EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
RENT-A-CENTER HOLDINGS, INC.
FIRST: The name of the corporation is Rent-A-Center Holdings, Inc. (the
"CORPORATION").
SECOND: The address of the Corporation's registered office in the State
of Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or
promoted by the Corporation is to engage in any lawful business, act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware or any successor statute (the "DGCL").
FOURTH: The aggregate number of shares of capital stock which the
Corporation shall have authority to issue is 125,000,000 shares of common stock,
having a par value of $0.01 per share (the "COMMON STOCK"), and 5,000,000 shares
of preferred stock, having a par value of $0.01 per share (the "PREFERRED
STOCK").
SECTION I. PREFERRED STOCK
Shares of Preferred Stock may be issued from time to time in one or
more series as may be determined by the Board of Directors. Each series shall be
distinctly designated. As of the date hereof, 400,000 shares of Preferred Stock
are designated as Series A Preferred Stock, the designation, powers (including
voting powers and voting rights), preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions of which are set forth in the Certificate of Designations,
Preferences and Relative Rights and Limitations of Series A Preferred Stock of
Rent-A-Center Holdings, Inc. set forth in Exhibit "A" hereto and incorporated
herein by reference. The Board of Directors of the Corporation is hereby
expressly granted the authority to fix, by resolution or resolutions adopted
prior to the issuance of any shares of each additional series of Preferred Stock
and incorporated in a certificate of designation filed with the Secretary of
State of the State of Delaware, the designation, powers (including voting powers
and voting rights), preferences and relative, participating, optional or other
special rights, and the qualifications, limitations or restrictions thereof, if
any, of such series, including, but without limiting the generality of the
foregoing, the following:
(1) the designation of, and the number of shares of Preferred Stock
which shall constitute, the series, which number may be increased (except as
otherwise fixed by the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time by action of the
Board of Directors;
(2) the rate and times at which (or the method of determination
thereof), and the terms and conditions upon which, dividends, if any, on shares
of the series shall be paid, the nature of any preferences or the relative
rights of priority of such dividends to the dividends
payable on any other class or classes of stock of the Corporation or on any
other series of Preferred Stock of the Corporation, and a statement whether or
in what circumstances such dividends shall be cumulative;
(3) whether shares of the series shall be convertible into or
exchangeable for shares of capital stock or other securities or property of the
Corporation or of any other corporation or entity, and, if so, the terms and
conditions of such conversion or exchange, including any provisions for the
adjustment of the conversion or exchange rate in such events as the Board of
Directors shall determine;
(4) whether shares of the series shall be redeemable, and, if so, the
terms and conditions of such redemption, including the date or dates or event or
events upon or after the occurrence of which they shall be redeemable, and the
amount and type of consideration payable in case of redemption, which amount per
share may vary under different conditions and at different redemption dates;
(5) the rights, if any, of the holders of shares of the series upon the
voluntary or involuntary liquidation, merger, consolidation, distribution or
sale of assets, dissolution or winding up of the Corporation, and the relative
rights of priority, if any, of payment of shares of the series;
(6) whether shares of the series shall have a sinking fund or purchase
account for the redemption or purchase of shares of the series, and, if so, the
terms, conditions and amount of such sinking fund or purchase account;
(7) whether shares of the series shall have voting rights in addition
to the voting rights provided by law and, if so, the terms of such voting
rights, which may, without limiting the generality of the foregoing include (a)
the right to more or less than one vote per share on any or all matters voted
upon by the Corporation's stockholders (b) the right to vote, as a series by
itself or together with other series of Preferred Stock or together with all
series of Preferred Stock as a class or with the Common Stock as a class, upon
such matters, under such circumstances and upon such conditions as the Board of
Directors may fix, including, without limitation, the right, voting as a series
by itself or together with other series of Preferred Stock or together with all
series of Preferred Stock as a class, to elect one or more directors of the
Corporation generally in the event there shall have been a default in the
payment of dividends on any one or more series of Preferred Stock or under such
other circumstances and upon such conditions as the Board of Directors may
determine; and
(8) any other powers, preferences and relative, participating, optional
or other rights, and qualifications, limitations or restrictions of shares of
that series.
The relative powers, preferences and rights of each series of Preferred
Stock in relation to the powers, preferences and rights of each other series of
Preferred Stock shall, in each case, be as fixed from time to time by the Board
of Directors in the resolution or resolutions adopted pursuant to the authority
granted in this Section I, and the consent by class or series vote or otherwise,
of the holders of Preferred Stock of such of the series of Preferred Stock as
are from time to time outstanding shall not be required for the issuance by the
Board of Directors of any
2
other series of Preferred Stock, whether the powers, preferences and rights of
such other series shall be fixed by the Board of Directors as senior to, or on a
parity with, the powers, preferences and rights of such outstanding series, or
any of them; provided, however, that the Board of Directors may provide in such
resolution or resolutions adopted with respect to any series of Preferred Stock
that the consent of the holders of a majority (or such greater proportion as
shall be therein fixed) of the outstanding shares of such series voting thereon
shall be required for the issuance of shares of any or all other series of
Preferred Stock.
SECTION II. COMMON STOCK
(1) Dividends. After the requirements with respect to preferential
dividends on the shares of any series of Preferred Stock shall have been met and
after the Corporation shall have complied with all the requirements, if any,
with respect to the setting aside of sums as sinking funds or redemption or
purchase accounts and subject further to any other conditions which may be fixed
in accordance with the provisions of this Certificate of Incorporation, then,
but not otherwise, the holders of Common Stock shall be entitled to receive such
dividends, if any, as may be declared from time to time by the Board of
Directors on the Common Stock, which dividends shall be paid out of assets
legally available for the payment of dividends and shall be distributed to such
holders pro rata in accordance with the number of shares of such Common Stock
held by each such holder.
(2) Liquidation. After distribution in full of the preferential
amounts, if any, to be distributed to the holders of the shares of any series of
Preferred Stock in the event of voluntary or involuntary liquidation,
distribution or sale of assets, dissolution or winding-up of the Corporation,
the holders of the Common Stock shall be entitled to receive all the remaining
assets of the Corporation, tangible and intangible, of whatever kind available
for distribution to stockholders, which assets shall be distributed to such
holders pro rata in accordance with the number of shares of Common Stock held by
each such holder.
(3) Voting. Except as may otherwise be required by law, this
Certificate of Incorporation or the provisions of the resolution or resolutions
as may be adopted by the Board of Directors pursuant to Section I, each holder
of Common Stock shall have one vote in respect of each share of Common Stock
held by such holder on each matter voted upon by the stockholders.
SECTION III. CAPITAL STOCK
(1) Regarding Preemptive Rights. No stockholder of the Corporation
shall by reason of his holding shares of any class of stock have any preemptive
or preferential right to subscribe for, purchase or otherwise acquire or receive
any shares of any class of stock issued by the Corporation, whether now or
hereafter authorized, or any shares of any class of stock of the Corporation now
or hereafter acquired by the Corporation as treasury stock and subsequently
reissued or sold or otherwise disposed of, or any notes, debentures, bonds or
other securities convertible into or carrying options or warrants to purchase
shares of any class of stock, whether now or hereafter authorized, whether or
not the issuance of any such shares, or such notes, debentures, bonds or other
securities, would adversely affect the dividend or voting rights of such
stockholder, and the Board of Directors may issue shares of any class of stock
of the
3
Corporation, or any notes, debentures, bonds or other securities convertible
into or carrying options or warrants to purchase shares of any class of stock,
without offering any such shares of any class, either in whole or in part, to
the existing stockholders of any class.
(2) Cumulative Voting. Cumulative voting of shares of any capital stock
having voting rights is prohibited.
FIFTH: All corporate powers shall be exercised by the Board of
Directors, except as otherwise provided by law or by this Certificate of
Incorporation. The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors.
(1) Directors. In furtherance and not in limitation of the powers
conferred by statute, this Certificate of Incorporation or the Bylaws of the
Corporation, the Board of Directors is expressly authorized:
(a) except as may be otherwise provided in the Bylaws, to
make, alter, amend and repeal the Bylaws of the Corporation;
(b) to fix in or pursuant to the Bylaws from time to time the
number of directors of the Corporation, none of whom need to be
stockholders of the Corporation;
(c) to fix, determine and vary from time to time the amount to
be maintained as surplus and the amount or amounts to be set apart as
working capital; and
(d) to designate by resolution or resolutions passed by a
majority of the whole Board of Directors one or more committees, each
committee to consist of one or more of the directors of the
Corporation, which, to the extent provided in said resolution or
resolutions or in the Bylaws of the Corporation shall have and may
exercise the power of the Board of Directors in the management of the
business and affairs of the Corporation, and may authorize the seal of
the Corporation to be affixed to all papers on which the Corporation
desires to place a seal. Such committee or committees shall have such
name or names as may be stated in the Bylaws of the Corporation or as
may be determined from time to time by resolutions adopted by the Board
of Directors.
The Corporation may confer powers upon the Board of Directors of the
Corporation in its Bylaws in addition to the powers conferred upon the Board of
Directors in this Certificate of Incorporation and in addition to the powers and
authorities expressly conferred upon the Board of Directors by law.
(2) Number, Election and Terms of Directors. The number,
qualifications, terms of office, manner of election, time and place of meeting,
compensation and powers and duties of the directors may be prescribed from time
to time by the Bylaws, and the Bylaws may also contain any other provisions for
the regulation and management of the affairs of the Corporation not inconsistent
with the law or this Certificate of Incorporation.
The number of directors which shall constitute the whole Board of
Directors of the Corporation shall be not less than one (1) as specified from
time to time in the Bylaws of the Corporation. The directors, other than those
who may be elected by the holders of any series of
4
Preferred Stock, shall be divided into three classes, Class I, Class II and
Class III. Such classes shall be as nearly equal in number of directors as
possible. Each director shall serve for a term ending on the third annual
meeting following the annual meeting at which such director was elected;
provided, however, that the initial Class III directors shall serve for a term
expiring at the annual meeting next following the end of the calendar year 2002,
the initial Class I directors shall serve for a term expiring at the second
annual meeting next following the end of the calendar year 2002, and the initial
Class II directors shall serve for a term expiring at the third annual meeting
next following the end of the calendar year 2002. Each director shall hold
office until the annual meeting at which such director's term expires and, the
foregoing notwithstanding, shall serve until his successor shall have been duly
elected and qualified, unless he shall resign, become disqualified, disabled or
shall otherwise be removed.
The names and mailing addresses of the persons who are to serve as the
initial directors of the Corporation until the next annual meeting following the
end of the calendar year 2002 or until their successors are elected and
qualified are as follows:
<Table>
CLASS I DIRECTORS
Peter P. Copses Apollo Management, L.P.
1999 Avenue of the Stars, Suite 1900
Los Angeles, CA 90067
Mitchell E. Fadel Rent-A-Center Holdings, Inc.
5700 Tennyson Parkway, Third Floor
Plano, Texas 75024
Mary Elizabeth Burton 1221 Ocean Ave., #1108
Santa Monica, CA 90401
CLASS II DIRECTORS
Mark E. Speese Rent-A-Center Holdings, Inc.
5700 Tennyson Parkway, Third Floor
Plano, Texas 75024
Laurence M. Berg Apollo Management, L.P.
1999 Avenue of the Stars, Suite 1900
Los Angeles, CA 90067
CLASS III DIRECTORS
Andrew S. Jhawar Apollo Management, L.P.
1999 Avenue of the Stars, Suite 1900
Los Angeles, CA 90067
J. V. Lentell Intrust Bank, N.A.
105 North Main
Wichita, Kansas 67201
</Table>
At each annual election, the directors chosen to succeed those whose
terms then expire shall be of the same class as the directors they succeed,
unless, by reason of any intervening changes in the authorized number of
directors, the Board shall designate one ore more
5
directorships whose term then expires as directorships of another class in order
more nearly to achieve equality of number of directors among the classes.
Notwithstanding the rule that the three classes shall be as nearly
equal in number of directors as possible, in the event of any change in the
authorized number of directors, each director then continuing to serve as such
shall nevertheless continue as a director of the class of which he is a member
until the expiration of his current term, or his prior death, resignation or
removal. If any newly created directorship may, consistent with the rule that
the three classes shall be as nearly equal in number of directors as possible,
be allocated to one or two or more classes, the Board shall allocate it to that
of the available classes whose terms of office are due to expire at the earliest
date following such allocation.
Election of directors need not be by written ballot unless the Bylaws
of the Corporation shall so provide.
(3) Removal of Directors. No director of the Corporation shall be
removed from his office as a director by vote or other action of stockholders or
otherwise except for cause. Except as may otherwise be provided by law, cause
for removal of a director shall be deemed to exist only if: (i) the director
whose removal is proposed has been convicted, or where a director is granted
immunity to testify where another has been convicted, of a felony by a court of
competent jurisdiction and such conviction is no longer subject to direct
appeal; (ii) such director has been found by the affirmative vote of at least a
majority of the entire Board of Directors at any regular or special meeting of
this Board of Directors called for that purpose or by a court of competent
jurisdiction to have been grossly negligent or guilty of misconduct in the
performance of his duties to the Corporation in a matter of substantial
importance to the Corporation; or (iii) such director has been adjudicated by a
court of competent jurisdiction to be mentally incompetent, which mental
incompetency directly affects his ability as a director of the Corporation.
(4) Vacancies. Except as provided in Article Fourth hereof, newly
created directorships resulting from any increase in the number of directors and
any vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other cause shall be filled by the affirmative vote
of a majority of the remaining directors then in office, even though less than a
quorum of the Board of Directors. Any director elected in accordance with the
preceding sentence shall hold office for the remainder of the full term of the
class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been elected and
qualified. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
SIXTH: In the event the Corporation becomes subject to the reporting
requirements of the Securities Exchange Act of 1934, no action required to be
taken or that may be taken at any annual or special meeting of the stockholders
of the Corporation may be taken without a meeting, and the power of stockholders
to consent in writing to the taking of any action by written consent is
specifically denied, except for action by unanimous written consent, which is
expressly allowed. Except as otherwise required by law, special meetings of
stockholders of the Corporation may be called only by the Board of Directors of
the Corporation pursuant to a resolution approved by a majority of the entire
Board of Directors or majority of an entire committee of such Board.
6
Notwithstanding any other provision of this Certificate of
Incorporation or the Bylaws (and in addition to any other vote that may be
required by law, this Certificate of Incorporation or the Bylaws), there shall
be required to amend, alter, change or repeal, directly or indirectly, the
provisions of paragraphs (2), (3) and (4) of Article Fifth regarding the Board
of Directors of the Corporation, and this Article Sixth, regarding special
meetings of stockholders and action by written consent, the affirmative vote of
the holders of 80% of all voting stock of the Corporation.
SEVENTH: No director of the Corporation shall be personally liable to
the Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director involving any act or omission of any such director;
provided, however, that the foregoing provisions shall not eliminate or limit
the liability of a director (i) for any breach of such director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL, as the same exists or as such
provision may hereafter be amended, supplemented or replaced, or (iv) for any
transactions from which such director derived an improper personal benefit. If
the DGCL is amended after the filing of this Certificate of Incorporation to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation, in
addition to the personal liability provided herein, shall be limited to the
fullest extent permitted by such law, as so amended. Any repeal or modification
of this Article Seventh by the stockholders of the Corporation shall be
prospective only, and shall not adversely affect any limitation on the personal
liability of a director of the Corporation existing at the time of such repeal
or modification.
EIGHTH: The Corporation shall, to the fullest extent permitted by the
DGCL or other applicable law, as the same may be amended, supplemented and
replaced from time to time, indemnify any and all past, present and future
directors and officers of the Corporation from and against any and all costs,
expenses (including attorneys' fees), damages, judgments, penalties, fines,
punitive damages, excise taxes assessed with respect to an employee benefit plan
and amounts paid in settlement in connection with any action, suit or
proceeding, whether by or in the right of the Corporation, a class of its
security holders or otherwise, in which the director or officer may be involved
as a party or otherwise, by reason of the fact that such person was serving as a
director, officer, employee or agent of the Corporation.
NINTH: The Corporation shall have the right, subject to any express
provisions or restrictions contained in the Certificate of Incorporation, from
time to time to amend this Certificate of Incorporation or any provision thereof
in any manner now or hereafter provided by law, and all rights and powers at any
time conferred upon the directors or stockholders of the Corporation by this
Certificate of Incorporation and Bylaws or any amendment thereof are subject to
such right of the Corporation.
TENTH: The Bylaws of the Corporation may be altered, amended, added to
or repealed by the stockholders at any annual or special meeting by the vote of
stockholders entitled to cast at least a majority of the votes which all
stockholders are entitled to cast (i.e., by the vote of a majority of the
outstanding shares entitled to vote), and, except as may be otherwise required
by law, the power to alter, amend, add to or repeal the Bylaws is also vested in
the Board of Directors (subject always to the power of the stockholders to
change such action).
7
ELEVENTH: The powers of the incorporator shall terminate upon the
filing of this Certificate of Incorporation. The name and mailing address of the
incorporator are as follows:
NAME ADDRESS
Thomas W. Hughes c/o Winstead Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
8
EXECUTED as of this 26th day of November, 2002.
/s/ Thomas W. Hughes
-----------------------------------
Thomas W. Hughes, Incorporator
9
EXHIBIT A
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RELATIVE RIGHTS AND LIMITATIONS
OF
SERIES A PREFERRED STOCK
OF
RENT-A-CENTER HOLDINGS, INC.
----------
PURSUANT TO SECTION 151
OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
----------
RESOLVED, that pursuant to Paragraph Fourth, Section I of the
Certificate of Incorporation, there is hereby authorized such series of
preferred stock on the terms and with the provisions herein set forth:
1. Certain Definitions.
Unless the context otherwise requires, the terms defined in this
Section 1 shall have, for all purposes of this resolution, the meanings
specified (with terms defined in the singular having comparable meanings when
used in the plural).
Affiliate. The term "Affiliate" shall mean, with respect to any Person,
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person and, in the case of
a Person who is an individual, shall include (i) members of such specified
Person's immediate family (as defined in Instruction 2 of Item 404(a) of
Regulation S-K under the Securities Act) and (ii) trusts, the trustee and all
beneficiaries of which are such specified Person or members of such Person's
immediate family as determined in accordance with the foregoing clause (i). For
the purposes of this definition, control when used with respect to any person
means the power to direct the management and policies of such person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing. Notwithstanding the foregoing, the
Initial Holders and their Affiliates shall not be deemed Affiliates of the
Corporation.
Change of Control. The term "Change of Control" shall mean the
occurrence of any one of the following events: (I) the acquisition after the
Initial Issue Date, in one or more transactions, of beneficial ownership (within
the meaning of Rule 13d-3 under the Exchange Act) by (i) any person or entity
(other than any Permitted Holder) or (ii) any group of persons or entities
(excluding any Permitted Holders) who constitute a group (within the meaning of
Section 13(d)(3) of the Exchange Act), in either case, of any securities of the
Corporation such that, as a result of such acquisition, such person, entity or
group beneficially owns (within the meaning of Rule 13d-3 under the Exchange
Act), directly or indirectly, 40% or more of the then outstanding voting
securities entitled to vote on a regular basis for a majority of the Board of
Directors of the Corporation (but only to the extent that such beneficial
ownership is not shared
A-1
with any Permitted Holder who has the power to direct the vote thereof),
provided, however, that no such Change of Control shall be deemed to have
occurred if (A) the Permitted Holders beneficially own, in the aggregate, at
such time, a greater percentage of such voting securities than such other
person, entity or group or (B) at the time of such acquisition, the Permitted
Holders (or any of them) possess the ability (by contract or otherwise) to
elect, or cause the election of, a majority of the members of the Corporation's
Board of Directors; (II) the acquisition by any person of all or substantially
all of the assets of the Corporation; (III) the determination by the
Corporation's Board of Directors to recommend the acceptance of any proposal set
forth in a tender offer statement or proxy statement filed by any person with
the Securities and Exchange Commission which indicates the intention on the part
of that person to acquire, or acceptance of which would otherwise have the
effect of that person acquiring, control of the Corporation; or (IV) upon, other
than as a result of the death or disability of one or more of the directors
within a three-month period, a majority of the members of the Board of Directors
of the Corporation for any period of three consecutive months not being persons
who (a) had been directors of the Corporation for at least the preceding 24
consecutive months or were elected by the holders of the Series A Preferred
Stock, voting separately as a class, or (b) when they initially were elected to
the Board of Directors of the Corporation, (x) were nominated (if they were
elected by the stockholders) or elected (if they were elected by the directors)
with the affirmative concurrence of 66-2/3% of the directors who were Continuing
Directors at the time of the nomination or election by the Board of Directors of
the Corporation and (y) were not elected as a result of an actual or threatened
solicitation of proxies or consents by a person other than the Board or an
agreement intended to avoid or settle such a proxy solicitation (the directors
described in clauses (a) and (b) of this subsection (IV) being "Continuing
Directors"); provided, however, that no Change of Control shall be deemed to
have occurred by virtue of any merger of the Corporation with any wholly owned
subsidiary of the Corporation or any merger of two wholly owned subsidiaries of
the Corporation if, in any such merger, the proportionate ownership interests of
the stockholders of the Corporation remain unchanged.
Common Stock. The term "Common Stock" shall mean the common stock, par
value $.01 per share, of the Corporation.
Conversion Date. The term "Conversion Date" shall have the meaning set
forth in Sections 8(c) below, as applicable.
Conversion Price. The term "Conversion Price" shall have the meaning
set forth in Section 8(d) below.
Convertible Preferred Nominees. The term "Convertible Preferred
Nominees" shall have the meaning set forth in Section 4(b)(i) below.
Convertible Securities. The term "Convertible Securities" shall have
the meaning set forth in Section 8(f)(iii).
Corporation Notice. The term "Corporation Notice" shall have the
meaning set forth in Section 5(b)(ii)(A) below.
A-2
Current Market Price. The term "Current Market Price" shall mean the
current market price of the Common Stock as computed in accordance with Section
8(f)(xi) below.
Dividend Payment Date. The term "Dividend Payment Date" shall have the
meaning set forth in Section 3(a) below.
Dividend Rate. The term "Dividend Rate" shall have the meaning set
forth in Section 3(a) below.
Exchange Act. The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
Initial Holders. The term "Initial Holders" shall mean those holders of
Series A Preferred Stock as of the Initial Issue Date.
Initial Issue Date. The term "Initial Issue Date" shall mean the date
that shares of Series A Preferred Stock are first issued by the Corporation.
Initial Series A Preferred Shares. The term "Initial Series A Preferred
Shares" shall have the meaning set forth in Section 4(b)(i)(B) below.
IRR. The term "IRR" shall have the meaning set forth in Section
4(c)(ix) below.
Junior Stock. The term "Junior Stock" shall mean any stock of the
Corporation, other than the Common Stock, ranking junior to the Series A
Preferred Stock as to dividends and upon liquidation.
Liquidation. The term "Liquidation" shall mean any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary;
provided, that 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 Corporation, nor the
consolidation or merger of the Corporation with one or more other entities,
shall, by itself, be deemed a Liquidation.
Liquidation Preference Amount. The term "Liquidation Preference Amount"
shall mean an amount equal to the sum of (i) $1,000 per share of Series A
Preferred Stock, plus (ii) all accrued and unpaid dividends thereon calculated
in accordance with Sections 3(a) and 3(b) hereof.
Permitted Holder. The term "Permitted Holder" shall mean (i) Apollo
Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., or any entity
controlled by either of the foregoing or any of the partners of the foregoing,
(ii) an employee benefit plan of the Corporation or any subsidiary of the
Corporation, or any participant therein, (iii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation or any of
its subsidiaries or (iv) any Permitted Transferee of any of the foregoing
persons.
Permitted Transferee. The term "Permitted Transferee" shall mean, with
respect to any Person, (i) any officer, director or partner of, or Person
controlling, such Person, (ii) any other
A-3
Person that is (x) an Affiliate of the general partner(s), investment manager(s)
or investment advisor(s) of such Person, (y) an Affiliate of such Person or a
Permitted Transferee of an Affiliate or (z) an investment fund, investment
account or investment entity whose investment manager, investment advisor or
general partner thereof is such Person or a Permitted Transferee of such Person
or (iii) if a Permitted Transferee of a Person set forth in the foregoing
clauses (i) and (ii) is an individual, (x) any spouse or issue of such
individual, or any trust solely for the benefit of such individual, spouse or
issue, and (y) upon such individual's death, any Person to whom Shares are
transferred in accordance with the laws of descent and/or testamentary
distribution, in each case in a bona fide distribution or other transaction not
intended to avoid the provisions of this Agreement.
Person. The term "Person" shall mean an individual or a corporation,
limited liability company, partnership, trust, or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
Quarterly Dividend Period. The term "Quarterly Dividend Period" shall
have the meaning set forth in Section 3(a) below.
Redemption Date. The term "Redemption Date" shall have the meaning set
forth in Section 5(a)(ii) below.
Redemption Event. A Redemption Event will be deemed to occur at the
earliest of (i) the date upon which there is a Change of Control of the
Corporation, (ii) the date upon which the Corporation's Common Stock is not
listed for trading on a United States national securities exchange or the NASDAQ
National Market System, or (iii) the eleventh anniversary of the Initial Issue
Date.
Redemption Percentage. The term "Redemption Percentage" shall have the
meaning set forth in Section 5(a)(i) below.
Redemption Price. The term "Redemption Price" shall have the meaning
set forth in Section 5(a)(i) below.
Repurchase Date. The term "Repurchase Date" shall have the meaning set
forth in Section 5(b)(i) below.
Repurchase Price. The term "Repurchase Price" shall have the meaning
set forth in Section 5(b)(i) below.
Securities Act. The term "Securities Act" shall mean the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder.
Series A Preferred Stock. The term "Series A Preferred Stock" shall
mean the Series A Preferred Stock authorized hereby.
Trading Days. The term "Trading Days" shall have the meaning set forth
in Section 8(f)(xi) below.
A-4
2. Designation.
The series of preferred stock authorized hereby shall be designated as
the "Series A Convertible Preferred Stock." The number of shares constituting
such series shall initially be Four Hundred Thousand (400,000). The par value of
the Series A Preferred Stock shall be $.01 per share.
3. Dividends.
(a) The holders of the shares of Series A Preferred Stock shall be
entitled to receive cumulative quarterly dividends at a dividend rate equal to
3 3/4% per annum (the "DIVIDEND RATE") computed on the basis of $1,000 per
share, when and as declared by the Board of Directors of the Corporation, out of
funds legally available for the payment of dividends; provided, however, for the
five-year period commencing with the Initial Issue Date, payments of dividends
may be made, at the election of the Corporation, either (i) in cash or (ii) by
issuing a number of additional fully paid and nonassessable shares (and/or
fractional shares) of Series A Preferred Stock for each such share (or
fractional share) of Series A Preferred Stock then outstanding determined by
dividing (x) the dividend then payable on each such share (or fractional share)
of Series A Preferred Stock (expressed as a dollar amount) by (y) 1,000.
Quarterly dividend periods (each a "QUARTERLY DIVIDEND PERIOD") shall commence
on January 1, April 1, July 1 and October 1, in each year, except that the first
Quarterly Dividend Period shall commence on the date of issuance of the Series A
Preferred Stock, and shall end on and include the day immediately preceding the
first day of the next Quarterly Dividend Period. Dividends on the shares of
Series A Preferred Stock shall be payable on March 31, June 30, September 30,
and December 31 of each year (a "DIVIDEND PAYMENT DATE"), commencing September
30, 1998. Each such dividend shall be paid to the holders of record of the
Series A Preferred Stock as they shall appear on the stock register of the
Corporation on such record date, not exceeding 45 days nor less than 10 days
preceding such Dividend Payment Date, as shall be fixed by the Board of
Directors of the Corporation or a duly authorized committee thereof.
Notwithstanding the foregoing paragraph, (A) for the four Quarterly
Dividend Periods commencing with the ninth Quarterly Divided Period following
the Initial Issue Date, no dividend shall be paid or accrued for any Quarterly
Dividend Period in which the Current Market Price as of the related Dividend
Payment Date is equal to or greater than two (2) times the Conversion Price and
(B) for each Quarterly Dividend Period commencing with the thirteenth Quarterly
Dividend Period following the Initial Issue Date, no dividend shall be paid or
accrued for any Quarterly Dividend Period in which the Current Market Price as
of the related Dividend Payment Date is equal to or greater than the Conversion
Price accumulated forward to the payment date at a compound annual growth rate
of Twenty-Five Percent (25%) per annum compounded quarterly.
If, on any Dividend Payment Date, the full dividends provided for in
this Section 3(a) are not declared or paid to the holders of the Series A
Preferred Stock, whether in cash or in additional shares of Series A Preferred
Stock, then such dividends shall cumulate, with additional dividends thereon,
compounded quarterly, at the dividend rate applicable to the Series A Preferred
Stock as provided in this Section 3(a), for each succeeding full Quarterly
Dividend Period during which such dividends shall remain unpaid. In the event
the Corporation elects to
A-5
pay dividends in additional shares of Series A Preferred Stock, the Corporation
shall on the Dividend Payment Date deliver to the holders certificates
representing such shares.
Notwithstanding anything to the contrary herein, in the event any
conversion, redemption or liquidation occurs as of a date other than on a
Dividend Payment Date, the holders of Series A Preferred Stock shall be paid a
pro rata dividend equal to the dividend payable for that Quarterly Dividend
Period multiplied by a fraction, the numerator of which is the number of days
that have elapsed since the last Dividend Payment Date and the denominator of
which is the number of days in the Quarterly Dividend Period in which the
conversion, redemption or liquidation occurs.
(b) The amount of any dividends accrued on any share of the Series A
Preferred Stock on any Dividend Payment Date shall be deemed to be the amount of
any unpaid dividends accumulated thereon to and including such Dividend Payment
Date, whether or not earned or declared. The amount of dividends accrued on any
share of the Series A Preferred Stock on any date other than a Dividend Payment
Date shall be deemed to be the sum of (i) the amount of any unpaid dividends
accumulated thereon to and including the last preceding Dividend Payment Date,
whether or not earned or declared, and (ii) an amount determined by multiplying
(x) the Dividend Rate by (y) a fraction, the numerator of which shall be the
number of days from the last preceding Dividend Payment Date to and including
the date on which such calculation is made and the denominator of which shall be
the full number of days in such Quarterly Dividend Period.
(c) Immediately prior to authorizing or making any distribution in
redemption or liquidation with respect to the Series A Preferred Stock (other
than a purchase or acquisition of Series A Preferred Stock pursuant to a
purchase or exchange offer made on the same terms to holders of all outstanding
Series A Preferred Stock), the Board of Directors shall, to the extent of any
funds legally available therefor, declare a dividend in cash on the Series A
Preferred Stock payable on the distribution date in an amount equal to any
accrued and unpaid dividends on the Series A Preferred Stock as of such date.
4. Voting Rights.
(a) Except as otherwise required by law, the shares of Series A
Preferred Stock shall be entitled to vote together with the shares of voting
Common Stock as one class at all annual and special meetings of stockholders of
the Corporation, and to act by written consent in the same manner as the Common
Stock, upon the following basis: each holder of Series A Preferred Stock shall
be entitled to such number of votes for the Series A Preferred Stock held by the
holder on the record date fixed for such meeting, or on the effective date of
such written consent, as shall be equal to the number of whole shares of Common
Stock into which all of such holder's shares of Series A Preferred Stock are
convertible immediately after the close of business on the record date fixed for
such meeting or the effective date of such written consent.
(b) (i) The holders of Series A Preferred Stock, voting as a separate
class shall have the right to elect such number of directors (the "CONVERTIBLE
PREFERRED NOMINEES") of the Corporation as set forth below, in addition to such
holders' rights to vote for the election of directors, generally, in accordance
with Section 4(a):
A-6
(A) Subject to Section 4(b)(i) (B) below, the number of
Convertible Preferred Nominees shall be two (2). One Convertible Preferred
Nominee shall be classified as a Class I Director of the Corporation, and the
other Convertible Preferred Nominee shall be classified as a Class II Director
of the Corporation. Each of the Finance Committee , the Audit Committee and the
Compensation Committee of the Board of Directors shall have one Convertible
Preferred Nominee as a member; and, in the event the Corporation establishes an
Executive Committee of the Board of Directors, at least one Convertible
Preferred Nominee shall be a member of such Executive Committee.
(B) At such time as the Initial Holders together with any and
all of their Permitted Transferees cease to hold in aggregate 50% or more of the
number of the Initial Series A Preferred Shares, the holders of Series A
Preferred Stock shall be entitled to elect one Convertible Preferred Nominee
under this Certificate; and, at such time as the Initial Holders cease to hold
in aggregate 10 % or more of the number of the Initial Series A Preferred
Shares, the holders of Series A Preferred Stock shall no longer be entitled to
elect any Convertible Preferred Nominees under this Certificate.
(ii) The holders of the Series A Preferred Stock may exercise any
right under Section 4(b)(i) to elect directors at a special meeting of the
holders of the Series A Preferred Stock, at an annual meeting of the
stockholders of the Corporation held for the purpose of electing directors, and
in each written consent executed in lieu of any such meetings.
(iii) A director elected in accordance with Section 4(b)(i) will
serve until the next annual meeting of stockholders of the Corporation at which
other directors of the Corporation of the same class shall be elected and until
his or her successor is elected and qualified by the holders of the Series A
Preferred Stock, except as otherwise provided in the Corporation's Certificate
of Incorporation or Bylaws.
(iv) Notwithstanding anything to the contrary contained herein,
the provisions of this Section 4(b) shall inure only to the benefit of the
Initial Holders and their Permitted Transferees, and any shares of Series A
Preferred Stock subsequently transferred by the Initial Holders to any Person
other than one of their Permitted Transferees shall not be entitled to the
benefits of this Section 4(b).
(c) While any shares of Series A Preferred Stock are outstanding, the
Corporation will not, directly or indirectly, including through a merger or
consolidation with any other corporation or otherwise, without approval of
holders of at least a majority of the outstanding shares of Series A Preferred
Stock, voting separately as a class, (i) increase the number of authorized
shares of Series A Preferred Stock or authorize the issuance or issue of any
shares of Series A Preferred Stock other than to existing holders of Series A
Preferred Stock, (ii) issue any new class or series of equity security, (iii)
amend, alter or repeal, in any manner whatsoever, the designations, preferences
and relative rights and limitations and restrictions of the Series A Preferred
Stock; (iv) amend, alter or repeal any of the provisions of the Certificate of
Incorporation or Bylaws of the Corporation in a manner that would negatively
impact the holders of the Series A Preferred Stock, including (but not limited
to) any amendment that is in conflict with the approval rights set forth in this
Section 4; (v) directly or indirectly, redeem, purchase or otherwise acquire for
value (including through an exchange), or set apart money or other
A-7
property for any mandatory purchase or other analogous fund for the redemption,
purchase or acquisition of any shares of Common Stock or Junior Stock, except
for the repurchase by the Corporation of up to $25,000,000 in Common Stock from
J. Ernest Talley, declare or pay any dividend or make any distribution (whether
in cash, shares of capital stock of the Corporation, or other property) on
shares of Common Stock or Junior Stock; (vi) cause the number of directors of
the Corporation to be greater than seven (7); (vii) enter into any agreement or
arrangement with or for the benefit of any Person who is an Affiliate of the
Corporation with a value in excess of $5 million in a single transaction or a
series of related transactions; (viii) effect a voluntary liquidation,
dissolution or winding up of the Corporation; (ix) sell or agree to sell all or
substantially all of the assets of the Corporation, unless such transaction (1)
occurs after the fourth anniversary of the Initial Issue Date, (2) is a sale for
cash and (3) results in an internal rate of return ("IRR") of 30% compounded
quarterly or greater to the holder of the Series A Preferred Stock with respect
to each share of Series A Preferred Stock issued on the Initial Issue Date; or
(x) enter into any merger or consolidation or other business combination
involving the Corporation (except a merger of a wholly-owned subsidiary of the
Corporation into the Corporation in which the Corporation's capitalization is
unchanged as a result of such merger) unless such transaction (1) occurs after
the fourth anniversary of the Initial Issue Date, (2) is for cash and (3)
results in an IRR of 30% compounded quarterly or greater to the holder of the
Series A Preferred Stock with respect to each share of Series A Preferred Stock
issued on the Initial Issue Date.
(d) While any shares of Series A Preferred Stock are outstanding, the
Corporation will not, directly or indirectly, without the majority affirmative
vote of the Finance Committee, issue debt securities of the Corporation with a
value in excess of $10 million (including any refinancing of existing
indebtedness).
(e) While any shares of Series A Preferred Stock are outstanding, the
Corporation will not, directly or indirectly, without the unanimous affirmative
vote of the Finance Committee, issue equity securities of the Corporation with a
value in excess of $10 million (including any refinancing of existing
indebtedness); provided, however, that the following equity issuances shall
require only a majority affirmative vote of the Finance Committee: (A) a Common
Stock offering within 24 months of the Initial Issue Date that is equal to or
less than $75 million of gross proceeds to the Corporation and the selling price
is equal to or greater than the Conversion Price, (B) a Common Stock offering in
which the selling price (1) at any time prior to the third anniversary of the
Initial Issue Date is equal to or greater than two times the Conversion Price
and (2) thereafter, equal to or greater than the price that would imply a 25% or
greater IRR compounded quarterly on the Conversion Price and (C) an issuance of
equity in connection with an acquisition if the issuance is equal to or less
than 10% of the outstanding Common Stock (calculated post-issuance of such
shares of Common Stock).
A-8
5. Redemption.
(a) Optional Redemption.
(i) Optional Redemption by the Corporation.
(A) The Series A Preferred Stock may not be redeemed, in
whole or in part, at the election of the Corporation prior to the fourth
anniversary of the Initial Issue Date. The Corporation by resolution of its
Board of Directors may redeem the Series A Preferred Stock, in whole or in part,
at any time after the fourth anniversary of the Initial Issue Date. The
redemption price per share (the "REDEMPTION PRICE") for such shares of Series A
Preferred Stock so redeemed shall equal 105% of the Liquidation Preference
Amount on the Redemption Date (as defined below).
(B) Notwithstanding the forgoing Section 5(a)(i)(A), an
Initial Holder shall be entitled to reserve from redemption by the Corporation
pursuant to Section 5(a)(i)(A) one share of the Series A Preferred Stock until
such time as the Initial Holders and their Permitted Transferees collectively
shall own less than 33 1/3% of the Shares issued to the Initial Holders on the
Initial Issuance Date as defined below. For the purposes of this Section
5(a)(i)(B), "SHARES" shall mean shares of the Common Stock and the Series A
Preferred Stock, and the preceding percentage shall be calculated as if each of
the Shares had been exchanged or converted into shares of Common Stock
immediately prior to each such calculation regardless of the existence of any
restrictions on such exchange or conversion.
(C) In the event that at any time less than all of the
Series A Preferred Stock outstanding is to be redeemed, the shares to be
redeemed will be selected pro rata. Notwithstanding anything to the contrary,
the Corporation may not redeem less than all of the Series A Preferred Stock
outstanding unless all accrued and unpaid dividends have been paid on all then
outstanding shares of Series A Preferred Stock.
(ii) Notice of Redemption. Notice of any redemption pursuant
to this Section 5(a) shall be mailed, postage prepaid, at least 30 days but not
more than 60 days prior to the date of redemption specified in such notice (the
"REDEMPTION DATE") to each holder of record of the Series A Preferred Stock to
be redeemed at its address as the same shall appear on the stock register of the
Corporation. Each such notice shall state: (A) the Redemption Date, (B) the
place or places where certificates for such shares of Series A Preferred Stock
are to be surrendered for payment, (C) the Redemption Price and (D) that unless
the Corporation defaults in making the redemption payment, dividends on the
shares of Series A Preferred Stock called for redemption shall cease to accrue
on and after the Redemption Date. If less than all the shares of the Series A
Preferred Stock owned by such holder are then to be redeemed, such notice shall
also specify the number of shares thereof which are to be redeemed and the
numbers of the certificates representing such shares.
(iii) No Preclusion of Conversion. Nothing in this Section
5(a) shall be construed to preclude a holder of Series A Preferred Stock from
converting any or all of its shares of Series A Preferred Stock in accordance
with Section 8 at any time prior to the Redemption Date.
A-9
(b) Mandatory Redemption.
(i) Right to Require Redemption. If at any time there shall
occur any Redemption Event of the Corporation, then each holder of Series A
Preferred Stock shall have the right, at such holder's option, to require the
Corporation to redeem, and upon the exercise of such right the Corporation shall
redeem, all or any part of such holder's Series A Preferred Stock on the date
(the "REPURCHASE DATE") that is 45 days after the date of the Corporation Notice
(as defined below). The redemption price per share (the "REPURCHASE PRICE") for
such shares of Series A Preferred Stock so redeemed shall equal the Liquidation
Preference Amount on the Repurchase Date.
(ii) Notices; Method of Exercising Redemption Right, etc.
(A) Unless the Corporation shall have theretofore called for
redemption all the Series A Preferred Stock then outstanding pursuant to Section
5(a) hereof, within 15 days after the occurrence of a Redemption Event, the
Corporation shall mail to all holders of record of the Series A Preferred Stock
a notice (the "CORPORATION NOTICE") of the occurrence of the Redemption Event
and of the redemption right set forth herein arising as a result thereof. Each
Corporation Notice of a redemption right shall state: (I) the Repurchase Date;
(II) the date by which the redemption right must be exercised; (III) the
Repurchase Price; (IV) a description of the procedure which a holder must follow
to exercise a redemption right including a form of the irrevocable written
notice referred to in Section 5(b)(ii)(B) hereof; and (V) the place or places
where such Series A Preferred Stock may be surrendered for redemption.
No failure of the Corporation to give the foregoing notices or
any defect therein shall limit any holder's right to exercise a redemption right
or affect the validity of the proceedings for the redemption of Series A
Preferred Stock.
(B) To exercise a redemption right, a holder must deliver to
the Corporation on or before the 15th day after the date of the Corporation
Notice (i) irrevocable written notice of the holder's exercise of such rights,
which notice shall set forth the name of the holder, the amount of the Series A
Preferred Stock to be redeemed, a statement that an election to exercise the
redemption right is being made thereby, and (ii) the Series A Preferred Stock
with respect to which the redemption right is being exercised, duly endorsed for
transfer to the Corporation. Such written notice shall be irrevocable. Subject
to the provisions of paragraph (D) below, Series A Preferred Stock surrendered
for redemption together with such irrevocable written notice shall cease to be
convertible from the date of delivery of such notice. If the Repurchase Date
falls after the record date and before the following Dividend Payment Date, any
Series A Preferred Stock to be redeemed must be accompanied by payment of an
amount equal to the dividends thereon which the registered holder thereof is to
receive on such Dividend Payment Date, and, notwithstanding such redemption,
such dividend payment will be made by the Corporation to the registered holder
thereof on the applicable record date; provided that any quarterly payment of
dividends becoming due on the Repurchase Date shall be payable to the holders of
such Series A Preferred Stock registered as such on the relevant record date
subject to the terms of Section 3(b) hereof.
A-10
(C) In the event a redemption right shall be exercised in
accordance with the terms hereof, the Corporation shall pay or cause to be paid
the Repurchase Price in cash, to the holder on the Repurchase Date.
(D) If any Series A Preferred Stock surrendered for
redemption shall not be so redeemed on the Repurchase Date, such Series A
Preferred Stock shall be convertible at any time from the Repurchase Date until
redeemed and, until redeemed, continue to accrue dividends to the extent
permitted by applicable law from the Repurchase Date at the same rate borne by
such Series A Preferred Stock. The Corporation shall pay to the holder of such
Series A Preferred Stock the additional amounts arising from this Section
5(b)(ii)(D) hereof at the time that it pays the Repurchase Price, and if
applicable such Series A Preferred Stock shall remain convertible into Common
Stock until the Repurchase Price plus any additional amounts owing on such
Series A Preferred Stock shall have been paid or duly provided for.
(E) Any Series A Preferred Stock which is to be redeemed
only in part shall be surrendered at any office or agency of the Corporation
designated for that purpose pursuant to Section 5(b)(ii)(A)(V) hereof and the
Corporation shall execute and deliver to the holder of such Series A Preferred
Stock without service charge, a new certificate or certificates representing the
Series A Preferred Stock, of any authorized denomination as requested by such
holder, in aggregate amount equal to and in exchange for the unredeemed portion
of the Series A Preferred Stock so surrendered.
6. Priority.
(a) Priority as to Dividends. Holders of shares of the Series A
Preferred Stock shall be entitled to receive the dividends provided for in
Section 3 hereof in preference to and in priority over any dividends upon any
Junior Stock or Common Stock.
7. Liquidation Preference.
(a) In the event of any Liquidation, holders of the Series A Preferred
Stock will be entitled to receive out of the assets of the Corporation whether
such assets are capital or surplus and whether or not any dividends as such are
declared, the Liquidation Preference Amount to the date fixed for distribution,
and no more, before any distribution shall be made to the holders of Junior
Stock or Common Stock with respect to the distribution of assets. If the assets
of the Corporation are not sufficient to pay in full the Liquidation Preference
Amount to the holders of outstanding shares of the Series A Preferred Stock,
then the holders of all such shares shall share ratably in such distribution of
assets in accordance with the amount which would be otherwise payable on such
distribution to the holders of Series A Preferred Stock were such Liquidation
Preference Amount paid in full. Except as provided, in this Section 7(a), in the
event of any Liquidation of the Corporation, the holders of shares of Series A
Preferred Stock shall not be entitled to any additional payments.
(b) The consolidation or merger of the Corporation with or into such
corporation or corporations shall not itself be deemed to be a Liquidation of
the Corporation within the meaning of this Section 7.
A-11
(c) Written notice of any Liquidation of the Corporation, stating a
payment date and the place where the distributive amounts shall be payable,
shall be given by mail, postage prepaid, not less than 30 days prior to the
payment date stated therein, to the holders of record of the Series A Preferred
Stock at their respective addresses as the same shall appear on the books of the
Corporation.
8. Conversion.
(a) Each share of Series A Preferred Stock shall be convertible at any
time and from time to time, at the option of the holder thereof into validly
issued, fully paid and nonassessable shares of Common Stock, in an amount
determined in accordance with Section 8(d) below.
(b) Immediately following the conversion of Series A Preferred Stock
into Common Stock on the Conversion Date (i) such converted shares of Series A
Preferred Stock shall be deemed no longer outstanding and (ii) the Persons
entitled to receive the Common Stock upon the conversion of such converted
Series A Preferred Stock shall be treated for all purposes as having become the
owners of record of such Common Stock. Upon the issuance of shares of Common
Stock upon conversion of Series A Preferred Stock pursuant to this Section 8,
such shares of Common Stock shall be deemed to be duly authorized, validly
issued, fully paid and nonassessable. Notwithstanding anything to the contrary
in this Section 8, any holder of Series A Preferred Stock may convert shares of
such Series A Preferred Stock into Common Stock in accordance with Section 8 on
a conditional basis, such that such conversion will not take effect unless
conditions set forth in Section 8(c) are satisfied, and the Corporation shall
make such arrangements as may be necessary or appropriate to allow such
conditional conversion and to enable the holder to satisfy such other
conditions.
(c) To convert Series A Preferred Stock into Common Stock at the option
of the holder pursuant to Section 8(a), a holder must give written notice to the
Corporation at its principal office that such holder elects to convert Series A
Preferred Stock into Common Stock, and the number of shares to be converted.
Such conversion, to the extent permitted by law, regulation, rule or other
requirement of any governmental authority (collectively, "LAWS") and the
provisions hereof, including but not limited to Section 5(a)(iii), shall be
deemed to have been effected as of the close of business on the date on which
the holder delivers such notice to the Corporation (such date is referred to
herein as the "CONVERSION DATE" for purposes of any conversion of Series A
Preferred Stock pursuant to Section 8(a)). Promptly thereafter the holder shall
(i) surrender the certificate or certificates evidencing the shares of Series A
Preferred Stock to be converted, duly endorsed in a form reasonably satisfactory
to the Corporation, at the office of the Corporation or of the transfer agent
for the Series A Preferred Stock, (ii) state in writing the name or names in
which the certificate or certificates for shares of Common Stock are to be
issued, (iii) provide evidence reasonably satisfactory to the Corporation that
such holder has satisfied any conditions, contained in any agreement or any
legend on the certificates representing the Series A Preferred Stock, relating
to the transfer thereof, if shares of Common Stock are to be issued in a name or
names other than the holder's, and (iv) pay any transfer or similar tax if
required as provided in Section 8(k) below. As soon as practical following
receipt of the foregoing, the Corporation shall deliver to such former holder of
Series A Preferred Stock, a certificate representing the shares of Common Stock
issued upon the conversion, together with
A-12
a new certificate representing the unconverted portion, if any, of the shares of
Series A Preferred Stock formerly represented by the certificate or certificates
surrendered for conversion.
(d) For the purposes of the conversion of Series A Preferred Stock into
Common Stock pursuant to Section 8(a), each share of Series A Preferred Stock
shall be convertible into the number of shares of Common Stock equal to the
Liquidation Preference Amount divided by the Conversion Price in effect on the
Conversion Date. The number of full shares of Common Stock issuable to a single
holder upon conversion of the Series A Preferred Stock shall be based on the
aggregate Liquidation Preference Amount of all shares of Series A Preferred
Stock owned by such holder. The Conversion Price initially shall equal $27.935.
In order to prevent dilution of the conversion rights granted hereunder, the
Conversion Price shall be subject to adjustment from time to time in accordance
with Sections 8(f) and 8(i) below.
(e) If the Corporation shall at any time subdivide, by stock split,
reclassification or otherwise, the outstanding shares of Common Stock or shall
issue a dividend on its outstanding Common Stock payable in capital stock, the
Conversion Price in effect immediately prior to such subdivision or the issuance
of such dividend shall be proportionately decreased, and in case the Corporation
shall at any time combine, by stock split, reclassification or otherwise, the
outstanding shares of Common Stock, the Conversion Price in effect immediately
prior to such combination shall be proportionately increased, effective at the
close of business on the date of such subdivision, dividend, combination or
other event, as the case may be.
(f) The number of shares issuable upon conversion and the Conversion
Price (and each component thereof) are subject to adjustment by the Corporation
from time to time upon the occurrence of the events enumerated in this Section
8.
(i) Changes in Capital Stock.
(A) If the Corporation (i) pays a dividend or makes a
distribution on its Common Stock in shares of its Common Stock, (ii) subdivides
its outstanding shares of Common Stock into a greater number of shares, (iii)
combines its outstanding shares of Common Stock into a smaller number of shares,
(iv) makes a distribution on its Common Stock in shares of its capital stock
other than Common Stock or (v) issues by reclassification of its Common Stock
any shares of its capital stock, then the Conversion Price (and each component
thereof) in effect immediately prior to such action shall be proportionately
adjusted so that each holder of shares of Series A Preferred Stock may receive
the aggregate number and kind of shares of capital stock of the Corporation
which such holder would have owned immediately following such action if such
holder had converted all of his shares of Series A Preferred Stock into Common
Stock immediately prior to such action.
(B) The adjustment shall become effective immediately after
the record date in the case of a dividend or distribution and immediately after
the effective date in the case of a subdivision, combination or
reclassification.
(C) If after an adjustment a holder of shares of Series A
Preferred Stock upon conversion may receive shares of two or more classes of
capital stock of the Corporation, the Corporation shall determine the allocation
of the adjusted Conversion Price
A-13
between the classes of capital stock. After such allocation, the conversion
privilege and the Conversion Price of each class of capital stock shall
thereafter be subject to adjustment on terms comparable to those applicable to
Common Stock in this Section 8(f)(i).
(D) Any adjustments made pursuant to this Section 8(f)(i)
shall be made successively.
(ii) Common Stock Issue.
(A) If the Corporation issues any additional shares of
Common Stock for a consideration per share less than the Current Market Price
(as hereinafter defined) on the date the Corporation fixes the offering price of
such additional shares, the Conversion Price shall be adjusted as set forth
below, such that a holder of shares of Series A Preferred Stock, upon conversion
of his shares of Series A Preferred Stock into shares of Common Stock, shall
have the right to receive that number of shares of Common Stock which, after
giving effect to the following adjustment, such holder would receive if such
holder elected to convert his shares of Series A Preferred Stock into Common
Stock. The Conversion Price shall be adjusted to the number determined by
multiplying the Conversion Price in effect immediately prior to such issuance or
sale by a fraction, the numerator of which shall be the sum of (i) the number of
shares of Common Stock outstanding immediately prior to the issuance or sale of
such additional shares of Common Stock plus (ii) the number of such additional
shares which the aggregate consideration received (or by express provision
hereof deemed to have been received) by the Corporation for such additional
shares so issued or sold would purchase at a consideration per share equal to
the Current Market Price, and the denominator of which shall be the number of
shares of Common Stock outstanding immediately after the issuance or sale of
such additional shares of Common Stock. For the purposes of this Section
8(f)(ii), the date as of which the Current Market Price shall be determined
shall be the date of the actual issuance or sale of such shares.
(B) The adjustment shall be made successively whenever any
such issuance is made, and shall become effective immediately after such
issuance.
(C) This Section 8(f)(ii) does not apply to: (i) any of the
transactions described in Section 8(f)(iii) and 8(f)(iv); (ii) the conversion of
the shares of Series A Preferred Stock; and (iii) any shares issued under the
Amended and Restated Rent-A-Center, Inc. Long-Term Incentive Plan, and any other
such plans adopted by the Board of Directors.
(iii) Rights Issue.
(A) If the Corporation issues or sells any warrants or
options or other rights entitling the holders of Common Stock to subscribe for
or purchase either any additional shares of Common Stock or evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable, with or without payment of additional consideration in cash or
property, for additional shares of Common Stock (such convertible or
exchangeable evidence of indebtedness, shares of stock or other securities
hereinafter being called "CONVERTIBLE SECURITIES"), and the consideration per
share for which additional shares of Common Stock may at any time thereafter be
issuable pursuant to such warrants, options or other
A-14
rights or pursuant to the terms of such Convertible Securities (when added to
the consideration per share of Common Stock, if any, received for such warrants,
options or other rights), shall be less than the Current Market Price at the
time of the issuance of the warrants, options or other rights, then the
Conversion Price shall be adjusted as provided below, such that a holder of
shares of the Series A Preferred Stock, upon conversion of his shares of Series
A Preferred Stock into shares of Common Stock, shall have the right to receive
that number of shares of Common Stock which, after giving effect to the
following adjustment, such holder would receive if such holder elected to
convert his shares of Series A Preferred Stock into Common Stock. The Conversion
Price shall be adjusted to the number determined by multiplying the current
Conversion Price by a fraction, (A) the numerator of which shall be the sum of
(i) the number of shares of Common Stock outstanding on the record date plus
(ii) the quotient of (x) the number of additional shares of Common Stock covered
by such warrants, options or rights, multiplied by the sales price per share of
additional shares covered by such warrants, options or other rights, divided by
(y) the Current Market Price per share of Common Stock on the record date, and
(B) the denominator of which shall be the sum of (i) the number of shares of
Common Stock outstanding on the record date and (ii) the number of additional
shares of Common Stock covered by such warrants, options or other rights. For
purposes of this Section 8(f)(iii), the foregoing adjustment shall be made on
the basis that (i) the maximum number of additional shares of Common Stock
issuable pursuant to all such warrants, options or other rights or necessary to
effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued and (ii) the aggregate consideration for such maximum
number of additional shares shall be deemed to be the minimum consideration
received and receivable by the Corporation for the issuance of such additional
shares (plus the consideration, if any, received for such warrants, options or
other rights) pursuant to such warrants, options or other rights or pursuant to
the terms of such Convertible Securities.
(B) The adjustment shall be made successively whenever any
such warrants, options or other rights are issued and shall become effective
immediately after the record date for the determination of shareholders entitled
to receive the warrants, options or other rights.
(C) This Section 8(f)(iii) does not apply to: (i) the
conversion of the shares of Series A Preferred Stock; and (ii) any shares issued
under the Amended and Restated Rent-A-Center, Inc. Long-Term Incentive Plan, and
any other such plans adopted by the Board of Directors.
(iv) Convertible Securities Issue.
(A) If the Corporation issues Convertible Securities (other
than securities issued in transactions described in Section 8(f)(iii)) and the
consideration per share for which additional shares of Common Stock may at any
time thereafter be issuable pursuant to the terms of such Convertible Securities
is less than the Current Market Price on the date of issuance of such
securities, the Conversion Price shall be adjusted as provided below, such that
a holder of shares of Series A Preferred Stock, upon conversion of his shares of
Series A Preferred Stock into shares of Common Stock, shall have the right to
receive that number of shares of Common Stock which, after giving effect to the
following formula, such holder would receive if such holder elected to convert
his shares of Series A Preferred Stock into Common Stock. The
A-15
Conversion Price shall be adjusted to the number determined by multiplying the
current Conversion Price by a fraction, (A) the numerator of which shall be the
sum of (i) the number of shares of Common Stock outstanding immediately prior to
the issuance of such securities and (ii) the quotient of (x) the aggregate
consideration received for the issuance of such securities, divided by (y) the
Current Market Price per share on the date of issuance of such securities and
(B) the denominator of which shall be the sum of (i) the number of shares of
Common Stock outstanding immediately prior to the issuance of such securities
and (ii) the maximum number of shares deliverable upon conversion or in exchange
for such securities at the initial conversion or exchange rate. The adjustment
shall be made on the basis that (i) the maximum number of additional shares of
Common Stock necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued and (ii) the
aggregate consideration for such maximum number of additional shares of Common
Stock shall be deemed to be the minimum consideration received and receivable by
the Corporation for the issuance of such additional shares pursuant to the terms
of such Convertible Securities. No adjustment of the Conversion Price shall be
made under this Section 8(f)(iv) upon the issuance of any Convertible Securities
which are issued pursuant to the exercise of any warrants or other subscription
or purchase rights therefor, if such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to Section
8(f)(iii).
(B) The adjustment shall be made successively whenever any
such issuance is made, and shall become effective immediately after such
issuance.
(C) This Section 8(f)(iv) does not apply to: (i) the
conversion of the shares of Series A Preferred Stock and (ii) any shares issued
under the Amended and Restated Rent-A-Center, Inc. Long-Term Incentive Plan, and
any other such plans adopted by the Board of Directors.
(v) Conversion Price Date. For purposes of Sections 8(f)(iii) and
8(f)(iv), the date as of which the Conversion Price shall be computed shall be
the earliest of (i) the date on which the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive any
warrants or other rights referred to in Section 8(f)(iii) or to receive any
Convertible Securities, (ii) the date on which the Corporation shall enter into
a firm contract for the issuance of such warrants or other rights or Convertible
Securities or (iii) the date of the actual issuance of such warrants or other
rights or Convertible Securities.
(vi) No Compound Adjustment. No adjustment of the Conversion
Price shall be made under Section 8(f)(ii) upon the issuance of any additional
shares of Common Stock which are issued pursuant to the exercise of any warrants
or other subscription or purchase rights or pursuant to the exercise of any
conversion or exchange rights in any Convertible Securities, if such adjustment
shall previously have been made upon the issuance of such warrants or other
rights or upon the issuance of such Convertible Securities (or upon the issuance
of any warrants or other rights therefor), pursuant to Sections 8(f)(iii).
(vii) Readjustment. If any warrants or other rights (or any
portions thereof) which shall have given rise to an adjustment pursuant to
Section 8(f)(iii) or conversion rights pursuant to Convertible Securities which
shall have given rise to an adjustment pursuant to Section 8(f)(iv) shall have
expired or terminated without the exercise thereof and/or if by reason
A-16
of the terms of such warrants or other rights or Convertible Securities there
shall have been an increase or increases, with the passage of time otherwise, in
the price payable upon the exercise or conversion thereof, then the Conversion
Price hereunder shall be readjusted (but to no greater extent than originally
adjusted), taking into account all transactions described in Sections 8(f)(i)
through 8(f)(iv) hereof that have occurred in the interim, on the basis of (i)
eliminating from the computation any additional shares of Common Stock
corresponding to such warrants or other rights or conversion rights as shall
have expired or terminated, (ii) treating the additional shares of Common Stock,
if any, actually issued or issuable pursuant to the previous exercise of such
warrants or other rights or of conversion rights pursuant to any Convertible
Securities as having been issued for the consideration actually received and
receivable therefor and (iii) treating any of such warrants or other rights or
conversion rights pursuant to any Convertible Securities which remain
outstanding as being subject to exercise or conversion on the basis of such
exercise or Conversion Price as shall be in effect at the time; provided,
however, that any consideration which was actually received by the Corporation
in connection with the issuance or sale of such warrants or other rights shall
form part of the readjustment computation even though such warrants or other
rights shall have expired or terminated without the exercise thereof.
(viii) Consideration Received. To the extent that any additional
shares of Common Stock, any warrants, options or other rights to subscribe for
or purchase any additional shares of Common Stock, or any Convertible Securities
shall be issued for cash consideration, the consideration received by the
Corporation therefor shall be deemed to be the amount of the cash received by
the Corporation therefor, or, if such additional shares, warrants, options or
other rights or Convertible Securities are sold to underwriters or dealers for
public offering without a subscription offering, the initial public offering
price, in any such case excluding any amounts paid or receivable for accrued
interest or accrued dividends and without deduction of any compensation,
discounts or expenses paid or incurred by the Corporation for and in the
underwriting of, or otherwise in connection with, the issuance thereof. If and
to the extent that such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the fair value of such consideration at the
time of such issuance as determined by the Board of Directors of the
Corporation. If additional shares of Common Stock shall be issued as part of a
unit with warrants or other rights, then the amount of consideration for the
warrant or other right shall be deemed to be the amount determined at the time
of issuance by the Board of Directors of the Corporation. If the Board of
Directors of the Corporation shall not make any such determination, the
consideration for the warrant, option or other right shall be deemed to be zero.
(ix) Other Conversions. If a state of facts shall occur which,
without being specifically controlled by the provisions of this Section 8, would
not fairly protect the conversion rights of the holders of shares of Series A
Preferred Stock in accordance with the essential intent and principles of such
provisions, then the Board of Directors of the Corporation shall make an
adjustment in the application of such provisions, in accordance with such
essential intent and principles, so to protect such conversion rights.
(x) De Minimis Adjustment. Anything herein to the contrary
notwithstanding, no adjustment in the Conversion Price shall be required unless
such adjustment, either by itself or with other adjustments not previously made,
would require a change of at least one percent (1%) in the Conversion Price;
provided, however, that any adjustment which by
A-17
reason of this Section 8(f)(x) is not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 8 shall be made to the nearest one-tenth of a cent ($.001)
(rounded to the nearest cent ($.01) with respect to any monetary amount to be
actually paid) or to the nearest one hundredth (0.01) of a share, as the case
may be.
(xi) Current Market Price. For the purpose of any computation
hereunder, the "CURRENT MARKET PRICE" on any date will be the average of the
last reported sale prices per share (the "QUOTED PRICE") of the Common Stock on
each of the fifteen consecutive Trading Days (as defined below) preceding the
date of the computation. The Quoted Price of the Common Stock on each day will
be (A) the last reported sales price of the Common Stock on the principal stock
exchange on which the Common Stock is listed, or (B) if the Common Stock is not
listed on a stock exchange, the last reported sales price of the Common Stock on
the principal automated securities price quotation system on which sale prices
of the Common Stock are reported, or (C) if the Common Stock is not listed on a
stock exchange and sale prices of the Common Stock are not reported on an
automated quotation system, the mean of the high bid and low asked price
quotations for the Common Stock as reported by National Quotation Bureau
Incorporated if at least two securities dealers have inserted both bid and asked
quotations for the Common Stock on a day will be the Quoted Price of the Common
Stock on that day as determined by a member firm of the New York Stock Exchange,
Inc. selected by the Board of Directors. If no two securities dealers have
inserted such bid and ask quotations, or such Quoted Prices otherwise are not
available, the Current Market Price means the fair market value of the Common
Stock as of the date prior to the date on which the Current Market Price is
determined, which such fair market value shall be determined by the Board of
Directors of the Corporation. As used with regard to the Series A Preferred
Stock, the term "TRADING DAY" means (x) if the Common Stock is listed on at
least one stock exchange, a day on which there is trading on the principal stock
exchange on which the Common Stock is listed, (y) if the Common Stock is not
listed on a stock exchange, but sale prices of the Common Stock are reported on
an automated quotation system, a day on which trading is reported on the
principal automated quotation system on which sales of the Common Stock are
reported, or (z) if the Common Stock is not listed on a stock exchange and sale
prices of the Common Stock are not reported on an automated quotation system, a
day on which quotations are reported by National Quotation Bureau Incorporated.
(g) No fractional shares of Common Stock shall be issued upon the
conversion of Series A Preferred Stock. If any fractional interest in a share of
Common Stock would, except for the provisions of this subparagraph (g), be
deliverable upon the conversion of any Series A Preferred Stock, the Corporation
shall, in lieu of delivering the fractional share therefor, adjust such
fractional interest by payment to the holder of such converted Series A
Preferred Stock of an amount in cash equal (computed to the nearest cent) to the
Current Market Price of such fractional interest as of the end of the
Corporation's last fiscal year as determined in good faith in the sole
discretion of the Board of Directors of the Corporation.
(h) Whenever the Conversion Price is adjusted, as herein provided, the
Corporation shall promptly mail a notice of the adjustment to holders of Series
A Preferred Stock by first class mail. The Corporation shall forthwith maintain
at its principal executive office and file with the transfer agent, if any, for
Series A Preferred Stock, a statement, signed by the Chairman of the Board, or
the President, or a Vice President of the Corporation and by its chief financial
A-18
officer or an Assistant Treasurer, showing in reasonable detail the facts
requiring such adjustment and the Conversion Price after such adjustment. Such
transfer agent shall be under no duty or responsibility with respect to any such
statement except to exhibit the same from time to time to any holder of Series A
Preferred Stock desiring an inspection thereof.
(i) If there shall occur any capital reorganization or any
reclassification of the capital stock of the Corporation, consolidation or
merger of the Corporation with or into another entity, or the conveyance of all
or substantially all of the assets of the Corporation to another person or
entity, each share of Series A Preferred Stock shall thereafter be convertible
into the number of shares or other securities or property to which a holder of
the number of shares of Common Stock of the Corporation deliverable upon
conversion of such Series A Preferred Stock would have been entitled upon such
reorganization, reclassification, consolidation, merger or conveyance; and, in
any such case, appropriate adjustment (as determined in good faith in the sole
discretion of the Board of Directors of the Corporation) shall be made in the
application of the provisions herein set forth with respect to the rights and
interests thereafter of the holders of the Series A Preferred Stock, to the end
that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the Conversion Price) shall be applicable,
as nearly as reasonably may be, in relation to any shares or other property
thereafter deliverable upon the conversion of the Series A Preferred Stock.
(j) The Corporation shall at all times reserve and keep available, out
of its authorized but unissued shares of Common Stock or treasury shares
thereof, solely for the purpose of issuance upon the conversion of Series A
Preferred Stock, the full number of shares of Common Stock deliverable upon the
conversion of all Series A Preferred Stock from time to time outstanding. The
Corporation shall from time to time, in accordance with the laws of the State of
Delaware, increase the authorized amount of its Common Stock if at any time the
authorized number of shares of Common Stock remaining unissued shall not be
sufficient to permit the conversion of all of the Series A Preferred Stock at
the time outstanding.
(k) The Corporation shall pay any documentary, stamp or similar issue
or transfer tax due on the issue of shares of Common Stock upon conversion of
the Series A Preferred Stock into Common Stock. The Corporation shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any security in a name other than
that in which the Series A Preferred Stock so converted was registered, and no
such issue or delivery shall be made unless and until the person requested such
issue has paid to the Corporation the amount of any such tax, or has established
to the satisfaction of the Corporation that such tax has been paid.
9. Exclusion of Other Rights.
Except as otherwise required by law, shares of Series A Preferred Stock
shall not have any preferences or relative, participating, optional or other
special rights, other than those specifically set forth in this Certificate of
Designations (as such Certificate may be amended from time to time) and in the
Certificate of Incorporation. No shares of Series A Preferred Stock shall have
any rights of preemption or subscription whatsoever as to any securities of the
Corporation, except as expressly provided in any written agreement among the
Corporation and any holder or holders of Series A Preferred Stock.
A-19
10. Reissuance of Preferred Stock.
Shares of Series A Preferred Stock that have been issued and reacquired
in any manner, including shares purchased or redeemed or exchanged, shall (upon
compliance with any applicable provisions of the General Corporation Law of the
State of Delaware) be canceled and shall not be reissued.
11. Headings of Subdivisions.
The headings of the various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the provisions
hereof.
12. Severability of Provisions.
If any right, preference or limitation of the Series A Preferred Stock
set forth in this Certificate of Designations for the Series A Preferred Stock
(as such Certificate may be amended from time to time) is invalid, unlawful or
incapable of being enforced by reason of any rule or law or public policy, all
other rights, preferences and limitations set forth in this Certificate of
Designations (as so amended) which can be given effect without the invalid,
unlawful or unenforceable right, preference or limitation shall, nevertheless,
remain in full force and effect, and no right, preference or limitation herein
set forth shall be deemed dependent upon any other such right, preference or
limitation unless so expressed herein.
13. Notice.
All notices and other communications required or permitted to be given
to the Corporation hereunder shall be made by hand delivery or registered or
certified mail, return receipt requested, to the Corporation at its principal
executive offices (currently located on the date of the adoption of this
Certificate of Designations at 5700 Tennyson Parkway, Third Floor, Plano, Texas
75024, Attention: Secretary. Minor imperfections in any such notice shall not
affect the validity thereof.
A-20
CERTIFICATE OF OWNERSHIP AND MERGER
OF
RENT-A-CENTER MERGER SUB, INC.
WITH AND INTO
RENT-A-CENTER HOLDINGS, INC.
Pursuant to Section 253 of the Delaware General Corporation Law (the
"DGCL"), Rent-A-Center Holdings, Inc., a corporation organized and existing
under and by virtue of the DGCL (the "CORPORATION"), does hereby certify that:
FIRST: The Corporation owns all of the outstanding shares of Common
Stock, par value $1.00 per share, of Rent-A-Center Merger Sub, Inc., a Delaware
corporation ("MERGER SUB"), being the only class of stock of Merger Sub
outstanding.
SECOND: By unanimous written consent dated December 12, 2002, the Board
of Directors of the Corporation adopted the resolutions attached hereto as
Exhibit "A", which resolutions have not been amended or rescinded and are now in
full force and effect, approving the merger of Merger Sub with and into the
Corporation (the "MERGER").
THIRD: The Corporation shall be the surviving corporation of the
Merger.
FOURTH: Pursuant to Section 253(b) of the DGCL and the terms of the
Merger, the name of the Corporation shall be changed to "Rent-A-Center, Inc."
upon consummation of the Merger.
FIFTH: The Merger shall become effective at 8:01 a.m., Eastern Time, on
December 31, 2002.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Ownership and Merger to be executed on December 30, 2002.
RENT-A-CENTER HOLDINGS, INC.
By: /s/ Mark E. Speese
------------------------------------
Mark E. Speese
Chairman of the Board and
Chief Executive Officer
-2-
EXHIBIT "A"
RESOLUTIONS
APPROVAL OF MERGER BETWEEN RENT-A-CENTER MERGER SUB AND THE COMPANY.
WHEREAS, pursuant to the terms of the Inversion Plan of Merger, on the
effective date of the Inversion Merger, Rent-A-Center's corporate name will be
changed to "Rent-A-Center East, Inc.;" and
WHEREAS, immediately after the Inversion Merger, the Company desires to
change its corporate name to "Rent-A-Center, Inc;" and
WHEREAS, to effectuate the corporate name change of the Company from
"Rent-A-Center Holdings, Inc." to "Rent-A-Center, Inc.," the Company desires to
merge, in accordance with Section 253 of the DGCL, Rent-A-Center Merger Sub with
and into the Company, with the Company continuing as the surviving corporation
(the "NAME CHANGE MERGER"); and
WHEREAS, the Board has been presented with and reviewed a draft of the
Agreement and Plan of Merger (the "NAME CHANGE PLAN OF MERGER"); and
WHEREAS, the Board has determined it to be in the best interest of the
Company to effect the Name Change Merger.
NOW THEREFORE, BE IT RESOLVED, that the Name Change Merger, as well as
the Name Change Plan of Merger, in substantially the form presented to the
Board, be, and each of them hereby is, adopted and approved in all respects; and
RESOLVED FURTHER, that, pursuant to the authority granted in Section
253(b) of the DGCL and the terms of the Name Change Plan of Merger, the
amendment to the Company's Certificate of Incorporation to change the corporate
name of the Company from "Rent-A-Center Holdings, Inc." to "Rent-A-Center, Inc."
be, and hereby is, adopted and approved in all respects, effective as of the
effective date of the Name Change Merger; and
RESOLVED FURTHER, that pursuant to the terms of the Name Change Plan of
Merger, the amendment to the Bylaws of the Company to change all references to
"Rent-A-Center Holdings, Inc." to "Rent-A-Center, Inc." be, and hereby is,
adopted and approved in all respects, effective as of the effective date of the
Name Change Merger; and
RESOLVED FURTHER, that the Authorized Officers be, and each of them
with full authority to act without the others hereby is, authorized, empowered,
and directed, for and on behalf of the Company to execute the Name Change Plan
of Merger, in substantially the form presented to the Board, with such changes
as the Authorized Officer so acting shall deem necessary, advisable or
appropriate and in the best interest of the Company in order to carry out the
transactions contemplated by these resolutions and to take such other actions as
in the judgment of such Authorized Officer shall be necessary, advisable or
appropriate and in the best interest of the Company to effect the Name Change
Merger with the taking of any such action by such Authorized Officer being
conclusive evidence that the same did meet such standard; and
RESOLVED FURTHER, that the Authorized Officers be, and each of them
with full authority to act without the others hereby is, authorized, empowered,
and directed to cause the Certificate of Ownership and Merger, in substantially
the form presented to the Board, to be executed and filed with the Secretary of
State of Delaware.
OMNIBUS AUTHORITY.
RESOLVED, that the Authorized Officers be, and each of them with full
authority to act without the others hereby is, authorized and empowered, on
behalf of the Company, to do and to perform all such acts and things and to
enter into, execute, verify and deliver all such certificates, instruments,
agreements, notices and other documents and to effect such filings with any and
all appropriate regulatory authorities, state and federal, as may be required or
as in the judgment of such Authorized Officer shall be necessary, advisable or
appropriate and in the best interest of the Company to effectuate the purposes
of the foregoing resolutions, with the taking of any such action by any such
Authorized Officer being conclusive evidence that same did meet such standards;
all such actions to be performed in such manner, and all such certificates,
instruments, agreements, notices, applications, declarations, powers of attorney
and other documents to be executed and delivered in such form, as the Authorized
Officer performing or executing the same shall approve, the performance and
execution thereof by any such Authorized Officer to be conclusive evidence of
the approval thereof by such Authorized Officer and by the Board; and
RESOLVED FURTHER, that the Secretary or any Assistant Secretary of the
Company is hereby authorized, empowered, and directed, for and on behalf of the
Company, to certify and attest to any documents which he may deem necessary or
appropriate to effectuate the purposes of the foregoing resolutions, provided,
that such attestation shall not be required for the due authorization, execution
and delivery or validity of the particular document; and
RESOLVED FURTHER, that each Authorized Officer is authorized to pay any
and all expenses and fees arising in connection with the matters described in
the foregoing resolutions, including without limitation attorneys' fees, and
that each Authorized Officer is hereby authorized to negotiate, execute, deliver
and direct payment under any guarantee or indemnity agreement which such
Authorized Officer shall deem necessary or advisable to accomplish the matters
which are the subject of these resolutions; and
RESOLVED FURTHER, that any and all actions previously taken by any of
the Authorized Officers or representatives of the Company, for and on behalf and
in the name of the Company, on or prior to the date of these resolutions, in
connection with any of the foregoing resolutions be, and the same hereby are, in
all respects ratified, confirmed, approved and adopted as acts of the Company
for all purposes.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-2-