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EXHIBIT E
CERTIFICATE OF DESIGNATION
OF
CONVERTIBLE
PREFERRED STOCK, SERIES B
OF
NATIONSRENT, INC.
________________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
________________
NationsRent, Inc., a Delaware corporation (the "Company"), certifies that
pursuant to the authority contained in its Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation"), and in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, the Board of Directors of the Company on August 1, 2000 (the AAdoption
Date@), 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 B Convertible Preferred Stock (the "Preferred Stock"), consisting of
100,000 shares having the following powers, designations, 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 the Adoption Date, by the
Board of Directors, the terms of which do not expressly provide that it ranks
senior to or on a parity with the Preferred Stock as to dividend distributions
and distributions upon the liquidation, winding-up and dissolution of the
Company (collectively referred to with the Common Stock of the Company as
"Junior Securities"); (ii) on a parity with the Company's Series A Convertible
Preferred Stock and on a parity with any additional shares of Preferred Stock
issued by the Company in the future and any other class of capital stock or
series of preferred stock issued by the Company established after the Adoption
Date, by the Board of Directors, the terms of which expressly provide that such
class or series will rank on a parity with the Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up and dissolution
of the Company (collectively referred to as "Parity Securities"); and (iii)
junior to each class of capital
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stock or series of preferred stock issued by the Company established after the
Adoption Date, by the Board of Directors, the terms of which expressly provide
that such class or series will rank senior to the Preferred Stock as to dividend
distributions and/or distributions upon the liquidation, winding-up and
dissolution of the Company (collectively referred to as "Senior Securities").
Notwithstanding the foregoing, a security shall not be deemed to be a "Senior
Security" solely because such security has a stated dividend or interest coupon.
2. Dividends.
(i) In the event that the Company declares, makes or pays any dividends or
other distributions upon the Common Stock (whether payable in cash, securities,
rights or other property) other than dividends and distributions referred to in
paragraph 3(vi), the Company shall also declare and pay to the holders of the
Preferred Stock, in addition to any dividends payable to them pursuant to the
other provisions of this paragraph 2, at the same time that it declares and pays
such dividends or other distributions to the holders of the Common Stock (and
with the same record date), the dividends or distributions which would have been
declared and paid with respect to the Common Stock issuable upon conversion of
the Preferred Stock had all of the outstanding Preferred Stock been converted
immediately prior to the record date for such dividend or distribution, or if no
record date is fixed, the date as of which the record holders of Common Stock
entitled to such dividends or distributions are determined.
(ii) From and after the date on which the provisions of this paragraph
become applicable pursuant to paragraph 5(iii), if any (the "Dividend
Commencement Date"), the holders of shares of Preferred Stock shall be entitled
to receive on each Dividend Payment Date thereafter in respect of the Dividend
Period ending on such Dividend Payment Date (but excluding such Dividend Payment
Date), cumulative dividends payable in cash at a rate per annum equal to 8% of
the Liquidation Preference of each share of the then outstanding Preferred
Stock. If dividends on the Preferred Stock are in arrears and unpaid for a
period of 60 days or more, then an additional amount of dividends shall accrue
at a rate per annum equal to 2% of the Liquidation Preference of each share of
then outstanding Preferred Stock (the "Default Rate") from 60 days after the
first Dividend Payment Date on which dividends were not paid in full until such
time as all dividends in arrears have been paid in full, such additional
dividends to be cumulative and payable in cash. Dividends shall be fully
cumulative and shall accumulate and accrue on a daily basis (computed on the
basis of a 360-day year of twelve 30-day months) and compound annually at the
rate indicated above (the "Dividend Rate") and in the manner set forth herein,
whether or not they have been declared and whether or not there are profits,
surplus or other funds of the Company legally available for the payment of
dividends.
(iii) From and after the Dividend Commencement Date, so long as any shares
of Preferred Stock are outstanding, the Company shall not pay or set apart for
payment any full dividend on any of the Parity Securities or any dividend on any
of the Junior Securities (other than dividends in Parity Securities to the
holders of Parity Securities or dividends in Junior Securities to the holders of
Junior Securities), or make any payment on account of, or set apart for payment
money for a sinking or other similar fund for, the purchase, redemption or other
retirement of any of the Parity Securities or any of the Junior Securities or
any warrants, rights, calls or options exercisable for or convertible into any
of the Parity Securities or any of the Junior Securities, and shall not permit
any Person
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directly or indirectly controlled by the Company to purchase or redeem any of
the Parity Securities or any of the Junior Securities or any such warrants,
rights, calls or options, unless the Accrued Dividends on the Preferred Stock
for all Dividend Periods ended on or prior to the date of such payment in
respect of Parity Securities or Junior Securities have been or contemporaneously
are paid in full.
(iv) If the Company desires to make a partial dividend payment with respect
to any Parity Securities at a time when any Accrued Dividends on the Preferred
Stock have not been paid, it may do so as long as dividends upon shares of the
Preferred Stock and upon such Parity Securities are paid pro rata so that the
amount of dividends paid per share on the Preferred Stock and such Parity
Securities shall in all cases bear to each other the same ratio that the Accrued
Dividends per share on the Preferred Stock and the accrued dividends on such
Parity Securities bear to each other.
3. Conversion Rights.
(i) A holder of shares of Preferred Stock may convert such shares into
Common Stock at any time, unless previously redeemed, at the option of the
holder thereof. In the event of a Change in Control that is not an acquisition
which is accounted for under the "pooling-of-interests" method of generally
accepted accounting principles, shares of Preferred Stock may be converted at
any time whether before or after the effective time of the Change in Control,
but not after the time that the holder of shares has accepted a redemption offer
by the Company pursuant to paragraph 5. In the case of a Change in Control that
is an acquisition which is accounted for under the "pooling-of-interests" method
of generally accepted accounting principles, such shares may be converted at any
time up to the effective time of the Change in Control. In the case of a
redemption of shares of Preferred Stock pursuant to paragraph 6, such shares may
be converted at any time up to the time of redemption. Except as set forth in
paragraph 5(iii) and in the next sentence, for the purposes of conversion, each
share of Preferred Stock shall be valued at the Liquidation Preference which
shall be divided by the Conversion Price in effect on the Conversion Date to
determine the number of shares issuable upon conversion. If a holder of shares
of Preferred Stock gives written notice (a "Dividend Conversion Notice") to the
Company at least two Business Days but not more than 60 days prior to giving a
notice of conversion pursuant to paragraph 3(ii)(B) that it will be electing to
convert a specified number of shares of Preferred Stock and that it elects to
have any Accrued Dividends thereon that are payable prior to the Conversion Date
but remain unpaid as of the Conversion Date converted into Common Stock on the
Conversion Date (thereby affording the Company the opportunity to pay such
Accrued Dividends in cash prior to the Conversion Date so that they will not be
converted into Common Stock), then for the purposes of conversion, each share of
Preferred Stock shall be valued at the Liquidation Preference plus the amount of
Accrued Dividends thereon that are payable prior to the Conversion Date but
remain unpaid as of the Conversion Date, if any, which shall be divided by the
Conversion Price in effect on the Conversion Date to determine the number of
shares issuable upon conversion. Immediately following any such conversion, the
rights of the holders of converted Preferred Stock shall cease and the persons
entitled to receive the Common Stock upon the conversion of Preferred Stock
shall be treated for all purposes as having become the owners of such Common
Stock.
(ii) To convert Preferred Stock, a holder must (A) surrender the
certificate or certificates evidencing the shares of Preferred Stock to be
converted, duly endorsed in a form satisfactory to the Company, at the office of
the Company or transfer agent for the Preferred Stock, (B) notify the
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Company at such office that he elects to convert Preferred Stock and the number
of shares he wishes to convert, (C) state in writing the name or names in which
he wishes the certificate or certificates for shares of Common Stock to be
issued, and (D) pay any transfer or similar tax if required by clause (iv)
below. In the event that a holder fails to notify the Company of the number of
shares of Preferred Stock which he wishes to convert, he shall be deemed to have
elected to convert all shares represented by the certificate or certificates
surrendered for conversion. The date on which the holder satisfies all those
requirements is the "Conversion Date." As soon as practical following the
Conversion Date, the Company shall deliver a certificate representing the number
of full shares of Common Stock issuable upon the conversion, and a new
certificate representing the unconverted portion, if any, of the shares of
Preferred Stock represented by the certificate or certificates surrendered for
conversion. The person in whose name the Common Stock certificate is registered
shall be treated as the stockholder of record on and after the Conversion Date.
Except as expressly set forth in paragraph 3(i) or in the following provisions
of this paragraph 3(ii), no adjustment will be made for accrued and unpaid
dividends on shares of Preferred Stock which have been converted. The holder of
record of a share of Preferred Stock at the close of business on a record date
with respect to the payment of dividends on the Preferred Stock in accordance
with paragraph 2(i) hereof will be entitled to receive such dividends with
respect to such share of Preferred Stock on the corresponding dividend payment
date, notwithstanding the conversion of such share after such record date and
prior to such dividend payment date. Accrued Dividends under paragraph 2(ii)
with respect to the Dividend Period in which conversion of shares of Preferred
Stock occurs, and all other Accrued Dividends under paragraph 2(ii) that are not
converted into Common Stock on the Conversion Date pursuant to a Dividend
Conversion Notice, shall be paid by the Company in cash within five Business
Days after the Conversion Date. If a holder of Preferred Stock converts more
than one share at a time, the number of full shares of Common Stock issuable
upon conversion shall be based on the total Liquidation Preference of all shares
of Preferred Stock converted.
(iii) The Company shall not issue any fractional shares of Common Stock
upon conversion of Preferred Stock. Instead the Company shall pay a cash
adjustment based upon the closing price of the Common Stock on the principal
securities exchange on which the Common Stock is then listed on the Business Day
prior to the Conversion Date.
(iv) If a holder converts shares of Preferred Stock, the Company shall pay
any documentary, stamp or similar issue or transfer tax due on the issue of
shares of Common Stock upon the conversion. However, the holder shall pay any
such tax that is due because the shares are issued in a name other than the
holder's name.
(v) The Company has reserved and shall continue to reserve out of its
authorized but unissued Common Stock or its Common Stock held in treasury enough
shares of Common Stock to permit the conversion of the Preferred Stock in full.
The Company further covenants that it will list and keep listed on the New York
Stock Exchange, so long as the Common Stock shall be listed on the New York
Stock Exchange, all Common Stock issuable upon conversion of the Preferred
Stock. All shares of Common Stock that may be issued upon conversion of
Preferred Stock shall be fully paid and nonassessable. The Company shall
endeavor to comply with all securities laws regulating the offer and delivery of
shares of Common Stock upon conversion of Preferred Stock.
(vi) In case the Company shall pay or make a dividend or other distribution
on any class of capital stock of the Company in Common Stock, the Conversion
Price in effect at the opening of
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business on the day following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall be
reduced by multiplying such Conversion Price by a fraction the numerator of
which shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination and the denominator of which
shall be the sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day following the
date fixed for the determination of the holders entitled to such dividends and
distributions. For the purposes of this paragraph 3(vi), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the Company.
(vii) In case the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be reduced, and, conversely, in case the
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the Conversion Price in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be increased, in either case to equal the product of the
Conversion Price in effect on such date and a fraction the numerator of which
shall be the number of shares of Common Stock outstanding immediately prior to
such subdivision or combination, as the case may be, and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after such subdivision or combination, as the case may be. Such reduction or
increase, as the case may be, shall become effective immediately after the
opening of business on the day following the day upon which such subdivision or
combination becomes effective.
(viii) The capital reorganization, reclassification, conversion or
exchange of Common Stock into securities, including securities other than Common
Stock (other than a reclassification, conversion or exchange in connection with
a business combination to which paragraph 3(xv) below shall apply), shall be
deemed to involve (A) a distribution of such securities other than Common Stock
to all holders of Common Stock, and (B) a subdivision or combination, as the
case may be, of the number of shares of Common Stock outstanding immediately
prior to such reclassification, conversion or exchange into the number of shares
of Common Stock outstanding immediately thereafter (and the effective date of
such reclassification, conversion or exchange shall be deemed to be "the day
upon which such subdivision becomes effective" or "the day upon which such
combination becomes effective," as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of paragraph
3(vii) above).
(ix) No adjustment in the Conversion Price need be made until all
cumulative adjustments amount to 1% or more of the Conversion Price as last
adjusted. Any adjustments that are not made shall be carried forward and taken
into account in any subsequent adjustment. Any adjustment to the Conversion
Price carried forward and not theretofore made shall be made immediately prior
to the conversion of any shares of Preferred Stock pursuant hereto.
(x) For purposes of this paragraph 3, "Common Stock" includes any stock of
any class of the Company which has no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company and which
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is not subject to redemption by the Company. However, subject to the provisions
of paragraph 3(xv) below, shares issuable on conversion of shares of Preferred
Stock shall include only shares of the class designated as Common Stock of the
Company on the Preferred Stock Issue Date or shares of any class or classes
resulting from any reclassification, conversion or exchange thereof and which
have no preferences in respect of dividends or amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding-up of the
Company and which are not subject to redemption by the Company, provided that,
if at any time there shall be more than one such resulting class, the shares of
each such class then so issuable shall be substantially in the proportion which
the total number of shares of such class resulting from all such
reclassifications, conversions or exchanges bears to the total number of shares
of all such classes resulting from all such reclassifications, conversions or
exchanges.
(xi) No adjustment in the Conversion Price shall reduce the Conversion
Price below the then par value of the Common Stock.
(xii) Whenever the Conversion Price is adjusted, the Company shall
promptly mail to holders of Preferred Stock, first class, postage prepaid, a
notice of the adjustment. The Company shall file with the transfer agent for
the Preferred Stock, if any, a certificate from the Company's chief financial
officer briefly stating the facts requiring the adjustment and the manner of
computing it. In the event of any dispute thereon, the opinion of the Company's
independent public accountants, if accepted by the Board of Directors of the
Company, shall be conclusive and binding on the holders of the Preferred Stock
absent manifest error.
(xiii) Upon a determination by the Board of Directors of the Company, the
Company from time to time may reduce the Conversion Price if the Board of
Directors of the Company considers such reduction 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.
(xiv) If:
(A) the Company enters an agreement to consolidate or merge with, or
transfer all or substantially all of its assets to, another Person, and
stockholders of the Company must approve the transaction; or
(B) the Company adopts a plan of dissolution or liquidation of the
Company;
the Company shall mail to holders of the Preferred Stock, first class, postage
prepaid, a notice stating the proposed record or effective date, as the case may
be. The Company shall mail the notice at least 10 days before such date.
However, failure to mail the notice or any defect in it shall not affect the
validity of any transaction referred to in clause (A) or (B) of this paragraph
3(xiv).
(xv) In the case of any
(A) consolidation or merger of the Company with or into any other
Person in which the Common Stock is converted into securities of another
Person, or the right to receive cash or assets,
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(B) transaction consisting of a sale or transfer of all or
substantially all the assets of the Company in exchange for securities of
another Person, cash or assets followed by a liquidation, or
(C) capital reorganization or reclassification, conversion or exchange
of outstanding shares of Common Stock other than in connection with a
business combination,
then, except with respect to shares of Preferred Stock that the Company shall
become obligated to purchase upon due acceptance of an offer made by the Company
pursuant to paragraph 5 or unless the Preferred Stock shall be automatically
converted into Common Stock pursuant to paragraph 5, upon consummation of such
transaction, each share of Preferred Stock shall automatically become
convertible into the kind and amount of securities, or the right to receive cash
or other assets, receivable upon the consolidation, merger, liquidation, capital
reorganization, conversion, reclassification or exchange by a holder of the
number of shares of Common Stock into which such share of Preferred Stock might
have been converted immediately prior to such consolidation, merger,
liquidation, capital reorganization, conversion, reclassification or exchange
(assuming such holder of Common Stock failed to exercise any rights of election
and received per share the kind and amount of consideration receivable per share
by a plurality of non-electing shares). Appropriate adjustment (as determined
by the Board of Directors of the Company) shall be made in the application of
the provisions herein set forth with respect to the rights and interests
thereafter of the holders of Preferred Stock, to the end that the provisions set
forth herein (including provisions with respect to changes in and other
adjustment of the Conversion Price) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other securities or
property thereafter deliverable upon the conversion of Preferred Stock. If this
paragraph 3(xv) applies, paragraphs 3(vi), 3(vii) and 3(viii) shall be deemed
not to apply. Notwithstanding anything contained herein to the contrary, the
Company will not effect any transaction of the type referred to in clause (A),
(B) or (C) of this paragraph unless, prior to the consummation thereof, the
Surviving Person (as defined in paragraph 17) thereof, if it is not the Company,
shall assume, by written instrument mailed to each record holder of Preferred
Stock, at such holder's address as it appears on the transfer books of the
Company, the obligation to deliver to such holder such securities, cash or
assets to which, in accordance with the foregoing provisions, such holder is
entitled upon conversion. Nothing contained in this paragraph (xv) shall limit
the rights of holders of the Preferred Stock to convert the Preferred Stock in
connection with the transaction or limit the rights of holders under paragraph
5.
(xvi) In any case in which this paragraph 3 shall require that an
adjustment as a result of any event becomes effective from and after a record
date, the Company may elect to defer until after the occurrence of such event
the issuance to the holder of any shares of Preferred Stock converted after such
record date and before the occurrence of such event of the additional shares of
Common Stock issuable upon such conversion over and above the shares issuable on
the basis of the Conversion Price in effect immediately prior to adjustment;
provided, however, that if such event shall not have occurred and authorization
of such event shall be rescinded by the Company, the Conversion Price shall be
recomputed immediately upon such rescission to 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.
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4. Liquidation Preference. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Company, each holder of shares of the Preferred
Stock will be entitled to payment out of the assets of the Company available for
distribution of an amount equal to the Liquidation Preference per share of
Preferred Stock held by such holder, plus Accrued Dividends, if any, to the date
fixed for liquidation, dissolution or winding-up, before any distribution is
made on any Junior Securities, including, without limitation, Common Stock of
the Company. After payment in full of the Liquidation Preference and all
Accrued Dividends, if any, to which holders of Preferred Stock are entitled,
such holders will not be entitled to any further participation in any
distribution of assets of the Company. If, upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, the amounts payable with
respect to the Preferred Stock and all other Parity Securities are not paid in
full, the holders of the Preferred Stock and the Parity Securities will share
equally and ratably in any distribution of assets of the Company in proportion
to the full liquidation preference and accrued dividends, if any, to which each
is entitled. However, neither the voluntary sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other consideration) of all
or substantially all of the property or assets of the Company nor the
consolidation or merger of the Company with or into one or more Persons will be
deemed to be a voluntary or involuntary liquidation, dissolution or winding-up
of the Company, unless such sale, conveyance, exchange or transfer shall be in
connection with a liquidation, dissolution or winding-up of the business of the
Company.
5. Change in Control Provisions.
(i) If a Change in Control has occurred or the Company enters into a
binding agreement to effect a Change in Control, the Company shall give prompt
written notice of such Change in Control (or a proposed Change in Control)
describing in reasonable detail the material terms and date or anticipated date
of consummation thereof to each holder of Preferred Stock, and the Company shall
give each holder of Preferred Stock prompt written notice of any material change
in the terms or timing of such transaction.
(ii) In the case of an actual or proposed Change in Control that is not an
acquisition which is accounted for under the "pooling-of-interests" method of
generally accepted accounting principles and that has been approved or publicly
recommended by the Board of Directors of the Company, the Company shall be
obligated, by notice given at any time before the effective date of such Change
in Control or not more than 10 Business Days after the effective date of such
Change in Control, to offer to purchase within 20 Business Days after the Change
in Control all of the then outstanding Preferred Stock tendered under this
paragraph at a purchase price in cash per share equal to the Liquidation
Preference thereof plus an amount equal to 8% of the Liquidation Preference,
compounded annually from the Preferred Stock Issue Date to the purchase date,
plus Accrued Dividends, if any, to the date of redemption (the "Call Price");
provided, however, that in the case of a merger or consolidation where the
Company is not the surviving corporation or a sale or other disposition of
substantially all of the Company's assets, such notice shall be given at least
10 Business Days before the effective date of such Change in Control and such
offer shall be to purchase concurrently with the effectiveness of such Change in
Control. The Company shall in its Change in Control redemption offer afford to
the holders of Preferred Stock at least five Business Days after the mailing or
delivery of the Change in Control redemption offer in which to accept such
redemption offer by written notice to the Company; the failure by any holder to
accept such redemption offer within such time period shall be deemed a rejection
of such redemption offer.
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(iii) In the case of a Change in Control that is not an acquisition which
is accounted for under the "pooling-of-interests" method of generally accepted
accounting principles and that has not been approved or publicly recommended by
the Board of Directors of the Company, the Company may, at its option, make a
redemption offer (which may be contingent upon consummation of such Change in
Control) to the holders of the Preferred Stock in accordance with paragraph
5(ii), in which case all provisions of paragraph 5(ii) shall be applicable
except that if the Change in Control results from a tender offer, the Company
shall give written notice of such redemption offer at least two Business Days
prior to the expiration of the tender offer, provided that if the tender offer
is subsequently extended, any such notice given previously shall be deemed to be
rescinded and the Company shall have until two Business Days prior to the new
expiration date of the tender offer to give notice of a redemption offer. If
the Company does not give written notice of such redemption offer by the date
required by this paragraph 5(iii) or by paragraph 5(ii), as applicable
(the"Notice Deadline"), then (A) commencing on the day after the Notice
Deadline, and ending upon effectiveness of such Change in Control if it results
from a tender offer or on the 20th Business Day after the holder receives
written notice from the Company of the occurrence of such Change in Control if
it does not result from a tender offer, each holder of shares of Preferred Stock
shall have the right to convert each such share into a number of shares of
Common Stock equal to 110% of the Call Price per share of Preferred Stock
divided, in the case of a Change in Control resulting from a tender offer, by
the current market price per share of Common Stock as of the expiration of the
tender offer (determined as provided below), or, in the case of a Change in
Control not resulting from a tender offer, by the current market price per share
of Common Stock as of the effective time of the Change in Control (determined as
provided below), and (B) immediately following the effective time of the Change
in Control, the Liquidation Preference of all shares of Preferred Stock that
were not converted at or prior to the effective time of the Change in Control
shall automatically increase to an amount equal to 110% of the Call Price and
the provisions of paragraph 2(ii) entitling the holders of Preferred Stock to
receive dividends thereafter at the rate of 8% per annum shall automatically
become applicable with respect to such shares. For purposes of this paragraph
5(iii), the current market price per share of a security on any day shall be
deemed to be the closing price of such security on the principal securities
exchange or association or other market on which it is then traded on the
Trading Day preceding the day in question. Any conversion of shares of
Preferred Stock pursuant to the rights set forth in this paragraph 5(iii) shall
be made in accordance with the provisions of paragraph 3, except the provisions
of paragraph 3(i) specifying the number of shares of Common Stock into which the
shares of Preferred Stock are to be converted. The rights of a holder of shares
of Preferred Stock under this paragraph 5(iii) shall not limit such holder's
right to convert such shares at any time in accordance with paragraph 3 into the
number of shares of Common Stock determined pursuant to the provisions of
paragraph 3(i).
(iv) Upon the occurrence of a Change in Control that is an acquisition
which is accounted for under the "pooling-of-interests" method of generally
accepted accounting principles, each then outstanding share of Preferred Stock
at the effective time of the Change in Control will be automatically converted
into a number of shares of Common Stock equal to 110% of the Call Price per
share of Preferred Stock divided by the closing price of a share of Common Stock
on the principal securities exchange or association or other market on which it
is then traded on the Trading Day preceding the effective date of the Change in
Control.
(v) Notwithstanding anything to the contrary herein, offers by the Company
under this paragraph 5 shall comply with all procedural and other requirements
of federal and state securities
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laws then in effect, but no such provisions of such securities laws shall negate
the obligation of the Company to purchase shares of the Preferred Stock under
this paragraph 5 which are validly tendered and not withdrawn at the price set
forth herein.
(vi) "Change in Control" means the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), is or becomes the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of
more than 50% of the total voting capital stock of the Company; except that, in
the event that James L. Kirk, H. Wayne Huizenga, H. Family Investments, Inc. or
any holder of Preferred Stock or any Affiliate of such holder, either
individually or as part of a group shall become the beneficial owner of more
than 50% of the total voting capital stock of the Company, then such event shall
not constitute a Change in Control hereunder, unless, in the case of James L.
Kirk, H. Wayne Huizenga and H. Family Investments, Inc., the effect of such
event is that the Common Stock of the Company shall no longer be listed on a
national securities exchange or quoted on NASDAQ or another national securities
association, or (b) any Person consolidates with, or merges with or into, the
Company, or the Company consolidates with, or merges with or into, another
Person (other than a wholly-owned subsidiary of the Company) or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets to any Person, in any such event in a transaction in which the
outstanding voting capital stock of the Company is converted into or exchanged
for cash, securities or other property, provided that following any transaction
described in this subpart (b) the holders of voting stock of the Company
immediately prior to such transaction do not own more than 50% of the voting
power of the voting stock of the Person surviving such transaction or to which
such assets are transferred.
(vii) In connection with any tender offer (including any exchange offer)
for shares of Common Stock, holders of Preferred Stock shall have the right to
tender (or submit for exchange) shares of Preferred Stock in such a manner so as
to preserve the status of such shares as Preferred Stock until immediately prior
to such time as shares of Common Stock are to be purchased (or exchanged)
pursuant to such tender offer, at which time that portion of the shares of
Preferred Stock so tendered (or submitted) which is convertible into the number
of shares of Common Stock to be purchased (or exchanged) pursuant to the tender
offer shall be deemed converted into the appropriate number of shares of Common
Stack. Any shares of Preferred Stock not so converted shall be returned to the
holder as Preferred Stock.
6. Redemption at the Option of the Company. At any time after the first
anniversary of the Preferred Stock Issue Date, the Company may, at its election,
redeem, in whole but not in part, the shares of the then outstanding Preferred
Stock at a purchase price in cash per share of Common Stock issuable upon
conversion of such Preferred Stock equal to $9.00 compounded annually at the
rate of 20% per annum for the period from the first anniversary of the Preferred
Stock Issue Date up to and including the date of redemption, plus Accrued
Dividends, if any, to the date of redemption. The Company will mail or cause to
be delivered to each holder of the Preferred Stock a written notice of the
Company's election to redeem shares of Preferred Stock not less than thirty (30)
days prior to the date set for the redemption. The notice will state (i) the
total number of shares of the Preferred Stock being redeemed; (ii) the number of
shares of the Preferred Stock held by the holder that the Company intends to
redeem; (iii) the aggregate purchase price for the shares of Preferred Stock
being redeemed; (iv) the redemption date; and (v) that the holder is to
surrender to the Company, at the office of the Company or the transfer agent for
the Preferred Stock, the certificate
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or certificates representing the Preferred Stock to be redeemed. Such notice
shall be accompanied by a representation by the Company to the effect that the
consummation of the redemption will not render the Company insolvent or unable
to pay its debts as they become due, as well as an opinion of counsel to the
Company in form and substance reasonably satisfactory to the holders of the
Preferred Stock to the effect that the consummation of the redemption will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default (or an event that with the giving of
notice or the lapse of time or both would constitute a default) under, or give
rise to a right of termination, amendment, cancellation or acceleration of any
right or obligation of the Company or any of its subsidiaries under, or give
rise to a loss of any material benefit to which the Company or any of its
subsidiaries is entitled under, or require any consent, approval or
authorization under, any indenture, credit agreement or other material agreement
to which the Company or any of the subsidiaries is a party or by which any of
them are bound or to which any of their property is subject, or give the holder
of any note, debenture or other evidence of indebtedness the right to require
the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company or any of its subsidiaries. As soon as practical following the
redemption date and receipt of the certificate or certificates representing the
shares of Preferred Stock so redeemed, the Company shall deliver to the holder
the aggregate price payable in respect of the redeemed shares and a new
certificate representing the unredeemed portion of the shares, if any. At the
effective date of the redemption the redeemed shares shall no longer be deemed
outstanding shares of Preferred Stock for any purpose and shall thereafter only
be deemed to entitle the holder to receive the redemption price upon surrender
of the certificates formerly representing such shares of Preferred Stock.
7. Voting Rights.
(i) The holders of Preferred Stock shall be entitled to notice of all
stockholders meetings in accordance with the Company's bylaws and the Delaware
General Corporation Law (the "DGCL"), and except as set forth in paragraphs
7(ii) and (iii) below and as otherwise required by applicable law, the holders
of the Preferred Stock shall be entitled to vote (or act by written consent) on
all matters submitted to the stockholders for a vote (or for action), voting
together with the holders of the Common Stock as a single class, with each share
of Common Stock entitled to one vote per share and each share of Preferred Stock
entitled to one vote for each share of Common Stock issuable upon conversion of
the Preferred Stock as of the record date for such vote (or action) or, if no
record date is specified, as of the date of such vote (or action).
(ii) In the election of directors of the Company, the holders of the
Preferred Stock, voting separately as a single class to the exclusion of all
other classes or series of the Company's capital stock and with each share of
Preferred Stock entitled to one vote, shall be entitled to elect: (i) two
members of the Company's Board of Directors, provided that on the record date
for such vote, DB Capital Investors, L.P., J.P. Morgan Capital Corporation,
Investcorp S.A. ("Investcorp") and their Affiliates have voting and dispositive
power with respect to at least 66,666 shares of Preferred Stock; (ii) one member
of the Company's Board of Directors, provided that on the record date for such
vote, DB Capital Investors, L.P., J.P. Morgan Capital Corporation, Investcorp
and their Affiliates have voting and dispositive power with respect to less than
66,666 but at least 33,333 shares of Preferred Stock; or (iii) one member to the
Company's Board of Directors, provided that on the record date for such vote DB
Capital Investors, L.P., J.P. Morgan Capital Corporation, Investcorp and their
Affiliates have voting and dispositive power with respect to less than 33,333
shares of Preferred Stock
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but DB Capital Investors, L.P. and its Affiliates, J.P. Morgan Capital
Corporation and its Affiliates or Investcorp and its Affiliates have voting and
dispositive power with respect to at least 25,000 shares of Preferred Stock. In
the event that on the record date for such vote DB Capital Investors, L.P., J.P.
Morgan Capital Corporation, Investcorp and their Affiliates do not have the
voting and dispositive power required by the foregoing provisions for the
Preferred Stock to be entitled to elect directors as a separate class, the
holders of Preferred Stock will have no rights as a separate class to elect
directors and shall be entitled to vote for the election of directors on the
basis set forth in paragraph 7(i). A person may be a director nominee or a
successor director nominee of the holders of Preferred Stock only if he or she
is acceptable to the Company, provided that the Company's acceptance shall not
be unreasonably withheld. Nothing herein shall be construed as a limitation on
the right of the Board of Directors of the Company to increase the size of the
Board of Directors.
(iii) In addition to any other vote required by law, the affirmative vote
or consent of the holders of at least two-thirds of the shares of Preferred
Stock then outstanding voting or consenting as the case may be, as one class,
shall be required to:
(A) authorize, create (by way of reclassification or otherwise) or
issue any Senior Securities or any obligation or security convertible or
exchangeable into or evidencing the right to purchase, shares of any class
or series of Senior Securities;
(B) amend or otherwise alter the Certificate of Designation setting
forth this resolution or the Certificate of Incorporation in any manner
that under the Delaware General Corporation Law requires the prior vote as
a separate class of the holders of Preferred Stock;
(C) waive compliance with any provision of this Certificate of
Designation; or
(D) make repurchases of, optional redemptions of and/or tender offers
for, the capital stock of the Company, the aggregate fair market value of
which exceeds 5% of the Company's market capitalization (determined as
provided below) during any 12-month period that occurs in whole or in part
during the first five years after the Preferred Stock Issue Date. For
purposes of this clause (D), the Company's market capitalization shall be
the product of the then-current market price per share of the Common Stock
(determined as provided below) times the sum of the aggregate number of
shares of Common Stock then outstanding. For purposes of this clause (D),
the current market price per share of Common Stock on any day shall be
deemed to be the average of the closing prices of the Common Stock on the
principal securities exchange on which the Common Stock is then traded for
the 20 consecutive Trading Days ending the day before the day in question.
(E) authorize an amendment (including, but not limited to, an
amendment resulting from a merger or consolidation unless it constitutes a
Change in Control under paragraph 5) or waiver of the Company's Certificate
of Incorporation or of the Certificate of Designation setting forth this
resolution which would:
(1) alter the voting rights with respect to the Preferred Stock
or reduce the number of shares of Preferred Stock whose holders must
consent to an amendment, supplement or waiver;
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(2) reduce the Liquidation Preference or alter the provisions
with respect to the redemption of the Preferred Stock;
(3) alter in any manner the conversion rights of the holders of
Preferred Stock set forth in paragraph 3 hereof;
(4) reduce the rate of or change the time for payment of
dividends on any share of Preferred Stock;
(5) waive the consequences of any failure to pay dividends on the
Preferred Stock;
(6) make any share of Preferred Stock payable in any form other
than that stated in the Certificate of Designation setting forth this
resolution;
(7) make any change in the provisions of the Certificate of
Designation setting forth this resolution relating to waivers of the
rights of holders of Preferred Stock to receive the Liquidation
Preference and dividends on the Preferred Stock;
(8) waive a redemption payment with respect to any share of
Preferred Stock; or
(9) make any change in the foregoing amendment and waiver
provisions.
(iv) Notwithstanding any other provision hereof, the Company in its sole
discretion may in accordance with the provisions of applicable law without the
vote or consent of any holders of the Preferred Stock amend or supplement this
Certificate of Designation:
(A) to cure any ambiguity, defect or inconsistency in any manner that
does not adversely affect the holders of Preferred Stock;
(B) to provide for uncertificated Preferred Stock in addition to or in
place of certificated Preferred Stock; or
(C) to make any change that would provide any additional rights or
benefits to the holders of the Preferred Stock or that does not adversely
affect the rights under this Certificate of Designation of any such holder.
8. Merger, Consolidation and Sale of Assets. Except for transactions
which pursuant to paragraph 5 constitute a Change in Control, without the vote
or consent of the holders of a majority of the then outstanding shares of
Preferred Stock, the Company may not consolidate or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its assets to, any person unless, if the Company is not the Surviving Person,
the Preferred Stock is converted into or exchanged for and becomes shares of
such Surviving Person, having in respect of such Surviving Person the same (or
more favorable) powers, preferences and relative, participating, optional or
other special rights thereof that the Preferred Stock had immediately prior
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to such transaction. The Surviving Person of such transaction shall thereafter
be deemed to be the "Company" for all purposes of this Certificate of
Designation.
9. Reports. Provided the holders of the Preferred Stock are then entitled
under the Certificate of Designation setting forth this resolution to elect as a
class at least one member of the Company's Board of Directors pursuant to
paragraph 7(ii) then, the Company will deliver to each holder of Preferred Stock
having voting and dispositive power together with its Affiliates (or, in the
case of NR2 Holdings Limited, together with Investcorp and their respective
Affiliates) with respect to at least 20,000 shares of Preferred Stock, (a)
within three Business Days after their filing with the Commission, all documents
filed by it with the Commission pursuant to the Securities Act or the Exchange
Act, including exhibits thereto; and (b) promptly upon receipt thereof, copies
of all final reports submitted to the Company or any of its subsidiaries by
independent certified public accountants in connection with each annual, interim
or special audit of the books of the Company made by such accountants,
including, without limitation, any final comment letter submitted by such
accountants to management in connection with their annual audit. The Company
will also deliver to such holders, promptly upon their becoming available,
copies of all financial statements, reports, notices and proxy statements sent
or made available generally by the Company to its security holders in their
capacity as such or by any subsidiary of the Company to the Company's security
holders.
10. Amendment. Except as otherwise specifically set forth herein,
amendments to the Certificate of Designation setting forth this resolution may
be made by the Company only with the consent of the holders of two-thirds of the
outstanding shares of Preferred Stock and any other approvals required by
Delaware law.
11. Exclusion of Other Rights. Except as may otherwise be required by
law, the shares of Preferred Stock shall not have any voting powers, preferences
and relative, participating, optional or other special rights, other than those
specifically set forth in this resolution (as such resolution may be amended
from time to time) and in the Certificate of Incorporation. Except as provided
in paragraph 12, the shares of Preferred Stock shall have no preemptive or
subscription rights.
12. Preemptive Rights. Provided holders of Preferred Stock are entitled
under the Certificate of Designation setting forth this resolution to elect as a
class at least one member of the Company's Board of Directors pursuant to
paragraph 7(ii), then each holder of Preferred Stock having voting and
dispositive power together with its Affiliates (or, in the case of NR2 Holdings
Limited, together with Investcorp and their respective Affiliates) with respect
to at least 15,000 shares of Preferred Stock shall have preemptive rights to
purchase or subscribe to purchase any capital stock of the Company, or any
obligation or security convertible or exchangeable into or evidencing the right
to purchase any capital stock of the Company, offered from time to time by the
Company for cash in a public offering or private placement (other than any
shares of capital stock of the Company, or any obligation or security
convertible or exchangeable into or evidencing the right to purchase any capital
stock of the Company, including shares of capital stock of the Company issuable
upon conversion or exchange of any such right or obligation, issued or issuable
as consideration in a business combination or as compensation to an employee,
consultant or otherwise). In any case in which the rights of the holders of the
Preferred Stock under this paragraph 12 are applicable, the Company shall submit
a written offer to each holder of Preferred Stock identifying the stock,
obligations or securities proposed to be sold, the terms of the proposed sale
including but not limited to the price or the basis upon which the price is to
be calculated
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(provided that, in connection with any proposed sale intended to be
substantially at market price, the sales price disclosed can be substantially at
market) and, to the extent practicable under the circumstances, the identity of
the buyer or buyers, and offering to such holder the opportunity to purchase its
proportionate share of such securities on terms and conditions, including price,
not less favorable to the holder than those on which the Company proposes to
sell such securities to any other purchaser. Each holder shall have the right to
purchase its proportionate share of such securities based on the ratio which the
Common Stock of the Company owned by or issuable to such holder upon conversion
of any Preferred Stock that it owns bears to all the issued and outstanding
shares of Common Stock of the Company. Any holder may transfer its right to be
offered any such opportunity to any transferee that is an Affiliate of such
holder, a holder of Preferred Stock or an Affiliate of a holder of Preferred
Stock. The Company's offer to the holders of Preferred Stock shall remain open
and irrevocable for 5 Business Days. Any shares so offered to the holders which
they do not elect to purchase pursuant to such offer may be sold by the Company
in accordance with the terms of the proposed offering at any time within 180
days following the date of such offer, but may not be sold after such 180 day
period without renewed compliance with this paragraph 12.
13. Headings of Subdivisions. The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
14. Severability of Provisions. If any voting or other powers,
preferences and relative, participating, optional and other special rights of
the Preferred Stock and qualifications, limitations and restrictions thereof set
forth in the Certificate of Designation setting forth this resolution (as such
Certificate of Designation setting forth this resolution may be amended from
time to time) is invalid, unlawful or incapable of being enforced by reason of
any rule of law or public policy, all other voting or other powers, preferences
and relative, participating, optional and other special rights of Preferred
Stock and qualifications, limitations and restrictions thereof set forth in the
Certificate of Designation setting forth this resolution (as so amended) which
can be given effect without the invalid, unlawful or unenforceable voting or
other powers, preferences and relative, participating, optional or other special
rights of Preferred Stock and qualifications, limitations and restrictions
thereof shall, nevertheless, remain in full force and effect and no voting or
other powers, preferences and relative, participating, optional or other special
rights of Preferred Stock and qualifications, limitations and restrictions
thereof herein set forth shall be deemed dependent upon any other such voting or
other powers, preferences and relative, participating, optional or other special
rights of Preferred Stock and qualifications, limitations and restrictions
thereof unless so expressed herein.
15. Re-issuance of Preferred Stock. Shares of Preferred Stock that have
been issued and reacquired in any manner, including shares purchased or redeemed
or exchanged or converted, shall (upon compliance with any applicable provisions
of the laws of Delaware) have the status of authorized but unissued shares of
preferred stock of the Company undesignated as to series and may be designated
or re-designated and issued or reissued, as the case may be, as part of any
series of preferred stock of the Company, provided that any issuance of such
shares as Preferred Stock must be in compliance with the terms hereof.
16. Mutilated or Missing Preferred Stock Certificates. If any of the
Preferred Stock certificates shall be mutilated, lost, stolen or destroyed, the
Company shall issue, in exchange and in substitution for and upon cancellation
of the mutilated Preferred Stock certificate, or in lieu of and substitution for
the Preferred Stock certificate lost, stolen or destroyed, a new Preferred Stock
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certificate of like tenor and representing an equivalent amount of shares of
Preferred Stock, but only upon receipt of evidence of such loss, theft or
destruction of such Preferred Stock certificate and indemnity, if requested,
satisfactory to the Company and the transfer agent (if other than the Company).
17. Certain Definitions. As used in the Certificate of Designation
setting forth this resolution, the following terms shall have the following
meanings (with terms defined in the singular having comparable meanings when
used in the plural and vice versa), unless the context otherwise requires:
"Affiliate" shall have the meaning attributed thereto under Rule 12b-2
under the Securities Exchange Act of 1934, as amended.
"Accrued Dividends" to a particular date (the "Applicable Date") means (i)
all dividends accrued but not paid on the Preferred Stock pursuant to Section
2(ii), whether or not declared, prior to the Applicable Date, plus (ii) all
dividends or distributions payable pursuant to Section 2(i) which were not paid
or made, and the record date for which occurred, on or prior to the Applicable
Date.
"Business Day" means any day except a Saturday, a Sunday, or any day on
which banking institutions in New York, New York are required or authorized by
law or other governmental action to be closed.
"Closing price" shall mean the closing price of a share of Common Stock, as
reported in the Wall Street Journal, on the New York Stock Exchange or other
national securities exchange or other national quotation system on which the
Common Stock is then traded or quoted.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company as presently constituted.
"Conversion Price" shall initially mean $4.50 per share and thereafter
shall be subject to adjustment from time to time pursuant to the terms of
paragraph 3 hereof.
"Dividend Payment Date" means each January 1, April 1, July 1 and October
1.
"Dividend Period" means each quarterly period from a Dividend Payment Date
to the next following Dividend Payment Date (but without including such later
Dividend Payment Date), provided that the first Dividend Period shall be the
period from the Dividend Commencement Date to the next following Dividend
Payment Date (but without including such later Dividend Payment Date).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any Agency or political subdivision thereof or any other entity.
"Preferred Stock Issue Date" means the date on which the Preferred Stock is
originally issued by the Company under the Certificate of Designation setting
forth this resolution.
"Surviving Person" shall mean the continuing or surviving Person of a
merger, consolidation or other corporate combination, the Person receiving a
transfer of all or substantially all of the assets of the Company, or the Person
consolidating with or merging into the Company in a merger, consolidation or
other corporate combination in which the Company is the continuing or surviving
Person, in connection with which the Common Stock of the Company is exchanged,
converted or reinstated into the securities of any other Person or cash or any
other property; provided, however, if such Surviving Person is a direct or
indirect subsidiary of a Person, the parent entity also shall be deemed to be a
Surviving Person.
"Trading Day" means any day on which the New York Stock Exchange or other
applicable stock exchange or market is open for business.
IN WITNESS WHEREOF, the Company has caused this certificate to be duly
executed by James L. Kirk, Chairman of the Board and Chief Executive Officer of
the Company, on this 2nd day of August, 2000.
NATIONSRENT, INC.
By: /s/ James L. Kirk
-----------------------------
James L. Kirk
Chairman of the Board and Chief
Executive Officer
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