted to the Company or any of its
subsidiaries by independent certified public accountants in connection with
each annual, interim or (but only if the holders of the Preferred Stock are
then entitled under this Certificate of Designation to elect as a class a
member of the Company's Board of Directors) special audit of the books of
the Company made by such accountants, including, without limitation, any
final comment letter submitted by such accountants to management in
connection with their annual audit; and (b) promptly upon their becoming
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. This Certificate of Designation shall not be
amended, either directly or indirectly, or through merger or consolidation
with another entity, in any manner that would alter or change the powers,
preferences or special rights of the Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of a majority or more
of the outstanding Preferred Stock, voting separately as a class.
11. Exclusion of Other Rights. Except as may otherwise be
required by law, the shares of Preferred Stock shall not have any voting
powers, preferences and relative, participating, optional or other special
rights, other than those specifically set forth in this resolution (as such
resolution may be amended from time to time) and in the Certificate of
Incorporation. The shares of Preferred Stock shall have no preemptive or
subscription rights.
12. Headings of Subdivisions. The headings of the various
subdivisions hereof are for convenience of reference only and shall not
affect the interpretation of any of the provisions hereof.
13. Severability of Provisions. If any voting powers,
preferences and relative, participating, optional and other special rights
of the Preferred Stock and qualifications, limitations and restrictions
thereof set forth in this resolution (as such resolution may be amended
from time to time) is invalid, unlawful or incapable of being enforced by
reason of any rule of law or public policy, all other voting powers,
preferences and relative, participating, optional and other special rights
of Preferred Stock and qualifications, limitations and restrictions thereof
set forth in this resolution (as so amended) which can be given effect
without the invalid, unlawful or unenforceable voting powers, preferences
and relative, participating, optional or other special rights of Preferred
Stock and qualifications, limitations and restrictions thereof shall,
nevertheless, remain in full force and effect and no voting powers,
preferences and relative, participating, optional or other special rights
of Preferred Stock and qualifications, limitations and restrictions thereof
herein set forth shall be deemed dependent upon any other such voting
powers, preferences and relative, participating, optional or other special
rights of Preferred Stock and qualifications, limitations and restrictions
thereof unless so expressed herein.
14. Re-issuance of Preferred Stock. Shares of Preferred Stock
that have been issued and reacquired in any manner, including shares
purchased or redeemed or exchanged or converted, shall (upon compliance
with any applicable provisions of the laws of Delaware) have the status of
authorized but unissued shares of preferred stock of the Company
undesignated as to series and may be designated or re-designated and issued
or reissued, as the case may be, as part of any series of preferred stock
of the Company, provided that any issuance of such shares as Preferred
Stock must be in compliance with the terms hereof.
15. Mutilated or Missing Preferred Stock Certificates. If any
of the Preferred Stock certificates shall be mutilated, lost, stolen or
destroyed, the Company shall issue, in exchange and in substitution for and
upon cancellation of the mutilated Preferred Stock certificate, or in lieu
of and substitution for the Preferred Stock certificate lost, stolen or
destroyed, a new Preferred Stock certificate of like tenor and representing
an equivalent amount of shares of Preferred Stock, but only upon receipt of
evidence of such loss, theft or destruction of such Preferred Stock
certificate and indemnity, if requested, satisfactory to the Company and
the Transfer Agent (if other than the Company).
16. Certain Definitions. As used in this Certificate of
Designation, the following terms shall have the following meanings (with
terms defined in the singular having comparable meanings when used in the
plural and vice versa), unless the context otherwise requires:
"Affiliate" shall have the meaning attributed thereto under Rule
[12b-2] under the Securities Exchange Act of 1934, as amended.
"Business Day" means any day except a Saturday, a Sunday, or any day
on which banking institutions in New York, New York are required or
authorized by law or other governmental action to be closed.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, par value $.01 per
share, of the Company as presently constituted.
"Conversion Price" shall initially mean $25.00 per share and
thereafter shall be subject to adjustment from time to time pursuant to the
terms of paragraph 3 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Extraordinary Dividend" means (i) all dividends and other
distributions made on, (whether payable in cash, securities or other
property), optional redemptions of, and tender offers for, the capital
stock of the Company (collectively, "Dividend Transactions") made within
the preceding 12 months, the aggregate fair market value of which (when
added to the amount of any repurchases of capital stock of the Company made
during such 12-month period) exceeds 5% of the Company's market
capitalization (being the product of the then-current market price per
share of the Common Stock (determined as provided below) times the
aggregate number of shares of Common Stock then outstanding) and (ii)
repurchases of capital stock of the Company made within the preceding 12
months (but before the 15th anniversary of the date of issuance of the
Preferred Stock), the aggregate fair market value of which (when added to
the amount of any Dividend Transactions made during such 12-month period)
exceeds the following percentages of the Company's market capitalization:
5% during the first five years after the date of issuance of the Preferred
Stock, 7.5% during the second five years after the date of issuance of the
Preferred Stock and 10% during the third five years after the date of
issuance of the Preferred Stock. The current market price per share of
Common Stock on any day shall be deemed to be the average of the closing
prices of the Common Stock on the principal securities exchange on which
the Common Stock is then traded for the 20 consecutive Trading Days ending
the day before the day in question.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization, government or any Agency or political subdivision thereof or
any other entity.
"Preferred Stock Issue Date" means the date on which the Preferred
Stock is originally issued by the Company under this Certificate of
Designation.
"Trading Day" means any day on which the New York Stock Exchange or
other applicable stock exchange or market is open for business.
"Transfer Agent" shall be American Stock Transfer Company
unless and until a successor is selected by the Company.
IN WITNESS WHEREOF, the Company has caused this certificate to
be duly executed by Bradley S. Jacobs, Chief Executive Officer of the
Company and attested by John N. Milne, Secretary of the Company, this
January 7, 1999.
UNITED RENTALS, INC.
By: /s/ Bradley S. Jacobs
------------------------------
Name: Bradley S. Jacobs
Title: Chief Executive Officer
ATTEST:
By: /s/ John N. Milne
--------------------
Name: John N. Milne
Title: Secretary
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of December 21, 1998, among
United Rentals, Inc., a Delaware corporation (the "Company"), Bradley S.
Jacobs and the other undersigned parties hereto (the "Holders").
1. Introduction. The Company is a party to the Stock Purchase
Agreement (the "Stock Purchase Agreement"), dated December 21, 1998, with
the Holders, pursuant to which the Company has agreed, among other things,
to issue 300,000 shares of its Series A Perpetual Convertible Preferred
Stock, par value $.01 per share (the "Preferred Stock"), to the Holders.
Pursuant to the terms of the Certificate of Designation with respect to the
Preferred Stock (the "Certificate of Designation"), the Preferred Stock is
convertible into shares of the Company's common stock, par value $.01 per
share (the "Common Stock"). This Agreement shall become effective upon the
issuance of the Preferred Stock to the Holders pursuant to the Stock
Purchase Agreement. Certain capitalized terms used in this Agreement are
defined in section 3 hereof; references to sections shall be to sections of
this Agreement.
2. Registration under Securities Act, etc.
2.1 Registration on Request.
(a) Request. At any time or from time to time after the
90th day following the issuance of the Preferred Stock pursuant to the
Stock Purchase Agreement, upon the written request of one or more
Initiating Holders, requesting that the Company effect the registration
under the Securities Act of all or part of such Initiating Holders'
Registrable Securities and specifying the intended method of disposition
thereof, the Company will promptly give written notice of such requested
registration to all registered holders of Registrable Securities, and
thereupon the Company will, subject to the terms of this Agreement, use its
best efforts to effect the registration under the Securities Act of:
(i) the Registrable Securities which the Company has
been so requested to register by such Initiating Holders for
disposition in accordance with the intended method of disposition
stated in such request;
(ii) all other Registrable Securities the holders of
which shall have made a written request to the Company for
registration thereof within 15 days after the giving of such written
notice by the Company (which request shall specify the intended method
of disposition of such Registrable Securities); and
(iii) all shares of Common Stock which the Company
or other holders of the Company's Common Stock having registration
rights may elect to register in connection with the offering of
Registrable Securities pursuant to this section 2.1,
all to the extent requisite to permit the disposition (in accordance with
the intended methods thereof as aforesaid) of the Registrable Securities
and the additional shares of Common Stock, if any so to be registered;
provided, that the Company shall not be required to effect any registration
pursuant to this section 2.1 (x) on more than three separate occasions and
(y) unless the Holders have requested to sell at least 2 million shares of
Registrable Securities or shares of Registrable Securities to be sold have
a fair market value (based upon the closing price of such Registrable
Securities quoted on the securities exchange or over-the-counter quotation
system on which such Registrable Securities are listed or quoted, as the
case may be, on the trading day immediately preceding any request pursuant
to this section 2.1) of at least $50 million; provided, however, the
Company shall be required, if so requested, to effect one additional
registration pursuant to this Section 2.1 subsequent to the third
anniversary of the issuance of the Preferred Stock to the Holders by the
Company which request may be made by Apollo or its Affiliates, whether or
not an Initiating Holder, and will not be subject to the volume or fair
market value limitations set forth in clause (y) above.
(b) Registration Statement Form. Registrations under this
section 2.1 shall be on such appropriate registration form of the
Commission as shall permit the disposition of such Registrable Securities
in accordance with the intended method or methods of disposition specified
in their request for such registration and as shall be permitted under the
Securities Act; provided, that such form shall not indicate that the
securities to be registered thereunder are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act.
(c) Expenses. The Company will pay all Registration
Expenses in connection with any registration requested pursuant to this
section 2.1 by any Initiating Holders. All other expenses (including
underwriting discounts and commissions and transfer taxes, if any) in
connection with each other registration requested under this section 2.1
shall be allocated pro rata among all Persons on whose behalf securities of
the Company are included in such registration, on the basis of the
respective amounts of the securities then being registered on their behalf.
(d) Effective Registration Statement. A registration
requested pursuant to this section 2.1 shall not be deemed to have been
effected (i) unless a registration statement with respect thereto has
become effective, provided that a registration which does not become
effective after the Company has filed a registration statement with respect
thereto solely by reason of the refusal to proceed of the Initiating
Holders (other than a refusal to proceed based upon the written advice of
counsel relating to a matter with respect to the Company) shall be deemed
to have been effected by the Company at the request of such Initiating
Holders unless the Initiating Holders shall have elected to pay all
Registration Expenses in connection with such registration, (ii) if, after
it has become effective, such registration becomes subject to any stop
order, injunction or other order or requirement of the Commission or other
governmental agency or court for any reason, other than by reason of some
act or omission by such Initiating Holders with respect thereto, (iii) if
the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such registration
are not satisfied, other than by reason of some act or omission by such
Initiating Holders or (iv) if the sale of the securities is not consummated
due to the lack of agreement between the Initiating Holders and the
underwriters with respect to the underwriting discount on the securities to
be sold.
(e) Selection of Underwriters. If a requested registration
pursuant to this section 2.1 involves an underwritten offering, the
managing or lead underwriter shall be selected by the Company and shall be
reasonably acceptable to the holders of at least a majority (by number of
shares) of the Registrable Securities as to which registration has been
requested, which shall not unreasonably withhold its acceptance of any such
underwriters, and any co-managing and co-lead underwriters shall be
selected by the Company.
(f) Priority in Requested Registrations. If a requested
registration pursuant to this section 2.1 involves an underwritten
offering, and the managing underwriter shall advise the Company in writing
(with a copy to each holder of Registrable Securities requesting
registration) that, in its opinion, the number of securities requested to
be included in such registration (including Common Stock of the Company or
other Persons which are not Registrable Securities) exceeds the number
which can be sold in such offering within a price range acceptable to the
holders of a majority of the Registrable Securities requested to be
included in such registration, the Company will include in such
registration, to the extent of the number which the Company is so advised
can be sold in such offering, (i) first, Registrable Securities requested
to be included in such registration by the holder or holders of Registrable
Securities, pro rata among such holders requesting such registration on the
basis of the number of such securities requested to be included by such
holders, (ii) second, Common Stock the Company proposes to sell and (iii)
third, Common Stock of the Company held by other Persons having
registration rights proposed to be included in such registration by the
holders thereof. Notwithstanding the foregoing, (A) in connection with the
first requested registration pursuant to this section 2.1 in any twelve
month period, the Company shall in all events be entitled to register and
sell up to 25% of the total number of shares of Common Stock to be
registered and (B) in connection with any subsequent requested registration
pursuant to this section 2.1 in such twelve month period, the Company shall
in all events be entitled to register and sell up to 50% of the total
number of shares of Common Stock to be registered; provided, that if the
Company registers and sells in excess of 33.3% of the total number of
shares of Common Stock to be registered, the request for registration
pursuant to this section 2.1 shall not be deemed to have been effected.
2.2 Incidental Registration.
(a) Right to Include Registrable Securities. If the
Company at any time after the 90th day following the issuance of the
Preferred Stock pursuant to the Stock Purchase Agreement proposes to
register any of its securities under the Securities Act (other than by a
registration on Form S-4 or any successor form, Form S-8, or any successor
form thereto, relating to a stock option plan, stock purchase plan,
managing directors' plan, savings or similar plan and other than pursuant
to section 2.1), whether or not for sale for its own account, it will each
such time give prompt written notice to all holders of Registrable
Securities of its intention to do so and of such holders' rights under this
section 2.2. Upon the written request of any such holder made within 10
Business Days after the receipt of any such notice (which request shall
specify the number of Registrable Securities intended to be disposed of by
such holder and the intended method of disposition thereof), the Company
will, subject to the terms of this Agreement, use its best efforts to
effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the
holders thereof, to the extent requisite to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the
Registrable Securities so to be registered, by inclusion of such
Registrable Securities in the registration statement which covers the
securities which the Company proposes to register, provided that if, at any
time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for
any reason either not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon, (i)
in the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses
in connection therewith), without prejudice, however, to the rights of any
holder or holders of Registrable Securities entitled to do so to request
that such registration be effected as a registration under section 2.1, and
(ii) in the case of a determination to delay registering, shall be
permitted to delay registering any Registrable Securities, for the same
period as the delay in registering such other securities. No registration
effected under this section 2.2 shall relieve the Company of its obligation
to effect any registration upon request under section 2.1, nor shall any
such registration hereunder be deemed to have been effected pursuant to
section 2.1. The Company will pay all Registration Expenses in connection
with each registration of Registrable Securities requested pursuant to this
section 2.2.
(b) Priority in Incidental Registrations. If the Company
at any time proposes to register any of its securities under the Securities
Act as contemplated by this section 2.2 and such securities are to be
distributed by or through one or more underwriters, the Company will, if
requested by any holder of Registrable Securities use its best efforts to
arrange for such underwriters to include all the Registrable Securities to
be offered and sold by such holder among the securities to be distributed
by such underwriters, provided that if the managing underwriter of such
underwritten offering shall inform the holders of the Registrable
Securities requesting such registration and the holders of any Common Stock
of the Company which shall have exercised, in respect of such underwritten
offering, registration rights comparable to the rights under this section
2.2, by letter of its belief that inclusion in such underwritten
distribution of all or a specified number of such Registrable Securities or
of such other securities of the Company so requested to be included would
interfere with the successful marketing of the securities so being
registered (other than such Registrable Securities and other Common Stock
of the Company so requested to be included) by the underwriters (such
writing to state the basis of such belief and the approximate number of
such Registrable Securities and shares of Common Stock so requested to be
included which may be included in such underwritten offering without such
effect), then the Company may, upon written notice to all holders of such
Registrable Securities and of such other shares of Common Stock of the
Company so requested to be included, exclude pro rata from such
underwritten offering (if and to the extent stated by such managing
underwriter to be necessary to eliminate such effect) the number of such
Registrable Securities and shares of such other Common Stock so requested
to be included the registration of which shall have been requested by each
holder of Registrable Securities and by the holders of such other Common
Stock so that the resultant aggregate number of such Registrable Securities
and of such other shares of Common Stock so requested to be included which
are included in such underwritten offering shall be equal to the
approximate number of shares stated in such managing underwriter's letter.
2.3 Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in sections 2.1
and 2.2, the Company shall, as expeditiously as possible:
(i) prepare and (in the case of a registration
pursuant to section 2.1, such filing to be made within 45 days after
the initial request of one or more Initiating Holders of Registrable
Securities or in any event as soon thereafter as possible) file with
the Commission the requisite registration statement to effect such
registration (including such audited financial statements as may be
required by the Securities Act or the rules and regulations
promulgated thereunder) and thereafter use its best efforts to cause
such registration statement to become and remain effective, provided
however that the Company may discontinue any registration of its
securities which are not Registrable Securities (and, under the
circumstances specified in section 2.2(a), its securities which are
Registrable Securities) at any time prior to the effective date of the
registration statement relating thereto, provided further that before
filing such registration statement or any amendments thereto, the
Company will furnish to the counsel selected by the holders of
Registrable Securities which are to be included in such registration
copies of all such documents proposed to be filed, which documents
will be subject to the review, but not the prior approval, of such
counsel;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement until the
earlier of such time as all of such securities have been disposed of
in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement or (i) in
the case of a registration pursuant to section 2.1, the expiration of
180 days after such registration statement becomes effective, or (ii)
in the case of a registration pursuant to section 2.2, the expiration
of 90 days after such registration statement becomes effective;
(iii) furnish to each seller of Registrable
Securities covered by such registration statement and each
underwriter, if any, of the securities being sold by such seller such
number of conformed copies of such registration statement and of each
such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424
under the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, as such seller and
underwriter, if any, may reasonably request;
(iv) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other securities laws or blue sky
laws of such jurisdictions as any seller thereof and any underwriter
of the securities being sold by such seller shall reasonably request,
to keep such registrations or qualifications in effect for so long as
such registration statement remains in effect, and take any other
action which may be reasonably necessary or advisable to enable such
seller and underwriter to consummate the disposition in such
jurisdictions of the securities owned by such seller, except that the
Company shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this subdivision (iv)
be obligated to be so qualified, to subject itself to taxation in any
such jurisdiction or to consent to general service of process in any
such jurisdiction;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities as
may be necessary to enable the seller or sellers thereof to consummate
the disposition of such Registrable Securities;
(vi) furnish to each seller of Registrable Securities a
signed counterpart, addressed to such seller and the underwriters, if
any, of:
(x) an opinion of counsel for the Company, dated the
effective date of such registration statement (or, if
such registration includes an underwritten public
offering, an opinion dated the date of the closing
under the underwriting agreement), reasonably
satisfactory in form and substance to such seller, and
(y) a "comfort" letter (or, in the case of any such
Person which does not satisfy the conditions for
receipt of a "comfort" letter specified in Statement on
Auditing Standards No. 72, an "agreed upon procedures"
letter), dated the effective date of such registration
statement (and, if such registration includes an
underwritten public offering, a letter of like kind
dated the date of the closing under the underwriting
agreement), signed by the independent public
accountants who have certified the Company's financial
statements included in such registration statement,
covering substantially the same matters with respect to
such registration statement (and the prospectus
included therein) and, with respect to events
subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to the
underwriters in underwritten public offerings of
securities (with, in the case of an "agreed upon
procedures" letter, such modifications or deletions as
may be required under Statement on Auditing Standards
No. 35) and, in the case of the accountants' letter,
such other financial matters, and, in the case of the
legal opinion, such other legal matters, as such seller
(or the underwriters, if any) may reasonably request;
(vii) notify the holders of Registrable Securities
and the managing underwriter or underwriters, if any, promptly and
confirm such advice in writing promptly thereafter:
(a) when the registration statement, the
prospectus or any prospectus supplement related thereto or post-
effective amendment to the registration statement has been filed,
and, with respect to the registration statement or any post-
effective amendment thereto, when the same has become effective;
(b) of any request by the Commission for
amendments or supplements to the registration statement or the
prospectus or for additional information;
(c) of the issuance by the Commission of any stop
order suspending the effectiveness of the registration statement
or the initiation of any proceedings by any Person for that
purpose;
(d) if at any time the representations and
warranties of the Company made as contemplated by section 2.4
below cease to be true and correct;
(e) of the receipt by the Company of any
notification with respect to the suspension of the qualification
of any Registrable Securities for sale under the securities or
blue sky laws of any jurisdiction or the initiation or threat of
any proceeding for such purpose; and
(viii) notify each seller of Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act,
upon the discovery that, or upon the happening of any event as a
result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made, and at the request of any such seller promptly prepare and
furnish to such seller and each underwriter, if any, a reasonable
number of copies of a supplement to or an amendment of such prospectus
as may be necessary so that, as thereafter delivered to the purchasers
of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made;
(ix) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
registration statement at the earliest possible moment;
(x) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months, but
not more than eighteen months, beginning with the first full calendar
month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder, and will furnish to each
such seller at least five business days prior to the filing thereof a
copy of any amendment or supplement to such registration statement or
prospectus and shall not file any thereof to which any such seller
shall have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the
requirements of the Securities Act or of the rules or regulations
thereunder;
(xi) subject to the provisions of section 2.5, make
available for inspection by a representative or representatives of the
holders of Registrable Securities to be included in such registration
statement, any underwriter participating in any disposition pursuant
to the registration statement and any attorney or accountant retained
by such selling holders or underwriter (each, an "Inspector"), all
financial and other records, pertinent corporate documents and
properties of the Company (the "Records"), and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any such Inspector in connection with such registration
in order to permit a reasonable investigation within the meaning of
Section 11 of the Securities Act;
(xii) provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered by such
registration statement from and after a date not later than the
effective date of such registration statement;
(xiii) enter into such agreements and take such
other actions as sellers of such Registrable Securities holding 51% of
the shares so to be sold or any underwriter shall reasonably request
in order to expedite or facilitate the disposition of such Registrable
Securities, including, without limitation, causing members of senior
management of the Company to participate in customary "road-show"
activities;
(xiv) use its best efforts to list all Registrable
Securities covered by such registration statement on any securities
exchange on which any of the securities of the same class as the
Registrable Securities are then listed; and
(xv) use its best efforts to provide a CUSIP number for
the Registrable Securities, not later than the effective date of the
registration statement.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company such
information regarding such seller and the distribution of such securities
as the Company may from time to time reasonably request in writing.
The Company will not file any registration statement or amendment
thereto or any prospectus or any supplement thereto (including such
documents incorporated by reference and proposed to be filed after the
initial filing of the registration statement) to which the holders of at
least a majority of the Registrable Securities covered by such registration
statement or the underwriter or underwriters, if any, shall reasonably
object, provided that the Company may file such document in a form required
by law or upon the advice of its counsel.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of
the occurrence of any event of the kind described in subdivision (viii) of
this section 2.3, such holder will forthwith discontinue such holder's
disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities until such holder's
receipt of the copies of the supplemented or amended prospectus
contemplated by subdivision (viii) of this section 2.3 and, if so directed
by the Company, will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in such holder's possession
of the prospectus relating to such Registrable Securities current at the
time of receipt of such notice. In the event the Company shall give any
such notice, the period mentioned in paragraph (ii) of this section 2.3
shall be extended by the length of the period from and including the date
when each seller of any Registrable Securities covered by such registration
statement shall have received such notice to the date on which each such
seller has received the copies of the supplemented or amended prospectus
contemplated by paragraph (viii) of this section 2.3.
If any such registration statement refers to any holder of Registrable
Securities by name or otherwise as the holder of any securities of the
Company, then such holder shall have the right to require (i) the insertion
therein of language, in form and substance satisfactory to such holder, to
the effect that the holding by such holder of such securities is not to be
construed as a recommendation by such holder of the investment quality of
the Company's securities covered thereby and that such holding does not
imply that such holder will assist in meeting any future financial
requirements of the Company, or (ii) in the event that such reference to
such holder by name or otherwise is not required by the Securities Act or
any similar federal statute then in force and a written opinion from
counsel to the holder to such effect is delivered to the Company, the
deletion of the reference to such holder.
2.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering by holders of Registrable
Securities pursuant to a registration requested under section 2.1, the
Company will enter into an underwriting agreement with such underwriters
for such offering, such agreement to be satisfactory in substance and form
to the Company, each such holder and the underwriters, and to contain such
representations and warranties by the Company and such other terms as are
generally prevailing in agreements of this type, including, without
limitation, indemnities at least as broad as those provided in section 2.6.
The holders of the Registrable Securities will cooperate with the Company
in the negotiation of the underwriting agreement and will give
consideration to the reasonable suggestions of the Company regarding the
form thereof, provided that nothing herein contained shall diminish the
foregoing obligations of the Company. The holders of Registrable
Securities to be distributed by such underwriters shall be parties to such
underwriting agreement and may, at their option, require that any or all of
the representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also be
made to and for the benefit of such holders of Registrable Securities and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to
the obligations of such holders of Registrable Securities. Any such holder
of Registrable Securities shall not be required to make any representations
or warranties to or agreements with the Company or the underwriters other
than representations and warranties or agreements regarding such holder,
such holder's Registrable Securities and such holder's intended method of
distribution and any other representation required by law.
(b) Incidental Underwritten Offerings. The holders of
Registrable Securities to be distributed by such underwriters shall be
parties to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of such holders of Registrable Securities and that
any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to
the obligations of such holders of Registrable Securities. Any such holder
of Registrable Securities shall not be required to make any representations
or warranties to or agreements with the Company or the underwriters other
than representations, warranties or agreements regarding such holder, such
holder's Registrable Securities and such holder's intended method of
distribution and any other representation required by law.
(c) Holdback Agreements.
(i) So long as a holder of Registrable Securities and
its Affiliates own Common Stock and/or Preferred Stock convertible
into Common Stock exceeding 5% of the Common Stock of the Company
outstanding (including Common Stock issuable upon conversion of the
Preferred Stock) or such holder has designated a member of the board
of directors of the Company pursuant to paragraph 6(ii) of the
Certificate of Designation which director continues to serve on such
board, such holder of Registrable Securities agrees, by acquisition of
such Registrable Securities, (x) if so required by the managing
underwriter, not to sell, make any short sale of, loan, grant any
option for the purchase of, effect any public sale or distribution of
or otherwise dispose of any Common Stock or Registrable Securities not
to be sold in an underwritten offering pursuant to section 2.1 or 2.2,
during the 30 days prior to the anticipated consummation of such
underwritten offering and 90 days after the applicable underwritten
registration pursuant to section 2.1 or 2.2 has become effective,
except as part of such underwritten registration and (y) in connection
with any acquisition by or merger with the Company which is accounted
for under generally accepted accounting principles as a pooling of
interest, upon the request of the Company, not to sell, make any short
sale of, loan, grant any option for the purchase of, effect any public
sale or distribution of or otherwise dispose of any Common Stock or
Registrable Securities, for the period commencing 30 days before the
effective date of such acquisition or merger until the publication of
the Company's financial results covering a period of at least 30 days
following such acquisition or merger which is sufficient in accordance
with Accounting Series Release No. 135, or such shorter period if
consistent with the requirements for pooling of interests accounting
treatment. Notwithstanding clause (x) of the foregoing sentence and
subject to clause (y), during any period described above, each holder
of Registrable Securities subject to the foregoing sentence shall be
entitled to sell securities in a private sale so long as the purchaser
of such securities agrees to be bound by the restrictions set forth
above to the same extent as the seller for the remainder of the
applicable period.
(ii) The Company agrees if so required by the managing
underwriter (x) not to sell, make any short sale of, loan, grant any
option for the purchase of, effect any public sale or distribution of
or otherwise dispose of its equity securities or securities
convertible into or exchangeable or exercisable for any of such
securities during the 30 days prior to and the 90 days after any
underwritten registration pursuant to section 2.1 has become
effective, except as part of such underwritten registration and except
in connection with (A) a merger or acquisition by the Company in which
securities of the Company are issued directly to shareholders of the
target entity or sellers of assets in exchange for shares of such
target entity or such assets or (B) a stock option plan, stock
purchase plan, managing directors' plan, savings or similar plan, or
an acquisition of a business, merger or exchange of stock for stock,
provided that no such agreement pursuant to this clause (x) shall
prevent the Company from fulfilling its obligations pursuant to
section 2.1 or 2.2, subject to the provisions of section 2.7 and (y)
to use its reasonable best efforts to cause each director and
executive officer of the Company and any holder (other than the
Holders) of its equity securities or any securities convertible into
or exchangeable or exercisable for any of such equity securities, in
each case purchased from the Company at any time after the date of
this Agreement (other than in a public offering and other than
securities issued to employees who are not directors or executive
officers of the Company pursuant to an employee benefit plan or
similar arrangement) to agree not to sell, make any short sale of,
loan, grant any option for the purchase of, effect any public sale or
distribution of or otherwise dispose of such securities during such
period, it being understood that no action is required by the Company
pursuant to this clause (y) until the managing underwriter requests.
(d) Participation in Underwritten Offerings. No Person
(other than the Company, which will be subject to and governed by the other
terms and provisions of this Agreement) may participate in any underwritten
offering hereunder unless such Person (i) agrees to sell such Person's
securities on the basis provided in any underwriting arrangements approved,
subject to the terms and conditions hereof, by the holders of a majority of
Registrable Securities to be included in such underwritten offering and
(ii) completes and executes all questionnaires, indemnities, underwriting
agreements and other documents (other than powers of attorney) required
under the terms of such underwriting arrangements. Notwithstanding the
foregoing, no underwriting agreement (or other agreement in connection with
such offering) shall require any holder of Registrable Securities to make
any representations or warranties to or agreements with the Company or the
underwriters other than representations and warranties or agreements
regarding such holder, such holder's Registrable Securities and such
holder's intended method of distribution and any other representation
required by law.
2.5 Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement, the Company will give the
holders of Registrable Securities registered under such registration
statement, their underwriters, if any, and their respective counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give
each of them such access to its books and records (collectively, the
"Records") and such opportunities to discuss the business of the Company
with its officers and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of such
holders' and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act; provided, that
Records which the Company determines, in good faith, to be confidential and
which it notifies such holder, underwriter, counsel or accountant are
confidential shall not be disclosed by such Person (other than to any
holder of Registrable Securities) unless (a) such Records have become
generally available to the public or (b) the disclosure of such Records may
be may be necessary or, in the case of clause (z) below, appropriate (x) in
compliance with any law, rule, regulation or order applicable to any such
holder, underwriter, counsel or accountant, (y) in response to any subpoena
or other legal process or (z) in connection with any litigation to which
such holder, underwriter, counsel or accountant is a party, and such Person
shall sign an agreement to such effect that shall be customary in form and
reasonably acceptable to the Company.
2.6 Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act
pursuant to this Agreement, the Company will, and hereby does agree to,
indemnify and hold harmless in the case of any registration statement filed
pursuant to section 2.1 or 2.2, the holder of any Registrable Securities
covered by such registration statement, its directors and officers, each
Person, if any, who controls such holder within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which such holder or any such director or officer or
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration
statement under which such securities were registered under the Securities
Act, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the case of any
preliminary prospectus, final prospectus or summary prospectus, in light of
the circumstances under which they were made, not misleading, and the
Company will reimburse such holder and each such director, officer, and
controlling person for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding, provided that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such holder specifically for
use therein. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such holder or any
such director, officer, underwriter or controlling person and shall survive
the transfer of such securities by such holder.
(b) Indemnification by the Sellers. As a condition to
including any Registrable Securities in any registration statement filed
pursuant to section 2.3, the Company shall have received from each seller
of Registrable Securities a written undertaking satisfactory to it from the
prospective seller of such Registrable Securities, to indemnify and hold
harmless (in the same manner and to the same extent as set forth in
subdivision (a) of this section 2.6) the Company, each director of the
Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, if such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such seller
specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Any such indemnity shall remain in
full force and effect, regardless of any investigation made by or on behalf
of the Company or any such director, officer or controlling person and
shall survive the transfer of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this section
2.6, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of
the commencement of such action, provided that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of
this section 2.6, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified, to the extent that the indemnifying party may wish, with counsel
reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof. No
indemnifying party shall, without the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement of any such
action which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation. No indemnified party
shall consent to entry of any judgment or enter into any settlement of any
such action the defense of which has been assumed by an indemnifying party
without the consent of such indemnifying party.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding subdivisions of this section 2.6 (with
appropriate modifications) shall be given by the Company and each seller of
Registrable Securities with respect to any required registration or other
qualification of securities under any Federal or state law or regulation of
any governmental authority, other than the Securities Act.
(e) Contribution. If the indemnification provided for in
the preceding subdivisions of this section 2.6 is unavailable to an
indemnified party in respect of any expense, loss, claim, damage or
liability referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such expense, loss, claim,
damage or liability (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the holder or
other Person, as the case may be, on the other from the distribution of the
Registrable Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and of
the holder or other Person, as the case may be, on the other in connection
with the statements or omissions which resulted in such expense, loss,
damage or liability, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one
hand and the holder or other Person, as the case may be, on the other in
connection with the distribution of the Registrable Securities shall be
deemed to be in the same proportion as the total net proceeds received by
the Company from the initial sale of the Registrable Securities by the
Company to the purchasers pursuant to the Stock Purchase Agreement bear to
the gain, if any, realized by the selling holder or the underwriting
discounts and commissions received by the underwriter, as the case may be.
The relative fault of the Company on the one hand and of the holder or
other Person, as the case may be, on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission to state a material fact relates
to information supplied by the Company, by the holder or by the other
Person and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission, provided
that the foregoing contribution agreement shall not inure to the benefit of
any indemnified party if indemnification would be unavailable to such
indemnified party by reason of the provisions contained in the first
sentence of subdivision (a) of this section 2.6, and in no event shall the
obligation of any indemnifying party to contribute under this subdivision
(e) exceed the amount that such indemnifying party would have been
obligated to pay by way of indemnification if the indemnification provided
for under subdivisions (a) or (b) of this section 2.6 had been available
under the circumstances.
The Company and the holders of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this
subdivision (e) were determined by pro rata allocation (even if the holders
and any underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
in the preceding sentence and subdivision (c) of this section 2.6, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subdivision (e), no holder of
Registrable Securities or underwriter shall be required to contribute any
amount in excess of the amount by which (i) in the case of any such holder,
the net proceeds received by such holder from the sale of Registrable
Securities or (ii) in the case of an underwriter, the total price at which
the Registrable Securities purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount of any
damages that such holder or underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission. No
Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
2.7 Suspension of Registration. Notwithstanding anything to the
contrary contained herein, the Company will not be required to file any
registration statement pursuant to section 2.1(a) or furnish any supplement
to a prospectus pursuant to section 2.3(viii) during any of the following
periods: (i) 30 days prior to the anticipated consummation of a public
offering by the Company of its securities and 90 days subsequent to the
consummation of such public offering where, in the good faith judgment of
the managing underwriter or underwriters thereof, such filing or furnishing
of such supplement would have an adverse effect on such offering, (ii) if
such filing or furnishing of such supplement is prohibited by applicable
law, (iii) if the filing of such registration statement or furnishing of
such supplement would require the Company to disclose a material financing,
acquisition or other corporate development, and the proper officers of the
Company shall have determined in good faith that such disclosure is not in
the best interest of the Company or (iv) during the period described in
section 2.4(c)(ii), provided that the Company may not delay the filing of
any registration statement or furnishing of such supplement pursuant to
this section 2.7 for more than an aggregate of 135 days in any twelve-month
period; and provided, further, that any such delay pursuant to this section
2.7 shall not in the aggregate exceed 135 days in any twelve-month period.
Notwithstanding the foregoing, in the case of a public offering by any
holder of the Company's capital stock (the "Selling Holder") pursuant to
rights granted by the Company to such holder similar to section 2.1, no
delay in the filing of a registration statement or the furnishing of a
supplement pursuant to clause (i) of the immediately preceding sentence
shall be for a time period longer than any similar time period for delay
imposed on such Selling Holder pursuant to the agreement with the Company
granting such Selling Holder registration rights. Upon the expiration of
the period described in clause (iii) of the first sentence of this section
2.7, the Company shall give prompt notice to all holders of Registrable
Securities and shall promptly file any registration statement requested to
be filed pursuant to 2.1(a) and furnish any prospectus supplement required
to be furnished pursuant to section 2.3(viii).
2.8 Other Agreements. The Company shall not enter into any
agreement or instrument which would conflict with or result in a breach or
violation of any of the terms or provisions of this Agreement. In
addition, the Company shall not enter into any agreement or instrument with
any Person (other than Apollo or its Affiliates) which grant such Person
rights similar to those in section 2.1 unless such agreement permits the
holders of Registrable Securities to exercise their rights pursuant to
section 2.2 hereof in connection with any registration statement filed
pursuant to which such Person will sell securities of the Company.
3. Tag-Along Rights.
3.1 Transfer of Common Stock. (a) Underwritten Offerings. In
connection with any proposed underwritten sale which is to be registered
with the Commission under the Securities Act (an "Underwritten Sale") of
Common Stock, or rights, options, warrants or other securities convertible
into or exchangeable into Common Stock, Beneficially Owned by Jacobs prior
to the fifth anniversary of the date of the issuance of the Preferred
Stock, no later than ten (10) Business Days prior to the filing of the
registration statement relating to such sale, Jacobs shall provide written
notice of such proposed sale to Apollo and any Affiliate of Apollo that
then Beneficially Owns any shares of Preferred Stock or Common Stock of the
Company. During such five-year period, Jacobs shall afford Apollo and any
such Affiliate of Apollo, the opportunity to participate proportionately in
such Underwritten Sale (based upon, with respect to Apollo and its
Affiliates, the Beneficial Ownership of Registrable Securities as of the
date of issuance of the Preferred Stock (including any shares of Common
Stock issuable upon conversion of the Preferred Stock) and, with respect to
Jacobs, 16.7 million shares (subject to customary anti-dilution adjustments
including, but not limited to, stock dividends, stock subdivisions, stock
combinations, reorganizations, recapitalizations and reclassifications
("Anti-Dilution Adjustments")) of Common Stock Beneficially Owned on the
date hereof or currently or hereafter issuable upon exercise of options or
warrants held on the date hereof, in each case less any of such shares of
Common Stock or Preferred Stock sold subsequent to the date hereof) by
selling Registrable Securities for the same consideration and otherwise on
the same terms as the sale by Jacobs.
(b) Other Offerings:
(i) Certain Definitions.
(1) The term "Jacobs Options" means rights,
options or warrants or other securities which are Beneficially
Owned on the date hereof by Jacobs and which are exercisable for,
convertible into or exchangeable for shares of Common Stock.
(2) The term "Excess Option Shares" means at any
time the amount by which (x) the number (subject to Anti-Dilution
Adjustments) of shares of Common Stock issuable or issued on
exercise, conversion or exchange of Jacobs Options, which Jacobs
shall then propose to sell or shall have sold since the date
hereof in private sales, public sales or otherwise, exceeds (y)
2,500,000 (subject to Anti-Dilution Adjustments).
(3) The term "Excess Common Shares" means at any
time the amount by which (x) the number (subject to Anti-Dilution
Adjustments) of shares of Common Stock which Jacobs shall then
propose to sell or shall have sold since the date hereof in
private sales, public sales or otherwise, but excluding any
shares acquired upon exercise of Jacobs Options, exceeds (y)
5,000,000 (subject to Anti-Dilution Adjustments).
(4) The term "144 Exempt Shares" means as of any
date, that number of shares of Common Stock which Jacobs could
then sell under the volume limitations of Rule 144, without
taking into account in calculating such volume limitation any
sales by Jacobs within the preceding 90 days only if Apollo shall
theretofore have had the right to participate in such sale under
section 3.1(a) or 3.1(b) and without regard as to whether or not
any proposed sale by Jacobs is in fact being made under Rule 144.
Notwithstanding the foregoing, the number of 144 Exempt Shares
shall be zero so long as Apollo and its Affiliates shall have
sold an aggregate of less than 7,000,000 shares (subject to Anti-
Dilution Adjustments) of Common Stock to Persons which at the
time of the sale are not Affiliates of Apollo in private sales,
public sales or otherwise.
(ii) Tag-Along. Prior to the fifth anniversary of the
issuance of the Preferred Stock, in connection with any proposed sale
by Jacobs (other than an Underwritten Sale or a sale of 144 Exempt
Shares which will be free from resale restrictions under the
Securities Act subsequent to such sale) of any Excess Option Shares or
any Excess Common Shares (each such sale, a "Covered Sale"), Jacobs
shall, as soon as practicable, but in any event no later than three
(3) or earlier than fifteen (15) Business Days prior to the trade date
of such Covered Sale, provide written notice of such proposed Covered
Sale to Apollo and any Affiliate of Apollo that then Beneficially Owns
shares of Preferred Stock or Common Stock of the Company. During such
five-year period, Jacobs shall afford Apollo and any Affiliate of
Apollo the opportunity to participate in each Covered Sale by selling
two shares of Registrable Securities for every three shares of Excess
Common Shares or Excess Option Shares to be sold in such Covered Sale
for the same consideration and otherwise on the same terms as the sale
by Jacobs; provided, however, if the number of Excess Common Shares or
Excess Option Shares exceeds by any amount (the "Over 50% Amount") 50%
of the total number of shares of Common Stock and Common Stock
issuable upon exchange of Jacobs Options to be sold by all Persons
(including, without limitation, Jacobs and Apollo) in such Covered
Sale, then Jacobs shall afford Apollo and its Affiliates the
opportunity to further participate in such Covered Sale by selling one
share of Registrable Securities for every one share of Excess Common
Shares or Excess Option Shares which is included in the Over-50%
Amount. To participate in any Covered Sale, except as provided below,
Apollo or its Affiliates must provide written notice to Jacobs, by
facsimile or otherwise, no later than three (3) Business Days after
the day Jacobs provides notice to Apollo and such Affiliate of such
Covered Sale pursuant to this paragraph.
Notwithstanding the foregoing requirement that Jacobs
provide three (3) Business Days prior notice of any Covered Sale,
Jacobs shall be required to give such notice of a Covered Sale
pursuant to an unsolicited bid which is reasonable in the
circumstances (an "Expedited Notice"), provided, that if such notice
is given less than one Business Day before the sale, then such notice
shall be given to Apollo no more than one hour after receipt of such
bid and not less than 30 minutes before the expiration of such bid.
Apollo and its Affiliates shall give notice to Jacobs of their binding
intention to participate in such sale a reasonable time after receipt
of such Expedited Notice, provided that notice from Apollo and its
Affiliates shall be deemed to be reasonable if given to Jacobs not
later than the later of 30 minutes after receipt of such notice or 30
minutes prior to the expiration of the bid. If, for example, Jacobs
receives an unsolicited bid at 1 p.m. which expires at 4 p.m. on the
same day, he must give notice no later than 2 p.m. in order for such
notice to be deemed reasonable. If he receives a bid at 1 p.m. which
expires at 1:30 p.m., he must give immediate notice to Apollo if he
intends to accept such bid, in order for such notice to be deemed
reasonable. A bid shall be considered solicited only if it is
responsive to an explicit request for a bid from Jacobs. A bid which
is responsive to an explicit request of Jacobs shall nevertheless be
deemed unsolicited if Jacobs provided Apollo notice of such request
immediately after making such request and such bid is received no
earlier than the day after such request and no later than seven days
after such request. A notice under this paragraph shall be given by
telephone or in person to the person or persons designated from time
to time by Apollo, who shall initially be Michael Gross, Andy Africk
or John Hannan, or such other persons who may be designated in writing
hereafter; provided that if Jacobs has used his best efforts to
telephone Apollos' designees at the numbers provided to him for that
purpose and has been unable to reach them, he will be deemed to have
given the required notice if he has left messages for each of such
persons and has sent a fax outlining the terms of the sale to the fax
numbers provided by Apollo for such purpose.
In addition, prior to the fifth anniversary of the issuance
of the Preferred Stock, Apollo may at any time provide to Jacobs a
notice (a "Sale Notice") in writing as to its intention to participate
in any Covered Sale until the earlier of (i) 30 days from the date of
such notice or (ii) receipt by Jacobs a written cancellation or
amendment of such notice, for a price equal to or greater than the
price specified in the Sale Notice and for a number of shares or a
percentage of shares equal to that set forth in such Sale Notice. In
the event of a Covered Sale entered into by Jacobs during the period
covered by such Sale Notice in a manner consistent with the terms of
the Sale Notice, if Jacobs is unable to give actual notice of the
Covered Sale because of his inability to speak to one of the persons
designated by Apollo, he shall include the Apollo shares in such
Covered Sale to the extent indicated in the Sale Notice.
(c) Notices. Unless otherwise specified herein, notices
given by Jacobs pursuant to section 3.1(a) and 3.1(b) shall be given by
facsimile transmission to each of (i) Michael D. Weiner at (310) 201-4166,
(ii) Michael Gross and Andrew Africk at (212) 261-4071 and (iii) Vincent
Pisano and Seth Pearlstein at (212) 735-2000, or in each case such other
facsimile number or to the attention of such other Person as Apollo shall
have furnished to Jacobs.
(d) Notwithstanding any other provisions of this Agreement,
the rights of Apollo and its Affiliates under this Section 3.1 shall be
transferable or assignable only to Affiliates of Apollo.
(e) Jacobs will not grant to any Person (other than Apollo
or any of its Affiliates) rights similar to those contained in section
3.1(b) which rights become effective before the rights granted to Apollo
and its Affiliates due to lesser thresholds than those contained in the
parenthetical of the first sentence of section 3.1(b).
(f) The rights granted Apollo and its Affiliates pursuant
to section 3.1(b) shall not apply to any sale or gift by Jacobs to a member
of his family or to any trust whose principal beneficiaries are Jacobs or
members of his family or to any gift to a charitable organization. The
obligations of Jacobs under this section shall not transfer to any Person
to whom Jacobs transfer securities other than an Affiliate of Jacobs, a
member of Jacob's family or any trust whose principal beneficiaries are
Jacobs or members of his family.
3.2 Priority in Registrations. In the event that, in connection
with an underwritten offering in which Jacobs is to sell securities of the
Company, the managing underwriter shall advise Jacobs and Apollo in writing
that, in its opinion, the number of securities requested to be included in
such offering exceeds the number which can be sold in such offering without
interfering with the successful marketing of the securities so being
registered, the number of shares to be sold may be reduced to such number
stated in the letter of the managing underwriter which can be sold without
interfering with the successful marketing of such securities. In such
circumstances, notwithstanding section 2.2(b) or the terms of the
Registration Rights Agreement, dated as of September 29, 1998 between the
Company, Jacobs and the other parties signatory thereto, the number of
shares Beneficially Owned by each of Apollo, its Affiliates and Jacobs to
be sold shall be reduced by the same percentage.
4. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
Affiliate: With respect to any entity, any other entity directly
or indirectly controlling or controlled by, or under direct or
indirect common control with, such specified entity. For
purposes of this definition, the term "control" means (I) the
power to direct the management and policies of an entity,
directly or through one or more intermediaries, whether through
the ownership of voting securities, by contract or otherwise or
(ii) without limiting the foregoing, the beneficial ownership of
50% or more of the voting power of the voting common equity of
such entity (on a fully diluted basis).
Apollo: Apollo Investment Fund IV, L.P., Apollo Overseas
Partners IV, L.P. and their Affiliates, collectively.
Beneficial Ownership or Beneficially Owned: With respect to any
person, any securities with respect to which such person is
deemed to have "beneficial ownership" as defined in rule 13d-3
under the Securities Exchange Act of 1934, as amended. For
purposes of this Agreement only, any holder of Preferred Stock
shall be deemed to be the beneficial owner of any shares of
Common Stock of the Company issuable upon conversion of such
Preferred Stock.
Business Day: Any day except a Saturday, Sunday or nationally
recognized holiday in the State of New York, United States of
America.
Commission: The Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
Common Stock: As defined in section 1.
Company: As defined in the introductory paragraph of this
Agreement.
Exchange Act: The Securities Exchange Act of 1934, or any
similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time. Reference to a particular section of the Securities
Exchange Act of 1934 shall include a reference to the comparable
section, if any, of any such similar Federal statute.
Holder: As defined in the introductory paragraph of this
Agreement.
Holder's Counsel: A single counsel (if any) designated by the
holders of not less than 25% of the aggregate principal amount of
the Registrable Securities to be sold pursuant to section 2.1 or
2.2; provided, however, that if more than one counsel is so
designated, the Holder's Counsel shall be the designee of the
holders that are holding the greater percentage of the
Registrable Securities.
Initiating Holders: Any holder or holders of Registrable
Securities holding at least 35% of the Registrable Securities (in
each case by number of shares at the time issued and
outstanding), and initiating a request pursuant to section 2.1
for the registration of all or part of such holder's or holders'
Registrable Securities.
Jacobs: Bradley S. Jacobs.
Person: A corporation, an association, a partnership, an
organization, business, an individual, a governmental or
political subdivision thereof or a governmental agency.
Preferred Stock: As defined in section 1.
Registrable Securities: The Common Stock or any other securities
issuable upon conversion of the Preferred Stock issued pursuant
to the Stock Purchase Agreement and any securities issued or
issuable with respect to any such Common Stock by way of stock
dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other
reorganization or otherwise which the holders thereof are
entitled to receive. As to any particular Registrable
Securities, once issued such securities shall cease to be
Registrable Securities when (a) a registration statement with
respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have
been disposed of in accordance with such registration statement,
(b) they shall have been distributed to the public pursuant to
Rule 144 (or any successor provision) under the Securities Act,
(c) they shall have been otherwise transferred, new certificates
for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of
them shall not require registration or qualification of them
under the Securities Act or any similar state law then in force,
or (d) they shall have ceased to be outstanding.
Registration Expenses: All expenses incident to the Company's
performance of or compliance with section 2, including, without
limitation, (a) all Commission and any NASD registration and
filing fees and expenses, (b) all fees and expenses in connection
with the registration or qualification of the Registrable
Securities for offering and sale under the State securities and
blue sky laws and, in the case of an underwritten offering,
determination of their eligibility for investment under the laws
of such jurisdictions as the managing underwriter or underwriters
may designate, including reasonable fees and disbursements, if
any, of counsel for the underwriters in connection with such
registrations or qualifications and determination, (c) all
expenses relating to the preparation, printing, distribution and
reproduction of the registration statement required to be filed
hereunder, each prospectus included therein or prepared for
distribution pursuant hereto, each amendment or supplement to the
foregoing, the expenses of preparing the Registrable Securities
for delivery and the expenses of printing or producing any
underwriting agreement(s) among underwriters and "Blue Sky" or
legal investment memoranda, any selling agreements and all other
documents in connection with the offering, sale or delivery of
Registrable Securities to be disposed of, (d) messenger,
telephone and delivery expenses of the Company, (e) fees and
expenses of any transfer agent and registrar with respect to the
Registrable Securities and any escrow agent or custodian, (f)
internal expenses of the Company (including, without limitation,
all salaries and expenses of the Company's officers and employees
performing legal or accounting duties), (g) fees, disbursements
and expenses of counsel and independent certified public
accountants of the Company (including the expenses of any
opinions or "cold comfort" letters required by or incident to
such performance and compliance), (h) fees, disbursements and
expenses of any "qualified independent underwriter" engaged for
acting in such capacity, (i) fees, expenses and disbursements of
any other persons retained by the Company, including special
experts retained by the Company in connection with such
registration, (k) all fees and expenses incurred in connection
with the qualification of the shares of Common Stock constituting
Registrable Securities for quotation on the Nasdaq National
Market, any over-the-counter market, or the listing of such
shares on any securities exchange and (l) in the case of an
underwritten offering, the reasonable fees, disbursements and
expenses of a single counsel retained by the Holders to represent
them in connection with such offering (the selection of such
counsel by such Holders to be made in the same manner as is
provided in the definition of the terms "Holders' Counsel").
Securities Act: The Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the Commission
thereunder, all as of the same shall be in effect at the time.
References to a particular section of the Securities Act of 1933
shall include a reference to the comparable section, if any, of
any such similar Federal statute.
Stock Purchase Agreement: As defined in section 1.
5. Rules 144 and 144A. The Company shall timely file the reports
required to be filed by it under the Securities Act and the Exchange Act
(including but not limited to the reports under sections 13 and 15(d) of
the Exchange Act referred to in subparagraph (c) of Rule 144 adopted by the
Commission under the Securities Act) and the rules and regulations adopted
by the Commission thereunder (or, if the Company is not required to file
such reports, will, upon the request of any holder of Registrable
Securities, make publicly available other information) and will take such
further action as any holder of Registrable Securities or any broker
facilitating such sale may reasonably request, all to the extent (i)
required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or (b) any similar rule
or regulation hereafter adopted by the Commission. The Company shall also
provide such information and otherwise use all reasonable commercial
efforts to cooperate with any holder of Registrable Securities in
connection with any other sale by such holder pursuant to another exemption
under the Securities Act, in each case to the extent such information or
other action by the Company may be necessary to effect such sale pursuant
to the applicable exemption. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder any information to be
delivered or filed in connection with the requirements of this Section 5.
6. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have
obtained the written consent to such amendment, action or omission to act,
of the holder or holders of 50% or more of the shares of Registrable
Securities and, in the case of any such amendment, action or omission to
act in respect of the first sentence of Section 5, the written consent of
each holder affected thereby. Each holder of any Registrable Securities at
the time or thereafter outstanding shall be bound by any consent authorized
by this section 6, whether or not such Registrable Securities shall have
been marked to indicate such consent.
7. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner
thereof, the beneficial owner thereof may, at its election, be treated as
the holder of such Registrable Securities for purposes of any request or
other action by any holder or holders of Registrable Securities pursuant to
this Agreement or any determination of any number or percentage of shares
of Registrable Securities held by any holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances
reasonably satisfactory to it of such owner's beneficial ownership of such
Registrable Securities.
8. Notices. Except as otherwise provided in this Agreement, all
notices, requests and other communications to any Person provided for
hereunder shall be in writing and shall be given to such Person (a) in the
case of a party hereto other than the Company, addressed to such party in
the manner set forth in the applicable Stock Purchase Agreement or at such
other address as such party shall have furnished to the Company in writing,
or (b) in the case of any other holder of Registrable Securities, at the
address that such holder shall have furnished to the Company in writing,
or, until any such other holder so furnishes to the Company an address,
then to and at the address of the last holder of such Registrable
Securities who has furnished an address to the Company, or (c) in the case
of the Company or Jacobs, at Four Greenwich Office Park, Greenwich,
Connecticut 06830 to the attention of its Chief Executive Officer, with a
copy to Oscar D. Folger at 521 Fifth Avenue, 24th floor, New York, New York
10175, or at such other address, or to the attention of such other officer,
as the Company shall have furnished to each holder of Registrable
Securities at the time outstanding. Each such notice, request or other
communication shall be effective (i) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (ii) if given by any other means (including,
without limitation, by air courier), when delivered at the address
specified above, provided that any such notice, request or communication to
any holder of Registrable Securities shall not be effective until received.
9. Assignment. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their
respective successors and assigns. In addition, the provisions of this
Agreement which are for the benefit of the parties hereto other than the
Company shall also be for the benefit of and enforceable by any subsequent
holder of any Registrable Securities that acknowledges such assignment in
writing and agrees to the terms hereof.
10. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only
and shall not limit or otherwise affect the meaning hereof.
11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE PRINCIPLES OF
CONFLICTS OF LAWS.
12. Counterparts. This Agreement may be executed simultaneously in
any number of counterparts, each of which shall be deemed an original, but
all such counterparts shall together constitute one and the same
instrument.
13. Entire Agreement. This Agreement embodies the entire agreement
and understanding between the Company and each other party hereto relating
to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter.
14. SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS AND APPELLATE
COURTS FROM ANY THEREOF. THE COMPANY HEREBY IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF TO THE COMPANY BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED, TO THE COMPANY
AT ITS ADDRESS SPECIFIED IN SECTION 7. THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVE TRIAL BY JURY, AND THE COMPANY HEREBY IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS.
15. Severability. If any provision of this Agreement, or the
application of such provisions to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such
provision to Persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
UNITED RENTALS, INC.
By: /s/ Bradley S. Jacobs
---------------------------
Name: Bradley S. Jacobs
Title: Chief Executive Officer
APOLLO INVESTMENT FUND IV, L.P.
By: Apollo Advisors, IV, L.P.,
its general partner
By: Apollo Capital Management IV,
Inc., its general partner
By: /s/ Andrew Africk
-------------------------
Name: Andrew Africk
Title: Vice President
APOLLO OVERSEAS PARTNERS IV, L.P.
By: Apollo Advisors, IV, L.P.,
its general partner
By: Apollo Capital Management IV,
Inc., its general partner
By: /s/ Andrew Africk
----------------------------
Name: Andrew Africk
Title: Vice President
/s/ Bradley S. Jacobs
------------------------
Bradley S. Jacobs
UNITED RENTALS, INC.
REGISTRATION RIGHTS AGREEMENT
Dated December 21, 1998
TABLE OF CONTENTS
Section Page
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . 1
2. Registration under Securities Act, etc. . . . . . . . . . 1
2.1 Registration on Request . . . . . . . . . . . . . . . 1
(a) Request . . . . . . . . . . . . . . . . . . . 1
(b) Registration Statement Form . . . . . . . . . 2
(c) Expenses . . . . . . . . . . . . . . . . . . . 3
(d) Effective Registration Statement . . . . . . . 3
(e) Selection of Underwriters . . . . . . . . . . 3
(f) Priority in Requested Registrations . . . . . 4
2.2 Incidental Registration . . . . . . . . . . . . . . . 4
(a) Right to Include Registrable
Securities . . . . . . . . . . . . . . . . . 4
(b) Priority in Incidental Registrations . . . . . . 5
2.3 Registration Procedures . . . . . . . . . . . . . . . 6
2.4 Underwritten Offerings . . . . . . . . . . . . . . 12
(a) Requested Underwritten Offerings . . . . . . . . 12
(b) Incidental Underwritten Offerings . . . . . . . 13
(c) Holdback Agreements . . . . . . . . . . . . . . 13
(d) Participation in Underwritten
Offerings . . . . . . . . . . . . . . . . . . . 15
2.5 Preparation; Reasonable Investigation . . . . . . . . 15
2.6 Indemnification . . . . . . . . . . . . . . . . . . . 16
(a) Indemnification by the Company . . . . . . . . . 16
(b) Indemnification by the Sellers . . . . . . . . . 17
(c) Notices of Claims, etc . . . . . . . . . . . . . 17
(d) Other Indemnification . . . . . . . . . . . . . 18
(e) Contribution . . . . . . . . . . . . . . . . . . 18
2.7 Suspension of Registration . . . . . . . . . . . . . 20
2.8 Other Agreements . . . . . . . . . . . . . . . . . . 21
3. Tag-Along Rights . . . . . . . . . . . . . . . . . . . . . 21
3.1 Transfer of Common Stock . . . . . . . . . . . . . . 21
(a) Underwritten Offerings . . . . . . . . . . . . . 21
(b) Other Offerings . . . . . . . . . . . . . . . . 22
(c) Notices . . . . . . . . . . . . . . . . . . . . 25
(d) . . . . . . . . . . . . . . . . . . . . . . . . 25
(e) . . . . . . . . . . . . . . . . . . . . . . . . 25
(f) . . . . . . . . . . . . . . . . . . . . . . . . 25
3.2 Priority in Registrations . . . . . . . . . . . . . 25
4. Definitions . . . . . . . . . . . . . . . . . . . . . . . 26
5. Rules 144 and 144A . . . . . . . . . . . . . . . . . . . . 29
6. Amendments and Waivers . . . . . . . . . . . . . . . . . . 30
7. Nominees for Beneficial Owners . . . . . . . . . . . . . . 30
8. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 30
9. Assignment . . . . . . . . . . . . . . . . . . . . . . . . 31
10. Descriptive Headings . . . . . . . . . . . . . . . . . . . 31
11. Governing Law . . . . . . . . . . . . . . . . . . . . . . 31
12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 31
13. Entire Agreement . . . . . . . . . . . . . . . . . . . . . 31
14. Submission to Jurisdiction . . . . . . . . . . . . . . . . 32
15. Severability . . . . . . . . . . . . . . . . . . . . . . . 32
EXHIBIT IV: Agreement pursuant to Rule 13d-1(k) filed herewith
Pursuant to Rule 13d-1(k) of Regulation 13D-G of the General Rules and
Regulations of the Securities ad Exchange Commission under the Securities
Exchange Act of 1934, as amended, the undersigned agree that the statement
to which this Exhibit is attached is filed on behalf of each of them in the
capacities set forth below.
APOLLO INVESTMENT FUND IV, L.P.
By: Apollo Advisors IV, L.P.,
its General Partner
By: Apollo Capital Management IV, Inc.,
its General Partner
By: /s/ Michael D. Weiner
-------------------------------------
Name: Michael D. Weiner
Title: Vice President, Apollo Capital
Management IV, Inc.
APOLLO OVERSEAS PARTNERS IV, L.P.
By: Apollo Advisors IV, L.P.,
its Managing General Partner
By: Apollo Capital Management IV, Inc.,
its General Partner
By: /s/ Michael D. Weiner
-------------------------------------
Name: Michael D. Weiner
Title: Vice President, Apollo Capital
Management IV, Inc.
APOLLO ADVISORS IV, L.P.
By: Apollo Capital Management IV, Inc.,
its General Partner
By: /s/ Michael D. Weiner
-------------------------------------
Name: Michael D. Weiner
Title: Vice President, Apollo Capital
Management IV, Inc.
