Exhibit V
UNITED RENTALS, INC.
SERIES B PERPETUAL CONVERTIBLE PREFERRED STOCK,
$.01 Par Value
PREFERRED STOCK PURCHASE AGREEMENT
June 28, 1999
United Rentals, Inc.
Four ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
June 28, 1999
To the Purchasers' listed on the signature page
Dear Sirs:
United Rentals, Inc., a Delaware corporation (the "Company"), agrees
with the entities who are signing this Agreement as Purchasers (together, the
"Purchasers") as follows:
1. Authorization of Stock. The Company will authorize the issue and sale of
100,000 shares (the "Shares", such term to include any such shares issued in
substitution therefor pursuant to section 8) of its Series B Perpetual
Convertible Preferred Stock, $.01 par value, to be designated as its "Series B
Perpetual Convertible Preferred Stock" (the "Stock"). The relative rights,
preferences and limitations of the Stock, including, without limitation, the
right to convert Shares into shares of the Company's common stock, par value
$.01 per share (the "Common Stock"), will be as set forth in the form of the
Certificate of Designation of the Stock of the Company attached as Exhibit A
hereto (the "Certificate of Designation"). Certain capitalized terms used in
this Agreement are defined in Section 9; references to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached
to this Agreement and references to a "section" are, unless otherwise specified,
to one of the sections of this Agreement.
2. Sale and Purchase of Stock. The Company will issue and sell to the
Purchasers and, subject to the terms and conditions of this Agreement, the
Purchasers will purchase from the Company, at the Closing provided for in
section 3, the Shares at a purchase price of $1,000 per share.
3. Closing; Payment of Purchase Price. The sale of the Shares to be purchased
by the Purchasers shall take place at the offices of Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP at 10:00 a.m., New York City time, at a closing (the
"Closing") on the later of (a) the first Business Day after the conditions to
closing set forth in
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Section 4 (other than those to be satisfied at the Closing, which shall be
satisfied or waived at the Closing) have been satisfied or waived by the party
entitled to waive such condition) or (b) the first to occur of (i) the 181st day
after the date of this Agreement, (ii) the 10th Business Day after the Company
gives notice to Purchasers that the Company's Debt to Total Capitalization Ratio
first equals or exceeds 0.6 , and (iii) the 10th Business Day after the Company
gives notice to Purchasers that the volume-weighted average of the closing price
of the Company's Common Stock on the New York Stock Exchange for the preceding
20 trading days shall have exceeded $30.00 per share, or on such other Business
Day thereafter or prior to such date as may be agreed upon by the Company and
the Purchasers. The Company's Debt to Total Capitalization Ratio shall mean an
amount determined by dividing (A) the sum of the Company's and its subsidiaries'
funded debt, consisting of notes, capital leases, debentures (other than those
issued to subsidiaries) and bank debt, less cash and cash equivalents, by (B)
the total capitalization (funded debt, preferred stock of a subsidiary trust and
stockholders' equity, less cash and cash equivalents) of the Company and its
subsidiaries, all as set forth on a month end consolidated balance sheet of the
Company prepared in accordance with generally accepted accounting principles.
The names in which the Company will register the shares of the Stock to be
purchased at the Closing are as set forth in Exhibit 1. At the Closing, the
Company will deliver to the Purchasers the Shares to be purchased by the
Purchasers in the form of a single certificate (or such greater number of
certificates representing such Shares as the Purchasers may request) dated the
date of the Closing and registered in the names aforesaid, and the Purchasers
jointly and severally shall deliver to the Company or its order immediately
available funds in the amount of the purchase price for such Shares. If at the
Closing the Company shall fail to tender to the Purchasers the Shares to be
purchased by the Purchasers, as provided above in this Section 3, or any of the
conditions specified in Section 4 shall not have been fulfilled to the
Purchasers' reasonable satisfaction, the Purchasers shall, at their election, be
relieved of all further obligations under this Agreement, without thereby
waiving any other rights the Purchasers may have by reason of such failure or
such nonfulfillment. If at the Closing, Purchasers shall fail to tender to the
Company the purchase price for the Shares, as provided above in this Section 3,
other than on account of any of the conditions specified in section 4 not having
been fulfilled to the Purchasers' satisfaction or on account of the breach by
the Company of any of its obligations under this Agreement, the Company shall,
at its election, be relieved of all further obligations under this Agreement,
without thereby waiving any other rights the Company may have by reason of such
failure.
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4. Conditions to Closing. The Purchasers' obligation to purchase and pay for
the Shares to be sold to the Purchasers at the Closing is subject to the
fulfillment to their reasonable satisfaction, prior to or concurrently with the
Closing, of the following conditions:
4.1. Representations and Warranties. The representations and warranties of the
Company contained in this Agreement shall be in all material respects correct
when made and at the time of the Closing, except as affected by the consummation
of the transactions contemplated by this Agreement.
4.2. Performance; No Default. The Company shall have performed and complied in
all material respects with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or at the
Closing.
4.3. Compliance Certificates. The Company shall have delivered to the
Purchasers an Officers' Certificate, dated the date of the Closing, certifying
that the conditions specified in sections 4.1 and 4.2 have been fulfilled.
4.4. Opinion of Counsel. The Purchasers shall have received the favorable
opinions, dated the date of the Closing and reasonably satisfactory in substance
and form to the Purchasers from Weil, Gotshal & ▇▇▇▇▇▇, counsel for the Company
and , if necessary, local counsel for the Company, substantially in the form set
forth in Exhibits B and C and covering such other matters incident to the
transactions contemplated by this Agreement as the Purchasers or their counsel
may reasonably request.
4.5. Certificate of Designation. The Certificate of Designation shall have
been duly filed under the laws of the State of Delaware, and the Restated
Certificate of Incorporation of the Company, as amended by the Certificate of
Designation, shall be in full force and effect, and shall not have been
otherwise amended or modified.
4.6. Registration Rights Agreement. The Purchasers shall have received a fully
executed counterpart of the Registration Rights Agreement substantially in the
form set out in Exhibit D (the "Registration Rights Agreement"), such agreement
shall be in full force and effect and no term or condition thereof shall have
been amended, modified or waived.
4.7. No Actions Pending. There shall be no suit, action, investigation,
inquiry or other proceeding by any Governmental Authority or any other Person or
any other legal or administrative proceeding pending or to the knowledge of
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the Company threatened which questions the validity or legality of the
transactions contemplated by this Agreement, or seeks damages in connection
therewith.
4.8. Compliance with Securities Laws. The offering and sale by the Company, at
or prior to the Closing, of the Shares pursuant to this Agreement shall have
been made in compliance with all applicable requirements of federal and state
securities laws and the Purchasers shall have received evidence thereof in form
and substance reasonably satisfactory to the Purchasers.
4.9. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory to the Purchasers and their counsel, and the Purchasers and their
counsel shall have received all such counterpart originals or certified or other
copies of such documents as the Purchasers or their counsel may reasonably
request.
4.10. Reservation of Common Stock. The shares of Common Stock initially
issuable upon conversion of the Stock shall have been duly authorized and
reserved for issuance upon conversion of the Stock.
4.11. Payment of Fees and Expenses. The Company shall have paid the
Purchasers on or before the Closing (a) a fee equal to 1% of the purchase price
of the Stock and (b) the costs and expenses provided for in Section 10 hereof,
provided that the Purchasers shall have provided to the Company a statement of
its estimated costs and expenses at least one Business Day prior to the
Closing.
4.12. HSR Act. Any waiting period (and any extension thereof) under the ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, applicable to this
Agreement and the transactions contemplated hereby shall have expired or been
terminated.
4.13. Shareholder Approval. If required under the rules of the New York Stock
Exchange, the shareholders of the Company shall have approved the transactions
contemplated hereby.
4.14. Proxies. Within 30 days of the date of this agreement, the Company shall
have delivered to the Purchasers irrevocable proxies from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ voting for ratification of this Agreement and the
issuance of the Series B Preferred Stock to Purchaser in accordance with the
terms hereof.
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5. Representations and Warranties. Except as disclosed in Exhibit E, the
Company represents and warrants that:
5.1. Organization, Standing, etc. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into and perform all of its obligations under this Agreement
and each of the Collateral Agreements to which it is a party, to issue and sell
the Shares to be issued and sold at the Closing and to carry out the
transactions contemplated hereby or thereby.
5.2. Subsidiaries. Exhibit E correctly lists as to each Subsidiary of the
Company on the date of this Agreement (a) its name, (b) the jurisdiction of its
incorporation and (c) the percentage of its issued and outstanding shares owned
by the Company or by another Subsidiary of the Company (specifying such other
Subsidiary), as the case may be. Each Subsidiary of the Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to own and operate its properties and to carry on its business as
now conducted and as proposed to be conducted. All the outstanding shares of
capital stock of each Subsidiary of the Company are validly issued, fully paid
and nonassessable, and all such shares indicated in Exhibit E as owned by the
Company or by a Subsidiary of the Company are so owned beneficially and of
record by the Company or by such Subsidiary, as the case may be, free and clear
of any Lien except as indicated in Exhibit E.
5.3. Qualification. Each of the Company and its Subsidiaries is duly qualified
and in good standing as a foreign corporation authorized to do business in each
jurisdiction (other than the jurisdiction of its incorporation) in which the
nature of its activities or the character of the properties it owns or leases
makes such qualification necessary and in which the failure so to qualify would
have a Material Adverse Effect. A "Material Adverse Effect" shall mean any
effect that is materially adverse to the properties, business, results of
operations or financial condition of the Company and its Subsidiaries taken as a
whole.
5.4. Business; Financial Statements. The Company has delivered to the
Purchasers complete and correct copies of the audited consolidated balance
sheets of the Company and its Subsidiaries as of December 31, 1998 and December
31, 1997, and the related audited supplemental consolidated statements of
operations, stockholders' equity and cash flows of the Company and its
Subsidiaries for the years ended December 31, 1998, 1997 and 1996. Such audited
financial statements are hereinafter referred to as the "Financial Statements."
The Financial Statements are accompanied
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by the report of Ernst & Young LLP, which state that the Financial Statements
have been prepared in accordance with GAAP consistently applied throughout the
periods involved (except as otherwise specified therein) and present fairly the
financial position of the corporations to which they relate as of the respective
dates specified and the results of their operations and changes in financial
position for the respective periods specified, and that the audit by such
accountants of the Financial Statements has been made in accordance with
generally accepted auditing standards. The Company has also delivered to the
Purchasers complete and correct copies of the unaudited consolidated balance
sheet of the Company and its Subsidiaries as of March 31, 1999, and the related
unaudited consolidated statement of operations, stockholders' equity and cash
flows of the Company and its Subsidiaries for the three month period ended on
such date. Such unaudited financial statements are hereinafter referred to as
the "Unaudited Statements." The Unaudited Statements have been prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as otherwise specified therein) and present fairly the financial
position of the Company and its Subsidiaries as of the respective dates
specified, and the results of their operations and changes in cash flows for the
respective periods specified. As of the date of this Agreement, the Purchasers
are not aware that this representation is incorrect in any material respect.
5.5. Changes, etc. Since March 31, 1999, neither the Company nor any of the
Subsidiaries has sustained any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree which would
be material to the Company and the Subsidiaries taken as a whole, otherwise than
as reserved for as disclosed in the Company's financials statements; and there
has not been any change in the capital stock of the Company or increase in the
long-term debt (other than accretion or scheduled repayments thereof) of the
Company and the Subsidiaries taken as a whole, or any material adverse change
which has had a Material Adverse Effect, in each case otherwise than as set
forth on Exhibit E.
5.6. Capital Stock and Related Matters. At the time of the Closing and after
giving effect to the transactions contemplated by this Agreement, the authorized
capital stock of the Company will consist of (a) 500,000,000 shares of Common
Stock, of which approximately 71,500,000 shares will be outstanding, (b) 300,000
shares of Series A Perpetual Convertible Preferred Stock, of which 300,000
shares are outstanding, (c) 100,000 shares of Series B Perpetual Convertible
Preferred Stock, of which 100,000 shares will be outstanding and (d) 4,600,000
shares of preferred stock, undesignated as to terms, none of which are
outstanding. The Company is obligated to issue Common Stock on conversion of
debentures held by United Rentals Trust I, a business trust organized under
Delaware law. The Common Stock and the Stock are hereinafter collectively
referred to as "Capital Stock". All of the outstanding shares of
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Capital Stock are, and at the Closing will be, validly issued and outstanding,
fully paid and non-assessable. Except as set forth above and on Exhibit E, the
Company has no outstanding stock or securities convertible into or exchangeable
for any shares of its Capital Stock, or any outstanding rights (either
preemptive or other) to subscribe for or to purchase, or any outstanding options
for the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any outstanding calls, commitments or claims of any character
relating to, any Capital Stock or any stock or securities convertible into or
exchangeable for any Capital Stock of the Company. Except as set forth on
Exhibit E, the Company is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
Capital Stock or any convertible securities, rights or options of the type
described in the preceding sentence. Neither the Company nor any of its
Subsidiaries is a party to, or has knowledge of, any agreement (except as set
forth on Exhibit E) restricting the transfer of any shares of the Company's
Capital Stock which would affect the transferability of the Common Stock
issuable upon conversion of the Stock.
5.7. Tax Returns and Payments. The Company and each of the Subsidiaries have
filed all necessary federal, state, local and foreign income, payroll, franchise
and other tax returns (after giving effect to extensions) and have paid all
taxes shown as due thereon (except where the failure to so file or pay would
not, singly or in the aggregate, have a Material Adverse Effect), and there is
no tax deficiency that has been, or to the knowledge of the Company is likely to
be, asserted against the Company, any of the Subsidiaries or any of their
properties or assets that would result in a Material Adverse Effect, except for
taxes that are being contested in good faith by appropriate proceedings and with
respect to which the Company has established adequate reserves in accordance
with United States generally accepted accounting principles.
5.8. Indebtedness of the Company. Exhibit F correctly describes all secured
and unsecured Indebtedness of the Company and its Subsidiaries (other than
intercompany items) outstanding, or for which the Company or one of its
Subsidiaries has commitments, which is individually in excess of $5,000,000
("Significant Indebtedness") (excluding operating leases), on the date of this
Agreement. The secured and unsecured Indebtedness of the Company and its
Subsidiaries (other than intercompany items, and other than Significant
Indebtedness) outstanding, or for which the Company or one of its Subsidiaries
has commitments does not in the aggregate exceed $1,600,000,000 on the date of
this agreement. Neither the Company nor any of its Subsidiaries is in default
with respect to any Indebtedness or any instrument or agreement relating
thereto, except for such defaults as would not, either in any case or in the
aggregate, have a Material Adverse Effect.
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5.9. Title to Properties; Liens. The Company and each of the Subsidiaries have
good and marketable title to all real property (other than property which is
leased) material to the conduct of the business of the Company and the
Subsidiaries, taken as a whole, and good and marketable title to all personal
property (other than property which is leased) material to the conduct of the
business of the Company and the Subsidiaries, taken as a whole, in each case
free and clear of all liens, encumbrances and defects except such as are
described on Exhibit E or such as do not in the aggregate have a Material
Adverse Effect; and any real property and buildings held under lease by the
Company and the Subsidiaries, material to the conduct of the business of the
Company and the Subsidiaries, taken as a whole, are held by them under valid,
subsisting and enforceable leases with such exceptions as are described on
Exhibit E and except for such other exceptions as do not have a Material Adverse
Effect.
5.10. Litigation, etc. There is no action, proceeding or investigation pending
or (to the knowledge of the Company) threatened (or any basis therefor known to
the Company) which questions the validity of this Agreement, the Shares or any
action taken or to be taken pursuant to this Agreement, the Shares or the
Collateral Agreements. Other than as set forth on Exhibit E, there are no legal
or governmental proceedings pending to which the Company or any of the
Subsidiaries is a party or of which any property of the Company or the
Subsidiaries is the subject, which if determined adversely to the Company or any
of the Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect; and, to the Company's knowledge, no such proceedings which would
in the aggregate have a Material Adverse Effect are threatened or contemplated
by governmental authorities or threatened by others.
5.11. Compliance with Other Instruments, etc. Neither the Company nor any of
its Subsidiaries is in violation of any term of its certificate or articles of
incorporation or by-laws, and neither the Company nor any of its Subsidiaries is
in violation of any term of any agreement or instrument to which it is a party
or by which it is bound or any term of any applicable law, ordinance, rule or
regulation of any Governmental Authority or any term of any applicable order,
judgment or decree of any court, arbitrator or Governmental Authority, the
consequences of which violation could reasonably be expected to have a Material
Adverse Effect. The compliance by the Company with all of the provisions of
this Agreement and the Registration Rights Agreement, the execution, delivery
and performance by the Company of this Agreement and the Registration Rights
Agreement, the issuance by the Company of the Common Stock upon the conversion
of the Shares, and the compliance with the terms of the Certificate of
Designation will not conflict with or result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement (provided the consent of the Company's
lending banks must be obtained before the Company makes an offer to
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purchase under Section 5 of the Certificate of Designation) or other agreement
or instrument to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries is bound or to which any of the
property or assets of the Company or any of the Subsidiaries is subject, or
constitute a Repayment Event thereunder, nor will such actions result in any
violation of the provisions of the certificate of incorporation or bylaws of the
Company or any of the Subsidiaries or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of the Subsidiaries or any of their properties except in each
case as would not, individually or in the aggregate have a Material Adverse
Effect. Except as set forth on Exhibit E, the execution, delivery and
performance by the Company of this Agreement and the transactions contemplated
hereby will not subject the Company to or accelerate any obligation to make
payments to any Person.
5.12. Governmental Consents, etc. Except as required under the HSR Act, no
consent, approval or authorization of, or declaration or filing with, any
Governmental Authority on the part of the Company is required for the valid
execution and delivery of this Agreement, the valid offer, issue, sale and
delivery of the Shares pursuant to this Agreement or the valid issue and
delivery of shares of Common Stock issuable upon conversion of the Stock.
Except for (a) the requirements of the HSR Act and applicable state securities
or blue sky laws, and (b) consents, approvals, filings or notices that will be
given or made at or prior to the time of the Closing, neither the Company nor
any of its Subsidiaries is required to obtain any consent, approval or
authorization of, or to make any declaration or filing with, any Governmental
Authority as a condition to the valid execution, delivery or performance of any
of the Collateral Agreements or the consummation of the transactions
contemplated thereby.
5.13. Offering of Securities. Neither the Company nor any Person acting on its
behalf has offered the Stock or any similar securities of the Company to, or
solicited any offers to buy any thereof from, or otherwise approached or
negotiated with respect thereto with, any Person or Persons other than the
Purchasers in such manner as would subject the offering, issuance or sale of any
of the Stock to the provisions of Section 5 of the Securities Act. Neither the
Company nor any Person acting on behalf of the Company has taken or will take
any action which would subject the offering, issuance or sale of any of the
Stock to the provisions of Section 5 of the Securities Act.
5.14. Certain Fees. Except for the fee payable by the Company to ▇▇▇▇▇▇▇ ▇▇▇▇▇
& Co., the amount of which will be disclosed to the Purchasers in writing prior
to the Closing, no broker's or finder's fees or commissions will be payable by
the Company with respect to the transactions contemplated by this Agreement
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and the Collateral Agreements, and the Company hereby indemnifies the Purchasers
against and agrees that it will hold the Purchasers harmless from any claim,
demand or liability for broker's or finder's fees alleged to have been incurred
at the instance of the Company or any Person acting on behalf of or at the
request of the Company or any agent of the Company in connection with any of the
transactions contemplated by this Agreement and the Collateral Agreements, and
from any expenses, including reasonable legal fees, arising in connection with
any such claim, demand or liability.
5.15. Investment Company Act. The Company is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
5.16. Disclosure. None of this Agreement, the Financial Statements, the Annual
Report on Form 10K for the year ended December 31, 1998, any document filed by
the Company with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 (the "Exchange Act") since the Annual Report on
Form 10K for the year ended December 31, 1998, or the Unaudited Statements,
contains (in each case, as of its date) any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they are
made, not misleading.
5.17. Enforceability. This Agreement and the Registration Rights Agreement
have been duly authorized and when validly executed and delivered by the Company
(assuming the due authorization, execution and delivery thereof by the other
parties thereto) will constitute the valid and binding obligations of the
Company, enforceable in accordance with their respective terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws relating to or affecting enforcement of
creditors' rights generally, or by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
5.18. Integration. Neither the Company nor any affiliate (as such term is
defined in Rule 501(b) under the Securities Act) has, directly or through any
agent, sold, offered for sale, solicited offers to buy or otherwise negotiated
in respect of, any security (as defined in the Securities Act) which is or will
be integrated with the sale of the Shares, in a manner that would require the
registration of the Securities under the Securities Act.
5.19. Manipulation. Prior to the date hereof, neither the Company nor any of
its affiliates has taken any action which is designed to or which has
constituted
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or which might have been expected to cause or result in stabilization or
manipulation of the price of any security of the Company in connection with the
sale of the Shares.
5.20. Acquired Companies. To the best knowledge of the Company, the
representations and warranties made by each of the Acquired Companies (as
defined in Section 9) and the selling stockholders in the respective agreements
pursuant to which the Company or another Subsidiary acquired the Acquired
Companies did not as of the respective dates thereof contain any inaccuracies
that would, singly or in the aggregate, have a Material Adverse Effect.
5.21. Intellectual Property. The Company and the Subsidiaries own or possess,
or can acquire on reasonable terms, adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on the
business now operated by them, and neither the Company nor any of the
Subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company or any of
the Subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly
or in the aggregate, would result in a Material Adverse Effect.
5.22. Government Licenses. The Company and the Subsidiaries possess such
permits, licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state, local or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by them, except where the failure to so possess such Government
Licenses would not, singly or in the aggregate, have a Material Adverse Effect;
the Company and the Subsidiaries are in compliance with the terms and conditions
of all such Governmental Licenses, except where the failure so to comply would
not, singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when the
invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not have, singly or in the
aggregate, a Material Adverse Effect; and neither the Company nor any of the
Subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in a Material Adverse Effect.
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5.23. Environmental Laws. Except as described on Exhibit E or except as would
not, singly or in the aggregate, result in a Material Adverse Effect: (a)
neither the Company nor any of the Subsidiaries is in violation of any federal,
state, local or foreign statute, law, rule, regulation, ordinance, code, policy
or rule of common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or judgment,
relating to pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), (b) neither the Company nor any of the Subsidiaries is lacking any
permits, authorizations and approvals required under any applicable
Environmental Laws or are in violation of the requirements of such Environmental
Laws, (c) there are no pending or, to the best knowledge of the Company,
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of the Subsidiaries and (d) to the knowledge of the Company there
are no events or circumstances that might reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit or proceeding
by any private party or governmental body or agency, against or affecting the
Company or any of the Subsidiaries relating to Hazardous Materials or any
Environmental Laws.
5.24. Insurance. Neither the Company nor any Subsidiary has received notice
from any insurer providing insurance coverage for the Company and the
Subsidiaries or agent of such insurer that capital improvements or other
expenditures will have to be made in order to continue present insurance
coverage, except such as could not reasonably be expected, singularly or in the
aggregate, to have a Material Adverse Effect.
5.25. Internal Controls. The Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with management's general or
specific authorization; (b) transactions are recorded as necessary (i) to permit
preparation of financial statements in conformity with generally accepted
accounting principles and (ii) to maintain accountability for assets; (c) access
to assets is permitted only in accordance with management's general or specific
authorization; and (d) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any material differences. Any exceptions to
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this representation would not render the representation in Section 5.4 incorrect
in any material respect or have a Material Adverse Effect.
5.26. ERISA. Neither the Company nor any of the Subsidiaries has violated any
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the rules and regulations promulgated thereunder, except for such
violations which, singly or in the aggregate, would not have a Material Adverse
Effect. If any plan subject to ERISA is adopted, the execution and delivery of
this Agreement and the sale of the Securities will not involve any non-exempt
prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Internal Revenue Code of 1986, as amended.
5.27. Year 2000 Compliance. With such exceptions as would not have a Material
Adverse Effect, the Company has been advised by its vendors (and has no reason
to believe that such advice is not correct) that as of the date of this
Agreement, all Date Data and Date-Sensitive Systems used by the Company and its
Subsidiaries are Year 2000 Compliant. "Date-Sensitive System" means any
software, microcode or hardware system or component, including any electronic or
electronically controlled system or component, that uses or processes any Date
Data and that is installed, in development or on order by the Company or any of
its subsidiaries for their internal use or for the use of third parties, or
which the Company or any of its subsidiaries sell, lease, license, assign or
otherwise provide to any third party. "Year 2000 Compliant" means (i) with
respect to Date Data, that such data is in proper format and accurate for all
dates, including for those before, on and after December 31, 1999 and (ii) with
respect to Date-Sensitive Systems, that each such system accurately processes
all Date Data, including for dates before, on and after December 31, 1999,
without loss of any functionality or performance, including but not limited to
calculating, comparing, sequencing, storing and displaying such Date Data
(including all leap year considerations), when used as a stand-alone system or
in combination with other software or hardware.
6. Investment Representations. The Purchasers understand that neither the
Shares nor any Common Stock issuable upon conversion, if any, of the Shares has
been registered under the Securities Act and that the certificates for the
Shares and such Common Stock will bear a legend to that effect. The Purchasers
also understand that the Shares are being offered and sold pursuant to an
exemption from registration contained in the Securities Act, based in part upon
their representations contained in this Agreement. The Purchasers hereby
represent and warrant as follows:
6.1. Acquisition for Own Account. The Purchasers are acquiring the Shares for
their own account for investment and not with a view toward distribution in a
manner which would violate the Securities Act.
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6.2. Ability to Protect Own Interests. The Purchasers represent that by reason
of their business or financial experience, or the business and financial
experience of their management, the Purchasers have the capacity to protect
their own interests in connection with the transaction contemplated in this
Agreement. The Purchasers are not a corporation formed for the specific purpose
of consummating this transaction.
6.2. Accredited Investor. The Purchasers represent that they are an
"accredited investor" as that term is defined in Regulation D promulgated under
the Securities Act.
6.3. Access to Information. The Purchasers have been given access to all
Company documents, records, and other information, have received physical
delivery of all those which the Purchasers have requested, and have had adequate
opportunity to ask questions of, and receive answers from, the Company's
officers, employees, agents, accountants, and representatives concerning the
Company's business, operations, financial condition, assets, liabilities, and
all other matters relevant to its investment in the Shares.
6.4. No Brokers. Purchasers represent and warrant to the Company that no
broker's or finder's fees or commissions will be payable by the Purchasers with
respect to the transactions contemplated by this Agreement and the Collateral
Agreements, and the Purchasers hereby jointly and severally indemnify and hold
the Company harmless from any claim, demand or liability for broker's or
finder's fees alleged to have been incurred at the instance of the Purchasers,
their affiliates or agents or any Person acting on behalf of or at the request
of the Purchasers, their affiliates or agents.
6.5. Compliance with Laws. Purchasers and their transferees will comply with
all filing and other reporting obligations under all Requirements of Law which
shall be applicable to Purchasers with respect to the Shares and to the Common
Stock issuable or issued on conversion of the Shares.
7. Affirmative Covenants. The Company covenants that from and after the date
of this Agreement through the Closing and thereafter (provided that the
covenants in Sections 7.1 and 7.2 shall continue only so long as the Purchasers
own at least 25,000 Shares or 1,000,000 shares of Common Stock which have been
acquired upon conversion of any Shares):
7.1. Exchange Act and Securities Act Filings. The Company will deliver to the
Purchasers, within three Business Days of their filing with the Securities and
Exchange Commission, all documents filed by it with the Securities and Exchange
15
Commission pursuant to the Securities Act or the Exchange Act, including
exhibits thereto.
7.2. Certificates; Other Information. The Company will deliver to the
Purchasers: (a) promptly upon receipt thereof, copies of all final reports
submitted to the Company or any of its Subsidiaries by independent certified
public accountants in connection with each annual or interim audit of the books
of the Company or any of its Subsidiaries made by such accountants, including,
without limitation, any final comment letter submitted by such accountants to
management in connection with their annual audit; and (b) promptly upon their
becoming available, copies of all financial statements, reports, notices and
proxy statements sent or made available generally by the Company to all of its
security holders in their capacity as such or by any Subsidiary of the Company
to its security holders.
7.3. Books and Records. The Company will, and will cause each of its
Subsidiaries to keep proper books of record and account in which entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities
7.4. Notices. The Company will, within 48 hours of occurrence, give notice to
the Purchasers: (a) of any (i) default or event of default under any instrument
or other agreement of the Company or any of its Subsidiaries which default or
event of default would have a Material Adverse Effect or (ii) litigation,
investigation or proceeding which may exist at any time between the Company or
any of its Subsidiaries and any Governmental Authority, which in any such case,
if adversely determined, could reasonably be expected to have a Material Adverse
Effect; and (b) of any litigation or proceeding affecting the Company or any of
its Subsidiaries (i) in which the amount claimed is $2,000,000 or more and not
covered by insurance or covered by reserves on the Company's balance sheet, or
(ii) in which injunctive or similar relief is sought which if obtained could
reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this section 7.4 shall be accompanied by a
statement of the chief executive officer or chief financial officer of the
Company setting forth details of the occurrence referred to therein and stating
what action the Company proposes to take with respect thereto.
7.5. Reservation of Common Stock. The Company will at all times reserve and
keep available, solely for issuance and delivery upon conversion of the Stock,
the number of shares of Common Stock from time to time issuable upon conversion
of all shares of the Stock at the time outstanding. All shares of Common Stock
issuable upon conversion of the Stock shall be duly authorized and, when issued
upon such conversion, shall be validly issued, fully paid and non-assessable.
16
7.6. Availability of Information. The Company will comply with the reporting
requirements of Sections 13 and 15(d) of the Exchange Act and will comply with
all other public information reporting requirements of the Securities and
Exchange Commission (including Rule 144 promulgated by the Securities and
Exchange Commission under the Securities Act) from time to time in effect and
relating to the availability of an exemption from the Securities Act for the
sale of any Restricted Securities. The Company will also reasonably cooperate
with each holder of any Restricted Securities in supplying such information as
may be necessary for such holder to complete and file any information reporting
forms presently or hereafter required by the Securities and Exchange Commission
as a condition to the availability of an exemption from the Securities Act for
the sale of any Restricted Securities.
7.7. Public Announcements. Attached hereto is the text of the press releases
which the parties shall issue publicly to announce the execution of this
Agreement.
7.8. Shareholder Vote. As soon as practicable following the execution and
delivery of this Agreement, the Company will hold a special meeting of
shareholders to approve the issuance of the Preferred Stock to the Purchasers
and shall use its best efforts to cause the approval of such issuance, including
the recommendation of the Board of Directors to vote in favor of approval.
8. Registration, Transfer and Substitution of Certificates for Stock.
8.1. Stock Register; Ownership of Stock. (a) The Company will keep at its
principal office a register in which the Company will provide for the
registration of the stock and the registration of transfers or conversion of the
Stock. The Company may treat the Person in whose name any of the Shares or
shares issued upon conversion of any of the Stock are registered on such
register as the owner thereof and the Company shall not be affected by any
notice to the contrary. All references in this Agreement to a "holder" of any
Shares or shares issued upon conversion of any of the Stock shall mean the
Person in whose name such Shares or shares issued upon conversion of any of the
Stock are at the time registered on such register.
(b) Upon the surrender of any certificate for Stock, properly
endorsed, for registration of transfer or for conversion at the office of the
Company maintained pursuant to subdivision (a) of this section 8.1, the Company
at its expense will (subject to compliance with section 8.2 hereof, if
applicable) execute and deliver to or upon the order of the holder thereof (i) a
new certificate or certificates for the same aggregate number of shares of Stock
less the number of shares of Stock being
17
converted, if any, in the name of such holder or as such holder (upon payment by
such holder of any applicable transfer taxes) may direct, and (ii) a certificate
or certificates for the number of shares of Common Stock to be issued upon
conversion of the shares of Stock so surrendered.
8.2. Replacement of Certificates. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
certificate representing shares of Stock or Common Stock issued upon the
conversion of shares of Stock and, in the case of any such loss, theft or
destruction of any certificate representing shares of Stock or Common Stock
issued upon the conversion of shares of Stock held by a Person other than the
Purchasers, upon delivery of indemnity reasonably satisfactory to the Company in
form and amount or, in the case of any such mutilation, upon surrender of such
certificate representing shares of Stock or Common Stock issued upon the
conversion of shares of Stock for cancellation at the office of the Company
maintained pursuant to subdivision (a) of section 8.1 hereof, the Company at its
expense will execute and deliver, in lieu thereof, a new certificate
representing shares of Stock or Common Stock of like tenor.
8.3. Restrictive Legends. Except as otherwise permitted by this section 8,
each certificate for Stock (including each certificate for Stock issued upon the
transfer of any certificate for Stock) shall be stamped or otherwise imprinted
with a legend in substantially the following form:
"The shares represented by this Certificate and any shares of Common
Stock issuable upon conversion of any such shares have not been registered
under the Securities Act of 1933 and may not be transferred in the absence
of such registration or an exemption therefrom under such Act. Such shares
and any such shares of Common Stock may be transferred only in compliance
with the conditions specified in the Preferred Stock Purchase Agreement
dated __________, 1999 between United Rentals, Inc. (the "Company") and the
purchasers identified therein. A complete and correct copy of such
Agreement is available for inspection at the principal office of the
Company and will be furnished without charge to the holder of such shares
upon written request."
Except as otherwise permitted by this section 8, each certificate for Common
Stock issued upon the conversion of any of the Stock, and each certificate
issued upon the transfer of any such Common Stock, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
18
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and may not be transferred in the absence
of such registration or an exemption therefrom under such Act. Such shares
may be transferred only in compliance with the conditions specified in the
Preferred Stock Purchase Agreement dated _________ 1999 between United
Rentals, Inc. (the "Company") and the purchasers identified therein. A
complete and correct copy of such Agreement is available for inspection at
the principal office of the Company and will be furnished without charge to
the holder of such shares upon written request."
8.4. Notice of Proposed Transfer; Opinions of Counsel. Prior to any transfer
of any Restricted Securities which are not registered under an effective
registration statement under the Securities Act, the holder thereof will give
written notice to the Company of such holder's intention to effect such transfer
and to comply in all other respects with this section 8.4. Each such notice
shall describe the manner and circumstances of the proposed transfer and shall
be accompanied by an opinion of counsel for such holder, which counsel and
opinion shall each be reasonably satisfactory to the Company, that the proposed
transfer may be effected without registration of such shares of Restricted
Securities under the Securities Act. Such holder shall thereupon be entitled to
transfer such shares in accordance with the terms of the notice delivered by
such holder to the Company. Each certificate representing such shares issued
upon or in connection with such transfer shall bear the restrictive legends
required by section 8.3, unless the related restrictions on transfer shall have
ceased and terminated as to such shares pursuant to section 8.5 hereof.
8.5. Termination of Restrictions. The restrictions imposed by this section 8
upon the transferability of Restricted Securities shall cease and terminate as
to any particular Restricted Securities when such restrictions are no longer
required in order to insure compliance with the Securities Act. Whenever such
restrictions shall cease and terminate as to any Restricted Securities, the
holder thereof shall be entitled to receive from the Company, without expense
(other than applicable transfer taxes, if any), new certificates for such
securities of like tenor not bearing the applicable legends required by section
8.3 hereof.
9. Definitions.
9.1. Certain Defined Terms. As used in this Agreement the following terms have
the following respective meanings:
Acquired Companies: The companies United Rentals, Inc. has acquired
since its formation in September 1997.
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Affiliate: With reference to any Person, a spouse of such Person, any
relative (by blood, adoption or marriage) of such Person within the second
degree, any director, officer or employee of such Person, any other Person of
which such Person is a member, director, officer or employee, and any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person.
Business Day: Any day except a Saturday, a Sunday, or any day on
which banking institutions in New York, New York are required or authorized by
law or other governmental action to be closed.
Capital Stock: As defined in section 5.6 of this Agreement.
Certificate of Designation: As defined in section 1 of this
Agreement.
Closing: As defined in section 3 of this Agreement.
Closing Date: The date of the Closing.
Code: The Internal Revenue Code of 1986, as amended from time to
time.
Collateral Agreements: The Registration Rights Agreement and the
Certificate of Designation.
Common Stock: As defined in section 1 of this Agreement.
Company: As defined in the introduction to this Agreement.
Exchange Act: At any time, the Securities Exchange Act of 1934 as then
in effect or any similar federal statute then in effect, and any reference to a
particular section of such Act shall be deemed to include a reference to the
comparable section, if any, in any such similar federal statute.
Financial Statements: As defined in section 5.4 of this Agreement.
GAAP: Generally accepted accounting principles set forth in the
Opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants and in statements by the Financial Accounting
Standards Board or in such other statement by such other entity as may be
approved by a significant segment of the accounting profession; and the
requisite that such principles be applied
20
on a consistent basis shall mean that the accounting principles observed in a
current period are comparable in all material respects to those applied in a
preceding period.
Governmental Authority: Any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
Indebtedness: With respect to any Person, at a particular time (a)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property, (b) the face amount of all letters of credit issued for the
account of such Person and, without duplication, all drafts drawn thereunder,
(c) all liabilities secured by any Lien on any property owned by such Person, to
the extent attributable to such Person's interest in such property, even though
such Person has not assumed or become liable for the payment thereof, and (d)
lease obligations of such Person which, in accordance with GAAP, should be
capitalized; but excluding trade and other accounts payable in the ordinary
course of business in accordance with customary trade terms and which are not
overdue for a period of more than 60 days or, if overdue for more than 60 days,
as to which a dispute exists and adequate reserves in conformity with GAAP have
been established on the books of such Person. The term "Indebtedness" shall not
include amounts which have not been drawn under credit facilities,
notwithstanding that such amounts when drawn will automatically be secured by an
existing Lien.
Lien: Any mortgage, pledge, hypothecation, assignment, security
interest, lien, charge or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effects as
any of the foregoing, and the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction). For the purposes of this Agreement, the Company or one of its
Subsidiaries shall be deemed to be the owner of any property which it has placed
in trust for the benefit of the holders of Indebtedness of the Company or its
Subsidiaries which Indebtedness is deemed to be extinguished under GAAP but for
which the Company or its Subsidiaries remain legally liable, and such trust
shall be deemed to be a Lien.
Majority in Interest: At any time, the holders of a majority, by
number of shares, of the outstanding Shares and the outstanding shares of Common
Stock issued upon conversion of any Shares, such majority to be determined by
reference to the number of shares of Common Stock into which all outstanding
Shares are at the time convertible.
21
Officers' Certificate: As to the Company, a certificate executed on
behalf of the Company by its Chief Executive Officer, and any one of its Vice
Chairman, Chief Acquisition Officer, or Chief Financial Officer.
Person: An individual, a partnership, a joint venture, a corporation,
a limited liability company, a trust, an unincorporated organization or a
government or any department or agency thereof.
Registration Rights Agreement: As defined in section 4.6 of this
Agreement.
Repayment Event: Any event or condition which gives the holder of any
note, debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any of the Subsidiaries.
Requirement of Law: As to any Person, the Certificate of
Incorporation and by-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
Restricted Securities: All of the following: (a) any certificates for
Stock bearing the applicable legend or legends referred to in section 8.3
hereof, (b) any shares of Common Stock which have been issued upon the
conversion of any of the Stock and which are evidenced by a certificate or
certificates bearing the applicable legend or legends referred to in such
section and (c) unless the context otherwise requires, any shares of Common
Stock which are at the time issuable upon the conversion of Stock and which,
when so issued, will be evidenced by a certificate or certificates bearing the
applicable legend or legends referred to in such section.
Securities Act: At any time, the Securities Act of 1933 as then in
effect or any similar federal statute then in effect, and any reference to a
particular section of such Act shall be deemed to include a reference to the
comparable section, if any, in any such similar federal statute.
Securities and Exchange Commission: The U.S. Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act or the Exchange Act, whichever is the relevant statute for the particular
purpose.
Shares: As defined in section 1 of this Agreement.
22
Stock: As defined in section 1 of this Agreement.
Subsidiaries: With respect to any Person, any corporation with respect
to which more than 50% of the outstanding shares of stock of each class having
ordinary voting power (other than stock having such power only by reason of the
happening of a contingency) is at the time owned by such Person or by one or
more Subsidiaries of such Person or by such Person and one or more Subsidiaries
of such Person.
Any of the above-defined terms may, unless the context otherwise
requires, be used in the singular or plural depending on the reference.
9.2. Accounting Terms. As used in this Agreement, and in any certificate,
report or other document made or delivered pursuant to this Agreement,
accounting terms not defined in section 9.1 and accounting terms partly defined
in said section 9.1 to the extent not defined, shall have the respective
meanings given to them under GAAP.
9.1. Other Provisions Regarding Definitions: (1) Unless otherwise defined
therein, all terms defined in this Agreement shall have the defined meanings
when used in any certificate, report or other document made or delivered
pursuant to this Agreement.
(1) The words "hereof", "herein", and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement.
10. Expenses, etc. Whether or not the transactions contemplated by this
Agreement shall be consummated, the Company will pay all of its expenses in
connection with such transactions and in connection with any amendments or
waivers (whether or not the same become effective) under or in respect of this
Agreement or the Shares purchased by the Purchasers hereunder, including,
without limitation: (a) the cost and expenses of reproducing this Agreement and
the Shares purchased by the Purchasers, of furnishing all opinions of counsel
for the Company (including any opinions requested by the Purchasers' special
counsel as to any legal matter arising hereunder) and all certificates on behalf
of the Company, and of the Company's performance of and compliance with all
agreements and conditions contained herein to be performed or complied with by
it; and (b) the cost (other than any applicable stock transfer taxes) of
delivering to their principal office, insured to their satisfaction, the Shares
sold to the Purchasers hereunder and any Shares delivered to the Purchasers upon
any substitution of Shares pursuant to section 8 and of the Purchasers
delivering
23
any Shares, insured to their satisfaction, upon any such substitution. In
addition, if the transactions contemplated hereby have been consummated, the
Company shall pay 50% of the reasonably itemized out-of-pocket expenses incurred
by the Purchasers in connection with such transactions (including the fees and
disbursements of their counsel), provided that the Company's liability under
this sentence shall not exceed $200,000. Reference is made to Section 5 of this
Agreement for certain agreements among the parties regarding the fees, if any,
of brokers and finders.
11. Adjustment of Terms. Notwithstanding the provisions of this Agreement and
the Certificate of Designation for the Series B Preferred Stock, if the Company
shall agree, on or before December 15, 1999, to issue to any person or persons
(other than (a) in connection with the acquisition of a business or the
acquisition of assets to be used in its business or (b) in a bona fide
underwritten public offering) more than $50 million aggregate liquidation
preference of a series of convertible preferred stock, then the Company shall
give to Purchasers not less than 15 business days' prior notice of such proposed
issuance, and the Purchasers shall be entitled at the closing of such issuance
to exchange their shares of Series B Preferred Stock for shares of the newly
issued convertible preferred stock, with the Series B Preferred Stock valued at
its liquidation amount.
12. Survival of Representations and Warranties and Indemnification; Certain
Limitations. The Company's indemnification obligations and all representations
and warranties contained in this Agreemen